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    F.T.C. Chair Lina Khan Upends Antitrust Standards by Suing Meta

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    Lina Khan may set off a shift in how Washington regulates competition by filing cases in tech areas before they mature. She faces an uphill climb.WASHINGTON — Early in her tenure as chair of the Federal Trade Commission, Lina Khan declared that she would rein in the power of the largest technology companies in a dramatically new way.“We’re trying to be forward looking, anticipating problems and taking fast action,’’ Ms. Khan said in an interview last month. She promised to focus on “next-generation technologies,” and not just on areas where tech behemoths were already well established.This week, Ms. Khan took her first step toward stopping the tech monopolies of the future when she sued to block a small acquisition by Meta, the company formerly known as Facebook, of the virtual-reality fitness start-up Within. The deal was significant for Meta’s development of the so-called metaverse, which is a nascent technology and far from mainstream.In doing so, Ms. Khan upended decades of antitrust standards, potentially setting off a wholesale shift in the way Washington enforces competition across corporate America. At the heart of the F.T.C.’s lawsuit is the idea that regulators can apply antitrust law without waiting for a market to mature to the point where it is clear which companies hold the most power. The F.T.C. said such early action was justified because Meta’s deal would probably eliminate competition in the young virtual-reality market.Since the late 1970s, most federal challenges to mergers have been in large, well-established markets and aim to prevent already clear monopolies. Regulators have mostly rubber-stamped the purchases of start-ups by tech giants, such as Google’s 2006 deal to buy YouTube and Facebook’s 2012 acquisition of Instagram, because those markets were still emerging.As a result, Ms. Khan faces an uphill climb. Regulators have been reluctant to try to stop corporate mergers by relying on the theory that competition and consumers will be harmed in the future. The federal government lost at least two cases that used this strategy in the past decade, including an attempt to block a $1.9 billion merger in 2015 among X-ray sterilization providers that the F.T.C. had predicted would harm future competition in regional markets.The F.T.C.’s lawsuit against Meta in the budding virtual-reality market is a “deliberately experimental case that seeks to extend the boundaries of merger enforcement,” said William Kovacic, a former chair of the agency. “Such cases are certainly harder to win.”The F.T.C.’s action immediately caused a ruckus within antitrust circles and across the tech industry. Silicon Valley tech executives said that moving to block a deal in an embryonic area of technology might stifle innovation and spook technologists from taking bold leaps in new areas.“Regulators predicting future markets is a very, very dangerous precedent and position,” said Aaron Levie, the chief executive of the cloud storage company Box. He warned that venture capitalists and entrepreneurs would become wary of going into new markets if regulators cut off the ability of companies like Meta to buy start-ups.Adam Kovacevich, the president of the trade group Chamber of Progress, which represents Meta, Amazon and Alphabet, also said the lawsuit would have a chilling effect on innovation.Read More on Facebook and MetaA New Name: In 2021, Mark Zuckerberg announced that Facebook would change its name to Meta, as part of a wider strategy shift toward the so-called metaverse that aims at introducing people to shared virtual worlds.Morphing Into Meta: Mr. Zuckerberg is setting a relentless pace as he leads the company into the next phase. But the pivot  is causing internal disruption and uncertainty.Zuckerberg’s No. 2: In June, Sheryl Sandberg, the company’s chief financing officer announced she would step down from Meta, depriving Mr. Zuckerberg of his top deputy.Tough Times Ahead: After years of financial strength, the company is now grappling with upheaval in the global economy, a blow to its advertising business and a Federal Trade Commission lawsuit.“This is such an extreme and unfounded reaction to a small deal that many tech industry leaders are already worrying about what an F.T.C. win would mean for start-ups,” he said.For Ms. Khan, winning the lawsuit may be less of a priority than showing it’s possible to file against a tech deal while it is still early. She has said regulators were too cautious in the past about intervening in mergers for fear of harming innovation, allowing a wave of deals between tech giants and start-ups that eventually cemented their dominance.“What we can see is that inaction after inaction after inaction can have severe costs,” she said in an interview with The New York Times and CNBC in January. “And that’s what we’re really trying to reverse.”Ms. Khan declined requests for an interview for this article, and the F.T.C. declined to comment on Thursday.Mark Zuckerberg, Meta’s chief executive, testifying on Capitol Hill in 2019. He has bet the company on the metaverse, a technology frontier.Pete Marovich for The New York TimesMeta said the F.T.C. was applying antitrust law incorrectly. The lawsuit focuses on how the merger with Within would remove competition, but Meta said the agency was ignoring the large number of companies that also had health and fitness apps.“The F.T.C. has no answer to the most basic question — how could Meta’s acquisition of a single fitness app in a dynamic space with many existing and future players possibly harm competition?” Nikhil Shanbhag, Meta’s vice president and associate general counsel, wrote in a blog post.The company added that it hadn’t decided on whether to challenge the lawsuit, which was filed on Wednesday in U.S. District Court for the Northern District of California.The F.T.C. accused Meta of building a virtual reality “empire,” beginning in 2014 with its purchase of Oculus, the maker of the Quest virtual-reality headset. Since then, Meta has acquired around 10 virtual-reality app makers, such as the maker of a Viking combat game, Asgard’s Wrath, and several first-person shooter and sports games.By buying Within and its Supernatural virtual-reality fitness app, the F.T.C. said, Meta wouldn’t create its own app to compete and would scare potential rivals from trying to create alternative apps. That would hobble competition and consumers, the agency said.“This acquisition poses a reasonable probability of eliminating both present and future competition,” according to the lawsuit. “And Meta would be one step closer to its ultimate goal of owning the entire ‘Metaverse.’”Rebecca Haw Allensworth, a professor of antitrust law at Vanderbilt University, said the F.T.C.’s arguments would face tough scrutiny because Meta and Within did not compete with each other and because the virtual-reality market was fledgling.“The way that merger analysis has stood for at least 40 years is about what kind of head-to-head competition does this merger take out of the picture,” she said.The onus will now be on the agency to convince a judge that its predictions about the metaverse and Meta’s purchase would harm competition.“The burden is on the F.T.C. to show, among other things, reasonable probability that Meta would have entered the V.R.-dedicated fitness apps market, absent its acquisition of Within,” said Diana Moss, president of the American Antitrust Institute.If the court dismisses the case, Ms. Khan may have created a precedent that would make it harder to pursue nascent competition cases, antitrust experts cautioned. That could then embolden tech giants to acquire their way into new lines of businesses.“This is a precedential system which goes both ways — if you win or lose — and sends a signal to the market,” Ms. Allensworth said.The F.T.C. is reviewing other tech deals, including Microsoft’s $70 billion acquisition of the gaming company Activision and Amazon’s $3.9 billion merger with One Medical, a national chain of primary care clinics. In addition, the agency has been investigating Amazon on claims of monopoly abuses in its marketplace of third-party sellers.Ms. Khan appears to be prepared for long legal battles with the tech giants even if the cases do not end up going the F.T.C.’s way.In her earlier interview with The Times and CNBC, she said, “Even if it’s not a slam-dunk case, even if there is a risk you might lose, there can be enormous benefits from taking that risk.” More

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    After Enduring a Pandemic, Small Businesses Face New Worries

