From Bloomberg:

A surge in wealth from technology stock sales and initial public offerings is spilling into the Silicon Valley real estate market as newly rich workers bid up home values in suburban cities south of San Francisco.

The median price of single-family houses sold in Palo Alto, home of Facebook Inc., climbed 20 percent in May from a year earlier to $1.63 million, the biggest jump since 2008, according to preliminary figures from research company DataQuick.

As a plugged-in reader notes:

According to Redfin there were only 63 SFH sales in Palo Alto in the past month. It’s completely possible for 10 people to alter a median with that small a sample. In fact it would only take 32 people to basically set the median!

And with respect to the broader market, last month Santa Clara County, of which Palo Alto is part, recorded a 23.6% year-over-year drop in sales volume (a loss of 510 transactions) and a 5.1% decline in median sales price.
Home Prices Exploding in Silicon Valley Amid More Millionaires [Bloomberg]
San Francisco Recorded Sales Activity Down 20.1% In May [SocketSite]

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by CSInvestor

    Yes, the funny money is out in force on the Peninsula right now. Over the last three months as we’ve been looking, we have seen most decent SFR’s in Palo Alto and Menlo Park go into contract within 7 days of listing, many above asking. In general, it seems that unless the home has some fundamental issue (close to Caltrain, El Camino, way overpriced, etc.), it’s being snapped up quickly. The agents down there are giddy. Unfortunately, as long as the IPO window is open and the funny money gravy train continues, this probably won’t change.

  2. Posted by Oceangoer

    The good news is that it may be spilling over to areas close to Silicon Valley, where worker bees can’t pay Palo Alto prices, but need to be near where the work is. A friend got 3 offers on her very modest condo in Newark within two weeks of offering. It was priced right, its a hop skip and a jump over the Dumbarton to Menlo Park and I am convinced that is what made it attractive.

  3. Posted by eddy

    I thought these IPOs were only making like 10 people rich? This can’t move the needle so why is Bloomberg writing an article?! /snark. The truth is that this sudden wealth creation demonstrates the real psychological premium individuals are willing to pay for home ownership. You’re playing with house money and new found wealth. Lot’s of it and spread fairly broadly. The home ownership premium is real and it is what keeps prices in desirable / supply constrained places traditionally higher than less desirable alternatives. Of course there are lots of factors but people want to own a home and if they have money to burn they will spend it. Of course, when the bubble blows that premium goes with it. But these bubbles seems to be shorter and shorter in cycles and its making the 1996 prediction in the top markets a hard case.

  4. Posted by tc_sf

    “I thought these IPOs were only making like 10 people rich? This can’t move the needle so why is Bloomberg writing an article?! ”
    According to Redfin there were only 63 SFH sales in Palo Alto in the past month. It’s completely possible for 10 people to alter a median with that small a sample. In fact it would only take 32 people to basically set the median!

  5. Posted by SF Dede

    If you’ve seen all the Facebook commuter buses, etc, you know it will.

  6. Posted by tipster

    and who is on the facebook commuter buses? A bunch of 22 year old single males. Not your typical real estate buyer.
    I think the car dealers are going to do very well with Palo Alto’s Facebook IPO. Zynga’s too.

  7. Posted by ex SF-er

    I think I already said this, but my relatives just bought in Palo Alto based on Facebook shares. (they were previously at Google like so many Facebookers).
    a few months ago I said I though there was probably no .com bubble part two… however I may have to revise that with the ridiculous valuations that LinkedIn and now Pandora got, with Facebook and Twitter up soon.
    all that said: this will not be a repeat of the 90′s IMO. this tech over-valuation is heading into a weak economy instead of heading into a boom as the .com bubble was back in the late 90′s.
    I thought these IPOs were only making like 10 people rich?
    although I disagree strongly with the number 10, I will say that there are less newly minted millionaires from these companies than many people think. (however, RE valuations are set at the margins, and thus a small number of new millionaires can really move a local RE market).
    A LOT of the shares go to just a few people in each company (CEO, COO, CIO, founder, etc). the worker bees get good amounts of shares, but not necessarily oodles. Plus, there is a lockout before they can sell their shares.
    we saw this with Google, where many Gooleaires fell back down to Google thousandaires as GOOG stock struggled. The early entrants made out hugely… the later entrants did well but not “rich”. current Googlers are paid well but not lavishly, except for the upper levels.
    this will be the big hurdle for the social media millionaires. Can Pandora, LinkedIn, Facebook, Twitter, SalesForce keep high stock valuations long enough for their workers to cash in?
    can they do so in the face of possible repeat recession?
    it’ll be interesting to watch.

