7 ms·

At what point do we collectively decide, you know what, this is ridiculous. Why are we funneling most of our money to landlords? You'd think VCs would push bac

by Reedx 8y ago

At what point do we collectively decide, you know what, this is ridiculous. Why are we funneling most of our money to landlords? You'd think VCs would push back on this too, because that's where their money is going. VC -> Startup -> Employee -> Landlord.

knuththetruth 8y ago
You think VCs don’t have Bay Area real estate investments in their personal portfolios?
deleted 8y ago
[deleted]
gnarcoregrizz 8y ago
VC -> Startup -> Employee -> Landlord (VC)
- ekianjo 8y ago
  The circle of life.
- Gargoyle 8y ago
  That's my favorite conspiracy theory. That VCs own the property and are fine with channeling their fund's money (which isn't all or even mostly theirs) into rent. Disclaimer- I don't really believe it's that simple.
  - monocasa 8y ago
    I've seen some of that in Boulder at least. The VCs here will "strongly recommend" that you rent their office space.
  - gnarcoregrizz 8y ago
    Haha, no, it's definitely not that simple, but it is a fun conspiracy theory. It's really to highlight the "wealth funnels up" effect which happens in a very broad and indirect way
  - jimbofisher1 8y ago
    Why is this a conspiracy theory? VCs are very wealthy and at least in theory financially savvy so they probably have a diversified portfolio of investments, some of which is definitely real estate. Seems obvious to me.
- deleted 8y ago
  [deleted]
monocasa 8y ago
If I had to guess somewhere in the next ten years when the absurd number of boomers who have been putting their retirement savings into second and third homes all try to cash out at the same time, flood the market, and find out that it was all just Monopoly money.
- malvosenior 8y ago
  The rent they are earning on those properties is definitely real money.
  - monocasa 8y ago
    And most of them I've seen are frittering that money away on bullshit, content in the idea that the gravy train will keep continuing ad infinitum.
  - pixl97 8y ago
    Not necessarily. I get a loan for a rent house, I'll be paying it for 30 years. I take your rent check, pay the loan fee, and invest the rest. The market crashed. I lose my investment. My renters lose their job. No one can afford rent that matches the minimum loan payment. Where is the real money again?
    - johnmaguire2013 8y ago
      That's a strawman argument. In any case, if you keep your money in the market, you'll almost certainly see it again.
- enervate 8y ago
  are you suggesting i might get to buy a house or i might not because i'll lose my job?
  - monocasa 8y ago
    I don't follow.
jimrandomh 8y ago
We've already collectively decided that. The problem is that a significant fraction of people have been misled about which policies will fix it. The problem is that local governments are controlled by the landlords, and they use zoning restrictions to limit supply and keep prices up. The fix is to transfer that power to the state government, which will allow enough housing to be built.
- pofilat 8y ago
  Municipalities aren't like states of the Union. Municipalities have no power except that which is granted to them by the state. There is nothing legally stopping any state government from passing a law tomorrow to change how municipalities are run.
  - monocasa 8y ago
    Except landlords have tons of political capital to expend, most effectively at the state government level.
- deleted 8y ago
  [deleted]
- abalone 8y ago
  This is overly dismissive of the concerns of poor and working class renters. A big problem in this debate is that privileged, largely white people who want more affordable market rate housing claim to be speaking on behalf of poorer people and claim that the same set of policies and approaches will work for everyone. They dismiss them as “misled” instead of listening carefully to their expressed needs for much more subsidized housing construction and controls on gentrification of their communities. Those are things that local governments can affect, so generally disempowering them is a concern to these communities.
- triviatise 8y ago
  this is 100% not true. Local governments are controlled by old people who are fighting change. Landlords would love to increase the density of properties to make more money from a single property.
erjjones 8y ago
> At what point do we collectively decide, you know what, this is ridiculous. I would say things are at that point. So move to a different city. Success != The Valley
- peterwwillis 8y ago
  I would say we need to redefine the idea of a city and how we live in them.
- stevehawk 8y ago
  It's all anecdotal but recruiters and lot of developers seem to frown on me for not being interested in moving to SV. I'd rather be unemployed in the midwest (which i am) than employed in the SV. Why give up my 1.5 acres and 4500sq ft home for the hell i see advertised on here so often.
zerostar07 8y ago
To what extent do VCs and landlords overlap?
- beat 8y ago
  They don't, probably. Totally different business models. The conspiracy theory is idiotic. VCs aren't in business to make the relatively flat world of rent. They're looking for that 100x return.
  - monocasa 8y ago
    Or, you know, just like the whole point of being a VC is diversifying so much that you catch the one 100x return, they've also diversified their capital also into more stable returns as well so they're not so feast or famine.
