How to Run a Ponzi Scheme for Tech People

Imagine, for example, that you had stumbled across a Magic Formula to create a niche Software as a Service business that brings in $5,000/month while only taking up 10 hours of your time each week. Why would you give that formula away when you could just use it yourself over and over and become a zillionaire?

Well, let's think about it. Assuming you do have that Magic Formula and have used it once, what are your options?

1. Go live on the beach in Thailand. Forever.

2. Build another business that brings in $5,000/month for 10hrs/week effort.

Notice that each spin of the Magic Formula cuts another 10 hours/week out of your schedule of growing your hair and hanging out with that blonde girl from the article. Spin it 4 times and you're back to having a full time job like the rest of the world.

So you don't do that. You hang out on the beach, wondering why more people don't do what you're doing. And you from time to time try to nudge a few more people into doing so themselves.

At least that's my take on it, having spun that formula twice.

I am not super plugged into the financial industry so I can't say for certain, but I think while people may not understand the difference between traders shouting on phones, "wall street", and wealth management, people think about wealth management the most in the context of "wall street", because that's what they're personally most familiar with. They think that even though wealth management seems to me to be very decentralized and not really something physically centered around Wall St.

I think wallstreetbets is mostly a pretty unsophisticated subreddit (which somehow declined in quality even more as it grew) but I think the parent was valid in pointing out that they willingly eschew the old-school strategy of diversification + "value investing" done by a third party on your behalf and the new-school (boglehead) strategy of putting literally everything in the S&P 500 or a bond index with the allocation mix dependent on retirement date/age.

There has undoubtedly always been a group of people micromanaging their personal portfolios with less risk-averse strategies like this, and WSB mostly takes things way too far, but at least for me it exposed me to the idea that maybe I could personally do better picking stocks on my own than just blindly throwing everything into VOO (and for people not plugged into the online-personal-finance-geek community, it could be the first time they even realize they don't need to have a third party manage their investments for them).

Agreed. For every tech millionaire there are a thousand guys who are just as smart and worked just as hard and it didn’t work out for whatever reason. Maybe their timing was off by a mere 6 months for example. There’s a lot of survivorship bias in what is in large part a lottery.

> In Ashlee Vance's biography of Elon Musk, it is claimed that the Musks' father, Errol Musk, provided them with US$28,000 during this time,[4]:Ch.4 but Elon Musk later denied this.[6] He later clarified that his dad provided around 10% of US$200,000 as part of a later funding round.[7]

I feel like someone who is able to get 90% of their funding round could either convince an existing investor in the round or convince someone else to join the round. This doesn't sound like money to "start Zip2" as you claim.

Also, note that Elon had to shower at a YMCA while starting up Zip2 (https://www.cnbc.com/2018/06/19/how-elon-musk-founded-zip2-w...). Does that really sound like a "trust fund baby" to you? I feel like a lot of the myths trying to tear down Elon Musk's successes are all sourced from Ashlee Vance's book, which in turn are based on, as I understand it, interviews of Errol Musk himself (the father).