She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars).<p>pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.
Your phrase “extract” betrays a fundamental disagreement with what Paul is saying. (Externalities does so again) It assumes a zero-sum game where the job is to shift money from one person to another. Value, and thus money/wealth can be created. Literally.
You are saying, in different words, that no one can do it “honestly”. He is saying one can.
Yes, and the art of this game is to extract value which you did not create. It may or may not come alongside creating value. Uber creates value in the form of an app marketplace for taxis, but it also pushes taxi wages down below the sustainability line without pushing prices down that far, and pockets the difference for itself. Apple made a cool phone that it sells for a high but fair price, but it also takes 30% of everything you buy with that phone, just because it can.
Based on this article at least, he is not disagreeing with those claims, he is not even acknowledging they exist.<p>The original claim, as I understand it, is basically this: you can’t be an honest actor in a dishonest system.<p>And it’s not even necessary to claim that billionaires did something uniquely wrong to become billionaires. It’s just that their share of the exploitation is so, so, so much bigger.
There is a finite amount of land on earth, and a finite amount of most natural resources. We currently have no indication we will EVER develop faster than light technology.<p>Any discussion not grounded in those facts is a dishonest discussion. It is a zero sum game until those externalities change because ultimately our species is built upon extraction resources to produce wealth. It IS a zero sum game until you or someone else invents a means of solving the first order problems.
> It assumes a zero-sum game where the job is to shift money from one person to another.<p>No, it observes, not assumes, that even when when money / wealth is created under this system, it flows mostly to a few individuals. That process is termed "extractive".
"Extract" here has two meanings:<p>1. Extracting from the market or the economy. It seems like (correct me if I'm wrong) this is what you're reading it as? and<p>2. Extracting from labor. This is the basis of the labor theory of value [1].<p>The point of comments like AOC's is mostly the second one, which is to say that you only become a billionaire by extracting it from your workers. And yes, this is a fundamental disagreement with many people. Some will say that the startup founder who makes a billion dollars deserves it by taking the risk or being the leader or however you want to frame it.<p>The counterargument is that that value simply wouldn't exist if it wasn't for those workers and their work. Even Instagram, which famously had only 13 employees when acquired for $1 billion, still needed those workers. It would've been nothing without them.<p>Take Google as another example. The profit per employee has famously been (at times) over $1 million per year.<p>The term for this is "surplus labor value".<p>[1]: <a href="https://en.wikipedia.org/wiki/Labor_theory_of_value" rel="nofollow">https://en.wikipedia.org/wiki/Labor_theory_of_value</a>
Can he provide evidence of one that has?
no one is doing it honestly in the disparity<p>musk isnt a trillionaire because his assets would equate to physical product. his valuation is an inflated target of market manipulation.<p>when you add up all the physical goods in the world that directly benefit people, that comes nowhere near these valuations.<p>and externalities are one way wealth is taken from the environment. then theyre parlayed.
I think there are many arguments against AOC's comments, but I agree that PG here is misrepresenting her point.<p>I don't think anyone reading PG's blog is clueless about the power of compounding or the difference between salary and wealth through asset growth.<p>Her point is essentially whether the entire capital system is "fair." And to be fair to PG I don't think AOC articulated a particularly strong point either.
pg is or was the owner of a very influential venture capital fund, that created projects such as Uber and AirBNB. He knows all about setting up structures to extract value, and he also knows which framing makes people more sympathetic instead of angry.
<i>>pg is or was the owner of a very influential venture capital fund, that created projects such as Uber</i><p>Uber was not a YCombinator company.<p>(An example of how chatbots hallucinate because they train on the text of people unintentionally hallucinating.)
The sad part about it, and one that has become a bit of a theme with his postings, is that pg stopped being intellectually honest in his online writings at some point over the last two decades.<p>His post here in particular violates the fundamental principles of HN in that he does not engage with the argument at all.<p>The argument isn't that it's impossible to become a billionaire <i>legally</i>, the argument is that it's impossible to become a billionaire in a <i>moral</i> way, though that's more of a problem of the system than it is necessarily one at the individual level. A just and moral system would assign the value being created in such a way that becoming a billionaire would be essentially impossible.<p>Yet pg never even acknowledged the possibility that that might have been the argument.
> he also knows which framing makes people more sympathetic instead of angry<p>I'm of the opinion that this skill atrophies substantially for billionaires.
Why does building a successful business necessitate generating economic externalities? Many do, and that should be prevented, but many also don’t. And to say that those externalities are responsible for a majority of the business’s growth in all cases is just false.
> pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.<p>Does this mean you haven't been following his twitter the past several years?
I think this is super interesting (because the answer is not at all obvious to me): What do you mean by "through work alone"? Can it only be work if I can map a human hour cleanly onto someone paying an invoice for that hour?
Yes. Investment gains are not work, inheritance is not work,capital appreciation is not work, winning the PayPal stocks lottery is not work.
> Investment gains are not work<p>Say, for example, my job is allocating capital across the S&P 500. My work is picking the stocks, the fruits of my labour are excess returns.<p>Are those excess returns not work? What are they?
Part of it is work, yes. But consider. How much is your take home as a fund manager with 100M AUM? How much is your take home with 10B AUM? The work is the same, yet if the take home is different, you've proven that your income is not in fact earned through work in a moral sense.
> Are those excess returns not work? What are they?<p>Wealth extracted from a market, which is what the parent commenter said in the first place
What if I build and run a SaaS?
The common argument would be that, unless you set it up as a co-op/full profit share or never hire employees, you're extracting value (exploiting) from what your employees' labor earned the company.<p>Missing from both sides of this argument, IMHO, is BATNA.[0]<p>[0] <a href="https://en.wikipedia.org/wiki/Best_alternative_to_a_negotiated_agreement" rel="nofollow">https://en.wikipedia.org/wiki/Best_alternative_to_a_negotiat...</a>
Agreed, what a disappointment of an essay, encouraging a growth at all costs mindset and pretending that this growth doesn't involve/encourage bad side effects.<p>And a lot of these structures either involves a percentage cut or a security of some kind. And it's not new, it's copied.
He also glosses over the fact that the founder started with $2 million.
I understood the phrase as emphasizing the "deserving" implication of the word earn. As in, it is not possible for a human to take actions such that the fair reward is a billion. Or in other words, if you got a billion you got more than it's fair. To emphasize: this does not necessarily mean that the way one became a billionaire is nefarious or evil. It just implies unfairness.<p>I'm not defending that interpretation, mind you, just saying it's a possible read of the phrase.
> so blunt and misrepresentative<p>You should read that as a self-preservation technique. The eager use of a strawman tells us PG heard AOC's words as an attack against <i>him</i> personally, his business, and his friends.<p>So the essay is not a reasoned retort but more an emotional self-defense to soothe a bruised ego. It's to assure himself that no -- in fact he <i>did</i> earn his wealth fair and square, and to imply otherwise shows a lack of understanding of how this all works. But I do love this essay because it does show just how emotional and irrational billionaires can be when their wealth and egos are threatened.
His entire essay is just based on a purposeful misreading of the opposing point. It's a straw man. And if you look at his history it's obviously intentional and part of his usual style of argument.<p>The actual opposing argument is that it's impossible to create a billion dollar enterprise without a group effort, and for one person to end up with a billion dollars necessarily means that they made decisions within that enterprise that resulted in a lopsided allocation of resources at the end.<p>Period. That's it, and it's inarguable.<p>Every single aspect of the system is arbitrary and is a policy decision made by society. The basic building block, the limited liability joint stock company as a legal concept with some form of independent rights and entity status is arbitrary. Every lever, every part of the system, is created by people making decisions about how society is organized.<p>The people he is arguing with are basically saying "we want the system structured differently because this one is producing too much concentrated wealth." That's a political choice and an eminently reasonable one.<p>So if it's that simple, why would he feel a need to straw man instead of just addressing the actual argument? Well because he'd lose. The reality is is <i>most people agree</i> with this assessment of society and want it to change.<p>And by the way the question of how resources get split between labor and capital is the oldest and most central political problem in human history. To adopt a condescending tone while pretending to be ignorant of stuff you learn in the first couple weeks of any real study of politics or history, betrays the deception inherent in his essay.
> it's impossible to create a billion dollar enterprise without a group effort<p>George Lucas made a movie with a (small) group effort. But what made a billion dollars is his Star Wars universe which is almost entirely his creation.<p>It literally creates wealth for other people. If my toy sells $10,000 without Star Wars and $100,000 with it, did I participate in making George’s billion, or am I benefiting from it?<p>> means that they made decisions within that enterprise that resulted in a lopsided allocation of resources at the end.<p>What do you mean? Every good and service involves many people, but the degree to which they participate in its creation and risk vary. For example, a Farmer may create a more efficient way to grow food. Is the grocery store now entitled to a piece of the reward? They didn’t change anything, all of the improvement is the farmer side.
