Barcelona Fines Landlords Who Let Buildings Sit Empty - <AUTHOR> https://www.citylab.com/equity/2019/03/barcelona-affordable-housing-spain-apartment-rental-fines/584902/ <comment><USER2> In Amsterdam, any property that has been empty for over a year can be legally squatted, and once in, legal squatters may be hard to get out. For this reason, landlords tend to rent out their empty properties cheaply as "anti- kraak" (anti-squat), on the condition that the tenant moves out when the landlord needs the property again. This is quite popular for students because you often get a ridiculous amount of space for very little money, though it may come with excessive restrictions.

Amsterdam has (or used to have, perhaps) a pretty healthy squatting culture. Many squatters are ideologically driven and improve the neighbourhoods they're squatting in.

<comment><USER3> I've never understood the pro-squatting arguments. It's theft, no?

<comment><USER4> The German constitution mandates that (property) ownership brings obligations for the public good. Ownership is a construct secured by society, so society as a whole must at least partially benefit. As such, keeping a building empty can be considered theft, too.

<comment><USER5> > As such, keeping a building empty can be considered theft, too.

Your assertion makes zero sense even if we accept your thesis at face value. For example, it's absurd to leap from "society mut at least partially benefit" from private property to assert that private property not being used in compliance to your personal taste to be theft. That's just plain nuts from any angle.

<comment><USER4> You're absolutely welcome to make an argument how a building kept deliberately empty of tenants over years benefits society.

You can consider that position nuts, but given the amount of public support and legal backing for a current initiative in Berlin to enact eminent domain against entities that hold > 3000 flats, "plain nuts from any angle" seems to be slightly exaggerated.

</comment></comment></comment></comment></comment><comment><USER6> A lot of text, but didn't read the obvious: Spain is having three elections in the next month. This is an electoral stunt with no reality behind. The statistics show that Barcelona (and Madrid) are at a historical minimum of empty houses available, yet the spanish population is migrating from smaller cities to the big ones. This is pushing the rents up, and the politicians are obligated to "do something". Colau, Barcelona major, has already fought against AirBnB last year, turned Barcelona in a heaven for squatters, and now this. Rents keeps going up, as the problem shown in the stats is the lack OF NEW HOUSES.

Spain suffered the worst housing bubble in 2007, and even now talking about building more is anathema. For Colau is even worst, as she built his political career fighting against the bubble.

<comment><USER7> >are at a historical minimum of empty houses available, yet the spanish population is migrating from smaller cities to the big ones.

So doing this in Barcelona actually makes sense then?

<comment><USER8> I read that as "the properties aren't empty", not "there are lots of people keeping empty properties off the market".

<comment><USER9> Doesn't that make empty properties especially offensive then?

<comment><USER10> There has never been as few empty properties as there is now (according to parent comment). As such, it should be less of a problem now than before? Not the other way around?

</comment></comment></comment></comment></comment><comment><USER11> DC has a punitive property tax rate for vacant (and even more so for "blighted") properties. Seems like it works ok, though there are loopholes and questions about how well it's implemented. Also means that a developer who actually wants to clean up a blighted property and flip it now has to go through extra steps, since they surely don't want to pay steep taxes in the meantime.

<comment><USER12> ANC Commissioner here. You can get an exemption from the vacant property status with a building permit.

There are a couple problems with implementation. First, DCRA is such a fucked agency that they widely miss out on rating properties as vacant. The property two doors down from me has been vacant for two years and I've reported it a couple times and they still won't rate it vacant (and I'm an elected official). The DC Auditor released a report last year highlighting this problem, which costs DC tens of millions a year. Second, most developers will create a separate LLC for each property and they're happy to not pay taxes and have a lien put out, etc., on the probability that they'll be able to flip it before foreclosure happens. If they do run into problems, the LLC lets them cut their losses. DC needs to move faster and blacklist two-bit developers who do this (I have a blighted property in my district where this has happened, and the District is out of options).

DC's new short-term rental restrictions might help free up some apartments. We'll see.

</comment></comment><comment><USER13> I would like to see this in my city center (Oviedo, Spain) but for another reason. Commercial store front is sitting empty and rents are not getting lowered to match the demand. I suspect it's due to funds or banks owning the property and not caring. However for the city itself this is bad as it hinders new economic activity as well potentially leaves blight in the near future.

</comment><comment><USER14> San Francisco recently did a similar thing but with commercial storefronts: [https://www.sfchronicle.com/politics/article/Vacancy-glut- in...](https://www.sfchronicle.com/politics/article/Vacancy-glut-in-SF-could- spur-tax-on-empty-13554017.php).

<comment><USER15> The city of Vancouver has the Empty Homes Tax.

Quote from [0]:

Each year, one owner of residential property in Vancouver is required to submit a property status declaration to determine if their property is subject to the tax.

Properties deemed empty will be subject to a tax of 1% of the property's 2018 assessed taxable value.

Most homes will not be subject to the tax, as it does not apply to principal residences or homes rented for at least six months of the year; however, all homeowners are required to submit a declaration.

Net revenues from the Empty Homes Tax will be reinvested into affordable housing initiatives.

End quote

[0] [https://vancouver.ca/home-property-development/empty- homes-t...](https://vancouver.ca/home-property-development/empty-homes- tax.aspx)

<comment><USER16> What's property tax in Vancouver? Is this essentially a doubling of property tax? (1% is a fairly common property tax amount)

<comment><USER17> In general, municipalities are not allowed to run a deficit in Canada. Since high taxes which would result in having a surplus are politically unpopular, usually municipalities get just enough tax to fund their programs. That is when they are writing their annual budget, they define their total expenditure E, the total assessed value of all properties within their municipality V, and set the tax rate for the year by dividing E/V [1].

Because of how inflated the values of homes in Vancouver are, V is huge. So E/V is much smaller than the rest of the country. In 2018, the tax rate for residential properties was 0.246826% [2]. A 1% surtax would more than quintuple the amount of taxes owed.

[1] It's a bit more complicated than that. Residential and commercial properties have different tax rates for example. But not too much more complicated. Municipalities are not allowed to charge sales or income taxes like they do in some other countries.

[2] [https://vancouver.ca/home-property- development/residential.a...](https://vancouver.ca/home-property- development/residential.aspx)

<comment><USER18> Wow, thanks for this, I did not know this and now it makes much more sense as to why international investors saw Vancouver real estate as a piggy bank. In Texas many localities have property taxes of about 2.5% (though no state income tax).

I wish places would do graduated property taxes - I don't know of any place that does that (with the exception of relatively meager homestead exemptions and a few "mansion taxes"). I.e. if you really want to invest in affordable housing, why not have, say, first 100k have very low tax, 100-500k a reasonable tax, etc. Many municipal water and electricity bills work this way and they work well in promoting conservation.

<comment><USER19> I like the idea, but I think you would end up with many lots getting subdivided so that more of their tax would be at lower rates. And then the small lots cause logistical issues later.

</comment></comment></comment></comment></comment></comment><comment><USER20> Why is it a fine? Why not a tax?

Taxing unused spaces sitting idle makes a lot more sense than income (ie: people's work).

<comment><USER21> In the US fines are not tax deductible, so that's one fiscal difference between taxes and fines. I have no idea if Spain considers fines to be tax deductible or not.

<comment><USER22> On the other hand, in the United States the Eighth Amendment forbids imposing excessive fines, and a very good argument could be made that some of these fines could be classified as "excessive".

<comment><USER23> The aim of laws is compliance. If the low and medium fines of previous years have failed to achieve compliance, and fines eventually escalate to high, I'd argue it's far from excessive. If it were excessive a much lower amount would have achieved general compliance with that particular law, would it not?

<comment><USER24> Our regular human ideas for excessive don't count. There's a legal standard there. I don't know it.

<comment><USER25> Nobody does, really. It has to be defined in context of the 'gravity of the offence'. I'm sure someone could make a good argument that 1% of the value of a property is reasonable.

<comment><USER26> As a 'fine', 100 or even 200 percent of a property could be argued reasonable. 'You aren't using this property as the law intended, so you have to give it to us and pay a penalty'.

If I steal an apple from Walmart, should the fine be 1 percent of the value of the apple? Clearly not.

</comment></comment></comment></comment></comment></comment></comment><comment><USER27> I'm curious about the legal grounds for such a tax or fine.

If local zoning already governs what may be built or operated on a property, what principle allows a government to levy fines for _lack_ of use of a property that has been built and maintained to the required zoning? (if to all other requirements, the property is not derelict, in poor condition, a blight or public nuisance?)

I didn't think that you could be compelled to be a landlord.

(By the way, Oakland also is attempting to put in place such a regulation, but to my knowledge, they have dumbed it down with so many exceptions -- elderly, destitute, social justice, etc. etc. that it's meaningless)

<comment><USER28> The article addresses that:

"The law the city is using, which gives it scope to fine negligent landlords after two years of leaving a property vacant, has in fact been in place since 2007 (before Colau's election) but wasn't implemented until during her tenure."

If a law's enacted by voters, and no law of a higher political body contradicts it, then that's what the government is allowed to do.

<comment><USER27> Well, that's basically what I'm interested in. Whether this law would stand if challenged with a constitutional due process (or other appropriate) claim.

</comment></comment></comment><comment><USER29> I'm surprised no one has mentioned China here.

