Excited to see this. I hope it leads to a trend to listing sooner and giving access to retail investors much earlier. Buying Uber at a few dollars instead of $42 for example. The markets will operate like they want to unless there are explicit rules to stop it. Right now it's wait to IPO as long as possible, and HFT only accessible to huge companies. Retail is left with the scraps.
Retail is left with "the scraps" because it is much riskier to invest early on. Companies that fail early aren't heard about as much, because Joe Average's pension plan hasn't invested in them, but are still plentiful. And maybe Joe Average's pension plan shouldn't be investing in what are effectively PE-stage firms.
I don't know if I'm right about this, but it seems such an exchange might contribute to something like 2008. Then, it was the common man investing in over-heated real estate; now, it could become the common man investing in over-heated tech.
I feel like those who work in tech often forget that it can fail, have cycles of boom and bust, etc. like any other industry.
Of course, I do think it can serve a useful purpose, but there is reason early-stage, private investment is restricted to qualified investors.
The reason investing is treated with greater scrutiny than gambling is because of the psychological factor. When you gamble, you're under no illusion that you're guaranteed to win. But it's easy to be fooled into thinking there's a way to hedge risk without putting in the time and effort to learn how.
Every single time I see democratized access to riskier financial markets actually make it to the public, I can hold my breath and wait for the news reports to come out about the scams and grifters that come out of the woodwork to take advantage of little old grandmas, who wouldn't ever think of pulling the cash out from under the mattress that she's saving for little Penny's college fund and going to Vegas, but can easily be talked into "investing" it in the brand new wave of "tech" sweeping the nation.
It's not Joe Average these laws protect. It's Joe Average's less cognitively-blessed parents. It's so easy to fool old people that if we don't take positive steps to stop it from happening, it becomes an industry.
You can't get rid of all of it, but you can at least push the wolves out to the periphery.
Yep, penny stocks, options and margin trading are all available to a retail investor. But hey, I want to invest in a new business? I want to buy Bitcoin? I want to participate in an ICO? Sorry. It's all about gatekeeping and not letting me do what I want with my money.
I don't like the gate keeping either but so called "entrepreneurs" would just go around washing people. The point is that you have enough money so no-one cares that the space mining company you invested in only hires website designers. Pumping penny stocks is illegal, but when it wasn't, salespeople were washing people.
It could also merely be convenience - as a startup you want to raise a few millions or whatever, and you want it all to come from a few sources, not too many. If you opened this up to an average investor, it will be a headache consolidating all of them. Also, there are offerings by banks for wealthy clients who can invest in the banks' PE or VC arm, this allows access to the clients, and since it's one bank providing liquidity the people obtaining it don't have to manage anything.
> A Joe Average is legally allowed to invest his 401k in the riskiest penny stock one can find.
Most 401ks do not allow individual stocks. Some do, but often with only a small % of total account value.
IRAs typically act more like a general equity account, but by that point I would argue a person is already a bit more financially savvy. If they have taken the time to either open an additional retirement account or roll a 401k over from a prior job, then they have some idea about penny stock risk.
> Of course, I do think it can serve a useful purpose, but there is reason early-stage, private investment is restricted to qualified investors.
The expected value of early stage investing is certainly higher than lotteries in the US. Every poor Joe can spend thousands on lottery tickets that expire worthless, but cannot invest thousands in real companies that Joe believes will do very well in the future. Shouldn't Joe have access to companies earlier, if he currently can access lottery games?
Yes, and he can become an accredited investor which has regulations tied around it. Safeguards are needed so your Average Joe doesn't squander his family's $500k retirement and become dependent on the govt's teat.
Only degenerates throw $500k away at lottery tix, while significant amounts of the population invest their entire $500k in funds as found in 401k's or IRAs (or whatever). So yeah, I'd rather shield most of the country from the volatility of early stage shitfests, and make that bar high to climb if they really truly want to invest in early-stage.
Then you can do marginal accredidation based on income and/or net worth rather than nothing or anything at 200k income/2MM net worth.
It would be easy to regulate for anyone that makes, or is worth, less than "accredited" levels can only put in X% of their net worth. Doesn't need to have this arbitrary cutoff. I'd wager there are quite a few dumb people making over 200k.
An aside: Income as a method of determining "accredited"-ness is quite arbitrary. Many SWE in the valley easily qualify, where an equivalent SWE in Midwest US would not qualify, just because cost of living/wages are lower.
Most mutual funds available at retail are borderline scams as-is. It is highly unlikely you will find one that has a true ROI / Sharpe Ratio above investing in basic Vanguard Index Fund ETFs, yet the public is still allowed to throw away 2% per year in management funds + loads + fees for buying garbage mutual funds and ETFs from enormous companies that sell at retail.
There is still a significant difference between earning less than you could in your retirement savings and wiping half of them because you put them in a bad investment though.
Not if you aggregate the amounts stolen. Im sure that 2% is a staggering amount of money, maybe more than all the cash robberies that are reported to the police yearly.
Then make them take some tests to get accredited rather than an arbitrary income barrier, or net worth gatekeeping. According to that logic, someone with $2M net worth is just as likely to lose their shirt as someone with $50k net worth if they put their entire worth into a losing fund.
I don't think you have a good sense of who's buying how many lottery tickets. By your measure here, amount invested as percentage of net worth, the lottery should definitely be illegal.
I think what you'd find is that Joe's money would go to shysters who are today turned off by the prospect by forfeiting their money and sitting the rest of their lives in federal prison (so they become telemarkets, roofing repair dudes that follow hurricanes around, or late-night TV hucksters).