> George Lucas<p>Once again, lopsided allocation - George benefited from and is directly responsible for keeping the cost of labor low: <a href="https://www.hollywoodreporter.com/business/business-news/100m-disney-settlement-signals-end-animators-anti-poaching-fight-970887/" rel="nofollow">https://www.hollywoodreporter.com/business/business-news/100...</a><p>Would he have been a billionaire without that? Who knows? But it definitely helped him get there.
Of course it's arguable. You make it sound like founders perform some jedi mind-trick to take money from others. Here's what actually happens. Investors put in initial money because it's a win-win (they get an expected return, founders get starting capital). Employees join because it's a win-win (they get a salary, health, equity, other perks; founders get a workforce). Customers pay cash because it's a win-win (they get a product or service they want, the business gets money). At no point is someone being held down and forced to hand money to someone else.
You are saying that people should not have a right to keep their private property
Most people would not agree with that
So what does you practical utopia look like in real terms. What's the master plan beyond I don't like people making money from what people want? What does that utopia look like in practice.
> So what does you practical utopia look like in real terms.<p>When you hit a hundred billion in net worth, you get a nice solid gold plaque that says "I won capitalism", you get an attaboy from the UN, and we start taxing the shit out of wealth over that cap.<p>Adjust periodically for inflation. (Do that for minimum wage while we're at it.)
Impressed at the commentary here, which correctly points out Paul dodges the entire issue at hand.<p>Three things can be true:
1. Growing at a rapid rate over long periods of time is <i>hard</i>, <i>doable</i> and <i>rewarding</i>
2. Incentivizing the discovery of these things is <i>good</i> for society.
3. Nonethless there is and <i>should be</i> a limit to wealth acquisition, given moral hazard.<p>To make a similarly glib counterargument to Paul G:<p>If it's the founders who <i>earned</i> the same monetary value of the companies they created ("because they're responsible for it"), they should bear the same moral and legal responsibility for the externalities.<p>So far, only SBF is in jail. Lots more of these companies have broken the law.<p>Let's throw the founders in jail too - they can keep their money!
But the accounting difference is real. It is virtually impossible to earn a billion dollars. What is possible but still difficult is to create something worth a billion dollars which you can then sell if you choose so.<p>And to the people criticizing, this is cheating. To them, a billion dollars enterprise is not possible without the exploitation of employees, customers, or at least the environment.<p>Also, the most important thing to understand about a society is how people gain <i>status</i>, not just money/wealth. If you focus on money, you won't have an explanation for political movements or artistic endeavors.
> She was getting richer at a stupendously rapid rate. And yet she hadn't been doing anything bad. The reason her startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong that politician was. She wasn't exploiting anyone.<p>I presume it's a company that just has co-founders then?
Or everyone is getting an equal % of the share? In which case SHE's not getting 93% richer just cause her start up is.
Let's say she has ten employees. They all voluntarily agree to work for her: slavery is illegal, so people work for others on a consensual basis. Both the employer and employee negotiated and consented to a salary or wage schedule for that employee. The employer pays the agreed-upon compensation, and the employee receives it.<p>If the company makes an unexpectedly large profit, the employer is not obligated to redistribute that to her employees in addition to the already agreed-upon and paid compensation. If the employees think that what they agreed to work for is no longer sufficient, they are welcome to renegotiate their compensation or, if they feel they have been wronged and are being paid less than they are worth, to take their talent to a different employer. After all, everything so far has been consensual. The only thing that would be non-consensual would be obligating the employer to redistribute her profit over and above what had already been negotiated.
:facepalm:<p>Lets walk through the math.
If her company is worth $100, and she owns 100% (her wealth starts at $100), and the company grows 93%, then the company has grown to be worth $193 and her share has grown by $93 which is indeed a 93% growth rate for her wealth.<p>Alternatively, if her company is worth $100, and she owns only 10% (making her wealth $10), and the company grows 93%, then the company has grown to be worth $193 and her share has grown by $9.30 which is still indeed a 93% growth rate for her wealth, which started at $10 and now rises to $19.30.
No it’s a magical startup where it’s just going to be her in a basement doing 100% of the work required for 10 months straight while demand doubles every month.
In creative destruction, you can do an accounting sleight of hand by attributing credit for creation while ignoring blame for destruction even though the two are linked.<p>This is a technology + investing forum and all of us agree that in general creative destruction processes are enormously net positive, but they frequently do kick off a toxic byproduct in the form of said destruction (e.g. Uber and displaced taxi drivers), so there is moral entanglement between creation and destruction. Morally speaking, figuring out how to mitigate this toxic byproduct is part of our remit just as it was part of the remit of earlier industrialists to figure out how not to discharge so much flammable goo into the river that it lit on fire. We neglect this at our peril, because society merely pinches its nose if the toxic byproducts are small, but they are increasingly not small.
When AI melts away these rent seeking marketplaces like Uber, Doordash, Amazon, etc, they won’t go as quietly as the people they displaced.
These are actually the most durable businesses because they have network effects: restaurants alright signed up, sellers onboarded, etc.<p>Easier for them to adopt AI than AI companies to rebuild the networks
One way to take over a network is to start with an alternative front end. We'll see if this works out for AI companies. First you have the AI consult booking.com whenever someone asks it to book a hotel, then you get more and more hotels to directly communicate with the AI company, then you drop booking.com once you have enough.
what makes you think AI won't be the ultimate rent-seeker
There's no resource destruction involved in displacing taxi drivers. Taxi medallions are a rent-seeking scheme, there's no real scarcity involved. Most other instances of "creative destruction" are like that, the capital simply gets repurposed at negligible social cost and only excess profits disappear.
I will say before Uber was a thing, if I tried to call and schedule a taxi pickup in the city I lived in at the time, if they showed up at all they were at east a half hour late. Missed a flight because of it once. I don’t even like uber, but it is objectively a better service most of the time.
Yeah, anyone who uses taxi drivers as an example of destruction either don't know what they're talking about (because they never experienced it) or they're crying crocodile tears.<p>I had cab drivers nearly drive off <i>with me hanging off the car</i> in San Francisco, because they were far more concerned with screening my destination than, say, <i>not killing me</i>. If Uber destroyed that industry, it was only a net benefit to society. They created <i>immense</i> value, and the "destruction" was only to eliminate a layer of corrupt parasites who made money by preventing a free market (in this case, the medallion owners, but the entire industry was corrupt from top to bottom).
Yes, Uber did something enormously creative. But it also did something destructive and we're guilty of an accounting sleight of hand if we focus on one while pretending the other doesn't exist.<p>We still want to encourage creative destruction to move forward, but paying taxes to clean up the destruction is the very least that the victorious parties can do because the entanglement exists in moral accounting even if it doesn't exist in financial accounting.
What's the byproduct of human-level AI and robotics?
Displaced workers.<p>I mean, maaaaaybe a Jevon's Paradox kicks into play with human labor and replacing people with robots somehow creates even more jobs, but whenever someone says this your immediate response should be: "ok, now put your money where your mouth is and bet on it by strengthening the social safety net."
I generally do believe that workers get redeployed elsewhere after technological disruption.<p>(Eg agricultural revolution in the US)<p>I do believe in good safety nets as well and I think that shows in my voting record, so I’m not sure what else you would expect from me, if anything.
We'll have a better idea if it arrives.
The pursuit of everlasting growth that pg describes inevitably results in cheating. At a certain point the market reaches a saturation point and if you're capitalising on every possible opportunity to retain your high growth rate, that will include hoarding resources and circumventing consumer protections.
The hoarding resources and circumventing consumer protections is just the start of it.<p>Eventually it becomes rational to start buying politicians, and subsequently laws. The next obvious avenue is to then control entire government agencies like the FAA or the FCC and just write favorable laws and regulations they don't even have to circumvent.<p>But even that isn't the end because they're growing too fast, they actually outgrow the law, so breaking it becomes a rational, profit-driven choice. Huge fines? Regulators breathing down your neck? No worries! Just spend more money then has ever been spent in an election to their favored presidential candidate, and then they get to just shut down investigations into themselves!<p>But even <i>that</i> isn't enough -- soon it becomes a rational business-forward goal to take over the entire government; or even better <i>become</i> the government. First a city, then a state, then a nation. Guess what folks EVEN THAT won't be enough. Not even everything on this entire planet Earth is enough for them; they also want the Moon and Mars and the entire solar system. They will have to become God at some point for this growth to keep up, and that will still be too little for their egos to bear. Something has to give.
