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How to earn a billion dollars

paulgraham.com

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Re: How to earn a billion dollars

#411

Post by wcfrobert »

I read pg's collection of essays (Hackers and Painters) in my 20s, and it single-handedly prevented me from being radicalized by leftist ideologies. The one insight from the book that I will always remember from the book is this: if you want to be rich, make something people want. Money is fiat to the value you've generated in growing the economic pie. It is in fact possible gain wealth ethically.

However, there are several addendum to this argument:

1. Most billionaires are hedge fund or private equity managers whose name no one has ever heard of. They provide liquidity or allocate capital or something. It's actually a major PR failure that people think Jeff Bezos or Elon Musk when they think of billionaires; If we can ignore their character for a second, these guys are actually hyper-productive and they've created immense wealth for society and are compensated in a power law sort of way.

2. Rich people make money with money - in the form of dividends, interest, rent, etc. Poor people trading labor for money. Salary only scales linearly; therefore, generating value for society is only half of the equation, you must also have ownership, or slowly invest your earned capital to eventually make money with money (i.e. retirement).

3. There must be a growing economy, otherwise it's a zero-sum game; a fixed-sized pie. In a stagnant economy, the customers you gained are customers another company lost. The wealth just shuffle hands from laid off workers to your employees. I think this is why Jeff Bezos once remarked that a stagnant economy is incompatible with free democratic society.

4. There must be a new frontier, otherwise the chance of success is pretty much zero. Software is this generation's new frontier. There are no bars to entry. You just need a laptop and the skill to arrange symbols on a screen in the right order. It's literally alchemy. On the other hand, non-software startups can't just do things. In many cultures, maybe due to their lack of growth, "entrepreneur" is actually very low status. It's synonymous with ne'er-do-well who can't find proper work. In the case of USSR before its collapse, it's synonymous with literal thieves and black market thugs.

Re: How to earn a billion dollars

#412

Post by nunez »

irishcoffee wrote: post #8
smallmancontrov wrote: post #3

In creative destruction, you can do an accounting sleight of hand by attributing credit for creation while ignoring blame for destruction even though the two are linked. This is a technology + investing forum and all of us agree that in general creative destruction processes are enormously net positive, but they frequently do kick off a toxic byproduct in the form of said destruction (e.g. Uber and displaced taxi dri…

I will say before Uber was a thing, if I tried to call and schedule a taxi pickup in the city I lived in at the time, if they showed up at all they were at east a half hour late. Missed a flight because of it once. I don’t even like uber, but it is objectively a better service most of the time.

Counterpoint: I scheduled an Uber once to take me to the airport. They arrived earlier than the requested time and left when I met them at the time I requested because they waited too long. This was on Uber Black, their professional driver level service.

Counterpoint: It is increasingly impossible to get to a human at Uber when you need support, as most of their support channels are gated by LLMs and self-service support workflows.

Re: How to earn a billion dollars

#413

Post by turtlesdown11 »

jasode wrote: post #160
inigyou wrote: post #134

Earlier quoted context omitted.

pg is or was the owner of a very influential venture capital fund, that created projects such as Uber and AirBNB. He knows all about setting up structures to extract value, and he also knows which framing makes people more sympathetic instead of angry.

>pg is or was the owner of a very influential venture capital fund, that created projects such as Uber Uber was not a YCombinator company. For some unexplained reason, many mistakenly think it was a YC startup but it's not correct. (The gp's comment is an example of how chatbots hallucinate because they train on the text of people unintentionally hallucinating.)

> (The gp's comment is an example of how chatbots hallucinate because they train on the text of people unintentionally hallucinating.)

We're now applying LLM anthromorphism back on people...sigh

Re: How to earn a billion dollars

#414

Post by beepbooptheory »

throwaway89864 wrote: post #385
theptip wrote: post #360

Earlier quoted context omitted.

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…

"Just do whatever, don't mind other people. You don't need to focus on consumers, you can always sell drones to the military."

Re: How to earn a billion dollars

#415

Post by inigyou »

PaulDavisThe1st wrote: post #313
changoplatanero wrote: post #263

Earlier quoted context omitted.

I wonder what she would say about professional athletes. Some of the top stars have made near a billion dollars in lifetime wages, as unionized employees. Hard for me to see who the sports stars are exploiting to get their wealth.

