Like Barbara of SC, I've been careful - and lucky - with a few missteps along the way (coffee futures, anyone?) but have also been thrifty, reinvesting rather than spending when possible. That was my mom's recipe as well, and she went from being a widow in her early forties, with only a high school education, to being able to leave a small estate to her children upon her death.
Of course: Things have changed, especially with housing costs in many places. From the end of WW II until 1970 or so, one could purchase a home in almost any of the metro areas for three or four times the annual salary of a young professional. Then the investors got into the game, and prices shot up, at the same time that wages started to stagnate. Now the same home costs twenty times the equivalent salary.
As we learned in the last national election, many people have become pretty angry with this state of affairs. I'm afraid though that Mr Calacanis's prescription may not solve that problem.
1
These comments are surprising to me—right there at the end of the article Mr. Manjoo writes: "And he is frank about the risks. The book begins with an all-caps disclaimer warning, “DON’T READ THIS BOOK IF YOU CAN’T HANDLE LOSING YOUR MONEY INVESTING IN THE RISKIEST ASSET CLASS ON THE PLANET: START-UPS.” Nowhere in the book does he say "take your life savings that you will need at 65 out of your 401k and bet it all on unproven founders and ideas."
Mr. Calacanis is giving people access to investments that used to be solely in the realm of the good old boys club of Sand Hill Road. Sure, angel investing is like betting on horses--you can read the sheets and make an "informed" bet but in the end, you never know what a horse is going to do. In Jason's syndicate he gets 20% to go out and vet founders and do due diligence on teams--he's writing the sheets and handicapping the horses and why would that be free?
I love the fact that in a syndicate I can put $1,000, $2,000 toward great ideas (most recently I talked to a founder who is trying to help refugees get aid via a blockchain identity system). It's making it possible for me to participate in tech innovation in a way I would never have had access to before. I think those of you tsk-tsking this concept are basically saying “gambling is bad” to an author who just wrote a book saying “gambling is good.” If you don’t like gambling, don’t gamble! But why spend time raking Mr. Calacanis over the coals?
3
Nothing more dangerous than a lucky guy who now thinks he's smart and somehow his luck is a brilliant formula that can be duplicated.
6
is it me or does this guy sound more than a little like the evangelical property bond salespeople of the 2000s, encouraging people to go all in to property bonds which turned out to be worthless while they made fortunes on the backs of their failed trades.. Moral: dont put all your eggs in one basket..
4
Move to Silicon Valley, Mr. Calacanis says? Start-ups in Silicon Valley, he says? Investing in Silicon Valley start-ups over the course of *ten years*, he says?
Mr. Calacanis, the future is *not* in Silicon Valley start-ups. Start-ups, perhaps--but not Silicon Valley start-ups.
Why not Silicon Valley? The answer is very simple: There's no more room. Actual, physical space--there's pretty much none left. I know this, because I live here.
Google, Apple, et al are having serious problems filling positions because the people they want to hire can't find housing (and so turn down offers). Apple's new, gargantuan "spaceship campus" has increased the housing demand in Cupertino by over 250%...problem is, there isn't any housing.
As for building more housing, there's few (if any) places left to build. Even if a lot more housing *could* be built, Bay Area schools are bursting at the seams, and the traffic congestion is so severe that to go anywhere is a major hassle.
No, the future in start-ups is not in the Bay Area--or even in California, for that matter. I would highly encourage those with exciting new ideas to establish a new start-up scene in an area that could benefit from an economic revival, and where there's room to grow.
2
Check out the Cortex complex in St Louis. Local involvement with the regions several universities including Washington U, St Louis U, Webster U. Affordable housing reasonable cost of living, public and private support of the art, diverse music scene.
The death of character.
6
A study by the Harvard Business School found 3 out of 4 companies backed by professional venture capitalists did not return their investments. What are the chances of amateur investors doing as well as this? Pretty slim really. Not sure what this dude is smoking.
2
A good old tried and true solution to this "You all are screwed" concentration of wealth is good old communism. After all, that is why it was created in the first place.
1
I've got a cement bunker ready for this guy...
1
Mr. Calcanis got lucky. Now he wants to sell the rest of us his ideas on getting lucky like him. How many other rich people are there out there trying to do the same thing?
Another snake oil salesman. The easiest way to get rich is to inherit money from Daddy, like President Trump did. I am sure that was not taught at the now defunct Trump University.
2
If you want a good life invest your brain in learning neglected art forms like history and mathematics instead of money making. The robots will hopefully make this the boom instead of aggression.