Playing devils advocate here:<p>Maybe the politicians position is that the whole system is based on cheating and everyone who partakes is acting immorally?<p>Is it fair that the founder got education and some money to start his company while other people are living on the street or have to care for relatives? If they come from a relatively privileged position and manage to build a company that ends up being successful, did they earn that money?<p>I don’t think the cheating people criticize is necessarily criminal fraud.<p>Edit: and the second thing people seem to criticize is that just keeping your company growing often seems to involve some unethical things. Basically every company that’s manufacturing hardware is doing that in Asia under inhumane conditions, so they probably can’t really claim they earned their money and it’s just maths.
Technically if you look at AOC's statement he mentions<p>>AOC: “There’s a certain level of wealth and accumulation that is unearned. You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that”<p>there's some truth there in that PG is talking about capital gains as the owner of a company and AOC is talking about earnings as payment for labour which are different things both in reality and in tax policy and law.<p>The capital gains can be unfair in that most of them go to founders and VCs and not much to other employees and stakeholders who have contributed as well.
Putting the scale of dollars and the startup world aside, AOC’s comments read that way would suggest a farmer who gets a series of loans from the bank to help him expand his family farm from a $200K sole proprietorship to a $10M sole proprietorship didn’t “earn” it either.<p>I don’t think a definition of “earn” that excludes cases like that captures the generally understood meaning.
What occurred to me reading this was the wage. Initially, and famously, the hours put into building a startup result in sub-par wages. But the amount of work by an individual never increases as it is limited by human capacity. In a successful startup with continuous growth the wage is ever increasing, to the point of absurdity.<p>That’s weird. I grew up around farming and farmers. A group also very proud of the work they do, in a profession where the wage is also indirect — sometimes negative, sometimes a fortune, always based directly on the work they’ve done. Year after year, the work.<p>That’s different.<p>I’ve always identified two sets in the realm of entrepreneurs: those that want to “be rich”, and; those that want to “become rich”. The latter group is perhaps more admirable as they acknowledge the process and the value creation whereas the former seek only the status. But neither are often interested in the work of it.
I think the distinction the politician tried to make, was that you don't "earn" a billion dollars the same way the vast majority of people make their money. You become a billionaire by company ownership, not getting cold hard cash.<p>The hierarchy of wage looks something like:<p>1. hourly pay (how many hours you can work sets the maximum possible salary)<p>2. base pay + cash bonus (the cash bonus starts to increase your earning potential. Sometimes the bonus can be huge, for traders, salespeople, etc.)<p>3. base pay + stock options (the stock options can outsize your base pay by big margins)<p>4. stock ownership (almost all your wealth is tied up to the stocks)<p>The vast, vast majority of people are stuck at (1), and will never move to (2). Nearly all billionaires are at (4).<p>The average worker will work around 100k hours in their lifetime. If you started working today, with a 2% inflation rate, you'd have to start getting paid close to $6000 / hour in order to reach a billion dollars (pre-tax) in total income by the time you retire 50 years from now.<p>Another factor to consider, is that salaried workers can't use leverage to increase their earnings. A startup founder can find investors and raise money, which works as rocket-fuel for their company. You can practically outspend your competition. That is simply not possible for regular workers, without breaking rules (as in outsourcing your job, taking on several jobs and outsourcing those, while collecting).
You say "stuck at (1)" as if most people actually desire this kind of wealth and are trying to become entrepreneurs.<p>The simple truth is that many people don't want to step into that kind of intensity and uncertainty, or lack the skills to succeed in a cutthroat industry.<p>The idea that founders are somehow "cheating" is hilarious to me. Anyone in the developed world can easily become a founder, why don't you try it?
I'm saying "stuck" in the sense that their earning potential is completely dependent on how many hours they put in, and how much their annual raise is.<p>While many don't necessarily value pay as #1, it <i>is</i> important to people. If a regular worker receives a 20% pay increase, that's huge compared to not getting anything, or something which barely covers inflation. Even though the dollar amount may not be much compared to others.
<p><pre><code> So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars [...] that it's impossible to get that rich without doing something bad — without cheating in some way.
</code></pre>
What counts as <i>'doing something bad'</i> and <i>'cheating'</i> clearly is subjective. I suspect Graham's opinion on the behavior of a Zuckerberg or a Musk would be a little more flattering than mine.
Conversely, I suspect the politician is <i>defining</i> that "all things that earn a billion dollars" are in the "bad" category.<p>LeBron James has, between playing basketball and endorsing things, earned a billion dollars. What bad thing did he do, other than losing the finals a few times?
If she meant <i>"impossible"</i> as hyperbole (as one might use <i>"nobody wants a stylus!"</i> to mean <i>"very few people want a stylus!"</i>) then I agree with her.<p>If she meant <i>"impossible"</i> completely literally, then she is wrong.
This then that makes the argument very hard to respond to.<p>"No I didn't mean this [virtuous example]. I meant the vast majority of [unnamed nefarious actors] which I don't need to elaborate about as their existence is obvious."<p>Once you say it's just hyperbole and you don't mean it literally, then the only way to prove it is a statistical argument.<p>"The overwhelmingly share of company founders and companies are bad and don't earn their money." is a big claim that requires more than vibes.
Would anyone take literally the claim that it is impossible to attain a billion dollars without ripping someone off? Someone with $100 billion, who wanted to disprove it, could do so in five minutes, by cutting a $1 billion bonus check to his nanny.
He probably signed advertising contracts.
Aren't shoe companies notoriously scummy in regards to human rights? Nike has quite a lengthy controversies section on Wikipedia, and they're where a lot of his money came from.
Nike has some of the best labor policies of all the shoe companies now. Their controversies were in the 90s.
Yeah, you can choose between two worlds: in the current one, Nike is producing shoes in <i>you don't want to really know</i> circumstances and is paying LeBron ~$40M a year.<p>In another world, LeBron is still a millionaire, getting a nice $1M a year. The rest, a mere $39M, which in Paul Graham terms is just a couple months from turning into a billion, goes to the hopeless kids actually churning out the god damn shoes.<p>LeBron did nothing wrong. The system is <i>this</i> corrupt.
>an American politician said that it was impossible to earn a billion dollars… What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.<p>This assumption is depressing. That the only alternative to "earn" is "cheat".<p>A system of diminishing work (i.e. where money makes money), especially combined with inheritance, means every dollar is <i>arguably</i> less earned than the last. That system is fine and actually very useful, but that diminishment becomes a big problem at large enough scales. We've been operating at that scale for many decades.
Precisely, I like the term "diminishing work". I think a lot of disagreement comes from differing definitions of "earning", or "ethically earned", but working 12hr days hard labour to earn $1000 and putting $10k into a stock that goes up 10% intuitively seem different.
I've been able to calculate logarithms for well over 20 years.<p>That's not the problem.<p>The problem is even simpler mathematics. Proportions. How much do we give to first employees? How realistic is that John Smith, first salesman of the company is getting 2% and should consider himself lucky, while I, Peter Boss retain most of the company?<p>We always talk about the dilation of the founders' shares and its relation to the VC portion.<p>What is the usual proportion of the shares held by the founders and the first 10 or 100 employees?<p>Is that proportion usually realistic with regards to the effort put in and the risk assumed?<p>Is that risk usually really that heroic or most of us in the "can found a startup" caste can usually go back to jobs that already pay well over average?<p>I <i>am</i> the founder of a company. I want it to succeed. I don't want to become a billionaire, but I want the people that help me build it to have similar successes to mine.<p>If we succeed, I don't want my car or house to be 10x more expensive than of those people who joined me first.<p>There's something seriously rotten about telling university students about billions. The issue isn't whether anyone can earn a billion dollars. Nobody actually needs a billion dollars.<p>The question they should be pondering is given the excess of talent and opportunity they have, how can they help the people around them and give something back to society.
Simply, neoliberal capitalism is sociopathy with quarterly returns.<p>The assumptions are:<p>1. A uniquely special class of people do all the work that matters. They're astoundingly gifted, talented, and insightful, and have a rare ability to make profits happen by having very special ideas, owning Important Things, and telling everyone else what to do. These prodigies deserve everything. They are not to be criticised or judged by their inferiors. Ridicule only proves their superiority.<p>2. The work everyone else does is far less important. Most of the people doing it are interchangeable and literally disposable. Sometimes they deserve nice things, in a limited sense, if it's hard to make things happen without them. But mostly no.<p>3. Negative externalities - pollution, ecosystem collapse, spiralling asset prices, financial and political instability - aren't real. If they are real they don't matter. If they do matter they're someone else's fault.<p>4. It's absolutely fine to treat other humans with aggressive indifference and outright contempt as long as Number Goes Up. In fact it's expected.
There's a kind of Efficient Market Hypothesis of career advice that I wish PG took better notice of.<p>If a career path (e.g. startup founder) outperforms at time T1, then this fact will diffuse quickly throughout society, causing the path to become overcrowded, which pushes down the average performance. So at time T2 the path will no longer outperform. This is analogous to a stock becoming overpriced due to hype. I consider the founder path to be enormously overcrowded at this point.<p>The key to finding a good career is to play a kind of Money Ball - find paths that, for whatever reason, are mispriced and thus undercrowded.
