Trending out of cities

For many decades, we’ve seen a migration to cities and urban areas. The rising cost of living in cities such as San Francisco and New York started a trend of people moving out of the cities in search for cheaper alternatives. Alongside the advent of remote work tools such as Zoom, we’ve seen people more and more moving out of big cities.

The big question is whether COVID-19 is going to accelerate this trend. Millennials flocked to cities in search of talent, excitement, and opportunity. Now with the everyone seemingly realizing that working remotely may be seamless, will this be the end of the mass migration to cities?

My hunch is that we’ll see a decline in growth of cities and the trends of moving to the suburbs/lower cost cities will continue. It may not be as drastic as people make it seem. For every person touting on Twitter that they are moving their family out of SF/NY along with all their friends, there’s thousands who are staying put, myself included.

With that said, it’s hard to ignore the trends among the younger generation.

Going to the park with your friends has turned into logging on and playing video games with friends.

Meeting other singles at a bar has turned into dating via apps.

Social gatherings have gone digital in recent times. Nothing replaces in person get togethers, but Zoom parties are the next best thing.

Technology has created connectivity once not possible. Given all the availability of all these options that were once unavailable, I don’t see what’s stopping someone in their 20s perhaps deciding to live in a lower cost suburb. Someone can be making a San Francisco salary living on a gorgeous house by the beach/lake for much cheaper outside of major cities. What’s stopping them?

Of course, there’s the other side of the equation. Nothing replaces the excitement of a city like New York and to a lesser extent, San Francisco. Sophia and I are city people. I grew up in San Francisco and I’d like to raise my family in San Francisco. Whether that’s going to be possible is yet to be seen, but I’m not on the bandwagon to abandon ship just yet.

Dead equity

Someone sent me this a16z article by Scott Kupor titled The Lack of Options for (Startup Employees’) Options. Scott makes a lot of good points.

Simple solutions to complex problems don’t work. They have unintended consequences that sometimes harm the very principles people are trying to protect in the first place. And other solutions (like handcuffing employees for the long term) may result in other problems, such as adverse selection; there’s still a balance that needs to be struck with supporting mobility of employees while also building value for the long term. The bottom line is that if companies are going to continue to stay private longer, we need to fundamentally re-think the stock option compensation model. We need better, careful, and more thoughtful solutions.

The big argument that Scott makes and that I agree with is that there’s no simple solution to the complex problem of stock options.

Many employees thinks that the solution is to extend the exercise window for all employees past the typical 90 day window. While this may help the departing employee by preventing them from losing their options, it creates the “dead equity” problem. That is, the employees who are at the company building it and getting it to the exit are the ones technically paying for the “dead equity” of the departing employees.

My biggest issue with Scott’s argument is that it’s not always “dead equity”. Companies offer equity compensation to employees so they can share in the growth of the company and to make up for the lack of cash compensation that startups can offer.

An employee who works at a startup, helps build it, and decides to take a job elsewhere should not automatically be deemed to own “dead equity”. In fact, it’s part of their compensation package and their vested options are and should be theirs to keep.

The fundamental problem here is education around an employee’s equity. Employees need to understand that stock options are an investment and likely a very risky one. Options are a right to invest in a company at a certain price for the future upside. It is part of your compensation package, albeit one that is a long-term investment.

Employers need to be helping their employees become shareholders in the company and exercise their right to participate in the upside. Unfortunately, the opposite of that is happening right now as employers are using equity the wrong way such as a retention tool or as a bargaining chip. If companies helped employees exercise, we wouldn’t have this discussion with extensions to begin with.

Employers set-up 401Ks so employees can contribute cash to retirement accounts. It’s no secret that tech employees command large salaries even at the entry level. The average tech employee can find a way to exercise their options throughout the course of vesting if they wanted to take that risk. For most employees, it’s not a matter of liquidity when these options vest — they just run into a liquidity issue because they wait the 4+ years until their stock has fully vested and appreciated greatly to decide to exercise.

