Sequoia Capital has funneled millions of dollars to scores of well-connected entrepreneurs and academics, who invest and look for ideas
Startup investor Jason Calacanis took a $25,000 gamble five years ago on a company almost no one had heard of called UberCab. That investment in what is now Uber Technologies Inc. has ballooned to roughly $110 million.
Mr. Calacanis has never said publicly where the money came from: Sequoia Capital, one of Silicon Valley’s biggest venture-capital firms. Since 2009, Sequoia has funneled millions of dollars to scores of well-connected entrepreneurs, academics and other people known as scouts.
Scouts invest the money in startups and keep their eyes and ears open for ideas that Sequoia might like. Mr. Calacanis introduced Thumbtack Inc.’s founder to a partner at Sequoia, which bought a stake in the local-services website that has since surged 50-fold, research firm VCExperts estimates.
Thumbtack’s founders now steer tips to Sequoia, too. “Sequoia had been great to us, so we were happy to send other high-quality entrepreneurs their way,” says Marco Zappacosta, chief executive of Thumbtack. He has made a few startup investments of his own using Sequoia’s money.
The secretive ecosystem of cash and connections is an unusually powerful example of how venture-capital firms try to gain an edge in the never-ending hunt for the next blockbuster. That search has gotten trickier now that some startups with sky-high valuations are hitting turbulence.
Most of Sequoia’s scouts are entrepreneurs whose startups were funded by the firm. That means they know a lot about what Sequoia is looking for and will recommend the firm to other entrepreneurs.
Forging tight relationships that generate new deals for venture-capital firms is more important than ever as the cost of creating startups falls. The resulting acceleration in company launches has made it harder for venture-capital firms to identify the best opportunities as startups emerge. And competition is growing as new investors who are flush with capital invade the technology world.
Sequoia has been a mainstay of the venture-capital establishment for decades. Based in Menlo Park, Calif., on Sand Hill Road, the Main Street of Silicon Valley’s venture-capital industry, Sequoia made early bets on many of today’s tech titans, including Apple Inc., Google Inc. and Cisco Systems Inc.
It was the only venture firm that backed messaging company WhatsApp, sold to Facebook Inc. last year for $22 billion. Sequoia invested about $60 million for a stake valued at $3.5 billion in the deal. Sequoia now owns stakes in 33 private,venture-capital-backed companies valued at more than $1 billion apiece, more than any other venture-capital firm.
Critics say the televised, speed chess-meets-Mortal Kombat competitions between politicians who want to lead the free world too often turn on stumbles, errors and style over substance. Supporters insist on their value, but want reforms, now more than ever.
Given such high stakes, relatively low expectations and declining overall TV viewership in an era where Twitter is a news source: Why are presidential debates still a thing?
Though they sometimes resemble the reality show “Survivor” more than a serious forum about the nation’s future, presidential debates are one of the top sources of information for voters, according to analyses and TV ratings. They can also determine which candidates can tap the ever-widening pipeline of money in politics – from small donors kicking in a few dollars to wealthy elites deciding which future president, or super PAC, is the best bet for their millions.
Yet the decades-old, gladiators-on-TV format is looking increasingly battle-worn.
Racial animus only tells part of the story. Red-state voters really believe Trump is so rich he can’t be bought
I’ve just returned from three weeks in “red” America.
It was ostensibly a book tour but I wanted to talk with conservative Republicans and Tea Partiers.
I intended to put into practice what I tell my students – that the best way to learn is to talk with people who disagree you. I wanted to learn from red America, and hoped they’d also learn a bit from me (and perhaps also buy my book).
But something odd happened. It turned out that many of the conservative Republicans and Tea Partiers I met agreed with much of what I had to say, and I agreed with them.
For example, most condemned what they called “crony capitalism,” by which they mean big corporations getting sweetheart deals from the government because of lobbying and campaign contributions.
THE question of when interest rates will rise gets frequent attention. Less energy is spent wondering where they will end up in the long-run. But for companies thinking about long-term investment projects, and savers planning for retirement—who will need to contribute more to their pension pots should rates stay low—the second question is at least as important as the first. Two new papers from the Brookings Institution, presented at a conference on October 30th, seek to answer it.
In the long-term, interest rates are beyond the control of central banks like America’s Federal Reserve. If the Fed sets rates too high or too low, inflation will veer off-course. Where rates must eventually settle to keep inflation stable depends on economic circumstances. In particular, it depends on what “real” interest rate—the return to saving, adjusted for inflation—balances the economy’s demand with what it can supply. This elusive sweet spot is called the “equilibrium real rate”.
