It also makes things harder for those of us that don't want to run Ponzi schemes: How does one break out when everyone's taking glamorous selfies in Thailand but I'm working in a dingy apartment trying to build the next big app?
It's a tough situation on all sides with no obvious solutions.
Isn't the idea of building the "next big app" itself based on the same kind of get-rich-quick mindset those schemes are exploiting?
Only except for the "nomad lifestyle" or "selling courses", etc, it's supposed to happen by coding in a dingy apartment. But it's equally unlikely, and too starry-eyed, the tech nerd version of the kind of dream the stereotypical bus-arriving Midwestern teenagers had of "becoming famous in Los Angeles".
How about merely building a business? Think small indie developer or Basecamp at best, vs Facebook and Amazon.
I think I could have made roughly as good of a living being a plumber, an electrician, or a welder! A good electrician around here makes 150k a year. I think the best career advice I heard was pick something you can stand doing and work as hard as you can at it, try and be as good as you can, not measured against someone else but for your self. If you pick a career where expertise matters and it has demand and you work harder and smarter than other people you will do fine.
Different strokes, different folks.
More people need to be told this.
The combination of work ethic, of risk tolerance, and of perseverance against ridiculous odds that is required to build a Tesla, or an Apple, or a Whatever, is extraordinarily rare
But that's the thing right? You aim to make the next big app, and fail into the comfortable existence of "merely" building a business, or aquihired. Certainly better than aiming for moviestar and ending up a waitress.
Perhaps, depending on the app, a ponzi scheme is based on wanting to get rich by taking advantage of people's gullibility and non-understanding of how ponzi schemes work.
I suppose some apps could have that kind of disregard for how users of the app are harmed, but I think in most cases people building apps also think they are helping their users in some way. Ponzi schemers know they're only helping themselves.
I think you're getting hung up on my qualifier of "big" -- really, I'd be very happy to make 250k yearly off of a project (a far cry from Basecamp's $25MM yearly revenue), but even ramen profitability is hard, let alone getting to quarter-of-a-million.
Or this talk from the Bandcamp guy about financial sustainability: https://www.youtube.com/watch?v=MaUkS-lr-ZM
WSB members have come to realize that so-called "financial professionals" by and large have no scrying crystal into the market. WSB got there because of the democratization of knowledge that the Internet has caused.
And before you cite some unicorn like Renaissance, that's generating 40% YOY for 20+ years, keep in mind that unicorns, while rare, do exist. Microsoft, Uber, Google, Apple, etc., so forth. How many "investment professionals" would have recommended you dump all your money into these companies when they were but fledging entities? Or even when they went through tough times?
No, I think WSB is doing a service to humanity. They're exposing the smoke and mirrors behind Wall Street.
Good on them.
The Hollywood-inspired folk concept of Wall Street is that they trade stocks. That’s what everybody in those big buildings in Manhattan does all day. They yell buy/sell orders into red phones and drink Scotch.
Except they don’t. Wall Street firms like Goldman Sachs make money by providing services such as mergers and acquisitions, IPOs, market making, etc. That is, they make money by selling shovels in a gold rush, not by speculating on where gold will be found. Other firms are in the business of buying and selling illiquid assets such as private companies and commercial real estate (with illiquid assets, there is far lower price efficiency, and thus it is possible to generate excess returns). Still others are in the business of managing people’s money for them—an industry which is mostly about managing volatility, not about generating excess returns (a pension fund usually cannot afford to have its portfolio go down by 50%, even if it’s temporary, so they’re not going to put it all in the S&P 500).
Proprietary trading (where firms use their own money to buy and sell public securities) has been in decline for decades at the big banks, precisely because they don’t have a scrying crystal, and they know it. Public stock trading on Wall Street is mostly the domain of companies in niches like high-frequency trading (such as Jane Street). HFT firms gain an edge through arbitraging different prices faster than anyone else (for example, sell Exxon in New York a few microseconds after oil futures drop in Chicago). In other words, the only people on Wall Street who do what Hollywood-Wall-Street does are the few who do have a scrying crystal.
WSB is not “exposing” anything except the fact that most people (understandably) have no idea what the financial industry does.
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).
If anyone wants to know that other reason, I used to be a mod there (low bar, but keep reading)
WSB existed in a void surrounded by personal finance forums full of the dumbest financially illiterate crowd being spoonfed Robert Kiyosaki and Suzi Orman all obviously sponsored by Vanguard. In fact, it still exists in that void. If you wanted to talk about trading volatility derivatives without being in some 1990s-layout investment banking forum, there was no place to go. WSB was the light, its forum rules specifically saying its the place where trading the VIX is normal.