Employees earn the right to their options by contributing years of service to their company. They should be armed with all tools and help to exercise and become a shareholder prior to becoming “dead equity”.

Time for a personal day

It was a rainy and gloomy Monday in San Francisco and my mood aptly reflected the weather. Mondays are hard for most people, myself included, but the quarantine has made it much harder. I ended the day relatively productive but it was a struggle.

While we’re not forcing anyone to take vacation days at Secfi, we’re all encouraging each other to use vacation days to unplug from our online lives. I think it’s time for me to do just that.

I’ve realized that I have not taken an extended vacation since summer of 2018. It was truly one of the last times I was able to fully unwind for more than a week and travel. I had a trip planned to Korea and Japan for the end of March, but well COVID-19.

Like many out there, I’m feeling tired and on edge being in quarantine. I’ve been fortunate to be able to get out for a bit, but I can’t remember the last day when I had some alone time to be with my own thoughts and enjoy the things that I love doing.

For some much needed time off, I decided to take Friday off. I’m going to start planning some activities for myself. Likely it’ll be a lot of walking, relaxing in parks, reading, and eating takeout.

While travel for vacations may not resume anytime soon, a staycation sounds like exactly what I need to recharge my batteries.

Mother's Day

Mother’s Day has always been an interesting day for me. My mom passed away from cancer when I was 7 years old. That was nearly 23 years ago at this point.

I am always grateful that I was old enough to remember my mom but perhaps still naive enough to understand the impact on my life.

My mom had two loves in her life: her children and shopping. She was tough but always nurturing like a mother should be. And boy did she love Nordstrom.

I sometimes wonder how different my life would have been if I grew up with mom still around. Unfortunately her life was cut too short for me to find out. I do know however that I grew up to be someone that my mom would be proud of and that was because I carried on my mom’s values and lessons throughout my life.

Bull or bear?

I’ve been trying to follow the markets more recently, but work has been taking up a lot of my time. I made sure to carve out some time today to catch-up and do some reading about this recent tech rally and the “bull market”.

It’s been interesting to say the least. I can’t imagine there has been a more confusion market ever in our history. Longest bull market in history runs right into a global pandemic which created the fastest drop in history which led to the fastest rebound in history which led to this bull market.

There’s so many sitting on the sidelines right now kicking themselves for not dabbling more. Myself included. But with record unemployment and the economy still largely shut down, it’s hard not to be a bearish.

Right now, we’re seeing a V-shaped recovery. I don’t know if that turns into a W or not. My bet, like many, is that we’ll likely see another spike in COVID-19 cases/deaths and likely another shutdown to contain everything.

It’ll be an interesting few months ahead.

Life is exponential not linear

I always find it fun to reflect back on my younger days and compare my thought process then and now. The things that were once insurmountable are usually much more trivial at this point in life. This is usually true in most of life as we conquer more in life.

The 3 mile run that once was a struggle is your minimum.

That job title that were once held by people so high up you couldn’t see yourself in is now your job title.

That dollar amount that you once thought was a lot of money is now sitting in your account.

Most of this is obvious as you grow as an individual and with more time have the ability to improve. Most people know they improve with time, but few understand that growth is exponential, not linear. It’s our natural instinct to think things in life are linear. One step at a time to get you one step ahead… not really though.

You run your first mile. Next time maybe you can run a little more than a mile. In reality, your next run may be a little more than a mile at a faster time.

You work hard at a job for a couple years and you get promoted. In reality, you can take steps to accelerate growth such as learning new skills or taking a job at a riskier company.

You save a dollar, your bank account grows a dollar. In reality, you save a dollar, your bank account grows a dollar, and you earn interest on that new dollar.

Life compound interest, the more time you spend developing yourself and your skills, the higher the return down the road in life.

Mid-day resets

I never really had the opportunity to work on my own schedule or time until I left to join the startup world. The old school big firm life always had the expectation that you were in the office or logged on during certain times and available. While my previous employer was relatively flexible in terms of working from home and whatnot, it’s still the old school mentality driving the guilt of taking an afternoon mid-day break.