    - beat 8y ago
      Yes, diversifying to catch the 100x, but that's still investing in startups. Doing a corrupt rent pass-through with general partners' money will never generate a 100x.
      - monocasa 8y ago
        I mean, I've literally seen it. If you have to pay rent for office space anyway, it might as well go back to you. And I'm sure there'd be internal issues at the fund if someone was doing this and charging above market rates, but otherwise, what's the harm?
        chipotle_coyote 8y ago
        What you're describing sounds much more like VCs with offices subletting that space to startups they're funding until the startups grow big enough to get their own space than the more conspiratorial "VCs own the property management companies your startup is leasing from." In any case, what you're talking about is renting office space -- the linked article is reporting on renting residential space. There's no evidence I can find to suggest that Silicon Valley style VC funding is secretly behind Essex Property Trust, AvalonBay Communities, or other residential REITs.
dmix 8y ago
> Why are we funneling most of our money to landlords? Government policy: https://www.amazon.com/Zoned-Out-Regulation-Transportation-Metropolitan/dp/1933115157/ https://www.amazon.com/Zoned-Out-Regulation-Transportation-M... > Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth. The myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide.
- asveikau 8y ago
  > According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Unfortunately I have to agree with the "myth": outside of urban bubbles like the one I live in, yes, Americans do prefer that. It is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it.
  - dmix 8y ago
    > it is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it. Incentives play a major role in defining such a culture. It doesn't have to be a positive seemingly self-selected incentive to want to live in the suburbs, but negative ones play a major role as well, such as the insanely high costs to own property... due to severe limitations on developing high density multistory buildings in cities, which is why modern cities are exclusively full of either a mega skyscrapers or a single family homes. Or the ease of an automobile-first lifestyle - which is almost always a reaction to poorly developed mixed density urban areas, causing urban sprawl, not a cause of it. Just because a lot of people have responded to opting the easiest options given to them doesn't mean the easiest option was the result of market/personal choices. Rather it was ultimately a result of the intention, or more often unintentional, side effects of government policy, not a prolonged series of personal choice. This is hardly limited to just urban sprawl and land development. Thomas Sowell has a brilliant book on how this same cycle has been applied across US culture/politics/economics for decades after WW2 - well beyond just real estate - to nearly every major sector which influences modern US lives: https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell/dp/046509676X/ https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell... If one considers government economic and social policy by their results, not simply their good intentions, this pattern can be seen in countless places. Yet the popular reaction by the media and political parties is so often to blame personal choice and 'unrestrained' markets for the output.
crimsonalucard 8y ago
It's recursive. Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> ...
arthurjj 8y ago
Part of it's that these cities make it hard to build more housing, sometimes illegally. I give money to CARLA[1] which enforces the housing laws in California. 1. https://carlaef.org/donate/ https://carlaef.org/donate/
xienze 8y ago
> At what point do we collectively decide, you know what, this is ridiculous. When tech workers get over their “I simply MUST live in the Bay Area, ugh, anywhere else is simply unliveable” mindset that in turn drives companies to concentrate in said area.
- trovi 8y ago
  Isn't it the other way around though?
  - xienze 8y ago
    Not really. Frequently cited by young workers are the desire/"need" to be in a big, walkable city, diverse, lots of food options, etc. The concentration of companies seems to be merely a bonus.
avn2109 8y ago
>> "VC -> Startup -> Employee -> Landlord." Hate to be the bearer of bad news, but the VC is the landlord. They're not stupid, and this setup is intentional. It's a company town. History doesn't repeat itself but it rhymes.
- johnmaguire2013 8y ago
  Do you have any sources to back that up?
anonymous5133 8y ago
It is slowly starting to change as more tech companies arent even located in the bay area anymore. Companies flocked to the bay area for the employee skills but now more of the talent can be found in other cities as well.
jimbofisher1 8y ago
You are probably missing the fact that many VCs are likely heavily invested in Real Estate and this chain simply loops back to them, what incentive would they have for changing the status quo? VC -> Startup -> Employee -> VC/Landlord
deleted 8y ago
[deleted]

by Reedx 8y ago

knuththetruth 8y ago

You think VCs don’t have Bay Area real estate investments in their personal portfolios?

