The Future of Drone Safety

Every time I go to the CODE Conference, I learn something new. There is something about watching some of the most prominent technology executives and founders responding to questions from talented journalists that gets me thinking.

Four years ago, I wrote about the transition technology CEOs needed to make from economics to politics. Coming back from this year’s gathering, there  is no question in my mind that this insight turned out to be true. Responsibility was a significant theme this year. As the technology industry continues to grow and mature,  more and more people are looking to investors and technology leaders to think ahead about potential issues that will happen when their creations become ubiquitous.

It got me thinking about drones.

The Problem with Drones

The FAA projects that the number of drones will reach 7 million in just the US alone by 2020. The growth rates for both consumer and commercial drones continue to grow at a rapid rate. The FAA estimates that there will be over 3.5 million hobbyist drones in the US by 2012.

Over the past few years, I’ve made a few investments in startups in the drone space. But until last year, I hadn’t given significant consideration to all of the safety issues around drones, particularly as they fly over large crowds or critical infrastructure.

The problem is fairly simple. Large venues, like sports stadiums, and critical infrastructure are largely defenseless against drones. Whether it’s a music festival, a weekend football game or anything of that sort, most people don’t realize that event managers really have no solution to protect a crowd. Whether accidental or intentional, there is a real risk that a malfunction or crash could harm people.

The Need for Active Measures

Long term, of course, we can imagine a world where drones can be programmed to avoid these spaces, (Airmap is a great example of a company making this happen). However, We can’t just assume or depend on this to be universally true – that risks the mistake of being overly idealistic. There needs to be an active solution to protect critical areas.

There are a number of companies working on solutions that involve intercepting and disabling drones that enter space that needs to be protected. In fact, there are solutions like drone on drone capture (with nets) 🕷, projectile solutions (shoot it down) 🔫, even flamethrowers! 🔥

Unfortunately, these kinetic measures make little sense in cases where the drones are flying over areas that need protection. If the concern is a drone crashing into a crowd or important infrastructure, these solutions run significant additional risk of the drone or pieces of the drone causing damage on impact. While there is definitely a market for kinetic solutions in the military and related markets, but it seems like a bad fit for the majority of the simple but real threats out there.

A Software-Based Solution for Drone Protection

Last year, as the co-chairman of ICON, I had the good fortune to meet Gilad Sahar, the co-founder and CEO of Convexum. With the unique insight that comes from military experience with both the costs & benefits of active solutions, they have developed a non-violent, software-based active measure to help automate perimeter protection from drones.

The concept is fairly simple.

Convexum has developed a device that allows companies & governments to detect when a drone is entering a restricted space, take control of the drone, and land it safely. A cloud-based service ensures that all Convexum devices have up-to-date signatures for known drones.

Initially, they are seeing significant demand for this solution around critical infrastructure, like energy development, and sporting venues. Long term, I can easily imagine a future where a non-violent solution for drone protection would be highly desirable anywhere we don’t want to bear the safety risk (like schools).

Working with Government

Europe has already provided a clear path for companies and government entities to receive the permits & exemptions needed to deploy this type of solution. (In fact, Enel has already deployed a solution to protect power plants.) Congress & Senate debating this now in the US, but seems to be one of the few remaining areas of true bi-partisan alignment.

I’ve personally been so impressed with Gilad & Convexum, I’ve decided to help them by becoming an advisor to the company.

Let’s hope this is part of an increasing pattern of entrepreneurs and investors thinking ahead about safety and regulation, and supporting technologies early that can help solve these eventual problems.

 

 

Every Function Has a Superpower. What’s Yours?

Over the course of my career, I’ve been fortunate enough to work in a variety of different functions.  No matter whether it is engineering, design, product, or service, every role has its own unique set of requirements and challenges.

Maybe that’s why I have always believed strongly that software is a team sport. If you want to build exceptional products, you have to find a way to harness the unique and diverse viewpoints of a team of professionals across a wide variety of functions.

Unfortunately, even at great companies, there is a repeated pattern where people in some functions feel disempowered. This doesn’t need to be the case.

Every function has a superpower. Make sure you know what yours is.

Every Function Has Value

Hypergrowth software companies are relentless in their pursuit of efficiency. Everyone who joins a new company dreams of building something new, something better than the companies that came before it. As a result, startups are always questioning the breakdown of functions in older, more established companies. In addition, resources are always tight, as companies stretch to make every dollar of funding count.