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    It has been a tough few years for companies without the scale to cruise through disruption. Making money isn’t getting any easier.America’s small businesses can’t catch a break.After two years of shutdowns and restrictions due to the Covid-19 pandemic, they’re straining to keep up with price increases without losing customers to larger competitors. They are struggling to keep positions filled as competition for workers remains at a fever pitch. And just at the moment that many business owners begin to recover and shore up their depleted savings, they’re worried that the Federal Reserve’s medicine for inflation will bring fresh hardship: higher borrowing costs and timid consumers.Surveys show that small-business sentiment has taken a markedly pessimistic turn in recent months — even more so than that of professional forecasters and of corporate executives.In June, the National Federation of Independent Business measured its lowest reading ever for economic expectations. The nonprofit Small Business Majority, in a survey in mid-July, found that nearly one in three small businesses couldn’t survive for more than three months without additional capital or a change in business conditions. The U.S. Chamber of Commerce’s Small Business Index for the second quarter showed that inflation had skyrocketed to the top of owners’ concerns. Seventy-five percent of participants in Goldman Sachs’s small-business coaching program reported that higher costs had impaired their finances.The sector — which the federal government typically defines as businesses below a certain size, ranging from 500 to 1,500 employees depending on the industry — is responsible for two of every three jobs created over the past 25 years, according to the Labor Department. So a weakening of that engine bodes ill for American growth and prosperity.Corinne Hodges runs the Association of Women’s Business Centers, a national network offering training, mentoring and financing to entrepreneurs. The organization’s funding from the Small Business Administration was augmented to help thousands of businesses navigate the pandemic, but, with the extra money now exhausted, the centers are laying off advisers, just as clients are asking for more help.“We saw pivoting in Covid,” Ms. Hodges said. “Well, what is it now? What’s the new pivot? It’s just been a vise grip of pressure emerging from the pandemic. Is a pivot going to be enough, or does it need to be something more?”Kymme Williams-Davis was one of those who survived pivot after pivot, and she isn’t sure she can make it much longer.Seven years ago, she started a coffee shop in Brooklyn called Bushwick Grind, specializing in fair-trade beans that are locally roasted. She spent $200,000 building out the space with a kitchen, and developed a brisk business selling healthier fare than that of the fast food outlets around her.When the pandemic hit, the shop had to close for nine months. Ms. Williams-Davis made rent by subletting the space to other small vendors. When she reopened in 2021, she got a boost from a contract to deliver 400 meals a day to the city’s vaccine sites. That cash flow allowed her to qualify for a loan to buy her own space.But she hasn’t been able to find anything in Brooklyn, in part because large investors keep outbidding her. Foot traffic hasn’t recovered. The cost of coffee, kale and other provisions — if she can even get them — is skyrocketing. Farmers from upstate are saving on gas by taking fewer trips into the city, so she has begun to swap in lower-grade ingredients.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    How a Trash-Talking Crypto Bro Caused a $40 Billion Crash

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    Do Kwon, a South Korean entrepreneur, hyped the Luna and TerraUSD cryptocurrencies. Their failures have devastated some traders, though not the investment firms that cashed out early.Do Kwon, a trash-talking entrepreneur from South Korea, called the cryptocurrency he created in 2018 “my greatest invention.” In countless tweets and interviews, he trumpeted the world-changing potential of the currency, Luna, rallying a band of investors and supporters he proudly referred to as “Lunatics.”Mr. Kwon’s company, Terraform Labs, raised more than $200 million from investment firms such as Lightspeed Venture Partners and Galaxy Digital to fund crypto projects built with the currency, even as critics questioned its technological underpinnings. Luna’s total value ballooned to more than $40 billion, creating a frenzy of excitement that swept up day traders and start-up founders, as well as wealthy investors.Mr. Kwon dismissed concerns with a taunt: “I don’t debate the poor.”But last week, Luna and another currency that Mr. Kwon developed, TerraUSD, suffered a spectacular collapse. Their meltdowns had a domino effect on the rest of the cryptocurrency market, tanking the price of Bitcoin and accelerating the loss of $300 billion in value across the crypto economy. This week, the price of Luna remained close to zero, while TerraUSD continued to slide.The downfall of Luna and TerraUSD offers a case study in crypto hype and who is left holding the bag when it all comes crashing down. Mr. Kwon’s rise was enabled by respected financiers who were willing to back highly speculative financial products. Some of those investors sold their Luna and TerraUSD coins early, reaping substantial profits, while retail traders now grapple with devastating losses.Pantera Capital, a hedge fund that invested in Mr. Kwon’s efforts, made a profit of about 100 times its initial investment, after selling roughly 80 percent of its holdings of Luna over the last year, said Paul Veradittakit, an investor at the firm.Pantera turned $1.7 million into around $170 million. The recent crash was “unfortunate,” Mr. Veradittakit said. “A lot of retail investors have lost money. I’m sure a lot of institutional investors have, too.”Mr. Kwon did not respond to messages. Most of his other investors declined to comment.Kathleen Breitman, a founder of the crypto platform Tezos, said the rise and fall of Luna and TerraUSD were driven by the irresponsible behavior of the institutions backing Mr. Kwon. “You’ve seen a bunch of people trying to trade in their reputations to make quick bucks,” she said. Now, she said, “they’re trying to console people who are seeing their life savings slip out from underneath them. There’s no defense for that.”Mr. Kwon, a 30-year-old graduate of Stanford University, founded Terraform Labs in 2018 after stints as a software engineer at Microsoft and Apple. (He had a partner, Daniel Shin, who later left the company.) His company claimed it was creating a “modern financial system” in which users could conduct complicated transactions without relying on banks or other middlemen.Mr. Shin and Mr. Kwon began marketing the Luna currency in 2018. In 2020, Terraform started offering TerraUSD, which is known as a stablecoin, a type of cryptocurrency designed to serve as a reliable means of exchange. Stablecoins are typically pegged to a stable asset like the U.S. dollar and are not supposed to fluctuate in value like other cryptocurrencies. Traders often use stablecoins to buy and sell other riskier assets.But TerraUSD was risky even by the standards of experimental crypto technology. Unlike the popular stablecoin Tether, it was not backed by cash, treasuries or other traditional assets. Instead, it derived its supposed stability from algorithms that linked its value to Luna. Mr. Kwon used the two related coins as the basis for more elaborate borrowing and lending projects in the murky world of decentralized finance, or DeFi.Read More on the World of CryptocurrenciesA Perfect Storm: A steep sell-off that gained momentum this week is illustrating the risks of cryptocurrencies. Crypto Emperor: Sam Bankman-Fried, a studiously disheveled billionaire, is hoping to put a new face on the still-chaotic world of digital assets.Crypto Critic: The actor Ben McKenzie, best known for “The O.C.,” has become an outspoken skeptic of digital currencies. Who’s listening?Fund-raising Efforts: Activists and nonprofits are considering digital currencies as a way to raise funds for causes like abortion rights. Can it work?From the beginning, crypto experts were skeptical that an algorithm would keep Mr. Kwon’s twin cryptocurrencies stable. In 2018, a white paper outlining the stablecoin proposal reached the desk of Cyrus Younessi, an analyst for the crypto investment firm Scalar Capital. Mr. Younessi sent a note to his boss, explaining that the project could enter a “death spiral” in which a crash in Luna’s price would bring the stablecoin down with it.“I was like, ‘This is crazy,’” he said in an interview. “This obviously doesn’t work.”As Luna caught on, the naysayers grew louder. Charles Cascarilla, a founder of Paxos, a blockchain company that offers a competing stablecoin, cast doubt on Luna’s underlying technology in an interview last year. (Mr. Kwon responded by taunting him on Twitter: “Wtf is Paxos.”) Kevin Zhou, a hedge fund manager, repeatedly predicted that the two currencies would crash.But venture investment came pouring in anyway to fund projects built on Luna’s underlying technology, like services for people to exchange cryptocurrencies or borrow and lend TerraUSD. Investors including Arrington Capital and Coinbase Ventures shoveled in more than $200 million between 2018 and 2021, according to PitchBook, which tracks funding.In April, Luna’s price rose to a peak of $116 from less than $1 in early 2021, minting a generation of crypto millionaires. A community of retail traders formed around the coin, hailing Mr. Kwon as a cult hero. Mike Novogratz, chief executive of Galaxy Digital, which invested in Terraform Labs, announced his support by getting a Luna-themed tattoo.Mr. Kwon, who operates out of South Korea and Singapore, gloated on social media. In April, he announced that he had named his newborn daughter Luna, tweeting, “My dearest creation named after my greatest invention.”