[Talk about excess income, the following is from today's NY Times.]
Pondering That Indiscreet Charm of the Superrich: Nothing Left to Buy?
By Laura M. Holson
Rex Golding, a partner at Softbank Technology Ventures, has made a lot more money than he had ever expected. But even among the circle he associates with, things are getting a little out of hand.
"My 6-year-old is starting to say things like, 'their house is bigger,' " Mr. Golding said, recalling a recent drive through his neighborhood in Menlo Park, Calif., in the heart of Silicon Valley. "She knows the different cars. It is troubling to me."
Peter Kiernan, a senior executive at the Goldman Sachs Group, attended an Ivy League party last fall where one recent graduate boasted he would own a fleet of personal airplanes by age 30. " 'I don't just want wealth,' " Mr. Kiernan said the young man told him. " 'I want plane wealth.' "
Keeping up with the Joneses used to mean buying a vacation home, a BMW perhaps, first-class airplane tickets. But your own fleet of planes? These days, though, even the superrich are finding that the rules of the game are being rewritten with each stock market move. In a world of instant windfalls where companies go public without ever earning a profit, a 10-figure fortune buys more freedom than nine, an eight-figure sum buys more than seven. So much so that at least two distinct classes among the rich have emerged -- the haves and the have s'mores.
Even the nearly newest of nouveau riche -- those who made their millions a decade ago in the Wall Street gold rush -- feel out of sorts with the fresh-faced generation filling its coffers today. And that angst pervades almost every conversation about their generally younger, often richer peers from the 90's.
Just ask Nelson Peltz who, in his heyday, was a confidant of Michael R. Milken, the former Drexel Burnham Lambert junk bond maven. Mr. Peltz made much of his wealth investing in troubled companies in the 1980's. No pauper, he caused a stir when he bought the singer Mariah Carey's $20 million estate in Westchester County, N.Y., and he has appeared on the Forbes list of richest executives for almost a decade, with a net worth estimated at $890 million.
"I'm like old money these days," Mr. Peltz complained one afternoon at his office on Park Avenue in Manhattan. "You see these young guys worth $3 billion to $4 billion, and you think to yourself, 'What have I done wrong?' I feel like the guy who has to say to his kids 'Go back to work because we can't make ends meet anymore.' "
O.K., he is joking -- at least a little. But an even bigger contrast between then and now is that people like Mr. Peltz were vilified a decade ago for flaunting their wealth in what was often called the Greed Decade. Not so today. The rich now, an overwhelming number of whom have profited from the technology boom, seem to be lauded as new-economy celebrities and have yet to experience the backlash of a disapproving public. And while some fear that is bound to happen, for now at least the benefits to the economy from new technology is helping to insulate the dot-com wunderkinds from attack.
Yet even this era's more restrained haves, it seems, have lost perspective in this time of fast, abundant riches. Consider Dave Welsh. As senior director for corporate development at Portal Software in Cupertino, Calif., he said, he has a stock option package worth tens of millions of dollars. But that is small change compared with the options given to John Little, Portal's chief executive and founder, who is now worth more than $1 billion.
"I don't have John's money," Mr. Welsh said, almost apologizing. "I'm normal."
True, being worth millions does not count for as much these days. Even the billionaires' club is getting a little crowded. Forbes magazine, in its annual effort to name the richest 400 Americans, counted 267 last year with a net worth of more than $1 billion, compared with just 13 in 1982. But it is not just the growing number that is causing the stir, but more importantly the very visible way in which those riches, mainly derived from stock ownership in newly public companies, can be monitored almost hourly by market watchers and journalists.
"It has created this mania to be rich," said Edward Wolff, a professor of economics at New York University. "The focus on other people's money has created a materialistic and self-serving milieu."
If anyone would know, Mr. Wolff would. For several years, he has been studying wealth and its impact on American society.
The number of households with a net worth of more than $10 million, according to his research, has grown fourfold the last decade from about 67,700, to almost 350,000. And corporate executives are pocketing a lot of that money. In 1988, for instance, the average chief executive's salary was 40 times that of the average employee. A decade later, Mr. Wolff said, a chief executive made 400 times what the average employee did.
The wealthy are hitting the jackpot at younger ages, too. Today, 5 of every 100 people in the top 1 percent of the wealthiest Americans are 35 years or younger, compared with a fraction of a percent just 17 years ago. "Wealth today is more of a result of entrepreneurial activity than inheritance," he said. "It's not just the coupon clippers anymore."
If any executive has fast become the model of the new monied class it is Meg Whitman, chief executive of eBay, the online auction site. Two years ago, Ms. Whitman was a little-known marketer selling Teletubbies at the toymaker Hasbro. But today she is seen almost as often as that other most-talked-about female billionaire, Martha Stewart.