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No gamble, no loss, I'd say. I have gone from being disabled at age 46 and existing on my Social Security to amassing enough money to ensure my future healthcare needs and a comfortable lifestyle at age 70. But I didn't do it by gambling on start-ups. I did part of it the old-fashioned way, scrimping and saving even on Social Security Disability Income, putting those savings into stocks and stock mutual funds and coming out ahead over the long run.
Investing in start-ups, as the article states, is a very risky business best not touched by anyone who is at all risk-averse. My current portfolio, under 30% stocks, 30% cash waiting to be invested and the rest in bonds and CDs, is producing close to 9% overall this year.
Much of this is achieved by investing in very low cost funds through a well-known mutual fund company. The cash is in a high-yield savings account and two CDs. The stocks are in several mutual funds, carefully distributed throughout asset categories as defined by Morningstar.
I would never advise anyone to pay someone 20% for the privilege of investing with that person. No wonder Mr. Calacanis is doing so well.
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Barbara,
Thanks for the considered response. I'm the author and I agree with your focus on a balanced portfolio -- especially at the age of 70 when one would expect you need liquidity.
The book teaches younger folks (say 20-60 years old), who are willing to dedicate 20+ hours a week to angel investing over 10 years, invest something in the range of 1-10% of their net worth in angel investing.
ANGEL (the book) is not a get rich quick scheme, it's a my playbook after investing in 150 startups and how to *potentially* get rich by working really hard in a very risky asset class.
Additionally, I really, really don't need to share my deal flow with aspiring angels in my syndicate (at jasonssyndicate.com). I share my deal flow, and I wrote the book, to help aspiring angels get access to startups that I am personally investing in.
I do hope you read the book, and if you don't love it I will buy the book back from you. :-)
All the best, @jason calacanis ([email protected])
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This article has an error. Amazon, like Microsoft, is not a Silicon Valley company. Just like Starbucks, those companies are from the State of Washington, specifically Seattle.
BTW, the Whole Foods company was started in the state of Texas. When one thinks of free range, non-gmo, and organic, one just does not usually think of Texas at all. A surprising place, Texas. Clear Channel, a large media company buying up radio stations in California, (the company which banned the Dixie Chicks from their radio stations for criticizing Bush 43) is also from Texas. I was visiting San Francisco this week for medical reasons and noticed they own the on-the-street newspaper dispensors in SF.
Zappos, which started in San Francisco, California, left soon afterward for Las Vegas, Nevada because it is cheaper to warehouse goods in Nevada. They moved both their headquarters and warehouse there.
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Lots of middle-class, middle-age people invest in startups. They work there. Some get rich on stock offerings. Some do OK with ERISA. Most hit the streets after 3 years when the company folds.
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The guy has been on the inside for a long time - I wouldn't discount his predictions. I've had the good fortune to hear NH inventor Dean Kamen speak many times, and he is singing the same tune - get a good technical education, or your future is bleak. That's what his FIRST robotics competition is all about - getting kids interested and excited about tech futures, and it is wildly successful. Kamen has pretty much single handedly turned a decrepit old mill yard in Manchester NH into a high tech powerhouse.
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Investing in real estate seems much "safer"to me. Then again, we're not talking 100,000,000. I always wonder why people like this guy need so much money? That's the root of it in my opinion, why does one need so much money???
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In the future, the parts that make up robots will be so cheap , they can be built for pennies.
Instead of investing in a grifter, invest in yourself. Take a course from code academy and learn python. It's a machine language that can control robots and it doesn't take an engineering degree to figure out. If you successfully handled a regular statistics class and everyday algebra, you can handle learning this language.
Investing in the market only helps the rich shear the sheep.
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Calcanis used to shout “Information wants to be free!” during the legal wrangling over Napster. He lost that bet but apparently recognized that there were no limits to AOL’s appetite for bad bets. Weblogs currently eeks out an existence as a ping server run by LexisNexis. Can’t help thinking that his start-up scheme is another bad bet.
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1. "Information wants to be free" wasn't a coin I termed.
2. AOL is making $50m+ a year off the weblogs inc assets (Engadget, auto blog, etc).
3. Read the book.... i think you'll love it since you clearly are a checky monkey!
All the best, @jason calacanis
It's funny how people who win the lottery think that everyone should do it because it's a great idea.
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Calacanis' proposal is a neoliberal version of Marie Antionette, 'let them eat angelfood cake.' There's nothing in it for anyone outside of the the top 10%.
The difference between the United States and places like Greece and Egypt is that we are less organized and less class conscious, but much better armed. Economic disruption will rend the social fabric and is more likely to give us individual violence than masses in the street. That is, until a suitable scapegoat is provided.
