How People Get Rich Now • Hacker News Board

Re: How People Get Rich Now

#111

Post by dudeman13 » Mon, Apr 12, 2021, 4:57 PM UTC

internetslave wrote: post #23

I think there’s a different reason, companies just aren’t paying enough. Wages, even at 150-200k just really aren’t that much. 200k now is a lot less than 200k in 2010. The younger generation intuitively knows this. I don’t know anyone jockeying to climb the corporate ladder, and my social circle spans Stanford grads to no college degree at all. People are starting businesses because working for a corporation day in…

Just how bad at finances are you and people around you if 150k just really isn't that much?

That literally places you amongst the richest 1%. Not metaphorically, literally.

A couple of years worth of saving is enough to give you passive income to never need to work again for food or shelter.

Re: How People Get Rich Now

#112

Post by quantumofalpha » Mon, Apr 12, 2021, 4:58 PM UTC

internetslave wrote: post #23

I think there’s a different reason, companies just aren’t paying enough. Wages, even at 150-200k just really aren’t that much. 200k now is a lot less than 200k in 2010. The younger generation intuitively knows this. I don’t know anyone jockeying to climb the corporate ladder, and my social circle spans Stanford grads to no college degree at all. People are starting businesses because working for a corporation day in…

Get out of your bubble. There's a whole world outside of Bay Area/NYC, where $150-200k/y is still a batshit crazy amount of money and $1M can last you happily ever after, even with kids. Accumulating $1-2M NW is totally within reach for most employees at US FAANGs after a decade or so of work.

Re: How People Get Rich Now

#113

Post by chrisBob » Mon, Apr 12, 2021, 4:58 PM UTC

harshaw wrote: post #32

I don't want to derail this too much with personal anecdotes, but I suspect you are much more likely to build wealth with the more established tech companies - and that wealth is "rich enough". Maybe I am just unlucky or unskilled, but I spent roughly 20 years working at startups or innovation labs. I was "close" to some big events where I could have made big $$ but made 0. Both at my own startup and being at early s…

He is saying you are more likely to become a Billionaire by starting a company than by joining a FAANG as an employee. Now that is a 1:1000000 event instead of a 1:5000000 event like it may have been in the past. I will forgive you if you still think it is unlikely.

Most people's goal isn't (and shouldn't be) $1B. If your goal is a more reasonable $5M then joining an existing company is still your best bet. I am going to plan my own like around the MEDIAN result which makes startup stock $0, and the salary wins.

Re: How People Get Rich Now

#114

Post by technofiend » Mon, Apr 12, 2021, 4:58 PM UTC

VBprogrammer wrote: post #34

aqme28 wrote: post #11

I don't think that the top 100 richest people is a good dataset. You can be extremely rich without making it anywhere near that list. While a lot of those top 100 people made it to that list by starting companies, I'm curious how many of them did so by leveraging family or inherited wealth.

There is a pretty low bar for inherited wealth. Simply having a family who is able to support you if everything goes pair shaped (maybe as little as letting you live in your childhood bedroom for little or no rent) gives you a huge advantage over someone who isn't in that position. Having parents who are able to lend / invest / gift modest sums of money is yet another step up the ladder. All the way up to having pare…

>Having parents who are able to lend / invest / gift modest sums of money is yet another step up the ladder.

>All the way up to having parents with business / political contacts in the industry you are trying to move into.

Well that and understanding how to leverage those contacts. I have people in my social circle that could serve as contacts, but the idea of asking for that makes me extremely uncomfortable. And if I somehow forced myself to do it, it would still end up in a "what now" situation because it's not really clear what next steps are. I think the kind of people who know how to operate in those circles have a skillset that's not taught in a CS/EE curriculum.

Re: How People Get Rich Now

#115

Post by edouard-harris » Mon, Apr 12, 2021, 4:58 PM UTC

onlyrealcuzzo wrote: post #15

It's hard to take this article seriously. People get rich now from companies because multiples have been artificially pushed higher by low interest rates. If that weren't the case, the top 100 would still likely be dominated by heirs. All that's changed is the Fed is manipulating the market more now than before, and that's benefiting growth stocks and fund managers of growth stocks... among other things.

> People get rich now from companies because multiples have been artificially pushed higher by low interest rates.

No — this is not correct. In reality, multiples are driven by the company's growth rate, minus the prevailing interest rate. And while it's true that interest rates are historically low, the growth rates of today's successful companies are high enough that increasing the interest rate (from ~0% to, say, 5%) wouldn't really have a big effect on valuations.