“It’s the cult of personality — the bombastic, arrogant, Do Kwon attitude — that sucks people in,” said Brad Nickel, who hosts the cryptocurrency podcast “Mission: DeFi.”Earlier this year, a nonprofit that Mr. Kwon also runs sold $1 billion of Luna to investors, using the proceeds to buy a stockpile of Bitcoin — a reserve designed to keep the price of TerraUSD stable if the markets ever dipped.Around the same time, some of the venture capital firms that had backed Mr. Kwon started to have concerns. Hack VC, a venture firm focused on crypto, sold its Luna tokens in December, partly because “we felt the market was due for a broader pullback,” said Ed Roman, a managing director at the firm.Martin Baumann, a founder of the Hong Kong-based venture firm CMCC Global, said his company sold its holdings in March, at about $100 per coin. “We had gotten increasing concerns,” he said in an email, “both from tech side as well as regulatory side.” (CMCC and Hack VC declined to comment on their profits.)Even Mr. Kwon alluded to the possibility of a crypto collapse, publicly joking that some crypto ventures might ultimately go under. He said he found it “entertaining” to watch companies crumble.Last week, falling crypto prices and challenging economic trends combined to create a panic in the markets. The price of Luna fell to nearly zero. As critics had predicted, the price of TerraUSD crashed in tandem, dropping from its $1 peg to as low as 11 cents this week. In a matter of days, the crypto ecosystem Mr. Kwon had built was essentially worthless.“I am heartbroken about the pain my invention has brought on all of you,” he tweeted last week.Some of Mr. Kwon’s major investors have lost money. Changpeng Zhao, chief executive of the crypto exchange Binance, which invested in Terraform Labs, said his firm had bought $3 million of Luna, which grew to a peak value of $1.6 billion. But Binance never sold its tokens. Its Luna holdings are currently worth less than $3,000.That loss is still only a drop in the bucket for a company as large as Binance, whose U.S. arm is valued at $4.5 billion.Expand Your Cryptocurrency VocabularyCard 1 of 9A glossary. More

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    Fear and Loathing Return to Tech Start-Ups

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    Workers are dumping their stock, companies are cutting costs, and layoffs abound as troubling economic forces hit tech start-ups.Start-up workers came into 2022 expecting another year of cash-gushing initial public offerings. Then the stock market tanked, Russia invaded Ukraine, inflation ballooned, and interest rates rose. Instead of going public, start-ups began cutting costs and laying off employees.People started dumping their start-up stock, too.The number of people and groups trying to unload their start-up shares doubled in the first three months of the year from late last year, said Phil Haslett, a founder of EquityZen, which helps private companies and their employees sell their stock. The share prices of some billion-dollar start-ups, known as “unicorns,” have plunged by 22 percent to 44 percent in recent months, he said.“It’s the first sustained pullback in the market that people have seen in legitimately 10 years,” he said.That’s a sign of how the start-up world’s easy-money ebullience of the last decade has faded. Each day, warnings of a coming downturn ricochet across social media between headlines about another round of start-up job cuts. And what was once seen as a sure path to immense riches — owning start-up stock — is now viewed as a liability.The turn has been swift. In the first three months of the year, venture funding in the United States fell 8 percent from a year earlier, to $71 billion, according to PitchBook, which tracks funding. At least 55 tech companies have announced layoffs or shut down since the beginning of the year, compared with 25 this time last year, according to Layoffs.fyi, which monitors layoffs. And I.P.O.s, the main way start-ups cash out, plummeted 80 percent from a year ago as of May 4, according to Renaissance Capital, which follows I.P.O.s.An Instacart shopper at a grocery store in Manhattan. The company slashed its valuation to $24 billion in March from $40 billion last year. Brittainy Newman/The New York TimesLast week, Cameo, a celebrity shout-out app; On Deck, a career-services company; and MainStreet, a financial technology start-up, all shed at least 20 percent of their employees. Fast, a payments start-up, and Halcyon Health, an online health care provider, abruptly shut down in the last month. And the grocery delivery company Instacart, one of the most highly valued start-ups of its generation, slashed its valuation to $24 billion in March from $40 billion last year.“Everything that has been true in the last two years is suddenly not true,” said Mathias Schilling, a venture capitalist at Headline. “Growth at any price is just not enough anymore.”The start-up market has weathered similar moments of fear and panic over the past decade. Each time, the market came roaring back and set records. And there is plenty of money to keep money-losing companies afloat: Venture capital funds raised a record $131 billion last year, according to PitchBook.But what’s different now is a collision of troubling economic forces combined with the sense that the start-up world’s frenzied behavior of the last few years is due for a reckoning. A decade-long run of low interest rates that enabled investors to take bigger risks on high-growth start-ups is over. The war in Ukraine is causing unpredictable macroeconomic ripples. Inflation seems unlikely to abate anytime soon. Even the big tech companies are faltering, with shares of Amazon and Netflix falling below their prepandemic levels.“Of all the times we said it feels like a bubble, I do think this time is a little different,” said Albert Wenger, an investor at Union Square Ventures.On social media, investors and founders have issued a steady drumbeat of dramatic warnings, comparing negative sentiment to that of the early 2000s dot-com crash and stressing that a pullback is “real.”Even Bill Gurley, a Silicon Valley venture capital investor who got so tired of warning start-ups about bubbly behavior over the last decade that he gave up, has returned to form. “The ‘unlearning’ process could be painful, surprising and unsettling to many,” he wrote in April.The uncertainty has caused some venture capital firms to pause deal making. D1 Capital Partners, which participated in roughly 70 start-up deals last year, told founders this year that it had stopped making new investments for six months. The firm said that any deals being announced had been struck before the moratorium, said two people with knowledge of the situation, who declined to be identified because they were not authorized to speak on the record.Other venture firms have lowered the value of their holdings to match the falling stock market. Sheel Mohnot, an investor at Better Tomorrow Ventures, said his firm had recently reduced the valuations of seven start-ups it invested in out of 88, the most it had ever done in a quarter. The shift was stark compared with just a few months ago, when investors were begging founders to take more money and spend it to grow even faster.That fact had not yet sunk in with some entrepreneurs, Mr. Mohnot said. “People don’t realize the scale of change that’s happened,” he said.Sean Black, the founder and chief executive of Knock. “You can’t fight this market momentum,” he said.Jeenah Moon for The New York TimesEntrepreneurs are experiencing whiplash. Knock, a home-buying start-up in Austin, Texas, expanded its operations from 14 cities to 75 in 2021. The company planned to go public via a special purpose acquisition company, or SPAC, valuing it at $2 billion. But as the stock market became rocky over the summer, Knock canceled those plans and entertained an offer to sell itself to a larger company, which it declined to disclose.In December, the acquirer’s stock price dropped by half and killed that deal as well. Knock eventually raised $70 million from its existing investors in March, laid off nearly half its 250 employees and added $150 million in debt in a deal that valued it at just over $1 billion.Throughout the roller-coaster year, Knock’s business continued to grow, said Sean Black, the founder and chief executive. But many of the investors he pitched didn’t care.