Ever since I started working at Secfi, I always really enjoyed these mid-day or afternoon breaks. Most times I would run over to the gym and take a quick workout class to get my mind off of work. Nowadays, I’ve been going on runs, doing yoga on my roof, or just sitting outside enjoying the sun.

Of course, this means that I’ll work into the evening and night… sometimes right up to bed time, but this is a trade-off I’ll take any day. On top of all this, I’m much more productive in the evening anyhow. I seem to get most of my work done between 6-9pm.

My mid-day reset gives me some time to break up my workday. When I’m going through a stressful time, it helps calm my mind and reset for the tasks ahead.

How to not hate writing

I hated writing as a kid in school. I was much more of a math and science guy and english was easily my worst subject. Throughout my entire collegiate career, writing an essay was the worst of all homework assignments — I never understood kids who liked writing. It wasn’t until my upper level business classes when I started to somewhat tolerate writing. I always attributed that to the fact that business writing is succinct and to the point rather than the use of fluff words to make things sound better for an essay.

I started this blog last year partly so I could improve my writing and document my thoughts. It’s been a largely mixed bag of pleasure. Some days I feel like writing flows naturally and I’m enjoying putting my thoughts to paper. Other days I feel like I’m just reaching to get to the end of this post so I can move onto my next task. I guess I never really thought too much about what drove those emotions, good or bad, whenever I was writing.

I’m not sure if I should feel embarrassed that I’m finally realizing this now or relieved, but after 30 years of learning about myself, I finally realized the secret formula on how to not hate writing. Write about things you want to write about.

I never truly hated writing. I just hated writing about shit I don’t care about like random essay prompts given to me in high school.

I don’t like business writing because it’s succinct. I like business writing because I like writing about business.

Writing on my blog is a mixed bag of pleasure and pain because I force myself to write about something I have no interest in. It’s those times where I get excited to talk about something where things flow naturally.

With my new found revelation, perhaps I can finally say I truly love writing sooner than later. More on that soon.

To reopen or not

I took a 2 hour nap today at noon. It felt amazing and probably my body telling me that it’s tired. It’s been a long few weeks and I’ve been feeling a lot of fatigue lately. It’s going to be important to listen to my body and get more rest in these next few weeks.

On to the next…

The big debate right now is to reopen the economy or not. Shelter in place orders have gone a long way to helping flatten the curve, but people are getting restless and unemployment is skyrocketing. As much as people don’t want to say it, there will be a point where this cannot go on and we have to get going.

We’re slated for the economy to start opening in waves starting now through the summer. I’m not a medical or pandemic expert, but it appears that this will lead to another wave of outbreaks. The big question is whether this next wave of outbreaks will be an acceptable outbreak or not.

The most important item here is to protect medical and emergency workers. This next outbreak cannot overwhelm our healthcare system. If we can open the economy and not max out our healthcare system, then we should consider opening the economy. Until then, we cannot risk another outbreak where there are not enough hospital beds for patients who need it.

Financial education

We finished our second webinar today and like last time, I had a lot of fun doing it. There’s a lot to improve on and we’ve learned a lot in the last few weeks, but we’ll take it.

The best part about hosting one of these webinars or educational sessions is the feedback we get afterwards. I admit that sometimes living and breathing stock options every day does create a bit of a fatigue. Hearing from a few attendees that they learned a lot has meant a lot to me and validates my work.

At Secfi, we help people achieve their dreams and goals by helping them get the most out of their equity. A lot of what we do is simply just education in regards to their options and how they work. We’re in the business of financial education.

I love learning about companies in the financial education space for the simple fact that the American school system has failed us in providing us with the most basic financial education.

Kids turning 18 can start getting credit cards and ruining their credit scores without know what it means. Adults do not know the basics of filing their taxes and why it matters. The majority of Americans do not a savings. Not everyone needs to be a financial expert, but every American has the right to have basic financial knowledge.

We have seen a new age of finance that have democratized investing to everyone with apps like Robinhood. Challenger banks such as Chime have provided a new age of banking for the under served.

