Glenn, are picking up any of this action?
>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.
>March 26, 2000
Continued from I-1
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,' " Golding says, recalling a recent drive through his neighborhood in Menlo Park, in the heart of Silicon Valley. "She knows the different cars. It is troubling to me."
Peter Kiernan, a senior executive at 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,' " Kiernan says 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 super rich 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 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. That angst pervades almost every conversation about their generally younger, often richer peers from the '90s.
Just ask Nelson Peltz who, in his heyday, was a confidant of Michael R. Milken, the former Drexel Burnham Lambert junk-bond maven. Peltz made much of his wealth investing in troubled companies in the 1980s.
No pauper, Peltz caused a stir when he bought 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," Peltz said 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.'"
He is joking -- at least a little.
An even bigger contrast between then and now is that people like 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.
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, he has a stock option package worth tens of millions of dollars. That is small change, though, 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," Welsh says, 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.
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," says 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, 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.
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, Wolff says, a chief executive made 400 times what the average employee did.
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, Whitman was a little-known marketer selling Teletubbies at the toymaker Hasbro. Today she is seen almost as frequently as that other most-talked-about female billionaire, Martha Stewart.
In the last year, 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.
Whitman's net worth -- she had stock options worth close to $1 billion, according to recent government filings -- is fodder for online chatter.
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 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.
One young entrepreneur who could not be with his friends on New Year's Eve had his own event 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.
Dinesh D'Souza, a research scholar at the American Enterprise Institute and author of a forthcoming book, "The Moral Conundrum of Success," says 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, might not feel so comfortable.
George Bell, chief executive of the Internet portal Excite@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 says. "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," D'Souza says. "They are not sure they can defend their extravagances."
D'Souza says 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, D'Souza says, while the super rich own homes around the world. Besides, the super rich get something the merely rich do not. "Great wealth, even if it is paper wealth," he said, "propels people into celebrity." |
