tl;dr: After 9 months of Covid and huge amounts of stimulus, the rich are getting even richer. Typically, this doesn’t end well.

I feel like we see headlines like this on a daily basis now:

Tech IPO Bonanza Yields Riches for Venture-Capital Firms:
Sequoia Capital and others prosper as the debuts of DoorDash and Airbnb cap the most lucrative year on record for new listings.

Not like it is so surprising.

With all of the money printed by the Federal Reserve and injected into the stock market, cash is everywhere and free. Naturally, it’s going to go further and further out in search of yield.

One obvious location for the cash is brand new companies that have growth potential, which explains why, despite a global pandemic, this has been the most lucrative IPO year ever.

While I’m happy that Sequoia Capital partners are now able to afford mega yachts and multiple houses, I am also concerned that the wealth and income equality we had before the pandemic has been further exacerbated.

When the data comes out next year about the percentage of total assets owned by the top 1%, I would expect the number to be even higher than it is today.

Historically, this type of imbalance doesn’t end well…for anyone.

When Capital is Imbalanced

There’s a really powerful movie on Netflix called “Capital in the 21st Century” which is based upon the research of French economist, Thomas Piketty.

You can watch the trailer here, though I highly recommend taking the 90 minutes to watch the film because it is something that will impact all of us.

Piketty’s basic thesis is that when we get to a point in society where 1% of the population owns 70% of the assets and that wealth is primarily transferred through inheritance rather than the productive deployment of capital, we’re going to end up in a societal overhaul of some sort…and it’s going to be dramatic.

It may be something like FDR’s New Deal and the rise of the social welfare state or it may be something far more intense like the French Revolution.

Regardless, a scenario where 1% of the population, like Sequoia partners, can live a life of opulence, and everyone else faces only the prospect of poverty or decreasing wealth, doesn’t stand a chance for long.

Just as Covid has hyperspace things like telemedicine and remote work, it may do the same for societal transformation.

I don’t know what’s going to happen exactly, but it’s going to be something…and we may already be seeing it take place.