People now have access — the next step is creating better behavior through education. I expect to see some major names start to emerge in this space in the next few years. My prediction is that an app that can “gamify” financial education will start to spread among the younger generation.

When I grew up, we had Pokemon cards and sneakers to show off to our friends. The younger generation live on games like Fortnite and show off in-game purchases. The new cool will be trophies and awards in apps.

The gamification of education, specifically financial education will be a trend that’s going to be fun to watch over the next few years. I hope for the day that my kid is excited to show me his reward for learning compound interest.

Sticking to your guns

We have a team slack channel for those who want to discuss the markets and investing. I feel like every day someone is posting some ridiculous fact about something unprecedented in the market. I’m happy I started nibbling last month and bought some $GOOGL. It’s been a nice return so far.

I can only imagine what it must feel like right now to be that person proclaimed that the world is falling apart and sold everything in March. I already have major FOMO from not buying more earlier this month.

There’s a lot of chart porn out there on Fintwit right now, but my favorite chart of a company in my portfolio is $RH.

Restoration Hardware $RH 1Y Chart

I bought $RH last March when Rob from Koyfin.com sent out a newsletter. I bought in at right around $105 and saw the stock drop to $85 in the following few months. The stock price peaked at about $250 in mid-February. After the crash, there’s been a great rally and I’m back to a nice return on my one-year position.

Of course, we all wish we could’ve bought at $85 and sold at $250 but the markets don’t work that way. Investing is an emotional rollercoaster. There’s lots of ups and lots of downs, but you need to stick to your guns during the good and bad.

Work from home burnout

I’ve been speaking to a lot of friends and clients lately and it appears that people starting to hit their edge with working from home. Weekends and weekdays are effectively blended into one during this quarantine. People get bored and perhaps cope with the boredom by doing more work. While I started the quarantine in good spirits, this work from home burnout has definitely set in.

Most of us are hitting that 6+ week mark of quarantine and the reality is that this isn’t likely to be over anytime soon. The planned vacations, social events, sports, etc. that I once lived for are now gone for the foreseeable future. It’s hard to get going as there’s just not a whole lot to look forward to.

In order to get through this with my sanity, I’m going to start implementing some more changes around work hours and weekend routines.

First, I need to further separate work and leisure. I have gotten bad habits of working later into the evening as I tend to hit a real productive streak right around 6pm. I need to get back to normalizing work hours better and cutting off when it’s time. There’s no office to separate work/life right now so it’s going to be a difficult initiative.

Secondly, I want to take advantage of weekends and do more. I realize that we may not have restaurants, bars, and other social activities, but we can still go on drives and do other safer outdoor activities.

It’s going to be a difficult time ahead, but I realize that we’re in this for the long-haul so I need to control what I can in order to set myself up for success.

Strategies for your options during COVID-19

Next Thursday I’ll be presenting on my second webinar, Navigating Equity Compensation: Strategies for Your Options during COVID-19.

These webinars have been a fun change of pace in my day to day at Secfi. One of the perks of being a small team is that you get to have your hands on a lot of things. I’ve had a lot of fun helping out with the marketing and creation of these webinars. We’ve had some decent early success and gotten a lot of constructive feedback so we’re excited to improve every time we host one.

I’m especially excited for this webinar’s topic. Dealing with the global pandemic has been difficult for many in the startup community and we’re hoping we can do our part to help out.

Bouncing back

I listened to Barbara Corcoran on Pardon My Take a couple weekends ago and she mentioned that the secret sauce for those who sell most in real estate are the ones who bounce back the best from the losses.

Of course she is referring solely to sales numbers, but you can probably use this and extrapolate this across nearly everything you do in life cause everything is sales one way or another. Whether you can raising a new round, asking for a raise, or interviewing for a job, you are selling something.

In the sales and business development world, you’re always bound for losses. No one can bat 1.000 no matter how good you or your product you are selling is. The hardest part about business development isn’t getting a deal closed, but taking one on the chin and recovering from it.

