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Pulliam and Demos look at the murky world of pre IPO trading of shares by venture capital companies and by employees of the pre-IPO companies in the secondary market. Federal and state laws permit pre-IPO trading for unregistered securities. The SEC has not issued more than a couple of enforcement actions for the trading of pre-IPO shares from startup companies. Wealth is now created before an IPO is done. During the 2000 tech boom most of the surge in price happened after the IPO- Amazon's IPO giving the company a valuation of $400 million based on IPO price then, compared to $171 billion in 2015, and Facebook worth $104 billion at the IPO price in 2012, and twice that in 2015. 78 privately held companies are worth over $1 billion in 2015, with combined valuation of $310 billion. The surge in prices of pre-IPO shares comes from the huge demand from investors, who are willing to accept that not much financial information will be disclosed by the startup companies, in the hope of quickly earning a large profit. The estimates of pre-IPO trading for the shares is in the range of $10- $30 billion in shares traded in 2014. This is what the WSJ's Puliam and Demos learned from extensive interviews with traders, investmetn bankers, hedge fund managers, venture capital executives, lawyers and company officials....

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The internet and tech startup scene in Japan as engineers from Toshiba, Panasonic, Sony and other companies start innovative tech companies.

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Chen and Goelfeb provide insights into the life and experiences that led Ukrainian immigrant Jan Koum to found startup WhatsApp. After taking a break from work at Yahoo he decided to travel places including Argentina, where he found it especially difficult to communicate with friends in other countries by phone and messaging. The messaging service was a response to this desperately felt need on his own travels, leading to the conviction that it was best to offer it free and make it easy and convenient to use. A similiar situation on travels to Mexico, with little adequate information on hotels, led to another startup Trip Advisor.

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Rick Perry's IPO for startup Fermi plans to build natural gas processing plants in Amarillo, Texas, in wide open country, and wait for approval of large nuclear plants planned for the next couple of years. It is attempting to build on the surge in data power for AI. Yet these investments in data power take away from other needs for power in the manufacturing sector and for homes and infrastructure. How the Nation allocates scarce resources is something on which there will be much debate.

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NatureQuant is a startup in Oregon that is providing ways for people to spend more time in places that best support the link of nature to healthy living. It has developed a Nature Score using satellite imagery on noise, air pollution, park space, trees, and open spaces. One can look up Nature Scores by neighborhood as shown here in The Washington Post by Harry Stevens, Climate Lab columnist.

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The Supreme Court in a 6-3 decision, says Aereo, a startup video streaming service, violated copyright laws by taking broadcast signals on miniature antennas and giving them to subscribers for a small fee.

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The story of GM's self driving car Cruise stemming from its acquisition of a startup in California in 2016. It started with GM perceiving a threat from driverless cars and ride hailing firms. After the acquisition GM's share price rallied. Investments came in from Softbank and other companies. The company planned a robo-taxi service to test its cars in American cities. This story covers the accidents as GM pushed for it too early till California pulled out of the program.

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This NYT report looks at the gradual breakdown in Silicon Valley of the "fake it till you make it" culture. A vast misallocation of resources by startups and other business, a waste of hundreds of billions of dollars needed for investment in rebuilding the American economy and manufacturing.

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How a tightly interconnected community such as tech startups can quickly fall apart in a crisis is the subject of this WSJ report by Christopher Mims. He says on the way up this meant positive leveraging that exceeded 150% and this is also true in the other direction on the way down just as fast. Most startups depended on Silicon Valley Bank and First Republic for financing. Venture capital moved from inside to unravel the SVB bank. The US government simply wants to stabilize the economy and is not intending to make the uninsured depositors whole except in the way that it is self contained and does not spread to other parts of the banking system. Tech startups will now find it difficult to get new financing, if not impossible, says this report. About 8% of total jobs in the US economy are dependent on tech. When it comes to work that is dependent on tech the number is higher closer to 20%. Some of the tech layoffs will be offset by new kinds of tech and with government private collaboration in the new frameworks coming up, such as for EV vehicles with manufacturing in the US, and the $53 billion for the  CHIPS and Science Act of president Biden. Solar and wind have new frameworks of a similar type as the focus shifts to fighting climate change. These networks are interconnected with the EU which is creating its own parallel networks of this type. ...