True, but only when you consider value as a combination of risk, reward, status, etc which is weighted by an individual’s preferences.<p>One reason why doctor is more popular is the process for becoming one is high effort but low risk. So if you have any risk tolerance you’re probably better off using that effort elsewhere.
Is this the same Paul Graham who says that founders need to be the kind of people who are prepared to break the rules? That is, cheat.
His essays are, themselves, "cheating" (in the sense of a life hack). Say what people want to hear today, even if it contradicts what you said yesterday.
Why would you even WANT to become a billionaire?<p>Wealthy, sure, but becoming a billionaire effectively destroys your place in any of your social circles. It obliterates any dynamics of trust and interdependence you may have and replaces them with a gnawing unease about if they’re still hanging out with you, or if they’re hanging out with the money.<p>Not to mention, Graham entirely fails to differentiate between EARNING a billion dollars and HAVING a billion dollars. You can be part of a structure that earns a billions dollars without “cheating”, there are all kinds of companies that do that. But if you let that wealth accumulate in yourself? There’s something wrong there. You are almost guaranteed to be under-valuing the contributions of others, or the externalities of the systems in which you operate or SOMETHING.<p>And even if you’re not? That’s a dragon’s hoard of money. You’d have a very difficult time spending that much money on yourself and your lifestyle, and I find it hard to justify sitting on the rest, just to have it. It is literally a hoarding problem at that point. You do not need that money, it is actively making your life worse (look up the Billionaire’s Social Calendar: it’s the list of ultra-wealthy-only events that billionaires must attend if they want even a chance of interacting with people as peers instead of dependents), just let it go.
Paul Graham seems pretty self-centered...
This is slightly disappointing, but it's probably necessary cope. If you want to build startups which move fast and break things, you have to ignore many problems and many people of this state, country, and world.<p>You start by ignoring what a "billion dollars" means, and most people don't think it's stock. Then you have to ignore what "earn" means, which most people don't think is getting stock on the assumption that the company you own a portion in will turn a profit one day, possibly many years ahead.<p>Getting investment without having profitability, getting to keep a portion of this investment, even if the banks that are insured with taxpayer money lose that money, is not what the constituency of AOC think is earning money.<p>There is a huge amount of technological advancement and personal fortune that I enjoy from this system, but I'm not trying to bullshit anyone that the system is fair.<p>In conclusion, I do think this attitude is cope that allows a high performing individual to focus on this game and be successful, and Paul Graham seems to be successful, so it's natural.
The arguments for or against it being possible to earn a billion units of currency seem to hinge on differences in understanding of the term "earn".<p>The pg view seems to assume that if there is a causal relationship between your actions and a billion dollars appearing in your bank account, then it counts as having earned that money.<p>The countering viewpoint seems to consider the words "earn" and "build" as having a similar relationships to money and buildings respectively. If I tell you I built the shed in my garden, then you'll probably take my word for it. If I tell you I built a skyscraper, you'll either call me a liar or understand me to mean that a large number of individuals built it at my request.<p>I think the second version is more useful and more accurate.
This is a strawman argument. It is of course mathematically possible to obtain a billion dollars (although notably much harder to do in a way that is liquid, but let's gloss over that). My somewhat more charitable reading of that claim (shared by other readers here, I see) is that ‘earn’ refers to moral dessert. I'm not really a dessert-oriented person but let me try to steelman it a bit:<p>In aristocracies we traditionally assume or imply that a person can deserve a certain wealth or power simply by being born into it. Capitalism, however, sells us the dream of the meritocracy: your (financial) success in life should depend not at all on factors of chance like birth or genetics but simply how much of yourself you choose to sell to the market.<p>At any point in time you have control of some tangible or intangible capital, including wealth, physical health, social connections, equipment, information, trained skills, et cetera. Some of these assets are gained by luck, e.g. accident of birth; some of them are gained by trading your time; and some of them are gained by spending another asset (whose origin reduces, recursively, to some combination of luck or time). At any point you can, assuming the market is appropriately liquid, spend some of these assets to get cash.<p>Some of these assets have force-multiplier effects on your future output in certain domains, from which exponentials naturally arise; but the time spent on them remains linear, and so, if we want to ignore inherited factors (the opportunity to spend the time on things without immediate feedback, say, or handed-down insight about which of these investments will produce the most value in the future, or access to the required tutors) the increase in earnings these things _merit_ has to remain linear as well. There is no way to compound your time and therefore, under an assumption of meritocracy, there is also no morally acceptable way to compound earnings, which I would assume is the point the politician is attempting to make. Under this worldview, any exponential compounding that occurs must, mathematically, be a result of systematically undervaluing the time of an exponential number of other people, since each person can only spend a linear amount of time.<p>In practice, of course, the assumption of meritocracy is simply wrong, and arguably the concept as a whole is internally incoherent (or at least I don't believe we've yet managed to articulate it coherently: we would have to settle the nature vs nurture debate and completely severs the value of a person's spent time from the accidents of their birth, if such a thing is indeed meaningful). But I think that's where the claim falls down, not in failing to understand the mathematics of exponentials.
"It's impossible to earn a billion" means it's impossible to work hard enough to deserve to have a billion dollars in a world where so many people died for lack of money, not that it's impossible to get it without cheating.
Another solid interpretation is that nobody gets a billion in wages. You have to own something that appreciates, and it appreciates because of the people who work for you, and you take disproportionately much of the benefit.
How does it work with theoretical distant poor aliens and any amount of money?
I enjoyed this, but the thesis is misleading. Paul’s own examples here were Facebook, apple etc. I imagine that the politicians point was that beyond a certain point, you do have to be unethical to continue that growth rate. Facebook is notorious for doing plenty of this. Apple too is known for exploiting developers.<p>If we extrapolate to trillionaires, we know for a fact that you need to be an all-around dousche that manipulates politics and literally cuts government funding to the poorest and most vulnerable groups to get there.<p>And since this post has a numbers focus, zuck is worth 195 billion. Would Facebook’s negative influence be noticeably less if they spent 194.9 billion on reducing the harms of Facebook, and zuck remained a millionaire? I believe so.
Yup. Billionaire - doable without too much ethical compromise (e.g early Google). The thing is that a billion isn't much per "first world" citizen if that is roughly your market. Many-many-billionaire - would need some good example, I can only think of bad ones. The SAP guys maybe? But they aren't exactly the richest. The only bad things I've heard about SAP are "making clunky software" and "charging too much money".
Early Google got that money because of the eventual market capture and implied evil they would definitely do because they are an american advertising company.
One billion is huge for a citizen, are you sure you don't mean one million?
The first billionaire I followed was gates. He did pretty horrible rent extraction to businesses all over the world. See monopoly trials and other similar things that didn’t go to trial.
Is that the incentive structure?
This article reads like a rather flippant dismissal of the original concern that "earning" a billion dollars cannot be done without some moral compromise.<p>Sure, if you start off with $2 million and double it 9 times, you end up with $1 billion. Exponential growth is a powerful thing, so it comes as no surprise that maintaining a large growth rate over time very quickly grows a starting sum into a much larger pool of money.<p>However, his only response for how you should <i>achieve</i> exponential growth is this hand-wavy "make something you yourself want". His only acknowledgement of the concern that maintaining exponential growth may require cheating is a casual dismissal, and his only acknowledgement of the concern that the growth rate will drop off over time is "you'll still get there eventually".<p>So, while the original concern was that you cannot earn a billion dollars without some wrongdoing, PG's response can be boiled down to "nuh uh".
Regarding "moral compromise," many in this thread are missing the forest for the trees. The trees are taxi drivers and airbnb noise complaints, the forest is a policy environment that is absurdly favorable for capital:<p>- Ordinary income has sky-high taxes compared to capital gains, and you don't even have to pay the taxes on capital gains if you don't realize them!<p>- Inelastic labor supply mismanaged into increasingly soggy demand, mathematically tanking wages<p>- Attributing credit for job creation to capital without attributing blame for job destruction to capital<p>there are more, but these are all Political Economy decisions that didn't have to be this way. They are this way because people with money and power wanted them to be this way and were willing to morally compromise to get them this way.
I think it's necessary that capital gains are only taxed when realized - anything else would be an accounting nightmare full of loopholes. However we could define more things as forms of realization - using it as collateral should count as realising it, and maybe casting certain shareholder votes that affect you financially
> that "earning" a billion dollars cannot be done without some moral compromise.<p>What did George Lucas do?<p>LeBron has to be worth a few hundred million. What did he do?
> PG's response can be boiled down to "nuh uh"<p>Worse, it's just a long post trying to show that doing math with a calculator somehow disproves real-life ethics.
I came to read well constructed rebuttals like this.
