Red Market

Mission

Professionals of the Valley unite, you have nothing to lose but your stock options.
-- Karl Marx (brought up to date)

In Silicon Valley's startup economy, workers get stock options -- and most of the startups go bust, leaving workers with no recompense for their dedication and no means to buy a home. Meanwhile, the capitalists diversify their investments across dozens of companies, ensuring that they receive a return and move to a mansion in Atherton.

Red Market Inc. provides a free-market solution to this oppression of the producing class. Workers in pre-IPO companies can barter their options, whether vested or not, with workers in other companies. (No money changes hands.) Thus the workers can diversify and eliminate the risks imposed on them by capitalists. Workers take their liberation into their own hands.

Business model

Red Market charges 10% of the equity traded. With Silicon Valley startups creating tens of billions of dollars in stock market capitalization every year, and with employees typically receiving a third of that wealth, Red Market will soon be a multi-billion dollar operation with greater revenues than Yahoo, Amazon, and eBay combined.

Once established in the startup arena, Red Market will expand its services to employees in established companies who own options whose exercise price is above the current market price.

Legal niceties

Many employment contracts limit workers' ability to hedge their risk. Typically, workers cannot sign rights to the stock over to another party. Nor can workers short their employer's stock. But workers *can* use stock options as collateral on a mortgage. For workers who don't wish to flout their employment contract (and risk losing their chains), Red Market offers a variant on its service. A few dozen workers from different companies can pool their options and use them as collateral on mortgages, from Red Market, for a few dozen Palo Alto houses. The mortgages have no monthly payments but have a very high balloon payment in five years, by which time the collateral will be liquid and can be seized.

To eliminate the problem entirely, Red Market is funding a California ballot initiative to outlaw these employment contract restrictions when they apply to more than 50% of a worker's stock options. Furthermore, because Red Market's unique financing mechanism allows startups to offer employees houses in Palo Alto as signing bonuses, we predict that many employers will be cooperative. Finally, Red Market is coordinating an Internet-wide strike and shutdown for May 1, 2000, code-named May2K.

morgannprice@yahoo.com

December, 1999

:-)