Unfortunately, this also means that many startups repeat the same mistakes over and over again when it comes to recognizing the value of different functions in a modern software company. This can be compounded by having a founding team or early employees who have never worked in those functions before.

You don’t really know a function until you know someone who is exceptional at it.

Inevitably, most startups, even when they have grown to hundreds of people, have gaps in their understanding and appreciation of some functions.

Avoiding Decision By Committee

Besides the lumpy build-out of different functions at fast-growing companies, the need for fast decision making also tends to bias the product process.

Great companies tend to be opinionated in their decision-making process around product, and those processes can vary significantly. Some companies may overweight decisions from engineering, others might look to a strong product function. There are companies that are largely sales-driven, and others that rely on general managers. There are companies where decision-making is hierarchical, deferring to the CEO or founder for key product calls, and others where decision-making is distributed broadly to the teams.

This isn’t surprising, however, because there is a direct tension at companies between the speed of execution and the exhaustiveness of a process. As a result, almost every product-centric company seeks to avoid “decision by committee” by assigning decision responsibility to a function or a hierarchy.

No matter what system exists, there are always people and functions that feel disempowered by the process.

Know Your Superpower

While you may not be the one to make the final product decision, it is a mistake to feel disempowered. Your function has unique value, and you can dramatically shape any product decision through your efforts.

The key is to know your superpower.

Every function has one. Here are just a few examples:

  • Engineering. Every engineer has the ability to take what is and isn’t possible off the table. I’ve seen product strategy discussions completely changed in a single weekend by engineers building something that no one else had even considered. The power to create is an awesome one, and the best engineers use this power to open the eyes of their teammates to what can be accomplished.
  • Design. Most people can’t visualize the different options that are possible around a given feature or product, and design has the power to reshape discussions completely based on visualization. Design can eliminate theoretical options, define the choices available, and most importantly trigger a deep, emotional response to certain choices in decision makers.
  • Product. At some companies, product managers have procedural power to make decisions. However, the most effective product managers use their power to frame the discussion with strategy and metrics to help drive decisions. The power to define the framework for a decision often is the power to control the decision.
  • Client Service. If you spend your day talking to real customers about real problems every day, you have amazing power to bring issues to the fore. Sometimes a decision is swayed by the scale of the problem, other times by the severity. Never underestimate the power of narrative, driven by real customer stories, to shape decisions on product and prioritization.

Every function has a superpower and everyone has the ability to do the extra work necessary to tap the unique capabilities and resources of their function to use that power to shape decisions. It requires work, but no matter what your function or role is, you can heavily influence critical decisions.

You just need to find your superpower.

 

Stanford CS 007: Personal Finance for Engineers (Reviews & Reflection)

For those looking for the course material, I’ve posted the slides for all 10 sessions on a parallel site: http://cs007.blog

On September 26th, I had the great pleasure of officially kicking off a brand new course at Stanford University, “Personal Finance for Engineers“.  The course was offered through the Computer Science department (CS 007), but was also open to undergraduate & graduate students of any major.

How quickly the quarter went. On December 6th, I gave the 10th and final lecture of the seminar. Grades were submitted by December 18th, and course evaluations were summarized and provided to lecturers by December 20th.

In the interest of learning & transparency, I thought I’d post some of the feedback here, as well as summarize a few of my own reflections on the seminar.

Summary Results: Learning Goals

Out of the 93 students who took the course, it looks like 69% (64) left feedback on the course.  The following charts and material are provided anonymously by Stanford University.

The learning goals for the course were as follows:

  1. Expose students to a wide range of personal finance topics.
  2. Provide students with both practical & theoretical frameworks to make financial decisions.
  3. Build confidence in students on how to approach real life financial decisions.
  4. Provide students with content that will encourage discussions with family and / or friends.

Overall, the student feedback on these four areas were fairly consistent. A majority felt the course achieved these goals “extremely well” (highest ranking), with a large minority giving the course “very well” for these goals.The individual comments left by students seemed to confirm these results. A few samples:

Q: What skills or knowledge did you learn or improve?

“I literally knew nothing about personal finance, but just being exposed to this material helped me ask the right questions to myself and my parents.”

“Everything — I’m a financial manager on the row and a senior, but knew next to nothing about finances. This was super super helpful.”

“I improved on a great deal in this class. From understanding behavioral finance. to deciding whether or not to rent/buy, this class truly taught me about personal finance and more.”