> Sure, if you start off with $2 million and double it 9 times, you end up with $1 billion. Exponential growth is a powerful thing, so it comes as no surprise that maintaining a large growth rate over time very quickly grows a starting sum into a much larger pool of money.<p>Reminds me of this post I’ve seen making the rounds recently about a welder at SpaceX who was making $28/hr becoming a millionaire.<p>They keep emphasizing he’s a welder, the system works, and at the verrrry end mention <i>he was issued 10k in stock a decade ago at SpaceX and held until it IPO’d the other day.</i> The only “lesson” here is “if you own stock and stock go up you get lots of dollar bucks.”<p>They keep emphasizing “he’s a hardworking welder.” My response is “great! Let businesses take a lesson here: give all your employees a chunk of the company. Let’s all share in the success!”<p>But that’s obviously not their point.
I don't think they hid the point that he was issued stock? I thought it was pretty obvious? Which is why they're talking about it now, because the value of those stocks shot up because they went public
Yet they keep talking about an emphasizing how he was a hardworking welder <i>first</i> when, frankly, it’s borderline irrelevant to his being a millionaire.<p>The thumbnails often just tell the welder story, for instance. It’s very clever (misleading).
> My response is “great! Let businesses take a lesson here: give all your employees a chunk of the company. Let’s all share in the success!”<p>Don't >95% of tech companies offer stock options or equity, from startups to FAANG?
A cursory search says 74-90% (in the US), but also that’s <i>just</i> tech companies and usually you need to be early. It’s also often in the form of options that take years to exercise and companies have gotten <i>very</i> creative lately in how they screw people out of them.<p>Looooots of caveats here.
> Since we started it in 2005 we've funded about 6500 companies.<p>> Starting a successful startup is the most common way to become a billionaire, so in effect I've spent the last 21 years training people to become billionaires. So far about 30 of them have, but there are many more in the pipeline.<p>Seems to me that right off the bat he completely undermines his own point - less than .5% of the founders being funded at basically the best connected best financed incubator become billionaires. Easy, right?<p>I won't even go into the embarrassing math that follows... pyramid scheme salesman levels...
>There are two numbers that determine how big a startup gets, and thus how rich its founders become: the growth rate and how long it continues. You get the first by making something users like so much they tell their friends. You get the second by being in a big market. If you grow exponentially into a big market, your startup will become valuable, and you, as a shareholder, will become rich. You not only don't have to cheat to make this happen, it will happen automatically if you just keep making customers happy.
The real problem is his example, "you start off with 2 million dollars and 95% growth rate".<p>Fine, show me the average person who can come up with 2 million dollars. I sure as hell can not. I even went to banks and founders with my ideas, cash flow sheets and customer list looking for a loan.<p>No, I am convinced, the rich already have 2 million dollars, and make themselves a billionaire. The system is rigged against "normal" people.
He was talking about an equity stake in a start-up. Although on paper it is worth $2M, it is (probably) not liquid (i.e, the shares can't be traded easily, maybe at all.) The vast majority of founders don't literally spend $2M from their checking account to purchase their position in a start-up - they get some ownership as part of taking the start-up risk.
Of course people who have more access to money and parents who understand money would be better at earning it.<p>Why are you presupposing the world is just when EVERY skill and opportunity is distributed non-linearly?
One in 500 of them makes themselves a billionaire, the rest have thrown two million dollars down the toilet. It's just a fair bet, there's nothing "rigged" about it.
Just because only 1 in 500 makes it to a billion, does not mean the other 499 are failures. Plenty of startup founders turn a few million into much more.<p>If someone has an idea that 'only' makes them 20 million, I would call that a great success; even if it takes dozens of years to get there.
yes but again, who has $2M to bet, even at 1/500 odds? You have to be a billionaire to make 500 bets hoping one hits, then you’re back to just being a billionaire again.
Well the average person, when you exclude real estate, is neither worth nor has a million dollars, that is true.<p>But this kind of person isn't rare either, even in Italy or Poland where I live I know many multi millionaires.<p>Some are farmers, some have restaurants/hotels, some work remotely for US tech companies, some were early engineers in startups.
> There are two numbers that determine how big a startup gets, and thus how rich its founders become: the growth rate and how long it continues<p>> The reason her startup was growing so fast was simply that users loved what she'd built.<p>> In the real world, growth rates tend to slow down a bit. A very successful startup will probably be growing faster than 15% a month in year 1 and slower than 15% a month in year 4.<p>It turns out that the people who will invest in your startup when 93% MoM gains are possible want you to do pretty much anything to keep growth as high as possible--also your career, net worth, and employment are tied to this so you're similarly motivated--including squeezing and manipulating those users who loved you so much. But hey, as long as you personally get rich it's fine I guess.
> So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars. I felt like a skating coach hearing someone say that it's impossible to do a triple axel. Of course it's possible. It's hard, but it's possible.<p>"Earning a billion", to the skating coach, is like pulling off a dodeca-axel.<p>It's not gonna happen through mere pluck, and it's probably gonna involve a lot of other folks' work if it ever happens, who probably aren't gonna get that much of the glory.
Paul Graham is the skating coach himself, as from 6000 startups financed by y combinator quite a few were unicorns. it is olympian level, but it there is a system to it.
You’re suggesting that selling others’ talent isn’t legitimate “earning”? Why?
I'm saying there's a difference between earning and benefiting from.
You can earn by deploying your own labor to facilitate transactions between other laborers, such as by running a job fair, that's completely legitimate, good, and creates value. You can't just take 90% of someone's wages, or rather, you can, and many people do, but it's theft.
Selling others labor isn't legitimate earning when you get a higher share of the labors value than the laborer themselves.
Because it's not your labor to sell and if you take part of the proceeds for yourself, that's <i>theft</i>.
I don’t know if this take is just naive or dishonest…<p>building something people love can make you a billionaire, but most billionaires did not build something people love, and most people who’ve built something people love are not billionaires.
Holy smokes, one could call this condescending but assuming both politicians and an average reader don’t understand how exponents work feels a step above. And that’s before you get to the part where it’s all about a great idea and hard work and definitely zero exploitation while mentioning examples like Apple, Facebook or Airbnb.
>PaulGraham: And how could you possibly cheat to increase the market size?<p>I can literally think of a million ways.<p>1) lie to your customers about what your product <i>actually does</i>; this seems inevitable, once (if not before) private equity gets involved.<p>Using AirBnB as example: all the excess fees which have slowly crept into the final purchase price, while still requiring guests to clean &c
Have you ever listened to a congressional hearing? Or spoken to an "average reader"?<p>Most <i>absolutely</i> glaze over at the idea of calculating the "log base" of anything. <i>If</i> they ever got that far in math class, they <i>certainly</i> have not used the concept since then and cannot remember what it means or how it works. They <i>might</i> remember exponents, but the compounding of them is absolutely lost on the overwhelming majority of people.
Unfortunately, there was plenty of not understanding exponentials on display during Covid, including from politicians, journalists and other public figures.
It’s appalling that it is at the top of the front page.<p>(Edit: At the top of <a href="https://news.ycombinator.com/classic">https://news.ycombinator.com/classic</a>, at present.)
The most offensive part to me is that it tries to excuse obscene wealth as simply (shrug) a pesky, I mean "magic", byproduct of math.<p>Regardless, can we talk about the danger to society of having these resulting billionaires and how we ought to address that? I think that is in fact what "the politician" mentioned in the article was trying to address.<p>(The <i>new</i> American Dream appears to be: be one of the 30 people every 21 years that finds themselves the head of a startup that succeeds.)
Let's put this math in a mirror and do the leftie version of the exponentials:<p>"The purpose of capitalism is to pay rich people for being rich in proportion to how rich they are, thereby establishing, reinforcing, and perpetuating a class hierarchy where the people on the bottom must constantly pay to exist while the people on top constantly get paid to exist."<p>Dear reader, if you bristled at how casually this statement ignored that compounding returns are a feature of the real world that we want our economy to model and encourage, now you understand how a normal person feels when a megacorp or megacorp cheerleader casually fails to account for everyone they displaced and stepped on in order to capture the value that they did. "Negligent accounting" is a strategy that points both ways.
> Let's put this math in a mirror and do the leftie version of the exponentials<p>The plot twist is that the 'rightie' and the 'leftie' are both entirely correct. Which is why most developed economies try to remove sources of wasteful, unearned rent and also include significant amounts of redistribution/social insurance rather than relying on pure market outcomes. This doesn't erase the compounding dynamics altogether, but it hopefully ensures that folks at the lowest end of the distribution can keep a tolerable standard of living that doesn't have them 'paying' too much.
We also want a compounding (progressive) tax rate to address compounding wealth (and perhaps we need a wealth tax?).
