I suppose if you boiled it down, they are selling "5% of planned public offering." So.. costs of selling those shares would be slightly higher. But, they have some presence from people who see the company the roughly same way they do, not as a piece of a portfolio or investment strategy. They get some buzz around the IPO (this article demonstrates that), if vendors are discussing it. It's not like they're giving away the shares.
A part of what's interesting is what's underlying it: an environment where so much capital is in the hands of rich people that there's not much point thinking of 'the public' as a source of capital.
I think income distribution is a lot easier to measure, comprehend and comment on. But wealth disparities are much larger, and I think the societal effect is different. If someone owns $2m in capital but $1.2m is a house and $1.8 is actively invested to yield an income of $75k per annum, is that person rich or are a middle class investor?
There's definitely markets for the middle classes. Apple, Walmart, etc are the biggest companies in the world and their business is selling stuff to us. But if your business is selling financial services or you want to raise capital, the middle class is irrelevant. It's not about risk or sophistication of the investor, it's about them not really having capital. I reckon that's significant. WHo has the capital matters.
Money gets even more theoretical when talking about capital. When you earn an income and use it to buy goods as service, the metaphor-made-real of money is relatively straightforward. I work for a company that makes medicines. They may me a salary which I can exchange for stuff other companies make. With capital, the link to physical things is broken. It becomes more of an abstract right^ to things. The right to establish a company. The right to future revenues from some venture. Rent…
^"right" isn't exactly it. It's somewhere in the ability/resource/right realm.
> and $1.8 is actively invested to yield an income of $75k per annum
I would say "never actually having to work again if you don't want to" is a fairly strong indicator for being "rich" in the sense that most people understand it.
Wealth is best measured in terms of age. A wealthy 25 year old with only 3 million in the bank is in a very different situation than a 70 year old with 3 million. The difference is 'earning potential' over their lifetime.
By, only I mean they don't also own a home and unlike most 60 year olds they don't have a pension or Social Security income etc.
3M is enough to live a 100k lifestyle for the rest of your life, but that’s considered ‘normal’ by HN standards even if it’s far better than most of humanity. But, my point is a young person with 3M is far richer than a retiree with that same income is they can also be self-sufficient (hava a job or just do things to save money) and let that money snowball. A retiree needs to insure a steady income without a job but a 25 year old can invest for the long term and take risks.
PS: Put another way, no pension, social security, or home equity but 100k is doing well by most standards at 25, but not so hot at 60.
In so far as being given the chance to participate in an IPO is typically a lucrative opportunity IPO allocations are treated as rewards to be doled out. Left to their own devices investment companies reward their highest value customers by setting minimum account value in the six figures to participate. Someone with a $1.8 million investment account could probably easily get an IPO allocation if they wanted one. Etsy offering 5% of the shares to their sellers is just putting a different emphasis on who they want to reward. I don't think you can draw a larger conclusion about wealth distribution as a whole from it.
This is more common than you think, especially during the dot-com 1.0 heydays. It is usually administered as something called a Directed Share Program to rewards friends, family, vendors, etc.
As others have mentioned, Lending Club has done this in the form of opening DSP to their Lenders.
This is more than just a nice gesture, it's also a very shrewd long-term business strategy.
The majority of the value in the Etsy platform comes from their vendors and community. If they didn't have vendors then the site wouldn't be so successful. Etsy are ensuring that their vendors are invested in the site with them and less likely to jump ship to a competing platform.
Etsy sellers are also less likely to try and push out the founders than Wall Street. They probably will not go to the shareholders meetings at all, and if they do they will not be pushing for short term profits that would hurt Etsy in the long run.
If you're using Firefox you can install an addon named "RefControl" and configure it to send a fake google.com referrer when visiting wsj.com or any of the other popular paywalled sites. This gets around the paywall pretty effectively.
I use a similar add on, but I've never gotten it to work. I didn't try too hard though, since archive.today is effective and has the nice side benefit of being linkable.
Work, they also block my online friends blog about living on a canadian sailboat*. Of course I can get on facebook and youtube and hell even reddit/somethingawful so for the life of me I cannot work out why tuglife.ca would be so terrifying.