I was recently able to travel to China for the first time and was fascinated to learn about their housing market. Apparently the Chinese government doesn't have a property tax.

For men in China, owning a home is already incredibly important. It's practically a requirement for getting married, to the point where a woman's family would almost certainly disapprove of a marriage if the man doesn't own a home (which, keep in mind, would be called an apartment in the US). So that coupled with China's huge population means there's already a major demand for owning a home.

China is also experiencing incredible economic growth. Local governments are pouring money into "economic development areas" where you can find modern shopping malls, skyscrapers for businesses, and lots and lots and lots of (what we would call) apartment buildings.

And this isn't just happening in Beijing or Shanghai. There are "tier 3" cities in China with populations the size of LA and NY where you see clusters of dozens and dozens of 40-50 story apartment buildings shooting up.

I was told that the value of homes in these economic development areas -- even in "tier 3" cities -- is going up by an absolute minimum of 10-15%/yr (that's being conservative). So if you have money in China, of course you invest in housing. There's no property tax.

When I see these clusters of apartment buildings popping up all over the country, I really wonder how many people are actually living in them, and how many are just getting turned around year after year for a profit. Chinese people have an unfathomable amount of trust in their government (from a westerner's perspective), so when I asked some friends about this, their response was basically, the government will take care of it. Regardless, very interesting place!

<comment><USER30> Policies like that are going to backfire in the long run though. If the wealth being generated by productive exports is being hoarded in unutilized housing there are long tail effects that will slow down the economy - the housing sitting idle isn't productive, and when the investors try to capitalize on their property in the future they will just be rent seeking the difference between the construction price and their sale price.

Its happening around the world. The rich realize that one of the scarcest resources is space and land and are powerful enough to manipulate governments into just letting them hoard their money in housing. Because for the states where this happens everyone loses except the rich - housing becomes prohibitively expensive for the working class, rising property values leech productivity and growth and stall out consumerism, and all the money that created the situation could have better been used creating productive business rather than rotting in a cyclic property investment bubble.

</comment></comment><comment><USER31> It doesn't make sense to me why they'd _WANT_ to leave them empty?? If I were a landlord, I'd be doing my best to keep the rentals occupied as much as possible.

<comment><USER32> Because renting doesn't make you that much money and you have to work for it. Just leaving it sitting there and selling it later is no effort profit

<comment><USER33> But its the exact opposite. Rental is generally profitable. You can bet on land while also renting and making extra money.

You can't argue that they are greedy for buying land but not greedy enough to squeeze more money out of it.

The answer is somewhere else.

<comment><USER34> In places with rent control, having a tenant reduces the value of the home. Sometime substantially if their rent is locked at a low rate.

It's not unusual to buy tenants out in SF before putting the home on the market. Spend $50k to get them to leave and the value of the home goes up $200k.

If you know you're going to sell in a few years, basically the value of the rent (adjusting for buyout) is way less than the incremental profit from selling an empty building.

<comment><USER33> Then the problem is rent control, and the solution is not to tax empty homes.

<comment><USER35> Rent control is the solution to a different problem. Without it, landlords have the power to make people homeless.

<comment><USER33> Didn't know rent-control people harbored the homeless.

</comment></comment></comment></comment></comment></comment></comment><comment><USER36> Sounds similar to UK's former "squatters' rights"―where squatting was legal after the WW2, so that someone looked after buildings and neighborhoods.

<comment><USER37> And eventually took ownership of them after seven years.

</comment></comment><comment><USER38> It sounds nice, but the real question is why are people letting these building sit empty. There is probably a good reason for it. Maybe some renter protection laws that went too far?

<comment><USER39> When I've seen these discussions before the two big factors cited are:

* Real estate investors can borrow against the long term income of their properties, and often value that above the short term rents. They also tend to be highly leveraged to build the next project. This creates situations where high vacancies and poor returns are worthwhile because they can pretend they'll fill the building at their price eventually, and therefore borrow against the building as though it would return that price X all their units X however many years.

* A lot of people seem to think (I haven't dug into the true scale of this) that enormous amounts of money from China is being parked in Western real estate as some sort of protection against seizure by the government.

<comment><USER40> Not just China, but Arabia and Russia too. The Manhattan Skyline is increasingly defined by enormous residential skyscrapers with condos that sell for hundreds of millions of dollars, and sit empty year-round.

</comment></comment></comment><comment><USER41> I live in one of such buildings in Thailand and I love it!

I live in 30 store high new condo that is pretty much bought out by chinese investors and few seasonal tourists. There are probably 200 people living here and on my floor I have 1 neighbour. There's a pool, sauna and a gym in the building and with so few inhabitants you often have it all somewhat private.

As an expat I definitely benefit from this. I've tried to look into what locals think of this and couldn't really find any strong opinions. In fact I've noticed a trend that locals tend to invest into condos themselves nowdays.

It's an intersting contrast to the problem Barcelona and San Francisco is facing - leaving housing empty might not be the core issue here at all as it clearly works perfectly fine for some places.

<comment><USER42> Is this not spooky? No noises? The drops of water somewhere? And you always start to wonder who this might be, who landed at my floor with the elevator? It actually triggers one of my childhood dreams. To be alone in a skyscraper. :)

<comment><USER43> You are Bruce Willis. You are alone in a skyscraper, except for a bunch of terrorists and their hostages all rounded up on the top floor.

That doesn't sound like my childhood dream, but it sure sounds like a fun Hollywood flick. :)

</comment></comment></comment><comment><USER44> Does anyone know why is it that seemingly every major city is having an affordability crisis at the same time?

<comment><USER45> My take on it is that there aren't enough desirable cities available to employ and house all the people who want to live in them. This can be addressed by either increasing the capacity of those cities, by making existing undesirable cities more desirable, or just creating new desirable cities where no city currently exists.

<comment><USER46> Spot on. I think zoning is a big part of it. It would be illegal to build most of the world's desirable cities now. Local zoning requires less mixed use, wider streets, more mandatory parking, etc

My dense, desirable neighbourhood in montreal couldn't be build elsewhere in north america. But itnisn't a safety ir code thing. The local zoning is actually reasonable: it's just the laws are more anti-urbanist elsewhere.

</comment></comment></comment><comment><USER47> It's kinda easy to make it look like a building is occupied and avoid the fine. It's kinda hard for authorities to prove otherwise.

<comment><USER48> You're right, Land Value Tax (LVT) would be much better, as other European cities use.

It's hard to off-shore property in a tax haven too.

It's one of those policies that is popular with virtually everyone right until the moment they get into power and meet the wealthy landowners/donors.

<comment><USER20> Why not both?

</comment></comment></comment><comment><USER49> In this conversation, it seems like people ignore the fact that there's a societal _benefit_ to leaving buildings empty, at least in economic theory.

Which is that it's keeping the space open for more productive use in the long term.

Suppose you own a storefront or apartment that could fetch $5K/month right now, but you think it will fetch $10K/month in 3 years, and that leases are 10 years long.

Well, the people/businesses who can afford $10K/month are by definition more economically productive: the people must have higher-paying jobs, and the businesses must be more productive economically.

If economic trends are such that you expect them to show up in 3 years ago but not right now, it's overall more productive for society to keep the properties empty for 3 years, and then get 7 years of the doubled rent.

Otherwise, if you were forced into 10-year leases now, then in 3 years' time, all those people and businesses won't have locations they can move into. Because of supply and demand, the small remaining inventory will be pushed up to, say, $20K/month, which will be unaffordable, and the city will be left with less economically productive people/business locked in, and economic growth will happen in other locations instead.

Now, certain laws/zoning/factors can distort this in possibly undesirable ways, and if you don't like gentrification then you won't like that either. And all this depends on where the market thinks the economy is going -- landlords are taking a bet, and there's no guarantee they'll be right, but that's the case with any investment.

But as a general rule, landlords letting properties sit vacant are actually providing an economic service, by ensuring future availability when it's even more valuable. Yet articles about vacant properties rarely seem to mention this. I'm not sure why.

<comment><USER50> Hmm. Maybe I'm missing something. I don't understand how more efficient rent- collection (and literal rent-collection at that) is productive. I mean, isn't it definitionally not "productive"?

I mean you can make the argument that by being more efficient at rent collection over some time horizon you funnel more money to yourself and other local industries but isn't this basically just a cost to everyone else at every other scale of time and space?

<comment><USER51> Whenever this argument is made, there seems to be this conflation of "economically good" and "x made me money." Just because you make money (or make more money) doing something doesn't mean it's a net good for society.

<comment><USER49> Of course, but that's a much deeper issue. Today, we generally accept that in a free market without externalities, private profit = public good. If you disagree, you can take that up with Adam Smith and the invisible hand. ;)

</comment></comment></comment></comment><comment><USER52> Why fine? Switzerland has a different approach. Regardless if you're keeping your property empty, you rent it or you're living in it, you're palying the same amount of tax - what you'd pay on the rent if you'd rent it. The tax is adjusted evey six months or so with the medium rent.

</comment><comment><USER53> This is the argument for squatting in a nutshell. Allowing people or organizations to hoard unused property in urban areas is damaging and should be strongly discouraged.

Legalizing squatting in these scenarios is a nice low-regulation way of making sure that property is always being used.

