DiabloWags said:

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going4roses said:

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Geez H Christ only 2% how is that possible? Is it because they are just so big of company?

How is it the heirs are worth so much though?

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'The Walton Family is worth what they're worth because of the capitalization of Walmart stock,
and the fact that they own 50% of all outstanding shares.


Alice Walton: 2.7 billion shares
John Walton: 1.6 billion shares
Helen Walton: 1.7 billion shares
Helen Walton Estate: 1.7 billion shares
Jim Walton: 1.3 billion shares
Robson Walton: 1.3 billion shares
Walton Enterprises: 1.0 billion shares
T. Walton Estate: 1.0 billion shares

The 7 heirs are collectively worth about $232 Billion.
They own 50% of the company.


Walmart Stock Ownership - Who Owns Walmart in 2022? | WallStreetZen

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I would argue with a majority interest, their valuation would be even higher than multiplying their share times the market price.

concordtom said:

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Unit2Sucks said:

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DiabloWags said:

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Unit2Sucks said:

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I would just want to add one thing when we are talking about risk and entrepreneurs. The benefits of capital have become truly massive and the access to capital has made it much less risky to start certain kinds of new businesses. It's fairly common for people these days to raise millions in seed capital based on resume / prior experience (even just people with a few years of eng experience). If they succeed, the sky's the limit. If they fail, they will have made less cash for a few years (but still a lot by ordinary standards) and will go back to high potential earning track they were on, or they will start something new. From a "risk" standpoint, it's not the same as it used to be where you would pour your life savings into a venture that might go to zero. Many people are funded before they even quite their prior jobs.

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Nonetheless, the general point that Cal 79 is making is abundantly clear.
And it's a point that is consistently IGNORED by the likes of liberals such as Sanders and Warren.
Entrepreneurs take on Risk. They take on Risk that most people would never even begin to embrace.

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I do generally agree with you but I would just note that the risk/reward is very lopsided right now. If you can raise VC funding to start a company, the economics are so good. Engineer at a big company with a few years of experience? You can likely raise a few million bucks out of the gate on favorable terms.

The only thing close is running a private fund. If you can convince people to let you invest their money, the economics are phenomenal - 2 and 20 goes a long way. I've talked to people with fairly thin track records who've managed to raise tens of millions of dollars to invest in startups. For every twenty million you invest, you get $400k per year for 5-10 years and for every $20M you return to investors, you keep $4M. You raise a new fund 2 years later, before people even know if your first fund worked out. Rinse and repeat and you can see how phenomenal the returns are.

So long story short, if you can raise VC money or convince LPs to let you invest their money, the rewards will be there. The risk? Not so much.

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Who wants to defend their cushy position in life.

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That depends on whether you are talking about inherited wealth.

Do the Wealthy Work Harder Than the Rest? - WSJhttps://www.wsj.com articles BL-WHB-5080

We put in way more hours than the hourly employees, and I take on way more risk. Then again, I'm not Mrs. Jobs who can spend her time being the queen of NGOs.
[url=https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwizjOCbkNr2AhX0D0QIHcd8D0AQFnoECC4QAQ&url=https%3A%2F%2Fwww.wsj.com%2Farticles%2FBL-WHB-5080&usg=AOvVaw1eKo43pJ_qKp_EJZAw20Hh][/url]

wifeisafurd said:

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I would argue with a majority interest, their valuation would be even higher than multiplying their share times the market price.

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Understood.

I simply posted about the market capitalization in an effort to provide Going4Roses with a better understanding of what is the basis for the Walton Family's worth. It's unfortunate that they and Walmart are cast as evil by liberals and progressives, when in fact they have the lowest prices for consumers, only 2-3% profit margins, and actually have a much more diversified workforce than Apple when it comes to employing women and African Americans.

wifeisafurd said:

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Unit2Sucks said:

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DiabloWags said:

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Unit2Sucks said:

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DiabloWags said:

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Unit2Sucks said:

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If you can raise VC funding to start a company . . . , the economics are so good.

---

---

So long story short, if you can raise VC money . . .

---

I would suggest that trying to fund your business idea via a VC and a series of funding rounds is no easy task.
There are only so many Sequoia's out there, not too mention how competitive it is.
Perhaps Sebastabear can weigh in on this.

And the ultimate payoff of a company doing an IPO after certain financial metrics are met, doesnt happen overnight. It takes years. Just look at what Rubrik has experienced as a cloud data management company that has still yet to go public.

