ramen-san

Admittedly I’m a little shocked and disappointed that the field of social science wouldn’t already be leaning heavily on the concepts of evolution to understand and explain human behavior. Personally, it’s one of the primary ways I’m able to make sense of the world and the human experience. For those interested, Sapiens is IMO the best, most accessible book on this topic. Puts human evolution and behavior in great context.

https://en.m.wikipedia.org/wiki/Sapiens:_A_Brief_History_of_...

"A bullshit job is not what Graeber calls “a shit job.” Hannibal, and many other of the bullshittiest employees, are well compensated, with expanses of unclaimed time."

Wow... where do I sign up for one of these jobs!

The share of young high tech companies seems pretty consistent over the decades, with the exception of dot com, which was no doubt an aberration. Not the norm.

Also, it has ALWAYS been a tremendous risk and challenge starting your own venture. Likely always will be, because there is also tremendous rewards for making it happen. If anything, right now seems like one of the easiest / best times to start a high tech venture in history. Plentiful angel and VC capital. Incredible resources and examples teaching you how to do it (YC, incubators, internet). Flexible tools that can scale up and down depending on company size / need (AWS, open source technologies, facebook / google ads).

To put things in context, I just finished Shoe Dog - the story of Phil Knight / Nike - back in the 60's they didn't even have the concept of VC. His biggest challenge was just getting someone to loan him a little cash so he could finance his inventory which was flying off the shelf! The point is that entrepreneurship is destined to be about tackling a very hard problem that nobody else has solved before - in the 60's that was simply getting financing to fund expansion. Today it's something different. In both cases though, it requires being on the edge and pushing the boundary. I would rather be alive today, playing this game. While the gatekeepers are still around, they have much less power than they used to.

Yes, it's true they have a stock buyback plan, so net-net it will be a wash. But the marginal decision remains the same - should we pay cash or shares for Github? If they really felt their shares were undervalued, why not just pay cash?

Stock buyback plans are heavily pre-meditated programs with relatively rigid rules. It's not like they added an extra ~8B to the last buyback plan in anticipation of this exact event.

Agreed - definite 'strategic' rationale for the purchase. Can't get there by any conventional valuation method. But to put things another way, do you believe that having Github as a Microsoft property (or the insurance that buys) is worth 1% of the company? Not too hard to get to big numbers when we're talking about a 3/4 trillion dollar company.

This one kind of feels like Skype, in that it felt like they overpaid there as well (I remember thinking that Silverlake had performed a masterful coup with Skype) ... only time will tell whether Github loses their mojo as in the Skype situation. I'm not a skype user, but my general sense is that the service has been completely eclipsed by everything else in that space.

Interesting that Microsoft paid with shares. They effectively just issued $7.9B in equity without having to go to the public markets for it. Granted it’s only ~1% of their $780B market cap... but this also suggests they believe their shares are perhaps a little richly valued.

I understand your visceral reaction here, and agree that equity pools need to be increased in general. But isn’t that really a reflection on all the folks who choose to join a startup for the prevailing equity packages offered today? The reality is unless you have founder or very early employee equity, it will take a Facebook size outcome to Be truly life changing.

Having been part of a billion dollar acquisition myself, I can attest that for the vast majority of people (myself included), it was equivalent to a nice bonus. Perhaps more people need to realize that and internalize that before they forego the higher compensation, and easier workload of an established company?

The only thing that will realistically get founders to share more equity is for the market to demand it. Personally I would not sign up for another startup journey unless I felt there was substantially more upside on the table. Otherwise, you’re better off joining BigCo or go further and start your own thing and get founder equity.

FWIW, I wouldn’t begrudge the Github founders... they’ve done an amazing job over a very long time. They rolled the dice and made it happen. Hats off to them!

It’s true, for people earning tech level salaries, the Bay Area is actually ‘affordable’ - see a comparison of earning and cost of living between SF and Kansas City here: https://ramenretirement.com/2018/05/14/cost-of-living/

You’ll save a higher percent and absolute amount of money working in the bay.

Of course, the issue is that not everyone earns $300K+ per year. Unless you make it into a senior role at a tech company by the time you want to have kids, living a ‘normal’ life in the Bay will be hard. Even doctors and dentists will struggle. I completely understand why people would want to leave. I expect they will. The Bay Area is great, but America is an amazing, beautiful place, and fine food / coffee / culture has spread far beyond the streets of SF these days.

Ha! No doubt. No shortage of schleps and ‘tech debt’ at startups too. But if the company is doubling every year it will hard to not be swept up by that rising tide in terms of seniority and responsibility.

To put a finer point on that, it’s important to remember not all startups succeed. We never hear the TechCrunch stories about the startup that quietly shuts down, or was sold to make the investors whole, leaving founders and employees holding the bag.