</comment><comment><USER54> This is also the case (tax not fine) in Melbourne Australia. Largely because of the perception that many high-end properties are being used to park money by overseas investors and left empty.

[https://www.theguardian.com/australia- news/2017/mar/06/victo...](https://www.theguardian.com/australia- news/2017/mar/06/victoria-to-tax-investors-who-leave-properties-vacant-for- more-than-six-months)

</comment><comment><USER55> This is also the case in Denmark. It is considered illegal to keep buildings empty. The government can force the landlord to rent them out.

</comment><comment><USER56> Barcelona has really good urban planning ideas that I wish New York would take a look at. It feels like we're a decade behind them.

<comment><USER57> I think people in Barcelona may want to differ, rent prices have increased a lot due to tourism and expats flocking to Barcelona, while salaries for people outside the tech bubble are almost the same.

All these articles featuring all the good things that Barcelona is doing are just marketing...

<comment><USER58> Tech salaries aren't great here. They are going up but still low compared to rent costs.

</comment></comment></comment><comment><USER59> Vice released this short doc recently, shows the ugly side of the system where narcopisos get a foothold on a property in the Raval

[https://www.youtube.com/watch?v=rTdmpjo5zkg](https://www.youtube.com/watch?v=rTdmpjo5zkg)

</comment><comment><USER60> Meanwhile in Australia you get tax rebates for the very same thing.

</comment><comment><USER61> How do you prove a building is empty?

"Do you have a lease contract?" Easy to get a lot of $1 contracts...

"Did you use water / electricity?" Easy to leave a faucet running or set up bitcoin miners.

If you go on word of mouth? What about false positives -- I travel for work and keep an apartment in one city and my house in another. Would that be a problem?

I don't know how to penalize empty apartments in a way that isn't really easy to game, or unjustly fair for people who don't just live in one place.

</comment><comment><USER62> If Bill de Blasio cares about rising rents, he would do this in NYC instead of persecute Airbnb.

</comment><comment><USER63> I think NYC is considering a "second home tax" for properties above a certain value...

</comment><comment><USER64> financial mechanisms and utility have diverged many times in history, but now, it takes on new gravity as the human population is at unprecedented levels, with demographics and market forces pushing young adults into cities.

</comment><comment><USER65> Meanwhile in NYC you can write off your empty unit as a loss!

</comment><comment><USER66> I don't the the government should have any say on the matter.

</comment><comment><USER67> Spain's government is simply trying to hide the fact that it is the #1 problem in the Spanish economy. [after the 2008 recession, economic researchers at Univerisidad Rey Juan Carlos in Madrid put out an analysis of the government's investments in alternative energy, which had been lavish. Results: every alternative energy job created resulted in 2.2 jobs lost in the rest of the economy. The average alternative energy job cost the taxpayer $800,000. Each job in the wind industry cost the taxpayer $1.4 million. The subsidies for photovoltaic installations were such that people would buy a solar panel, which would then qualify them for getting "net metering". They would then buy a gas generator and drive the meter backwards, and make enough money to pay for the generator, gasoline, the disconnected solar panel, and a tidy profit.

<comment><USER68> The story here is about something mayor of Barcelona is doing, rather than the national government of Spain.

Also, what does subsidising renewable energy jobs have to do with leaving residential buildings empty?

</comment></comment><comment><USER69> Why is no one asking the biggest question; why are people piling into cities when there are towns and smaller cities that could be developed instead and thereby lower cost of living. It's a global phenomenon it seems, as much as it doesn't make any sense regardless.

Please save yourself the quality of life arguments. Those are post hoc arguments that only express laziness.

What state governments should be doing is "redistributing the wealth" by heavily taxing successful cities to fund and develop less successful counties and districts and towns. When businesses stop clustering and concentrating in places like Silicon Valley and NYC then you know that taxation is at the right level to compensate for the cartel and monopolistic like behaviors and phenomenon of, e.g., Silicon Valley and SF.

In the USA that should look like heavily taxing Silicon Valley and NYC, etc and using that money to fund high speed Internet and education and companies and business centers in under developed regions like rural Alabama or Mississippi or North Dakota.

<comment><USER70> Because the migration to cities has been a large proportion of the increase in productivity over the last few centuries.

It is more efficient to have urbanised populations. Rural life is already over-subsidized by urban centers.

<comment><USER71> I wonder if remote work opportunities could become significant enough to slow this trend and make more people prefer smaller/quieter towns to the big city life while still holding jobs for big industries.

Does anyone happen to know if this effect is/can be a thing or do remote workers still flock to big cities anyway? I imagine this could eventually lead to lower rents in cities (but also lower salaries due to increased competition in cheaper places)

<comment><USER70> Remote work is a rounding error compared to the overall migration trends. Many jobs require presence, and this isn't going to change anytime soon.

</comment></comment></comment></comment><comment><USER72> People should be able to do whatever they want with their properties

<comment><USER73> No, they shouldn't. There are externalities that effect others, and the free market.

For example, you don't want people doing things that poison groundwater for the neighbors, right?

Anyway, letting property sit idle benefits the landowner but causes issues for neighbors, local government and the free market. It means businesses in those locations get less customers, and local governments less sales tax. If the property is not cared for, there can be additional issues that lower the value of other's homes.

It causes rental prices and home prices for buyers to inflate because of the market distortion, leading to boom bust real estate problems.

Boom and bust effects homesellers and homebuyers, but also, given how often property tax plays a role in government budgets, dramatically affects local and state revenue, (and federal revenue in countries with a federal property tax).

<comment><USER74> "letting property sit idle benefits the landowner"

Can you help me understand this? I've never understood why any property sits idle -- the property would need to increase in value fast enough to counteract property taxes, just for the owner to break even. And that's ignoring the opportunity cost of not filling the property with tenants.

To me, it seems that it would always make more financial sense to try and hit 100% occupancy, even if that means steeply discounting the rent. Wouldn't an empty property be hemorrhaging cash?

<comment><USER75> In here are two reasons[1].

Another is this: a building nearly full rented has an easily calculable valuable based on its income. A building with a higher price but not trying to rent can, incredibly, claim to have a higher value. Especially if there are several building nearby claiming the same value.

If there is a debt associated with the building, it is especially in the owner's interest to keeping the supposed value of the building high even if they are loosing revenue at the moment.

If a few organizations own a large number of units they can strongly influence a market both of rental rates and building values by doing this. Undoubtedly to a net profit or they wouldn't be doing it.

[1][https://news.ycombinator.com/item?id=19427243](https://news.ycombinator.com/item?id=19427243)

</comment></comment></comment></comment><comment><USER76> Maybe we should tax people for voting for politicians who enact laws that artificially restrict housing? Some places sitting vacant are far less then problem then restrictions on building.</comment>


Box files for $250M IPO on full-year revenue of $124M, net loss of $168M - <AUTHOR> http://techcrunch.com/2014/03/24/box-files-for-250m-ipo-on-full-year-revenue-of-124m-net-loss-of-168m/ <comment><USER2> So, $250M actually falls short of the $292M they are burning through every year. The net loss of $168M a year means the $250M buys them almost 18 months of runway.

Their growth looks less impressive when you consider they spent $292M to only grow revenue $65M.

In short, they are spending $5 to make $1. It's possible the customer LTV is actually $6 over a period of years, but they might not be able to borrow enough to make it back in time.

Am I the only one that thinks that a company turning a profit is not like flipping a light switch? If you have a culture of overspending, you aren't going to wake up money and start running a tight ship.

<comment><USER3> It doesn't matter. The street will eat it up. Wall Street is begging tech to produce - even if that means no profit. They will line up to invest. Also, (and probably) because Box is a potential buy-out. Which is probably why they are doing an IPO in the first place.

Look.. look at Amazon. That company has never posted a profit. And yet every trader I know is falling over themselves throwing money at them. It's the belief in investing in something"sexy", and "new".

<comment><USER4> "Look.. look at Amazon. That company has never posted a profit. And yet every trader I know is falling over themselves throwing money at them. It's the belief in investing in something"sexy", and "new"."

This is a) a lazy narrative that simplifies the realities of Amazon's business models and b) flat out false.

The last 4 years Amazon has posted EBITDA of $1.497B, $934M, $544M and $506M (2010-2013, respectively). (1)

Over that same time period they've had Net Income of $1.152B, $631M, ($39M), and $274M

So yeah, I'd say unequivocally that $3.481B in EBITDA and $2.018B in Net Income over a four year time span is absolutely "posting a profit."

1) [https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=...](https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=sLswU5CbEYHm6AHo4QE)

<comment><USER3> Actually I do stand corrected.. cause Amazon DID post a profit, after several quarters of almost no profit or straight-up losses (for the holiday season).

Also this crap about revenue before taxes, interests - etc (your EBITDA) is just that, crap. It's unreliable because a company can decide what is (and what is not) included in the calculation. Of course, this means that a company can change (and many do) this "measure" from reporting period to reporting period. Remember the Dot-Com bust? Companies that had no value, or any chance of value, looked great on paper due to the EBITDA.

EBITDA does not represent a company's cash. More like it's cash flow that it has to service debt (and as I already said, that calculation can be manipulated by the company). It was designed for this purpose in the 80's - the leverage buy-out decade.