It sounds easier and we all want to think we’re resilient but tough situations happen all the time. We all take L’s. At Secfi, we’ve had to deal with a lot over the last few months. We’ve had some great wins but it’s always the losses that keep me up at night.

There’s no silver bullet for this. Everyone copes with it differently, but one thing is obvious: the great ones always bounce back one way or another.

Free oil and trader education

Never thought I’d ever say that I'm happy to have a sunburn but here I am. Did a bit of yoga on my roof this morning as a way to switch up my typical programming of runs and prison workouts. It was the first time I truly enjoyed yoga much although some of that may have been aided by the sun.

On to the next…

Yesterday was a historic day in the annals of the stock market. The price of oil dropped to negative for the first time in history. As commodities require delivery upon settlement of the contract, people were literally paying others to take the oil off their hands.

It was a bizarre day and largely amusing for most people. The fintech memes delivered and were great as usual. Fintwit was live and well. Of course this was probably not as amusing to oil and gas traders as well as those who acted on tips to buy oil last month during the Saudi/Russian oil war.

I recall a few friends talking about “buying the dip” on oil recently. Needless to say, I haven’t heard much from them in regards to their investments in oil. That also reminds me, it’s been awhile since I heard my friends talk about all the money they’ve made on shorting the market also.

Apps like Robinhood that allow pretty much anyone to start trading is a blessing and a curse for most people. I love the idea of democratizing access and allowing everyone to learn and start investing. On the flip side, this is real money at stake and people make really stupid and piss poor decisions without really knowing what they are doing.

I’m not sure what my solution for this is. By no means am I advocating that people need licenses to trade stock or invest and perhaps individuals need to get burned a couple times to truly learn. It’s almost a rite of passage in the world of investing.

Paycheck Protection Program

I helped my Dad apply for the Paycheck Protection Program over the weekend. He runs a travel agency. It’s a dying business but he’s had a lot of loyal customer for years now so he’s been somewhat surviving over the last few years until now. Unfortunately, I think this might be the death sentence for his company as we know it. It’s sad, but at the same time he’s had a very good run being in business for almost 30 years. It’s about time he starts to retire and enjoy life.

I advised him to apply for the PPP to help cover payroll costs for his two employees for the next couple months. He had a lot of trouble with the application. First, he went to Bank of America who told him that the only way to apply was to do it online. Then the application online was very difficult. He’s not the most technologically gifted person but he does work on computers every day. I decided to take over to help him out.

I am a native English speaker, CPA, and I’ve run a couple small businesses on the side before and this application was pretty darn confusing. I don’t see how an average small business owner can fill this out accurately and quickly.

Probably the most alarming part of this was that there was not a standard set of instructions to help you fill out the form. You literally get instructions for the most menial things such as how to clean your water bottle after you buy it. How can an application to get thousands of dollars online not come with a set of instructions to help you fill out the form?

With nearly every small business likely applying for this loan, I can only imagine what a mess this process is for all these banks. I have no idea on the status of my Dad’s application and I’d imagine we won’t know for awhile as banks figure out how to process everything. Imagine how many small businesses are struggling right now to pay employees as they await help from the government only to be held up by this awful system. What a wreck.

Zoom presentations

I hosted my first webinar for Secfi on Friday. Producing regularly scheduled webinars has been on our list for many months so we’re happy to finally have kicked it off.

I’ve been fortunate to have a lot of experience with presentations in my short career so I don’t typically get too nervous anymore speaking in front of a crowd. However, the webinar was almost an entirely different animal and my nerves were definitely kicking in a bit before hand.

There is just something different in not having people in front of you to interact with or ask questions. There’s no ability to really read a room or try to use humor to lighten up the situation. There’s also something inherently weirder in speaking to my computer rather than directly to someone’s face.

On top of all this, there’s just a lot of to prep for in regards to technology in these presentations. Lighting, microphones, and backdrops all need to be considered. While the Zoom virtual background feature is nice, it’s far from perfect and creates for awkward viewing at times.

