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How People Get Rich Now

paulgraham.com

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Re: How People Get Rich Now

#611

Post by mmmmmbop »

qzw wrote: post #464

I'm rather disappointed PG would think that the Forbes wealth list could support any kind of conclusion whatsoever. One of the biggest reasons that the top of the list is filled with tech billionaires is that their wealth is relatively transparent, being mostly in the form of stock holdings in publicly traded companies and often directly disclosed. This makes it much easier for Forbes to estimate their net worth with…

Genuinely curious: Do you have any more background on this? Who are these rich people that are not listed in Forbes?

Re: How People Get Rich Now

#612

Post by lanstin »

daemin wrote: post #508
missedthecue wrote: post #452

Earlier quoted context omitted.

Performance and incentive alignment. John Doe stacking pallets at the Coca Cola factory really won't produce much better top or bottom line results for the business if you offer him a stock bonus. His forklift only drives so fast, and he plays a very minute part in the direction of the business. The CEO on the other hand can have a huge impact, and it's why shareholders choose and vote on certain incentives and bonus…

But why not give them stock options as well? Why shouldn't all the people employed by the company share in its success? Even if it's the CEO's decision which determines the direction the company will go, it's all the people implementing that plan that actually cause the company to make money and succeed.

And it's not like a top down plan is the key. Having all the people in the company feel interested in and empowered to fix problems they see is the key to a successful organization these day. A genuine commitment to "people are valuable" is key to getting people's interest in fixing problems.

Re: How People Get Rich Now

#613

Post by samatman »

alpha_squared wrote: post #454
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…

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…

> 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.

This is correct, but the post you're replying to has the answer: CEOs successfully claimed more of the portion of surplus value which was going to stockholders, employees claimed less.

It's key to analyze these things if the goal is to see employees better rewarded, as they should be, but it must start from the correct analysis.

The details of how to do this are way over my head, and I won't embarrass myself by trying to make suggestions here.

Re: How People Get Rich Now

#614

Post by crispyambulance »

dcolkitt wrote: post #73

> It's easier now to start and grow a company than it has ever been. That means more people start them, that those who do get better terms from investors, and that the resulting companies become more valuable. This may be a quibble, because I think Paul Graham really means a certain type of high-growth startup in mind when he says "start a company". But the rate of new business formation in the US has fallen off a cl…

When Paul Graham says "get rich" it goes without saying that he means "billionaire rich" by virtue of being a founder of a unicorn that goes IPO. That's nice for those that can do it but it's such a tiny number of people, it's irrelevant and non-actionable advice for practically everyone. Right off the bat, he's talking about the "100 Richest".

What about people that run a business and make a good living and some profit for themselves and their employees doing innovative stuff? Is that too inconsequential to even mention because VC's aren't interested?

Re: How People Get Rich Now

#615

Post by lanstin »

missedthecue wrote: post #586
heavyset_go wrote: post #535

Earlier quoted context omitted.

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 $2…

If that worker has a pension or 401k, then it does matter. The fleecing isn't directly from him, but aggregate it by "managerial class" and "middle class" and you see the high $ managerial cash flows are directly at the expense of the middle class and retirement of the middle class. Thru in some tax policy, and you can see it is also taking money away from education of young middle class folks, and investment in communal things like roads and public health and so on.

Re: How People Get Rich Now

#616

Post by lanstin »

crazygringo wrote: post #587
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 di…

And the shareholders are often held by pension or 401k funds for the employee retirements. Certainly in aggregate, and all the companies have seemed to decide that this fleecing is a good thing all at once.

Re: How People Get Rich Now

#617

Post by fellowniusmonk »

908B64B197 wrote: post #602
fellowniusmonk wrote: post #413

Earlier quoted context omitted.

The heart defect thing definitely puts me in a weird psychological bucket when it comes to underlying drive/motivation. I've only met one adult that had similar feelings/views and they had childhood multiple recurrence leukemia. I have some concepts that I want to try to bring into the world. One is a first principles notes/app platform I've been using for personal use that upends how apps and data relate. The goal i…

> Another is a platform for developers to "never" interview again and for high signal employed developers to capture 50/60% of profits going towards recruiters (piggy backing off my work with speaking talent and how speaker bureaus work.) That's interesting. You mean to get rid of "Coding Interviews?"

Get rid of coding interviews for devs not already employed is one aspect.

Lead gen for filling a companies open roles either 1. Doesn't get engagement from the employed or 2. Extracts value from the already employed with little career return. It distracts from core competency.

Software engineers path to self monetization is basically be a dev and get paid for labor or start an agency (which sucks and changes what your work actually is), but there is a third path that is pretty well trod that most people haven't experienced (and no devs really), that lets dev write code like they love and still reap most of the profit from placement without an active time sink.

It's basically bringing what Zig Zigler originally modeled with his company and current speaker bureaus do for "hot" talent to the developer world.

Re: How People Get Rich Now

#618

Post by wavefunction »

missedthecue wrote: post #588
Florin_Andrei wrote: post #494

Earlier quoted context omitted.

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.

I find the notion that paying a CEO 321 times the salary of a worker in cash to be problematic for society while paying the CEO 321 the salary of a worker in stock options/grants is not not problematic to society to be completely unconvincing. Both illustrate to me the historic and increasing inequality in distribution of income and wealth. Asking me to ignore that divide and instead sympathize with someone like Carl Icahn is obscene in a humorous way.

Re: How People Get Rich Now

#619

Post by dred_prte_rbrts »

areyousure wrote: post #578
jedberg wrote: post #528

Earlier quoted context omitted.

When I look at that list, Jeff Bezos is #1. The first woman on the list is at #10 and inherited her wealth. Are you looking at a different list? Also, people born in foreign countries had completely different experiences, and more importantly, what is relevant is if they were in the bottom quintile in their own country. If you're super rich in your own country then you have a lot of opportunity. For example Sergey Br…

For reference, the people mentioned are #1 Jeff Bezos, #7 Larry Ellison, #9 Sergey Brin, #13 Mukesh Ambani, and #18 Zhong Shanshan. And https://en.wikipedia.org/wiki/Zhong_Shanshan "He dropped out of elementary school during the Cultural Revolution and found work in construction." https://en.wikipedia.org/wiki/Xu_Jiayin "Xu Jiayin was born to a rural family in Jutaigang Village, ... His father is a retired soldier wh…

Mukesh Ambani's dad was NOT lower quintile by any standard: https://en.wikipedia.org/wiki/Dhirubhai_Ambani

Re: How People Get Rich Now

#620

Post by liveoneggs »

xur17 wrote: post #610
Alex3917 wrote: post #597

Earlier quoted context omitted.

> Why didn't employee profit-sharing increase at the same rate as non-salary compensation did for CEOs? Because employees generally hated profit sharing and created unions to fight against it. Joseph Blasi talks about this in his book The Citizens Share. And it's not like he's some crank conservative, he's the economic advisor for Elizabeth Warren.

A good example of that [0]. Amazon is quoted as saying that hourly employees prefer the "predictability and immediacy of cash to RSUs", and I imagine Amazon would prefer to give RSUs, so this is probably accurate. [0] https://www.theverge.com/2018/10/3/17934194/amazon-minimum-w...

an RSU is a massive tax problem, for one thing.
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