Making Pizza

MARCH 16, 2023

By Wen Shiau 

Silicon Valley Bank’s demise will impact the VC and Startup world and the global contagion of credit contraction is not yet over.  Yet, its important to put this immediate crisis into context and to offer guideposts for the future.

In the below chart, YTD as of March 16, 2023:

1. S&P 500, +2.08%

2. Boston Properties, BXP, -20.3%

3. Toll Brothers, TOL, +15.7%

Boston Properties is one of the largest office REITs in the country and we and the world are obviously very bearish on office post Covid.

Cypress Capital Group is very similar to Toll Brothers where we build and invest in residential properties (Single and Multi) for upper middle income families.

We often refer to our business model as “making pizza.” When there is a recession, do you stop eating pizza if you are a upper middle income family?

Our cost of goods sold is $500/sf construction cost and we sell for $1000-2000/sf.

Our homes in Silicon Valley are $5-7mm which are sold to senior executives in their 40s with families, not Startup kids.

We are confident in our business model to continue making pizza and even more excited for opportunities to arise in buying cheap assets from unique, special situations which should arise from a credit contraction.