Silicon Valley’s year of IPO-Palooza
Is San Francisco ready to get all uber-ized again? Feel the Lyft, guys! As if San Francisco wasn’t already so unaffordable that every year we talk about the exodus from San Francisco or about how San Francisco is maybe in decline.
Still if you follow the money, the incredible IPO-dense year of Tech unicorns of 2019 is sort of epic.
On the backs of some of the least profitable most scalable companies supposedly ever that are disrupting the way we think of Unicorns, with valuations so high, backed by foreign money (like Saudi Arabia and Japan) that makes you wonder what an American companies even are anymore, come the floods of “IPO-Palooza”. Indeed, for greed and innovation, the time is always now.
As we “drown in millionaires” the wealth-inequality conversation is getting more heated, as each month we step closer to the 2020 Presidential Elections. The way Silicon Valley operates, leads and hijacks the future of technology displays an urgent need for regulation, and folks, it needs it badly.
Uber, Airbnb, Pinterest and Lyft are some of the half-dozen billion-dollar companies expected to go public, producing a potential $230 billion market windfall. We are talking about an era where Mark Zuckerberg has way too much power in one of the most powerful companies in the world, an era where Travis Kalanick will be worth well over $8 Billion after Uber’s IPO.
While we whisper about how CEOs can make 150 or 200x the average employees of tech companies, we rarely talk about how founders and BUIDLers have monopolistic control of Unicorn monopolies. No, because Silicon Valley doesn’t really question its core values, only dances around its own greatness or unsustainability.
Lyft’s founders are set to make over $1 Billion. A low-margin unprofitable company that is a pure-play ride-sharing platform in an age where everyone from Grab to Uber are diversifying their business model. What could possibly go wrong? Well I’ll tell you, Lyft’s inflated “valuation” will be corrected by the market, all things in their right place and all.
Lyft’s founders and IPO deal is also a major turn off. They will keep a majority of voting power over corporate issues thanks to the stock’s dual class structure and it shows a new law for Unicorn that I call the Zuckerberg-Principle. It states greed is accelerating wealth inequality as Silicon Valley founders become even more controlling in how they groom their startups to global growth. In spite of shareholder rebellion, Zuck is untouchable with all the power he has on Facebook’s board and voting structure. Others are emulating this model, including Chinese Unicorns.
We’re Creating a Self-Driving Path to Wealth Inequality
San Francisco graduate monopolies also are spending more and more in lobbying. FANG stocks have an incredible runway for further growth as they get into monetizing new kinds of consumer data like healthcare data. Uber is a symptom of the times. It’s highly likely Silicon Valley is becoming too powerful, is out of control and deserves to be regulated and Tech companies deserve to be broken up, there’s just one problem.
The Tech IPO phenomena also creates a pyramid of profiteers. Think about all of these new millionaires, then shall we, 30,000 people just from some of the major ones — Uber (16,000), Airbnb (3,000), Lyft (5,000), Slack (2,000), Palantir (2,000), Pinterest (1,600) and Postmates (1,000).
Listen, San Francisco and the valley is already suffering from housing madness. But Silicon Valley’s role in accelerating wealth inequality in America is a tad more nefarious.
While the Valley is drowning in Millionaires, the Middle Class is slipping with each generation. What does this say to the values of young people today?
America’s richest urban area is about to get even richer. But Silicon Valley’s role in American capitalism is, arguably, shadier than ever. I’m not throwing shade for its own sake here, I really believe this is detrimental to America and how capitalism is evolving. I think Silicon Valley is hacking Wall Street and it’s a bit like a collective fraud for investors and prospective shareholders. You are peddling Unicorn hype and it’s harmful to a lot of other people, while a few surf into the 1%.
We have lessons to learn here, but as usual that might take decades. While the prices of these companies upon going public are yet to be determined, the profiteering has never been this bad, not at this scale.
I don’t feel bad for San Francisco housing, not one bit. I feel bad for the rest of North America. I feel bad about the role San Francisco has taken, not just as a leading innovator, but a lead scammer of how Capitalism actually functions. This year in 2019, IPO-Palooza isn’t about success of maturing companies, but about how easy it is to hack collective sentiment for profit. Wall Street is rigged, and Silicon Valley is the epicenter of not just innovation.