• Tag Archives Silicon Valley
  • Busted Billion-Dollar-Baby Fraud Finds Another Greater Fool – Softbank Lends Theranos $100 Million!

    Japan’s Softbank Group is coming to the rescue of yet another embattled Silicon Valley ‘unicorn’. The Wall Street Journal reported Saturday that Fortress Capital, the publicly traded private-equity firm that agreed to sell itself to the Japanese conglomerate earlier this year, has extended a $100 million loan to Theranos, which is still facing multiple lawsuits and investigations for misleading investors, business partners and clients about the efficacy of its core technology.
    The loan, which will avert a bankruptcy filing for the former poster-child of tech-centric “disruption”, which was once one of Silicon Valley’s most valuable private companies with a valuation of $10 billion. Theranos famously marketed itself to investors by playing up its core innovation: A diagnostic machine that could supposedly run tests for hundreds of medical conditions with only a single drop of blood.
    The company’s founder, Elizabeth Holmes, honed the perfect marketing pitch: A Stanford dropout, she claimed she was inspired to create the ‘nanotainer’ fingerstick that would become Theranos’s signature product by her irrational fear of needles.

    This post was published at Zero Hedge on Dec 24, 2017.


  • What Bubble? Silicon Valley Homes Going For Nearly $2 Million Over Asking Price

    If you’re still holding out hope that the following chart is anything but another massive housing bubble in the making then you should probably ignore the disturbing evidence to the contrary that we’re about to present below…
    ***
    Back in 2005/2006, one of the key signs that housing markets across the country were overheating was the number of houses that, thanks to soaring demand from speculators, were suddenly selling at prices well in excess of their asking price. That said, as a local CBS affiliate in San Francisco points out, the premiums of 2005/2006 pale in comparison to homes in Silicon Valley today that are selling for as much as $1-$2 million over their original asking prices.
    But if you thought they area housing market couldn’t get any more outrageous, consider a home on Colorado Avenue in Palo Alto.
    It listed for $2.9 million, but sold for $3.9 million, $1 million over asking price.

    This post was published at Zero Hedge on Dec 20, 2017.


  • The Most Expensive Housing Zip Codes in the US

    Hang on to your hat.
    The winner is Atherton, a small town in Silicon Valley with just one zip code, with a median sale price (not asking price) of $4.95 million in 2017. But that’s down 8.8% from the even juicier $5.5 million in 2016.
    It beat Sagaponack’s 11962 zip code. The community in the Hamptons had reigned supreme in the prior two years. But in 2017, it dropped to 15th place ‘mainly due to more sales recorded at lower price points, which slashed its median sale price in half,’ to just $2.82 million, according to Yardi’s PropertyShark. That’s quite a step down from $5.5 million last year.
    In second place is New York City’s 10013 zip code, which covers TriBeCa with its luxury condo developments. It came in with a median sales price of $4.1 million, up 7.7% from last year.
    In third place is 33109 in Fisher Island, ‘a small, secluded island community’ in Miami-Dade County, with a median sales price of $4.05 million, which is up nearly 20% from 2016.

    This post was published at Wolf Street on Dec 19, 2017.


  • The Approaching Silicon Valley Meltdown

    To say that we are living through precarious times seems to be an understatement. Whether one lives in the so moniker’d ‘developed world, emerging, or frontier’ there seems to be one constant currently: No one seems to be able to accurately ponder what tomorrow may bring, whether its political, economical, social, or combination there of.
    The only thing constant right now is one of two things: Either, further instability is on the horizon. Or, complete and utter chaos is already knocking on the door. (See Kim Jong-un or Robert Mugabe for clues.)
    Stability, the once deemed word for progress throughout civilized society now seems, to have devolved to mean, at what point of the instability around them they’re currently coping with. i.e., If you’re currently muddling through economically while dodging being a statistic, as the term goes, that currently means you, or your situation, is currently ‘stable.’
    This now applies to not only people, but business, as well as politics worldwide. If you think I’m exaggerating? Hint: Hollywood. Need I say more?
    However, there has been one outlier, for the most part, which seemed to skirt around all the current chaos, relatively unscathed. That would be Silicon Valley and all its ancillary provinces aka ‘Disruptive Tech.’
    So far the coveted group known collectively as ‘FAANG’ (e.g., Facebook™, Apple™, Amazon™, Netflix™, Google™) seems to have held the ‘barbarians at the gates’ known as investors relatively at bay, or ‘stable’ in their positions, if you will. What has been, anything but, is their cohort of IPO brethren that were supposed to have joined them.