That is its utility. A place for people with a risk tolerance slightly above an undocumented wage slave. Okay, that was hyperbole, I don't like personal finance forums and Wall Street Bets is the opposite of them. Not everyone is born sucking at basic money topics and not everyone is too risk averse to consider financial products outside of the mold. Actually, let's take it one step further, not everyone was raised around a stigma of money and maybe isn't completely ignorant as a product? Obviously that isn't the prevailing culture, and there aren't many communities that catered to it.
Anyway, outside of WSB the only other communities at the time were in trading guru chatrooms, the ones you subscribe to get into. Now everyone might be joking around but they are worshiping the guru. Its pathetic.
WSB was made for options traders to make jokes and wild trades that had a week to pay off. It then got co-opted by penny stock traders pretending like it was the new Yahoo finance board, and now it got co-opted again by the most denegerate options traders in history and it is marvelous! Its even better than what it originally was and the financial meme niche is new and hysterical.
Hopeless 20 year olds fueling the flame? Sure, that is pretty much what happened. I'm glad they made the venue, it is wildly popular now, and the options market is wildly liquid in ways I could have only dreamed of.
WSB has been duped.
While we're at it, quant firms occupy a family of trading strategies which are a superset of HFT; not all quants are market making, trading intraday or pursuing low latency strategies.
With all due respect, please stop perpetuating popular finance misconceptions of the Flash Boys variety. If this is something you'd like to learn more about, I suggest you read the following:
- https://blog.headlandstech.com/2017/08/03/quantitative-tradi...
- Flash Boys: Not So Fast
I think the trick is to realize those glamorous selfies are mostly a mirage. If you were having the best day of your life on the beach, maybe, just maybe, you wouldn't be on your phone trying to get the perfect selfie.
Well said, but the optics are still there. The selfie is bound to get more hits on social media, more coverage, etc.
That's a bad example. By many measures retail investors have outperformed institutional investors since March. The simple reason is that options have a built in exit strategy, the thing that's missing when most people lose in scams - including Ponzi schemes!
On the flip side, why then do they outperform? High risk, high reward. Opportunities where you lose your entire principle, like out of the money options, turned out to be wildly underpriced, simply because institutions never buy them.
Anyway, I get it, those people are stupid. But they made money.
I don't think it's a bad example, because if you spend some time on that subreddit, you'll quickly realize people are literally gambling with their life savings. In no small part due to disillusionment and cynicism with the current economic realities -- we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k.
This is what nearly everyone in tech who isn't spending their free time shitposting about their side projects and the nuances of programming languages is doing. Sure you can't work your whole career at one company anymore but that's just a reflection of macroeconomic conditions, the stability is still there for the people who's skills are in demand. Pretty much no competent programmer, or electrician for that matter, is unwillingly unemployed for long enough to matter.
Gambling, yes. But the stock market is not a ponzi scheme.
Been wondering lately, why is a position in a stable company also generally considered stable?
I mean, it’s a scalable system designed to survive, running on cash flow. Say load reduces, or flow reduces, wouldn’t it be only sane to immediately cut down on worker nodes? Why keep, except as strategic reserves?
I suppose because strategic planning up top used to be harder in the past so reserves tended to be large?
People don't understand how money comes from value created, in the long run. People think they can game the system. Everyone feels they are not a part of the average.
Not true, companies can create value, that value is reflected in the stock price. The economy is not zero sum. Did all the people that got rich off of apple, google, microsoft, nvidia, etc get rich because someone else lost money?
Many of the calls that have hit recently only capped out people’s gains - so yes there was an opportunity cost to that lost, but people didn’t literally lose invested capital. Not as much money as you think has gone into the red this year - even on the way down.
They are absolutely not stupid. Everything they're doing is entirely rational. It doesn't seem that way, because clearly you're not in the same circumstances as they are. Neither am I.
However, I completely understand it. If you're 22-25, not married, and have far more liabilities than asset, you have no reason not to trade on high margin with an options play and try to turn $50,000 into $2 million or more.
If you lose the $50,000, you can recover. If you end up horribly in debt, you file for bankruptcy and move on.
Given the current state of affairs, its completely understandable.
The average retail investor might have outperformed institutional investors, but it's a leap to suggest that wsb outperformed institutional investors. Foe one, the average retail investor isn't buying otm options like wsb users are.
> The simple reason is that options have a built in exit strategy, the thing that's missing when most people lose in scams - including Ponzi schemes!
Not really? Options can have their value go to zero if they remain unexercised, just like if a ponzi scheme goes bust.
true. but as a person who plays with options, I should point out that when you buy an option contract, you don't want it to expire worthless.
However if you are an options seller, that is the best possible outcome.
