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The Collison Brothers Built Stripe into a $95B Unicorn

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Re: The Collison Brothers Built Stripe into a $95B Unicorn

#281

Post by specialist »

edanm wrote: post #279
specialist wrote: post #276

Earlier quoted context omitted.

> The reason NFL wages are so high is... ...because they formed unions.

Doctors also have a union and for the most part aren't making nfl wages. I don't understand what makes people think that software engineers are so valuable that they'd get wages that are multiples of doctors.

Scarcity is not necessary for leverage. Preventing defectors from collective bargaining is.

The Logic of Collective Action explains the mechanics. https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action

It's basically game theory, by another name.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#282

Post by nwienert »

goodoldneon wrote: post #252
nwienert wrote: post #57

Earlier quoted context omitted.

If Shaq lifts me up so I can dunk, you can say that I dunked, but in general it's more accurate to evaluate things under more normal circumstances.

Right, but that not OP's point. OP said that insane valuations reached in private markets can't be reached in public markets. Public markets can be just as irrational as private markets

No, he said today they wouldn't reach it.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#283

Post by lifeisstillgood »

philwelch wrote: post #259
lifeisstillgood wrote: post #193

Earlier quoted context omitted.

It's about how and why the deal was structured that way. Amazon is structured so that there is net 100,000 dollars of wealth in the deal betweeen you and him that goes to him (whatever goes to you, he also gets 100k. I am sure you have no complaints, but why the 100k? why can't that be 50k to him and 50k to you.? Or 33, 33 and 33 extra in tax? or ... And is the particular arrangement something that is fundamental and…

Fine, so what's stopping you from starting a business that does exactly the same thing Amazon does, except you make less money and you pay your employees more, and then you go ahead and poach Amazon's entire workforce? If that's actually possible, you should do that, because if you only end up half as rich as Jeff Bezos, you'll still be rich and all of your employees will be better off. What's stopping you?

I can see you are angry - this is not about me.

If Amazon had had a competitor back in the day that had done just that - everything Amazon did, only shared more, then probably we would all be buying from ... err ... Mississippi.com. But this competitor would have had to pull all the right moves - as well as sharing differently.

And one day, yes there will be some innovative new company that will do to Amazon what they have done to Walmart. And maybe that company will have a competitor that will be a co-op and maybe they will have the edge. It has worked ok in the UK for John Lewis. But the lesson from John Lewis is they have to be good at all the basic stuff - and only then do they get to pick staff based on the nicer governance / culture / slight pay gap.

Building a company is hard. Building something like Amazon is freakishly hard. Which is why this "treat employees well" is basically never left up to the market and just tacked on afterwards in regulations.

And finally - yeah would Bezos exactly be hurting if he was half as wealthy. Neither of us think so - which kind of is my point. If there was some (weird) regulation that meant no-one can become richer than 10 billion dollars, and would need to improve share grants when they go over, guess what, Bezos would still have started Amazon, still done it all, and still have a yacht and a second wife.

The phase space available to us is larger than we think.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#284

Post by listenallyall »

xmprt wrote: post #218
edanm wrote: post #199

Earlier quoted context omitted.

> - Senior engineers would make NFL wages That is an absurd exaggeration, unless by "senior engineers" you are including people who do a lot more than "just" engineering, e.g. build companies, build products, etc. The reason NFL wages are so high is not just that they bring in a lot of money, it's that the players are to a large extent irreplaceable. If you take the, say, 500 most talented players in the US at a give…

> If you take the, say, 500 most talented players in the US at a given time, you can't just replace them with the next 500 most talented players and get the same outcome I genuinely believe that a league made of the 500-1000 rank players would be just as (or at least almost as) entertaining as one with the top 500 players. Relative rank is what matters and it's why NCAA March Madness is so popular despite being made…

The AFL, WFL, USFL, XFL, AAFL, 2nd XFL and 2nd USFL would likely disagree.

"March Madness" is an anomaly, a single-elimination tournament with 48 games in one weekend with a history of upsets and buzzer-beaters. Additionally, college basketball and football in the US benefit greatly from the local and alumni network affinity for the programs, that doesn't exist with, say, minor league baseball or the NBA D-League.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#285

Post by philwelch »

lifeisstillgood wrote: post #283
philwelch wrote: post #259

Earlier quoted context omitted.

Fine, so what's stopping you from starting a business that does exactly the same thing Amazon does, except you make less money and you pay your employees more, and then you go ahead and poach Amazon's entire workforce? If that's actually possible, you should do that, because if you only end up half as rich as Jeff Bezos, you'll still be rich and all of your employees will be better off. What's stopping you?

I can see you are angry - this is not about me. If Amazon had had a competitor back in the day that had done just that - everything Amazon did, only shared more, then probably we would all be buying from ... err ... Mississippi.com. But this competitor would have had to pull all the right moves - as well as sharing differently. And one day, yes there will be some innovative new company that will do to Amazon what the…

> I can see you are angry

I'm not angry. I'm just making a point.

> Building a company is hard. Building something like Amazon is freakishly hard.