// END of rant

EBITDA doesn't measure profit. Or the ability to earn profit. And frankly, it's a cop-out to state to prove a company's value.

</comment></comment></comment></comment><comment><USER5> I'm somewhat astounded to hear they have 972 employees. I would have guesstimated somewhere below 200. Even with a huge marketing push, I'm a little at a loss for what they all do.

<comment><USER6> Isn't that insanely many people compared to what they deliver? Many more than DropBox (300+?) and JottaCloud (~10) without me being able to see why.

Edit: You were before me, so added my comment as a reply to you instead.

<comment><USER7> They have a much higher-touch enterprise sales process, so my guess is that most of the extra employees vs. DropBox are sales, customer service, relationship management, etc. Even after the sell, big clients tend to want dedicated account managers, dedicated support staff they know by name, etc. (Still, it does seem like a lot.)

<comment><USER8> Based on their revenues, it looks like they need to start charging more if that sort of head count is required.

</comment></comment></comment></comment><comment><USER9> The IPO is seeking to _raise_ $250M. The S1 doesn't actually say how many shares they are planning to offer, so you can't say what the valuation would be. I'm guessing somewhere between 5-10 times the $250M.

</comment><comment><USER10> I'm not sure how anyone can look at a growing history of losses due to increasing customer acquisition costs, in an industry with numerous competitors, and want to invest in this.

<comment><USER11> How quickly everyone seems to have forgotten the lessons of Groupon.

</comment></comment><comment><USER12> I just read Ben Horowitz's new book, and he describes taking Loudcloud public as a Hail Mary because private markets were essentially too smart to give them any more money at a horrible time (while the original dotcom bubble was in the middle of bursting).

Clearly Box is in much better shape, but it's not too hard to imagine that maybe they are rolling the dice on an IPO during a super-hot market in response to feedback from private investors that they were going to have to raise a down (or otherwise disappointing) round.

</comment><comment><USER13> $250M feels tiny for a tech IPO (and for an IPO in general).

Does anyone have any data around this?

<comment><USER14> They are looking to issue $250M worth of stock. That's not their valuation.

<comment><USER13> I understand that, but even that feels low.

</comment></comment></comment><comment><USER15> Will this end up devaluing Dropbox in its future IPO?

<comment><USER16> It will if this IPO is an epic fail, which it looks like it may be...

<comment><USER15> This is why I'm concerned. With Google pushing the price of online storage down and Box filing for its IPO we might end up with a damaged reputation of online storage companies and result in probably tanking Box's future revenues. The biggest loser will be us consumers since we'll end up with less choices if companies go bust.

<comment><USER17> I think the only losers will be cloud storage companies if the industry is commoditized and margins are pushed towards zero. The industry is only going to grow, and there will always be competition. Meanwhile, cheaper cloud storage is better for almost everyone.

But I don't think full commoditization will ever fully happen - there's a lot of value in trust and dependability in online storage, and these attributes are difficult to quantify. I'm much more likely to go with dropbox or google than some startup, even if the startup is offering much cheaper rates. Also, companies can compete on efficiency and scale, which adds barriers to entry.

</comment></comment></comment></comment><comment><USER18> Actually a lot of this is surprising for me...I have a buddy that works there right now and while I knew there were bleeding some cash from articles I had read, I was under the impression that they actually were doing better than that financially.

The close to 1000 employees is also fairly surprising, but I would agree that it would mostly be on the sales side.

</comment><comment><USER14> Odd, some numbers are "whited out":

"Based on shares of our capital stock outstanding as of January 31, 2014, upon the completion of this offering, a total of              shares of Class A common stock and"

Can't figure out the valuation.

<comment><USER19> I think the idea is they fill in these numbers when they get closer to the offering, using values that make sense given the indicated demand.

<comment><USER20> Yup. There will be a few iterations of the S-1.

</comment></comment></comment><comment><USER21> Pump and dump IPO. Mark my words.

</comment><comment><USER22> Is their product actually competitive? I had tried it once long ago, but currently I don't see any particular niche where it'd be superior to dropbox/google drive/onedrive/whatever.

What am I missing here?

<comment><USER23> applications / companies that have security requirements, e.g. healthcare needs BAAs to be signed and Box will do that whereas the rest (of the big players) generally do not

<comment><USER24> What's a BAA? Thanks

<comment><USER25> Business Associate Agreement-

It's a HIPPA requirement.

<comment><USER26> HIPAA

</comment></comment></comment></comment></comment><comment><USER27> Read this as throwing in the towel with Google announcing cheaper storage plans last week with renewed emphasis on the enterprise mkt?

<comment><USER28> It takes a bit longer than a week to organise an IPO, my guess is it's been on the cards for a lot longer

<comment><USER29> But that Google Pricing cut was certainly a bad timing for Box.

</comment></comment></comment><comment><USER30> What is box? What do they do? Why do I care that they are losing money? (Though I seem to already have figured out WHY)

</comment><comment><USER31> gotta say it, one of the reasons Dropbox is king is good support for all platforms. Box still ignores Linux so it's a no go for me personally, and my work.

</comment><comment><USER32> let's gamble, buddies!</comment>


Ask HN: Marketing and validating side project when already in a job? - <AUTHOR>

A friend and I are working on a project. We both have full time jobs at the same (large) company. The plan is that if the idea is validated and gets some traction, we will leave our jobs and work full time on it.
We are targeting enterprise market and I am struggling on how to market and validate the idea without letting our current employer know. We cannot even list our names on our web site. Same fear with reaching out to people we know but don't completely 'trust' or other random people in our target markets.
Am I overthinking it? Did anyone had a similar situation? How would you recommend we handle it? <comment><USER3> IANAL

You should first talk to your HR about how your company treats side projects. In some companies, any work that you do automatically belongs to the company (even if the work is done during weekends). This also depends on your local laws. A large company should definitely have policies around this.

It's very hard to talk to your market in an anonymous fashion. Especially when you are just starting out. However, you can gauge some preliminary interest by setting up a good landing page and buying some targeted traffic from Facebook/Adwords. Describe what problem you are trying to solve, and have an email sign up form. Find out how many people sign up. Send follow up emails to these people. For this to work, your landing page has to be informative and should have a clear value proposition. You can have a great idea, but if you can't communicate that to your visitors within their first few seconds, then you're not going to be successful with this approach.

</comment><comment><AUTHOR> No, we didn't sign non-competes and in any case, it is not a competing product. We work on it during nights and weekends. However, the culture around here isn't used to side-projects. If others at the company find out about our side-project, the assumption will be that we are doing it on company time. We are less worried about the legal implications but more cultural - <USER2> if this doesn't take off and we end up staying.

<comment><USER4> Are you sure you didn't? Many companies have language like this buried in the employment agreement (mine does):

I agree to disclose and assign promptly, completely and in writing to the Firm any inventions, whether or not patentable, and including but not limited to, any innovations on processes, methodologies, software applications or products which I discover, conceive and/or develop, either individually or jointly with others, during the term of my employment with the Firm ("Inventions"). I understand that all inventions which I do hereby assign are and shall become the exclusive property of the Firm, whether or not patent applications are filed thereon, and I agree to treat such inventions as Firm proprietary and confidential information and to use such solely for the benefit of the Firm.

</comment></comment><comment><USER5> Why is your current company not allowed to know? Are you working on it during company hours? Does your contract forbid this?

</comment><comment><USER6> Did you sign a non-compete?</comment>


Ask HN: Can I see your vesting agreement? - <AUTHOR>

My partners and I are about to incorporate and we want to put a vesting agreement in place.
We've got an accountant who will do everything for $500 (S-Corp filings, vesting, articles of blah blah).  Still, if we do it ourselves, we only pay the state fees of $150, saving $350.
But, I've never put together a vesting agreement before.  Previous ventures were partnerships where we split equity up front.
So, does anyone have the legal docs necessary for creating a vesting agreement?  Or, should I just pay the money and have the accountant do everything? <comment><USER2> Yes, pay the money.

This is probably not what you want to hear, but I would consider consulting a business attorney to get these docs drawn up.

I'm reminded of this: <http://particletree.com/notebook/a-tale-of-two-legal- paths/>

<comment><AUTHOR> Thanks for the link.

Funny how the legal fees dwarf everything else for a web startup. I could get a couple years' hosting for the price of drawing up these kinds of legal docs.

</comment></comment><comment><USER3> Pay the money.

Not only will it be done right (hopefully), but it's good to build a relationship with a lawyer/accountant early on.

If you're personable, you can usually call up once or twice for a quick bit of advice/answers at no charge, and when you need it, that will be worth the $350 fee easily.

<comment><USER4> agree, but also he must have some information about what this accountant is doing this will avoind him of being scammed or rolled by the accountant.

<comment><AUTHOR> We've worked with him before and he came recommended from a friend running a small business.

He might still be scamming us, but so far we've been pleased.</comment></comment></comment>


Google, Microsoft, Stall Points, and Growth - <AUTHOR> http://blog.kedrosky.com/googles-microsoft-moment-when

<comment><USER2> It is an interesting analysis. I've followed Google's numbers pretty closely since I left in 2010 to track trends from the outside that had started becoming apparent on the inside. Basically there is a limit on how "good" you can be at search advertising, and other companies are relentlessly investing there and so as Microsoft, for example, has quarters of growing ad value both in CPC and volume. Google has declining CPC and growing paid distribution costs. It is often hard to hold a technological edge without moving the bar forward, and while Google was way out ahead before, now they get fewer and fewer gains with the investments they do. That squeezes margins and that results in focus (good) and conservative management (not so good).