NAFTA's deindustrialization cost 1 million manufacturing jobs over 20 years, most of the consequences, e.g. the opioid epidemic, declining lifespans, breakdown of families, were individual. Only recently has it brought us Trump and torches in Charlottesville. What happens when self-driving trucks destroy 3.5 million jobs over 5 years?
This will end badly.
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If your goal is to become enormously wealthy, and you don't mind a 95% risk of going broke and spending your life slaving to catch up and subsisting on cat food at the end, then there are many plans to choose from, a few of which may not be scams.
If your goal is to retire in your 60s with a secure-for-life income to cover a comfortable life (and medical care for the uncomfortable parts), then the best advice is the same thing my mother told me in the 1970s:
Get a job with a pension and a union. Support your union to protect your pension, pay, working conditions and job security.
Organize to pressure politicians to: lift the payroll tax cap to boost Social Security and Medicare benefits, pass laws supporting workers' rights to organize, increase spending on public goods like schools, parks and transit.
Buy a house you can imagine spending the rest of your life in and pay it off before you retire.
Simple, boring, true.
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You don’t have to invest in start ups. You do have to be invested. While technology will change products, that does not mean the firms disappear. Maintaining a diversified group of investments with a additions of proven technologies is something most people can do. That is most worthwhile message from this promoter. You have got to reach point where the tech people work for you.
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It is not a matter of "should or shouldn't" but it is a matter of allocation. The age old maxim of investing with your age is still by and large valid except your age range is stretched further because of the simple fact that people live longer.
Whether you are middle class, upper class or working class, you live within your means with an eye of future growth.
When financial crisis hit, financial publications talked about the lost decade when all the indexes were set back by 10 years. But now, they are all time high. But what if you died in between? That is a more pertinent question.
People buying a house they could afford is not wrong. Even if their house values dropped, they live there. It is utility. Don't use it as a piggy bank you can't break into at when you need a new car you can't afford. The same with investment. Buy a reasonable venture fund with a small portion of your investment money and dollar cost averaged in.
It is hard. We, myself included, tend to buy high and sell low. You will win by making fewer mistakes but you can't win without trying
The principles discussed in the article are a little bit short on substance, because there is no mention of diversification, as anybody who has taken a class on investing knows. I haven't read the book, but I can only assume that if the journalist doesn't mention it, neither does the book cover it. A D grade to both in my opinion.
9
Giovanni,
In fact the book does go into great detail about diversification. In the book I suggest that people who want to spend 20 hours a week or more, invest somewhere in the 1-10% of their net worth in startups in Silicon Valley. Additionally, I suggest only investing in startups that have other notable investors and that have their products in the market (i.e. Don't give money to people with just an idea or a business plan -- wait for them to build the product and get some customers you can talk to).
There are no shortcuts in life, but value is created in many different stages of a startups life. In the early stage you take the most risk and can have the greatest reward, but you want to be smart and diversify: perhaps invest 5% of your net worth in 25 startups and go 5x on the top 5 performers. You certainly don't want to dump all your money into one startup.
I hope you read the book... I think you'll love it.
Best @jason calacanis
2
Theoretical question: Is there terminal smug?
Based on Farhad's "reporting" of "refreshing" self promotion I suggest not. Bragging on making your fellow countrymen and the world worse than it was in an era of plenty? Chutzpah? Nah. The correct words are there but banned by the Times. What is the word for will allow it but not say it?
9
When the bellhops get in, it's time to get out.
17
So he's worth "over $100 million", made $30 million in 2005 from Weblog and then $100 million on Uber suggested by a friend - with two wins accounting for all of his successes, he may just be lucky. This does sound a tad risky for those without trust funds. Of course, now that he is running a "syndicate" that rakes 20% off the top, he is no longer investing in startups; he is investing in syndicate investment banking.
Still, all in all, his experiences would seem to make him eminently qualified to comment on investing in startups.
3
Thanks for taking the time to comment JPriestly.
To be clear, I've invested in around 150 startups -- most of which have failed. however, I've sold two companies, invested in six unicorns, dozens of $50m+ startups and been an LP in three other very successful venture funds. So, I've been lucky about 9 or 10 times.
I wrote the book to help people who are interested in angel investing avoid the mistakes I've made, find high-quality companies to invest in and basically demystify something that no one succcessful has ever explained: angel investing.
The syndicate is my way of sharing deal flow, and candidly I don't need to run it. I do it to help folks who are starting out see how I make decisions and invest a tiny amount of money (say $1,000 to $5,000) while they learn.
