Lots of folks in America today really need more money.
Our kids, for starters. We ought to be investing in their futures, not stuffing them in overcrowded classrooms or forcing them to graduate from college with tens of thousands of dollars in debt.
And plenty of working people need more money, too. Wages for average Americans, after you take inflation into account, have sunk below what workers were making four decades ago.
I could go on.
But not everyone’s feeling the pinch. Take Stewart Butterfield, the CEO of Slack—a tech startup whose corporate messaging app just might, some experts believe, one day replace email.
The year-old Slack, in other words, may prove to be quite a big deal. Or the company might crash, as so many startups inevitably do. But that risk hasn’t stopped the heavyweights of American high finance from rushing to invest in Butterfield’s fledgling operation.
By this past March, those investments had jacked up Slack’s market value to a stunning $1 billion. Then, in April, investors injected an additional $160 million for a mere 5 percent stake in Butterfield’s company. That brought the startup’s total market value to just about $3 billion.
The strangest part of all this? Butterfield’s company didn’t ask for that latest $160 million—and doesn’t need it either.
“We don’t have an immediate use for that money,” Butterfield openly acknowledged in a recent interview.
“Eventually,” he added, “we will find a use for it, at least I hope we do.”
Wait, this story gets stranger still.
What’s happening with Slack turns out to be happening all across America’s economic cutting edge. The nation’s high-finance chiefs—the exceedingly deep pockets who run hedge funds and the like—are dumping cash into startups at a dizzying pace.
Back in the old days—say, six years ago—hot startups would raise a pile of cash from investors, digest that money into their ongoing operations, then come back a year or so later and ask investors for more. Another year would typically pass before a third round of financing.
This wait-and-see financing has gone by the boards. Since early 2013, The New York Times reports, more than 20 tech start-ups have swallowed three rounds of financing in less than 18 months. One of these, the anonymous messaging startup Yik Yak, completed three rounds in just seven months.
What’s going on here? In a word: inequality.
