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These guys need to take a lot closer look at Silicon Valley. They report that San Francisco has only 526 people with a net worth over $30 million. That's crazy

These guys need to take a lot closer look at Silicon Valley. They report that San Francisco has only 526 people with a net worth over $30 million. That's crazy low. Just for example, Dustin Moscovitz says that employee number 100 made $200M at Facebook[1]. Imagine the number that made $30M, and that's just one company (see slide 14). [1] http://www.businessinsider.com/dustin-moskovitzs-startup-advice-deck-2014-9?op=1 http://www.businessinsider.com/dustin-moskovitzs-startup-adv...

ariwilson 12y ago
Based on what? Your Rolodex?
erdevs 12y ago
Moscovitz did not say that employee #100 made $200M at FB. Read the article. First, this was an overly simplistic analysis. It assumes a strike price of $0.00... Which never happens, and certainly wouldn't have happened by the time FB hit 100 employees. It assumes full vesting. It assumes no lockup on liquidity. It assumes no dilution from exiting... which, in the real world, never happens. You can actually see how much money FB's top shareholders were worth at their IPO. Very, very few employees made over $10M. TEN. Before tax. A lot of people front in SF / the Bay Area. Very, very few are worth over $30M in liquid net worth.
- paulsutter 12y ago
  What do you think the strike price was at 100 employees? I mean seriously. I know a guy who was around number 70 at Google and his strike price was about 30 cents. Correction: The S-1 listed only a handful of the top people.
  - onion2k 12y ago
    I think the 'TEN' was emphasising $10m rather than stating only 10 employees made that much.
  - npalli 12y ago
    It is worth noting that the S-1 listed one shareholder (among 10 or so individuals) who owned 10 bp of stock. Facebook thought that was worthy of disclosure. Like the commentator above, I'm highly skeptical that employee #100 got 10 bp stock (unless it was matching some google offer etc not something Dustin implied).
patmcguire 12y ago
$30 million is a high bar. If someone's making it in tech, with investors and other stockholders you'd have to have a $100 million+ exit as a founder. There are more in SV than anywhere else, but still few in an absolute sense. The other option is that they were somewhat early in something that took off like Google/Facebook, that's still probably not more than a few dozen over the $30 million mark each. So the number makes sense to me at least.
- fasteddie 12y ago
  I agree its a very high bar, but someone with a relatively lower exit -- say $10m, could hit the $30m mark within 15 years with a 7% annualized return, not to mention getting lucky with a winning seed investment or two.
  - hkmurakami 12y ago
    The data is from 2013, so by your calculation the person would have had to have made the $10MM in 1998. The stock market has not had 7% returns since then, and you haven't considered the impact of taxes and using part of the gains to fund a higher standard of living. In addition, it was much harder to make $10mm before the .com era.
ganeumann 12y ago
It actually seems low to me too. $30 million is a lot of money, but given the number of companies with $1bn+ valuations recently, you'd think there would be at least 200 from those alone. It may be they are not counting paper wealth in private companies. It may also be that many of these $1bn+ valuations came in the last year or so (their data is from 2013.)
- hkmurakami 12y ago
  If the company is worth $1BB, then you must own 3% of its equity in order to have $30MM worth of equity of that company [1]. Non-founders rarely, if ever, are given that much equity (commonly cited numbers tend to top out around 2%). The most likely candidates are engineer #1 and an early VP, but engineer #1 has likely been diluted by over 30% since seed stage and even the exec will have been diluted by 10~20%. At $5BB, a nonfounder needs about 0.6% of the company. By this point though, dilution is usually even more severe, and engineer #1 will likely have had his/her initial share cut by close to 50%. This means that only the earliest of early employees, along with the VP level hires, will have $30MM at a typical $5BB startup (though $5BB startups are hardly typical). It's the companies that are another order of magnitude higher in valuation that mint wealth of that kind to dozens of employees. [1] ignoring liquidity preference for the sake of simplicity.
  - will_work4tears 12y ago
    MM is often used to denote millions, but I don't think BB is used to denote Billions. Do you have a cite that indicates otherwise, because I don't see it on a quick search.
    - hkmurakami 12y ago
      I would suggest googling "$1BB". They're both rather commonly used. That being said, MM is more necessary because "M" also denotes 1000, and can thus be ambiguous.
      - will_work4tears 12y ago
prostoalex 12y ago
> employee number 100 made $200M at Facebook before taxes and assuming he never sold any of the stock until now
badusername 12y ago
10 basis points for a #100 employee does not seem like an accurate representation. FB was quite mature by 2009, and offers were not as high. (Source: Offer in 2008)

ariwilson 12y ago

Based on what? Your Rolodex?