Nozick has a very interesting thought experiment about this. It poses a completely egalitarian world in which everyone has the same wealth and earns the same income. But there's a kid who's really good at dunking basketballs, and starts charging 5c to watch him dunk. Nobody is required to pay the kid, everybody does so entirely of their own free will. Things progress, and the kid now has 100x the wealth of anybody el…

I have an interesting thought experiment too. First everyone has the same wealth and earns the same income. But there's a kid who strings razor wire across a road and starts charging 5c to unhook it while you pass by. Nobody is required to pay the kid, everyone does so entirely of their own free will. Things progress, and the kid now has 100x the wealth of anybody else. I ask the question: is this something that a good society would try to stop?

Which one is the better allegory of modern capitalism?

Re: How to earn a billion dollars

#416

Post by analog31 »

zeroonetwothree wrote: post #406
theptip wrote: post #360

Earlier quoted context omitted.

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…

Perhaps you realize this, but the way the economy grows 2.5% is through lots of entities growing faster than that. Growth comes from innovation, and innovators get rewarded with faster growth as non-innovators decline.

I would say it slightly differently: The average rate of growth comes from the average of the successful and unsuccessful innovators and non-innovators.

Re: How to earn a billion dollars

#417

Post by nunez »

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.

Why do many Americans feel like they need SUVs? Or huge 3000+ sq. ft. houses? Or five-star luxury vacations to impoverished countries where they barely have to lift a finger?

My take: they don't; nobody does. But when you aren't successful and don't have a lot, and when "success" is marketed to you as "big SUV; fancy big ass house; private jet; fancy vacations", you get trained into think you need much more than you actually do to be happy.

Re: How to earn a billion dollars

#418

Post by HDThoreaun »

changoplatanero wrote: post #263
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 wonder what she would say about professional athletes. Some of the top stars have made near a billion dollars in lifetime wages, as unionized employees. Hard for me to see who the sports stars are exploiting to get their wealth.

Sports leagues exploit their monopoly power constantly. College football is the worst, but they all do it. If you watch a college football game you will see more ads than game. If there was a fair market competition people wouldnt watch these crappy broadcasts but since the college football teams all colluded to make their broadcasts shit together people dont defect. Athletes generally make around 50% of revenue from their league so they are taking advantage of the exploitation.

Re: How to earn a billion dollars

#420

Post by Grombobulous »

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…

There are extremely good arguments for why the act of becoming and remaining a billionaire is immoral and bad alone, without any need for you to have directly wronged someone else.

PG just completely misunderstands and hand-waves over this basic concept and makes the excuse that "hey we worked really hard and made an amazing product that people loved, we aren't harming anyone."

For one thing, founders and employees don't share equally in the high growth rate of the company even though at most a founder is working let's say 2x longer hours than a salaried employee. You can do nothing wrong but you're still taking more of your fair share by the basic structure of how the business is setup.

I think anyone who is running a successful company and doesn't have a path to converting to an employee-owned enterprise is immoral, especially if you have managed to capture $1 billion just for yourself while your median employee is just making market rate salaries, or maybe they happened to gamble on your stock options and have a modest nest egg about 1/100th-1/50th the size of your wealth as a founder.

So yeah, Jeff Bezos made $260 billion dollars, but an alternative that could have happened was "Jeff Bezos makes $50 million and every Amazon employee gets a much more fair share of the happy customers' money."

More importantly, if you have $1 billion in net worth, that means that you can choose to do anything with your life on a daily basis.

When I'm over here working my job in my cushy upper middle class life, it's still an objective truth that I need to be selfish in order to secure the future of my family. Nothing is guaranteed and we need to fend for ourselves. I can't stop working or the home finances collapse within months or a short number of years if I'm very lucky and have something significant saved up or my house paid off. I legitimately don't have the time or money to help many other people outside of my nuclear and extended family.

But when you have a billion dollars (and some people have hundreds of those and one person even has a thousand of those), that means you have no limit to what you spend your time on. You can do anything, and deciding not to work on capitalist endeavors anymore has zero chance of turning you destitute.

In other words, when you are a billionaire, what you choose to spend your time on says a lot about the content of your character compared to someone who is not that wealthy.

Paul Graham is out here giving speeches to rich kids at Oxford Union, but he could be spending his morning in the local soup kitchen or building homes with Habitat for Humanity. He could be mentoring people who are struggling to escape housing insecurity, or he could be working with advocacy groups to expand healthcare access and end childhood hunger.

He doesn't have to go to work every day like I do. But he is one of the people who has dedicated his life to capitalism, even after successfully taking care of his family for many lifetimes, and that says a lot about him.

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