5 ms·

I think the implication is that it's captured via salaries paying high rent.

• vincentmarle 8y ago
  It's actually pretty easy to calculate. Labor costs can account for up to 70% of total business costs so, out of $100, roughly $70mm is spent on salaries. The "one-third rule" for landlords to determine eligibility for rent means you can spend up to roughly 33% of your income on rent. So 33% out of $70mm is $23 million. You can say that 23% of every VC dollar goes towards landlords.
  • Retric 8y ago
    That's only the employee portion, you also spend money on office space.
    • TheCoelacanth 8y ago
      Also some of the employee's non-rent spending will go to local businesses which will spend some of that money on rent and some of that money on salaries and so on with the new set of employees.
  • goobynight 8y ago
    This assumes people spend at the 33% level on housing. You'd have to actually know what people are spending on housing, after accounting for spouses/roommates. It could end more being more or less than 23 million, easily. e.g. I spend ~22% Also, some people will own their home or live at a family owned home.
    • manquer 8y ago
      In SV owning your home or living in family owned one for the avg tech employee is unlikely, and 33% is probably less in SV not more
  • socketnaut 8y ago
    You're applying the "one-third rule" to pre-tax salary, but it's generally applied to take-home pay.