Reality is starting your own startup is a very risky proposition. Huge upside potential (serious generational wealth), but tons of downside scenarios. If financial security is important to you, then pursuing a more measured approach to reaching some basic level of financial independence is probably a good idea before going that route - I write a lot about this here: https://ramenretirement.com/

On the other hand, starting or joining a startup can be a huge accelerator to career and skills growth. You’ll get opportunities you’d have to wait years for at a larger company. That’s (arguably) the best reason to join someone else’s startup.

The reality is you need to increase your top line earning power. Working for decades earning average compensation for your location will get you an average outcome (which means a late in life, short retirement, at best). You need to super charge your earnings and savings for a number of years. Ideally through doing higher value work, as opposed to simply working more hours.

If you’re not making enough, and having financial flexibility is important to you, then considering a career change is in order. You might need to go down before you go up. Invest in yourself through education and experience and leverage that to get into a higher paying path (see more on this here: https://ramenretirement.com/2018/04/30/wealth/)

Once you have some real savings and wealth, then it’s all about investing it properly to generate inflation protected passive income (IPPI). I prefer real estate for this (see here for more on RE investing: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). I don’t think enough people consider alternative investments. Putting all your eggs in public markets is a low cash flow proposition, along with lower long term returns (see how returns compare here: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). If you have excess savings, you don’t need all that liquidity and should consider less liquid investments that might have higher returns: https://ramenretirement.com/2018/02/23/youre-too-liquid/

Lastly, people talk about the 4% rule, but that’s bullshit for a whole host of reasons: https://ramenretirement.com/2018/01/21/4-percent-rule/

Save money. Build wealth. Invest it wisely, considering alternatives other than the stock market. That’s the path. Simple, but not necessarily easy.

Yes - if rates continue rising, along with prices, then returns will get compressed. Check out my analysis of that dynamic here:

https://ramenretirement.com/2018/05/16/interest-rate-impact/

Doesn't mean you shouldn't invest - just figure out what sort of returns you're willing to accept (along with the corresponding risk / cushion you need), and hold that line when you run your diligence. FWIW, I think you can still find single family investments in the midwest that will generate 8%+ cash on cash returns (after fully accounting for all direct, and reserved expenses). That's still a pretty good return, but getting harder to find.

It's hard to say when the market will soften or correct, so a dollar-cost-averaging approach to buying RE is probably a good idea (i.e. buy a rental property every quarter, or every half year.).

Given that pretty much everything is going right in the economy right now, my investment stance is more conservative. It's not a bad time to buy, but it's definitely not a fire sale. Bigger Pockets is a great resource. Drop me a line if you ever want to chat in more detail. I've gone pretty deep in the whole space, and have a background in investing and finance.

5 years ago was a great time to invest in real estate. Today is probably okay, though prices have risen dramatically across the board (even the cities that got crushed in the recession have risen past pre recession levels), and rates are rising. Returns are getting compressed. Still good deals out there, but the risk/reward profile is shifting in the wrong direction.

For more on real estate investing, I write a lot on the topic here: https://ramenretirement.com/

The fed agrees with you. That’s why they have an inflation target of ~2%. They’re basically saying outright that they expect to erode the purchasing power of the USD over time. It’s one thing we can count on - inflation might be bad, but deflation is worse.

I did a more thorough review of historical inflation, and the implications for investments here - cheers:

https://ramenretirement.com/2018/04/23/inflation/

Well, for context, mortgage rates have hovered between 3.5-4.5% for almost a decade. Rates now going over 4.5% is new, but it’s not a HUGE change yet, and still well below historical norms. The headline is a little sensational.

That said, if the trend continues, it will have an impact on the cost of home ownership, the returns to real estate investors, and ultimately property prices. The cost of debt is just another line item in the economics of owning property, and as it goes up, affordability goes down. This is, of course, offset by a more buoyant economy (I.e. more people with jobs able to afford the higher costs)

I invest in real estate, and was curious what the rising interest rates would imply for investment property. So I ran some analysis here:

https://ramenretirement.com/2018/05/16/interest-rate-impact/

Rising rates will add cost (assuming you use leverage), which hurts returns (all things being equal). Every situation is unique, but for higher yielding properties in the Midwest, a 0.5% increase in rates would require a 3-5% drop in property value in order to hold investor returns constant. Of course, that’s not what I’m seeing in the market. It’s the opposite in fact. As rates have been rising, property prices have as well. This has the effect of compressing prospective investment returns. Ironically, it’s times like now when it is most dangerous to invest. I think there are still deals worth doing out there, but it’s wise to proceed with caution. Now is not a time for ‘risk on’.