In the last year, Ms. Whitman has been on the cover of five magazines (she was anointed one of the most powerful women executives by Fortune); appeared almost 20 times on CNN and CNBC; sat through 15 photo shoots, including sessions for Vanity Fair and Glamour; and been mentioned hundreds of times in major newspapers and magazines. Her net worth (she had stock options worth close to $1 billion, according to recent government filings) is fodder for online chatter.
But that intrusion into her personal life is wearing a little thin. One evening, Ms. Whitman and her family were trapped at an ice cream shop in Palo Alto, Calif., delayed after several strangers grabbed her to chat. And at restaurants, diners whisper and point when she walks in the room.
"You know how you watch movies and you follow a star's career?" she recently mused.
"You feel like you know them. But when you meet them, you have to hold yourself back. I think that is a little bit of what is going on now."
As the focus of where wealth is generated most quickly has shifted from Wall Street and Hollywood to Silicon Valley, the scale has escalated as well. Remember when Mr. Milken was chided for making $550 million in salary and bonuses in 1987? Pierre Omidyar, who founded eBay so that his wife would have a place to trade Pez dispensers and is now worth billions, owned stock options worth $661 million the day eBay went public in 1998.
At Harry Winston, the high-end jewelers at Fifth Avenue and 56th Street in Manhattan, a growing army of Internet millionaires barely out of college are splurging on diamond engagement rings at $125,000 to $1 million each.
And one young entrepreneur who could not be with his friends on New Year's Eve had his own affair last fall -- a black-tie dinner at Windows on the World at the World Trade Center in lower Manhattan, where 200 people danced until a wall-size clock brought in for the evening struck midnight. The cost? About $120,000, or $30,000 an hour.
Of course, many on Wall Street have been the beneficiaries of selling shares in Internet companies like eBay to an eager public. But some cannot help missing the spotlight they once enjoyed.
"All these cyberbillionaires, in a perverse way, have put Wall Street in its place," said Michael Biondi, chief executive of Wasserstein Perella & Company, the investment advisory boutique that helped mastermind many of the corporate takeovers of the 1980's.
Dinesh D'Souza, a research scholar at the American Enterprise Institute and author of a forthcoming book, "The Moral Conundrum of Success," said that among the monied class, wealth is less about a dollar figure than how secure a person feels about it. Much of the wealth created these days is tied up in stock option packages that are subject to the vagaries of a volatile stock market. So while a billionaire is assured the same grand life even if his stock price drops in half, someone who is worth, say, $50 million, may not feel so comfortable.
George Bell, chief executive of the Internet portal Excite at Home, acknowledges that he used to track his stock options several times a day after each market tick. But that exhilaration wore off as soon as his wealth became the talk of the party circuit.
"One of the first things people ask is: 'How much are you worth?' " he said. "You kind of laugh at first. But now it has gone out of my psyche. You've got to get over it."
That is not so easy to do. Unlike earlier generations, many of the new rich were raised in middle-class homes and seem awestruck by their good fortune. Jeff Bezos, the founder of Amazon.com, for instance, likens his success to winning the lottery.
But there is a practical side to such humility, too. "The new money doesn't want to separate itself from the population at large," Mr. D'Souza said. "They are not sure they can defend their extravagances."
Mr. D'Souza said the most affluent Americans have an income of at least $10 million a year and assets of $100 million or more. The merely rich earn $1 million to $10 million a year, with assets of $10 million to $100 million. The difference between the two is scale. The rich own two homes, he said, while the superrich own homes around the world. And besides, the superrich get something the merely rich do not. "Great wealth, even if it is paper wealth," he said, "propels people into celebrity."
On a Sunday afternoon last December, a crush of cars filled the parking lot in front of Buck's restaurant in Woodside, Silicon Valley's equivalent of Morton's in West Hollywood. For years, entrepreneurs and wealthy venture capitalists gathered weekdays to discuss ideas over coffee and toast. But Saturdays and Sundays have lately been given over to camera-carrying tourists and television news crews eager to catch a glimpse of a Silicon Valley billionaire, who is now more likely to be holed up in his home miles away.
Such notoriety is producing some fear among many in the entrepreneurial class who are beginning to sense a rising tide of resentment toward those who became too rich, too fast. Most hope they will not be remembered as many of their predecessors of the 1980's were.
"In 20 years if all these people go out and make a difference, there will be no backlash," Mr. Little, the chief executive of Portal Software, said. "But if all they end up with is 14 cars, 3 houses, and the jet -- the symbols of wretched excess -- there will be."
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