How People Get Rich Now • Hacker News Board

Re: How People Get Rich Now

#811

Post by rvn1045 » Tue, Apr 13, 2021, 3:12 AM UTC

purple_ferret wrote: post #95

>So it's not 2020 that's the anomaly here, but 1982. The real question is why so few people had gotten rich from starting companies in 1982...a wave of consolidation was sweeping through the American economy Microsoft, Oracle, Apple, Bloomberg, etc were all started in the late 70's/ early 80's. Their founders are the richest people in the world. Seems like the question he's asking, though, is why weren't they obscene…

Because you can scale a technology company much faster with less capital and lower acquisition costs today. A lot of the infrastructure has been built out for internet companies to take advantage of. That’s the point of the article that it keeps getting faster . Msft, aapl etc grew faster than their predecessors and today’s companies are growing even faster. Bill gates was a billionaire at age 31.

Re: How People Get Rich Now

#812

Post by rvn1045 » Tue, Apr 13, 2021, 3:17 AM UTC

I think one of the most disturbing things about how people get rich in technology startups today is that they get chosen by rich vcs to become successful.

Let’s say there are a few different teams of people working on some promising space that requires a new solution, vcs basically decide the winner by injecting massive amounts of capital into them and make the rest fail.

Re: How People Get Rich Now

#813

Post by 7e » Tue, Apr 13, 2021, 3:22 AM UTC

sillysaurusx wrote: post #576

sushisource wrote: post #552

Earlier quoted context omitted.

I think you're making the point. Correct according to... what... lol? The preconceived notion that it should be? I don't even necessarily disagree, but, "No, it totally is right" isn't exactly an argument.

Personal experience. But, my experience is merely anecdata. Does it hold true in general? It seems to. Suppose your company consists of ten people, and its valuation rises to $10M. The value must have come from those ten people. If they weren't at the company, the company would not be worth $10M. It would be easy to dismiss that example too. After all, I made it up. But that kind of example happens all the time in st…

Valuations are bait that VCs use to motivate founders and employees to take below market wages. But after all the rounds are done, the employees are almost always massively diluted back to below market wages. You could just have diluted them in advance, but then they wouldn’t have worked as hard.

Re: How People Get Rich Now

#814

Post by d110af5ccf » Tue, Apr 13, 2021, 3:30 AM UTC

ashtonbaker wrote: post #659

samatman wrote: post #625

Earlier quoted context omitted.

It's not religious to observe that founders who made a successful exit are well-poised to do it again. They're swimming in money, they have a bunch of investors in their phone contacts, and they know all the ins and outs from the last time they put a startup through its life cycle. How could they not be in better shape than some kid slurping ramen in his first YC cohort? This does leave two big wildcards: the idea (s…

No real argument with this! I think we're talking about different things. If I could put my difference in opinion in my own words, it would be that I believe many people play the startup game with the right "intrinsic" qualities - hard work, brilliance, etc - many more than the number who exit with a billion dollars. Hence, "lottery". Of course, some of that luck can carry forward in terms of experience, networking..…

> even in the face of evidence to the contrary

This is the problem though. There really isn't any clear evidence one way or the other in your example. Predicting how someone will perform in a particular context is incredibly difficult (see the frequent disagreements on HN surrounding the hiring process). More technical proficiency might or might not translate to better overall performance in your particular case.

Meanwhile, the other candidate has already been in what was presumably a substantially similar situation. Given that the previous startup succeeded, I'd assign good odds (but no guarantee, of course!) of that candidate having performed well (all else being equal, a startup with dead weight seems statistically unlikely to succeed).

> You could argue for either justification, honestly, but it's the failure to see a distinction that strikes me as religious.

It might not be that someone else is failing to see a distinction (social status vs technical proficiency vs something else), but rather that they disagree with your estimates of how much various factors will contribute to the likelihood of success for a candidate in the first place. In other words, I think someone might reasonably disagree with you that there's a meaningful distinction to be made here. Such a view would of course be expected to lend their actions the appearance of religious dogma from your perspective.

Re: How People Get Rich Now

#815

Post by lerchmo » Tue, Apr 13, 2021, 3:34 AM UTC

sillysaurusx wrote: post #576

sushisource wrote: post #552

Earlier quoted context omitted.

I think you're making the point. Correct according to... what... lol? The preconceived notion that it should be? I don't even necessarily disagree, but, "No, it totally is right" isn't exactly an argument.