  8. Posted by [anon.ed]

    According to Redfin there were only 63 SFH sales in Palo Alto in the past month. It’s completely possible for 10 people to alter a median with that small a sample. In fact it would only take 32 people to basically set the median
    The same phenomenon can happen in SF pretty easily. There are only 153 SFRs for sale right now throughout districts 5-9, districts where CW might expect tech workets to buy within. And over the past month, since 5/15, there have been 71 sales.
    So I get decrying the notion that a sea change is upon the market once again. Fair enough, and I agree with that. What makes no sense is trying to talk like these tech companies successes will not have any effect on RE whatsoever. There are only so many decent houses for sale in various neighborhoods. It’s not a huge market, plain and simple.

  9. Posted by SocketSite

    With respect to the broader market, last month Santa Clara County, of which Palo Alto is part, recorded a 23.6% drop in sales volume (a loss of 510 transactions) and a 5.1% decline in median sales price.

  10. Posted by Zig

    I wish they would stay out of SF so I could buy a house
    I would go to the East Bay but my industry is centered in SSF.
    I don’t like the Peninsula anymore

  11. Posted by The Milkshake of Despair

    “…last month Santa Clara County, of which Palo Alto is part, recorded a 23.6% drop in sales volume…”
    Could that have also been caused by pushing April 2010 closes into May?

  12. Posted by steve

    MoD, the likely answer is that the market is not strong for SC county overall. SC is very large and includes santa clara, san jose, milpitas, morgan hill and gilroy.
    the parts that matter for this discussion are palo alto, los altos and, to a lesser extent, mountain view, cupertino and sunnyvale. some folks also choose to commute from los gatos and saratoga. broadening to san mateo county, the revelant parts are menlo park, portola valley, woodside and then burlingame / hillsborough.

  13. Posted by SocketSite

    Could that have also been caused by pushing April 2010 closes into May?
    With respect to sales volume, of course. With respect to the median (which is the basis of the Bloomberg story), not so much.

  14. Posted by ZapBrannigan

    Totally anecdotal, I know, but as a Milpitas resident and house hunter for the past TWO years, I can confirm this silliness has spread to even the armpit of Silicon Valley (aka Milpitas, S. Fremont, Berryessa). I’m not going to attribute this to IPO money, but mediocre homes are being snatched up at a ridiculous pace compared to last year. We’re searching in the $550-$700k range, and we’ve been outbid three times in the last month for homes, all of which we felt were reasonably priced, not under-priced (based on comps from past two years). All three bids were well over asking and one was all cash.
    WTF?!

  15. Posted by badlydrawnbear

    Hopefully the influx of cash will help stablize the bay area economy and begin to add much needed construction and retail jobs.
    However, I have to say the linkedin valuation just seems ridiculous (most people I know don’t even consider it social media), Pandora has a revenue stream but is far from profitable (and no one from Pandora seems to have a plan on how to make a profit either), Facebook and Twitter seem to be the only companies that look like they might be worth it until you think about Friendster and MySpace.
    Of course the IPO’s will make a small number of people amazingly wealthy and hopefully that will smooth out the growing ‘double dip’ locally.

  16. Posted by anon

    ‘I thought these IPOs were only making like 10 people rich’
    Lots of people (a few hundred I guess) are going to get a couple of millions $$ out of this – far from being rich but enought to buy in the 1-2 Million range.

