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Wednesday, May 31, 2023

FirstFT: Silicon Valley staff offload start-up shares

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Silicon Valley workers are scrambling to offload stakes in tech start-ups through private share sales after a wave of job cuts, compounding a collapse in valuations.

Employees of embattled tech groups are flooding secondary markets — where stakeholders in a private company sell shares to third parties — as the industry’s former darlings like Klarna and Stripe have been forced into aggressive cost-cutting measures, according to brokers and investors.

For many workers who have lost their jobs, their shares vest within 60 days, forcing them to sell during the worst downturn in a decade. Some companies are offering an extension on this timeframe, according to brokers, although some sellers want to get out of their holdings over fears the market rout will get worse next year.

“We are seeing an inflow of people being laid off trying to sell their shares,” said Greg Martin, managing director of Rainmaker Securities, which facilitates private securities transactions. “These companies have built their headcounts up so much, so there are a lot of people highly motivated to get a sale done.”

Martin added: “In general, we are seeing a 30 to 80 per cent decline in price from a year ago.”

  • Opinion: Silicon Valley once set the standard for corporate success with a simple strategy: innovate rapidly and splash out to woo customers. But those days are over, writes Brooke Masters, arguing it is time to unlearn the lessons of Big Tech.

1. ‘Moron premium’ looms over the UK economy The damaging effects of Liz Truss’s radical economic experiment are still being felt in the UK, more than two months after she resigned as prime minister. While Rishi Sunak has reaped a “dullness dividend” by adopting a more orthodox economic stance on the public finances, experts say the mortgage market — with UK homeowners facing more expensive deals following Truss’s premiership — will take longer to fix.

  • Further reading: UK shoppers rush to buy energy-efficient appliances, such as air fryers and heat pump tumble dryers, to keep bills down.

Line chart of Change in yield on 10-year government bonds, from July 1 2022 (% points)  showing The 'moron' premium has not disappeared completely

2. UK unions threaten legal action over anti-strike laws Paul Nowak, the incoming head of the UK’s Trades Union Congress, has warned that unions will take the government to court if it tries to ram through legislation to curb the right to strike instead of negotiating on pay with public sector workers.

3. US economy can still pull off ‘soft landing’, insists adviser Heather Boushey, a member of the White House’s Council of Economic Advisers, said the US economy could still nail a “soft landing” as the large-scale government investments enacted by Joe Biden help buoy the labour market in the months and years ahead.

What else we’re reading

China begins to reopen after three years of isolation While China is being hit by an unprecedented wave of Covid-19 cases, the world’s second-largest economy is starting to show signs of coming back to life, and an outgoing tourism boom is predicted. However, the prospect of an influx of Chinese travellers potentially carrying the virus — as well as possible future variants — has already led countries including the US, Italy, Japan and India to institute testing requirements for Chinese arrivals.

  • First person: Having dodged the virus for nearly three years, it was ironically in Beijing — Xi Jinping’s zero-Covid citadel — that it finally caught up with me, the FT’s Asia news editor Joe Leahy writes.

An officer collects passports for renewal at a police station in Beijing yesterday
An officer collects passports for renewal at a police station in Beijing yesterday © Ng Han Guan/AP

Home Depot chief: ‘I’m worried about capitalism’ Bernie Marcus, the 93-year-old co-founder of DIY chain Home Depot, has a long list of potential obstacles to entrepreneurial success in the US today. It includes human resources executives, government bureaucrats, regulators, socialists, Harvard graduates, Harvard MBAs, lawyers, accountants, Joe Biden, the media and “the woke people”.

Race is on to develop new generation of weight-loss drugs Changing attitudes, surging demand and tight supply for a new class of obesity drugs has sparked a race to develop medications for a market projected to be worth $50bn in annual revenues by the end of the decade. More than four in 10 American adults are clinically obese, according to the Centers for Disease Control and Prevention. Is a game-changer on the way?

Most popular FT world news story: US scientists make fusion energy breakthrough

As the year reaches its close, we are sharing some of our most-read stories across different sections of the FT. Today we highlight our most read world news story.

Earlier this month, US government scientists made a breakthrough in the pursuit of limitless, zero-carbon power by achieving a net energy gain in a fusion reaction for the first time. The FT’s Tom Wilson was first to break the news.

Thanks to readers who took yesterday’s poll. Fifty-nine per cent of respondents said they feel they are more productive at home than in the office.

Take a break from the news

The past 12 months have brought outstanding cinematic debuts by women, a Tom Cruise megahit and dissident voices from Russia and Iran. In the world of film, 2022 was a year of comebacks, flops and arrests. Explore FT critic Danny Leigh’s top 10 films of the year.

Images from films of 2022

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