Summary Results: Instruction & Organization

One of the elements I underestimated when proposing this class was the amount of time it would take to prepare an 80 minute lecture every week. Converting what previously had been a 60-minute talk into a 10 seminar course proved to be a significant time commitment (one of the reasons you haven’t seen any posts on this blog since the course started).

As a result, I was particularly concerned about what the feedback would be to the course material, since most of it was new. Fortunately, the results look positive.

Individual Feedback: Student Recommendations

One of the most telling results from teaching a course at Stanford are the individual recommendations that students are asked to give about a course to future students.

Q: What would you like to say about this course to a student who is considering taking [CS 007] in the future?

These reviews confirm how much students want to learn and engage around personal finance topics. The desire is there, the fundamental problem is that few schools offer any curriculum to fulfill it.

If you are wondering, Review #12 is my Mom’s favorite.

Data: What sessions did students value most?

Stanford allows faculty to add supplementary questions to the student feedback form. I asked students specifically to name three sessions that they found most valuable, and to name a session they found least valuable.

The results were interesting. Investing was far away the seminar students found the most valuable, with compensation, real estate and debt following.

Investing 28
Compensation 16
Real Estate 12
Debt 10
Financial Planning & Goals 7
Bonus: Crypto, VC & Derivatives 6
Behavioral Finance 5
Savings & Budgeting 4
Net Worth 2

When students were asked which session was the least valuable, there were far fewer votes to count. Still, it was interesting that despite being one of the favorites, “Real Estate” was also one of the least favorites. Reading the comments, it seems as if some students felt like real estate was too far in the future to be relevant to their current situation. The students who enjoyed it clearly enjoyed the section on how to make the decision between renting & buying.

Real Estate 7
Behavioral Finance 5
Debt 3
Compensation 2
Bonus: Crypto, VC & Derivatives 2
Savings & Budgeting 2
Financial Planning & Goals 1
Net Worth 1
Investing 0

It is worth noting that 8 students actually put down that all of the sessions were valuable, so I think it is fair to say that the content was well received.

Final Thoughts & Reflections

As part of developing this course, I chose to post the slides from every seminar online within a couple of days of teaching the class. My goal was to get as many eyes as possible on the content, to ensure there were no mistakes and to get advice on places to improve it.

There was only one session that received several corrections, and that was the “Real Estate” seminar. A special thank you to those of you on Twitter who helped me improve  & correct this content.

Top requests that I received for the next time I teach the class:

  • PDF versions of the slides
  • Voice over version of the slides
  • Video of the lectures

I likely should have done all of these in 2017, but I was a bit nervous about doing this with a brand new course & course material.

The most important reflection I have on this quarter is a sincere feeling of gratitude to Stanford University for allowing me to teach this course. Mehran Sahami, the Associate Chair for Education in the Computer Science department, sponsored the course, and without him it would not have been possible. A special thank you is also due to Greylock Partners, who supported my efforts to teach this course this year.

I also would like to thank the 93 students who took the course and provided excellent feedback along the way. The course was originally opened to only 50 students, and it was incredibly gratifying to see so many students request an exception to take the class during the Fall Quarter.

If you have additional feedback or thoughts about the course, and how to broaden the reach of financial education, please feel free to reach out with comments on Twitter or LinkedIn.

Stanford CS 007: Personal Finance for Engineers (Kickoff)

Update: For those looking for full course material, I’m posting it on a parallel site:
http://cs007.blog

Yesterday, I had the great pleasure of officially kicking off a new course at Stanford University, “Personal Finance for Engineers“.  The course is offered through the Computer Science department (CS 007), but is open to undergraduate & graduate students of any major.

Personal Finance for Engineers

 

It was a packed room, and I was delighted. In fact, I was delighted for three reasons.

First, I love teaching. In an unexpected coincidence, the room my course was assigned, 200-034, is the same room that I taught CS 198 for the CS 106 Section Leaders over 20 years ago as a graduate student. It was the home of CS 198 for many years. To see it filled with students again was wonderful.

Second, the level of student engagement has been outstanding. Originally set for a maximum of 50 students, I expanded the enrollment to 75, and with waitlist interest the total number of students easily went over 100. For a new course without a track record on campus, I was delighted to see so many students interested in the topic.

