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How People Get Rich Now

paulgraham.com

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Re: How People Get Rich Now

#581

Post by danans »

hindsightbias wrote: post #523
ludocode wrote: post #455

Earlier quoted context omitted.

> You would think, after having been on the side of labor in its fight with capital for almost two centuries, that the far left would be happy that labor has finally prevailed. But none of them seem to be. You can almost hear them saying "No, no, not that way." This line is particularly disgusting. Labor has not prevailed. Labor in fact has been crushed by deregulation, union busting, automation, and most importantly…

He must be in some world where all labor gets rich on RSUs and not the one where they're worthless or have pensions defaulted to the PBGC. Let them eat soylent.

> He must be in some world where all labor gets rich on RSUs

He's even out of touch with that kind of labor.

Even in RSU land, most don't get "rich" (meaning enough $ to work electively) from them. Companies have increasingly been shifting regular pay to things like RSUs.

Many people at RSU granting companies are using the proceeds to pay their mortgages or for childcare.

Re: How People Get Rich Now

#582

Post by jkubicek »

joshuamorton wrote: post #302
bradlys wrote: post #263

Earlier quoted context omitted.

Everyone argues about this but for most people in tech - $400k/yr does not give you a "very comfortable" lifestyle. You cannot afford a $2m home. A $2m home isn't even that comfortable in the peninsula. (Varies on location but it'll probably be under 2000sqft, still 3-4 bedroom, 4000-8000sqft lot, 2-car garage if you're fortunate, will likely require $200k+ in renovation/repairs on move in, nothing lavish) Good luck…

> 2000sqft, still 3-4 bedroom, 4000-8000sqft lot, 2-car garage if you're fortunate In what way is this not "comfortable"? What is your definition of "comfortable"? Like, I grew up in a 3BR, 2 car garage house that was You're describing an inflated, luxury lifestyle. You even sort of admit it when you say "very comfortable lifestyle for most people in tech". That's not "very comfortable", that's "very comfortable for…

> You're describing an inflated, luxury lifestyle.

Exactly. I consider a "comfortable" lifestyle to be a 3BR house in a safe neighborhood, 2 reliable cars, 2 week+ domestic vacations/year, plus saving enough to give a nice cushion in case of emergencies / retirement.

I'm terrible with budgeting / saving and I was doing this working for a startup on a $120k/year salary. Granted, this was 10 years ago and housing has appreciated significantly since then, but still. $200k would be more than enough to enjoy this sort of comfortable lifestyle.

Re: How People Get Rich Now

#583

Post by WalterBright »

yardie wrote: post #548
WalterBright wrote: post #538

Earlier quoted context omitted.

You can't get a CEO without offering a golden parachute. This is because you're not hire a loser CEO, you're going to hire a winner, and you'll need to attract him away from his current lucrative position. It's the same thing as top athletes getting contracts paying them millions of dollars whether or not they continue to win games.

> top athletes getting contracts paying them millions of dollars whether or not they continue to win games. I know in the NFL, a lot of those contracts have clauses big enough to drive a dump truck through. Many of those million dollar football contracts are back loaded to only pay out if the athlete competes the full term [0]. Winning and losing games is definitely tied to whether they stay or are cut. Unlike a CEO,…

You don't think that CEOs also have a lot of performance related clauses? Stock options are, for example.

Re: How People Get Rich Now

#584

Post by gip »

WalterBright wrote: post #554
gip wrote: post #437

Earlier quoted context omitted.

Exactly. And I also think looking at money only may not go far enough. At the end of the day what matters is the amount of resources that the society allow a person to enjoy during her/his life, from food to home ownership to work opportunities, to access to vaccine. It's pretty clear that a new class of people (founders, VCs and people close to them) are capturing a larger part of the resources today while the major…

They're creating the value, not taking it from others.

What you are missing is that the resources in the world that matter are bounded. So if a minority is creating most of the value at scale, they will be able to redirect most of the resources to themselves. This drives the increase in inequality.

That is why thinking purely in financial terms is misleading. It's not because everyone has more $$$ in the bank that everyone is better off.

Re: How People Get Rich Now

#585

Post by dfxm12 »

WalterBright wrote: post #538
alpha_squared wrote: post #454

Earlier quoted context omitted.

You're not wrong, but the perspective feels like missing the forest for the trees. So what if stock-based compensation was uncommon in 1965? The average employee doesn't get to benefit from the very real contributions they've made to the company, while the CEO does benefit. Why didn't employee profit-sharing increase at the same rate as non-salary compensation did for CEOs? That's still relevant. Additionally, your c…

You can't get a CEO without offering a golden parachute. This is because you're not hire a loser CEO, you're going to hire a winner, and you'll need to attract him away from his current lucrative position. It's the same thing as top athletes getting contracts paying them millions of dollars whether or not they continue to win games.

Athletes aren't comparable to the CEO in this situation.