    This post was published at Zero Hedge on Nov 20, 2017.


  • Is Peter Thiel Trying To Break Up Google? This $300,000 Political Contribution Seems To Imply He Is…

    Peter Thiel, the billionaire venture capitalist who backed President Trump (just before giving his presidency a “50% chance of ending in disaster“) and infamously helped Hulk Hogan bring down Gawker.com, has allegedly set his sights on a new target: Google. According to The Mercury News, suspicions about Thiel’s next pet project were raised after he recently contributed $300,000 to Missouri Attorney General Josh Hawley just before he launched an antitrust lawsuit against the alleged search monopoly.
    So far, high-profile Silicon Valley venture capitalist and PayPal co-founder Peter Thiel isn’t saying publicly why he gave hundreds of thousands of dollars to the campaign of a state attorney general who’s just launched an antitrust probe of Google. But it’s not the first time Thiel has handed cash to an AG who went after Google over monopoly concerns.
    Missouri Attorney General Josh Hawley announced Nov. 13 that his office was investigating Google to see if the Mountain View tech giant had violated the state’s antitrust and consumer-protection laws. The Missouri attorney general said he had issued an investigative subpoena to Google. He’s looking at the firm’s handling of users’ personal data, along with claims that it misappropriated content from rivals and pushed down competitors’ websites in search results.

    This post was published at Zero Hedge on Nov 16, 2017.


  • Silicon Valley Exec Has Created A New Religion That Will Worship A ‘Godhead’ Based On Artificial Intelligence

    I know that the headline sounds absolutely crazy, but this is actually a true story. A Silicon Valley executive named Anthony Levandowski has already filed paperwork with the IRS for the nonprofit corporation that is going to run this new religion. Officially, this new faith will be known as ‘Way Of The Future’, and you can visit the official website right here. Of course nutjobs are creating ‘new religions’ all the time, but in this case Levandowski is a very highly respected tech executive, and his new religion is even getting coverage from Wired magazine…
    The new religion of artificial intelligence is called Way of the Future. It represents an unlikely next act for the Silicon Valley robotics wunderkind at the center of a high-stakes legal battle between Uber and Waymo, Alphabet’s autonomous-vehicle company. Papers filed with the Internal Revenue Service in May name Levandowski as the leader (or ‘Dean’) of the new religion, as well as CEO of the nonprofit corporation formed to run it.
    So what will adherents of this new faith actually believe?
    To me, it sounds like a weird mix of atheism and radical transhumanism. The following comes from Way of the Future’s official website…
    We believe in science (the universe came into existence 13.7 billion years ago and if you can’t re-create/test something it doesn’t exist). There is no such thing as ‘supernatural’ powers. Extraordinary claims require extraordinary evidence.

    This post was published at The Economic Collapse Blog on November 16th, 2017.