Third, the topic is incredibly important to me.  Those of you who have been following my efforts around personal finance education know that I care deeply about the topic. Over the past 7 years, I’ve given talks at dozens of companies like Facebook, LinkedIn, Twitter & Dropbox, hoping to better educate and inspire employees to learn more about personal finance and make better financial decisions.

I’m hoping this class can amplify those efforts even further.

Making Personal Finance Education Open

I feel grateful to Stanford University and the Computer Science Department for supporting this effort, and I hope that by making the material public, we can help get higher quality education about personal finance to as many students as possible.

My hope is that by circulating this material, more people will engage to give feedback on the content, make suggestions for improvement and continue to improve the material and the class.

After every class, I’ll be posting the slides for the session up on Slideshare. The materials from the first class, “Introduction,” are now available.

As the introductory session, I focused the seminar on three topics:

  1. Why the topic of Personal Finance is worth studying?
  2. Real data from a survey of students enrolled in the class.
  3. Full syllabus for the topics that will be covered during the course.

Student Survey Data

The second topic is based on 10 questions I asked every student in the class to complete before the start of the first session. It is hardly a scientifically representative student survey, but I wanted to ground some of the initial discussion of financial topics with data about their own experiences & expectations.

73 students completed the survey. It’s worth sharing the results of the 10 questions here:

A few data points worth sharing:

Question 1: A little over 50% of the class are either graduating seniors or graduate students. Only 14% are freshman or sophomores.

Question 2: Approximately 3/4 of the class (76%) had a “magic number” in mind when asked about how much wealth would define success for them. While the most common answer fell between $10M-$100M, the range spread from $20,000 to $15B. It was truly a blank field in the survey, so students typed in whatever number came to mind, and it started the process of open & honest discussion on why students picked the number they did.

Question 3: 92% of the students reported that they had either “some” or “quite a bit” of knowledge about the finances of their parents or guardians. Given the selection bias inherent in who signed up for this course (or even what type of students end up at Stanford), it’s hard to assign deep meaning to this result, but this was a class of students who clearly had received some meaningful exposure to financial decisions at home.

Question 6: 92% of students in the class do not expect to be responsible for any student loans after graduation. This was the most surprising result to me, based on both overall market data and my own personal experience .

I have two possible hypotheses to explain the result of Question 6. (1) The selection bias for enrollment in the class might explain part of the result. It is possible that the type of students who are most willing to sign up for a class on personal finance are not burdened by student loans.  (2) It is possible that the financial aid policies of the premier schools, like Stanford, have been highly effective in lowering the number of students requiring loans dramatically. For families with household income below $125,000, tuition is waived, and 71% of families with up to $245,000 receive scholarship assistance. (In fact, 34% of families making over $245,000 also get scholarship assistance.)

Since the syllabus was not shared in advance, Question 10 gave me a clear read of the expectations and hopes students had coming into the class. Not surprisingly, the students were, for the most part, very pragmatic. They are looking for information about compensation & job offers, the stock market, real estate and how to maximize their earning power during their careers.

Feedback

Throughout the next few months, I’ll be posting the course material in the hopes of receiving both corrections and ideas for improvement. If there are topics or material out there worth formalizing into the curriculum, I want to know about them.

Best way to reach me about the course will be through twitter @adamnash

Thank you in advance for your help.

 

Solve the Product Maze Backwards

As the father of young children, I can tell you that there is a special place in my heart for restaurants that provide puzzles and crayons for small children to pass the time.

On a recent trip out to The Counter in Mountain View, Jordan (who is 8)  was really struggling with a large maze puzzle on one of these activity sheets. It was a fairly large maze, and he was frustrated by his inability to see the dead ends ahead, forcing him to retrace his somewhat tortured crayon path.

I told him to try to solve the maze backwards.

As you can probably guess, he began at the end, and was able  to find a path back to the beginning in just a few seconds . He was delighted, and a bit surprised, to see how simple the puzzle looked like from a different perspective.

Surprisingly, I find that both entrepreneurs & product leaders miss this important lesson when evaluating ideas for either their company or their products.

Three Questions in Product Prioritization

In my experience, there are three common questions that often come up when product features are being debated:

  1. Should we build this?
  2. When should we build this?
  3. How should should we build this?

Unfortunately, even highly talented teams can become  get bogged down in debate and uncertainty when all of these questions become entangled. As engineers & designers are professionally trained to answer the question of “How,” the worst debates tend to happen around the questions of  “Should” and “When.”