erdevs 12y ago

Moscovitz did not say that employee #100 made $200M at FB. Read the article. First, this was an overly simplistic analysis. It assumes a strike price of $0.00... Which never happens, and certainly wouldn't have happened by the time FB hit 100 employees. It assumes full vesting. It assumes no lockup on liquidity. It assumes no dilution from exiting... which, in the real world, never happens. You can actually see how much money FB's top shareholders were worth at their IPO. Very, very few employees made over $10M. TEN. Before tax. A lot of people front in SF / the Bay Area. Very, very few are worth over $30M in liquid net worth.

paulsutter 12y ago
What do you think the strike price was at 100 employees? I mean seriously. I know a guy who was around number 70 at Google and his strike price was about 30 cents. Correction: The S-1 listed only a handful of the top people.
- onion2k 12y ago
  I think the 'TEN' was emphasising $10m rather than stating only 10 employees made that much.
- npalli 12y ago
  It is worth noting that the S-1 listed one shareholder (among 10 or so individuals) who owned 10 bp of stock. Facebook thought that was worthy of disclosure. Like the commentator above, I'm highly skeptical that employee #100 got 10 bp stock (unless it was matching some google offer etc not something Dustin implied).

patmcguire 12y ago

$30 million is a high bar. If someone's making it in tech, with investors and other stockholders you'd have to have a $100 million+ exit as a founder. There are more in SV than anywhere else, but still few in an absolute sense. The other option is that they were somewhat early in something that took off like Google/Facebook, that's still probably not more than a few dozen over the $30 million mark each. So the number makes sense to me at least.

fasteddie 12y ago
I agree its a very high bar, but someone with a relatively lower exit -- say $10m, could hit the $30m mark within 15 years with a 7% annualized return, not to mention getting lucky with a winning seed investment or two.
- hkmurakami 12y ago
  The data is from 2013, so by your calculation the person would have had to have made the $10MM in 1998. The stock market has not had 7% returns since then, and you haven't considered the impact of taxes and using part of the gains to fund a higher standard of living. In addition, it was much harder to make $10mm before the .com era.

ganeumann 12y ago

It actually seems low to me too. $30 million is a lot of money, but given the number of companies with $1bn+ valuations recently, you'd think there would be at least 200 from those alone. It may be they are not counting paper wealth in private companies. It may also be that many of these $1bn+ valuations came in the last year or so (their data is from 2013.)

hkmurakami 12y ago
If the company is worth $1BB, then you must own 3% of its equity in order to have $30MM worth of equity of that company [1]. Non-founders rarely, if ever, are given that much equity (commonly cited numbers tend to top out around 2%). The most likely candidates are engineer #1 and an early VP, but engineer #1 has likely been diluted by over 30% since seed stage and even the exec will have been diluted by 10~20%. At $5BB, a nonfounder needs about 0.6% of the company. By this point though, dilution is usually even more severe, and engineer #1 will likely have had his/her initial share cut by close to 50%. This means that only the earliest of early employees, along with the VP level hires, will have $30MM at a typical $5BB startup (though $5BB startups are hardly typical). It's the companies that are another order of magnitude higher in valuation that mint wealth of that kind to dozens of employees. [1] ignoring liquidity preference for the sake of simplicity.
- will_work4tears 12y ago
  MM is often used to denote millions, but I don't think BB is used to denote Billions. Do you have a cite that indicates otherwise, because I don't see it on a quick search.
  - hkmurakami 12y ago
    I would suggest googling "$1BB". They're both rather commonly used. That being said, MM is more necessary because "M" also denotes 1000, and can thus be ambiguous.
    - will_work4tears 12y ago

prostoalex 12y ago

> employee number 100 made $200M at Facebook before taxes and assuming he never sold any of the stock until now

badusername 12y ago

10 basis points for a #100 employee does not seem like an accurate representation. FB was quite mature by 2009, and offers were not as high. (Source: Offer in 2008)