What is really spot on in the article is that when the 'luster' of being a growth company comes off, the stock feels it disproportionately. And as RSUs are the retention package of choice your "retention bonus" gets smaller as the stock takes a hit. That unlocks hand cuffs and people who are smart and aggressive opt to try something with more risk and a better potential reward.

It really is true that nothing is forever, but I know there is always the tendency to operate as if it is. Looking forward to the next wave.

<comment><USER3> > Google has declining CPC ... now they get fewer and fewer gains with the > investments they do.

Keep in mind that the declining CPC is coupled with increased revenue, caused by the amount of ad inventory they're moving. So, your second statement is not supported by your first.

(disclaimer: googler, but not in ads or anything related)

<comment><USER2> That is correct, revenue is increasing, but that increase is coming through increases in ad inventory on the core sites, and paying for more traffic (aka Paid Distribution) as more and more people don't bother to switch off 'bing' or 'yahoo'[1] on two big platforms (Windows and Firefox).

There is a limit on how much traffic you can buy, there is a limit on how many ads you can put on your pages before those ads push people away. And when those work arounds lose their effectiveness (my guess is Q3/Q4 2016) then revenue will be flat year/year. If people decide that Google isn't a "Growth" stock, they will reprice their value based on current revenues rather than projected revenues, and call for the elimination of everything that cuts into profits. As the original article points out, there are many previous examples.

[1] Currently also Bing :-) but will no doubt change when the agreement expires.

</comment></comment></comment><comment><USER4> I'm not sure I agree with the author's analysis on compensation.

While RSUs at a large company don't have the growth potential of a startup, Google, Microsoft, etc still seem to be the smarter choice for compensation- minded engineers.

And of course the author also ignores the CEO change that occurred at Microsoft in 2000, and the reawakening that has occurred after his departure in 2014.

<comment><USER5> That is a good point. History is going to remember Ballmer as one of the worst CEOs in history, though, unlike Jeffrey Skilling or Bernard Ebbers, Ballmer will be remembered for mistakes of omission rather than commission. And the revival of Microsoft should be factored in to a full understanding of the situation.

<comment><USER6> Ballmer grew profits, there is no denying that. He definitely missed a lot of things, but there is no qualification for the title of "one of the worst CEOs in history," just like Bush 2 made mistakes but will hardly be remembered as one of the worst presidents.

<comment><USER7> I agree Ballmer was not "one of the worst CEOs in history", but Bush will quite certainly rank among the worst presidents in history. Bush's two war mistakes were gargantuan, scholars estimate over one million war dead in Iraq, in addition he accelerated the decline of the American state in numerous other aspects.

<comment><USER6> Eh, I'm no Bush fan, and the historians will sort it out 20 or so years from now anyways. There were plenty of bad presidents in the 19th century to compete with.

Hyperboles are almost always inaccurate.

</comment></comment></comment></comment></comment><comment><USER8> Every time someone draws historical parallels for tech businesses I think back to Apple. Remember how the iPhone was repeating Apple's mistake vs Windows in the 80s?

The author happens to find some factors that match Microsoft in the 2000s, but completely ignores the ones that don't.

</comment><comment><USER9> Claims of MS decline are not serious, they ignore that the beaste has been making billions in profits every year.

<comment><USER10> Microsoft is enormously profitable! And though their growth may have stalled, that simply means that their growth stopped accelerating - not that they stopped growing. Being a Microsoft is pretty great!

That said, Microsoft _did_ decline. Not in revenues (which grew), but in relevance. Their new products were perceived as chasing market leaders: Zune, Bing, Windows Live etc. Their strategy for their most popular products seemed ill-defined: remember Windows.NET and Office .NET? And this was reflected in their P/E, which did decline, from the 40s to the low teens. Most tellingly, at some point, people stopped being _afraid_ of Microsoft, which may be the most telling. Microsoft competes with everyone, but its competitors don't worry about Microsoft any more.

This would not be a terrible fate for Google, but it's not ideal and far less than they're capable of. For that matter, it's less than what Microsoft is capable of!

</comment></comment><comment><USER11> This is written by someone who isn't in the advertising business and doesn't understand the dynamics of that industry. Extrapolating from stock prices doesn't cut it.

Google is not going anywhere anytime soon, it's the defacto unspoken leader in online advertising and the closest competitor these days is Facebook, and even they have a very hard time getting to parity. Google owns so much of the adserving stack and online ecosystem that it borders on ridiculous. Any issues they might face with shifts in advertising would be the same challenges anyone else will face, but Google has more talent, money and scale to solve these problems.

<comment><USER10> The article compares Google to Microsoft. Microsoft, too, had a dominant position in a lucrative market (and still does, with revenues ~50% higher than Google). Microsoft also underwent a decade of a flat stock price.

Their revenue kept growing during this period. It grew by a lot! But their P/E declined, from the 40s to 12 or so. This is because all of the action (iPod, Google Search, iPhone) was happening outside of MSFT. The "growth genie" was gone, and they transitioned from a growth stock to a value stock, and (as perceived) an innovative company to a company protecting its cash cows.

The article discusses whether Google will undergo the same fate. Being the undisputed leader in online advertising is an enviable position; the question is whether Google can grow to be more than that.

<comment><USER11> It seemingly can as it actively has ventures in several out of band ventures and is encroaching in all the areas Microsoft already is, while having search/advertising as a massive foundation which MS doesnt have.

And yes, advertising will continue to grow, native/video/mobile are all still growing at double digits and Google is slowly rolling out their products to extract even more value here. The ad industry is going through another revolution and Google, while not innovating, has plenty of growth potential still left.

</comment></comment></comment><comment><USER12> i would say i felt similar lackluster when i interviewed (engineering position) there a few years ago. probably one of the worst interviews i've had, completely mechanical. literally all human emotion removed from it. the interview consisted of purely how well one did on the 5 sessions of solving problems. not a single session even bothered to take into account personality. the last interviewer explained they did't want to introduce any sort of bias hence the reasoning for the robotic interviews.

was pretty sad. i love search/gmail/maps but there isn't much coming out of google thats pushing the envelope these days for me.

once again the story of david and goliath... infinite growth is not sustainable...

<comment><USER3> > not a single session even bothered to take into account personality.

So you'd prefer that the interviewers set up situations for unconscious biases to take hold? That would hurt the quality of engineering at Google.

<comment><USER13> Perhaps that's not the end of the world. Is Google's primary burden to growth their quality of engineering? I doubt it, so weighing the entire interview on coding skills seems like a mistake, one that is compounded by creating a homogenous culture where everyone has the same blind spots.

</comment></comment></comment><comment><USER14> This person doesn't know how to read a stock chart ([https://d23f6h5jpj26xu.cloudfront.net/2ihthwrngo9lfq_small.j...](https://d23f6h5jpj26xu.cloudfront.net/2ihthwrngo9lfq_small.jpg)). They clearly ignored the years where 2007-2012 when that would be considered a flatline. That is a huge flatline.

<comment><USER15> Did you choose to ignore the financial crisis of 2007-8?[0]

[0] - [http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%...](http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308)</comment></comment>


Why Talent Is Overrated - <AUTHOR> http://money.cnn.com/2008/10/21/magazines/fortune/talent_colvin.fortune/index.htm?postversion=2008102116 <comment><USER2> I wouldn't say talent is overrated. I'd say hard work is underrated; talent is misunderstood. Luck is also underrated. Wealth is overrated.

<comment><USER3> Talent alone does little or nothing. Talent + hard work = great potential. Talent + hard work + luck = success.

For a great psychological (layman's) treatment of this, see _Mindset: The New Psychology of Success_ by Carol Dweck.

<comment><USER4> I would say that talent is how good you can be at something without having to try (i.e. without hard work), and that as such it is a continuous quantity rather than a binary one. When talent runs out, the only way to get better is through hard work. In a way, I think being too talented at something is a handicap because you never learn how to work hard, and so you are unable to progress any further than your talent will take you.

</comment></comment></comment><comment><USER5> 'Talent' is not something anybody should be proud of having. Everybody is born with a particular advantage over other people in some particular area. Some discover this advantage and put it to good use. Others do not, or never have the chance to develop it. So 'Talent' is irrelevant, because everybody has it.

The thing to be proud of is discovering your talent and actually putting it to use in a way that benefits you or other people.

In a church choir, there are tons of people talented in singing. But they don't try to develop or focus on those talents.

And of the programming crew here, perhaps some of you could have turned out to be the greatest footballers in the world. But you may not even know that the balance and co-ordination for this is within you. Instead you're here writing medicore PHP code.

To develop a talent, one needs a positive feedback loop. Many people don't get that in the area they have natural abilities in.

So, talent is irrelevant. Everyone has it. It's the development of the talent that counts.

</comment><comment><USER6> It makes more sense to say that talent is necessary but not sufficient. I'd like the writer to provide examples of people who had no apparent talent at all, even lacking whatever talents are necessary to get into a good college, and show me how many billionaires you get from that group. Saying that out of a crowd of Ivy League graduates, since only two made it big, that being an Ivy League graduate had absolutely nothing to do with it at all, makes no sense.