Yes, although I tend to think this produces better incentives and is easier to administer if we formulate it as progressive corporate taxation. This structurally discourages mega conglomeration and encourages spin-offs to enhance competition. Also, taxing at the source of profits obviates the need to track down the destinations of profit, who are far more numerous and easy to hide.<p>The non-explosive way to do this is simply to set the heel above the megacorps today and let inflation push them into it. They will be able to avoid the heel by splitting at their leisure, slowly remediating the consolidation we have seen and restoring competition.
If you start with a mere two million and get really lucky, you, too, can be a billionaire!<p>Now, if that isn't inspiring, I don't know what is! Some of my rich buddies got to be super rich following my advice!<p>I really don't know why the average person hates the rich. Those poors are so out of touch!
Come on. Exponentials are deeply counterintuitive, but simultaneously pretty much where all the returns come from in startup investing. I think it’s extremely illustrative, especially to a group that’s probably heard a lot of degrowth propaganda.
I don't think this article properly engaged with the criticism from the politician. That's fine, I wasn't expecting it to, but this isn't valuable commentary on the politician's point. I suppose it does serve to demonstrate that Graham and people in Graham's orbit are unable to see a distinction between "have a billion dollars" and "earn a billion dollars".<p>It's a very sf-bubble type article.
pg should just get every founder to trade wallstreetbets style for a few days. they'll be doing this calculator exercise intuitively
How many businesses are there that are worth at least $1 billion and employ no-one but the founders?<p>When people say that it's not possible to earn a billion dollars, they're talking about the discrepancy between the wealth gained by those employed by the company versus the shareholders of the company. For example, when WhatsApp was sold to Meta for $19 billion, how many of WhatsApp's 55 employees walked away with hundreds of millions of dollars?<p>The fundamental problem is that it's possible for an employee to generate a hundreds of millions of value for a business, and yet be compensated for a vanishingly small fraction of that. Even if the employees agreed to a particular salary, is it ethical to pay them so little in comparison to the worth they generate, or is it exploitative?<p>Most, if not all billionaires, reach that status by paying people far less than the value they generate. If you want to become a billionaire, you need to find people who are willing to be paid thousands or tens of thousands of times less than they're worth. You need employees who will generate you $100 million in exchange for being given $100 thousand.
Your post implies that every employee of a successful company is entitled to a share of whatever wealth that company generates.<p>As a career programmer, I worked for several companies. Each time I took a job, I negotiated what I thought was a fair salary for my wages. Some companies also gave me stock options and one gave me founder's stock. When a company had a good year, they often gave generous bonuses.<p>Only when I took great personal risk, did I expect to share the rewards that come with a successful company. I was always grateful when I got more than I agreed to work for, but I never felt entitled to it.<p>A janitor working for a 10x company should not feel entitled to 10x of the salary as another janitor working down the street for another company that is struggling.
This wouldn't happen if employees rejected cash-based compensation and decided to be founders themselves. Most employees trade risk for higher cash comp, and end up with less upside. This issue is mostly settled by the employment market
I think Paul left out the fact that in order to grow that fast, you often need to commit crime.<p>Airbnb/Bed Boat, Neighbor, Swimply, Uber/Lyft, Bird/Lime, BlackJet, Waymo/Cruise, Splacer/Peerspace, Zenefits, Tilt, Loomis/Stablecoins, Coinbase, Worldcoin, Stripe, AngelList/Sydecar, Polymarket, Uniswap Labs, Doordash/Instacart/Postmates, CloudKitchens, Shef, Done Health, Forward Health, Cerebral, Pacaso, Sonder, 23andMe, Ro/Hims/Hers, Viome, Juul Labs, Oura Ring, Particle Health/Moxe Health, Roblox, YouTube, Popcorn Time, Kickstarter/Indiegogo, Republic/Wefunder, Deel/Remote, Lambda School, Make School, Mission Bit, WeWork, Oyster/Papaya Global, HiQ Labs, FlexPort, Katerra, Zipline, Starship Technologies/Serve Robotics, 3D Robotics, Anduril Industries, DraftKings/FanDuel, Cydia, Eaze, MindMed, Odin, Swarm Technologies, Starlink, Convoy/Uber Freight, Carvana, Tesla, VoltShare.... oh yeah, and OpenAI.<p>What do all of these companies have in common? They all manipulated markets, bent and broke laws in order to get that "exponential growth". They didn't want to wait around and find out if their businesses would be legally allowed to grow. So they just broke or worked around the law, with the intention of becoming billionaires. But that's okay, because growth rate! We're not doing anything bad, people want these things! Who cares if it might be illegal or the spirit of the law frowns on what we do? Money!!!<p>This is just one of the reasons why becoming a billionaire requires you to cheat. There's also the tax loopholes, the inducement to harm (both of the customer and by the customer), anti-competition, etc. In order to get these gains, you need to cheat, because if it were easy to do legally, ethically, and quickly, somebody already would have. It's corporate doping.
> <i>Who cares if it might be illegal or the spirit of the law frowns on what we do?</i><p>Surely these things are on a moral and ethical continuum and we need to look at them individually? Pretty much every person has broken some law at least once in their lives. I don’t disagree that moral ambivalence is often necessary to make billions, but I also don’t consider all laws sacrosanct, or that breaking the law is the primary measure of a company’s moral standing.
"So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars… What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way."<p>Not <i>exactly</i> the way I interpreted it (emphasis on <i>earn</i>). Right or wrong, I think the vast majority of us think that "deserved money" is money <i>earned</i> from "work".<p>A simple example would be the billionaire Walton children: their fortunes inherited. Most people would argue that they did not really <i>earn</i> those billions of dollars.<p>On an admittedly slippery slope, for many, investing and other means where the <i>money makes money</i> is also not regarded as work (and therefore is not earned money).<p>To wave around the idea of "the American Dream", I suspect that many American's disapprove of any means of obtaining wealth that the average Joe or Jane are not privy to. This idea that you have to be <i>born</i> into money or <i>have money</i> to make money—we are (perhaps naturally) repugnant to.
> So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars.<p>> She wasn't saying, of course, that it's impossible to become a billionaire.... What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.<p>> But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues. If it's impossible to make a billion dollars without cheating, which of those two numbers is impossible?<p>AoC quote:<p>> There’s a certain level of wealth and accumulation that is unearned. You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that.<p>Come now @pg.<p>$2 million * 9.45 months * 93% growth rate = earning a billion dollars, ok. Does that really address what AoC was saying? She wasn't saying that the math doesn't math.
Benefits of being a billionaire are vastly overstated. To live a happy life, you don't need to be a billionaire.
I don't personally subscribe to this belief but the people saying it's impossible to earn a billion dollars without doing something bad would say that your founders are doing something bad by exploiting the employees by not returning to the value creators a fair share of the value generated and instead hoarding it for themselves. pg is arguing a strawman to the actual argument when there are far better arguments around rewarding risk though I feel like most people shouting that don't value risk either so maybe that's not a better argument?<p>Andrew Wilkinson has a whole part in his book about what it's like to be on the billionaire side of this speaking to former employees who feel that you took more of the value than you deserved it was an interesting read.
What will become of this site once its userbase turns against its corrupt oligarch owners on the basis of it propagating evil things like Flock?
Generally a PG defender (at least nowadays), but he is deliberately misrepresenting what she meant, and/but I think a good % of the students/attendees know that.
I don't disagree with the essay, but is there any benefit to being a billionaire? Almost anything I could possibly want could be satisfied by being a humble multi-millionaire.
Do you have a want to please millions of people whose lives are improved by exactly the product that your company sells? I could certainly do without that, but it does sound nice.
I'm not sure there is but if you create a company that successfully serves the world's 8 billion population it often ends up worth more than 12.5 cents per head. Or else it maybe isn't providing that significant a service.<p>With nearly all the billionaire PG mentions the money is the company valuation rather than cash in the bank.
(underscores to visually identify mag)<p>--<p>// 8bn world population / 3,500 billionaires:<p>0.000000_44<p>--<p>// 300mm US population / 1,000 billionaires<p>0.00000_333<p>--<p>// Odds of winning billion dollar powerball<p>0.00000000_3422298 (play once)<p>0.0000000_68446 (play twenty times)<p>0.000000_34223 (play 100 times)<p>--<p>// Global net worth vs billionaires<p>0.03636364<p>--<p>// US net worth vs billionaires<p>0.0942029
This post hand waves away the inflection point(s) of maintaining high growth rates as you grow. He hints at it saying year 4 growth is harder, but it is _vastly_ harder.<p>Companies focus of the Rule of 40 and struggle to keep above it. And this struggle is where many in management lose their way.<p>Enshitification begins. The margins get harder. More corners cut. Employees get treated less well, customers get treated less well.<p>Instead of telling us "it is just exponential growth bro," do case studies on billionaires and their dealings. In the US, you have billionaire business leaders who have full time employees who require government assistance every month.<p>The couple of billionaires and near-billionaires I have worked with (and helped build their companies) have not been bad people. But working at their companies pre and post IPO is way different. Less perks, more pressure. If the company culture isn't solid, it becomes bad fast.