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Questions about a decision to not exempt underage users from messaging encryption on Meta products that affects young children, are raised in this report in the WSJ. Far too often the startups that have turned into large monopolies over a few years now fail to fulfill their primary responsibilities to society and the public interest. 

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Mims raises questions about how productive current investments in Silicon Valley are in tackling real problems we face. He points out that advertising represents about $100 billion in an economy of $16 trillion, yet most startups focus on advertising revenues. Is $1.2 billion invested in Uber ride sharing service too much when other startups tackling bigger problems could be funded with some of that money, is a question raised by some in Silicon Valley.

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This podcast in the WSJ by Sarah Randazzo shows how 15 months of the Theranos trial have revealed ways in which Silicon Valley startups raise cash. It shows the culture of creating hype and so called buzz behind startups that was lauded in business culture but has led to massive capital misallocation away from essential needs of society for infrastructure, health services, and education, investing in new technologies at home and fighting climate change. Many such situations are recorded in the pages of the WSJ, of hype and huge losses for investors in the last decade when some of the most egregious behaviour happened. Along with this was the acceptance in the business culture of shipping jobs and technology overseas, then shipping products halfway across the globe what could be easily be made in the home country- leading to a loss of control over the future and with it a loss of hope. The WSJ says the trial was a referendum on how Silicon Valley startups raise cash, with the jury finding Holmes guilty on 4 counts. The pandemic has led to rethinking and going back to basics, discarding all the unessentials or self-harm behaviours.  ...

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Instant information, too much information, can bring its own set of problems including making people unable to figure out what information to trust. Here Evan Williams, a co-founder of Twitter, describes the problems and his second thoughts about progress and the internet. His new startup Medium hopes to encourage long form writing, but even this is shorter than the longer form articles that were common in prior decades.

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The unnerving and distracting effect of a long IPO process and investor demands on two co-founders of Box Inc., as competiton and market perceptions change for a once promising tech startup in cloud computing.

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Koch Industries which is built on oil is investing heavily in electric batteries. The company has made 10 investments of over 750 million dollars in the US battery supply chain and electric vehicles in 2021-2022. This money is coming at a critical time for many new battery company startups.

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Softbank suffers a loss of $6.5 billion after placing bad bets on WeWork startup. Is there massive capital misallocation in capital markets as they are operating now, with waste and misallocation leading to depriving other productive investments for society's benefit being funded. 

During this period of misallocation in the way capital markets are functioning in allocating scarce capital, infrastructure investments in the U.S. and Europe have been badly neglected. The U.S. and Europe now lag behind China in 5G making this an issue with implications for society, and for protecting the public interest.

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WSJ looks at how investment allocation is severely flawed today and needs major overhaul. Startup founders can walk away with gains even when a company they founded goes into bankruptcy, billions of dollars of capital are lost for investors. And as investments needed in infrastructure and to fight climate change are diverted to ventures that do not add much to economic progress or betterment. In 2019 Softbank committed billions of dollars to save WeWork, after heavy losses. WeWork's founder Adam Neumann surrendered control with one clause providing a$430 loan to Neumann, says this report in WSJ. If Neumann stopped paying Softbank would have to get the amount due from WeWork share held as collateral. They are now worth only $4 million.

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Pfanner and Chen of the NYT talk to Samsung executives in Digital City, Suwon, head offices near Seoul. After capturing about 40% of the smartphone market Samsung still remains for the most part a hardware based company with strengths in production, cost and efficiency. Samsung still remains dependent on the Google Android software. Competitors in China are making smartphones that compete with Samsung products and cost much less. There is also the awareness of the problems faced by Motorola, Nokia, Blackberry, HTC, having only a temporary advantage in the fast paced software driven industry. Samsung's software efforts include merging its research effort in mobile operating systems with an industry effort that includes Intel Corp called Tizen operating system. In 2011 Samsung hired David Eun, who worked for AOL and Google, as one of the executives leading its software effort. The Boxee startup for television software was acquired and a partnership setup with the Flipboard news reading app company. In Feb. 2013 the Open Innovation Center was opened in S. Korea, New York and Mountain View, California, The same year the Samsung Accelerator program was setup in Palo Alto and Chelsea for tech startups to make products exclusively for Samsung. ...