And that's the point.

> If there was some (weird) regulation that meant no-one can become richer than 10 billion dollars, and would need to improve share grants when they go over, guess what, Bezos would still have started Amazon, still done it all, and still have a yacht and a second wife.

I don't want to fixate on Bezos in particular, but there are probably a lot of founders who would be hesitant to start a company if, once that company became valuable enough, they would be forcibly divested from it by law and therefore be at risk of losing control. Even if you're a vision-focused founder who is intrinsically motivated by wanting the company you are founding to exist in the way that you want it to exist, with no regard to your own personal wealth, you're going to be hesitant with that sort of confiscatory regime. And that's setting aside the fact that building a large company is not only "freakishly hard" but also tremendously risky. If you have a wealth cap of 10 billion dollars thinking "10 billion dollars is enough motivation for anyone", sure, but there's a risk premium involved and the expected value is nowhere close to that number.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#286

Post by philwelch »

specialist wrote: post #281
edanm wrote: post #279

Earlier quoted context omitted.

Doctors also have a union and for the most part aren't making nfl wages. I don't understand what makes people think that software engineers are so valuable that they'd get wages that are multiples of doctors.

Scarcity is not necessary for leverage. Preventing defectors from collective bargaining is. The Logic of Collective Action explains the mechanics. https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action It's basically game theory, by another name.

> Scarcity is not necessary for leverage. Preventing defectors from collective bargaining is.

"Preventing defectors from collective bargaining" is also, more or less, the definition of what an economic cartel does.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#287

Post by philwelch »

listenallyall wrote: post #284
xmprt wrote: post #218

Earlier quoted context omitted.

> If you take the, say, 500 most talented players in the US at a given time, you can't just replace them with the next 500 most talented players and get the same outcome I genuinely believe that a league made of the 500-1000 rank players would be just as (or at least almost as) entertaining as one with the top 500 players. Relative rank is what matters and it's why NCAA March Madness is so popular despite being made…

The AFL, WFL, USFL, XFL, AAFL, 2nd XFL and 2nd USFL would likely disagree. "March Madness" is an anomaly, a single-elimination tournament with 48 games in one weekend with a history of upsets and buzzer-beaters. Additionally, college basketball and football in the US benefit greatly from the local and alumni network affinity for the programs, that doesn't exist with, say, minor league baseball or the NBA D-League.

We also have a third XFL coming soon!

The AFL was actually relatively successful since it forced a merger with the NFL. Meanwhile, at least according to a 30 for 30 documentary, the original USFL had a potentially viable niche as a second-tier spring league for awhile until they made the bizarre decision to switch to the fall football season and try to force an NFL merger.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#288

Post by philwelch »

specialist wrote: post #277
philwelch wrote: post #259

Earlier quoted context omitted.

Fine, so what's stopping you from starting a business that does exactly the same thing Amazon does, except you make less money and you pay your employees more, and then you go ahead and poach Amazon's entire workforce? If that's actually possible, you should do that, because if you only end up half as rich as Jeff Bezos, you'll still be rich and all of your employees will be better off. What's stopping you?

That's the easy part. Though I doubt investors will ever again allow 90s era Microsoft level of profit sharing Amazon's secret sauce was cheap capital. Both tax holiday/avoidance and persuading Wall St to forego profits. A combo that's unlikely to be repeated any time soon.

There were hundreds of other e-commerce companies that were started around the same time, all of which had those exact same benefits. Most of them died in the dotcom crash.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#289

Post by philwelch »

tsimionescu wrote: post #223
tjs8rj wrote: post #208

Earlier quoted context omitted.

This is the answer and why the labor theory of value tends to fall flat without due consideration to the labor of managers and the cumulative returns of labor. If your work earns $100k/y in revenue for a company, that doesn't mean your work created it entirely. The continued dividends of organization of the company, customer acquisition, legal apparatus, support of your entire organization made that revenue possible…

While you're right that you have to account for the entire organization, not just the engineers (obviously), the gap between what the owners earn compared to all other employees combined is still wildly disproportionate. It's of course hard to precisely quantify these things, but the worsening gap between worker and owner incomes is quite obviously not proportional to any change in how much value owners add to a corp…

You're not taking risk premium into account. Owners run the risk of working for several years and getting absolutely nothing in return. Sometimes they put their own money into the company and never get it back.

Re: The Collison Brothers Built Stripe into a $95B Unicorn

#290

Post by throw123123123 »

notfromhere wrote: post #183
philwelch wrote: post #171

Earlier quoted context omitted.

> It is a wealth-sharing problem as well. I don't know much about stripe, but think of Bezos as a pretty good example - to a O(n) rounding he has 100 billion dollars and 1 million employees. Why is he getting 100,000 from each employee? I used to work for Amazon. I did not give Jeff Bezos $100,000. In fact, I actually made money out of the deal.

By its nature, you get more value out of an employee than you pay in wages. Otherwise, there would be no point to hiring anyone.

At the same time, the proposal has to be better than what others companies offer, or nobody would accept the position.
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