We had great reception and there were not many technological issues so it’s hard to really complain especially in times like these. But much like video conferencing in general, there’s just so much more left to be desired with Zoom’s webinar function.

I’m really excited for the evolution of video conferencing. It’s going to be great to see entrepreneurs build great software and hardware to make our remote work lives easier.

Time to build

Marc Andreesen wrote an essay and it’s a great read. You should read IT’S TIME TO BUILD if you’re looking for motivation to start building something or just need an extra kick to continue building something. I won’t ruin too much of the essay, but the premise is simple: we’re missing a lot of things in the U.S. and the world and it’s time to build them.

I’m taking most of today off from work to relax and recharge, but this gave me a lot of motivation to get back to it tomorrow and continue building Secfi.

Confused and paper rich

I wrote about Post CoVid-19: The new normal about a month ago in mid-March followed by a couple posts on some predictions for the new normal. I read an article on CNN titled America’s ‘new normal’ will be anything but ordinary. People who think things will return to as they were before coronavirus need to reset their expectations. This will be a long road to recovery and even when a vaccine is available, we’ll probably still be in masks every winter and bumping elbows instead of shaking hands.

On to the next…

Despite being in the business of helping startup employees and founders with their stock options, I really don’t write about stock options much on this blog. I suspect that it’s because I spend my day job writing and talking about stock options all day, and by the time I get to writing here all I want to do is talk about something else.

It’s always funny when I try to explain to people in the startup world what I do. I’ve been having a lot of Zoom happy hours with Sophia’s friends and the conversation inevitable comes up. I’ve gotten my general 1000 feet in the sky pitch down, but I always run into trouble when people start asking questions and get curious. What’s so complicated about stock options that a company like yours needs to exist?

Well…. stock options are inherently very complicated. They touch on pretty much every aspect of finance: investing, taxes, valuation, portfolio management, etc. Experts in each one of these topics alone get paid a lot of money to specialize in these fields. Combine them together into one great financial product called a stock option and you have a perfect storm.

Did I also mention that information isn’t readily available in the private space to make informed decisions? Yes, companies seldom provide financials, data, or offering any help whatsoever so their employees can make the best decision.

If my friends haven’t hung up on me yet by the time I get done explaining the above, they usually change the subject really quickly.

A client said to me the other day that she’s sick of of stock options cause they’re confusing as all hell and at the end of the day it’s paper money. I laughed and told her that she’s right, but it’s paper money that may be worth a large chunk of your net worth one day.

Corona layoffs or trimming the fat?

I was working out in the park by my house today. To my 4 o’clock was a couple doing some kind of tantric yoga thing. To my 12 was a group of kids doing a social distance toke session. And to my 8 was a social distance wine lunch. Got to love San Francisco.

On to the next…

I saw this tweet today by Justin Kan and it resonated with me.

If you can avoid doing layoffs right now, you should. It is the patriotic and prosocial thing to do to minimize mass unemployment at this time.

— Justin Kan (@justinkan) April 15, 2020

To no one’s surprise, there’s been a lot of layoffs in the startup community lately. I understand a lot of businesses need to make the decision in order to survive and make it through this. That’s an unfortunate reality of this pandemic. They’ll need to do everything they can to survive and it’s unfortunately understandable.

Of particular interest to me has been the businesses that seemingly are doing well or okay during these times, but are taking advantage of the coronavirus as an excuse to layoff staff. In my eyes, this is complete bullshit.

As some background here, I sit on the pro-business side of the aisle and likely am more understanding to tough business decisions than most. Sometimes companies need to make tough decisions to do what’s best for the company. Firing, lay-offs, and cost cutting sometimes have to happen in business.

With that said, using a global pandemic as an excuse to layoff staff is disingenuous at best.

Companies have the right to rightsize their staff. Employees deserve the right to transparency and truth. Don’t hide under the veil of coronavirus as the primary driver. Be honest and tell them why they are being laid off. The truth hurts, but they will be better off afterwards.