  • What Silicon Valley Home Prices Have Done since the Prior Peak

    But household incomes got left behind.
    Ten years have passed since the peak of Housing Bubble 1 in Silicon Valley. In 2007, home prices were crazy. After they began diving, accompanied by a deafening layoff boom, everyone called what had happened before a ‘bubble.’ But in early 2010, the layoff boom flipped around and turned into a dizzying hiring boom, and home prices bottomed out in late 2011, as global liquidity was once again washing ashore.
    Now, ten years later, the hiring boom that has created hundreds of thousands of jobs in the Bay Area is stalling. And home prices?
    Let’s start with the most expensive Bay Area town first: Atherton, with a population of less than 8,000. Only a few homes are sold every month. Currently, 25 homes are listed for sale on Zillow, ranging in asking price from $2.8 million to $22.8 million. Some of them have been on the market for well over a year (including 945 days). With few sales every month, the median price can be a very jumpy.
    For example, Forbes, when it called Atherton the most expensive zip code in 2015, figured that the median home price was $10.6 million.
    In its new report on the 10-year changes in property prices and household incomes in Silicon Valley, PropertyShark placed the peak of Atherton’s Housing Bubble 1 in 2008. Prices ‘took a tumble in 2009 and 2010, only to rebound and grow even faster over the following years,’ it said. After perhaps a few low-brow homes sold, the median price was at $5.1 million (as of August 31), up 45% from the prior peak.

    This post was published at Wolf Street on Nov 8, 2017.


  • “Homeless Explosion”: Tech Boom, Surging Rents Creating Homeless Crisis On America’s West Coast

    America’s liberal left coast states count themselves among the most adamant supporters of controversial pieces of legislation intended to support low-income families. From their stunningly high income tax rates to their $15 minimum wage mandates, states like California and Washington are leading the charge on implementing Bernie’s socialist agenda.
    Of course, some of the biggest advocates of that socialist agenda are the billionaire leaders of Silicon Valley’s largest tech companies…which is precisely why it’s so ironic that it’s the “tech boom” being enjoyed by those billionaires that has resulted in surging housing prices and what SFGate described earlier today as a “homeless explosion pushing West Coast cities to the brink.”
    Housing prices are soaring here thanks to the tech industry, but the boom comes with a consequence: A surge in homelessness marked by 400 unauthorized tent camps in parks, under bridges, on freeway medians and along busy sidewalks. The liberal city is trying to figure out what to do.
    “I’ve got economically zero unemployment in my city, and I’ve got thousands of homeless people that actually are working and just can’t afford housing,” said Seattle City Councilman Mike O’Brien. “There’s nowhere for these folks to move to.”

    This post was published at Zero Hedge on Nov 6, 2017.


  • ‘Office-Using Employment’ in San Francisco and Silicon Valley Gets Hit

    I am going to melt your brain today. Vanguard has an ETF that allows you to get long world stock markets. The ticker: VT.
    This raises all sorts of interesting philosophical questions. You see, if you are long every stock in the world, you are basically long global economic growth. Which is weird! Who has an opinion on global economic growth?
    ***
    Well, if you got long the human race circa 1880 or so, you have done pretty well. It is hard work being short human ingenuity. But there have been some big drawdowns along the way! We had a huge depression in the 30s and a die-off in the 40s. Global stock markets have certainly not gone up in a straight line – although they are today.

    This post was published at Mauldin Economics on OCTOBER 26, 2017.


  • Falling Interest Rates

    Amassing Unproductive Debt
    Last week, we discussed the marginal productivity of debt. This is how much each newly-borrowed dollar adds to GDP. And ever since the interest rate began its falling trend in 1981, marginal productivity of debt has tightly correlated with interest. The lower the interest rate, the less productive additional borrowing has in fact become.
    Let’s look at a recent event: the Ikea acquisition of TaskRabbit. You might wonder, why does a home goods company need to own a freelance labor company? Superficially, it seems to makes sense. Ikea products notoriously come in flat packs, but consumers don’t want to fuss with all the little parts. They just want finished furniture. Ikea has been using TaskRabbit to hire people to assemble it in their homes.
    Isn’t this like that caricature of the billionaire who buys, say, the Planters Peanut company because he likes to eat salted nuts? Ikea could be a customer of TaskRabbit, hiring its temporary workers as needed, without owning the company. In fact, it had been doing that for years.
    The acquisition price was not disclosed, however, we can guess that it was high. TaskRabbit was a Silicon Valley darling with a bright future. Its value proposition is right for this economy. It had raised $50 million, presumably at rich valuation multiples.

