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.
Now with a 6bil market cap is seems.
https://news.ycombinator.com/item?id=8863
(Apologies to BrandonM for reminding everybody...)
She also pays full UK tax on her earnings, the 36th most of any individual.
For authors, the arguments are again quite simple - billionaire authors or directors don't become billionaires by selling books or movies, they become billionaires from much larger businesses that employ way more people who were collectively much more critical to the success of said businesses than the authors themselves. JK Rowling didn't become a billionaire until the movie franchise and the toy mega production began. If the movies hadn't happened, or the toys hadn't happened, she would have just been an extremely rich multimillionaire.
PG> I don't want anyone to accuse me of using unrealistic numbers, so let's take a more conservative growth rate. Let's see what happens at 15% a month. That's not rare at all.
You> it is anyway limited by the size of the market(s) it is operating in
PG> how long you can continue to grow at that rate depends on the size of the market.
You> Then, he completely hand waves away the externalities, lawlessness, self dealing and similar issues
Not addressing an issue, that doesn't undermine the points he does make, is not hand waving.
Hallmarks of clear instead of reactionary thinking: you don't lash out at people for things they said, that you agree with, or things they didn't say, that you would have disagreed with.
Make your own (good) points. No need for framing around disagreement or other misleading tie ins.
I feel just as disgusted and frustrated by some rich people. But lots of people quietly become billionaires now, from normal companies that produce sensible services or goods people want. Substitute "rich" for "billionaire" to account for inflation, and increased globalization, and this has been true for a long time.
Again, if all it takes to become a billionaire is 15% growth rate for 5 years, which is easy, then if you start with two billion dollars and grow at 15% per month, you'll be a trillionaire in 5 years. And 5 years after that, a quadrillionaire. If the billionaires are literally generating billions of new value, what explains why trillions can't be generated in the same way?
If the market is limited, then it means that you can't grow your way to a billion dollars, you have to displace others - either competitors in the same market, or other markets as well. So now there's a much clearer chance that you're using underhanded means to actually get your billions - you're not growing a new pristine market that people just love, you might just be edging out competitors or snuffing out other markets that had existed before - and perhaps were limited by things like regulations or externalities that you simply choose to ignore.
And the question of externalities and unfair competition and corruption is not tangential, it is the whole point that Alexandria Ocasio-Cortez or Bernie Sanders or others in this anti-billionaire movement are making. Not talking about it is simply ignoring their argument. The problem isn't "oh, I didn't realize that simply growing at 15% every month for 5 years will make a million dollar business into a billion dollar business". It's "the actions that you need to take in order to continue growing at 15% every month for 5 years are going to include things like un priced externalities, corruption, cartel behaviors, etc". Addressing how you can sustain this growth, and how the markets can have so much money in them, are exactly the most important things - not the trivial math of exponential growth that he discusses, condescendingly, at length.
There will not be next quadrillionaire soon because there are economic crashes that kick economy down each time so it has space to climb again.
That is how its been historically and how it will continue unless the math underpinning it will change.
PG made the error thinking that this is just people misunderstanding math and exponential growth, which created a convoluted math section that could have simply been explained as - if you start with a million dollar and double every month, you'll be a Billionaire in less than a year. He also didn't really touch well on why many people hate large companies / billionaires.
You are making the mistake of using a moralization framework that equivocate being accused of something to being bad for society + not looking at the alternative (i.e. even if it's true that every Billion dollar company is "bad/exploitative/etc.", that doesn't mean that the (realistic) alternative is better for society or people.
The reality is that companies like Google, Amazon, NVidia, etc. have create an immense amount of wealth for their founders and investors, but also created an immense amount of value in society. There is a real problem of incentives when you prioritize growth endlessly, as it leads to perverse incentives such as that ones these companies are accused of - leading you to progressively take more and more less positive actions in order to achieve this growth. So I don't disagree with the general premise that growth leads to moral problems, but I do disagree with saying that building big companies is bad for society.
Like poet/warrior/advisor that convinces the King to give them one grain of rice on the first square of the chessboard, two grains of rice on the second square, four grains of on the third square, eight on the fourth - and so on, doubling the number of grains each square until the 64th square. The King can no more deliver 2^64 grains of rice that PG's founder keep her 93% growth rate consistent for 64 months (or even the calculated 9.5 months to make her a billionaire).
Yes, it's true that a very few tech startup founders create billion dollar wealth by "making what the people want" - but anybody trying to tell you the naive compound interest math makes it inevitable, is trying to sell you something (like perhaps their companies startup accelerator program or venture capital investment opportunities).