It might seem so easy given the SPAC model that emerged last year with "overnight" valuations that were in the stratosphere, but those valuations have totally collapsed and investors are certainly wary of that business model, now more so than ever. Half of the IPO issuance last year came via SPAC's. And I believe 75% of those deals are underwater.

My Dad once invested in a private tech company out of Milpitas.

He was able to get paid in shares due to his consulting work. And at one point, he was also able to buy a bunch of shares from the Marketing Manager who wasnt all that confident that he was ever gonna be able to realize any kind of equity in this tiny little tech company with a paltry $40 million in sales. Probably not the safest place for my Dad to put his middle class income. But he was a very optimistic man and believed in innovation and took the RISK.

Long story short, the CEO was able to find an acquirer that was a mezzanine defense contractor that was interested in the secured communications products that it had to offer. But still, my Dad had to have incredible patience and belief.
It took him 15 years to realize a capital gain and even then, there was another 3 years of sales earnouts that needed to be achieved.

---

The world is awash in VC money, it's not just the Sequoias of the world. Startups raised over $600B in capital in 2021. Insight Partners just raised a $20B fund. Hedge funds are now closing VC rounds in huge numbers. Tiger just raised $11B for their VC vehicle and lead 200+ rounds in 2021. Coatue led almost 100 rounds in 2021. I could go on and on with anecdotes but that would just belabor the point.

I would also say that your dad's experience is interesting because you said "paltry" $40 million in sales. Last year before the threat of interest rate raises came into play, high growth companies with $40M in sales were looking at valuations of perhaps $1-4 billion with a B. And founder liquidity is available earlier and earlier in the lifecycle. Maybe people don't care about high 8 and low 9 figure outcomes for individuals, but you often see that well before a company IPOs or sells.

For a variety of reasons (including availability of later stage VC funding), companies are staying private longer. Rather than going public with a low 9 figure valuation, companies are waiting until they are 10 or 11 figures. Much more of the rewards are going to early investors, founders and early employees. A lot of the juice that used to go to the public markets is being retained by those people. That's in large part why I am going to continue to place my bets on early stage private companies rather than the public markets. Right now, the incentives are just too strong to do so.

I have a close friend who invested in a seed stage startup at a mid 8 figure valuation a few years ago. A year later they were a unicorn and he had an opportunity to cash out 30x on his investment. The CEO has had a chance to cash out nine figures easy. They barely had any revenue or a developed business model and it's not clear to me that they will reach the sort of commercial scale that many might foresee as "success".

So I guess I would just reiterate that it's just not like it used to be. In large part what has changed is the concentration of capital in the private fund space and the relatively easy availability for the group of people who have access to it. I don't know Sebastabear's background and don't really know where he fits into the tech ecosystem, but I suspect we are probably seeing a lot of the same things.

---

Sebasterbear is a retired corporate lawyer. He headed a large law firm's technology practice. Beyond that you need to contact him directly.

I never understood some of the economics of valuing tech companies, but I'm a stupid real estate guy and former bond/real estate lawyer, with too many economics degrees. So ask Sebasterbear, not me.

---

Small world. Sebasta and I likely crossed paths at least one at some point and may very well know each other! In any event, I would expect he and I don't differ that much in our view of the VC funding and founder liquidity landscape.

As for the economics of valuing tech companies, it's largely a story about gross margins and TAM. If you construct the business properly and nail the execution, the success can be phenomenal. The return on early investments is so high for the successes, that the failures basically fall away. It comes down to portfolio theory, but the incentives are there for early stage VCs to play roulette with the initial checks, back the winners over multiple stages and you don't have to lose sleep over the losers. In other words, the wins are so large (100x or more) that the losses fall away.

Unit2Sucks said:

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wifeisafurd said:

---

Unit2Sucks said:

---

DiabloWags said:

---

Unit2Sucks said:

---

DiabloWags said:

---

Unit2Sucks said:

---

If you can raise VC funding to start a company . . . , the economics are so good.

---

---

So long story short, if you can raise VC money . . .

---

I would suggest that trying to fund your business idea via a VC and a series of funding rounds is no easy task.
There are only so many Sequoia's out there, not too mention how competitive it is.
Perhaps Sebastabear can weigh in on this.

And the ultimate payoff of a company doing an IPO after certain financial metrics are met, doesnt happen overnight. It takes years. Just look at what Rubrik has experienced as a cloud data management company that has still yet to go public.