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Adam Neumann, the 40 year old startup founder of WeWork, which is basically a subleaser of real estate space, resigns. Aggressive brash attitude, a party heavy lifestyle, unpredictable decision making,  are cited by WSJ as reasons he lost the confidence of investors. Mr. Dimon of JP Morgan Chase was a key banker for the company. Chase under Dimon pursued startups in the hope of doing the IPO's. The company has substantial losses, and new management was brought in after Softbank decided Neumann should leave. Growth was fast, losses also mounted fast to $1.6 billion. WSJ says many investors decided that WeWork was not a tech company so much as a overvalued real estate company that engaged in business of leasing office space tricked out in millenial friendly decor. The greed for outsize returns has led to the accumulation of capital that could otherwise be spent wisely on infrastructure and other improvements in health and education, even though many of the gains in tech are behind us.  Recently the head of Uber was also asked to resign for an aggressive approach and questionable management style, also with substantial losses, and new management brought in. Fast expansion in an imprudent manner affects established companies. It led to collapse of India's Jet Airways, Britain's Thomas Cook in 2019. Yet the huge amount of capital of tens of billions of dollars wasted as investors seek outsize returns and are disappointed, is a pattern seen mostly in capital markets in the U.S. and to a lesser extent in Europe, China, Japan. The ideas piggyback on some aspect of tech already developed and are not major tech advances by and of themselves, and many as in the case of WeWork are touted as tech because of the catch and appeal of the word for everyone hoping to make an outsize return.    ...

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According to AJO, institutional money manager in Philadelphia, the average return since March 10, 2000, for the S&P 500 is about 5%, and the NASDAQ Composite less than 1% annually, including dividends. Zweig cites this to show that investors not make the mistake of overpaying for tech stocks or startup stocks, or buy into the hype for a second time since 2000. The NASDAQ Composite hit 5048 in April 2015. The last time it was at this level was on March 10, 2000. Cisco traded at 167 times earnings at the time. For the average long term S&P 500 index shows it traded at an average of 16 times earnings. This is a sober reminder for the average investor that gains depend on on what you pay for a stock.

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Paul Krugman in NYT explains the failure of Silicon Valley Bank. He says the bank invested its money in safe Treasury bonds which fell in value with Fed's policy of sharp increase in interest rates to fight inflation. It presented itself as the bank for people in Silicon valley and succeeded more than it imagined possible leading to these investors putting their money at SVB bank. However Krugman points out SVB bank did not put this money from deposits into startups, it put these deposits in safe US Treasury assets. It is Venture Capital that put its money in the startups at Silicon Valley, then panicked and set in motion a bank run that led to $42 billion withdrawals on one day Thursday March 9. These SVB assets have value says Krugman. Over time the government says Krugman will get much of its money back from these Treasury assets of SVB.  Then why the government rescue by president Biden? A bank run of this type undermines confidence in other regional banks affecting the US banking system in a way that is totally unnecessary when the banking system as a whole is safe. In fact the Fed vice chairwoman Lael Brainard understood and made clear these risks says Krugman, and she now heads Biden's national Economic Council.   ...

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The monopolistic behaviour of Amazon is the subject of this report in the WSJ. Bezos originally called his company relentless and even now relentless.com takes you to Amazon site. What he has set up is a mentality of relentless growth by acting like an aggressive startup. WSJ says it has never grown up even though it has acquired business after business often buying or copying smaller companies. It has not matured even though it has over 1 million employees. The problem was low wages and only recently did Amazon increase wages. So that we have this strange and bizarre situation in a developed advanced country like the U.S. where a whole class of academic economists offer Americans low consumer goods costs with manufactured jobs shipped overseas in the name of fighting protectionism, and Amazon as well as automobile and other manufacturers cutting American wages, to create the kind of society we have today split between blue collar and white collar, economically, politically and socially. ...