    This post was published at Acting-Man on October 25, 2017.


  • Falling Interest

    Last week, we discussed the marginal productivity of debt. This is how much each newly-borrowed dollar adds to GDP. And ever since the interest rate began its falling trend in 1981, marginal productivity of debt has tightly correlated with interest. The lower the interest rate, the less productive additional borrowing has in fact become.
    Let’s look at a recent event: the Ikea acquisition of TaskRabbit. You might wonder, why does a home goods company need to own a freelance labor company? Superficially, it seems to makes sense. Ikea products notoriously come in flat packs, but consumers don’t want to fuss with all the little parts. They just want finished furniture. Ikea has been using TaskRabbit to hire people to assemble it in their homes.
    Isn’t this like that caricature of the billionaire who buys, say, the Planters Peanut company because he likes to eat salted nuts? Ikea could be a customer of TaskRabbit, hiring its temporary workers as needed, without owning the company. In fact, it had been doing that for years.
    The acquisition price was not disclosed, however, we can guess that it was high. TaskRabbit was a Silicon Valley darling with a bright future. Its value proposition is right for this economy. It had raised $50 million, presumably at rich valuation multiples.
    How much would Ikea be willing to pay? We don’t know how many dollars TaskRabbit was earning, so we will have to pass on total price. However, we can ask how much Ikea would be willing to pay for each dollar of earnings. There are two metrics to help answer this question.
    One, Ikea can compare to the price that its own investors are willing to pay for a dollar of Ikea earnings. If it can buy a dollar of earnings via TaskRabbit for less than the market pays for a dollar of Ikea earnings, then it’s a good deal. Ikea is not publicly traded (but we suspect management has an accurate internal estimate of enterprise value).

    This post was published at GoldSeek on 23 October 2017.


  • Bank Of America: “This Could Send The Nasdaq To 10,000”

    Last weekend, One River’s CIO Eric Peters explained what he thought would be the nightmare scenario for the next Fed chair, who as we now know will either be Jerome Powell or John Taylor, or both (with an outside chance of Yellen remaining in her post). According to the hedge fund CIO, the “worst case scenario” is one in which despite an improving economy, yields simply refuse to go up, leading to the final asset bubble and Fed intervention that “pops” it:
    ‘if we don’t see a sustained cyclical jump in wages, then yields won’t go up. And if yields don’t go up, then the asset price ascent will accelerate,’ continued the strategist. ‘Which will lead us into a 2018 that looks like what we had expected out of 2017; a war against inequality, a battle for Main Street at the expense of Wall Street, an Occupy Silicon Valley movement.’ He paused, flipping through his calendar. “Then you’ll have this nightmare for the next Federal Reserve chief, because they’ll have to pop a bubble.’ While Peters never names names in his pieces, the “strategist” in the weekend letter was BofA’s Michael Hartnett, who several days after Peters penned the above, followed up with some thoughts of his own on precisely this topic, and in a note released this week, described what he believes is the “biggest market risk” for the market. Not surprisingly, it is precisely what Peters was referring to in the above excerpt.

    This post was published at Zero Hedge on Oct 20, 2017.


  • The Bids Are In: Amazon Offered Up To $7 Billion In Tax Breaks ($140k Per Employee) For Second U.S. HQ

    For the past several months, cities all across the country have been competing for the opportunity to host Amazon’s second headquarters which promises $5 billion in capital investment and 50,000 new jobs over a period of time. And now that the bids are in, we have the opportunity to review some of the staggering tax subsidies offered to one of Silicon Valley’s biggest companies.
    New Jersey apparently ‘wins’ the prize for ‘biggest tax cuts’ after offering $7 billion in state and city tax credits, or roughly $140,000 per job promised by Amazon…which should be plenty to once again thrust Bezos to the top of the world’s richest list. Per Reuters:
    New Jersey proposed $7 billion in potential credits against state and city taxes if Amazon locates in Newark and sticks to hiring commitments, according to a Monday news release from the governor’s office.
    Across the Hudson River, New York City made a proposal without incentives special for Amazon, though the state is expected to offer some, a spokesman for the city’s economic development corporation said on Wednesday.
    And across the country, California is offering some $300 million in incentives over several years and other benefits, the governor said in an Oct. 11 letter to Amazon’s Chief Executive Jeff Bezos, published online by the Orange County Register.