What negative actions has Google Amazon and Nvidia done due to them prioritizing growth endlessly?
For Google, they didn't prioritize growth or they would have moved on AI a decade ago, but they were afraid of having tech journalists who hate them already write mean articles about how their AI is harmful.
Amazon just .. I don't know, keeps squeezing out operational efficiencies that get me next day delivery? Or developing AWS to enable other people to build apps?
Nvidia sells GPUs. Maybe you're a gamer and the push into AI means higher GPU prices?
I'm at a loss here. I don't think anyone is mad at these companies outside of a tiny vocal terminally online minority.
I would say value is subjective. For example, some people might consider a successful game as having created value. Others might view it as too addictive and see the negative value on society as a whole.
It could be very true that in the long arc of history, most of the "value" these companies have created is seen as a net negative. Take smartphones for example. They have created "value" but it's very possible that in 100 years when we better can evaluate what they have done to kids who grew up with them, we well conclude that they were a net negative until their usage was rained in. The only opposing force is government regulation and that's exactly what is wrong with these types of companies (and billionaires in general). They are the ones that stop reasonable legislation from happening because they have too much power because they are so large/rich.
You and Paul are both claiming it's extremely hard.
A restaurant won't scale - most ideas won't scale - because they're not useful enough.
These companies are not criminal enterprise and they don't steal money or threaten them with violence: they just offer them products and ecosystem and most people are dumb enough to ruin their life with it. Don't get me wrong: I hate them and I ban social media for my kids, but it doesn't make them evil.
The bad actors are thugs with guns stealing your purse and the government stealing your tax money or threatening you with jail.
To give another, less controversial example, I don't think companies selling products with sugar and seed oils are bad, even though they likely have the highest combined reduction of life expectancy across all people - but I hate them too.
Counterexample, a restaurant worth $202 billion: https://stockanalysis.com/stocks/mcd/market-cap/
One of the arguments against billionaires really deserving that much money is that while they own the shares, the scaling up is done by a labour force that doesn't capture this growth, "only" (so goes the argument, I do know about share options) "their wages".
How many burger flippers get compensation in the form of shares in the parent company? I genuinely don't know, but I do expect it to mostly be in the form of pension funds rather than stuff they can see in their working lives. Pension funds are a lot of money, they need to be so those with them can retire, same logic as FIRE because being a pensioner is the first three initials of FIRE.
This is probably for the best, owing to something not explicitly mentioned in the article: startups are risky. This is as much a lottery question as it is an effort question, because "cool idea" absolutely does not mean "make it and they will come", no matter how hard working the founders (and first hires) are.
Also an argument for El Chapo and friends (if we didn't criminalize their products and add the violence around the trade, see Alcohol and Tobacco).
> - but I hate them too.
Why do you hate them if you don't think they are bad?
You seem to be saying, "it's not illegal; I will hate it, but it is not bad". What is "illegal" is an arbitrary classification that different countries choose. That's the point of what the unnamed politician (it's AoC I think?) is saying: those things should be illegal.
Let's take Y combinator. He is in the money lending business - where he sells the idea of becoming a billionaire ( which is possible in software as it so easily scales relative to other types of businesses ) to young people so they work crazily hard. Most of them fail ( which he doesn't focus on ), but just like a bookie who profits from gambling - he always wins as he controls the rules ( odds/investment percentages - ie lending rates ) of the game.
So he has set up a system that extracts value from others.
Nothing wrong with startups - not only to the founders get to keep more of their value, they can also set company culture and values etc.
However you could argue, particular in software where capital isn't really needed, that taking money from a VC is very expensive - and also somewhat abrogates that founder control.
Sometimes you need investment, and good VC's can really add value ( both to the investor and investee ) - but his ideal investment is going to be to companies that don't really need it - where he can reap a huge reward for little effort.
That's a very negative way to describe buying a share in a company.
As I said, I'm not a person that thinks that correct allocation of capital isn't a useful role. Really good VCs and investors are really really important.
However like art - it can be both simultaneously true that art has intrinsic value and that the art market is seriously corrupt.
Sure Paul adds value - but I'd humbly suggest not as much as he has extracted.
I also have kids. I want them to live in a just society where billionaires, whom Mr. Graham proudly grooms, according to his telling of the matter, don’t actively undermine the ability of ordinary citizens to earn a living wage, to have a say in self-governance, and to enjoy universal healthcare.