Too often, when debating what feature to work on next, debates around timing quickly devolve into debates about whether the feature is needed at all.

Solving the maze backwards does a fantastic job of disentangling these two questions. Simply asking the question of “If we are successful, will we have this feature in 3 years?” tends to illuminate whether the debate is about “Should” or “When.”

If the answer is yes, you will have that feature, then the question is simple. You are just debating priority.

Avoid the Local Maximum

One of the well known issues with iterative processes for delivering product features is the “local maximum” problem.

The assumption is that where ever you start with your product, your team keeps working on improvements. Each improvement is measured to ensure it is “better” than the product before the change. However, you can reach a point where every change you make hurts the metrics that you measure. The fear is that there is a better version of your product (the absolute maximum), but it requires a change bigger than you can get to from the current design.

It’s called a local maximum problem because of the similarity to the concept in mathematics when you are traveling along the curve. From the local maximum, every move is down, even though the curve ends up higher eventually.

Solving the maze backwards can help.

By asking the simple question about whether or not your product in the far future has a given capability, it can unblock your thinking about what leaps and changes will be necessary. Whether the limitations are in technical architecture or product design, clarity on your long term vision can help your team visualize a future not trapped by their current constraints.

Too often, the real limitation is not related to either technical or design constraints, but rather a lack of clarity and imagination about what might be possible. Just like a maze, it is easy to get lost in the middle. Thinking backwards from the end goal can help the team escape a Zeno’s paradox of minor feature improvements.

Founders Can Solve the Maze Backwards, Too

It may seem hard to believe, but in early 2009 when I took over LinkedIn’s mobile efforts, there was still active debate within the company about whether to dedicate significant effort to mobile. Why? Well, back in 2009, the Blackberry was still hitting record sales, the  app store was a year old, and from a web metrics point of view, mobile views represented less than 1% of LinkedIn’s traffic. Like every hypergrowth startup, LinkedIn had a huge number of initiatives it wanted to pursue around growth, engagement & revenue, and it wasn’t obvious that mobile would move any of these needles for the company in the next few years.

Solving the maze backwards helped.

What was fairly obvious in 2009 was that the growth rate of mobile engagement was compounding at a phenomenal rate. LinkedIn, as a professional use case, might have been slightly behind social use cases for mobile adoption, but it was fairly clear that within 5 years (by 2014), mobile should represent a majority (over 50%) of all visits to LinkedIn.

Thinking backwards helped give us the confidence to invest in both talent and technology that had little short term payoff, but would become essential to engagement over the next five years as those predictions came true.

Fast forward to 2017. I was recently meeting with a founder who was debating whether they should hire a Vice President of Marketing. As he walked me through his thinking, the argument wandered, and became more focused on whether or not the company “needed” marketing.

I asked him if there was any way, if the company hit their numbers over the next three years, that the company would not need marketing, or an experienced marketing leader?

The CEO quickly responded that marketing would be essential to hit the numbers they were looking for in three years. All of a sudden, the conversation changed. The question wasn’t whether or not to invest in marketing, but more a question of when they need to.  Was this a 2017 or a 2018 problem? Is this something they would need to hit the milestones to raise their next round of funding, or something that they would invest in during the next cycle?

It was now a question of when.

Questions of “Should” vs. Questions of “When”

“The essence of strategy is choosing what not to do.” — Michael Porter

Being clear about what your product will and won’t do is a critical element of product strategy. However, because it is so important, even well-meaning teams can turn almost any feature into an existential debate.

Thinking backwards can help differentiate questions of “should” from questions of “when,” and that can be incredibly productive in moving the discussion to prioritization.

This is not intended to be dismissive of questions of prioritization. Phasing decisions are some of the most important decisions start ups make. Financing for startups is phased. Small teams can only work on a few projects at a time. Customers can only absorb so many new features at once. As a result, prioritization decisions are incredibly difficult to make.

Greedy algorithms are very good, but can be traps if you are working against competitors and an ecosystem that is willing to make bets that lie across the gap from your product’s current local maximum. Thinking backwards can help illuminate long term goals that are across the gap.

When you are building a product roadmap, and get stuck on debates about a short term feature that doesn’t move the numbers, I encourage founders to take a moment and try to solve the maze backwards.

It worked for Jordan, right?

