The Book of Graham

I interpreted this piece of satire attacking both industries. I don't think the author's intention is to state the Wall Street is better.

I can't thin of anything in English, but I'm reminded of this Russian word. http://betterthanenglish.com/stiob-russian/

And what is the point that the satire makes? Just saying that something is "satire" or "sarcasm" is a total cop-out.

Did you even read the article carefully? The 7% figure corresponds to $40MM+ exits for YC. There are a huge, absolutely huge number of YC startups that get acquired for less than that. Many of those are acquihires ($rdl is suggesting you pick top startups that are post Series B and which already have multi-hundred-million to billion dollar valuations (think: Stripe, Pinterest, Airbnb). He is not suggesting you join a 5 person YC startup that is still trying to get product market fit. Hugely different categories. rdl is essentially suggesting you work for the roughly one YC company out of every batch that becomes a great success - and that you make that leap when the startup had already proved itself.

From reading your other posts it seems like you are willfully misunderstanding his point.

Certainly. Exploitation is taking advantage of the other party's lack of options – which results in its lack of bargaining power – for an unfair distribution, in this case the workers get far below their contribution, even when adjusting for the capitalist's risk. The meager payment ensures the workers will never have options.

The theoretical economic model for this case is the dictator game[1]. In the dictator game, one player receives an amount of money, and he has to offer the second player a portion of it. If the second player rejects the offer, neither gets any money. Often, the only distribution accepted will be 50% or close to it, but when a rich person plays a very poor person, the rich person knows that the poor player will take any offer rather than go home empty-handed. That's exploitation.

Now, a misguided free-market advocate, not familiar with both theory and practice might say that the islanders do have bargaining power, as they can invite another employer to their island in exchange for a loaf of bread plus a burger per day. But, of course, this can't happen, as the second capitalist knows the first will retaliate on their own islands. This is a digression, but in fact, in a saturated market, the best strategy for competitors of roughly equal size (even quite far from equal) is almost never to compete, certainly not on price. Lowering prices is not an option as your competitor has the resources to do the same, which will result in the same market distribution, only with all competitors worse off. Again, this is supported both by theory and practice.

FYI, a lot of the regulation in the US government came as a result of the US economy under the rule of the robber barons a little over one hundred years ago. Similar to the island story, some employers would pay their employees not in US dollars, but in their own currency, which the workers could only use in stores owned by the employer ("the company store").

Of course, the situation in Silicon Valley is not that of full blown exploitation, since startup founders are not without options. Still, large tech companies benefit from the lottery model, as they profit more from it than from large research departments; the founders, on the other hand, get an unfair share of the cake. In this case, the large companies are not exploiting the entrepreneurs lack of options, but are simply taking advantage of their psychological preference for the lottery. There is more to that, as all parties know that if the lottery were to go away (say VC money stops), and everyone would have to work for the large companies, salaries would drop (that's a sort of a sword those companies hold over the workers should anyone decide to rebel). We don't even need to speculate, as we know that large SV employers already colluded to lower salaries.