I do hope you read the book, or listen to the new podcast we started which is free ( angelpodcast.com).
Don't downplay the hard work and intelligence of this guy to put himself in the position to be able to invest 25K in uber when it was just a crazy ideal. Listen to his podcasts This week in startups, a great way for anyone to learn about angel investing and the tech field. I have loved them from the first podcast.
2
So let me get this straight. We're all screwed, we meaning teachers, nurses, pharmacists, truck drivers, policemen, musicians, tree trimmers, administrators, care givers, apartment store employees, house painters, carpet installers, construction workers, legal assistants, editors, pilots, shoemakers, and anyone else who doesn't work in tech, preferably for one of the frightful five, and isn't poised to systematically gut the rest of the economy. But, wait! There's a solution for all these ignorant and incompetent has beens. They can invest the little money they're still making in the very companies that are eliminating their jobs and destabilizing the societies in which they live. How wonderful! In the darkest moments of the 20th century, people living in ghettos were likewise given these kinds of choices for survival, for instance by burying or rounding up the rest of the victims. If it's eventually going to be all of our turns, what's the use?
34
At least in the US we can buy guns...and lots of them.
Thanks for the comment Rise. I'm the author, Jason Calacanis.
You mention truck drives and retail works in your list of people you don't believe will be screwed in the near future -- you couldn't be more wrong. There are 30 million jobs in America in those two categories, and based on the technology I see daily here in Silicon Valley I can tell you that in the next 10-20 years the majority of those jobs will be gone.
In fact, many large retail chains are either shutting down or replacing cashiers with iPads for ordering. Additionally, I've been seeing more and more robotics companies that will replace things like delivery, washing dishes, making pizza and making coffee.
Will we find other jobs for these people?
Will these people be able to be retained for new jobs?
No one actually knows, but i am certain those jobs will go away and they will go away quicker than people anticipate.
Not everyone will be able to be an investor, but I wrote the book for those bold and hard working enough to join the startup revolution. This is not a get rich quick book, it's a *maybe* get rich by investing in 50 startups over 10 years in Silicon Valley.
I hope you read it. If you do and you don't like it, I will buy the book back from you. Best [email protected]
So this guy wants smart people who have worked hard and received a medical school education to divert 20 hours/week from medicine and family to immerse themselves in the world of people who are rich in money but so insecure they need to extract millions of dollars more from the hard work of others?
What a perfect article to run alongside the Republicans' tax cut for the rich plan. It inspires me to suggest that we raise taxes significantly on people like him (so he got in early and made millions from Uber by exploiting hard working taxi and Uber drivers ) and use the money to, e.g., give scholarships to smart public spirited strivers who aspire to go to medical school (some of them may even be stuck as struggling Uber drivers) and to work in underserved communities.
Greed is not good.
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Lynn,
I'm the author, Jason Calacanis, responding here to your important comments.
1. The rich in America should pay more taxes -- I'm 100% in favor of a tax increase for the rich and cut for the poor.
2. The average American watches 4-5 hours of TV a day, so yes, I am suggesting that those who want to potentially have outsized returns turn off the television (or 80% of their TV time) and spend that time researching and investing in founders and startups who want to build game-changing startups.
All the best, @jason
Equally tauted have been bets that have to other failed or have sold out to their competition. Who remembers Prime or DEC or ComputerVision.. or WANG? In each case, the winners were those who got out before the collapse, while the going was good.
2
The issue is whether a person wants to get rich or just slowly create a retirement account. Getting rich absolutely requires a concentrated bet (ie VC, or Bezos with Amazon or Gates with Microsoft or Larry with Google) on one thing that gives you great returns. If you cannot do it yourself, then the second best option is to bet on someone, so this is what startup funds are for. The problem I see is in the exit strategy, many funds have exits that are optimized for one class of investor (usually the early/large ones). If the fund that the little guy gets in, has less liquidity of options then the large guy, then they are better off stay out of the game. Concentration builds wealth, Diversification maintains wealth.
3
Without commenting on the soundness of Mr. Calacanis financial advice, I have to support his vision of the future. Yes, the future is technological - not just software but increasingly, biotechnology as well. Yes, the future belongs to the educated and the entrepreneurial who are a minority of the population. Yes, it means that the rest may find themselves not just without jobs but without the meaning in their lives that jobs and middle-class family existence used to provide. I personally welcome these developments. Science, arts and technology are what makes us into something more than clever animals. However, I am apprehensive about the possibility of a social backlash. As new advanced AIs are being developed in the Silicon Valley, a man who believes that the world was created in six days has won the GOP primary in Alabama. We are not talking about two cultures anymore but about two worlds. Unfortunately they coexist within the same country.