2008 wasn't about the common man making poor investment choices. It was about banks extending credit to people who weren't credit worthy, but pretending to their investment customers that they were.
If by "crowdfunding" you mean Kickstarter, then no, that's not like investing at all. Putting money into a Kickstarter project doesn't entitle you to any future profits.
However, equity crowdfunding platforms do exist. One example is CrowdCube.
New York didn't lose anything by not having Amazon here. New York is a city built on diversity, and ensuring resources are available to maintain that diversity is important to the citizens. It's a matter of giving one huge handout to the most valuable company in the world that will destroy a community and drive up wages (bad for small businesses) and housing costs (bad for Queens), versus giving $5M to 100 small businesses who can create jobs and maintain diversity while keeping wages / housing in check. That not to mention, there are other infrastructural things in NYC that need attention / money. People here want money going back into the soul of the city, not to an outsider traipsing around to various cities looking for who will give the biggest handout. Amazon's big misstep here is that they acted like they were a gift to NYC, and didn't sell the dream of what value they'd bring to the city. New Yorkers will immediately tell people to fuck off with that approach.
Amazon's other missed opportunity is not intentionally choosing a smaller city like Austin or Denver, which would not only have amazing talent, schools, transportation, and culture, but would be far less costly. They would save more money in the long run and achieve the same results. But that's beside the point.
New York doesn't need Amazon, and I'm glad Amazon caved when the people pushed back. It shows that Amazon never cared about the people here and would bring nothing to the community.
edit: If you're going to downvote please comment why you disagree.
> It shows that Amazon never cared about the people here and would bring nothing to the community.
Jesus christ, no. The state put an outspoken opponent of the deal in a position where he has veto power to stop said deal. Then when Amazon execs tried to call this guy multiple times he refused to even take their call. That's why they pulled out.
They want to get a multibillion dollar deal done in a global economic center, and a few phone calls to one guy was enough for them to stop pursuing it? Pretty weak if that's the case. Nobody I've spoken with here has anything positive to say about Amazon being here, and there's no way it hinged on one person.
Wait so all those people in the street with the protest signs were cheering FOR Amazon? Nope. Maybe the guy with veto power was put in place because he protects the city from BS like this? Possible. Our whole office is laughing at how Amazon approached this and couldn't get it done, so yeah maybe our bubbles don't overlap.
Amazon and/or Austin would literally have to build in another part of the city and construct their own rail system to compete with how awful the traffic is.
Also, I disagree that diversity is a priority over long term tax revenue and infrastructure improvements and economic success.
Austin's traffic is bad for sure. Dallas then perhaps, which at least has a rail going north (also bad traffic). That said, Queens absolutely values diversity. They mom and pop shops getting pushed out all over the city is creating a negative feedback loop. Some city officials and politicians may like the tax, but there are some that are also protective of the culture. It's a complex issue, but ultimately, New York is not an easy place to walk into. Lots of people to make happy on a deal this size.
Long Island City is practically indistinguishable from Manhattan these days. Those mom and pop shops are going to be pushed out regardless of whether or not HQ2 is in LIC. At best, current residents have a reprieve that can be measured in months or two years at the outside.
> I disagree that diversity is a priority over long term tax revenue and infrastructure improvements and economic success
'Tech bros' are also diversity, and so are Trump supporters. You can't just pick and choose and create your own special brand of diversity that needs protection from groups and cultures you don't like.
It seems like the bigger problem may be denial. I don't think depression is unique to entrepreneurs. Just living in NYC brings an exceptional set of challenges for someone to overcome (The article tells stories from NYC). For start-ups though, constantly having to put on a pretty face for everyone (employees, investors, clients, customers, friends and family) and deny the fact that you're a total mess on the inside technology-wise, business-wise and personally is the root of the problem. It creates incredible pressure, and if you can't live up to all the beauty you say you have, it makes you feel sad, angry, frustrated, and lost. Throw in not eating properly, not exercising, and not getting enough sleep and you have a recipe for depression. If we could just talk about how messed up everything is, we might find that we aren't the only ones and feel better about it. I'm a founder in NYC, so if anyone wants to talk, hit me up!
Totally agreed. I also lost a little respect for Hipmunk when I found out they are basically an exact copy of ITA's app: http://matrix.itasoftware.com/search.htm.
ITA's app doesn't seem nearly as useful to me for a few reasons:
1) The form at the beginning is much more confusing. Creating a search with Hipmunk is much less complicated.
2) Flights are ordered by price, whereas Hipmunk orders them by "agony", which in my experience, seems to be pretty accurate.
3) Doesn't default to time bar mode, like Hipmunk does.
Ugh, another button. The check-in buttons are coming next. Soon, there will be an aggregate button that lets you Like, Follow, +1, Check-in, Tweet, Post to FB, and save the page for later. There will be no more corporate or personal websites to house the aggregate button either. They will live on an aggregate page which has all the feeds from all the social networks in one place. This aggregate page will itself live on a social network which will have many clones that need to be aggregated. Goodbye signal, hello noise.
F1 cars also cost a couple million dollars while a Nascar costs around 150k total. Another difference is that F1 cars are electronically limited to 18k RPM (they can easily go to 20k) and they have 7 gears. Nascar cars have 4 gears and top out at 9-10k RPM. There are so many other little details about F1 that make it technically marvelous. There are no vehicles in the world that can top the overall performance of an F1 car. (I'm also a fan, so I'm a little biased)
> There are no vehicles in the world that can top the overall performance of an F1 car.
The dragster folks might disagree.
I'm curious why you think that the number of gears is significant. My Crossfire has 6 - does that make it "better" than a Nascar COT? How about the cars with CVT (effectively infinite) - are they "better" than F1?