Helping People Save is a Job Worth Doing

“Every day stuff happens to us. Jobs arise in our lives that we need to get done. Some are little jobs, some are big ones. Some jobs surface unpredictably. Other times we know they’re coming. When we realize we have a job to do, we reach out and pull something into our lives to get the job done.” — Clay Christensen

In the summer of 1993, after declaring computer science as my major, I got my first high paying software development internship. Over that summer Hewlett-Packard paid me over $5,000, which seemed like an unbelievable amount at the time.

Unfortunately, like a lot of people, I was so excited by receiving this windfall that I promptly spent it. By Thanksgiving, I was shocked to find that my bank account was nearly empty. All that money, gone. It literally sickened me.

That was the moment when I decided to learn as much as I could about personal finance and I got religious about saving.

The Theory of Jobs to Be Done

For a lot of people, there is a moment they can recall when they consciously decided that they wanted to start saving.

When I attended Harvard Business School at the end of the dot-com era, I was incredibly fortunate to spend time with Clay Christensen, who at the time had just recently published the now famous book, The Innovator’s Dilemma. In his class, we studied his new theory of disruption, and how industrial giants filled with smart people would make seemingly smart decisions that would lead to their downfall.

One aspect of his theory, which later went into his book, Competing Against Luck, is the Theory of Jobs to Be Done. Quite simply, Clay believes that companies can go astray by focusing too much on the data about their customers and the features of their product. Instead, he argues they should focus on the end-to-end experience of the job that their product is being hired to do.

In the past few years, I’ve come to believe that saving is a job that a huge number of people want a product to help them do and help them do it well.

Saving Itself is a Goal

Our lives are filled with a large number of small financial decisions and problems, but there are only a few very large financial moments that warrant the creation of an entire companies to support. Spending, borrowing, investing and financial advice all certainly fit that description. I believe that saving belongs on that list as well.

Americans are in a terrible state when it comes to saving. 6 in 10 Americans don’t have $500 in savings. An estimated 66% of households have zero dollars saved. If you are cynical about small, one-off surveys, The Federal Reserve itself estimated in 2015 that 47% of households didn’t have the means to cover a $400 emergency expense.

Saving is a huge problem, so it isn’t really surprising that tens of millions of Americans seem to be looking for something to help them save. Enter Acorns.

Hiring Acorns

Over the past two years, it has been astounding to watch Acorns grow. An elegantly simple product, designed from the ground up for a mobile generation, Acorns has grown to over 2 million accounts in less than three years. In the first half of 2017 alone, Acorns added over 600,000 new customers. Their overall mission is to look after the financial best interest of the up-and-coming, something I personally care deeply about.

It isn’t really surprising to see why so many Americans have decided to use Acorns to help them save. 75% of Americans have a household income under $100K. Acorns simple features like Round Ups automate the process of making sure that as you spend, you save. Acorns has now performed over 637 million round-up transactions for their customers – each one an action designed to help people save more. I believe that on any given day, thousands of people decide to hire a product to help them save, and increasingly they are hiring Acorns.

When I met the founders of Acorns two years ago, we immediately connected over the common ground between their culture and Wealthfront’s (the company I was running at the time.) They are very different services, focused on different problems and audiences, but with a shared belief in the power of automation. This is a company worth supporting, and I feel fortunate to serve on their Board of Directors.

At a time when people continue to grow more and more frustrated with the solutions offered by incumbent banks and brokerages, I continue to be excited about the opportunities for new products that are built around automation and world-class software design.  As an industry, we can and should radically improve the financial solutions that are available to everyone. Acorns is proving that saving is a job worth doing.

Silicon Valley Home Prices, Stock Prices & Bitcoin

I’m writing this post with a bit of trepidation, because talking about Silicon Valley home prices these days is a bit dicey. The surge of the last five years has been shocking, and almost no one I know feels good about how difficult it is for people to buy a new home in Silicon Valley in 2017. Some houses are pretty bad but others arae actually at a reasonable price, because they come with furniture and some even come with shutters from plantation shutters installation Sydney. They are actually really good quality.

So if you need a trigger warning, this is it. Stop reading now.

The truth is, as shocking as the rise in Silicon Valley home prices has been, there has also been an asset boom in other dimensions as well. Total compensation for engineers is up considerably and stock prices at the big tech companies continue to rise.

To visualize this, I thought I’d put together a few charts based on real market data. As a proxy for Silicon Valley, I pulled the last 5 years of home prices from Zillow, and monthly stock price data from Yahoo.

