"Thus, the public investors in Microsoft have had the opportunity to realize $233.5 billion in market cap appreciation; the private investors had only a $500 million head-start. From IPO, a single share of Microsoft stock has appreciated close to 500x."
That's an ok point, but it ignores the extreme multiplier benefits from participating in that first $500 million. That is to say, very few (likely none) of the private investors would pay at a $500m valuation on a $500m IPO.
If you got in at $50m your return was upwards of 5,000 (4,680) fold vs. 500 fold at $500m. And of course this is all theoretical as Microsoft didn't take meaningful outside money.
Scott tries to say that private investors only had a $500m head start, and compares that to the total $234b market cap. $500m vs $234b is not the important stat line, rather it's the way the returns massively increase if you got in with the private money early. It's the difference between being perhaps being a billionaire versus having $25 or $50 million. Both are great outcomes, but there's no sense in pretending the first $500m shares much in common with the last $234 billion.
Point being: no, the private investors did not just have a tiny head start in the grand scheme of things (ie compared to the market cap now), and that is almost always the reality. They had an extremely massive head start over the IPO money, no matter how you calculate it. Early money multipliers can almost never be touched by public investors.
That's an ok point, but it ignores the extreme multiplier benefits from participating in that first $500 million. That is to say, very few (likely none) of the private investors would pay at a $500m valuation on a $500m IPO.
If you got in at $50m your return was upwards of 5,000 (4,680) fold vs. 500 fold at $500m. And of course this is all theoretical as Microsoft didn't take meaningful outside money.
Scott tries to say that private investors only had a $500m head start, and compares that to the total $234b market cap. $500m vs $234b is not the important stat line, rather it's the way the returns massively increase if you got in with the private money early. It's the difference between being perhaps being a billionaire versus having $25 or $50 million. Both are great outcomes, but there's no sense in pretending the first $500m shares much in common with the last $234 billion.
Point being: no, the private investors did not just have a tiny head start in the grand scheme of things (ie compared to the market cap now), and that is almost always the reality. They had an extremely massive head start over the IPO money, no matter how you calculate it. Early money multipliers can almost never be touched by public investors.