  17. Posted by sfrenegade

    the parts that matter for this discussion are palo alto, los altos and, to a lesser extent, mountain view, cupertino and sunnyvale. some folks also choose to commute from los gatos and saratoga. broadening to san mateo county, the revelant parts are menlo park
    See http://www.julianalee.com/reinfo/monthly.shtml for raw data for Palo Alto, Los Altos, Los Altos Hills, Mountain View, Cupertino, Sunnyvale, Santa Clara, and Menlo Park.
    I see that Palo Alto has a decent number over asking and sometimes for a large amount over asking, and Cupertino seems to have a few as well, although not nearly to the extent of Palo Alto. The rest of the listed cities from Juliana seem to have the majority of houses either at or below asking, including Menlo Park, contrary to CSInvestor’s account.
    Usually more of the selling prices show up as the month comes to an end, so we’re missing a bunch of data thus far. Juliana tends to have more accurate data than other places, because (a) she provides raw data, and (b) she goes by original listing date/price instead of last listing date/price. As a result, her DOM and listing price stats are much better than anywhere else.
    I can confirm this silliness has spread to even the armpit of Silicon Valley (aka Milpitas, S. Fremont, Berryessa).
    Based on the data so far for Sunnyvale and Santa Clara in the $550-$700K range, I’m not buying this anecdote. However, it’s worth noting that $550-700K is still well within super-conforming limits, which has an effect.
    All three bids were well over asking and one was all cash.
    As for all cash, those should be very short escrows right? 20 days or less? I see about 5 candidates in Palo Alto out of 52, 2 extremely short (4 and 7) in Menlo Park out of 54, and not that many anywhere else — 1 epic prime house with an 8-day escrow in Los Altos, and 2 in Cupertino.

  18. Posted by sfrenegade

    Lots of people (a few hundred I guess) are going to get a couple of millions $$ out of this – far from being rich but enought to buy in the 1-2 Million range.
    From Pandora and LinkedIn? Absolutely not from analysis of their S-1s. From Facebook next year — maybe a decent number, but I’m not sure about “a few hundred.” From Twitter — I don’t know.
    Pandora has a revenue stream but is far from profitable (and no one from Pandora seems to have a plan on how to make a profit either)
    As I mentioned in another thread, Pandora also has the double uncertainty of potentially having an abruptly changing business model. Pandora is still in rate court over music licensing fees. Stay tuned.

  19. Posted by tc_sf

    “I’m not going to attribute this to IPO money, but mediocre homes are being snatched up at a ridiculous pace compared to last year. We’re searching in the $550-$700k range,”
    Since the Bloomberg article itself points out employees are “locked up” for six months after the IPO, in addition to all the points listed above, I find the premise of the article about a correlation between IPO’s and these median changes unpersuasive. Especially considering when transactions would have needed to start in order to show up in May stats. Secondary market sales have been transpiring for some time as well, so drawing the line to May sales isn’t clear either.
    However, the $550-$700k range, seems very much in line with what a two income tech couple (~$150-$200k HH income) could afford under traditional lending standards. At the low $550k end 3.5% down is only $20k, not too hard to scrape up. Even 20% down on $700k is $140k and I don’t think it’s unreasonable that either through options, ESPP or bonus there will be far more ten-thousandairs and fewer but a still significant number of one hundred-thousandaires.

  20. Posted by tc_sf

    “Lots of people (a few hundred I guess) are going to get a couple of millions $$ out of this – far from being rich but enought to buy in the 1-2 Million range.”
    As a comparison, Pandora raised $235M in the IPO.
    Two hundred people getting $2M would represent $400M.

