The Times is known for its brave forays into advocacy journalism, and in today's paper, DealBook columnist Andrew Ross Sorkin delves into the frequently touched-upon but little-explored plight of a subset of struggling Americans: the poor rich. Go ahead, snicker. They know it sounds like an oxymoron. They're used to it. Derisive laughter from an uncomprehending populace is just one of the many burdens poor not-poor people have to bear. It's a difficult life, the life of an itinerant entrepreneur. Imagine it: Living from multi-million-dollar deal to multi-million-dollar deal, the bulk of your wealth tied up in stock options, supporting yourself with low-interest loans, tossing and turning at night, wondering if your best days are behind you, if you'll ever have another face-melting cash payout again.
And then, when your finances are so tight you think you're going to have to sell off stock before it reaches its height or sell a work of art, just to keep the staff on, something happens that drives you to what kind of sort of feels like almost insolvency. Like you meet a twentysomething model/actress and you have to get a divorce from your model/novelist wife, who insists on being supported in the lifestyle to which she has become accustomed. That's what happened to 38-year-old Silicon Valley entrepreneur Elon Musk. He had at least $200 million in cash in his bank account not that long ago, on top of billions of dollars in assets. Now, he is penniless. Well, except for his jet. And some pocket money he found in the couch cushions.
Now Mr. Musk says his account is empty. Actually, less than empty. He says he invested his last cent in his businesses and is living off loans from his wealthy friends. He subsists, according to court filings, on $200,000 a month and still flies his private jet. “About four months ago, I ran out of cash,” Mr. Musk acknowledged in a divorce court filing that was widely circulated among the West Coast digital elite.
And he's not the only one!
It was quite a revelation, one that laid bare an uncomfortable truth in the world of venture capital: high-tech entrepreneurs who look rich are often relatively cash-poor, at least next to their glittering images. Mark Zuckerberg may be a billionaire when, or if, Facebook goes public. Larry Ellison, the founder of Oracle, lives like a king. But most of his wealth is tied up in Oracle stock. Mr. Ellison lives in part off loans.
People like Mr. Musk may have redefined what it means to be rich, particularly young and rich. But somehow, many of these seemingly successful people live on the financial edge, waiting, hoping for the next deal to unlock their next fortune.
Wow, that really is ... uncomfortable.