“It’s frustrating as a company to know you’re crushing it, but they’re just reacting to whatever the ticker says today,” he said. “You have this amazing story, this amazing growth, and you can’t fight this market momentum.”Mr. Black said his experience was not unique. “Everyone is quietly, embarrassingly, shamefully going through this and not willing to talk about it,” he said.Matt Birnbaum, head of talent at the venture capital firm Pear VC, said companies would have to carefully manage worker expectations around the value of their start-up stock. He predicted a rude awakening for some.“If you’re 35 or under in tech, you’ve probably never seen a down market,” he said. “What you’re accustomed to is up and to the right your entire career.”Start-ups that went public amid the highs of the last two years are getting pummeled in the stock market, even more than the overall tech sector. Shares in Coinbase, the cryptocurrency exchange, have fallen 81 percent since its debut in April last year. Robinhood, the stock trading app that had explosive growth during the pandemic, is trading 75 percent below its I.P.O. price. Last month, the company laid off 9 percent of its staff, blaming overzealous “hypergrowth.”SPACs, which were a trendy way for very young companies to go public in recent years, have performed so poorly that some are now going private again. SOC Telemed, an online health care start-up, went public using such a vehicle in 2020, valuing it at $720 million. In February, Patient Square Capital, an investment firm, bought it for around $225 million, a 70 percent discount.Others are in danger of running out of cash. Canoo, an electric vehicle company that went public in late 2020, said on Tuesday that it had “substantial doubt” about its ability to stay in business.Baiju Bhatt, left, and Vlad Tenev, founders of Robinhood, at the New York Stock Exchange last year for the company’s initial public offering. Robinhood recently laid off 9 percent of its workers.Sasha Maslov for The New York TimesBlend Labs, a financial technology start-up focused on mortgages, was worth $3 billion in the private market. Since it went public last year, its value has sunk to $1 billion. Last month, it said it would cut 200 workers, or roughly 10 percent of its staff.Tim Mayopoulos, Blend’s president, blamed the cyclical nature of the mortgage business and the steep drop in refinancings that accompany rising interest rates.“We’re looking at all of our expenses,” he said. “High-growth cash-burning businesses are, from an investor-sentiment perspective, clearly not in favor.” More

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    For Tens of Millions of Americans, the Good Times Are Right Now

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    Their houses are piggy banks, their retirement accounts are up and their bosses are eager to please. When the boom ends, everything will change.This is an era of great political division and dramatic cultural upheaval. Much more quietly, it has been a time of great financial reward for a large number of Americans.For the 158 million who are employed, prospects haven’t been this bright since men landed on the moon. As many as half of those workers have retirement accounts that were fattened by a prolonged bull market in stocks. There are 83 million owner-occupied homes in the United States. At the rate they have been increasing in value, a lot of them are in effect a giant piggy bank that families live inside.This boom does not get celebrated much. It was a slow-build phenomenon in a country where news is stale within hours. It has happened during a time of fascination with the schemes of the truly wealthy (see: Musk, Elon) and against a backdrop of increased inequality. If you were unable to buy a house because of spiraling prices, the soaring amount of homeowners’ equity is not a comfort.The queasy stock market might be signaling that the boom is ending. A slowing economy, renewed inflation, high gas prices and rising interest rates could all undermine the gains achieved over the years. But for the moment, this flood of wealth is quietly redefining retirement, helping fuel Silicon Valley and stoking a boom in leisure and entertainment. It is boosting corporate profits by unprecedented amounts while also giving just about everyone the notion that a better job might be within reach.More than 4.5 million workers voluntarily quit in March, the highest number since the government started keeping this statistic in 2000, the Bureau of Labor Statistics reported last week. A few years ago, the monthly total was between three million and 3.5 million.“Maybe it’s easier to focus on the negative, but a huge number of people, maybe 40 million households, have been doing pretty well,” said Dean Baker, an economist who was a co-founder of the liberal-leaning Center for Economic and Policy Research. “You’d have to go back to the late 1990s to find a similar era. Before that, the 1960s.”This widespread wealth throws light on why the number of workers who say they expect to be working past their early 60s has fallen below 50 percent for the first time. It accounts for the abundance of $1 billion start-ups known as unicorns — more than 1,000 now, up from about 200 in 2015. It offers a reason for the rise in interest in unionizing companies from Amazon to Apple to Starbucks, as hourly workers seek to claim their share.And it helps explain why Dwight and Denise Makinson just returned from a 12-day cruise through Germany.“Our net worth has reached the millionaire level due to our investments, which was unfathomable when we were married 40 years ago,” said Mr. Makinson, 76, who is retired from the U.S. Forest Service.The couple, who live in Coeur d’Alene, Idaho, have company. There are 22 million U.S. millionaires, Credit Suisse estimates, up from fewer than 15 million in 2014.The State of Jobs in the United StatesThe U.S. economy has regained more than 90 percent of the 22 million jobs lost at the height of pandemic in the spring of 2020.April Jobs Report: U.S. employers added 428,000 jobs and the unemployment rate remained steady at 3.6 percent ​​in the fourth month of 2022.Trends: New government data showed record numbers of job openings and “quits” — a measurement of the amount of workers voluntarily leaving jobs — in March.Job Market and Stocks: This year’s decline in stock prices follows a historical pattern: Hot labor markets and stocks often don’t mix well.Unionization Efforts: Since the Great Recession, the college-educated have taken more frontline jobs at companies like Starbucks and Amazon. Now, they’re helping to unionize them.“I used coupons to buy things. One of my daughters would say, ‘Mom, that’s so embarrassing,’” said Ms. Makinson, 66, a registered nurse. “But we believed in saving. Now she uses coupons, too.”Denise and Dwight Makinson in their backyard in Coeur d’Alene, Idaho. Their net worth has reached the millionaire level.Margaret Albaugh for The New York TimesEvery economic transaction has several sides. No one thought home prices in 2000 were particularly cheap. But in the last six years, prices have risen by the total value of all housing in 2000, according to the Case-Schiller index. In many areas of the country, it has become practically impossible for renters to buy a house.This is fracturing society. Even as the overall homeownership rate in 2020 rose to 65.5 percent, the rate for Black Americans has severely lagged. At 43.4 percent, it is lower than the 44.2 percent in 2010. The rate for Hispanics is only marginally better.That disparity might account for the muted sense of achievement.“It’s a time of prosperity, a time of abundance, and yet it doesn’t seem that way,” said Andy Walden, vice president of enterprise research at Black Knight, which analyzes financial data.Shawn and Stephanie McCauley said the value of their house 20 miles north of Seattle had shot up 50 percent since they bought it a few years ago, a jump that was typical of the market.“We are very fortunate right now given the situation for many others during the pandemic,” said Mr. McCauley, 36, who works for a data orchestration company. “Somehow we are doing even better financially, and it feels a bit awkward.”Even for those doing well, the economy feels precarious. The University of Michigan’s venerable Index of Consumer Sentiment fell in March to the same levels as 1979, when the inflation rate was a painful 11 percent, before rising in April.Politicians are mostly quiet about the boom.“Republicans are not anxious to give President Biden credit for anything,” said Mr. Baker, the economist. “The Democrats could boast about how many people have gotten jobs, and the strong wage growth at the bottom, but they seem reluctant to do this, knowing that many people are being hit by inflation.”The initial coronavirus outbreak ended the longest U.S. economic expansion in modern history after 128 months. A dramatic downturn began. The federal government stepped in, generously spreading cash around. Spending habits shifted as people stayed home. The recession ended after two months, and the boom resumed.Jerome H. Powell, the Federal Reserve chair, recently warned that there were too many employers chasing too few workers, saying the labor market was “tight to an unhealthy level.” But for workers, it’s gratifying to have the upper hand in looking for a new position or career.