There needs to be a wealth maximum, afterwards you just get taxed 100%.
"Earned income", for tax purposes, matches pretty closely the kinds of income many people consider genuinely earned in the moral sense. From this perspective, if a startup grows organically and the founders become rich, they have earned it. But if the growth requires capital (an investment, a loan, or the wealth the founders already have), the situation becomes less clear. How much of the success can be attributed to the contributions of the founders and how much is based on arbitrary choices made by wealthy people?
If you now assume that existing wealth is mostly unearned, any success made possible by arbitrary allocations of that wealth is similarly unearned.
The wealth controlled by a startup investor becomes earned income, in your words, when the founder receives pay for their work, in the form of cash or exercised options or whatever else.
To get that earned income, which is derived from wealth but is not the wealth, they have to earn it in the same way the wagies in your first paragraph earned it. The investor (on the board, presumably) has to vote him in as CEO and approve his pay package.
And just as retail customers don’t give their money away for no good reason, neither do investors.
The intuitive difference is mostly between the many and the few. Between the ordinary people and the elite. If your money comes from many small streams, it looks likely that many people have independently determined that what you are doing is valuable. If there are a few large streams, the situation is less clear. Maybe your contributions are genuinely valuable, or maybe someone is picking favorites or choosing winners in advance. From that perspective, capital is a poison that permanently puts the reasons of your success in question.
No. Earned income is salary, and taxed as such. Unearned income is capital gains, exercised options, etc, not taxed as income. It's pretty easy.
If we just use this tax office definition, it's effectively impossible to earn a billion dollars because you'd need to pay yourself ~$1.6 billion dollars in salary (depending on where you live), and very, very, few people can afford to do that
That's a very charitable way to put it. The reality is Graham blatantly lied about what AOC wrote, and then went on and on addressing the strawman of whether you can accumulate a billion dollars.
> as the question was mostly about the meaning of word "earned".
Exactly. Which makes this entire page absurdly misdirected.
I don't get it. If I need to raise money to fund my startup, how are my profits more "earned" if I crowd fund $10m by finding 10,000 wage earners who will lend me $1000 each than if I borrow $10m from a billionaire?
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 rewards."
Now it is: "What did they leverage to force another subscription on us?"
Indeed this wouldn't even be front page material if PG's initials were not on it.
> 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?"
Much as I appreciate the former, the latter is if questionable benefit to most people, as the cost of launching e.g. GPS constellations and weather satelites was not the limiting factor for them, and direct-to-satelite phones and broadband at whatever the subscription price is, while neat, are not life changing for 99% of the population.
(Space is cool, I like space, he's free to spend his own money how he likes, but the IPO happened because he ran out of his own and private investors' money).
Also Tesla has problems going with that benefit, between court cases over marketing of FSD & if he committed fraud by saying he had secured funding to take it private, and also the P/E ratio is unjustifiable as a mere car company so they're pushing an AI narrative that's also unjustifiable for reasons long enough I can't be bothered to type them in again.
That and him selling Tesla shares worth more than the lifetime revenue of the business, which is sus.
Same guy ships cars that drive themselves, humanoid robots for the factory floor, brain chips that let paralysed people move a cursor with pure thought, and an AI running on a supercomputer his team stood up in months instead of years.
Your are debating people who sincerely believe that money is the economy and is not just a transaction mechanism lying on top of the actual goods and services that make up an economy. That the physical vectors of goods/services/logistics are just formalities relative to hard currency distribution, which, when implemented, would “solve world hunger” with $50 billion or whatever bunk number they claim is enough.
Your are dealing with envious, deeply incurious people who, as history has demonstrated again and again, will kill millions in pursuit of their ideology. There is no convincing them, debating them, enlightening them. It is futile.
https://edition.cnn.com/2026/02/04/world/lancet-usaid-global...
Are you seriously saying you think Elon Musk falls into the "now it is" category? That's making up something to get angry about.
He's been a billionaire for quite a while. IE he falls into the "used to be" category.
What did the founder have to do to keep growing at 93%? Good solid business fundamentals and identifying a new solution can get you some growth. But eventually you've done all that and the only way to continue growing is extraction -- buy out your competition and raise margins, outsource your workers, enshittify your user experience. THAT is why no one "earns" a billion. The last $900M pretty much always requires using your resources in clever but unethical ways to extract money from customers and financial markets.
I don't see why he should have engaged with them any more than he did, because AOC's claims are BS. He gave them more attention than they deserve.
