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How to earn a billion dollars

paulgraham.com

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Re: How to earn a billion dollars

#861
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.

Why do you think no one is contradicting him?

The exponential growth model that pg presents is an obvious lie - you could use his exact explanation to claim that good founders will soon become trillionaires, all it takes is 9 months of 93% growth after your first few billions; quadrillionaires will soon follow. The obvious reality is that exponential growth is just a small phase in any company's history, and it is anyway limited by the size of the market(s) it is operating in. A company can quickly capture a market, but not quickly grow forever.

Then, he completely hand waves away the externalities, lawlessness, self dealing and similar issues that are the supporting power of all such growth events. He claims this is all powered by "making your users happy", which makes them tell others about your business, as if every restaurant that people fawn over becomes a billion dollar business in 1-5 years. Even the examples he can think of of companies that did this are infamously bad companies that have become rightly hated and accused of spreading various forms of social ills - e.g. social media addiction induced by Meta, spy ads by Google, excessive tourism and house price increases by Airbnb, or the erosion of worker protections by Uber. There isn't a single billion dollar company that doesn't at least get accused of similar problems, which represent t the meat of the argument, and pg ignores this completely in favor of the "build something useful" model.

Re: How to earn a billion dollars

#862
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.

Both political parties and all 'sides' in America fundamentally agree on degrowth. The only distinction is the Idiocracy version or the ivory tower one

Re: How to earn a billion dollars

#863

Earlier quoted context omitted.

> 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. For those who are sympathetic to this idea, look no further than China. They have a very good system (superior to US-style taxes) for ensuring that no one gets “too rich” and that excess returns are captured and redistributed “fairly”

I'm very interested in details about this please.

It’s more like only the true red families and their white gloves are allowed to be too rich.

Re: How to earn a billion dollars

#864

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…

This is a great example of why you can't earn a billion dollars without doing something immoral.

First of all, you don't know how to build a house, you have some vague idea of it, maybe even some innovative one, and hire people who actually know how to implement that idea to do it for you, but you pocket some of the money because they don't know the exact worth, and because they need to live and no one else is paying them.

Then, what happens next is that some competitor springs up, and they want to poach your people by offering to pay them $475k and only keeping $25k in profits for themselves. You can't have that, so you start paying off government officials to deny or delay their building approvals, paying off mafia thugs to sabotage their construction or threaten workers who try to leave, you sue them for breaching worker non-competes or IP rights on the construction methods, etc.

All of these are part of how the construction industry actually operates, it is well known as one of the most corrupt industries around. Let's also not forget that the value of real estate is location location location - house and business prices are hugely determined by where the plot of land is, much more so than any differences in construction prowess, if we disregard the very top of the most complex projects ever made (of which there are way fewer than 20k).

Re: How to earn a billion dollars

#865
post #780

Earlier quoted context omitted.

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 o…

This sub optimal system is what has (at times) led to massive growth of disruptive technologies and platforms.

People got reasonably mad at Apple’s iron fisted control of the App Store and access to its platforms.

It got to the point that there was political will to force Apple to change. (Sort of, in some circumstances)

But during the golden age of the App Store, when Angry Birds came out—-it wasn’t something people were hemming and hawing about the fairness of distribution platforms it was more like: “wow! iPhone! Check out this game! Everyone is playing this thing, Jack White is playing it. You too can have this game for a few bucks, can you believe this?”

It is only after Apple had ridden the horse a good long while and reaped what came to be outsized profits and using the thing to control competition over an extended period that something really was done about it. (Sort of)

There are many other examples of this kind of thing.

Compensated creative expression has somewhat relied on it in the form of intellectual property, which has built in albeit relatively toothless expiration.

But even IP is under greater threat than ever with gen AI. Just look at what fans are doing with the Star Wars franchise on YouTube right now.

Anyhow, I agree with the system is flawed but I mean to point out that deciding a person or company has reaped enough for their thing is something we do on a case by case basis.

It is not easy to say when to say to someone or something has been compensated “enough.”

Re: How to earn a billion dollars

#866

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.

False, you just make something very valuable. To get people to help you make it you offer to pay them and they willingly exchange their time for that money (or equity if they also think it will be very valuable someday or you have a record of making valuable things in the past) Who is the person swindled here? Who agreed to something and was deceived? Who was stolen from? This process is net wealth creation. The weal…

To enter in a voluntary contract in wich one party works and the other party pays is not sufficient reason to declare that the working party had its fair share.

People need to be educated to ask for equity from every company they work, and society needs to normalise giving every worker in a company a proportional stake.

The wealth creation you talk about is true, the problem is that people creating that wealth are not equally rewarded. Signing a contract makes it legal, not right.

Re: How to earn a billion dollars

#868

Disco Stu meme Paul is my favorite example of "brain gout." I learned what gout was as "a disease kings used to get by eating foods that were too rich." Paul's writing when he was closer to reality, in the early 2000's, was a lot more insightful, because he was closer to reality. But if you've spent 21 years never having a material concern, and increasingly interacting with other rich people (or young people who idol…

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Re: How to earn a billion dollars

#869

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.

> 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. For those who are sympathetic to this idea, look no further than China. They have a very good system (superior to US-style taxes) for ensuring that no one gets “too rich” and that excess returns are captured and redistributed “fairly”

I don't think the alternative that solves these issues is to go full communist dictatorship. Just get a better educated society that understands that value creation should be rewarded and where people ask for their fair share of it (as well as understand that your employees should ask for it and get it)

Re: How to earn a billion dollars

#870
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.

I can't speak for his other essays but this article was not great. He basically does some maths to show exponential growth. The definition of "earn" is not on the chopping block. Nor is what it means to "cheat" - which he introduces pretty early on. And times change. With the announcement: "[Insert name] is a billionaire!" It used to be: "Congrats to them for making the world better in some way and reaping the reward…

  > It used to be: "Congrats to them for making the world better in some way and reaping the rewards."

  > Now it is: "What did they leverage to force another subscription on us?"
Are you seriously asking how Elon Musk made the world better in some way? How about catalysing the move away from fossil fuels? How about inexpensive spaceflight?
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