“Both my husband and I have been able to make job changes that have doubled our income from five years ago,” said Lindsay Bernhagen, 39, who lives in Stevens Point, Wis., and works for a start-up. “It feels like it has mostly been dumb luck.”A decade ago, the housing market was in chaos. Between 2007 and 2015, more than seven million homes were lost to foreclosure, according to Black Knight. Some of these were speculative purchases or second homes, but many were primary residences. Egged on by lenders, people lived in houses they could not easily afford.Now the reverse is true. People own much more of their homes than they used to, while the banks own less. That acts as a shield against foreclosures, which in 2019 were only 144,000, according to Black Knight. (During the pandemic, foreclosures mostly ceased due to moratoriums.)The equity available to homeowners reached nearly $10 trillion at the end of 2021, double what it was at the height of the 2006 bubble, according to Black Knight. For the average American mortgage holder, that amounts to $185,000 before hitting loan-to-value tripwires. The figure is up $48,000 in a year — about what the average American family earns annually, according to some estimates.Even very new homeowners feel an economic boost.“We never had enough for a down payment, but then in summer of 2020, we got a good tax return, a stimulus check and had a little money in the bank,” said Magaly Pena, 41, an architect for the federal government. She and her husband bought a townhouse in the Miami suburb of Homestead.Ms. Pena, a first-generation immigrant from Nicaragua, likes to check out the estimated value of her house and her neighbors on the real estate website Redfin. “Sometimes I’ll check it every day for three days,” she said. “It’s been crazy — everything has skyrocketed.”In 2006, homeowners cashed in their equity. Sometimes they used the money to double down on another house or two. In 2022, there’s little sense of excess. One reason is that lenders and the culture in general are no longer so encouraging about that sort of refinancing. But owners are also more cautious.Brian Carter, an epidemiologist in Atlanta, said he and his wife, Desiree, had about $250,000 in equity in their home but didn’t plan to draw on it.“I was 27 in 2007 and watched a lot of people lose their houses because they couldn’t leave their equity alone,” he said. “That included my next-door neighbor and the family across the street. I don’t want to worry.”Those who take a boom for granted often get upstaged by reality. In May 2000, the entrepreneur Kurt Andersen said raising money for a media start-up called Inside was as easy “as getting laid in 1969.” That was a few weeks after the stock market peaked. Seventeen months and one merger later, Inside shut down. (Mr. Andersen clarified in an email that he did not actually have sex until the 1970s.)In 2000, the start-up downturn was the first sign of wider economic trouble. This time it may be simply that people are doing too well. “U.S. households in best shape in 30 years … but does it matter?” Deutsche Bank asked in a research note last month.Its logic: Households have more cash than debt for the first time in decades, which is theoretically good. But all that money is encouraging spending, which is propelling inflation, which is forcing the Fed to push up interest rates. The result: a recession late next year.Ashley Humphries, 31, feels prepared for most any scenario. Six years ago, she was a graduate teaching assistant making $12,000 a year. Now she earns a low six figures as a senior product manager for a parking app developer in Atlanta.“I’ve lived out some childhood dreams like dyeing my hair vibrant colors and seeing ‘Phantom of the Opera’ from the front row,” Ms. Humphries said. She got a dog named Kylo, put a bit of her income in the stock market and bought a Tesla. She just left on a Caribbean cruise. Two of them, in fact, one after the other.Ashley Humphries and Kylo. “I’ve lived out some childhood dreams,” she said.Kendrick Brinson for The New York Times More

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    Tech Start-Ups Reach a New Peak of Froth

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    SAN FRANCISCO — How crazy is the money sloshing around in start-up land right now?It’s so crazy that more than 900 tech start-ups are each worth more than $1 billion. In 2015, 80 seemed like a lot.It’s so crazy that hot start-ups no longer have to pitch investors for money. The investors are the ones pitching them.It’s so crazy that founders can start raising money on a Friday afternoon and have a deal closed by Sunday night.It’s so crazy that even sports metaphors fall short.“It’s not like one jump ball — it’s 10,000 jump balls at once,” said Roy Bahat, an investor with Bloomberg Beta, the start-up investment arm of Bloomberg. “You don’t even know which way to look, it’s all just wild.” He now carves out two hours a day for whatever “emergency deal of the day” pops up.The funding frenzy follows nearly two years of a pandemic when people and businesses increasingly relied on tech, creating bottomless opportunities for start-ups to exploit. It follows breakthroughs in artificial intelligence, nuclear technology, electric vehicles, space travel and other areas that investors say are poised to change the world. And it follows nearly a decade in which tech companies have dominated the stock market.The activity has crossed into even frothier territory in recent months, as tech start-ups offering food delivery, remote-work software and telehealth services realized that they not only would survive the pandemic but were in higher demand than ever. The money hit a fever pitch in the final months of 2021 as investors chased a limited pool of start-ups and as tech stocks like Apple, which topped a valuation of $3 trillion, reached new heights.When Roy Bahat, left, an investor with Bloomberg Beta, thought past tech bubbles would burst, “every single time it’s become the new normal,” he said.Andrew Spear for The New York TimesThe result is a booming ecosystem of highly valued, cash-rich start-ups in Silicon Valley and beyond that are expanding at breakneck speed and trying to unseat stalwart companies in all kinds of fields. Few in the industry see a limit to the growth.“The pot of gold at the end of the rainbow has become bigger than ever,” said Mike Ghaffary, an investor at Canvas Ventures. “You can invest in a company that could one day be a trillion-dollar company.”Astonishing data for 2021 tell the story. U.S. start-ups raised $330 billion, nearly double 2020’s record haul of $167 billion, according to PitchBook, which tracks private financing. More tech start-ups crossed the $1 billion valuation threshold than in the previous five years combined. The median amount of money raised for very young start-ups taking on their first major round of funding grew 30 percent, according to Crunchbase. And the value of start-up exits — a sale or public offering — spiked to $774 billion, nearly tripling the prior year’s returns, according to PitchBook.The big-money headlines have carried into this year. Over a few days this month, three private start-ups hit eye-popping valuations: Miro, a digital whiteboard company, was valued at $17.75 billion; Checkout.com, a payments company, was valued at $40 billion; and OpenSea, a 90-person start-up that lets people buy and sell nonfungible tokens, known as NFTs, was valued at $13.3 billion.Investors announced big hauls, too. Andreessen Horowitz, a venture capital firm, said it had raised $9 billion in new funds. Khosla Ventures and Kleiner Perkins, two other venture firms, each raised nearly $2 billion.The good times have been so good that warnings of a pullback inevitably bubble up. Rising interest rates, expected later this year, and uncertainty over the Omicron variant of the coronavirus have deflated tech stock prices. Shares of start-ups that went public through special purpose acquisition vehicles last year have slumped. One of the first start-up initial public offerings expected this year was postponed by Justworks, a provider of human resources software, which cited market conditions. The price of Bitcoin has sunk nearly 40 percent since its peak in November.But start-up investors said that had not yet affected funding for private companies. “I don’t know if I’ve ever seen a more competitive market,” said Ambar Bhattacharyya, an investor at Maverick Ventures.Even if things slow down momentarily, investors said, the big picture looks the same. Past moments of outrageous deal making — from Facebook’s acquisitions of Instagram and WhatsApp to the soaring private market valuations of start-ups like Uber and WeWork — have prompted heated debates about a tech bubble for the last decade. Each time, Mr. Bahat said, he thought the frenzy would eventually return to normal.Instead, he said, “every single time it’s become the new normal.”Investors and founders have adopted a seize-the-day mentality, believing the pandemic created a once-in-a-lifetime opportunity to shake things up. Phil Libin, an entrepreneur and investor, said the pandemic had changed every aspect of society so much that start-ups were accomplishing five years of progress in one year.