Source please?
Sprinkled with some truly fascinating folks who genuinely discovered some new and interesting way of making this work for them.
It’s strange ‘cuz I’ve been working in digital nomad hotspots for years and have met very very few people like that. Lots of translators, programmers, and then a complete mishmash of other people, but very few people selling courses, and the ones who _were_ selling courses generally nothing to do with being a digital nomad
When I was working remotely from Asia, I sometimes went to cafes in the backpacker areas and there would be lots of people working online and posting selfies about their dream life, but their entire monthly budget was like $300. Even in Asia, that's not enough to rent a good office, let alone for apartment +office +food.
Also, maybe you just didn't dig deep enough. I myself was once feeling quite impressed about someone getting rich from making iOS children's games. But when I had issues with my own apps and asked him for advice, it turned out that he was actually making a living from selling an Udemy course on how to get rich by selling apps... And as usual, the revenue from Udemy was presented as if it had come from the apps.
I’ve been nomading for ten years. I haven’t met a single person who was not legit doing something of value. The closest I came to one was an online poker player in Chiang Mai back in 2010.
Maybe we just hang out in the “right” circles?
It’s probably just like in real life. I have never met anyone offering me a generic (non nomad) Ponzi scheme. But I sure had several legit investment opportunities thru my circles.
It gets old pretty fast, has tons of hidden costs, and looks quaint and romantic to people who've never had to do it. Fun for a year, but I probably would have paid almost as much just booking into hostels or AirBnB's and renting a car on occasion.
I was able to go and see some cool places -- but breaking down in remote South Australia was scary and frustrating. And you get really, really tired of the lack of space.
What made it tolerable was being able to get out of the van and chill in places like the library or a coffee shop-- likely all no-gos in the COVID era
When I was still selling naughty bikinis online, I did a few promotions with Instagram yoga teachers and I was always surprised by how low their asking prices were.
I guess most of them valued having any success to show for it much higher than being paid a livable wage.
Especially when you realize that
>buy and sell services from each other in a circle
isn't true at all.
I don't know anything dropshipping - the name certain implies something scammy, but our economy is full of things like that.
It's a weird aspect of society - which lies are we all going to agree to accept - and since each person answers those questions differently, it leads to a lot of tension.
None of these people are solving any of the core needs of any of these other people (food, clothes, transportation, housing, any physical goods at all) and very little new money is entering this system at all, maybe some on the drop shipping side but that can also be a net loss in some cases. So yes this represents an economy but the denizens of that economy would be impoverished and miserable, constantly waiting for some outsider to come solve their problems. This is seen in the fact that most people do this as long as their pre existing savings can sustain it because they are doing it at a loss and then they give up when they have eaten through their existing wealth.
So yeah, i don't think it's much of a profound insight to point out the similarities to other economies just because of the existence of people engaging in trade with each other. The quality of the trade is the issue, not its existence.
1) Try to start an online business. It doesn't really matter what you're doing or if it succeeds as long as it's marketable to people aspiring to create an online business
2) Make a big fuss about the launch on all social platforms (Twitter, HN, PH, IH, your blog, etc) and hope someone with a big audience signal boosts you or you get lucky
3a) If you start making money, awesome! Constantly post revenue numbers, things about Building in Public (TM) and "you can do it too!". Your audience (And therefore revenue) will compound exponentially
3b) If you 'fail', make a blog post retrospective called "Lessons Learned" and blast that out everywhere as well
4) Repeat steps 1-3 until you hit 3a. Throw in a few "6 Months of Building in Public" type posts if you're really having trouble
In reality, I strongly believe that very few people end up making it through this type of process and success mostly comes down to luck or connections (Anyone who already has an audience can easily pull you up).
It's not a ponzi scheme in the literal sense, but these businesses are built off the back of other people who believe they can do what you're doing supporting you (In the article this is by paying for your course).
Some of them will go on to create their own successful businesses (And perpetuate the cycle), but most will most likely fail.
There was a post on Indie Hackers not long ago about a guy who said he lost thousands of dollars trying to build a business. I'm sure there are many more people who got into similar situations.
Tech people don't fall into these Ponzi schemes. They fall into a different variety where a serial entrepreneur who has repeatedly received funding is assumed to be more capable than a guy new to the game.
The VC dream is for an entirely different segment of tech people than those wanting to be indie hackers.
This should gets it's own article. So many products and services totally unremarkable but survive simply because they've managed to peddle a brand image whereby it is fashionable to talk them up and unfashionable to say "I blew a bunch of money on them and the results were crap".
It's part of the game that you need to convince investors that you still have a chance in being the unicorn.