Does that work always without fail with anyone anywhere anytime?
For those that pg has sponsored it has happened a few times out of ~5,000. Better odds than the lottery, for sure.
Because he sponsored those who already have something really valuable, and not just anyone.
He says ~30 out of 6500 companies which if you estimate two founder per company comes out at 1/433.
I would not compare to lottery because a lottery ticket is bought at pure chance whereas these startup are taken onboard after very thorough audit.
Most likely that this works in a small number of all cases.
- So I would like you all to do me a favor please. I would like you to take out your phones and calculate a number. I know this may seem contrived, but I promise it will be useful for you.<p>I’m thinking of vibe coding a calculator app How Many Babies Died For This where you input your startup idea, life(style) goals and AI token usage and the machine spits out the Net Babies Dead for you to achieve your dreams
An obvious calculation. The real world cannot be calculated so easily, It is changing unexpectedly and quickly.
The issue with billionaires is that some of them got insanely rich while being net negative from a societal perspective.<p>The most famous ones ended-up in prison (Sam Bankman Fried, Elizabeth Holmes, Jeffrey Epstein, Bernie Madoff) but anyone with a basic grasp of statistics and criminal behavior know that many others will escape the justice system forever.<p>It does not mean that all billionaires are bad, the criminals are not the majority, but there are enough criminals to justify skepticism and scrutiny.
"So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars..."<p>Paul, playing dumb doesn't suit you.<p>The first definition of "earn" on merriam-webster.com is "to receive as return for effort and especially for work done or services rendered".<p>Your chose a straw man, "doing something bad", to argue against because it's so easy to beat.<p>Much harder to justify that anyone's doing $1B of effort. Being a billionaire doesn't mean you're bad. In fact, it doesn't even matter if they <i>are</i> all bad -- there are always going to be bad people. It means a system that allows, encourages, and protects billionaires <i>might be a problem that needs to be fixed</i>.<p>Scary idea, I know. But we all only get to go around this world once. Might as well spend our time trying to make it better rather than rationalizing why it's OK to spend all your time trying to make it worse.
I exclusively build stuff that I think is cool for me and my friends but I have little drive to market these things and plus they are designed to be completely free forever so I don't think I'll ever be a billionaire.
Ew
So nice of pg to mention AirBnB as one of his examples of what a successful startup who "doesn't cheat" means. They just were great people with a great idea who found a market for something people wanted that no one had thought about before, and poof, exponential math billionaires who earned it!<p>Of course, we'll ignore the huge issues that Airbnb created for cities, customers, and providers. We'll ignore the way they knowingly helped ignore any regulations on tourism as much as they could. We'll ignore the business model of simply being the biggest middlemen around. We'll ignore the fact that their business is slowly being outlawed in major cities, at least in Europe, because of all of the above.<p>And, surprisingly, if we ignore all of the things these founders do to ignore the law and cheat the market or their competition, we can say that they earned their billions without cheating!<p>We'll also ignore the fact that the brilliant magic math that us lay people and politicians just don't understand also predicts that the founder whose business is growing 93% per month will not only be a billionaire in 9 months, but a trillionaire 9 more months after that, and surely the world's first quadrillionaire within 5 years. You might think this is implausible, but that's just because you don't understand how exponential growth works!
No, that problem was not generated by Airbnb. There’s growing demand and, because of regulation, not enough is built every year. For example, according to INE, 250k new families are formed in Spain (more than 500k people) and only 100k new houses/flats are built and the yearly deficit has been accumulating for 12 years. That is the real issue and blaming corporations is just the politicians’ easy path to deflect blame, which unfortunately too many citizens eagerly buy into.
Even if it were true that the problem of housing affordability was not affected by Airbnb (it's not, at best it only exacerbated an existing problem), that would not mean it didn't create other problems for cities. Having tourists concentrated in places that are not designed for it, where a hotel license would never have been issued; the problem of too many tourist accommodations, causing an overflow of tourism; problems for neighbors with parties and similar nuissances; problems with untaxed income from the smaller owners; and probably others I'm forgetting.
You can exacerbate a problem (which Airbnb is doing) without being its major cause. Doing that is still bad.
There was also the whole Craigslist spam stuff airbnb did to bootstrap growth
Mr. Graham is making 2 mistakes:<p>a) thinking that others don't understand exponential. Any reasonably college educated grad understands it well.<p>b) thinking that growing 93 percent every month means the founder has put in 93% more effort than the prior month.<p>Their argument relies upon the ideology that just because you thought and executed an idea profitably means you should continue to "earn" from it.<p>In the LLM age, more and more people are questioning this, and rather want to goto: effort == earnings.
There's an older tradition of thought on the matter with better intellectual pedigree and epistemological hygiene: "Behind every great fortune lies a great crime."<p>The easiest way to earn a million dollars is to start a business that makes sense and work your ass off running it well. Maybe that's even the easiest way to reliably earn ten million dollars, a million isn't what it used to be.<p>But at some scale that's far short of a billion the game becomes about <i>asymmetry</i>.<p>This asymmetry takes many forms. For Steve Cohen it was trading on inside information, for Jim Simons it was (as far as anyone can tell) novel mathematics.<p>For most of the technology companies in the 21st century it was about privatizing the commons and/or externalizing costs that a well-refereed market would place on your company.<p>The United States used robust public/private partnerships and a vibrant, thriving university system to build the greatest pile of latent wealth in the sum history of humanity during the 20th century. Everything from the transistor to the integrated circuit to the laser to Velcro to tang to the internet to the web was a product of this holy Trinity of innovation: defense and related public money, well-refereed private companies (even a notable natural monopoly or two under muscular regulation), and a paved path between the Academy and the other two. The gains accrued enough to individuals to keep everyone motivated but largely in the form of <i>status</i>, which confers a desirable station in life but does not compound directly into political power. Feynman and von Neumann and Einstein all seem to have led very enviable lives and are easily as smart and accomplished as anyone in the front row at the last Inauguration (and if we're honest, a lot more), but none of them had a billion dollars or untoward access to the levers of government. All of them paid far more <i>into</i> the ocean of latent wealth deeded to the body politic than they took <i>out</i> of it.<p>And at some point (my money is on the kneecapping of Brooksley Born, whose architect is now resigning in disgrace from everything for Epstein affiliation and whose most recent post was on the board of pg's protege) the flow reversed. The access caste started to be d away from the competence caste and the singular fortune deeded to the public started to accumulate as a dozen private fortunes <i>that were substantially just the 20th century stuff with a named owner</i>.<p>You get a billion dollars by stealing it, this is qualitatively different, a distinction of kind not of degree, from how you get a million or even a few tens of millions.<p>To get a trillion dollars as we have now seen, well first you steal a billion.
PG actually addresses this in other essays. That adage does have more history. But the world literally changed;<p>1. In pre-industrial society there is less technological leverage, so that it’s very difficult for an incidental or group to help very many people.<p>Perhaps the closest analog before then was land discovery or conquest (taking other people’s stuff).<p>2. Post-enlightenment society is one of the first which doesn’t predefine your social role by birth. So you can claim new roles and status from your own wealth.<p>America has a much stronger sense of 2 which is why European attitudes towards wealth differ.
Why would you want to earn a billion dollars? You must have the maturity to handle the money. Hopefully you’ll mature sufficiently through the process of making that money but if the money’s fast, that might not happen. I’ve seen people get 9-figure rich overnight. Didn’t change them at all, they are still the wonderful folks they were. But I’ve also seen people drink themselves to death as it turns out a few mill in the bank does not answer the question “wtf do I do when I don’t have to do anything?”
its even easier with a 9999% month over month growth
The answer is easy, steal the value created by thousands of your employees.
It’s like fertilizer, for jealousy.
Yeah man its just all the people who are jealous that are mad and no other reason.<p>The billionares hands are clean, the climate is fine, the elections are great, there's nothing wrong, close your eyes, stuff your ears with wax, and keep on trucking :)
Um, did i just get mansplained compound interest by Paul f*ing Graham? I feel like this has been the subject of condescending advice since the beginning of time.<p>"But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues."<p>What could possibly be false in a two-parameter model of reality?
He makes it sound simple, and in some ways, it is. You have to not only build the thing, but also find the thing that people want. It’s the latter that’s as hard if not harder than the former.<p>In addition, the converse is not true. Just because you’ve found something that grows fast and in large market, doesn’t mean you’ll become a billionaire. With all humility, I’ve been lucky to have done that twice, but in a large company. I’m not complaining, I’m just saying that doesn’t necessarily make you a billionaire.