“The basic fabric of the world is up for grabs,” he said, calling this time “the changiest the world has ever been.” In mid-2020, he started Mmhmm, a video communication provider for remote workers, and has landed $136 million in funding. Mr. Libin said he heard from interested investors a few times a week.Phil Libin has attracted $136 million in funding for Mmhmm, the video communication service he founded.Andrej Sokolow/picture alliance, via Getty ImagesIn less frothy times, young, fast-growing tech companies sought new investment every 18 months. Now they are re-upping multiple times a year.For Daniel Perez, a co-founder of Hinge Health, a provider of online physical therapy programs, the unsolicited emails from investors started in late 2020. They contained pitch decks packed with the elaborate research that the investment firms had done on Hinge, including interviews with dozens of its customers and data on its competitors.These “reverse pitches,” which numbered in the 20s, were meant to persuade Mr. Perez to take money from the investment firms. He also got several term sheets, or investment contracts, from investors he had never met before.“Often when we’re speaking to investors, they’d cut me off and say, ‘Let me show you what I already know about you,’” Mr. Perez said. The reverse pitch from Tiger Global, the firm that Hinge picked to help lead a $300 million funding round alongside the investment firm Coatue Management last January, was 90 pages.A few months after Hinge announced that funding, the reverse pitches started rolling in again. Three different investors sent Mr. Perez videos from celebrities they had hired on Cameo to make their case. One was from Andrei Kirilenko, a former Utah Jazz player whom Mr. Perez was a fan of.“It was a constant drumbeat that got a bit more feverish,” Ms. Perez said. In October, Hinge raised another $600 million led by Coatue and Tiger.Mr. Bhattacharyya said this kind of “pre-work” had become table stakes for firms looking to land a hot investment. The goal is to pre-empt the company’s formal fund-raising process and show how excited the firm is about the start-up, while possibly sharing some useful data.“It’s part of the selling process,” he said.Vijay Tella, founder of Workato, an automation software start-up in Mountain View, Calif., said the dossiers sent by prospective investors during his company’s latest round of funding in November were so elaborate that one firm had interviewed 30 of Workato’s customers. Afterward, Mr. Tella worried that his customers had been spammed by prospective investors and even apologized to some.Workato, which raised $310 million across two rounds of funding last year and is valued at $5.7 billion, is not currently seeking more money. But, Mr. Tella said, “I would bet right now that those calls are still happening.” More

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    Battling for Bolivia’s Lithium That's Vital to Electric Cars

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    SALAR DE UYUNI, Bolivia — The mission was quixotic for a small Texas energy start-up: Beat out Chinese and Russian industrial giants in unlocking mineral riches that could one day power tens of millions of electric vehicles.A team traveled from Austin to Bolivia in late August to meet with local and national leaders at a government lithium complex and convince them that the company, EnergyX, had a technology that would fulfill Bolivia’s potential to be a global green-energy power. On arriving, they found that the conference they had planned to attend was canceled and that security guards blocked the location.Still, the real attraction was in plain sight: a giant chalky sea of brine high in the Andes called the Salar de Uyuni, which is rich in lithium, among several minerals with growing value worldwide because they are needed in batteries used in electric cars and on the power grid.Surrounded by rusty equipment, empty production ponds and pumps uncoupled from pipes, it seemed a forlorn spot. But to Teague Egan, EnergyX’s chief executive, it had nothing but promise.“This is the new Saudi Arabia,” he promised.The Indigenous Quechua people revere the Salar de Uyuni, 4,000 square miles of salt flats that their forebears believed were the mixture of a goddess’s breast milk and the salty tears of her baby. For Mr. Egan, the site is “pure white beauty as far as the eye can see.”With a quarter of the world’s known lithium, this nation of 12 million people potentially finds itself among the newly anointed winners in the global hunt for the raw materials needed to move the world away from oil, natural gas and coal in the fight against climate change.Eight foreign companies have been competing in recent months to establish pilot lithium projects here, including four from China and one from Russia, countries that have had friendlier relations with Bolivia’s government than the United States has.Just as wildcatters have long sought riches prospecting for oil, the clean energy revolution is spawning a wave of gritty entrepreneurs who hope to ride a new boom, vaulting themselves into the intersection of geopolitics and climate change. Some are familiar names like Elon Musk at Tesla, while Mr. Egan and others are strivers looking for their first break in mineral-rich places like Bolivia, the Democratic Republic of Congo and the South Pacific.Mr. Egan is among the determined underdogs. His company, with 30 employees, is one of two from the United States among the eight contenders to develop Bolivia’s lithium reserves.Lithium is a basic component of lithium-ion batteries, enabling the flow of electrical currents. Because of the metal’s light weight, long life, large storage capacity and easy recharging, demand is expected to grow exponentially over the next decade to power an expanding fleet of vehicles produced by Tesla, Ford Motor, General Motors and other carmakers and spread power grid battery storage for renewable energy. This year alone, prices for lithium compounds are up over 200 percent on several global markets.Mr. Egan, 33, had never worked in the energy industry before starting EnergyX in 2018 to pursue lithium projects. With his hair slicked back, frequently unshaven and wearing his baseball cap backward, he projects youthful exuberance and self-confidence.He established a book club at his company and assigned a biography of Thomas Edison as the first offering to send a message to his colleagues: “You can try 100 times and give up. Edison tried 17,000 plants to produce domestic rubber.”Despite the bravado, he would appear to be an unlikely character to drive Bolivia’s energy future. He has never worked in Latin America and speaks virtually no Spanish.But for Mr. Egan, the only thing that is really important is his belief that his technology to coax the lithium out of the Andean brine is the best to finally make Bolivia an energy power.“In Bolivia they are so sensitive about the politics,” he said. “I just don’t understand why they should not do what is in the best interest of the country. I can only control what I can control.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}‘The Lithium Is for Bolivians’There is much that Mr. Egan cannot control in this country long riddled with coups and racial, ideological and regional divisions.Bolivia’s governing party, the Movement for Socialism, is led by former President Evo Morales, who tried to draw the country closer to China before protests and the military forced him from power two years ago.The current president, Luis Arce, who was Mr. Morales’s economy minister, heads a coalition of social democrats and more doctrinaire leftists. He faces challenges from local movements that object to the socialist government and are wary of foreign interests, seeing them as exploiters of Bolivia’s mineral wealth going back to the 17th century.Only two years ago, a lithium deal between Mr. Morales and a German company led to protests that eventually spread around the country. Mr. Morales was forced to scrap a contract only a week before he fled the country.Marco Pumari, a local politician who led the protests, demanded a tripling of royalties for Potosí Province and local involvement in ownership of lithium enterprises. He said that his demands had not changed, and that his opposition to the ruling socialists remained steadfast.“As soon as they publicly choose the foreign companies, the province will mobilize,” he said in an interview. “The government is playing with fire.”In August, about 80 protesters took over two roads, blocking Mr. Arce from visiting government lithium facilities and demanding that he fire the new head of the state-owned lithium company and give local residents greater say in decisions about lithium production. The protest forced the cancellation of the conference that Mr. Egan and his EnergyX team were scheduled to attend.