As an example, note that Slack's 2020 revenue was around $1B, which represents an approximately 94% YoY increase over its 2019 revenue [1]. At 0% interest rates, that gets them a (very roughly) 10x valuation multiple. At a moderate-high 5% interest rate, their real growth rate drops to 94% - 5% = 89% YoY. One can argue that this should drop their multiple from 10x to maybe something like 9x. That drop is not nothing, but the reality is that it represents little more than a rounding error on the founder's wealth.

PG's point is that growth rate is by far the dominant factor in valuations. He correctly ignores interest rates in the essay because (barring out-of-band hyperinflation) their magnitude is too small to have a material effect on the conclusion.

[1] https://www.macrotrends.net/stocks/charts/WORK/slack-technol...

Re: How People Get Rich Now

#116

Post by sneak » Mon, Apr 12, 2021, 4:58 PM UTC

nindalf wrote: post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

> At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem".

Now, I can't speak to whether or not pg's implication here was intended and unsaid, or not intended: it is likely intentionally ambiguous.

One thing I can speak to though is that it seems common now to read something as if the thing it implies is the thing the author actually intended to communicate. We should be quite careful with this sort of assumption. Sometimes it's a safe one, other times it is not.

Re: How People Get Rich Now

#117

Post by mempko » Mon, Apr 12, 2021, 4:59 PM UTC

fsckboy wrote: post #84

mempko wrote: post #25

Earlier quoted context omitted.

That's why I put "far left" in quotes. What is "just left" to many might seem to be the "far left" to Mr. Graham. But I'm just speculating what he meant by "far left" and could be wrong. He doesn't elaborate on the term.

he does elaborate, he said "after having been on the side of labor in its fight with capital for almost two centuries" whereby he describes the aspect of the left he is talking about. He is a pro capital-ist, and he's referring to the part of the left that is anti capitalist. There is a lot of the left that is not anti capitalist

I'm confused by this conversation. What's important about the semantics around the words vs my criticism around that his view is outdated? Nobody seems to comment about the substance around my original post.

Paul Graham seems to think labor is now winning since it is able to get capital to do startups much easier than in the past. But nobody on the left is criticizing this. The left criticizes the organization of these companies as they grow bigger. Anti-capitalism is the criticism that only a small group of people end up owning everything and making all the important decisions. The criticism is the anti-democratic nature of how most corporations function.

Re: How People Get Rich Now

#118

Post by boringg » Mon, Apr 12, 2021, 4:59 PM UTC

tqi wrote: post #82

internetslave wrote: post #23

I think there’s a different reason, companies just aren’t paying enough. Wages, even at 150-200k just really aren’t that much. 200k now is a lot less than 200k in 2010. The younger generation intuitively knows this. I don’t know anyone jockeying to climb the corporate ladder, and my social circle spans Stanford grads to no college degree at all. People are starting businesses because working for a corporation day in…

"working for a corporation day in and out is slavery" Corporations are the boogeyman de jour but from personal experience, landlords / restrictive zoning / "anti gentrification" activists are the primary cause of my angst. I make more money now than I ever thought I would, but a truly staggering amount of it goes directly into my landlord's pocket.

And how much of your paycheck to landlords goes to the bank to pay off the mortgage

Re: How People Get Rich Now

#119

Post by mdorazio » Mon, Apr 12, 2021, 4:59 PM UTC

mgolawala wrote: post #77

harshaw wrote: post #39

Earlier quoted context omitted.

Inflation data: https://www.in2013dollars.com/us/inflation/2010?amount=1 . I don't think that a 20% difference means 200K is a lot less. It's a bit less.

Unfortunately, for the last few years I have noticed more and more people no longer take government inflation data very seriously. Here are two (I am sure there are more) reasons why: Housing, Health and Education.. these very basic needs have consistently outstripped official inflation numbers. Specifically on the US coasts. Correct me if I am wrong, but I believe the cost of housing is completely left out of that i…

CPI and inflation metrics generally do account for housing costs [1], but the problem is inflation in housing is not evenly distributed. If you live in a coastal city or tech hub, your housing costs have likely risen much faster than the national average. I've found it difficult to get realistic measures of city-level inflation data without trying to construct my own index from various data sources.

[1] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...

Re: How People Get Rich Now

#120

Post by WhompingWindows » Mon, Apr 12, 2021, 4:59 PM UTC

nindalf wrote: post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

Paul Graham's articles always shoot immediately up to the top of HN, but I agree with you, they're generally cursory and pithy thoughts which don't convince my skeptical mind. I don't know, can someone explain why his work is so popular?

Think of all the amazing writers across our civilization whose work is linkable, and we're worshipping these decent but not amazing blog posts?