A long list of factors should, in theory, affect the equilibrium real rate. Top of the list is economic growth. If the economy is expanding quickly, people will expect higher incomes in future, causing them to spend more and save less today. That pushes up the equilibrium real rate. Similarly, weak growth should depress the equilibrium real rate.
But James Hamilton of the University of California at San Diego and three co-authors put this relationship to the test using data stretching back to the 19th century, and argue that it is, in fact, quite weak. For instance, in the early 1980s real rates hovered around 6% while growth was a little over 1%, but in the 1990s both growth and real rates were around 3%.
A whole lot of other stuff matters for the real rate too, such as productivity, demographics, and conditions in financial markets. The authors say that this creates much uncertainty as to where the equilibrium rate is today; their best guess is that it lies somewhere between 0% and 2%. This uncertainty, they argue, should make policy more inert. Often, rate-setters assess whether policy is tight or loose by comparing real interest rates to the equilibrium real rate. But when they do not know what the equilibrium real rate is, their next best option is to make changes in rates respond to the data. Rates should rise when the economy looks too hot, and fall when it looks too cold.
On Friday, the United Nations released a survey of the plans laid out by more than 100 countries to fight climate change. Its report uncovered some interesting trends, including that most countries are planning to invest in renewable energy and that global adaptation efforts focus first and foremost on protecting the food and water supply.
But the survey also affirmed that all this collective global action doesn’t add up to keeping global warming below 2 degrees Celsius (3.6 degrees Fahrenheit), the internationally agreed-upon goal. That brought to mind the great interview with Bill Gates that The Atlantic, one of our Climate Desk partners, recently released. In the above video, Gates points out another key flaw in the international negotiating process: Most countries’ goals focus on the progress to be made by 2030—phase one of the global push to slash greenhouse gas emissions. The United States’ goal, for example, calls for cutting emissions by about a third by that time.
If we’re really serious about keeping global warming in check, Gates argues, we need to start thinking more concretely about what comes after 2030. The Obama administration has promised that the short-term goal will get us on track to cut emissions 80 percent by 2050. But Gates cautions that that second phase will much more difficult to achieve than the first.
Art makes up 2.5 percent of the biggest estates and just 0.6 percent of those who had between $10 million and $20 million. This Picasso fetched more than $95 million in 2006. TIMOTHY A. CLARY/AFP/GETTY IMAGES
The superrich are different from the very, very rich. For one thing, they own more art.
Estate tax data recently released by the Internal Revenue Service show what the wealthiest Americans possess when they die—and where the money goes.
First, a few basics. The returns in the data sample were all filed in 2014, which means they came largely from the estates of people who died in 2013. That year, the tax applied to estates of individuals exceeding $5.25 million, with a top rate of 40 percent, up from 35 percent the year before. Estates can deduct charitable contributions and bequests to surviving spouses, who then pay up when they die.
The most important thing to remember about the estate tax is that almost no one pays it anymore. Congress has bumped up the exemption and indexed it to inflation, ensuring that almost all of the 2.6 million people a year who die in the U.S. never have to worry about the estate tax.
That leaves the very wealthiest sliver of the country. Fewer than 12,000 estate tax returns were filed in 2014, and more than half of those returns didn’t yield any tax for the federal government.
The data break down what assets people hold at death, offering a glimpse into the holdings of the ultrawealthy. They don’t provide much information about all of the ways that wealthy individuals shift assets out of their ownership or all of the convoluted planning maneuvers that can reduce the size of estates before death. People who died with more than $50 million–the top category–were heavily invested in stock and closely held businesses.
Those who were rich enough to file an estate tax return–but not at the very top–relied much more heavily on retirement accounts such as 401(k) plans and on real estate.
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Apple has recorded the biggest annual profit in corporate history, with record sales of the iPhone helping it to make $53.4bn (£35bn) in the last 12 months.
However, Apple warned that growth is likely to slow down significantly in the crucial Christmas period, and sales of the iPad fell by a fifth to their lowest level since 2011.
The company predicted that sales in the current quarter would be between $75.5bn and $77.5bn – as little as 1pc up on the same period last year – partially due to a strong dollar.
Apple has been facing questions about its ability to maintain the tremendous growth that propelled it to a $750bn value this year, as China’s economic troubles raise fears about customer demand for its pricey devices.
Analysts have also suggested that the Apple Watch, the company’s first new product category since Steve Jobs’ death four years’ ago, has got off to a slow start since launching earlier this year.
Nonetheless, Apple said revenue increased by 22pc to $51.5bn in the three months to September 26, the final quarter of its fiscal year. The company sold 48m iPhones, an 22pc increase, during the quarter, which included the first two days that its new 6s and 6s Plus models went on sale.
Android users are switching to the iPhone at a record rate, the company said.