deleted 8y ago

[deleted]

gnarcoregrizz 8y ago

VC -> Startup -> Employee -> Landlord (VC)

ekianjo 8y ago
The circle of life.
Gargoyle 8y ago
That's my favorite conspiracy theory. That VCs own the property and are fine with channeling their fund's money (which isn't all or even mostly theirs) into rent. Disclaimer- I don't really believe it's that simple.
- monocasa 8y ago
  I've seen some of that in Boulder at least. The VCs here will "strongly recommend" that you rent their office space.
- gnarcoregrizz 8y ago
  Haha, no, it's definitely not that simple, but it is a fun conspiracy theory. It's really to highlight the "wealth funnels up" effect which happens in a very broad and indirect way
- jimbofisher1 8y ago
  Why is this a conspiracy theory? VCs are very wealthy and at least in theory financially savvy so they probably have a diversified portfolio of investments, some of which is definitely real estate. Seems obvious to me.
deleted 8y ago
[deleted]

monocasa 8y ago

If I had to guess somewhere in the next ten years when the absurd number of boomers who have been putting their retirement savings into second and third homes all try to cash out at the same time, flood the market, and find out that it was all just Monopoly money.

malvosenior 8y ago
The rent they are earning on those properties is definitely real money.
- monocasa 8y ago
  And most of them I've seen are frittering that money away on bullshit, content in the idea that the gravy train will keep continuing ad infinitum.
- pixl97 8y ago
  Not necessarily. I get a loan for a rent house, I'll be paying it for 30 years. I take your rent check, pay the loan fee, and invest the rest. The market crashed. I lose my investment. My renters lose their job. No one can afford rent that matches the minimum loan payment. Where is the real money again?
  - johnmaguire2013 8y ago
    That's a strawman argument. In any case, if you keep your money in the market, you'll almost certainly see it again.
enervate 8y ago
are you suggesting i might get to buy a house or i might not because i'll lose my job?
- monocasa 8y ago
  I don't follow.

jimrandomh 8y ago

We've already collectively decided that. The problem is that a significant fraction of people have been misled about which policies will fix it. The problem is that local governments are controlled by the landlords, and they use zoning restrictions to limit supply and keep prices up. The fix is to transfer that power to the state government, which will allow enough housing to be built.

pofilat 8y ago
Municipalities aren't like states of the Union. Municipalities have no power except that which is granted to them by the state. There is nothing legally stopping any state government from passing a law tomorrow to change how municipalities are run.
- monocasa 8y ago
  Except landlords have tons of political capital to expend, most effectively at the state government level.
deleted 8y ago
[deleted]
abalone 8y ago
This is overly dismissive of the concerns of poor and working class renters. A big problem in this debate is that privileged, largely white people who want more affordable market rate housing claim to be speaking on behalf of poorer people and claim that the same set of policies and approaches will work for everyone. They dismiss them as “misled” instead of listening carefully to their expressed needs for much more subsidized housing construction and controls on gentrification of their communities. Those are things that local governments can affect, so generally disempowering them is a concern to these communities.
triviatise 8y ago
this is 100% not true. Local governments are controlled by old people who are fighting change. Landlords would love to increase the density of properties to make more money from a single property.

erjjones 8y ago

> At what point do we collectively decide, you know what, this is ridiculous. I would say things are at that point. So move to a different city. Success != The Valley

peterwwillis 8y ago
I would say we need to redefine the idea of a city and how we live in them.
stevehawk 8y ago
It's all anecdotal but recruiters and lot of developers seem to frown on me for not being interested in moving to SV. I'd rather be unemployed in the midwest (which i am) than employed in the SV. Why give up my 1.5 acres and 4500sq ft home for the hell i see advertised on here so often.

zerostar07 8y ago

To what extent do VCs and landlords overlap?