    This post was published at Zero Hedge on Oct 19, 2017.


  • This $1.1 Million Silicon Valley Shack Is A Steal, But There’s A Bizarre Catch

    The owner of one tiny, unassuming cottage in Mountain View, California just sold his house for well below the asking price of $1.6 million – but asked the new buyers to agree to one highly unusual condition: They must allow him to continue living there, rent free, for seven years, NBC News reported.
    The Silicon Valley property went for $1.1 million after being on the market for only a few weeks, which is surprising, considering the house – little more than a shotgun shack – hardly has room for multiple tenants.
    The property’s realtor said the home’s elderly former owner will continue living in the home for seven more years ‘rent back at no charge.’
    Realtor Joban Brown said that while the price is not unusual for the hot spot location, the former owner’s request to continue living at the property is ‘not a typical situation.’

    This post was published at Zero Hedge on Oct 15, 2017.


  • Tech Vs. Trump: The Great Battle Of Our Time Has Begun

    Social media helped Donald Trump take the White House. Silicon Valley won’t let it happen again…

    In the 1962 Japanese sci-fi classic King Kong vs Godzilla, the two giant monsters fight to a stalemate atop Mount Fuji. I have been wondering for some time when the two giants of American social media would square up for what promises to be a comparably brutal battle. Finally, it began last month – and where else but on Twitter?

    This post was published at Zero Hedge on Oct 13, 2017.


  • Google ‘Suddenly’ Discovers Questionable “Russia Ads” On YouTube, DoubleClick, Gmail

    Update (Noon ET): In an emailed statement, Google confirmed that it found $100,000 worth of questionable ads and said it’s working with researchers and ‘other companies’ on investigating abuse of its systems.
    Et tu, Google?
    For the first time since Sen. Mark Warner began questioning whether Silicon Valley tech giants have been ‘doing enough’ to root out and expose examples of alleged Russian interference in the November 2016 election, Google has reportedly discovered that Russia-linked operatives deceptively purchased tens of thousands of dollars’ worth of advertising on YouTube, as well as advertising associated with Google search, Gmail and the company’s DoubleClick ad network, according to the Washington Post. Google operates the largest advertising platform in the world, and YouTube is the world’s largest video-advertising platform.
    According to WaPo, Google’s discovery is ‘significant’ because the advertisements in question do not appear to be from the same Kremlin-affiliated troll farm that bought ads on Facebook, which the paper says suggests that Kremlin disinformation efforts were much broader than lawmakers and Silicon Valley had believed.

    This post was published at Zero Hedge on Oct 9, 2017.


  • Silicon Valley Snake Oil: It’s Passed Its ‘Sell By Date’

    ‘It’s different this time!’ One of the greatest examples of Silicon Valley ‘snake oil’ ever devised, embraced, and consumed en masse.
    The problem with ‘snake oil?’ It’s never different. And today’s newest and improved version has passed its expiration date – and is beginning to turn rancid.
    ***
    Remember when ‘unicorns’ were the thing? I know, they still are in a sense. But they are far from the once mythical enablers of turning $Millions into $Billions via IPO’s. As a matter of fact, that process has become so tainted, the only way to keep attention focused that a company may still be worth what investors declare? Is to keep it under the cloak-of-darkness, also known as ‘private.’

    This post was published at Zero Hedge on Sep 24, 2017.