<comment><USER7> Thomas A Edison lacking talents to get into a grade school has physical limitation (deaf) but invented? phonograph?

i would even say as far that limitations (talent, physical, money etc) are necessary to make it big

<comment><USER6> Just because you're deaf, doesn't mean you can't have mechanical aptitude. And what if your limitation is that you have Down's Syndrome? Clearly, some parts of human ability are genetic, and some of the variance in human ability is innate. I'm just not impressed to hear that out of a hundred smart people, only 5 became successful. That doesn't prove talent has nothing to do with it. If a study showed that the rate of success was 5% regardless of "talent," whatever that is, that would be something, but the article didn't do that.

I suppose if your limitation is mild poverty though, you'd probably have a lot more ambition to move onto something better than somebody born into a comfortable middle-class life.

</comment></comment></comment><comment><USER8> Did they just use, as an example to prove that talent is not genetic, one former NFL quarterback having two sons who are NFL quarterbacks? Or did I imagine that?

I must have imagined that.

<comment><USER9> I think it was meant to show that if you look beneath the inherited skill, you'll find a lifetime of hard work, just like with anyone else. Still, that's not what I'd call quality writing. I'm surprised it made it past the editor.

<comment><USER8> Right, because if you accept the contrary argument, that it's about nothing but raw talent and work is irrelevant, you would assume that the training didn't hurt but didn't matter either.

Show me a quarterback whose 5'2" dad who stopped at middle school peewee trained them, and I'll be impressed.

<comment><USER10> From Wikipedia:

"László Polgár (born 1946) is a Hungarian chess teacher and father of the famous "Polgár sisters": Zsuzsa (Susan), Zsófia (Sofia), and Judit. He authored well-known chess books such as Chess: 5334 Problems, Combinations, and Games and Reform Chess, a survey of chess variants.

Although he himself is a modest chess player, Polgár is an expert on chess theory, owning over 10,000 books about chess. He is interested in the proper method of rearing children, believing that "geniuses are made, not born". Before he had any children, he wrote a book entitled Bring Up Genius!, and asked for a wife who would help him carry out the experiment. He found one in Klara, a schoolteacher, who lived in a Hungarian speaking enclave in the Ukraine. He married her in the USSR and brought her to Hungary. They have three daughters. He homeschooled his three daughters, primarily in chess, and all three went on to become strong players. An early result was Susan winning the Budapest Chess Championship for girls under 11 at the age of four"

<comment><USER11> I would rephrase it as - "geniuses are born and can be made"

[http://susanpolgar.blogspot.com/2007/02/geniuses-are-made- no...](http://susanpolgar.blogspot.com/2007/02/geniuses-are-made-not- born.html)

</comment></comment></comment></comment></comment><comment><USER12> I've always felt that early music education had something to do with brain development later in life. This article helped to explain a lot. To be able to identify weak areas and purposely practice at them is something I used to do in my 20s all the time, mainly because my music education told me that this was the way to improve a poor-performing piece.

This article was a good reminder for me. I need to get back into that mindset.

</comment><comment><USER13> I couldn't help but notice the discrepancies between the article and reality:

 _Bill Gates, the world's richest human, is a more promising candidate for those who want to explain success through talent. He became fascinated by computers as a kid and says he wrote his first piece of software at age 13; it was a program that played ticktacktoe. The problem is that nothing in his story suggests extraordinary abilities._

From wikipedia:

"Gates graduated from Lakeside School in 1973. He scored 1590 out of 1600 on the Scholastic Aptitude Test[17] and subsequently enrolled at Harvard College in the fall of 1973.[18] Prior to the mid 1990s, an SAT score of 1590 was equivalent to an _IQ of about 170_ (roughly the one in a million level),[19] a figure that would frequently be cited by the press.[20]"

Source: <http://www.wikipedia.org/wiki/Bill_Gates>

"This photo's from Lakeside High School, a private school that Paul Allen and I attended. Paul was two years ahead of me in school, looking here you might think he was about ten years older than I am...This particular room was very important cause this is where the first computer connection was created ...the mothers club funded that teletype this was when I was in eighth grade and first figuring out how to use the computer, and a bunch of kids came down and were fascinated but the two who really stuck to it the most were Paul and I. In fact, people thought it was strange that Paul kept talking to a kid who was two years younger than him, but _I had won this nationwide math contest_ and so Paul knew I thought I could figure stuff out and he kept challenging me saying hey can you understand this or you know can you figure out how to do that and so he and I became very close friends and that led directly to the creation of Microsoft only about five years later."

Microsoft without Gates, as narrated by Bill Gates.

Source: [http://money.cnn.com/magazines/fortune/storysupplement/gates...](http://money.cnn.com/magazines/fortune/storysupplement/gates_microsoft/index.html)

From an interview with Playboy in the early nineties: GATES: I was 11. But he was an enlightened guy. He was always challenging me. He would ask me questions, but he would never tell me whether my answer was right or not. He would say, That's an OK answer. Then our time would always be up and he'd give me more stuff to read.

PLAYBOY: Ever wonder what might have become of you if you had gone to public school instead of Lakeside, where you met Paul Allen and fell in love with computers?

GATES: I'd be a better street fighter.

 _PLAYBOY: When did you know you had something special to offer? When did you become aware you were different?_

GATES: [Big raspberry] I have something special to offer, Mom! Mom, I just figured it out: I have something special to offer! So don't make me eat my beans.

PLAYBOY: You know what we mean.

GATES: _When I was young we used to read books over the summer and get little colored bookmarks for each one. There were girls who had read maybe 15 books. I'd read 30. Numbers two through 99 were all girls, and there I was at number one. I thought, Well, this is weird, this is very strange. I also liked taking tests. I happened to be good at it. Certain subjects came easily, like math. All the science stuff. I would just read the textbooks in the first few days of class._

<http://ei.cs.vt.edu/~history/Bill.Gates.html>

I recommend CNN learn to use google.

<comment><USER14> I know what you're saying, but those quotes also describe deliberate practice... look how hard Gates worked at 11 yo, and in what way.

If (and I don't know if he did or not) Bill Gates had been practicing those skills since the age of 3 or so (as Tiger Woods did), one would expect him to be highly capable by the age of 11, and to score well in any test of those skills. etc

</comment></comment><comment><USER15> I would say that talent is a useless idea. What really matters is an openness to new ideas, the courage and diligence to pursue them, and a genuine interest in success. Sometimes these things do not appear at all in someone but then as they acclimate themselves to an environment, they polish themselves to a shine.

How do you even define talent anyway? If it's just something you're good at, enough practice will get you there provided you are physically able.

</comment><comment><USER16> If you're in a creative position, talent is essential. But if you simply need to make the right decisions (or not too many wrong ones) and get the job done reasonably well to get ahead. For a guy like Ballmer (featured in the article), discipline and diligence far outvalue talent.

<comment><USER17> > If you're in a creative position, talent is essential.

I used to believe this strongly as well. I worked with a great web graphics designer on several projects 3-5 years ago. We'd collaborate on overall flow and wireframes. He'd make it look good, and I'd make it work.

I commented once that I wished I had his artistic talent. His response was basically that if along the way I'd spent as long in photoshop working on and trying to dream up mockups as he had, I'd be just as good.

Since then I've come to strongly agree with him.

</comment></comment><comment><USER18> The sports analogy is misleading.

If you want to make it to the top in sports, you need the talent, which in this case, means the right genes.

Usain Bolt will never beat Haile Gebrselassie in a marathon, no matter how much training (or doping), and vice versa.

<comment><USER19> I think it's much easier to discuss "talent" if you ignore physical attributes. Not just because it avoids using the word "talent" too broadly, but because physical attributes only apply in a very limited number of professions.

<comment><USER20> Like the rest of the body, the brain exists in the physical world. All "talent" is based upon physical attributes.

<comment><USER19> I was using the dichotomy between physical and mental in this context. Perhaps I didn't make that clear but it seems you are just being difficult for the sake of...well...being difficult. Was my point really that difficult to understand?

I am asking honestly, not to be condescending.

<comment><USER20> I believe it's a false dichotomy in this context. Our bodies and brains are both shaped by our genetics as well as our experiences.

Small differences in heredity can have drastic effects on mental limits. Those limits may not be as easy to see as height is, but they are real, nonetheless.

<comment><USER19> If those limitations are hard to measure, nearly impossible to judge at a glance, and are not guaranteed to even be present in an individual, how do you have a discussion about their effects on a person's success?

Either way, my point was that I felt you should ignore physical attributes not related to mental abilities when discussing talent. I think using them as examples of "talents" making a difference just confuses the issue.

</comment></comment></comment></comment></comment></comment><comment><USER21> I thought Ballmer knew Gates well in college. I'd say that would definitely help him get that CEO position.

</comment><comment><USER20> As my old basketball coach liked to say, "You can't teach tall."

We each have different innate limits that no level of "deliberate practice" can overcome. Yes, the power of sheer will can do amazing things, but our genetics still limit us. Lion DNA differs from human DNA by less than 10%, but no amount of training could ever allow a human to close the gap created by genetics and leap or run as quickly as a lion.

</comment><comment><USER22> Wouldn't it take talent to actually perform deliberate practice? Most people don't have that kind of self control.

