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> save a fortune by not playing the real-estate bubble game I always thought that the real estate game was intentionally part of the deal. The idea would be f
by TAForObvReasons 8y ago
> save a fortune by not playing the real-estate bubble game
I always thought that the real estate game was intentionally part of the deal. The idea would be for a group of VCs to pick a target location (say, San Francisco), buy up the local infrastructure (housing, office space, coffee shops, etc), and turn around and rent / sell to the startups that you just funded. This would pad the ROI, so even a company that crashes and burns after 5 years would still be profitable on the basis of the rents paid.
This cycle wouldn't come into play with a remote team. And in that lens, the onerous zoning laws of the bay area make perfect sense
- thaumasiotes 8y ago> buy up the local infrastructure (housing, office space, coffee shops, etc), and turn around and rent / sell to the startups that you just funded. This would pad the ROI, so even a company that crashes and burns after 5 years would still be profitable on the basis of the rents paid. You can never turn a profit on rent paid out of money you gave to someone, just like it's impossible to turn a profit on purchases your employees make from you with the wages you pay them. You're always better off just keeping the money.
- TAForObvReasons 8y agoIt's someone else's money. - VC raises money to invest - VC or the individual partners buy the infrastructure (or already owns it through different channels) - VC instructs companies it funds to use infrastructure it owns $$ Now, of course there's interest in successes in the fund, but even when a bet doesn't pan out the VC firm can profit
- thaumasiotes 8y agoThat does not "pad the ROI". It lowers the ROI of the fund. It may launder some money from the fund into a VC's personal pockets, but that's not the same thing.