Personal experience. But, my experience is merely anecdata. Does it hold true in general? It seems to. Suppose your company consists of ten people, and its valuation rises to $10M. The value must have come from those ten people. If they weren't at the company, the company would not be worth $10M. It would be easy to dismiss that example too. After all, I made it up. But that kind of example happens all the time in st…

Opportunity, luck, timing, capital, risk, decisions, specific knowledge. Converting hours into value is way more than productivity.

Re: How People Get Rich Now

#816

Post by anonu » Tue, Apr 13, 2021, 3:36 AM UTC

cupofcoffee wrote: post #517

anonu wrote: post #402

Earlier quoted context omitted.

Yes, EV. I certainly think tech entrepreneurs go into a startup opportunity impassioned by their ideas, but knowing they could IPO or exit at some point in the future for a sizeable amount of cash is certainly a motivating factor. EV = Probability * Outcome Probability is very low of an IPO outcome - but EV is probably still higher than FANG work.

Your intuition is wrong. Suppose, 10^-9 odds of a startup making 10 billion. Let's assume the other terms are negligible. E_startup = ... + 10^-9 * 10^11 = 100$ E_faang = 10^-1 * 10^5 + 10-2 * 10^6 + ... >= 10^4

> 10^-9 odds of a startup making 10 billion

Intuitively those numbers feel wrong. theres 7bn people on this planet - and only a very tiny proportion might become tech entrepreneurs. So I think your "1 in a billion" chance of being successful is a bit high. Also, who said $10bn was successful? It is just 1 outcome of many...

Re: How People Get Rich Now

#817

Post by rangewookie » Tue, Apr 13, 2021, 3:42 AM UTC

"This trend has been running for a long time. IBM, founded in 1896, took 45 years to reach a billion 2020 dollars in revenue. Hewlett-Packard, founded in 1939, took 25 years. Microsoft, founded in 1975, took 13 years. Now the norm for fast-growing companies is 7 or 8 years."

Shouldn't inflation be taken into account here? A speed increase is still apparent, but at a slower rate overall.

Re: How People Get Rich Now

#818

Post by nowherebeen » Tue, Apr 13, 2021, 3:51 AM UTC

sillysaurusx wrote: post #513

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

Why Dropbox? Did something change? I haven't paid attention for many years, but at one point is was an extremely profitable company.

Cloud storage has become a commodity and cheaper elsewhere.

Re: How People Get Rich Now

#819

Post by shuckles » Tue, Apr 13, 2021, 3:53 AM UTC

WalterBright wrote: post #651

shuckles wrote: post #596

Earlier quoted context omitted.

Is it really the case that Jeff Bezos is consuming a million times more finite resources than someone whose net worth is $100k? It seems to me like what you buy with virtually infinite money is status like hanging out or sleeping with celebrities, a seat in important rooms, and assets. There is only so much additional jet fuel and human labor a multi-billionaire can consume.

SpaceX, etc. That's what you do with billions to spend.

I think there’s an interesting and fair argument to make that one negative consequence of billionaires is entire otherwise unproductive economic sectors that exist for no reason other than their vanity (mega yachts, Swiss boarding schools, high fashion, doomsday bunkers). That is a different argument than one about resource hoarding though — a Louis bag doesn’t take much in the way of resources, just a single python in the worst case!

Re: How People Get Rich Now

#820

Post by hnick » Tue, Apr 13, 2021, 4:00 AM UTC

handmodel wrote: post #804

hnick wrote: post #784

Earlier quoted context omitted.

> These companies achieve growth and put pressure on the competition by offering their services below the real cost that would be needed to achieve profit, hence driving huge share price growth Which I find weird, if I sell fruit at a loss to run a local competitor out of business as a major supermarket it's illegal predatory pricing (or at least was when I was growing up), yet do it to an entire industry and it's fi…

I don't think this covers all of this - but I feel like the reason it could never be investigated is that most of these things are only unprofitable because of the administration. Not on a per item basis. Netflix may lose money on their show but clearly by giving you a month free and then charging just $12 a month they are making money on that unit. AirBNB is making money on each additional rental they do even if his…

I guess that makes sense and is one consequence of moving so many things to an abstract 'service' model. Many services are essentially free to provide - until you count all the other overheads any business also has to pay for. It's not as simple as buying and selling berries like you say.