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How to earn a billion dollars

paulgraham.com

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Re: How to earn a billion dollars

#771

Post by InterviewFrog »

oatmeal1 wrote: post #716

PG makes little effort to identify what it means to earn something. Some people consider effort the measure of whether something is earned. Some believe luck should be subtracted from result to get what is earned. Some say you cannot earn the benefits you receive from your genetics. No idea of what it means to earn something is given except for making users happy while "not cheating" (who decides what counts as cheat…

You saved $500k to buy a beautiful home. You don't know how to build a home.

I do. I take the $500k from you and then pay $450k to a bunch of employees who put in 40 hours a week. I take home $50k. I earn $50k.

Now, you like the home so much you tell all your friends about it.

I hire more employees and I take $50k profit per house but I build 20k houses and make $1B. I earn $1B.

Market forces decide how much you "earn". There are plenty of blue collar workers who work 3 jobs and live paycheck to paycheck. There are SWEs who work 20 hours a week and make the bank.

Re: How to earn a billion dollars

#772

Post by jltsiren »

hammock wrote: post #686
jltsiren wrote: post #670

Earlier quoted context omitted.

The essay kind of misses the point, as the question was mostly about the meaning of word "earned". "Earned income", for tax purposes, matches pretty closely the kinds of income many people consider genuinely earned in the moral sense. From this perspective, if a startup grows organically and the founders become rich, they have earned it. But if the growth requires capital (an investment, a loan, or the wealth the fou…

Halfway through your second paragraph you started conflating income with wealth/capital. The wealth controlled by a startup investor becomes earned income, in your words, when the founder receives pay for their work, in the form of cash or exercised options or whatever else. To get that earned income, which is derived from wealth but is not the wealth, they have to earn it in the same way the wagies in your first par…

You are focusing too much on legal definitions.

The intuitive difference is mostly between the many and the few. Between the ordinary people and the elite. If your money comes from many small streams, it looks likely that many people have independently determined that what you are doing is valuable. If there are a few large streams, the situation is less clear. Maybe your contributions are genuinely valuable, or maybe someone is picking favorites or choosing winners in advance. From that perspective, capital is a poison that permanently puts the reasons of your success in question.

Re: How to earn a billion dollars

#773

Post by pazimzadeh »

cm11 wrote: post #746
oatmeal1 wrote: post #716

PG makes little effort to identify what it means to earn something. Some people consider effort the measure of whether something is earned. Some believe luck should be subtracted from result to get what is earned. Some say you cannot earn the benefits you receive from your genetics. No idea of what it means to earn something is given except for making users happy while "not cheating" (who decides what counts as cheat…

The reason her startup was growing so fast was simply that users loved what she'd built. He's said the "make something people want" thing before, his argument for billionaires doesn't seem to go much beyond it. It seems rather clear it's not all you need nor is it all it took for these people to get there. You don't just make the thing. The founder didn't become a billionaire simply because users loved her product. Y…

also his argument relies on consumers being in a stable situation. desperate people 'want' a lot of things which makes them easier to exploit

Re: How to earn a billion dollars

#774

Post by epsteingpt »

wtfHN26 wrote: post #457
epsteingpt wrote: post #238

Impressed at the commentary here, which correctly points out Paul dodges the entire issue at hand. Three things can be true: 1. Growing at a rapid rate over long periods of time is hard , doable and rewarding 2. Incentivizing the discovery of these things is good for society. 3. Nonethless there is and should be a limit to wealth acquisition, given moral hazard. To make a similarly glib counterargument to Paul G: If…

> 3. Nonethless there is and should be a limit to wealth acquisition, given moral hazard. How do we determine that limit ? Most Americans ( middle class and above ) are richer than most people in the world. Way richer than most people in Africa or poorer parts of Asia can ever aspire to be. Consider that when competing for resources these poor people are competing with wealthy middle class Americans. Add to that the…

You don't need to guess, the bounds are common sensical.

1. Too much inequality, and the risk is bloodshed. This is most of human society. 2. Too little, and you get communism, repression, or European stagnation. 3. U.S. is in the goldilocks zone. The goal is to make it so most people in society don't give up (Japan had this happen).

USD is a bit of a red herring. It does make our capital markets the most valuable in the world, and it does generate nearly endless demand for the dollar, but that's actually based on the wide scale belief that the U.S. is far and away the best arbiter of the world economy. The EU had a shot at that crown and absolutely wrecked it via over regulating.

Re: How to earn a billion dollars

#775

Post by dodu_ »

pipes wrote: post #509

The amount of negativity to this is depressing. No one seems to be contradicting anything he's saying here, instead it's just vacuous ideology "extraction" etc etc. Purposely narrow reading. I've got kids, I want people creating start ups they can work in, the alternative is too grim.

>No one seems to be contradicting anything he's saying here

So the exact same thing PG is guilty of in the article?