“We need asphalt roads and textile factories,” said Rosa Belen Julaca, a Potosí quinoa farmer who joined the protest even though she generally supports the government. “If they don’t listen to us, we’ll keep blocking the roads.”Government officials soon visited to calm tensions.Women poured colorful confetti on the heads of officials and draped their necks in wreaths of flowers. The visitors included Franklin Molina, the energy minister, and the head of the state lithium company, whom the protesters had wanted ousted.At a festive community meeting punctuated by Indigenous music, dance and poetry, they promised jobs and social programs from a lithium industry that would someday include manufacturing batteries and even electric cars.“The lithium is for Bolivians,” Mr. Molina declared to cheers.Energy experts say a major increase in Bolivian lithium production would keep battery prices down, helping President Biden achieve his goal of electrifying half of new cars sold in the United States in 2030, up from 4 percent today.“The amount of lithium we need in any of our climate goals is incredible,” said Anna Shpitsberg, the U.S. deputy assistant secretary of state for energy transformation. “Everyone is trying to build up their supply chains and think about how to be strategic.”But Washington has little sway in Bolivia, whose leaders have long disagreed with the American approach to drug policy and Venezuela. That may explain why some energy executives do not think Bolivia is worth the risk.“You’ve had 30 years’ worth of projects in Bolivia with almost nothing to show,” said Robert Mintak, chief executive of Standard Lithium, a publicly traded mining company based in Vancouver, British Columbia, referring to lithium development efforts dating back to 1990. “You have a landlocked country with no infrastructure, no work force, political risk, no intellectual property protection. So as a developer, I would choose someplace else that is safer.”Mr. Egan sees the odds differently.‘I Need to Be Involved’That Mr. Egan has gotten this far is a marvel. He learned about Bolivian lithium only by chance when he and a friend crisscrossed South America as tourists in 2018.When they got to the salt flats, a guide explained that they were standing on the world’s largest lithium reserve. “I thought, ‘I don’t know how I’m going to do this, but I need to be involved,’” Mr. Egan said.He had tried his hand as a sports and music agent and ran a small investment fund at the time. He had invested in Tesla in 2013 at $9 a share; it now trades around $975. (He would not reveal how many shares he had bought and how many he still had.)But he felt that he wasn’t achieving much. Before Mr. Egan traveled to South America, his father, Michael, the founder of Alamo Rent A Car, advised him to make two lists — of his five biggest passions and of the five industries he thought would grow fastest in the coming decades. Renewable energy was on both lists.Mr. Egan read up on lithium. He settled on filtering membranes as the vital missing link to make lithium evaporation ponds more productive and profitable. Then he came across a 2018 paper written by Benny Freeman, a chemical engineering professor at the University of Texas at Austin, and some scientists working in Australia about a new type of membrane with atom-size pores that could be used to separate and purify lithium salts from rocks and brines.He traveled to Austin and Australia, and Mr. Egan and Dr. Freeman hit it off.Teague Egan at the Salar de Uyuni, which he called “the new Saudi Arabia.”The two made an unlikely pair. Dr. Freeman, 60, was born into poverty in rural North Carolina and was the first person in his family to graduate from high school. Mr. Egan grew up wealthy in southern Florida. Dr. Freeman became passionate about chemistry handling pesticides on his family’s apple farm. Mr. Egan said he had learned business skills from his father at the dinner table.Mr. Egan returned again and again to Bolivia, but he made little progress selling officials on his technology. “All these people, their hands are just tied behind their backs,” he said, since they are scared to offend leaders at the top.A big break came in April 2020 when Diego von Vacano, a Bolivian political science professor at Texas A&M University — and an informal adviser to Mr. Arce, then a leading presidential candidate — contacted Dr. Freeman for advice on lithium extraction. Dr. Freeman connected Dr. von Vacano and Mr. Egan, and the Texas A&M professor became Mr. Egan’s vital bridge to Bolivia.After Mr. Arce won, Mr. Egan attended the inauguration. With Dr. von Vacano’s help, Mr. Egan made critical connections in the new administration.He was not able, though, to secure a meeting with the new president. During one trip, he tracked down Mr. Arce when they were both in Santa Cruz. Accompanied by Dr. von Vacano, Mr. Egan finally got a glimpse of the president eating in the canvas-covered wooden stalls of a fish market.But as he approached the leader, Dr. von Vacano stopped him. Mr. Arce was eating with a congressman antagonistic toward the United States. Avoiding a scene, Mr. Egan walked away. He returned home, but he was not done trying.A Visit and a BlessingMr. Egan discussing strategy with his team after learning that the conference they flew to Bolivia to attend had been canceled.In August, after the conference was canceled, Mr. Egan and his team flew to La Paz, the seat of government, and kept knocking on doors, hoping to capitalize on the contacts that Mr. Egan had made among top Energy Ministry officials.As always, there were hurdles.When they met with Carlos Humberto Ramos, the newly appointed head of the state lithium company, to persuade him of the advantages of their approach, they found that he had little understanding of EnergyX’s membrane technology.Mr. Egan’s team returned to Mr. Ramos the next day, and after explaining its technology to his top technicians, the team was told that it could visit the lithium complex and that an initial agreement approving EnergyX’s project was virtually a done deal.That night, EnergyX’s strongest ally in the government — Álvaro Arnez, a deputy energy minister overseeing lithium development — gave the arrangement his blessing. He joined Mr. Egan’s team for a celebration at an elegant La Paz restaurant over plates of dried Amazonian catfish and roast pork with pear kimchi.The next morning, Mr. Egan and his team flew back to the salt flats.They inspected several shimmering man-made ponds, which hold brine for evaporation — a method of lithium extraction that has been hampered by heavy seasonal rains.Even when dry, the lithium must be separated chemically from other minerals, a process that wastes much of the desired lithium.Mr. Egan told technicians that his technology could greatly increase and speed up production.There were disagreements over where to put the proposed pilot project, and when Mr. Egan suggested ways to move forward toward commercialization, the technicians told him to wait until initial test results were in. But he was content that he toured the facilities before other companies.In an interview, Mr. Molina, the energy minister, said Chinese and Russian diplomats were lobbying on behalf of their own companies, but he insisted that “there is room for Americans, Russians, Chinese, Japanese, whoever wants to invest as long as they respect our sovereignty.”China has advantages. It already controls substantial lithium assets in South America, and its businesses have made roughly $4.5 billion in lithium investments over the last three years in South America and Mexico. Chinese banks give low-interest loans to Chinese mining and construction companies operating abroad to advance President Xi Jinping’s plans to dominate industries of the future.As for Russia, President Vladimir V. Putin has spoken by phone with Mr. Arce at least twice about lithium and other matters, Russian officials said.Mr. Egan said he was getting virtually no help from the U.S. government. And American officials say their best hope is to gently press for a level playing field.The long game has paid off for Mr. Egan, at least so far. He signed an agreement to start the pilot, and in October he shipped a container to Bolivia outfitted with pumps, valves, tanks and membranes to separate lithium from brine. If the pilot shows promising results, he may be able to proceed with a commercial project.Of the 20 companies in competition at the start of the year, the government has named eight to carry out pilots, including one other small American company, Lilac Solutions of California.All the contenders — the eighth is from Argentina — will be competing for Bolivian government attention and resources like power hookups and skilled local technicians in the months ahead before any can be approved to move toward commercial operations.“We still need to do a demonstration and scale it up,” Mr. Egan acknowledged. “We still need to go commercial. I mean, this is just Day 1.” More

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    Even Your Allergist Is Now Investing in Start-Ups