What he should have engaged with is, what happens when a startup stops being a startup? All three of his poster children for startups, Apple, Google, and Facebook, are now notorious for treating their users badly and making money in ways that at least a substantial number of people don't think are "earning" money, such as monetizing users' data. And at the last of those three, the founder is still in charge, so even if PG can argue that Zuckerberg earned what he got from Facebook in its startup phase, that doesn't mean he's earning the money he makes now from Facebook in the same way. (And the other poster child he mentions, AirBnB, can't be said to have clean hands either at this point.)
To me that's the biggest gap in PG's worldview more generally, that I never see him address in his essays: once the startup phase is over, the company drops off his radar and he pays no attention to the collateral damage it causes when it's a tech giant. (And of course AOC's claims have nothing to do with this genuine issue either.)
> making money in ways that at least a substantial number of people don't think are "earning" money, such as monetizing users' data.
Is this not a contradiction? Or are you splitting hairs between a "true startup" and an enshittified bigCo?
It used to be if you criticized anything in his blogs you’d get downvoted to oblivion. Now criticism is the norm.
As far as I can tell it’s less a change in pg’s viewpoints (though the topics have evolved, and he has gotten more transparent perhaps), but a change in the public reaction to them.
I’m not sure if it’s the same people though, might just be the new generation.
It is quite possible for someone to have thought about their views before they formed them and maintain stable opinions over 15 years because they are aligned with objective reality. That is good. Then there is the opposite where they've got ridiculous views that don't make sense and they stick with them despite all evidence out of stubbornness. That's bad. But again, the exact view and the nature of the evidence is what matters.
From the mid '00s through early '10s, pg was a much more grounded, down-to-earth person. Sure, he'd sold Viaweb and was doing quite well financially, but he was still working hard and was very close to the startups he was advising and was funding. I attended Startup School back in 2006 and thoroughly enjoyed it and thought it was a genuinely useful experience, even though I never went on to start a startup.
Fast forward to today: pg's net worth has gone up a ton, and he's moved on to bigger and different things than his old roles at YC. He's not the same person he was 20 years ago (who is!), and his writing reflects that over time.
Much of his old work still resonates with me (I go back and re-read my favorites from time to time), even though I'm a bit more cynical (or perhaps just more realistic) about startups these days, but most of the new stuff he writes feels out of touch. Plus he sometimes tries to write about things well outside his wheelhouse, and gets much of it trivially wrong, which tends to turn me off.
The thing that really made me shake my head at this particular essay was that he used Facebook and Airbnb as examples in an article about how it's possible to make heaps of money without cheating. Just... wow.
This should not come as a surprise when they are forced to live with roommates because they can't afford a house or even an apartment to themselves because every cent is being analyzed for optimal extraction from them.
Just so you know, the new generation is investing earlier than the previous generation.
Gen Z is also outpacing millenials on home ownership https://www.npr.org/2026/05/15/nx-s1-5791499/gen-z-homeowner...
The idea that the latest generation is not benefiting from the current situation is in your head, not reality.
I still really like some PG essays, but PG used to be a much better writer.
These days, most people's experience at a big tech company is a political dystopia where everyone is optimizing for their promo packet.
That's going to get you 2 different audiences.
The good vibes and optimism have left the industry.
I think it's mostly demographics. Most people my age (I'm 38) have to come to terms with the fact that their most energetic age and most of their opportunities are already behind them. When faced with uncomfortable reality, many start looking for something or somebody else to blame for this. Not only billionaires, but tens of thousands of millionaires have played their cards better than I and others like me. They had the same opportunities, sometimes even less, but they have shown better judgement, strength of character and pure talent. Admitting this is not pleasant.
Things are measurably darker. Hell, we went from “do no evil” being a motto for Google to being removed entirely. Early Tech had a genuine claim on trying to be better than firms that had come before.
I'm always curious as to why something that happens to 100% of humans remains 'uncomfortable.' Like there's nothing in genetic code making aging (or death, I suppose) less uncomfortable. It's kind of fascinating.
Why would it be an unpleasant realization that you are less successful than 0.00012% of the world’s population? There is arguably something sick about a system that can make a significant number of people feel this way.
* There were far fewer tech billionaries.
* The tech billionaries were not publicly associating with far-right figures or cryptofascist belives, or at least were doing so quietly while promoting ideas of technology as social progress
* A lot of the tech startups were seen as fighting entrenched interests grounded in regulatory capture and people had the illusion that the next generation of companies supplanting these wouldn't succumb to the same factors.
