NZ Herald
  • Home
  • Latest news
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather forecasts

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
    • The Great NZ Road Trip
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
    • Cooking the Books
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • What the Actual
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

IPOs creating wealth crisis in San Francisco

By Katherine Boyle
Washington Post·
10 Apr, 2019 04:06 AM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

The city of instant millionaires is about to have thousands of even newer millionaires. Photo / Getty Images

The city of instant millionaires is about to have thousands of even newer millionaires. Photo / Getty Images

At 12:30 Pacific time on a recent Friday afternoon, a small crowd gathered at the foot of San Francisco's tallest, shiniest office tower.

Onlookers stared at a temporary stage decked out with a banner that read, "Celebrating 20 Years of Salesforce!" Onstage, flanked by backup dancers, stood a man dressed in a full black suit singing a familiar tune:

"They can't, they won't, they never will . . . stop the party."

"Is this Pitbull?" I asked a middle-age man in a corporate-branded Patagonia vest.

He just nodded as he stared ahead.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

"Y'all having a good time out there?" Pitbull asked to silence.

A good time shouldn't be hard to come by in San Francisco, but don't blame us for being antsy.

As if US$24 ($35.57) lunch salads, multiplying tent cities and two-hour commutes across the Bay Bridge weren't worrisome enough, the city at the heart of the global tech revolution is now at the breaking point - and bracing for another wave of wealth to hit.

Advertisement
Advertise with NZME.

With Bay Area-based tech companies scheduled to hold initial public offerings this year, the city of instant millionaires is about to have thousands of even newer millionaires.

And many residents of this city - secretly and not-so-secretly - fear that 2019 is the year San Francisco becomes a truly impossible place to live.

Initial public offerings should be causes for celebration, and not just for those ringing the bell at the stock exchange. These public and soon-to-be-public companies - the likes of which include Lyft; Slack; Postmates; Pinterest; Uber; and Levi Strauss, a San Francisco stalwart founded during a different Gold Rush - will allow everyday investors across the country (finally!) to partake in the fruits of a decade of consumer internet innovation.

Similarly, universities, pension funds and nonprofits will see windfalls that will underwrite important work across the country.

Discover more

Media and marketing

'Dark patterns': the online trick coaxing you into handing over data

10 Apr 01:05 AM
Business

Michael Hill shares fall

10 Apr 01:14 AM
Opinion

Comment: Three things PM needs to do about Google and Facebook

10 Apr 05:48 AM
Business

Infratil looks at replicating Longroad in Europe

10 Apr 04:20 AM

But most of the initial employees and early investors in these unicorns live here in San Francisco, one of the most densely populated metropolitan areas in the United States. In the months after these companies go public, it will be fair to ask: How much wealth can one city take?

You could say this crisis isn't San Francisco's fault, at least not entirely. It didn't anticipate the smartphone, the app store or the consumer internet revolution that made San Francisco a magnet for young people seeking burritos and taxis at 3 a.m.

It wasn't prepared for global interest rates to hit record lows and remain there, making late-stage venture capital a lucrative asset class where companies could stay private longer, raising funds not from public markets but from individual and institutional investors.

It didn't anticipate the worst recession since the Great Depression and the surge of excess labour to power the gig economy.

Nor did it notice the emergence of cloud computing that made startups easier to launch from a studio apartment rather than a suburban garage.

But it did adopt - and then cling to - closed-minded housing policies for decades, stunting construction and stifling growth even as repeated waves of young people poured into the Bay Area over the past 20 years to build the next big thing. San Francisco, very literally, wasn't built (or zoned) for this many people or this much good fortune.

Advertisement
Advertise with NZME.

A family of four making nearly US$120,000 in San Francisco is now considered low-income by the Department of Housing and Urban Development.

According to a recent report from rental website Zumper, the median market monthly rent for a one-bedroom here has hit an all-time high of US$3,690 - nearly US$45,000 a year. There are social-impact startups, such as Landed, helping the underpaid and underappreciated - like teachers and nurses - afford housing in the region.

Meanwhile, if you're looking to buy a single-family home, good luck: Although there are about 100,000 vacant homes in San Francisco and neighboring communities, many aren't for sale; some have been bought, likely as an investment, and simply left empty. (It isn't uncommon to find apartment buildings here that are one-fourth to one-half empty, an experience that is a little eerie, not to mention inefficient.)

Those with the means to buy a home in these parts will find it challenging to lock one down, and the most-discussed topic among young people is: Will I ever be able to afford the apartment I am renting?

The irony of this extreme concentration of wealth is that tech was supposed to solve this problem and allow people to innovate anywhere.

Instead, this superconcentration of new wealth is likely to push talented people and their employers out of the area in search of more sustainable lifestyles - meaning the wealth is pushing people out of San Francisco, not the democratisation of tech.

Advertisement
Advertise with NZME.

It will also ensure that bashing tech companies is going to be the safest political sport for politicians in the months leading up to the 2020 election.

Candidates on both the left and right will lift a page from the early 20th century election playbook, when Standard Oil was depicted as an octopus, dexterous enough to parry Republicans and Democrats.

No one's weeping for big tech, but the war on Silicon Valley won't solve the region's housing crisis, either. And regulation won't stop a financial culture that will continue to mint more unicorns and, thus, more Bay Area millionaires.

We can only hope that a crisis of wealth will lead to better housing policy in the United States' tech capital, and that some of tech's victors will make an exit from this lavish party and take their wealth, their angel investments, their networks and their knowledge to communities outside a fatigued city that simply wasn't prepared for this Big One to hit.

Save

    Share this article

Latest from Business

Premium
Media Insider

'They've labelled me a troublemaker': Top economics professor terminates blog, takes aim at politicians

18 May 05:17 AM
Premium
Opinion

Sasha Borissenko: The great Kiwi workplace wipeout

18 May 03:00 AM
Premium
Opinion

Diana Clement: What to do when your spending doesn’t match your financial reality

17 May 09:00 PM

Deposit scheme reduces risk, boosts trust – General Finance

sponsored
Advertisement
Advertise with NZME.

Latest from Business

Premium
'They've labelled me a troublemaker': Top economics professor terminates blog, takes aim at politicians

'They've labelled me a troublemaker': Top economics professor terminates blog, takes aim at politicians

18 May 05:17 AM

Auckland professor's final post accuses political parties of threatening his prospects.

Premium
Sasha Borissenko: The great Kiwi workplace wipeout

Sasha Borissenko: The great Kiwi workplace wipeout

18 May 03:00 AM
Premium
Diana Clement: What to do when your spending doesn’t match your financial reality

Diana Clement: What to do when your spending doesn’t match your financial reality

17 May 09:00 PM
Premium
AI is getting more powerful, but its hallucinations are getting worse

AI is getting more powerful, but its hallucinations are getting worse

17 May 07:00 PM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP