4 ms·
Thank you. I read this article twice, thought I was completely missing something. No, it's a pretty obvious statement wrapped around pseudo-intellectual ideas o
by ThrowAwayGlen 7y ago
Thank you. I read this article twice, thought I was completely missing something. No, it's a pretty obvious statement wrapped around pseudo-intellectual ideas of Carlota Perez and presented in an Emperor's New Clothes style where if you disagree with it you're an idiot ("Maybe not all investors get this, but the smart ones do").
Alex was previously at Social Capital, a fund with amazing PR and huge egos combined with very mediocre financial results and awful morals. It would not surprise me at all to see him get back into the game by starting a fund using drivel like this post to sucker LPs into writing him checks.
- eru 7y agoThe article seemed pretty straightforward. Perhaps a bit too excited. But the fundamental thesis that the predominance of equity financing in tech is an aberration and will likely come to an end, seems rather plausible.
- pmart123 7y agoThis is not new though. Robert Smith pioneered the idea that while software companies didn’t have tangible assets, they had stable cash flows. In the public markets, data providers like IHS Markit, MSCI, etc. have used some debt to rise the returns on equity. At the end of the day, it’s more about where you define “tech” as cutting edge, or as a software or data business.
- eru 7y agoYes. And the elephant in the room is differing tax treatments for returns on equity vs returns on fixed income. Most jurisdiction allow you to pay interest with pre-tax income but profits are taxed and then used to pay dividends or buy back stock. (Which is pretty silly and self-contradicting, if you combine it with regulation _against_ leverage. Government, please make up your mind which capital structure if any you want to prefer.)
- happyrock 7y ago> awful morals Care to elaborate?