[terminalshort]

It stems from the relatively low capital requirements of tech companies relative to other industries (pre-LLM). Now that this factor has changed we see them rapidly adopting debt financing for their capital intensive LLM projects.

[JumpCrisscross]

> stems from the relatively low capital requirements of tech companies relative to other industries (pre-LLM)

Not really. Tech, including low fixed-cost software, has been tremendously capital intensive for decades. Early-stage start-ups lack the cash flows to fund debt. But post-Series B companies raising equity are generally doing so for idiosyncratic reasons, e.g. capital sponsors being concentrated in equity for historical reasons, valuation escalators and capital denial to competitors.

[terminalshort]

I don't think you understand what capital intensive means. Many tech companies are started out of their founders apartments for essentially 0 startup cost and from here the only serious costs are salaries and AWS. There's a reason that tech founders get so much richer than founders in other industries and that reason is because the minimal capital requirements allow them to sell off so much less of the company before reaching massive scale.

[JumpCrisscross]

> don't think you understand what capital intensive means

I may have missed something in my career on Wall Street, as a founder and in VC.

(Being wrong is fine. Being confidently wrong is dumb.)

> Many tech companies are started out of their founders apartments for essentially 0 startup cost

You’re mixing up fixed costs and capital. Both fixed and operating costs consume capital. (We call the latter working capital.)

(You may also be mixing up PP&E and capital.)

> a reason that tech founders get so much richer than founders in other industries and that reason is because the minimal capital requirements allow them to sell off so much less of the company before reaching massive scale

This is wrong. Obviously wrong.

Tech founders get richer because their companies get bigger. Apple, Tesla, Google and Saudi Aramco have massively different capital requirements. Their owners (and founders/founding lineages) are in the same ballpark.

Similarly, most family businesses never sell equity until they sell the business. And most tech founders don’t have a majority of equity after a couple rounds.