* Donald Trump as a phenomenon of current politics did not quite exist yet, so we didn't have to witness these people sucking up to him
That's just for starters.
See the post above, where I criticize him and am being downvoted into oblivion...
To be less glib, that amount of time is more than ample to see a generational change in a sector as fast-moving as technology. Perhaps some robust push-back on his ideas better represents the a zeitgeist of people being less happy with a maximalist winner-takes-all attitude to business or personal success.
I'd say HN is slowly catching up with traditional SV startup culture dying, and seeing more non-VC-funded people flowing in as sites like Reddit enshittify. Those people identify more as tech workers than as early startup employees who aren't a billionaire yet.
Combine that with recent economic and political developments, and it isn't exactly surprising that a growing part of HN isn't a big fan of the über-wealthy tech elite trying to make their life worse.
I blame the pandemic and social media.
It's an ugly ugly post, and that's what set the tone.
I hope your kids grow up to become better people than those who would write what PG wrote, and not spread lies about their interlocutors with straw man BS.
It's also an insulting post. Yeah we can add, thanks. That was never the problem. PG think math is what we were missing?
If Airbnb, DoorDash, Instacart, Coinbase, Reddit, Brex, Deel, or Flexport disappeared tomorrow, humanity would not lose a vaccine, a new energy source, a scientific discovery, or a cure for disease. We would mostly switch apps.
Only depressing aspect is pretending jackpot level, private wealth, equals meaningful progress. There is a reason not once, he used the word entrepreneur in the essay...
In this case, I feel there’s no shared foundation. Half of the commenters here don’t seem to understand what money is or how it works. There's no soil in which to plant an argument, because there's no understanding of what a billion dollars represents. There’s no genuine desire to understand the counterparty either.
Very disturbing.
So even if the debate reveals that no, there wasn’t a viable reconciliation, the debate was still worthwhile.
I read the first half of PG’s essay and was left wondering if I should read the whole thing, just in case there was something in half 2 that redeemed half 1.
Most startups fail! Ignoring that reality, and only focusing on the slope of money growth is like saying that if you hit the right drafts you will survive falling out of a high rise window.
There is no such thing as a free lunch. The payoff for doing startups is the (incredibly small chance that you succeed) * (the absurd payout if you do).
Even VC funds fail.
If PG brought up survivorship bias at any point, it would have significantly armored his case.
I've observed this in a lot of internet arguments, but have not been able to put it into words until you said this. It feels like everyone is more concerned about 'winning' the argument more than anything else.
got some bad news for ya pal
So the exact same thing PG is guilty of in the article?
He disagrees with the opposing statement, gives a lazy counterexample with 0 evidence that introduces at least two major assumptions that do the the entirety of the work for his "argument", and then takes another few paragraphs to effectively say "just grow exponentially, bro".
There's nothing to push back against except vague hand-wavey nonsense. PG is washed and the level of discourse in the thread matches the quality bar of his post, so I'd say it's pretty appropriate.
His core premise is terrible if not outright facetious given the case he made. That the girl who is going to become a billionaire in his example has a startup that makes a product that everyone loves does nothing to disprove the point. Billions of people love VLC media player but Jean-Baptiste Kempf didn't become a billionaire.
The difference isn't the product, it's that what makes the startup founder a billionaire is that they're willing to pawn off their invention to people who do all the unethical things, while they laugh on their way to the bank, that's the point of the big check.
In some sense I prefer the robber Barron over the startup founder because at least the former doesn't pretend they're a saint between they've put one level of indirection between themselves and the exploitation.
I don't know what the best solution to the problem of wealth inequality is, but I know that we need to collectively get over this "but if people think they will be limited to a mere hundred million dollars in wealth they will have no motivation whatsoever to work" nonsense. You know what the motivation is? It's still a hundred million dollars, that's what.
What can happen though is that companies figure out how to prevent meaningful competition to preserve high margins. They're worth millions for the innovation but they get to billions through anti-competitive and extractive practices.
But we can start by not forgiving CG on death. That seems like a no brainer with no downsides.
No downsides I respect, at least. "We want to keep the business in the family" should be ignored.
You tax them. Wealth inequality of this magnitude is toxic to democracy. It's simply too much power. These men aren't gods, they are just flesh and blood and usually really terrible people. We are not staff at their resort. Let them live in luxury for the rest of their life, great. But they don't get to have more political power than half a million people put together.