<comment><USER14> From this one talent springs all.

But this "talent", to make effort in a specific way, seems more a moral "talent" - like courage or kindness - than anything else. These qualities can be cultivated, and are a necessary part of being human that are within us all. They are within you.

</comment></comment><comment><USER4> "You could say that work, like deliberate practice, is often mentally demanding and tiring. But that's typically not because of the intense focus and concentration involved. Rather, it's more often a result of long hours cranking out what we already know how to do. And if we're exhausted from that, the prospect of spending additional hours on genuine deliberate practice activities may seem too miserable to contemplate. "

That I can agree with :( A very interesting article once you get into the description of deliberate practice and how to implement it.

</comment><comment><USER23> Bodybuilding came to my mind. People say they don't have good genes (I would say some percentage of professional athletes do have far better genes than anyone else, but not most professional or college athletes). However, unless they try lifting weights 4x a week and/or trying to be good at a sport for five years in their early 20's, they will never actually know.

<comment><USER24> "A stronger will beats superior genetics" -- Dorian Yates. He's only partially right, tho', as Stuart McRobert demonstrates.

</comment></comment><comment><USER25> "Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent." -- Calvin Coolidge

</comment><comment><USER26> 'Deliberate Practice' is what Easterners might call 'Kung Fu', while we Westerners often associate the concept with Chinese Martial Arts, I think the East associates this term in a much broader context whereas Kung Fu is used for describing much more than just martial arts.

</comment><comment><USER27> An aphorism about babies and bathwater comes to mind.

To pick one concrete example, great musicians often have perfect pitch and are rarely tone-deaf; and, great musicians always work hard at music.

And so it goes with everything else.

</comment><comment><USER28> A dropout can beat a genius through hard-work and determination. -Naruto

<comment><USER29> Never argue with an idiot. They will only drag you down to their level and beat you with experience.

<comment><USER26> Is there a source for this? Or is this all you?

<comment><USER29> No, not me I'm afraid, but a good question that I couldn't get google to answer (in 30 seconds). I did however find this one credited to Mark Twain - 'Never argue with a fool, onlookers may not be able to tell the diference'

</comment></comment></comment></comment><comment><USER30> Talent isn't everything, but it sure helps. But then again, maybe "talent" is just the product of hard work and dedication in the form of an almost scary obsession with something.

</comment><comment><USER31> Too many people aspire for mediocrity; Not many people aspire for GREATNESS

</comment><comment><USER32> I believe I'm talentless so I couldn't agree more with this article.

</comment><comment><USER33> desire trumps ability

</comment><comment><USER34> Success = Passion + Potential + Patience

<comment><USER35> \+ Talent</comment></comment>


Language Aptitude Not Math Predicts Programming Skill - <AUTHOR> https://www.i-programmer.info/news/99-professional/13517-language-aptitude-not-math-predicts-programming-skill.html <comment><USER2> I guess it depends who you are talking about. Computer Scientists are generally great at math, but it doesn't mean they are good programmers. A good programmer has style: from how the code looks, to how it is arranged, test, regressed... to how defensive the code is to soft-failures. I've worked with spectacular computer scientists who wrote compiler kernels, but their code looked like a big pile of... well, you get it.

</comment><comment> tj-teej Makes sense, as naming is the one of the two hardest problems in programming!

(the other is maintaining distributed cache consistency and catching off-by- one-errors :D)

<comment><USER3> Agreed! Questions though... about two... is this two where two comes from 0,1,2 ?

Also, on a relational note, what kind of "and" are you using?

'Could be my isolation talking, but the further I look into this comment the more dad/logic jokes I see. Caveat: am dad.

Eh hem... I will see myself out.

</comment></comment><comment><USER4> In general, you don't need to be exceptional at math for doing programming. A basic understanding of arithmetic is sufficient. Okay, perhaps if you work with numerical analysis on daily basis, or doing type theory/lambda calculus/any theoritical computer science stuffs.

</comment><comment><USER5> It's 2020 and the g factor ism't mainstream</comment>


The brain avoids looking at glassy skyscrapers - <AUTHOR> https://geneticsofdesign.com/2019/07/27/how-bostons-glassy-seaport-fails/ <comment><USER2> _It turns out that the new glassy exteriors, whether boxy or round, are really tough on the brain—difficult for it to take in._

I'd say it is the exact opposite: no one will focus on flat nearly-featureless surfaces, because there is no fine detail to focus on. It's _easy_ to "take in" at a glance, so the brain doesn't direct any more attention to it.

<comment><USER3> Also bland, badly-composed uninteresting picture -- it's all a noisy background.

Just use google images search for glass skyscrapers an repeat the experiment.

</comment></comment><comment><USER4> The second image doesn't have anything else in the image to look at, whereas the first has multiple buildings and plenty of sky space. This article is bollocks. They've worked backwards from a conclusion to find (bad) evidence.

<comment><USER5> As somebody who dealt with photography and cameras his whole life and took pictures as a professional for movies: this isn't bollocks. The visual readability of an opaque non-reflective cube is always going to be higher than that of a mirror cube in a non studio environment.

This is because your brain needs to do more legwork to figure out the underlying shape when you look at reflective suefaces that are mostly flat and show you parts of a sky that you may or may not see at that point.

Reflectivity can also work in your favour, to highlight shapes, especially when the paint additionally has a diffuse color (think of cars) and they are in eye level (less confusing sky reflections), but highly reflective glass buildings with nothing else to gisually hold on will most of the time just reflect a random patch of the sky.

What visual readability _is_ , is the answer to the question how fast and effortless a image can be read. A certain degree of unreadability may be interesting even, but I am not sure if architects are that aware of the reflective part of their buildings.

E.g. I happen to have the luck to have a second sun in the end of the day despite my east-facing windows, because one of the glas buildings opposite. I am sure they didn't simulate that. I am also sure this increases the temperature in the city.

Most architects I met just think glas looks rad and all their collegues use it and so they do too.

<comment><USER6> > _I am sure they didn't simulate that_

They actually might, after arc-shaped reflective buildings started almost literally melting cars that happened to be parked in the focus of the reflected sunlight, and some constructs had to be built in the line of that sunlight to protect the cars.

[https://www.nbcnews.com/sciencemain/london-skyscraper-can- me...](https://www.nbcnews.com/sciencemain/london-skyscraper-can-melt-cars- set-buildings-fire-8C11069092)

[https://www.bbc.com/news/uk-england- london-23930675](https://www.bbc.com/news/uk-england-london-23930675)

[https://www.dailymail.co.uk/news/article-2786723/London- skys...](https://www.dailymail.co.uk/news/article-2786723/London-skyscraper- Walkie-Talkie-melted-cars-reflecting-sunlight-fitted-shading.html)

<comment><USER7> Apparently not. The same architect had previously designed the Vdara Hotel in Las Vegas, which suffered from the same problem. Apparently no lessons were learned.

[https://www.businessinsider.com/the-vdara-death-ray-hotel- is...](https://www.businessinsider.com/the-vdara-death-ray-hotel-is-still- burning-people-in-las-vegas-2016-6?r=US&IR=T)

[https://en.wikipedia.org/wiki/Vdara](https://en.wikipedia.org/wiki/Vdara)

</comment></comment></comment></comment><comment><USER8> This seems ridiculous. Based on the output of an automated tool developed by 3M that produces a saliency map based on an image, I'm not sure how we can conclude that people ignore skyscrapers.

<comment><USER9> I don't believe the article makes this claim. It's not about people actually ignoring the skyscrapers, but rather the low-level layers of the brain tagging them as not worth looking at. This sounds plausible - glassy skyscrapers look a lot like the sky, which isn't very interesting to look at.

<comment><USER8> No, this is wrong. In reality there's no link between the claim in the article and the way that the human visual system processes its input. The article is trying to make a leap between the output of some algorithm, and what the human visual system does.

Meaningless.

<comment><USER9> I guess there is no disagreement. The evidence is indeed worthless.

Still the hypothesis is interesting and plausible. Maybe there is a way to test it more rigorously, this time based on actual eye tracking.

</comment></comment></comment></comment><comment><USER10> This resonates with some of my experiences.

When I had a corporate job, I worked in a large glassy building that wasn't a skyscraper. It was initially one story -- though tall for just one story because it was industrial scale and held more than a thousand employees (about two thousand, at least after the addition).

The one story building reflected the sea of blacktop parking lots around it and appeared ominously black.

They added a two-story addition to one end and moved my department there. It became clearer that the building appeared to be ominously black because of what it reflected. The taller part reflected the sky while its base still seemed ominously black.

It became even clearer that this was so when they built a three-story building next door to house the IT department. That building mostly looked like floating clouds and blue sky. Very little of it seemed visually heavy and ominously dark.

But they were equally hard to mentally process. It was hard to comprehend these buildings whose appearance morphed based on what was being reflected. It was hard to figure out where they began and ended, what they were made of, etc.

It was not only disorienting, it was disturbing. It was a bit like working in a fun house mirror.

</comment><comment><USER11> > It's equally instructive to see how the older parts of the Seaport (above) > original 19th-C commercial buildings on Seaport Boulevard, for instance, fit > well within the city.