The adblockers are mostly comprised of people who simply don't want to look at ads and aren't seeking to pay out of pocket, either. There is a vocal minority that speaks about privacy and (possibly a separate group) claims that they'd rather pay for content but the majority just plain doesn't want to be bothered with looking at ads. Maybe the next generation is ad blind. I doubt they're concerned with malware given what they'd download from The Pirate Bay. My guess: they just feel entitled or don't feel like their contribution (click/view-wise) impacts the publisher's bottom line. On the whole, not any more annoying than people who disable JavaScript.
I have high hopes that the Internet will find a way to finance itself that isn't based on ads/surveillance. I'm thinking of launching a platform to monetize sites.
I would like to think that someone will find the happy medium between target advertising and privacy, but I don't hold out much hope. When ad companies get sold and acquired (like Flurry for $300m to Yahoo!) the buyer is not buying their ability to serve an ad.
Has anything like this been done before? It's a curious concept. It's certainly costing the company ~nothing (legal, financial, broker fees aside) but it's an incredible gesture to the community that made all this possible. Very clever - and touching!
Yes, it has been done before. I have worked on several IPOs, and it's common to have a very small tranche for employees, various stakeholders, and "friends". Hence, its not really "news". It's my understanding that this article is just marketing. Etsy wants to come across to sellers as "we care", after a series of quarrels with them.
I was at a creative agency in 2005 which was doing work for FastClick. We had the opportunity to buy "friends and family" shares in their IPO. A number of us did.
I love this. but it does cost the company in terms of shares available to their underwriters to sell. and when you assume there will be easy first day gains to be had by getting the shares at the offering price that everyone wants a piece of, I'm sure it took a lot of convincing of their investors & bankers to do this.
Selling $2,500 worth of shares to their vendors is exactly the same as selling it bankers who will flip it to the public. They get $2,500 no matter what.
My wife is an Etsy Vendor. This is the first we heard about this, and we were interested in this IPO. Granted, with our experience with Etsy, this is not surprising.
The Boston Beer Company (which makes Sam Adams) did something similar when they went public in the 90s. They set aside a chunk of their IPO and allowed their customers to buy shares at 25% less than the IPO price:
I just found out about this today, very unfair ,
Does anyone know what the pre IPO price per share was offered at?
Please email me at oneeasyride@aol.com
it's not just limited to Etsy Vendors. there's been a link for anyone to participate in this pre-ipo program in the footer of the Etsy website for weeks now.
It's a shame that they didn't go with LOYAL3, as discussed in the article - it's much less forms and paperwork than Morgan Stanley required.
I suppose if you boiled it down, they are selling "5% of planned public offering." So.. costs of selling those shares would be slightly higher. But, they have some presence from people who see the company the roughly same way they do, not as a piece of a portfolio or investment strategy. They get some buzz around the IPO (this article demonstrates that), if vendors are discussing it. It's not like they're giving away the shares.
A part of what's interesting is what's underlying it: an environment where so much capital is in the hands of rich people that there's not much point thinking of 'the public' as a source of capital.
I think income distribution is a lot easier to measure, comprehend and comment on. But wealth disparities are much larger, and I think the societal effect is different. If someone owns $2m in capital but $1.2m is a house and $1.8 is actively invested to yield an income of $75k per annum, is that person rich or are a middle class investor?
There's definitely markets for the middle classes. Apple, Walmart, etc are the biggest companies in the world and their business is selling stuff to us. But if your business is selling financial services or you want to raise capital, the middle class is irrelevant. It's not about risk or sophistication of the investor, it's about them not really having capital. I reckon that's significant. WHo has the capital matters.
Money gets even more theoretical when talking about capital. When you earn an income and use it to buy goods as service, the metaphor-made-real of money is relatively straightforward. I work for a company that makes medicines. They may me a salary which I can exchange for stuff other companies make. With capital, the link to physical things is broken. It becomes more of an abstract right^ to things. The right to establish a company. The right to future revenues from some venture. Rent…
^"right" isn't exactly it. It's somewhere in the ability/resource/right realm.