You don't /know/ that people need to collectively get over "this" -- you have a feeling that it seems more fair to do that than the alternative. But you can look at what happens elsewhere in the world with regimes that implement exactly what you are describing. And what happens is the people who are most equipped to be the golden gooses that you are proposing are just as equipped to simply most somewhere they can do so unencumbered.
That's why what you're proposing will just never really work.
Every American economic miracle has been precipitated by the government building basic infrastructure and doing basic research.
And it’s not like he took the money from somebody else.
He spent a ton of time to create something that he owned the majority of and to make that thing more valuable. He paid other people to help him and they were happy with that exchange. The government also helped them and they were happy with that exchange.
Suddenly, people have assigned a concrete value to the thing via the IPO and it is very valuable.
It’s not like he suddenly has $1 trillion in his account. It’s just the thing that he made and has ownership of is suddenly worth that much.
Is your theory that he dug it out of the ground with a shovel or something?
What does this mean? Without some insane wealth tax this is literally impossible. No founder chooses to become a billionaire. They just keep growing a business that is solving a billion dollar problem.
The only other was is if after 100M they start turning down customers or restricting services.
It might be that if personal wealth alone were (effectively, by taxation) capped to $100m, we would still have exactly as much collective wealth, innovation, and value creation as we do today. Possibly more, because of more wealth distributed onto shared infrastructure and into the fluid economy.
Making a billion dollars doesn’t require becoming a billionaire. Someone who makes a billion dollars in a balanced society generates wealth and taxes. (One who does in an unbalanced one has the choice to donate.)
Also, liquid versus illiquid. Founders shouldn’t be under obligation to cap their ambition or force liquidate if their companies do well.
You might think: I can argue with them.
No. You can't. They literally couldn't care less about you or anyone else. They do, however fear retribution.
Just waiting for my company’s top 10 shareholders to be anonymous entities owned by other companies based in the Cayman Islands.
That net worth is, under our current system, tightly linked with his interest and control in his various enterprises.
He can borrow against it which gets around taxes and that should probably be addressed, but he like the hypothetical fresh billionaire startup founder don’t have that money. And the mega rich on paper can’t access more than a small percentage of that money without reducing their control of the company they built or are building.
Ideas like a wealth tax, or the new sovereign fund paid into by an equities tax or grant are all interesting, but they are all more complicated on the ground than “wouldn’t $100m be motivating enough?”
FWIW, I think that some sort of public endowment and/or sponsored healthcare, education and safety net and/or tax or management of hyper wealth is one of the problems of our age.
But part of that problem is that it’s not clear how to do that in a way that is workable in an increasingly multipolar world of tech and soon healthcare giants that are as powerful as small but growing nation states. Economically and in some cases militarily linked to great powers.
Folks who lend money against stock insist on being repaid. (In fact, they typically have the right to sell the stock to be repaid.) The money to replay was taxed. (It comes from salaries and/or stock sales. Borrowing more to repay previous loans just kicks the can down the road.)
Yes, this is a good take. I wish more people understood this. Things like sales taxes could address this. Land value tax, with single homestead exemptions are another.
Professional athletes and lottery winners prove otherwise.
How so?
Well, suppose we say, nobody should be a trillionaire - is this an arbitrary number, or is it aimed at the richest person? Clearly, the latter. Now if we carried this out, now there are billionaires remaining. Well, nobody should be a billionaire, one might say. Most will agree. So the wealth of billionaires is taken away, and redistributed evenly.
This will continue, with the majority of people below the average wealth level, demanding a more equal playing field. You can see how it ends
People who work a job they don't like because they need money to live, view money as the objective in life, because the equivocate it to escaping and freedom. So wearing that lens, and looking at billionaires, these motherfuckers are greed driven psychopaths who blew past the "escape with freedom" bank account ages ago, and are now just taking money off the table from others trying to get ahead.
But that is not how it is at all. Virtually every billionaire is crazy focused on their work, and the money is a side effect that they don't really care that much about, besides it being a tool to enable more work they can do.
It's very hard to get this across when speaking to people who view work as an obstacle, money as god, don't have personal business experience, and whose passions are things that aren't very productive.
I can assure you, with the utmost in direct observation, that they are extraordinarily obsessed with money. It is, in fact, the defining characteristic of their entire existence, literally by definition.
Any argument to the contrary is profoundly hilarious. Imagine if you came across someone that had over one billion model trains in his basement who was claiming that he wasn't super interested in model trains.