It might seem so easy given the SPAC model that emerged last year with "overnight" valuations that were in the stratosphere, but those valuations have totally collapsed and investors are certainly wary of that business model, now more so than ever. Half of the IPO issuance last year came via SPAC's. And I believe 75% of those deals are underwater.

My Dad once invested in a private tech company out of Milpitas.

He was able to get paid in shares due to his consulting work. And at one point, he was also able to buy a bunch of shares from the Marketing Manager who wasnt all that confident that he was ever gonna be able to realize any kind of equity in this tiny little tech company with a paltry $40 million in sales. Probably not the safest place for my Dad to put his middle class income. But he was a very optimistic man and believed in innovation and took the RISK.

Long story short, the CEO was able to find an acquirer that was a mezzanine defense contractor that was interested in the secured communications products that it had to offer. But still, my Dad had to have incredible patience and belief.
It took him 15 years to realize a capital gain and even then, there was another 3 years of sales earnouts that needed to be achieved.

---

The world is awash in VC money, it's not just the Sequoias of the world. Startups raised over $600B in capital in 2021. Insight Partners just raised a $20B fund. Hedge funds are now closing VC rounds in huge numbers. Tiger just raised $11B for their VC vehicle and lead 200+ rounds in 2021. Coatue led almost 100 rounds in 2021. I could go on and on with anecdotes but that would just belabor the point.

I would also say that your dad's experience is interesting because you said "paltry" $40 million in sales. Last year before the threat of interest rate raises came into play, high growth companies with $40M in sales were looking at valuations of perhaps $1-4 billion with a B. And founder liquidity is available earlier and earlier in the lifecycle. Maybe people don't care about high 8 and low 9 figure outcomes for individuals, but you often see that well before a company IPOs or sells.

For a variety of reasons (including availability of later stage VC funding), companies are staying private longer. Rather than going public with a low 9 figure valuation, companies are waiting until they are 10 or 11 figures. Much more of the rewards are going to early investors, founders and early employees. A lot of the juice that used to go to the public markets is being retained by those people. That's in large part why I am going to continue to place my bets on early stage private companies rather than the public markets. Right now, the incentives are just too strong to do so.

I have a close friend who invested in a seed stage startup at a mid 8 figure valuation a few years ago. A year later they were a unicorn and he had an opportunity to cash out 30x on his investment. The CEO has had a chance to cash out nine figures easy. They barely had any revenue or a developed business model and it's not clear to me that they will reach the sort of commercial scale that many might foresee as "success".

So I guess I would just reiterate that it's just not like it used to be. In large part what has changed is the concentration of capital in the private fund space and the relatively easy availability for the group of people who have access to it. I don't know Sebastabear's background and don't really know where he fits into the tech ecosystem, but I suspect we are probably seeing a lot of the same things.

---

Sebasterbear is a retired corporate lawyer. He headed a large law firm's technology practice. Beyond that you need to contact him directly.

I never understood some of the economics of valuing tech companies, but I'm a stupid real estate guy and former bond/real estate lawyer, with too many economics degrees. So ask Sebasterbear, not me.

---

Small world. Sebasta and I likely crossed paths at least one at some point and may very well know each other! In any event, I would expect he and I don't differ that much in our view of the VC funding and founder liquidity landscape.

As for the economics of valuing tech companies, it's largely a story about gross margins and TAM. If you construct the business properly and nail the execution, the success can be phenomenal. The return on early investments is so high for the successes, that the failures basically fall away. It comes down to portfolio theory, but the incentives are there for early stage VCs to play roulette with the initial checks, back the winners over multiple stages and you don't have to lose sleep over the losers. In other words, the wins are so large (100x or more) that the losses fall away.

---

While you make it sound easy, I have a feeling there is a lot more to it.

wifeisafurd said:

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Unit2Sucks said:

---

wifeisafurd said:

---

Unit2Sucks said:

---

DiabloWags said:

---

Unit2Sucks said:

---

DiabloWags said:

---

Unit2Sucks said:

---

If you can raise VC funding to start a company . . . , the economics are so good.

---

---

So long story short, if you can raise VC money . . .

---

I would suggest that trying to fund your business idea via a VC and a series of funding rounds is no easy task.
There are only so many Sequoia's out there, not too mention how competitive it is.
Perhaps Sebastabear can weigh in on this.