Palo Alto Home Prices

Two days ago, the Mercury News reported that a home in Palo Alto sold for $30 million.  A quick check on Zillow seems to confirm this.

I chose Palo Alto as a proxy for Silicon Valley home prices because it is historically “ground zero” for Silicon Valley tech companies, and it has relatively close proximity to all of the massive tech giants (Apple, Google, Facebook).

I picked June 2012 – June 2017, not only because it is roughly five years, but also it also happens to mirror the time that Facebook has spent as a public company. For many in the local real estate market or online sites as SafeguardProperty.com, correctly or incorrectly, the Facebook IPO still looms as a transformational event.

As you can see, in June 2012 the average Palo Alto home cost $1.38 million. Five years later, the estimate for June 2017 is up 84.6% to $2.55 million.

Apple (AAPL)

Apple is the most valuable company in the world, as measured either by market capitalization ($810B as of 6/7/2017) or by profitability ($45.7B in 2016).  Thanks in part to this exception financial performance, Apple stock (AAPL) has risen 84.5% in the last five years, from $83.43 per share to $153.93 per share.

84.5%? Where have I heard that number before?

That’s right, the increase in Apple stock over the last five years is almost exactly the same increase as the average home price in Palo Alto over the same time period.

In June 2012, it took 16,555 shares of Apple stock to purchase the average Palo Alto home. In June 2017, it took 16,566 shares. (Of course, with dividends, you’re actually doing a little better if you are a shareholder.)

If you look at the chart, the pink line shows clearly the large rise in price for the average Palo Alto home. The blue line is the number of AAPL shares it would take to by the average Palo Alto home in that month. As you can see, AAPL stock is volatile, but five years later, that ratio has ended up in almost the exact same place.

Alphabet / Google (GOOG)

Alphabet, the company formerly known as Google, may not be as large as Apple in market capitalization ($686B), but it has seen far more share appreciation in the past five years. Since June 2012, Alphabet has seen its stock price rise 240.4%, from $288.95 in June 2012 to $983.66 per share.

What does this mean? Well, it means that if you have been fortunate enough to hold Google equity, the rise in Palo Alto home prices doesn’t look as ominous. It took 4,780 shares of Google to purchase the average Palo Alto home in June 2012, but it only took 2,592 to purchase the average Palo Alto home in June 2017.

Facebook (FB)

Facebook, the youngest of the massive tech giants, already has one of the largest market capitalizations in the world. As of today, Facebook is valued at $443B. Facebook stock has risen 394% in the past five years, from $31.10 in June 2012 to $153.63 in June 2017.

To state the obvious, it has been a good five years for owners of Facebook stock. Not many assets could make owning Palo Alto real estate look slow, but 394% growth in five years is unbelievable. In June 2012, you would have needed 44,412 shares to buy the average Palo Alto home. In June 2017, that number had dropped significantly to just 16,598 shares.

Bitcoin (BTC)

While I realize that Bitcoin is not a stock, the original idea for this post came from a joke I made on Twitter recently given all of the buzz about Bitcoin, Ethereum and ICOs over the past few weeks.

I couldn’t resist running the numbers.

For the small number of readers of this blog that haven’t been following the price of Bitcoin, the increase in value over the past five years has been unbelievable.The total value of all Bitcoin outstanding is currently about $44.5B. Since June 2012, Bitcoin has risen approximately 4,257%, from $6.70 per Bitcoin to a current value of $2,858.90.

You can see why there has been so much buzz.

In June of 2012, it would have taken 260,149 Bitcoin to buy the average home in Palo Alto. In June of 2017, that number is now down to 892.

Needless to say, anyone who sold Bitcoin to buy a house in 2012 is likely not loving these numbers. But to people who have held Bitcoin for the past five years, Palo Alto is looking cheaper by the day.

Silicon Valley Is Seeing Significant Asset Inflation

To be clear, I’m not attempting to attribute causality to these charts. I believe the real driver of home prices in Silicon Valley is the lack of sufficient building of new supply at pace with the economy, combined with a significant increase in compensation for technology employees and historically low interest rates.

But the fact is, if you are fortunate enough to have equity in one of the tech giants (or in Bitcoin), houses might actually be looking cheaper now relatively than they did five years ago.

I always find it enlightening to look at real data and compare it to intuition. Hope you find this data and these charts as interesting as I did.