When Snap Inc., the parent company of Snapchat, issues its first round of public stock in two weeks, it will likely raise between $19 billion and $22 billion. That valuation will make it the most valuable tech company in Southern California and one of the most valuable of all L.A.-based companies. Many of its 1,900 employees will make fortunes overnight.
One senior vice president of engineering stands to make $110 million. That’s enough to cover rent for 10,000 or so of Los Angeles’ working-class residents for a year.
Of course, Snap money probably won’t be going into rent. As the New York Times reports, Snap’s millionaires-to-be are going to have long wish lists of things to buy. Near the top of those lists will be real estate.
Back when Snapchat was just a sketchy platform for kids to send, um, silly photos to each other, the fledgling company operated out of a cottage in Venice Beach. As it grew into a social media juggernaut, it didn't follow convention by renting space in a high rise or building a mega-campus in the suburbs. Instead, it colonized its own neighborhood, expanding from cottage to cottage, scooping up small office spaces, and oozing its way through Venice.
Venice Beach is regarded almost universally as “funky.” By Los Angeles standards, Venice has history in spades, with its share of hippies, beach people, drifters, and artists. They fit in well with the early-20th century bungalows and brick. The rise of Snap and its brethren in the so-called Silicon Beach scene has led to a miniature culture war as ambitious millennials have displaced old-timers, forced longstanding businesses to close, and gleefully disrupted the neighborhood.
(In that sense, Snap occupies far different territory than does its counterparts in Silicon Valley. While tech money has driven cost of living in Mountain View, Palo Alto, and Cupertino to insane levels, there’s more history on one block in Venice than in an entire zip code on the Peninsula.)
Despite all pressure to the contrary, coastal cities and neighborhoods have refused to add housing. Los Angeles has done so in places, but housing supply on the Westside is growing at rates somewhere between 0 and negative-22 billion percent. Home prices are already bonkers. We can only imagine what will happen when the Snap folks get real money in their bank accounts.
Real estate agents are salivating. Many longtime Venice locals are terrified.
There at least one demographic group in the Los Angeles area that's even more terrified. Not necessarily of Snap — though Snap doesn’t help.
On the very same day that the New York Times reported on Snap’s impending riches, President Donald Trump announced his intention to fulfill his promise to aggressively deport undocumented immigrants.
Let’s estimate the impact of this lunacy on California. Some 2.7 million undocumented immigrants call California home — by far the largest such population in the nation. More than 800,000 live in Los Angeles County alone.
A perverse notion occurs to me as I consider Trump’s vile solution to a nonexistent problem. If it succeeds, 800,000 people in Los Angeles County could disappear like so many Snap messages. That’s 800,000 lost workers. 800,000 lost customers. 800,000 lost mothers, fathers, siblings and friends. 800,000 lost taxpayers. It’s also 800,000 bedrooms that will open up.
From a purely numerical standpoint, Trump’s crusade could put a serious dent in housing costs. After all, demand for rental housing would go down.
The thought gives me chills. I don’t want to say any more about it other than that deportation is — to say the least — the most perverse way to solve a housing crisis.
Fortunately, Californians are leading the charge to protect their undocumented neighbors. Indeed, many of us hope marginalized people from around the country will join us, even if we’re short on space. Even so, we should be making space. We should be solving the housing crisis the old-fashioned way and the humane way: by building ourselves out of it.
This convergence of wealth, poverty, xenophobia, and exclusivity is no mere coincidence. See, these issues — immigration, housing, gentrification, Trump — are intertwined. Economic booms like that of the past seven years naturally come with echoes of desperation. Blue-collar workers in the Heartland want to protect their jobs from immigrants. Wealthy homeowners at the beach want to protect their property values from competition.
The Snap IPO completes the process of turning Venice into a superstar neighborhood in a superstar city – which, as Richard Florida describes in The New Urban Crisis, is marked by inequality, unaffordability, segregation, and economic dysfunction. It’s also marked, I’d argue, by political apathy.
Hillary won got 71 percent of the vote in California. The president didn’t break double digits in some Venice precincts. I bet you can count on two hands the number of those 1,900 employees who voted for Trump.
And yet, I’d also wager that scarcely more than ten Snap employees plan on voting in the March 7 Los Angeles election. That’s the one with the Neighborhood Integrity Initiative on the ballot. It’s a slow-growth initiative that, critics contend, could cripple the city’s ability to approve new housing. If that critique is true, then young professionals should vote for it like the second coming of Barack Obama. But they probably won’t.
Last year Santa Monica, which the northern quarter of Silicon Beach, was considering a slow-growth measure. Back then, I wrote how the young professionals of Silicon Beach were, as far as I could tell, disengaged from local politics — even though they stood to suffer mightily from further restrictions on housing development in a market already tighter than a noose.
Essentially, the tech crowd has tolerated high rents while hoping that their ships would come in rather than agitate for the type of development and planning policies hat would have benefited not only them but also many of their less wealthy, less flashy neighbors.
Now that Snap is going full steam ahead, that’s 1,900 more people who can blithely let the other 10 million of us in L.A. County to fight over the scraps. Or 9.2 million of us, depending how bleak things get.
So, we have two opposing forces. Deportation could lower housing costs A massive influx of cash may raise housing costs. Clearly Snapchat is doing something right. Good for them. But the other half of that equation threatens to morally bankrupt all of us.
Of course, formerly apathetic citizens are resisting, mobilizing, and donating in record numbers. I'm sure Silicon Beachers are too. And I hope some of them will hold off on an extra bedroom or a Wolf range and instead make some timely donations. America can right itself, and California -- with its energy, innovation, and, yes, wealth -- can lead the way.
For now, in this tale of one city, it is both the best of times and the worst of times.