Cherry picking. The sample images are misleading at best. First one is mainly three buildings with quite some space around like sky and ground, even more buildings in the back. Second one is basically only the facade of one building. Sure there is a car, a bit of street and even some sky. But really there is not much else to look at.

</comment><comment><USER12> I love 4 WTC, for some reason its extra-mirrory, really tall with a flat roof, from the street it often looks like it disappears.

[https://42floors.com/images/H596cc3895888f38019aee71d9a21247...](https://42floors.com/images/H596cc3895888f38019aee71d9a212479bdf344d9S1000x700W0seB505153O/0ca546855e4bfa8001033dcaf223b2e4a70c6d68) [https://42floors.com/images/H2ace7a05db1517e4a6726532b38d4e6...](https://42floors.com/images/H2ace7a05db1517e4a6726532b38d4e65aec3ec1aS1000x700W0seB505153O/9eed7b2022eca55b6a4eca675aac7b4f29099cb7) [https://42floors.com/images/Hc03b5fe9133b1ba7b10f11d22531e87...](https://42floors.com/images/Hc03b5fe9133b1ba7b10f11d22531e875b4702cf0S1000x700W0seB505153O/bb46f7a7a95d1ca70178bc178e148a9c4a3daff5)

<comment><USER13> I can't help but wonder how much of this is influenced by the lighting and composition of the photo. Both your examples and those in the article.

I'm generally not a fan of the all-glass architecture, or even modern architecture in general, and prefer buildings made of stone, and preferably on a human scale, like 19th and early 20th century architecture. After the War, buildings became featureless and soulless, and when architects started making them look good from a distance or from the sky, and not up close. Designed to look good as a model but not something for real people to live in.

Recent years have fortunately seen a return to more sensible architecture.

<comment><USER12> Yes definitely that second pic is probably not great. One thing I think it does benefit from is being surrounded by other tall buildings, so often you can only see it from very close up and its that view in the first photo that I see nearly every day.

</comment></comment></comment><comment><USER14> Should we flag this post? The "science" presented in this article is so bad it deserves being called fake news.

Like the commenters mentioned:

\- the photos are chosen in such a way that it's obvious eyes won't go looking into the buildings

\- there is no mention of the sample size regarding participants and photos that were shown. looks like cherrypicking

<comment><USER15> Flagging should be removed from HN, or at least give an option to un-flag. Its a good interesting article.

You stated your opinion in your comment. Why do you need to flag the post?

</comment></comment><comment><USER16> Isn't it simply brain looking at the edges of things? If a building doesn't have edges inside it then we look at its silhouette.

<comment><AUTHOR> The author shows how for more classical buildings with more structure, the eye focus on the structural aspects of the buildings.

<comment><USER17> No, the author shows that some random computer vision tool focuses on more structural aspects of the buildings. Assuming that is related at all to what "the eye" does is ridiculous.

<comment><USER18> Assuming that a tool explicitly created to simulate visual human behaviour would do exactly that doesn't seem very strange.

You can look at their validation study, it does ok: [http://multimedia.3m.com/mws/media/1006827O/3msm-visual- atte...](http://multimedia.3m.com/mws/media/1006827O/3msm-visual-attention- software-vas-validation-study.pdf)

</comment></comment></comment></comment><comment><USER19> They can reflect enough light to melt cars:

[https://www.bbc.com/news/magazine-23944679](https://www.bbc.com/news/magazine-23944679)

[https://www.dailymail.co.uk/news/article-2786723/London- skys...](https://www.dailymail.co.uk/news/article-2786723/London-skyscraper- Walkie-Talkie-melted-cars-reflecting-sunlight-fitted-shading.html)

[https://wonderfulengineering.com/skyscraper-literally- melts-...](https://wonderfulengineering.com/skyscraper-literally-melts-a-car- in-england/)

</comment><comment><USER20> I like glassy buildings. Can stare at them for minutes; the article makes little sense to me. E.g. Hong Kong Harbour skyline, which is quite "glassy". Many people travel to take a look at it.

[1] [https://www.tripsavvy.com/thmb/SPLQhcPHF_u06LNEFd1qIc4p_3Q=/...](https://www.tripsavvy.com/thmb/SPLQhcPHF_u06LNEFd1qIc4p_3Q=/950x0/filters:no_upscale\(\):max_bytes\(150000\):strip_icc\(\)/GettyImages-586892388-5c7b646fc9e77c0001d19d3b.jpg)

<comment><USER21> This image shows the opposite of a glassy skyline. The only true glass building, which reflects sky and water, is the one just above the boat. The rest of the buildings are more traditional sky scrapers with mixed cladding.

<comment><USER20> Maybe. But I can count something like 6 or 7 buildings on that pic which look glassy to me. I'd say there are several glassy (which reflect sky and water) buildings there [1][2].

[1] [https://www.shutterstock.com/video/clip-7263112-panning- time...](https://www.shutterstock.com/video/clip-7263112-panning-timelapse- video-victoria-harbour-hong-kong)

[2] [https://www.shutterstock.com/video/clip-27791884-victoria- ha...](https://www.shutterstock.com/video/clip-27791884-victoria-harbor-hong- kong-14-june-2017)

Edit: added more links.

</comment></comment></comment><comment><USER22> Just for fun, here's how some of OpenCV's feature detectors handle the first image:

AKAZE: [https://imgur.com/EvcStcH](https://imgur.com/EvcStcH)

ORB: [https://imgur.com/YHSEDD7](https://imgur.com/YHSEDD7)

I certainly wouldn't make any claims about what this says about the human visual system, but at least for these two algorithms they do seem to have troubles finding interesting key points to track on the buildings.

</comment><comment><USER23> I'm the author of this article. These are good questions and comments; evolution's preset the way we take in surroundings and brain can't 'fixate' or focus on glassy facades; eye-tracking studies and emulation software used in article, show this. You can read more studies showing this here: [https://geneticsofdesign.com/2019/07/07/why-eye-track- boston...](https://geneticsofdesign.com/2019/07/07/why-eye-track-boston-city- hall-to-see-evolution-at-work/) And here: [https://commonedge.org/game- changing-eye-tracking-studies-re...](https://commonedge.org/game-changing-eye- tracking-studies-reveal-how-we-actually-see-architecture/)

And if you're curious about why modern architecture is 'avoidant' here: [https://commonedge.org/the-mental-disorders-that-gave-us- mod...](https://commonedge.org/the-mental-disorders-that-gave-us-modern- architecture/)

LMK if you have questions; always open to discussing.

</comment><comment><USER24> The article keeps using the word 'ignore'. The brain is not ignoring the buildings, its just looking at them more subliminally.

<comment><USER18> No, the claim is explicitly that the fast visual processing parts of the brain (the subliminal processing) decides the eye should focus on something other than the buildings. That's quite clearly within the reasonable interpretation of "ignore".

</comment></comment><comment><USER25> Playing Devil's advocate: The glassy skyscrapers are a good design because you ignore them. So it's like they don't exist.

On a more serious note, this is kinda of an isolated part of Boston city. It's a port that requires crossing the bridge. The bigger problem is that they are building huge buildings with no connection to the subway/metro network.

<comment><USER26> Silver line goes there, but I'm not sure how useful that is.

</comment></comment><comment><USER27> Somehow there seems to be an application for military use here. Make a shiny tank and the enemy just won't be able to see it. Or does the shiny magic only work on civilian buildings?

<comment><USER28> Dazzle camouflage[0] was used extensively in WWI to make it difficult to see ships because they were so brightly coloured. It's not quite the same principle, but it comes close.

[0]: [https://en.wikipedia.org/wiki/Dazzle_camouflage](https://en.wikipedia.org/wiki/Dazzle_camouflage)

<comment><USER29> The ships were easy to see. What was hard is determining what side you were looking at and what direction they were moving. This made it more difficult to engage them.

<comment><USER28> Sorry, sloppy phrasing about an often confused topic on my part. You're quite right.

</comment></comment></comment></comment><comment><USER30> In the first photo, it seems more like the glass facade camouflages with the sky which gives an illusion of more nature and less artificial construction.

<comment><USER18> There's not much nature there, it's just empty sky. For simple comparison of what gives a stronger nature experience, just go out into a field and compare looking straight up to looking out across the field

</comment></comment><comment><USER31> I agree that, in general for everyday stuff, I prefer "down to earth" stuff like the gritty NYC in the 80s or SF of today, than glitzy skyscrapers. They seem too sterile.

BUT in those photos, man, there are so many confounding variables. How about the fact that the sky is brighter than the skyscrapers, so you could be looking for where it is brighter? Secondly, there isn't much detail or variation on those "boxes", so your brain doesn't find that patch very interesting. And so on.

There are plenty of skyscrapers people notice right away, e.g. the empire state building, the space needle, etc.

</comment><comment><USER32> Perfect design for Evilcorp hq.

</comment><comment><USER33> Seems like the first image is just looking for the areas of highest contrast, ie the completely overexposed areas of clouds against the darker building. Meanwhile the second photo lacks any areas of significant contrast. Bleh.

</comment><comment><USER34> Feels like the wrong conclusion in submission title to me. Glass buildings are by their nature quite uniform & featureless.

...of course the brain looks elsewhere.

And I don't think it's a given that it's a bad thing either. If you think about an ocean - people tend to look at the horizon not stare at the fairly uniform ocean surface. Nothing wrong with the ocean surface though</comment>