And the ultimate payoff of a company doing an IPO after certain financial metrics are met, doesnt happen overnight. It takes years. Just look at what Rubrik has experienced as a cloud data management company that has still yet to go public.

It might seem so easy given the SPAC model that emerged last year with "overnight" valuations that were in the stratosphere, but those valuations have totally collapsed and investors are certainly wary of that business model, now more so than ever. Half of the IPO issuance last year came via SPAC's. And I believe 75% of those deals are underwater.

My Dad once invested in a private tech company out of Milpitas.

He was able to get paid in shares due to his consulting work. And at one point, he was also able to buy a bunch of shares from the Marketing Manager who wasnt all that confident that he was ever gonna be able to realize any kind of equity in this tiny little tech company with a paltry $40 million in sales. Probably not the safest place for my Dad to put his middle class income. But he was a very optimistic man and believed in innovation and took the RISK.

Long story short, the CEO was able to find an acquirer that was a mezzanine defense contractor that was interested in the secured communications products that it had to offer. But still, my Dad had to have incredible patience and belief.
It took him 15 years to realize a capital gain and even then, there was another 3 years of sales earnouts that needed to be achieved.

---

The world is awash in VC money, it's not just the Sequoias of the world. Startups raised over $600B in capital in 2021. Insight Partners just raised a $20B fund. Hedge funds are now closing VC rounds in huge numbers. Tiger just raised $11B for their VC vehicle and lead 200+ rounds in 2021. Coatue led almost 100 rounds in 2021. I could go on and on with anecdotes but that would just belabor the point.

I would also say that your dad's experience is interesting because you said "paltry" $40 million in sales. Last year before the threat of interest rate raises came into play, high growth companies with $40M in sales were looking at valuations of perhaps $1-4 billion with a B. And founder liquidity is available earlier and earlier in the lifecycle. Maybe people don't care about high 8 and low 9 figure outcomes for individuals, but you often see that well before a company IPOs or sells.

For a variety of reasons (including availability of later stage VC funding), companies are staying private longer. Rather than going public with a low 9 figure valuation, companies are waiting until they are 10 or 11 figures. Much more of the rewards are going to early investors, founders and early employees. A lot of the juice that used to go to the public markets is being retained by those people. That's in large part why I am going to continue to place my bets on early stage private companies rather than the public markets. Right now, the incentives are just too strong to do so.

I have a close friend who invested in a seed stage startup at a mid 8 figure valuation a few years ago. A year later they were a unicorn and he had an opportunity to cash out 30x on his investment. The CEO has had a chance to cash out nine figures easy. They barely had any revenue or a developed business model and it's not clear to me that they will reach the sort of commercial scale that many might foresee as "success".

So I guess I would just reiterate that it's just not like it used to be. In large part what has changed is the concentration of capital in the private fund space and the relatively easy availability for the group of people who have access to it. I don't know Sebastabear's background and don't really know where he fits into the tech ecosystem, but I suspect we are probably seeing a lot of the same things.

---

Sebasterbear is a retired corporate lawyer. He headed a large law firm's technology practice. Beyond that you need to contact him directly.

I never understood some of the economics of valuing tech companies, but I'm a stupid real estate guy and former bond/real estate lawyer, with too many economics degrees. So ask Sebasterbear, not me.

---

Small world. Sebasta and I likely crossed paths at least one at some point and may very well know each other! In any event, I would expect he and I don't differ that much in our view of the VC funding and founder liquidity landscape.

As for the economics of valuing tech companies, it's largely a story about gross margins and TAM. If you construct the business properly and nail the execution, the success can be phenomenal. The return on early investments is so high for the successes, that the failures basically fall away. It comes down to portfolio theory, but the incentives are there for early stage VCs to play roulette with the initial checks, back the winners over multiple stages and you don't have to lose sleep over the losers. In other words, the wins are so large (100x or more) that the losses fall away.

---

While you make it sound easy, I have a feeling there is a lot more to it.

---

In my post, "construct the business properly and nail the execution" is doing a lot of the work!

Setting aside high profile disasters like WeWork, the bread and butter of software VC investment isn't that hard for people to wrap their heads around. I wouldn't say it's easy, but it's not all science projects either.

I'm not saying everyone should go out and start a software company, far from it, but for people who have the capability and opportunity to do so, the development of the VC industry and the power of software operating models has made it incredibly attractive to do so.

DiabloWags said:

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going4roses said:

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Geez H Christ only 2% how is that possible? Is it because they are just so big of company?