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    The once-clubby world of start-up deal making known as “angel investing” has had an influx of new participants. It’s part of a wider boom in ever-riskier investments.SAN FRANCISCO — On a recent Wednesday evening, 60 people gathered in a virtual conference room to discuss start-up investments. Among them were a professional poker player from Arizona, an allergist in California and a kombucha maker from Tennessee. All were members of Angel Squad, a six-month $2,500 program that aims to help people break into the clubby world of venture capital as individual investors, known as “angels.”The group listened as Eric Bahn, the instructor, rattled off anecdotes and advice from the front lines of start-up investing. “The most important question when you are an early stage investor is: What happens if things go right?” he said, stepping back from his desk and raising his hands for emphasis.Caroline Howard, 29, one of the founders of Walker Brothers Beverage, a kombucha company in Nashville, said the class taught her how to evaluate deals. “I think it’s so fun to see companies when they’re so young and have a germ of an idea and back them,” she said.Founded in January, Angel Squad is one of several ways that people from outside Silicon Valley’s investing elite are now joining the ranks of angel investors. The influx — which includes art curators, dentists, influencers and retirees — is transforming the way that start-ups raise money, upending the pecking order in venture capital and pushing a niche corner of the investing world toward mass adoption.“It is absolutely going mainstream,” said Kingsley Advani, founder of Allocations, a tech platform for angel investors. “It’s accelerating and it’s getting faster and faster.” He said even his mother, a retired schoolteacher in Australia, has invested in 41 start-ups over the last few years.More than 3,000 new angel investors are projected to make their first deal this year, up from 2,725 last year, according to the research firm PitchBook. And the amount of money that angels are pouring into start-ups has swelled, reaching $2.1 billion in the first six months of this year, compared with $2.6 billion for all of 2020, according to the National Venture Capital Association and PitchBook.Until recently, such investing was off-limits to most people. Securities rules restricted it to the wealthy because of the level of risk involved, since most start-ups fail. Even those who qualified often lacked the connections to find deals. And start-ups preferred to raise big slugs of cash from a handful of investors, rather than deal with the costs and headaches of processing dozens of tiny checks.But over the last year, many of those roadblocks have dissipated. Last year, the Securities and Exchange Commission loosened restrictions and began allowing people to become accredited investors — those allowed to back private start-ups — after passing a test. New tech tools are making the process of raising funds from many small investors cheaper and faster. And start-ups have become eager to add potentially helpful angels to their rosters of backers.The boom is part of a rush into ever-riskier forms of investment, driven by low interest rates, stimulus money and a little bit of “why not?” chutzpah. Nowhere is that sentiment stronger than in the tech industry, where start-ups are flush with cash, initial public stock offerings have been plentiful and Big Tech is delivering blockbuster profits.“Overnight, the entire world just woke up and went, ‘Oh, wow, we want to go invest in technology,’” said Avlok Kohli, chief executive of AngelList Venture, a company that provides tools for start-up fund-raising.Many new angel investors have some connection to the tech industry but are not the V.I.P.s who are normally invited into deals. Some are complete outsiders. Many are broadcasting their activity on social media and turning the investing into a branding opportunity, a hobby, a networking play, a social status or a way to give back.Karin Dillie, 33, an executive at an e-commerce company in New York, said she hadn’t realized that she could be an angel investor. But in June, when a business school classmate emailed asking her to help fund a calendar app called Arrange, Ms. Dillie decided to go for it. She invested $5,000.“I probably needed someone to give me permission to play the game because investing always seemed so elusive,” she said.Karin Dillie, 33, an executive at an e-commerce company in New York, said she hadn’t realized that she could be an angel investor.Elianel Clinton for The New York TimesMs. Dillie has since joined several informal investing groups, listened to podcasts and set up news alerts for terms like “preseed funding” (the earliest money a start-up usually raises from outside investors). She said she was motivated to support female founders, who raise less than 2 percent of all venture funding.In London, Ivy Mukherjee, 28, a product designer, and Shashwat Shukla, 30, a private equity investor, also started putting money into start-ups together this year to learn new skills and network with others in the industry. They said they were proceeding cautiously, with checks of $2,000 to $5,000, knowing they could lose it all.“If we happen to make our money back, that’s good enough for us,” Mr. Shukla said.The new angels have the potential to transform a venture capital industry that has been stubbornly clubby. They could also put pressure on bad actors in the industry who get away with things ranging from rudeness to sexual harassment, said Elizabeth Yin, a general partner at Hustle Fund, a venture capital firm. The firm also created Angel Squad and shares deals with its members.“More competition brings about better behavior,” Ms. Yin said. (In addition to investing in start-ups, Hustle Fund sells mugs that say “Be Nice, Make Billions.”)The angel boom has, in turn, created a miniboom of companies that aim to streamline the investing process. Allocations, the start-up run by Mr. Advani, offers group deal making. Assure, another start-up, helps with the administrative work. Others, including Party Round and Sign and Wire, help angels with money transfers or work with start-ups to raise money from large groups of investors.AngelList, which has enabled such deals for over a decade, has steadily expanded its menu of options, including rolling funds (for people to subscribe to an angel investor’s deals) and roll-up vehicles (for start-ups to consolidate lots of small checks). Mr. Kohli said his company runs a “fund factory” that compresses a month of legal paperwork and wire transfers into the push of a button.Still, getting access to the next hot tech start-up as a total outsider takes time.Ashley Flucas, 35, a real estate lawyer in Palm Beach County, Fla., began investing in start-ups three years ago. She said it was a chance to create generational wealth, something underrepresented people did not typically get access to.“It’s the same people doing deals with each other and sharing in the wealth, and I’m thinking, how do I break into that?” said Ms. Flucas, who is Black.But it took cold emails, research, building her reputation on AngelList and participating in three angel investing fellowships to get access to deals and construct a portfolio of more than 200 companies, she said. Things especially took off this spring after she invested in several companies that had just graduated from Y Combinator, the start-up accelerator. Some of her investments have appreciated enough on paper to return more than she has put in.Now, Ms. Flucas said, she is getting asked to join venture firms or raise her own fund. “The seeds I planted at the beginning of the journey are bearing fruit,” she said.“It’s the same people doing deals with each other and sharing in the wealth, and I’m thinking, how do I break into that?” Ms. Flucas said.Ysa Pérez for The New York TimesSome longtime angels have cautionary words for those just beginning their start-up investments. Aaron Houghton, 40, an entrepreneur, said he lost $50,000 that he had invested in a friend’s start-up in 2014, along with a $10,000 deal that went belly-up. He sarcastically called the losses a “really nice, somewhat inexpensive wake-up call” that showed he needed to spend more than a few hours researching companies before investing.But that isn’t always an option in today’s frenzied market. Mr. Houghton said he had recently been given little more than a pitch presentation, a high price tag and a few hours to decide whether he was in or out of an investment.“It’s all so hot right now,” he said.In the recent Angel Squad class, one participant asked if investors should be concerned about valuations. Mr. Bahn said it was up to each investor, but he added that there was an upside to the skyrocketing prices. Some tech companies were becoming huge, worth $10 billion or more on paper, creating bigger returns for investors who got in early. That was the exciting thing about investing in young start-ups, he said.“The alpha,” he said, referring to an investor’s ability to beat the broader market, “just continues to grow.” More