Yacht Industry, Warehouse Diet & Unequal Employment ⛵

Why is that? 

As many startups shut shop or faced takeover in the 2020-21 period, early-stage investors had more capacity for investments. And since today exit prices and liquidity capacity for startups is higher, investors are willing to pay more for shares. It seems that late 2010s deals that are reaching maturity today are potential goldmines, having raised early-stage capital at cheaper rates, but exiting at a time when software valuations are still rich.

This prompts another question: Were startups dramatically undervalued in prior years and decades? 

Not necessarily. Just that a lot of factors affected startups prices over the years.  

• After the financial crisis of 2008, startup prices were modest due to lack of spending power and a shaky economy.
• Startup valuations drifted higher in the 2010s as software and tech company revenues accelerated.
• Then in the pandemic era, the value of software revenues shot higher, meaning that deals struck in prior years suddenly became cheap.

So it’s hard to say that in 2010 startup prices were incredibly unfair, given that exit values were lower than they are today.

Young entrepreneurs are flocking to buy luxury boats.

Yacht sellers sold $1.6 billion in inventory in 2021, a 175% increase over the prior year.  According to the U.S. National Marine Manufacturers Association, boat sales reached record highs in 2020 and 2021. Supply chain disruptions are impacting new boat deliveries, pushing more buyers to the pre-owned yacht market, which posted record sales of more than $7 billion in 2021. 

Where’s the demand coming from? 

Young crypto investors and tech startup executives are fuelling the boating industry boom. According to Forbes, a record 493 people joined the billionaires club globally in 2021, including nine new crypto billionaires. These new money entrepreneurs are investing in yachts to have a space for party and isolation during Covid.

There’s such a mad rush to buy yachts that owners/companies are selling yachts for the full-asking price. Competition is so fierce for these ultimate status symbols that some buyers are even purchasing yachts sight unseen.

Amazon has been on a warehouse buying spree during the pandemic.

Over the past two years, the company has more than doubled its warehouse holdings from 192 million square feet in 2019 to over 410 million square feet today. The company has spent over $100 billion on purchases of property and equipment since the start of 2020, including eight out of the 10 largest warehouses being built in the US.

Impact? 

1. All that buying is affecting the industrial real estate market. Warehouse vacancies are effectively zero and rents are spiking to record levels around the world, according to a recent report from Prologis. Globally, rents rose a record 15% in 2021; in the US and Canada, the average rent hike was nearly 18%.
2. Startups that were forced to pivot to home delivery of goods are having an even harder time keeping up with rising warehouse costs. 
3. The supply chain tumult has made it more costly for businesses to move goods around the world, which can in turn lead to price hikes for everything from used cars to Valentine’s Day roses. And so higher warehouse costs has made life even more difficult for startups and small businesses. 

Men have largely recovered their pandemic-related job losses, but women—especially women of color—are still lagging behind. According to recent data from the Bureau of Labor Services, the unemployment rate for white men is relatively low, followed by that of white women overall. But Black women, Latinas, and women with disabilities are still experiencing unemployment at a much higher rate than their counterparts. The impact of Covid on these sections of the population are far from waning.