  21. Posted by anon

    Well, let’s just put it that way: whoever’s been in the valley over the last 10 years as an engineer working for a good company easily has 1 Million to burn on a down payment based on salary, options and benefits. There are only a few SFHs in the hot areas Palo Alto/Menlo Park/Los Altos/Woodside on the market below 2.5 Million. So you can do the math…

  22. Posted by sfrenegade

    “So you can do the math…”
    Maybe you should do the math if you’re making an unsupported claim like “whoever’s been in the valley over the last 10 years as an engineer working for a good company easily has 1 Million to burn on a down payment based on salary, options and benefits.”
    How many people would that actually be? A few Googillionaires who have already cashed out?

  23. Posted by tc_sf

    “Well, let’s just put it that way: whoever’s been in the valley over the last 10 years as an engineer working for a good company easily has 1 Million to burn on a down payment based on salary, options and benefits”
    Given that high paying google’s current mid career average salary is $140k which gives a gross salary of $1.4M over 10 years and the poor performance of the Nasdaq and many tech stocks over the same period, your generalization is extremely unlikely to be true.
    Especially considering that these jobs typically do not provide retirement benefits so that even a decent fraction of their savings would be excluded from the “money to burn” category.

  24. Posted by anon

    ‘Given that high paying google’s current mid career average salary is $140k’
    I don’t think you know what you are talking about. Highly paid in the Valley starts at $250K per year. And all it takes is a director level in engineering with maybe 20+ people reporting to you. There are thousands of director level jobs in the Valley.

  25. Posted by tc_sf

    “Google employees are the best-paid in the IT industry, according to a pay survey.
    Workers at the search giant earn an average mid-career pay, for workers with 10 years’ experience, of $141,000, which is 23 percent higher than the IT industry’s market pay, the PayScale survey found. ”
    http://www.pcworld.com/article/230169/google_leads_tech_salaries.html
    Note that “whoever’s been in the valley over the last 10 years as an engineer ” is a far cry from highly paid director level with 20+ reports. But even for someone with a 2011 salary of $250k and 10 years of work, while its possible that they have $1M saved outside of retirement accounts, I don’t think it’s a given.

  26. Posted by ZapBrannigan

    -sfrenegade
    Well, I have no real estate data to back up my anecdote, because that’s what they are…just anecdotes, and they’re based off of what my realtor has told me. These are the 3 homes we bid on and lost:
    http://www.redfin.com/CA/San-Jose/3658-El-Grande-Dr-95132/home/940954
    Listed $650, we bid $625 with 10% down, it was supposedly sold for $690. BTW, house needed approx $100K remodeling.
    http://www.zillow.com/homedetails/3557-Westview-Dr-East-San-Jose/19792517_zpid/
    Listed $650, we bid $650 with 20% down, winning bid was $665 with 50% down.
    http://www.zillow.com/homedetails/1063-Crescent-Ter/19484102_zpid
    Listed $760, we bid $700 with 20% down, winning bid was $800 all cash.
    Again, this is all from my realtor and I can’t verify. If you could verify somehow, that’d be fantastic. I believe House 1&3 are pending, but House 2 is a completed transaction.

  27. Posted by ZapBrannigan

    “I don’t think you know what you are talking about. Highly paid in the Valley starts at $250K per year. And all it takes is a director level in engineering with maybe 20+ people reporting to you. There are thousands of director level jobs in the Valley.”
    I’ve worked at HP, Apple, Lockheed Martin, and Cisco as a mechanical & systems engineer through the boom, bust, boom, and bust again… Every engineering director I’ve worked under “directs” 100s of engineers. My direct manager usually managed in the 15-35 people, and I’m actually on 2 salary grades higher than him (technical vs management split). According to my org charts, this was true with all engineering and software divisions. BTW, my current engineering director oversees 380 people.
    Maybe Google and Facebook are different, but I’m not sure you can say the entire valley is as you described.

  28. Posted by meep

    only a small percentage of people working and living in the valley are involved in IT.
    you people act like no gets their hair cut ,goes to the mall or dines out in. do your kids go to school?
    most hair dressers ,retail sales people,cooks waitresses ,cooks and school teachers aren’t making loads of money and there are a bunch of them in the valley

  29. Posted by sfrenegade

    “Highly paid in the Valley starts at $250K per year. And all it takes is a director level in engineering with maybe 20+ people reporting to you.”
    1) When your original claim is about any engineer in the valley, this seems like changing the goalposts.
    2) Many people at the level you’re talking about in 2001 likely already owned property and probably wouldn’t be a new buyer. Also, they don’t necessarily have $1M in investable assets — do the math, as you say.
    3) Not all companies are as you describe. In addition, the manager types are not necessarily the same as engineers (as per your original claim), whether in skillset or paygrade.
    In addition, not all people who have that much in assets (which again, isn’t that many) want to sink all their savings in housing, and many of them already have houses.

  30. Posted by sfrenegade

    Zap — thanks for being so open and honest with what you sent. It’s a model post! The houses you sent are interesting because one is a short sale and another is REO.
    FWIW, I’m not surprised that 3557 Westview (http://www.redfin.com/CA/San-Jose/3557-Westview-Dr-95148/home/1730900) went modestly above asking, given that it sold for $990K in 2005 and then was foreclosed with a balance of $843,491 and then listed for $650K.
    3658 El Grande sold for $950K in 2000 and was most recently listed for $650K, again, not a surprise. It’s a massive short sale.
    1063 Crescent Ter (http://www.redfin.com/CA/Milpitas/1063-Crescent-Ter-95035/home/1208034) seems to be the exception, although it might not be a surprise. It sold for $715K in 2002, but its tax value per Prop 13 in 2009 was already above $800K ($804K, which they got reassessed to $802K in 2010), so the tax assessor apparently thought it should go for $800K. Realtor.com estimates the value at about $780K, which would be above asking:
    http://www.realtor.com/realestateandhomes-detail/1063-Crescent-Ter_Milpitas_CA_95035_M20463-60263

  31. Posted by anon

    Well, guys, be that as it may. If you want to live in the nice areas of Palo Alto, Menlo Park, Los Altos, Woodside, Portola Valley, etc. and can’t afford more than 2 Million, there are not many homes to choose from. Check on MLS and I bet you’ll find fewer than 20 homes. And there are obviously enough people with salaries and/or assets that can buy those homes.

  32. Posted by ZapBrannigan

    sfrenegade,
    Thank you for your additional digging! Some additional notes as to why I’m still surprised by the recent action despite their previous sold prices.
    The Westview was on the market as a short sale for 250 days before we decided to bid on it. The bank approved the short sale for $630, but ultimately the seller decided to just let the house foreclose since her ex-husband’s name was on the loan, not hers and therefore wouldn’t hurt her credit. Once it came back on as REO, it was on the market 1 day (7 day preview though), and supposedly had double digit offers.
    The El Grande we felt was slightly overpriced based on the comps and the other properties we’ve seen for the past 2 years, yet still went over asking.
    This is why I’m wondering if there is indeed “silliness” even in the armpits of the bay. I know, I know…3 data points don’t make for good stats.

  33. Posted by The Milkshake of Despair

    “If you want to live in the nice areas of Palo Alto, Menlo Park, Los Altos, Woodside, Portola Valley…”
    I assume you mean “nicer” areas because there is hardly anything available in those towns that would be considered “not nice”.

  34. Posted by CSInvestor

    I love how the peanut gallery that isn’t actively in the market likes to comment on activity and pricing. I guess attending dozens of open houses and bidding on properties in both Menlo and PA (unsuccessfully) makes me unqualified to comment on what I’m seeing.
    Nevertheless, let’s put aside the anecdotes for a minute and take a look at the numbers. According to Redfin, there are a total of 51 SFH’s currently on the market between $0 and $1.5M in Menlo and PA (including the less desirable areas east of 101 or in areas like Flood Park and Fair Oaks in Menlo). I chose that maximum because, in my experience, that represents a reasonable proxy for the maximum buying power of a double income, mid-level tech family that has benefited from a modest level of ESPP, options, bonuses, etc. over the years. Your mileage may vary.
    During the last 3 months, 172 SFH’s sold in those two cities in that price range. Of those currently on MLS, 23 have been on the market for at least 30 days (and as I argued originally are likely to have some issue such as being too close to Caltrain or in the less desirable Redwood City school district for parts of Menlo). Average DOM in Menlo is 53 days and 35 in PA. In other words, in a best case scenario (including all 51 SFH’s on MLS), there is less than 1 month’s (approx. 25 days) inventory currently available. Note that for the five year period from 2006-2010, inventory peaked around 140 days for Menlo and 82 days for PA in 2008.
    As always, it’s a question of supply and demand, and, at least right now, demand seems to be outstripping supply, which is why many SFH’s in Menlo and PA are going contingent quickly and often over asking.