27
I'm open to the idea that entrepreneurism is a route to prosperity, but these guys, for all their economic wisdom, haven't run the numbers. They confuse the true statement, "anyone can be an entrepreneur" with the untrue "everyone can be an entrepreneur". OK, if we're all VCs and startup bosses, then who works at these companies? Inevitably, there will be only a few VCs and management, and the rest will be salaried or contingent workers with little bargaining power, and consequently, low incomes. I get the hope that we could achieve universal prosperity by spreading ownership widely, but advocates of capitalism have yet to tell us exactly how that would get achieved. Show us the business plan for it, guys. Otherwise, we're not investing in your vision.
6
Henry,
I share your concern that capitalism is, at times, flawed in that it's creating massive income inequality. From what I've learned, as an outsiders outsider growing up in Bay Ridge, Brooklyn, is that the best way to confront this disparity is to join it and try and change it.
The reason I wrote this book is because I would like to see 10,000 new middle class individuals become angel investors and, after 10 years of hard work, perhaps become really rich, powerful and connected. That upward mobility would help them pull up the people behind them.
If these new angels invest 1-5% of their net worth in startups and lose it, the likely worst-case scenario is that they make it back with a balanced portfolio returning 3-7% a year. If they do lose their 1-5% they will have been along for the ride and education of a life time, investing in the greatest companies in Silicon Valley --- which pays a HUGE dividend as well in terms of network and education.
Thanks again for considering what I'm working on! Best @jason calacanis
No. Middle class investors should NEVER invest in start-ups.
That's what venture Capitalism is for.
11
This is a terrible idea and would only enrich Mr. Calacanis at the expense of the investors. Doesn't he remind you of someone? AKA Trump?
14
Actually Mr Manjoo's article is not ridiculous. Rather, it's a sly and sobering reminder of the dotcom meltdown that began the 21st century. Was that only 17 years ago?
10
"Apple, Amazon, Google, Facebook and Microsoft, which employ a select and privileged few"
What? Privilege?!
Privilege might once have been defined as getting paid for painting cars badly at GM. It might once have been defined as getting paid to sell IBM products and shut out everybody else.
People who work for tech companies, especially the real techies as opposed to the sales droids and publicity mongers, are smart and not the least bit undeserving of their jobs. And if the "Frightful Five" are taking over it is only because of the sheer ignorance and incompetence of so much of what passes for business in the USA.
8
Calacanis is likey to get rich-he gets more investors in his syndicate from which he gets 20% of the gains and on which he pays captial gains tax rates-not ordinary income tax rates. He no capital at risk for this "carried interest" yet it is treated as if he did. That folks, is the "carried interest loophole" that Trump and the R's apparently do not want to close. Great deal for Calacanis, not so great for his investors. I wonder if the carry is done on a deal by deal basis or if the losses are dedcuted? Either way, this is a no lose proposition for Calacanis, but his "investors" could lose it all. Echoing Jonathan, this is indeed the sound of a bubble straining at its boundaries.
15
This is a ridiculous article encouraging a terrible investment. There is a legitimate problem (a handful of large tech firms are undermining whole industries and possibly democratic institutions), but we shouldn't let our legitimate fear cause us to respond in a way that makes things worse - losing all of our money to low quality, early stage companies that we are unable to properly assess.
31
Chris: in the book I detail how to invest 1-10% of your net worth in startups over 10 years in Silicon Valley. The book details how to do this very slowly and with small bets at first (say $1,000 or $2,500 per deal) before learning enough to go 5-10x on your winners (say $10,000 or $50,000 in a break out deal).
Under no circumstances would I suggest that readers invest all of their money in early stage companies.
I do hope you read the book (or listens to me read it on audible). IF you do and don't love it I will buy the book back!
Also, i have two free podcasts you can listen to to learn how to do this: ANGEL (the podcast) and This Week in Startups. If you listen to 20-30 episodes of the podcast you will understand more about the amazing startup revolution and how to potentially benefit from it.
All the best, @jason calacanis
This is a technology version of reading about Kim Kardashian's latest outfit. We need NYT to do better than this.
44
Author uncloaking here... you're correct, this is the just like reading about Kim Kardashian's latest outfit -- if that outfit created tens of thousands of jobs in under 10 years and 100B+ in economic value for America. :-)
All the best, @jason Calacanis
Ps - please read the book!
This is what a bubble sounds like when it is about to burst.
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