This is an illusion. A share has value because it represents the hypothetical future productivity of an abstract entity that may or may not even exist in the future.
At the margin, you can take an Amazon share and buy bananas with it. However you absolutely can't take the entirety of Amazon and exchange it for a trillion bananas. Those bananas don't exist.
More importantly, you can't take the entirety of Amazon and transform it into housing supply. I think people are often too careful about "missing the forest for the trees" and then conceive of problems as overly abstract. The affordability crisis is, first and foremost, a housing shortage.
Young people can't afford homes. Millennials are hitting 40 and realizing they may never afford one. Being secure in housing is pretty damn low on the Maslow hierarchy of needs. Sure maybe we need a more progressive tax policy, but this myopic focus on billionaires distracts from the real problem which is a housing shortage.
The problem is that when you cap earnings to $100m, most investors lose motivation to invest in startups, because their investment isn’t likely to yield a reward. Unless you think all investments should be less than $100m, this kills large investment rounds. That would have killed OpenAI, for example, since their recent round was larger.
In other words, it’s fine to say “you can only earn a hundred million dollars.” The hard part is implementing it without killing the investment ecosystem. Every investor is chasing the big return that covers the 20 investments that didn’t pan out. If that big return is capped, there won’t be investment, and hence no startups.
OK, PG might have proved it's possible for someone to become a billionaire. But why is that a good thing?
The model is: rich old guys extract money from the populace with threats of violence (just try not paying taxes). The rich old guys get FOMO. They give this money to young people who work really hard. This means foregoing sleep in favor of vibe coding some BS that nobody ever asked for, and making it addictive.
Nobody in their right mind would give a penny to these very hard working young people. In fact they don't: their startups only make money through ads. Nothing they make is worth even a tiny subscription fee. And ads are paid for by resource strip-mining megacorps.
What we have is a two-tier population of a have-nothing underclass and a handful of nobility. If we continue down this path there will be a revolution. There always is. Now that is something you probably don't want your kids to live through.
Every global economic statistic backs this up
It consumes childhood and adulthood. Only when workers have power can the engines of innovation benefit the many.
Of course history is littered with failed autocracies aspiring to be capitalist/socialist/insert-econ-system utopia. I'd argue the current US administration is in an autocratic mode right now. And doesn't seem to be going well for any except the richest asset owners.
Billionaires are a sign of a failing systems because nobody earns a billion dollars.
What do you think why many important jobs are badly paid while some CEO gets a billion dollars.
Didn’t you see in the pandemic where the real important jobs are and did you realize how low their payment is?
BTW it’s interesting you see you kids working in a startup but not creating one.
et tu hn?
I am tired of seeing this nonsense on social media (it's particularly bad on reddit, where /r/antiwork and it's offshoots keep hitting the front page)
- Wealth is not a zero-sum game
- Yes, billionaires shouldn't exist because they're a symptom of a broken system
- And they don't exist on a long enough timescale, there's a reason why oil barons and railroad tycoon families are a shadow of their former selves, and why the richest people are all in tech/oil
- Billionaires and increasing income inequality are a symptom of a bigger problem. Musk wouldn't have as much money if his publicly traded stock wasn't as popular... among the public.
- Modern day securities are broken because they're poorly regulated because the public doesn't vote for people that would do the regulation.
https://commons.wikimedia.org/wiki/File:Global_Distribution_...
> Modern day securities are broken because they're poorly regulated because the public doesn't vote for people that would do the regulation
And Billionaires and their media power has nothing to do with it
It literally is, though. For one's wealth to grow, the wealth of others must shrink. You could print more money, but that'd just result in inflation reducing everyone's wealth.
If you intend to say value is not a zero-sum game, I agree.
The problem is, reality doesn't care whether you think it's grim or not.
I think the environmentalism movement faces this - it's easier to believe that everything is fine and we're not harming the planet and all is good, because the alternative is grim. But if the alternative is real then the fear of facing it is only going to make the reality even more grim.
Which is probably why this immediately devolves into a bunch of silly math and equally silly proclamations that don't seem rooted in any actual defined course of action. This is less than worthless, it's actively harmful.
> I've got kids
And this requires _a billion_ dollars? Perhaps an intentionally narrowed scope would be good for some of the HN audience.
The log base 1.93 of 301,100,000,000,000,000 is 61.2091. That's about 5 years and 35 days. Is it really impossible to grow 93% month over month for 5 consecutive years? I can imagine some startups that can.