Regarding <i>the scale</i> of what a billion dollars even means, I've recently been thinking of an example which I think might work (but I haven’t tried it on many people yet).<p>There are 86,400 seconds in a day (24 hours * 60 minutes * 60 seconds = 86400). Now let’s say you spend an average of 1$ every second. That’s <i>every</i> second, including when you’re sleeping or on the toilet. That’s 86,400$ per day, which I hope we can all agree is a lot of money.<p>If you had one million dollars, to spend it all it’d take you over 11 days (1,000,000 dollars / 86,400 seconds = 11.57).<p>If you had one billion dollars, to spend it all it’d take you over 31 years (1,000,000,000 dollars / 86,400 seconds / 365 days = 31.71). That is an obscene amount of money.
Reading this, I realize that I don't have confidence in winning under capitalism, so I think it would be quicker to just try to break the game of capitalism altogether.
But communism, in my opinion, seems like a concept that is unlikely to arrive, so please wait just a little while until I come up with a new ideology.
What people mean by "you can't earn a billion dollar" is that there's no work that's useful enough, alone, to be worth that much in reward. How can we live in a world where a moron can have a trillion to their name, while others work arduous physical labor all their lives and end up with nothing?<p>You might not believe you've done anything "bad" to become a billionaire, but the mere fact that you accumumated so much wealth necessarily means others, somewhere, had to work for it. The mere existence of billionaires is the mark of an unhealthy economy, that doesn't distribute wealth in an efficient or fair manner.
What an out of touch buffoon. AOC is right, billionaires are a policy failure, and pg is making her point.
Woof. This article is pretty impressively tone deaf and seemingly missing the point (on purpose?)
And yet, the vast majority of startups fail. This essay about exponential growth is clearly not the whole story.<p>How does your startup avoid failing? By skirting local laws? Exploiting employees? Destroying the environment? Replacing jobs in a way that makes the standard of living better for the few but worse for the many? Making weapons or systems that coordinate weapons? Submitting to and therefore tacitly supporting oppressive governments?<p>Sure, there are examples of startups that don’t do these things. But looking at billionaire-class startups (there’s not that many of those to analyze!), there are far more of them in the other category.
He's right. You don't have to cheat to become a billionaire. Stepping on everybody else's throats is a legit part of the capitalist playbook. No cheating involved.
> Since we started it in 2005 we've funded about 6500 companies.<p>> I've spent the last 21 years training people to become billionaires. So far about 30 of them have<p>Since it's a post about math, let's do it.<p>6500 companies with 2 founders each - 13000 founders.<p>30 of them became billionaires - 0.2% of them.<p>So being a tech founder at the most famous startup accelerator in the world give you about 0.2% chance of becoming a billionaire.<p>Or put another way, only 1 out of every 500 YC-combinator founded startup makes one of it's founders a billionaire.
This horrible mentality is what ails tech bro culture today and ruined the tech world for me - chasing billions<p>Greed mixed with analytical thinking on industrial scale - graham, thiel, musk, hoffman, bezos, zuck all symptoms of “smart” people who screwed this country ultimately - all for what?<p>Has the changed world that resulted been for the better?
Man I am so tired of rich people. Can they all just go f each other on a little island and leave the rest of us alone to enjoy a normal life?
Please don't bury the lede here of how the author <i>completely and epically</i> misses the point of the statement.<p>It's not about the math of the thing, it's about the arguably necessary exploitation that must occur to hit those kinds of numbers.<p>And in fact, IMHO, you don't even need to get to "exploitation" to criticize this mentality.<p>Any <i>normal human</i> would (and if not would, SHOULD) want to stop "earning" well before they hit those ridiculous numbers. Let's say -- at about 50 million, a normal person should realize, yes, that's enough. Time to pivot to something that doesn't cause so much accumulation. This does happen, we just don't hear about it enough.
I think maybe the fundamental issue is something that he said really late in the essay:<p>> There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy.<p>> How people become rich in your society is one of the most important things to understand about it. You can't let your beliefs about this be determined by ideology, or movies, or historical examples that are centuries old. You must look at the world around you and see how it's actually done.<p>The "it's impossible to do morally" people are looking at how it used to be done, and how it's sometimes still done. They are right to be opposed to that. But oppose the immoral aspects of it, not doing it at all.<p>And those who hard-core <i>define</i> a billion as immoral are I think signalling something else: They want the government to take that money, from every billionaire. (If we're talking immorality, we could discuss the morality of <i>that</i>.) But they don't understand that there will probably be second-order consequences of doing so...
You're right, higher taxes on the billionares would create all sorts of second order effects, like the ability to pay for the social safety net for the common folk, maybe educating the populace properly, all sorts of truly scary stuff!
He seems to be regressing, he said this in January:<p>> The rational fear of those who dislike economic inequality is that the rich will convert their economic power into political power: that they’ll tilt elections, or pay bribes for pardons, or buy up the news media to promote their views.<p>> I used to be able to claim that tech billionaires didn't actually do this — that they just wanted to refine their gadgets. But unfortunately in the current administration we've seen all three.<p>Now he's claiming he's trained all these billionaires and they are a blessing to the world, not avaricious sociopaths.
I think the problem with AOC's statement is that it already buys into the myth of meritocracy, where money is some kind of moral reward for work, and the goal of meritocracy is to ensure that the right people get the right among of money, an "imperfect" meritocracy when people earn more or less than what they morally "earned". Of course it's not just AOC buying into that myth but also millions of other people, which is why AOC's remarks have some public attraction. On the other side, you have billionaires claiming that "taxation is theft" or some nonsense, buying into the myth that they morally deserve their wealth.<p>I never bought into the myth of meritocracy. I happen to earn more than the average American, but I never felt that I "deserved" more than anyone else. I don't think my work is particularly "hard". When I was young I worked a temp job for crap pay on an assembly line and curled up into the fetal position afterward because it was so physically exhausting. That work was hard! So am I doing not "hard work" but rather "smart work"? Maybe, but I was born smart, won the genetic lottery, and started to surpass my peers in elementary school, which was easy for me, not hard, so I don't see how I deserved that either.<p>As far as I'm concerned, there's nothing more than the "market power" mentioned by AOC, and we shouldn't expect there to be. Moreover, I think that our economic and political policies should not be based on the idea that some people are more deserving morally than others. Billionaires are a problem because they have too much power for one individual, both market and political power.
You do not EARN 1B$.<p>You mass exploit labor at scale to exfiltrate 1B$.<p>You commit wage theft to obtain 1B$ (the largest theft category).<p>You union bust and fire workers who try to fight for better working conditions and wages.<p>You engage in monopoly practices to obtain 1B$.<p>You engage in corruption via 'campaign donations' to lay down laws that benefit you and harm others.<p>Doctors earn. Engineers earn. Scientists earn. LABOR EARNS.<p>But billionaires never *earn* 1B$. They exfiltrate, steal, and corrupt.
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I know an easier 3 step hack if anyone's looking for one:<p>Step 1 ensure server connection is alive and you see pre-birth screen<p>Step 2 pick character starter pack of higher surface luck areas (e.g. father runs emerald mine in south africa)<p>Step 3 identify server grandmasters and rewrite unfavorable rules after birth<p>Unfortunately I skipped step 1 on this build so I'm looking to improve next time!
Absent circumstances of four digit inflation rates, one cannot <i>earn</i> a billion dollars… one can only <i>accumulate</i> a billion dollars.<p>If one ever does so, one has <i>definitely</i> done something morally indefensible.
What, <i>exactly</i>, is the morally indefensible thing that they have definitely done? If it's definitely there, you should be able to point out what it is.
There is nothing more evil in this world than the pursuit of power and wealth.
“<i>For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows. </i>”<p>— 1 Timothy 6:10 KJV (The King James Bible) <<a href="https://en.wikisource.org/wiki/Bible_(King_James)/1_Timothy#6:10" rel="nofollow">https://en.wikisource.org/wiki/Bible_(King_James)/1_Timothy#...</a>>
Most people do that to some extent. There are worse things.
This is what weak people say to comfort themselves in a world with hierarchy and power differential.
What AOC is trying to do here is shift the debate from extracting retribution on people who have violated specific laws (a fair and an honest way to enforce justice in a civil society) to extracting retribution on people who she insinuates "must have done something immoral" based on their net worth (a selfish, dishonest, envious and greedy way to run a society). It's a clever play, and unfortunately for the people of the world who value freedom and a high standard of living, it's going to work. There is enough of the population filled with envy and greed that they'll lap up whatever a politician tells them bogie man of the day is. Historically it's been the aristocracy, Jews, immigrants, but those don't work any more, so now it's generally "the rich". Billionaires are the thin end of the wedge. After them it will be business owners of all kinds, people with second homes, people who send their children to private schools, and generally anyone who has anything else that someone might envy. It's clear that the way society is going people are going to keep lapping this stuff up.<p>HN used to be open minded about people creating wealth. The change is shocking to me, actually.