  35. Posted by sfrenegade

    “Nevertheless, let’s put aside the anecdotes for a minute and take a look at the numbers.”
    I’ve looked at these markets, and I’ve given you (incomplete) raw data for May. DOM in Menlo Park is 92 days, DOM in Palo Alto is 50 days. Again, I’m using data with true DOM and true original list price to sale price ratio, not the rigged kind you typically get where re-lists are treated as original.
    No one’s saying these markets aren’t doing okay — Palo Alto does seem to be exactly as hot as people make it out to be. The other cities appear to be far less frothy than the “all cash, over asking, sold in less than a week,” you tend to hear, per the data and experience. Even for Cupertino, which seems a little frothy, people tend to exaggerate a little bit on those factors. I once saw a claim of 10% over asking being typical in Cupertino, and there are very few houses in that range from what I’ve seen.
    Btw, I’m not sure if Redfin is always the most accurate for aggregate statistics, and I’ve even heard of systematic data issues for their aggregate data. At minimum, tipster’s surveys of Redfin vs. fluj’s surveys of MLS (which don’t always match the editor’s/rereport’s for some reason) seem to be distinct.

  36. Posted by anon

    ‘I love how the peanut gallery that isn’t actively in the market likes to comment on activity and pricing’
    Well, I just bought in Menlo Park a few months ago :-)
    And by nice, I definitly don’t mean east of 101!

  37. Posted by noodle

    The date you all care about is about six months after a Facebook IPO. The great unlock.
    The current beneficiaries of secondary markets are comparatively few. You could argue that there are almost as many newly-minted UHNWs who made 83b elections and are quietly moving to Seattle, Las Vegas, or New Hampshire.
    Many Pac Heights home sized fortunes in state tax will be saved when shares are sold outside California on January 2nd, 2012. These folks won’t be back until 2013.

  38. Posted by lol

    We should all be happy the BA is one of the last healthy areas of the country. Sure houses are expensive, but we all enjoy the liveliness that comes with people’s success. Better a hipster zone than a sea of empty storefronts. Better having renovated mini-manses than rotting blight that no one will touch because tear downs do not make sense.
    This is the 4th or 5th gold rush we have had, folks. Better enjoy it while it lasts. Sell shovels if you want to profit from it.

  39. Posted by tipster

    Some gold rush. LNKD has lost about 45% of its peak first day value in a month, Pandora lost 50% in a few days.
    The employee shares are locked up for 6 months. At the rate these two stocks are moving, the rank and file employees will be lucky to have enough option money for a decent car. They aren’t going to do jack for the SF housing market.
    Oh, GOOG has dropped below $500 and is dropping like a rock.

  40. Posted by lol

    Tipster,
    These people took nothing and created something. They had 0 options a few years back and are now loaded with them and will soon be able to trade them publicly. I am not sure they’re losing as much sleep as you obsessing whether you’re going to be right or wrong.
    Sure the sidelines is a great place to watch.
    As old desert wise men say: a kutya ugat, a karaván halad

  41. Posted by EBGuy

    The employee shares are locked up for 6 months.
    Can they sell calls?