1. The book you linked is just technical content. It teaches you how to use AWS, not how to sell books about using AWS.
2. Unlike the tongue-in-cheek examples of the original post based on minimal success, this book is written based on years of professional experience as a developer building AWS.
3. His content pops up pretty often because people like it.
Of course, if the book was part of a ponzi scheme, then part of that scheme would be having people like me defend it on HN :)
If you check the testimonials of those who have achieved success, it’s exactly as the article describes. Someone going from 100 to 150 followers going “OMG ITS WORKING!”
[0]: https://mobile.twitter.com/dvassallo/status/1263160316277350...
I’ll address one thing - the Twitter audience course. There is no secret/hidden Twitter audience strategy. Post good stuff, engage with others with insights that provide value, don’t post BS. That’s it. That’s the strategy. Anything beyond that is made up stuff. People on Twitter follow those that provide meaningful content that is useful. Short of that, any other automation schemes, follow/unfollow tactics, are just for inflating low quality numbers.
IMO he’s legit, not a scheme
I'm pretty sure Daniel has good intentions, though he has most definitely benefitted from this type of 'scheme' given that a lot of his brand revolves around the lifestyle he has managed to create for himself due to the success of his info products.
Even if person X is successful and writes down every step, it will be very hard for anyone to repeat it.
If you want to see how I make it all work, check out my interview on Indie Hackers: https://www.indiehackers.com/podcast/177-daniel-vassallo
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.
Work remote contracts to fund yourself while building a saas business targetting real problems that companies will spend money on. Repeat as necessary until you hit a niche that works.
My first success was on try number six or so. The second was half a dozen tries later.
Good luck!
I looked the guy up, he's just a college dropout whose parents owned a very successful real estate agency to which he was placed in. He then got absurd amounts of capital from the commissions only people like his parents could get.
My roommate believed this guy knew the ticket to wealth but all I saw was basically the xkcd comic of "but lottery tickets! It works!"
Sucker being the operative word.
(also, its satire, the real denouement is his last guidance: "make things of value, don't seek money, seek problems of high value to solve")
"How to double your money gambling everything on a coin toss"
Sure, you can win a coin toss, but unless you can reproduce that experiment consistently it's not a viable advice.
And that pretty much to everything... if a process is not better than random chance then it's worthless.
Nice distillation of what many might dismiss as common sense.
Now, when I asked where did that money come from, the guy on Twitch told me "it's like a bank, the money comes from you". The difference here is, of course, this gives you much, much higher returns than a bank while a bank can actually invest your money, and this "entity" cannot. Also the interface of some of these "investment" agencies look like a game, I guess to be more attractive [1].
In the end, the idea is always the same: crypto will only go up. So far that's been the case, though.
I do admire the hustle and ingenuity, but what is ambition but a form of love and hope? The entire article had a meticulously cynical view on business and his customers. I think the idea of responsibility is shocking to the author, who obviously has never experienced something meaningful. He's a fraud and he knows it.
Humans find meaning by helping other humans. The article is perverse and I really wish the author go back to wherever trash hole he came from. The western world does not need this kind of parasitic thinking.
That said, don't all the cool kids call it "Mastermind" these days?
Step 1. Invent Bitcoin.
When you got your profits you often sent it back to the scheme. It was a classic chicken race where you wanted to pull out just before it crashed.
Cool article though.
But Bitcoin is nothing.
It now has value because a lot of people - having a stake in it - artificially created demand with bullshit stories.
Because the cryptocurrency ecosystem does not do investment -- likely in very large part because no one can buy anything legal with cryptocurrency -- returns for coiners who cash out must, by definition, come from later investments.
Paying earlier investors with the investments of those who follow is the definition of a ponzi scheme.
They make lots of money, they must be smart right? So when a friend disagrees the person doesn't consider it.
And unlike their Engineering counterparts they won't search for proof. If you need to see real world examples, look at who buys brand name. It's telling.
Death to the halo effect https://en.wikipedia.org/wiki/Halo_effect
I understand that this is not a very high bar to set in comparison to other working professionals, but nearly everyone in the tech industry, and most other people who have a desk in a company's head office, are working at a level above the average person. Many of the posters on HN are biased by their personal and professional contacts and have an incorrect impression of what an IQ of 100 looks like, or how smart the average person is.
Going back to what I said originally, being smart is not the same as being infallible. Smart people can get themselves into all sorts of trouble that everyone else would have the humility and common sense to avoid.
If you're defining "dumb" as "below average for a programmer" then yeah that's... about half of us, turns out.
Programming isn't physics, but it is a profession that starts around +1 SD. Below that you're gonna wash out.
But that's drastically different than Engineering where calculations are done methodically.
