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How to earn a billion dollars

paulgraham.com

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Re: How to earn a billion dollars

#381

Post by edelbitter »

jadenPete wrote: post #155
AdamN wrote: post #124

She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars). pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of…

Why does building a successful business necessitate generating economic externalities? Many do, and that should be prevented, but many also don’t. And to say that those externalities are responsible for a majority of the business’s growth in all cases is just false.

Do you have any company in mind (within the subset the argument refers to, so one that achieved >=15% monthly growth with sufficient consistency) without one or more worrying externalities?

Re: How to earn a billion dollars

#382

Post by MinimalAction »

onlyrealcuzzo wrote: post #326
MinimalAction wrote: post #301

First question: why? Why should I (or anyone) earn a billion dollars? PG made it seem like that's the ultimate goal somehow. Also, why only a billion dollars, PG? You see your infinite cancerous growth machine doesn't stop? This article did not sit well with me. I have found myself rereading Beyond Smart, How to Write Usefully, The Need to Read, Life is Short. But this one is harmful; nobody needs a billion dollars.

Certainly, $1B is a lot of money... But you probably need >$10M to not HAVE to work and live a low-risk comfortable life in even modestly expensive parts of the US. The funny thing about money is, it's really hard to save $1M and $10M, but once you get there, it's pretty easy to grow that substantially. The fundamental problem in the West, IMO, is that we make it so hard to save even small amounts of money, and so ea…

$10M is also perhaps asking for too much to live a modest life even without working, but I hear you with rising costs and healthcare. In any case, $10M is 100x smaller than $1B.

Re: How to earn a billion dollars

#383

Post by Glyptodon »

PG seems be becoming more and more disingenuous. People using the word "earn" almost always mean "you can't get this from wages." This doesn't mean that the effect of growth isn't real - almost any business that scales even moderately, but none the less scales, and is profitable, can make its owners millionaires or better. But this does not mean that those riches were "earned." Or that the person who started the business had more glorious suffering than some rando who works 80 hours a week of part time jobs to keep a roof over their kids' heads. Rather, it is inherent to finding a scalable business and not screwing it up.

Re: How to earn a billion dollars

#384

Post by rayiner »

AdamN wrote: post #124

She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars). pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of…

Your phraseology of “extract” suffers from the same problem as AOC’s. You’re conflating value creation with value extraction.

The problem with AOC’s argument is she’s recycling a 2008 talking point into a context where it doesn’t make sense. Financial entities making trillions moving money around raises questions about whether value is really being created. When I get three Amazon packages delivered to my house every day, there’s no question about value creation.

Re: How to earn a billion dollars

#385

Post by throwaway89864 »

theptip wrote: post #360
AdamN wrote: post #124

She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars). pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of…

Right, regardless of whether you agree or disagree with the point, PG doesn’t actually engage with it. He just says “compound growth + build something that people love”. But the meat of the point is: if the economy is growing at 2.5%, how do you sustain 15% over 5 years? Look, I’m a startup guy, I buy into the premise that it’s an intensely value-creating activity. But I think it’s self-defeating to pretend like the…

I don't think you are the target audience. Here's the direct quote, does that apply to you:

"You're young, and usually young founders should make something that they themselves want. You don't have enough experience yet to know what other people need. But at the same time your own needs are uniquely valuable, because your needs predict future demand. You're the age when people start using new things. Whatever you and your friends start using now, everyone is going to be using in ten years. Since your intuitions about other people's needs are usually a crap signal, and your own needs are an especially valuable one, you should usually listen to the second signal; you should make something you and your friends want.

Making something you and your friends want doesn't mean you have to build a consumer product. Maybe you and your friends are molecular biologists, and there's something cool that could be done now to DNA that everyone else has overlooked. Maybe you and your friends are into drones. The idea doesn't have to have a wide appeal. It literally just has to appeal to you and your friends."

Re: How to earn a billion dollars

#386

Post by rayiner »

theptip wrote: post #360
AdamN wrote: post #124

She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars). pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of…

Right, regardless of whether you agree or disagree with the point, PG doesn’t actually engage with it. He just says “compound growth + build something that people love”. But the meat of the point is: if the economy is growing at 2.5%, how do you sustain 15% over 5 years? Look, I’m a startup guy, I buy into the premise that it’s an intensely value-creating activity. But I think it’s self-defeating to pretend like the…

[flagged]

Re: How to earn a billion dollars

#387

Post by abraxas »

leto_ii wrote: post #69

> Since we started it in 2005 we've funded about 6500 companies. > Starting a successful startup is the most common way to become a billionaire, so in effect I've spent the last 21 years training people to become billionaires. So far about 30 of them have, but there are many more in the pipeline. Seems to me that right off the bat he completely undermines his own point - less than .5% of the founders being funded at…

Moreover, he conveniently forgets the millions of aspiring founders who did not even get into his puppy mill to get a chance to play the 5% odds. In many cases their only obstacle was not being born in the United States and living in California.

Paul if you are so rich why aren't you smart? Or is this the age old problem of getting a man to understand something when his paycheck depends on him not understanding it?

Re: How to earn a billion dollars

#388

Post by mlsu »

skybrian wrote: post #361
mlsu wrote: post #346

You can tell that he doesn’t really think too deeply about any of this, because the way he wants to illustrate the point is by typing the numbers into a calculator. It’s as if the money comes right up out of thin air, isn’t it? He inadvertently gets close when he talks about Facebook being about people doing stalking. PG, is stalking a good thing or a bad thing, hmmm?

There’s no conservation rule for an asset’s value. Market cap comes mostly out of thin air because people believe a company is valuable. If they change their minds, it disappears. (Market cap is estimated based on transactions that are a small percentage of market cap.)

No, market cap does not come out of thin air. Money flows in one direction and human activity and real changes in the physical world flow in the other direction.

Nobody is mad about the billionaires having a lot of money - they are mad that people are pissing in water bottles to make their route, or having the city’s public infrastructure privatized, or the many other fantastic real world changes that are on the other side of these fantastical market caps.

Re: How to earn a billion dollars

#389

Post by [deleted] »

sofard wrote: post #181
AdamN wrote: post #124

She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars). pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of…

I think there are many arguments against AOC's comments, but I agree that PG here is misrepresenting her point. I don't think anyone reading PG's blog is clueless about the power of compounding or the difference between salary and wealth through asset growth. Her point is essentially whether the entire capital system is "fair." And to be fair to PG I don't think AOC articulated a particularly strong point either.

[deleted]

Re: How to earn a billion dollars

#390

Post by blitzar »

AdamN wrote: post #124

She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars). pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of…

I presume when it comes to filing taxes, PG is not confused and declares it as capital gains and not earned income.
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