  • Google Also Allowed Advertisers To Buy Racist Keywords Like “Why Do Black People Ruin Neighborhoods”

    Ever since failing miserably in their efforts to appoint Hillary Clinton to her rightful throne in the Oval Office, Silicon Valley’s biggest tech titans have come under relentless attack from disappointed liberal politicians in DC and their primary propaganda distribution platforms, the mainstream media.
    Just last night, on the Rachel Maddow show, Hillary once again blamed Facebook for her 2016 loss and vowed that “we’re going to make Facebook own up to everything” (you can watch the full interview here).
    “We are not going to let the Russians come in and divide us. We’re going to make Facebook own up to everything.”
    The irony, of course, is that perhaps no one contributed more money to getting Hillary elected than the same Facebook execs that are now coming under pressure for ‘colluding with Russia” after admitting that a staggering $50,000 worth of ads may have been bought by potentially Russian-linked accounts on their platform. In fact, Facebook co-founder Dustin Moskovitz even contributed $20 million of his own money to the Democratic efforts in 2016, which we believe is slightly more than $50,000 but we’re not great at math.

    This post was published at Zero Hedge on Sep 15, 2017.


  • The 30 Metros in the US with the Highest and Lowest Incomes

    Breath-taking differences in a vast country.
    The Census Bureau released another data trove today for 2016, based on the American Community Survey. Among many other data points, the survey details median household incomes by geographic location, such as by metro area, county, or state. And they show just how enormous the income differences in the US are from city to city.
    Of the 382 metropolitan statistical areas (MSA) that the US government recognizes, the median income of $110,000 in Silicon Valley is over three times the median income of $35,600 in Laredo, TX.
    These MSAs can be large. For example, the extended San Francisco Bay Area is divided in several metros including the two biggest:
    San Jose-Sunnyvale-Santa Clara, which is the southern portion of Silicon Valley and includes Palo Alto. San Francisco-Oakland-Hayward, which includes five counties (San Francisco, Alameda, Marin, Contra Costa, and San Mateo) that make up the northern part of Silicon Valley, San Francisco, parts of the East Bay, and a part of the North Bay. These two are also the metros that had the highest median household incomes in the US in 2016, of $110,040 and $96,677 respectively.
    ‘Household income’ is income by all household members and from all sources of money, including ‘earnings’ (wages, salaries, and the like) and investment income such as interest, dividends, and rents (#11-#13):

    This post was published at Wolf Street by Wolf Richter ‘ Sep 14, 2017.


  • A Startling Anecdote About Online Ad Spending From Restoration Hardware

    Category 1 storm clouds are gathering over what has traditionally been one of the most lucrative, and perhaps only profitable, sectors to come out of Silicon Valley in decades: online advertising.
    Two months ago, it was P&G which fired the first shot across the “adtech” bow when not long after it announced it was slashing its digital ad spending because it thought it was not getting the kind of return on investment it desired, it made a striking discovery: ‘We didn’t see a reduction in the growth rate.’ CFO Jon Moeller said ‘What that tells me is that that spending that we cut was largely ineffective.’
    Speaking to the WSJ, P&G CEO David Taylor echoed Moeller when he explained that cuts on digital ads are part of a larger strategy to more quickly halt spending on things – from ad campaigns to product development programs – that aren’t working: ‘we got some data that said either it was in a bad place or it was not effective,’ Taylor said of the digital cuts. ‘And we shut it down and said, ‘We’re not going to follow a formula of how much you spend or share of voice. We want every dollar to add value for the consumer or add value for our stakeholders.’
    Previously P&G’s CFO had said that ‘the reduction in marketing that occurred was almost all in the digital space. And what it reflected was a choice to cut spending from a digital standpoint where it was ineffective: where either we were serving bots as opposed to human beings, or where the placement of ads was not facilitating the equity of our brands.”
    Moeller also touched on the two most common complaints about digital advertising scams: advertisers are paying for ads that are viewed and clicked on by bots, not humans; and ads are placed by thousands of automated ‘ad exchanges’ that are out of control of the advertiser on sites and pages that don’t match the advertiser’s products.

    This post was published at Zero Hedge on Sep 11, 2017.