beat 8y ago
They don't, probably. Totally different business models. The conspiracy theory is idiotic. VCs aren't in business to make the relatively flat world of rent. They're looking for that 100x return.
- monocasa 8y ago
  Or, you know, just like the whole point of being a VC is diversifying so much that you catch the one 100x return, they've also diversified their capital also into more stable returns as well so they're not so feast or famine.
  - beat 8y ago
    Yes, diversifying to catch the 100x, but that's still investing in startups. Doing a corrupt rent pass-through with general partners' money will never generate a 100x.
    - monocasa 8y ago
      I mean, I've literally seen it. If you have to pay rent for office space anyway, it might as well go back to you. And I'm sure there'd be internal issues at the fund if someone was doing this and charging above market rates, but otherwise, what's the harm?
      - chipotle_coyote 8y ago
        What you're describing sounds much more like VCs with offices subletting that space to startups they're funding until the startups grow big enough to get their own space than the more conspiratorial "VCs own the property management companies your startup is leasing from." In any case, what you're talking about is renting office space -- the linked article is reporting on renting residential space. There's no evidence I can find to suggest that Silicon Valley style VC funding is secretly behind Essex Property Trust, AvalonBay Communities, or other residential REITs.

dmix 8y ago

> Why are we funneling most of our money to landlords? Government policy: https://www.amazon.com/Zoned-Out-Regulation-Transportation-Metropolitan/dp/1933115157/ https://www.amazon.com/Zoned-Out-Regulation-Transportation-M... > Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth. The myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide.

asveikau 8y ago
> According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Unfortunately I have to agree with the "myth": outside of urban bubbles like the one I live in, yes, Americans do prefer that. It is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it.
- dmix 8y ago
  > it is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it. Incentives play a major role in defining such a culture. It doesn't have to be a positive seemingly self-selected incentive to want to live in the suburbs, but negative ones play a major role as well, such as the insanely high costs to own property... due to severe limitations on developing high density multistory buildings in cities, which is why modern cities are exclusively full of either a mega skyscrapers or a single family homes. Or the ease of an automobile-first lifestyle - which is almost always a reaction to poorly developed mixed density urban areas, causing urban sprawl, not a cause of it. Just because a lot of people have responded to opting the easiest options given to them doesn't mean the easiest option was the result of market/personal choices. Rather it was ultimately a result of the intention, or more often unintentional, side effects of government policy, not a prolonged series of personal choice. This is hardly limited to just urban sprawl and land development. Thomas Sowell has a brilliant book on how this same cycle has been applied across US culture/politics/economics for decades after WW2 - well beyond just real estate - to nearly every major sector which influences modern US lives: https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell/dp/046509676X/ https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell... If one considers government economic and social policy by their results, not simply their good intentions, this pattern can be seen in countless places. Yet the popular reaction by the media and political parties is so often to blame personal choice and 'unrestrained' markets for the output.

crimsonalucard 8y ago

It's recursive. Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> Landlord -> business -> VC -> Startup -> Employee -> ...

arthurjj 8y ago

Part of it's that these cities make it hard to build more housing, sometimes illegally. I give money to CARLA[1] which enforces the housing laws in California. 1. https://carlaef.org/donate/ https://carlaef.org/donate/

xienze 8y ago

> At what point do we collectively decide, you know what, this is ridiculous. When tech workers get over their “I simply MUST live in the Bay Area, ugh, anywhere else is simply unliveable” mindset that in turn drives companies to concentrate in said area.

trovi 8y ago
Isn't it the other way around though?
- xienze 8y ago
  Not really. Frequently cited by young workers are the desire/"need" to be in a big, walkable city, diverse, lots of food options, etc. The concentration of companies seems to be merely a bonus.

avn2109 8y ago

>> "VC -> Startup -> Employee -> Landlord." Hate to be the bearer of bad news, but the VC is the landlord. They're not stupid, and this setup is intentional. It's a company town. History doesn't repeat itself but it rhymes.

johnmaguire2013 8y ago
Do you have any sources to back that up?

anonymous5133 8y ago

It is slowly starting to change as more tech companies arent even located in the bay area anymore. Companies flocked to the bay area for the employee skills but now more of the talent can be found in other cities as well.

jimbofisher1 8y ago

You are probably missing the fact that many VCs are likely heavily invested in Real Estate and this chain simply loops back to them, what incentive would they have for changing the status quo? VC -> Startup -> Employee -> VC/Landlord

deleted 8y ago

[deleted]