He disagrees with the opposing statement, gives a lazy counterexample with 0 evidence that introduces at least two major assumptions that do the the entirety of the work for his "argument", and then takes another few paragraphs to effectively say "just grow exponentially, bro".

There's nothing to push back against except vague hand-wavey nonsense. PG is washed and the level of discourse in the thread matches the quality bar of his post, so I'd say it's pretty appropriate.

Re: How to earn a billion dollars

#776

Post by tjwebbnorfolk »

johnea wrote: post #719
oatmeal1 wrote: post #716

PG makes little effort to identify what it means to earn something. Some people consider effort the measure of whether something is earned. Some believe luck should be subtracted from result to get what is earned. Some say you cannot earn the benefits you receive from your genetics. No idea of what it means to earn something is given except for making users happy while "not cheating" (who decides what counts as cheat…

I think we can clearly say that capital gains are not earned. Someone who lays bricks, "earns" their income; someone who's wealth increases as a bricklaying company's value increases, does not. In this sense, it is indeed impossible to "earn" a billion dollars...

All production requires labor AND capital.

Your labor alone without materials, without tools, or a farm, or a factory, is just you flailing your arms in the air and producing nothing. Capital is as valuable an input to production as labor. You cannot have one without the other.

It's so funny to see people on HN who have clearly overdosed on Marx but have never read Das Kapital, where even the man himself acknowledges the critical role capital plays in production.

Re: How to earn a billion dollars

#777

Post by tjwebbnorfolk »

protocolture wrote: post #727
johnea wrote: post #719

Earlier quoted context omitted.

I think we can clearly say that capital gains are not earned. Someone who lays bricks, "earns" their income; someone who's wealth increases as a bricklaying company's value increases, does not. In this sense, it is indeed impossible to "earn" a billion dollars...

>Someone who lays bricks, "earns" their income; someone who's wealth increases as a bricklaying company's value increases, does not. How does this follow? Is the management effort in organising a brick laying company not count as work? Does the RND effort of a bricklaying company not count as work? I would have used housing speculation as my example tbh.

also, the bricks ARE capital.

Re: How to earn a billion dollars

#778

Post by sgentle »

sberens wrote: post #764
PowerElectronix wrote: post #637

It's clear to me that in order to get a billion, you have to swidle a lot of people out of their fair share of the billion. As soon as the person that has "The Idea" keeps their 60% stake of the company while the army of minions are working their assess off to get that idea to a billion dollar valuations are given crumbs or no stake at all, you know who is swindling who.

If all you need is the idea, then the minions could easily start their own company and reach a similar order of magnitude outcome.

More precisely, you need the idea and mechanisms to prevent competition, such as proprietary technology, network effects, economies of scale, and branding.

Re: How to earn a billion dollars

#779

Post by spprashant »

aabajian wrote: post #749

How can someone so successful be so naïve? The statement, "impossible to earn a billion dollars," is not meant to be taken literally. It is used to underscore the fact that founders (and early investors) are paid ridiculously disproportionately to their employees. There is no labor that a single person can do (without the help of their employees, family, friends, network) that justifies earning $1B.

He is just being willfully obtuse to make a point. This has to be one of his weaker essays. He is trying to "gotcha" AOC by talking math instead of debating the larger point. The kind of thing he has himself argued against in the past.

Re: How to earn a billion dollars

#780

Post by beloch »

InterviewFrog wrote: post #771
oatmeal1 wrote: post #716

PG makes little effort to identify what it means to earn something. Some people consider effort the measure of whether something is earned. Some believe luck should be subtracted from result to get what is earned. Some say you cannot earn the benefits you receive from your genetics. No idea of what it means to earn something is given except for making users happy while "not cheating" (who decides what counts as cheat…

You saved $500k to buy a beautiful home. You don't know how to build a home. I do. I take the $500k from you and then pay $450k to a bunch of employees who put in 40 hours a week. I take home $50k. I earn $50k. Now, you like the home so much you tell all your friends about it. I hire more employees and I take $50k profit per house but I build 20k houses and make $1B. I earn $1B. Market forces decide how much you "ear…

>I hire more employees and I take $50k profit per house but I build 20k houses and make $1B. I earn $1B.

This is the "rock star" fantasy. You do something that becomes wildly popular and can then walk away while still making epic amounts of cash. You didn't earn that $1B through continuous effort. It was all made by your initial idea. It just takes time for the cash to be delivered in full.

Do you deserve to profit off a good idea? Yes, and few would contest that. Do you deserve to profit so much that you never have to work another day in your life? Should the system let people retire after having one good idea? That's going to seem like a sub-optimal system to many. However, its important to note that ideas take capital to implement, and it's much more typical for rock star rewards to go to those with the capital than those with the ideas. That's a system that many more will find to be flawed.

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