How is it the heirs are worth so much though?

---

'The Walton Family is worth what they're worth because of the capitalization of Walmart stock,
and the fact that they own 50% of all outstanding shares.


Alice Walton: 2.7 billion shares
John Walton: 1.6 billion shares
Helen Walton: 1.7 billion shares
Helen Walton Estate: 1.7 billion shares
Jim Walton: 1.3 billion shares
Robson Walton: 1.3 billion shares
Walton Enterprises: 1.0 billion shares
T. Walton Estate: 1.0 billion shares

The 7 heirs are collectively worth about $232 Billion.
They own 50% of the company.


Walmart Stock Ownership - Who Owns Walmart in 2022? | WallStreetZen

---

G4R asks about the Walton heirs using their wealth to subsidize Walmart employees. Thinking outside the box is worth pondering. The answer, however, is not so simple.

As Wags pointed out, the Walton family wealth is due to market capitalization. It's what someone else would be willing to pay for their shares. Market capitalization, however, does not equate to cash-in-hand. It's similar to somebody having a house worth hundreds of thousands, but having little to no savings.

Another element to consider: Why are so many choosing to be employed by Walmart when the financial rewards are so low? Asked another way, if you need X amount of income to cover expenses, why would you choose to work someplace that pays less than you need?

That makes a lot of sense

Cal_79 said:

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G4R asks about the Walton heirs using their wealth to subsidize Walmart employees. Thinking outside the box is worth pondering. The answer, however, is not so simple.

As Wags pointed out, the Walton family wealth is due to market capitalization. It's what someone else would be willing to pay for their shares. Market capitalization, however, does not equate to cash-in-hand. It's similar to somebody having a house worth hundreds of thousands, but having little to no savings.

---

This reminds me of Elon Musk and how he has sold off all of his homes and literally lives in a "shack" on a property in Texas owned by Space-X.

I was catching up on my reading the other day and came across some quotes by his former girlfriend Grimes (who he is about to have a second child with). In a recent Vanity Fair cover story on Grimes, she said:

"Bro does not live like a billionaire ... Bro lives at times below the poverty line," she said. "To the point where I was like, 'Can we not live in a very insecure $40,000 house? Where the neighbors, like, film us, and there's no security, and I'm eating peanut butter for eight days in a row?'"

The article also noted that rather than when she complained that their mattress had a hole in it, he said instead of buying a new mattress, he suggested they replace the mattress with the one at her house. "Like, bro wouldn't even get a new mattress."

In the interviews, Boucher notes that it gets tiring that she spend a decade writing and producing all her music for the press to turn her into just his "sidepiece." But she also can't help but defend him at every turn.

"And Grimes is baffled that so many people view his Mars ambition as some billionaire's boondoggle, rather than the essence of being human and maybe, just maybe, the key to our survival," the Vanity Fair article says.

"The Mars project is hard," she says. "There's no income for it. There's no way for it to make money. It's for the benefit of humanity, and it's dangerous and it's expensive."

DiabloWags said:

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Should the local high school girl that works at Rocco's Pizza as a greeter make more than $15 an hour?

Or should her hourly wage be based on PRODUCTIVITY?

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Her PRODUCTIVITY is dependent on how much disposable income people have in that area. If everyone is making >$300,000 per year, she's likely to be very "productive". If everyone is at the Federal minimum wage of $7.25/hr, they can't afford Rocco's pizza, and she'll be rather "unproductive".

DiabloWags said:

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Cal_79 said:

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G4R asks about the Walton heirs using their wealth to subsidize Walmart employees. Thinking outside the box is worth pondering. The answer, however, is not so simple.

As Wags pointed out, the Walton family wealth is due to market capitalization. It's what someone else would be willing to pay for their shares. Market capitalization, however, does not equate to cash-in-hand. It's similar to somebody having a house worth hundreds of thousands, but having little to no savings.

---

This reminds me of Elon Musk and how he has sold off all of his homes and literally lives in a "shack" on a property in Texas owned by Space-X.

---

This is sort of a charitable take on Musk. I think more likely he's on the Howard Hughes crazy billionaire spectrum. You mentioned he sold off "all of his homes" and to be clear he had many and they were not modest. Here's one of his local houses. Just because he's peeing in empty coffee cans now doesn't mean he's dedicated himself to a life of asceticism for the benefit of mankind. He's just kind of a crazy eccentric genius who is as likely to turn into Liberace as a monk.