Athlete pay (at least for athletes who are paid by an owner and not mostly from prize money) isn't really tied to winning or losing, but is largely defined by collectively bargained negotiations, based on how much the league brings in. You also have guys like Bryce Harper who, even when he goes 0-for-3, will earn their keep in other ways, like getting people to watch games on TV which increases rights fees & ad rates, selling tickets to games where people spend money on parking and beer or jersey sales: https://www.mlb.com/news/bryce-harper-sets-pro-sports-jersey...

In short, athletes get paid a lot because they know how much money their bosses are making from their labor and have collectively bargained to get their fair share.

Re: How People Get Rich Now

#586

Post by missedthecue »

heavyset_go wrote: post #535
missedthecue wrote: post #433

Earlier quoted context omitted.

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

This analysis is about as apt as saying, "Larry Ellison's salary was only $1, so what are you complaining about?"

The guardian article and the commenter I replied to are pointing out the difference between 1965 and 2020 as if it's a problem.

A problem is defined as something that has a negative impact on people. My analysis points out that the only people that modern CEO pay has a negative impact on is the shareholders.

I illustrated that it makes literally no difference to your average floor worker whether the CEO gets $0 or $20 million in stock comp.

Re: How People Get Rich Now

#587

Post by crazygringo »

greatgib wrote: post #411

Strangely, an explanation for the increased number of wealths coming from new, tech companies and investments that is ignored in his post is the disturbing fact it was taken from the average employee cut of the profits. See this: https://www.theguardian.com/business/2018/aug/16/ceo-versus-... I quote: "The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965, and more than…

> taken from the average employee cut of the profits

There's never been any such thing. In the US, salaries have always been determined by the supply and demand of skills, they've never been linked to profitability or some share of it.

And stock options and stock grants are relatively new (not really a thing in 1960), so if anything the actual employee share of profits -- since the value of stock is future profits discounted -- has gone up.

The idea that CEO compensation is somehow "at the expense of" employee compensation is a pure myth. If CEO's were paid less, the extra money would flow to shareholders, not employees.

Re: How People Get Rich Now

#588

Post by missedthecue »

Florin_Andrei wrote: post #494
missedthecue wrote: post #433

Earlier quoted context omitted.

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

TLDR: CEOs are wildly better paid nowadays, compared to decades ago, via mechanism X, as opposed to mechanism Y. Both X and Y ultimately deliver money.

And the question is whether that's a problem or not, and if so, who is it a problem for. My comment illustrates that modern CEO pay does not hurt the average employee in any way, only the shareholders.

Either you don't think modern CEO pay is a problem, or you think it's a problem because it makes shareholders poorer. It doesn't impact the rest of the employees or reduce their incomes.

Re: How People Get Rich Now

#589

Post by jdgoesmarching »

Balgair wrote: post #506
benzor wrote: post #488

Earlier quoted context omitted.

Apologies for some hastily chosen examples. I think the point still stands if you consider the following companies: WeWork, Lyft, Snapchat, Pinterest, Dropbox, Slack, Casper, Lime, Peloton, Beyond Meat, Wayfair, Zillow. More generally speaking, take a look at Goldman Sachs' Non-Profitable Technology Index: https://pbs.twimg.com/media/EsRVCiMXIAE7xlA.png

Are the fake-meat companies tech companies? I thought they are more like contract manufacturers, brewers, or other industrial foodstuffs. No doubts on the access to cheap debt, though.

WeWork was also never a tech company but pushed really hard to brand themselves that way. If evaluated truthfully as a real estate company, the money they raised was hilariously idiotic.

So much of this world is driven by idiotic speculation based on slick websites and charismatic presenters.

Re: How People Get Rich Now

#590

Post by jfk13 »

tjs8rj wrote: post #522
coldtea wrote: post #501

Earlier quoted context omitted.

> The benefits should go to whoever is responsible for the success of the company. This obviously opens up a political can of worms: the Left will say the CEO can't get anything done without the workers, the Right will say the workers can't get organized without the CEO And a pragmatism can say that all kinds of CEOs have driven companies to the ground, reducing their valuation even 1/10 what it was, and destroying t…

A sharper metric: it tends to do with whoever is responsible for the success of the company at the least cost to shareholders. Imagine a company starting out. If they need you to join or they fail, and they can get you for 1% of the company, that founder is rewarded incredibly for securing you with very minor cost to the company, making them rich and you not, even if you are responsible for the success of the company…

> As long as we are all free to be the founders or the employees

But we're not. Much of it comes down to the simple lottery of the circumstances into which you were born.

If you have an inherited trust fund, or wealthy parents and friends to fall back on, you can take huge risks, one of which might eventually lead to a multi-million dollar payout even if several of them fail dismally in the meantime.

But if keeping a roof over your head and putting food on the table today is dependent on working two backbreaking jobs today and every day, you're not "free" to be a founder.

"To them that have, more shall be given."

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