A story today describes how start-ups are having problems:<\/p>\n
Internet start-ups across Silicon Valley are struggling to compete for talent amid the investment frenzy gripping Facebook Inc., Twitter Inc. and Zynga Inc., with many smaller companies beefing up pay and recruiting and wading into the private-company share market to keep pace with their larger rivals.<\/em><\/p><\/blockquote>\n
Silicon Valley is full of world-class engineers sleeping on futons and living on ramen noodles.\u00a0 These (mostly young) people accept company paper instead of the decent cash that their talents could easily justify for the privilege of toiling 14 hours a day in untested ventures.\u00a0 This system depends upon well-functioning equity markets to secure this manner of devotion.\u00a0 Public equity markets enable those making the gamble to see the payoff sooner.\u00a0 Bill Gates has said that Microsoft never needed the public capital for investment in growth; the company went public to so that its 10,000 paper millionaires<\/a> could become actual millionaires.\u00a0 Many of them would go on to fund or work in other start-ups, and their example has fueled many more.<\/p>\n
Today, our IPO market is broken.\u00a0 That avenue of exit has been crushed by the weight of governance regulations, especially Sarbanes-Oxley<\/a>.\u00a0 These rules were intended to restore confidence<\/a> in our public markets.\u00a0 They have, instead, prevented ordinary people from investing in maturing companies like Facebook, Twitter, or LinkedIn, and hampered the ability of companies like that to attract the talent they need to get going.\u00a0 Such companies are now forced to go to private markets for liquidity, markets that are far less accessible to smaller firms than IPOs used to be.<\/p>\n
We will never know how many Microsofts or Apples have not been able to get off the ground since 2002–the year SOX was passed–or may not in the future, because of the higher cost of securing needed talent.\u00a0 Unfortunately, the people who proliferate these rules like Topsy<\/a> are not accountable for what doesn’t get created.<\/p>\n","protected":false},"excerpt":{"rendered":"
A story today describes how start-ups are having problems: Internet start-ups across Silicon Valley are struggling to compete for talent amid the investment frenzy gripping Facebook Inc., Twitter Inc. and Zynga Inc., with many smaller companies beefing up pay and recruiting and wading into the private-company share market to keep pace with their larger rivals. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,9],"tags":[],"class_list":["post-2843","post","type-post","status-publish","format-standard","hentry","category-invisible-trade-offs","category-unintended-consequences"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/2843","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=2843"}],"version-history":[{"count":5,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/2843\/revisions"}],"predecessor-version":[{"id":2845,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/2843\/revisions\/2845"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=2843"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=2843"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=2843"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}