How People Get Rich Now • Hacker News Board

Re: How People Get Rich Now

#661

Post by WalterBright » Mon, Apr 12, 2021, 9:53 PM UTC

missedthecue wrote: post #433

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…

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…

> Stock based compensation didn't exist in 1965.

In 1965 employees also typically got pensions, the value of which is not counted in those figures.

Re: How People Get Rich Now

#662

Post by mensetmanusman » Mon, Apr 12, 2021, 9:53 PM UTC

“ But the main reason it's easier to start a startup now is that it's cheaper. Technology has driven down the cost of both building products and acquiring customers.

The decreasing cost of starting a startup has in turn changed the balance of power between founders and investors. Back when starting a startup meant building a factory, you needed investors' permission to do it at all. But now investors need founders more than founders need investors, and that, combined with the increasing amount of venture capital available, has driven up valuations. [8]”

This is true for software companies, but not for materials companies that have to build stuff out of atoms. (e.g. cheaper to move electrons than atoms).

Re: How People Get Rich Now

#663

Post by giantg2 » Mon, Apr 12, 2021, 9:55 PM UTC

bradlys wrote: post #634

jkubicek wrote: post #582

Earlier quoted context omitted.

> 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 a…

Sorry, $200k isn't enough. You won't get the house. I know because I've applied. No landlord is renting out homes to single income in the peninsula at $200k/yr. $400k at FAANG - yes (they're all afraid of people losing their jobs at startups and lots of FAANG out there to rent them homes up). But, again, we're talking about "very comfortable" - not comfortable. Not okay. Not "I managed". Very comfortable - something…

I'm just curious, why do people choose to put themselves in that environment? I'm mean, based o the cost of living one could move to practically anywhere else (excluding about five areas) in the US and have this "very comfortable" lifestyle on $100k-150k.

Re: How People Get Rich Now

#664

Post by bumby » Mon, Apr 12, 2021, 9:55 PM UTC

Aerroon wrote: post #652

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…

Imagine looking at the 5 deadliest plane crashes in 1970 and comparing them to the 5 deadliest plane crashes in 2010. You find that more people died in these crashes in 2010 than 1970. You wouldn't conclude that air travel is now less safe than in the 70s, would you? There was a lot more air travel in 2010 compared to 1970. The 5 deadliest flights makes up a much smaller portion of all flights in 2010 than it did in…

Not entirely sure why you're being downvoted but I think these are at least relevant considerations.

There seems to be a lot of contradictory academic claims about CEO compensation so I thought referencing a meta-analysis would be the most useful[1]. If company size is a proxy for your complexity claim, that seems to be much more informative regarding executive pay. Actual company performance was only about 5% predictive, compared to 40% for firm size. It seems like the heuristic I've heard about the "best way to get a raise is to grow your department not necessarily grow your profit" may have a seed of truth to it.

[1]https://www.researchgate.net/profile/Steve-Werner-3/publicat...

Re: How People Get Rich Now

#665

Post by kennywinker » Mon, Apr 12, 2021, 9:56 PM UTC

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...

If I'm making a below-livable wage, I need ALL of that cash NOW. I can't wait a few days for it to clear - I can't handle the loss if I have to sell in a dip.

And amazon is using that fact to justify lowering total compensation for hourly workers, so I don't think they actually do have an incentive to give RSUs in this case

Re: How People Get Rich Now

#666

Post by corpMaverick » Mon, Apr 12, 2021, 9:58 PM UTC

I don't always agree with PG. But this is the first time I feel disappointed by one of his posts. He is thinking about the rich of the rich. The 0.001% . May be he can make the case that intellectual capital is as important as assets capital. But that doesn't make it any better for the millions of people struggling in the middle classes or the billions of people living in poverty.

Re: How People Get Rich Now

#667

Post by eptcyka » Mon, Apr 12, 2021, 9:59 PM UTC

missedthecue wrote: post #492

eptcyka wrote: post #12

I wonder if it really is easier than ever for the bottom 95% of US citizens (or bottom 95% of the developed western countries) to become rich by starting a business these days.

There are a lot of freshly minted billionaires in Asia these days so I'd say yes.

Asia is an underdeveloped market, excluding Singapore (a tax haven), Japan and South Korea etc on account of being American protectorates.

Re: How People Get Rich Now

#668

Post by fredophile » Mon, Apr 12, 2021, 10:00 PM UTC

missedthecue wrote: post #433

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…

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…

What does "diluting wall street" mean? How is it different from "taking money from the business owners"? If I'm CEO at a company what difference does it make to me if I'm compensated by salary or shares/bonuses? If I'm an employee at a company what difference does it make to me if the CEO is compensated by salary or shares/bonus3s? If I'm a shareholder in a company what difference does it make to me if the CEO is compensated by salary or shares/bonuses?

The distinction between salary and bonus compensation is irrelevant outside of possibly some minor tax impacts.

Re: How People Get Rich Now

#669

Post by bumby » Mon, Apr 12, 2021, 10:02 PM UTC

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.

While you're not wrong, I think what you're missing is an important qualifier. Sometimes they are creating perceived value that doesn't materialize. Meaning the value is at least part speculation, rather than realized value.

E.g., did Broadcast.com really create nearly $6B in value just because that's what it was speculatively valued at when purchased? I'd argue no, unless you think the "greater fool theory" is the correct way to measure value rather than intrinsic worth.

Re: How People Get Rich Now

#670

Post by aerosmile » Mon, Apr 12, 2021, 10:03 PM UTC

jasonwatkinspdx wrote: post #575

tjs8rj wrote: post #522

Earlier quoted context omitted.

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…

The problem with this position is its naivety. Are you going to say with a straight face that all potential founders are equally likely to be funded by investors purely on their probability of success, and not via false signals and stereotyping if not straight up bigotry? That there aren't credentials that can be effectively bought to gain access to that? Markets are just markets, not oracles of unbiased merit. Makin…

That argument sounds familiar, but it's not reflected in the latest YC stats (32% of founders come from underrepresented groups). I feel good knowing that one of the fastest career paths in the history of the world has a 32% admission rate to practically anyone anywhere in the world (again, if you're feeling down about your chances as a US citizen, spend a minute talking to one of the Nigerians in YC and your perspective with change instantly).