  42. Posted by tc_sf

    @ EBGuy — Generally not, but the exact lockup agreement will be found in the prospectus filed with the SEC.
    Rather then employee options, I think the real issue is that if these stocks fall quickly below the public open price then all retail investors hoping to make big money on the IPOs will suffer a loss.
    If we see a situation where insiders cash out via secondary markets or private sales ( Groupon insiders cashed out nearly $1B pre-IPO!!), but retail investors get slaughtered that is certain to attract regulatory scrutiny to these types of pre-IPO cash outs followed by low-float IPO’s.

  43. Posted by A.T.

    I see that Facebook just delayed its IPO for at least another year. They are already kind of “public” but looks like they won’t really be public until late 2012 or later.

  44. Posted by eddy

    How do you delay an IPO when no S1 is filed?

  45. Posted by A.T.

    You postpone your plans to file it . . .

  46. Posted by eddy

    Good article:
    Facebook doesn’t need to go public. Ever.
    “First, let’s be clear: Facebook hasn’t actually “delayed” anything. It never registered for an IPO, let alone prepped a roadshow or a formal offering date.”
    http://finance.fortune.cnn.com/2011/09/14/reminder-facebook-does-not-need-to-go-public/

  47. Posted by tc_sf

    “”First, let’s be clear: Facebook hasn’t actually “delayed” anything. It never registered for an IPO, let alone prepped a roadshow or a formal offering date.”
    The Financial Time’s source could be wrong or spreading disinformation, but presuming they’re correct that Facebook was working towards a 2011 IPO and now is looking towards 2012 at the earliest. That is in fact a delay.
    In the context of Groupon’s and Zynga’s delays this becomes more consequential.

  48. Posted by eddy

    Consequential to what?
    And here is the excerpt from the FT article:
    “Facebook is preparing to launch its blockbuster initial public offering in the US towards the end of next year, a later public debut by the social networking site than had been widely anticipated, say people familiar with the company.
    The IPO, expected to be one of the world’s biggest with recent private share sales valuing Facebook at more than $66.5bn, has been expected by April 2012, with persistent speculation that it could even come this year.
    However, people close to the company have told the Financial Times that Mark Zuckerberg, Facebook’s chief executive, wants to wait until next September or later in order to keep employees focused on product developments rather than a pay-out.”

    Nothing was delayed other than what was widely rumored.

  49. Posted by tc_sf

    “Consequential to what?”
    First off, when three companies are delaying their IPO’s it’s more indicative of market conditions then individual factors. Groupon in particular has accounting issues so if they alone were delaying, a case could be made for that being an isolated event. The source in the FT article also claims that Facebook’s delay is not due to market conditions. Alone, this might fly. ( Although the stated rational “Mark Zuckerberg, Facebook’s chief executive, wants to wait until next September or later in order to keep employees focused on product developments rather than a pay-out.”, is pretty weak gruel)
    Secondly, the FT article and your quoted section mention that according to the source, Zuckerberg explicitly calls out that the delay will result in delayed pay-outs to the employees. i.e. There will be a direct financial consequence for employees.

  50. Posted by tc_sf

    To reiterate my point above, the real issue here is whether the reporting is correct or not.
    Since they have Thiel on the record praising IPO delays but not talking specifics, I’m going to guess that this isn’t just some source pulling stuff out of thin air or some one person going completely off the reservation. It could be a trial balloon to see how employees and other investors would react to the prospect of a delayed payout.

  51. Posted by eddy

    So every company that didn’t file their S1 today is just continually postponing it? The CEO / Board has one single job: Maximize Shareholder Value. I think it is a safe assumption that is what is happening here.

  52. Posted by tc_sf

    “So every company that didn’t file their S1 today is just continually postponing it?”
    No. But when you have one of your board members and large investor go on the record to the Financial Times praising the general idea of delaying your IPO and also have someone go not for attribution directly quoting your CEO saying why and until when you are delaying your IPO, then either you are floating the idea of delaying your IPO or your playing a much deeper game.

  53. Posted by eddy

    What game exactly? Other than maximizing shareholder value?

Add a Comment

Your email address will not be published. Required fields are marked *