Nick Hodge,
Publisher
June 18, 2024
The following story may leave you a bit in disbelief, but it should also leave you angry.
You’ll see why after I’m done telling it.
The main character of the story is a graffiti artist, an occasional criminal, and a natural — some might say pathological — gambler.
Like most graffiti artists, he didn’t care much about the finer things in life. He certainly didn’t care much for modern marvels like the Internet and social networking — even though the latter would change his fate forever.
In late 2004, this young man, who was 29 at the time, was hired by the partner of a fledgling Silicon Valley start-up to paint some X-rated murals inside their office.
Being a gambler, however, this artist decided to take his payment for the first job not in cash but in shares of the company — which was still quite small at the time and years away from going public.
Like I said before, he didn’t care much for what the company did. In fact, he claimed he thought it was a “ridiculous and pointless idea.”
But the idea that this artist — who many considered little more than a glorified vandal — thought was ridiculous ended up getting some traction.
A lot of traction.
In fact, it got more traction than almost any website that came before or has come since.
A Story for the Ages
Five years after the completion of this artist’s second job for the start-up, the company went public.
The day of the IPO — May 16, 2012 — this artist found his stake in the company was worth a bit more than the original $60,000 contract…
More than 3,300 times more.
The artist’s name is David Choe, and the company is Meta (NASDAQ: META), formerly Facebook.
If you don’t believe me, go ahead and Google his name. I promise you’ll reread this story on a number of different sites — including David Choe’s own Wikipedia page.
Today, this slightly anti-social graffiti artist, who has spent more than a few nights sleeping in the streets, is worth some $300 million.
Amazing story, right? A true rags-to-riches tale of the American Dream coming true in spectacular fashion.
But if you think a story like this might befall you at some point in your life, I hate to burst your bubble.
Now this is the part where you’re going to get angry.
The reason you’re probably not going to make nine figures in a sudden change of fate like the kind that changed David Choe’s life isn’t because you’re not talented or smart or lucky...
It’s because there is a federal law on the books that prevents ordinary, everyday people from even being eligible for this kind stroke of luck.
The law is known informally as the accredited investor rule and was written into the books as Rule 501 of Regulation D of the Federal Securities act of 1933 — Roosevelt-era legislation that imposed the first major regulations on securities trading during the early years of the Great Depression.
And here is the part that should make you angry...
Under the guise of protecting “unsophisticated” investors from overly risky business ventures, this law defines exactly who can and cannot put money into non-public companies — companies like the kind Facebook was back in 2007.
The main condition affecting most people is the wealth or income-based requirement. If you want to invest in a non-public company, you need to fit one of two categories:
- Have a liquid net worth of more than $1 million.
- Be a “natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.”
Now, there is another way you can be an accredited investor, and that’s if you either work for the company in question or are personally related to or associated with (friend or family) a major shareholder.
David Choe was able to get shares of Facebook thanks to his close association with Mark Zuckerberg and Sean Parker (Facebook’s first president).
You may not know Mark Zuckerberg. But you know me. And I’m offering access to these kinds of private deals right now. Full informational tutorial here.
Why You’re Always Late to the Party, and How to Be on Time
Between 2004 and 2012, Facebook went from a $5 million microcap start-up to a $1.1 trillion global brand. Gains of tens of thousands of percent.
Since May 16, 2012 — the first day regular investors were able to buy shares of the company on the open market — Facebook has merely quadrupled in market capitalization.
Not surprisingly, most of the early investors dumped their shares the day of the IPO or soon afterwards.
If you invested in Facebook after that point, it’s your money, along with that of millions of other retail investors, that went into the pockets of early investors.
Mark Zuckerberg himself pocketed $1.1 billion in cash that first day by selling off less than 4% (30.2 million shares) of his position.
His partners and the venture capital firms that financed the company’s early growth took home billions upon billions more.
The same happened with Google and its early investors. The same happened with Microsoft. The same happened with Apple.
The same happens every time a successful company goes public.
The bulk of the profits go to investors who got in earliest. And that means getting in privately.
Those are the kinds of deals Private Placement Intel provides.
And we are participating in one right now. Full details here.
Call it like you see it,
Nick Hodge
Publisher, Daily Profit Cycle