There are two numbers that determine whether you can make one avogadrillion dollars. One is your growth rate, which doesn't matter at all. The other is the size of the available market. Simply identify a market that has on the order of 10^20 times the demand that is currently being met. Understand what your users want. Ask ChatGPT for advice.
However, there obviously exist markets to support billionaire level wealth, as evidenced by the at least 30 billionaires produced by YC, and the many others.
There are markets that can grow fast of course, but once that exceeds the overall economy it can only come from forcing other markets to shrink, and that limits the growth rate to which the fast-growing market can ultimately attain.
Sure, if they have a monopoly. Any market seeing that kind of growth will instantly have competitors and eventually the TAM runs out.
Three things can be true: 1. Growing at a rapid rate over long periods of time is hard, doable and rewarding 2. Incentivizing the discovery of these things is good for society. 3. Nonethless there is and should be a limit to wealth acquisition, given moral hazard.
To make a similarly glib counterargument to Paul G:
If it's the founders who earned the same monetary value of the companies they created ("because they're responsible for it"), they should bear the same moral and legal responsibility for the externalities.
So far, only SBF is in jail. Lots more of these companies have broken the law.
Let's throw the founders in jail too - they can keep their money!
How do we determine that limit ?
Most Americans ( middle class and above ) are richer than most people in the world.
Way richer than most people in Africa or poorer parts of Asia can ever aspire to be.
Consider that when competing for resources these poor people are competing with wealthy middle class Americans.
Add to that the USD being world's reserve currency makes life easy for a small part of global population earning in the USA and makes it harder for people in every other country whose currency might not be competitive compared to the USD.
How about a cap relative to GDP?
Elon Musk's net worth is 3% of USA's annual GDP and 1% of global GDP.
I'm not a fan of limiting wealth among the upper class. But I am a fan of stopping a small number of individuals from controlling a significant percent of the world's GDP because if that trend continues, we'll end up with individual people more powerful than the governments that are supposed to keep them in check.
1. Too much inequality, and the risk is bloodshed. This is most of human society. 2. Too little, and you get communism, repression, or European stagnation. 3. U.S. is in the goldilocks zone. The goal is to make it so most people in society don't give up (Japan had this happen).
USD is a bit of a red herring. It does make our capital markets the most valuable in the world, and it does generate nearly endless demand for the dollar, but that's actually based on the wide scale belief that the U.S. is far and away the best arbiter of the world economy. The EU had a shot at that crown and absolutely wrecked it via over regulating.
Just like those cases, what other countries are doing would mostly be irrelevant - except, just like now, people may try to find arbitrage opportunities by getting creative about where they live.
and depends on factors outside your control.
This last is a critical caveat, and really the crux of the argument. It's not about cheating, but the limits of predictability in complex dynamic systems.
You can't predict these systems at all!
Nobody who illegally make the rich richer goes to jail, they get a promotion usually
There's a huge social element. No one wants to throw their buddies in jail.
It looks bad on the golf course (or at Burning Man / Sun Valley if you're in tech)
Me too, honestly. I'm also kind of shocked. I want to expand on your last point.
Uber became a billion dollar business by running an illegal taxi service. Now I like the ability to book a taxi from my phone with seamless payment. I also dealt with the yellow cabs in NYC in years gone by and it sucked. Shift changes, annoying looping ads you couldn't turn off, card skimming, the process of hailing a cab sucked and the cabs themselves tended to be bad. All that is true but it was still illegal.
AirBNB became a billion dollar company by allowing people to run illegal hotels in residential neighborhoods. This was value extraction from all the neighbors who had to live with the externalities created but gained nothing from it. That value was extracted by people who usually didn't live there. Agree with it or not, it was generally illegal, particularly in their large profit centers like NYC.
There is a lot of this that goes on and, honestly, is the entire basis for private equity. Private equity looks for companies that have what they call "pricing power", which is a form of "inelastic demand". Housing, for example, has inelastic demand. But it also includes creating regional monopolies like buying up all the vets or medical practices in an area and then jacking up the price of all of them. You're not going to drive 5 hours for most medical treatment.
This can sometimes go wrong. KKR bought Envision Healthcare, an amergency medicine contracting company, and unlocked "pricing power" by intentinoally using out-of-network services wherever possible to charge a lot more. Lots of medical practices do this actually. Anyway, their business was effectively killed when the No Surprises Act [1], which interestingly was signed into law by Donald Trump in his lame duck period after losing the 2020 election to Joe Biden.
[1]: https://www.brookings.edu/articles/understanding-the-no-surp...
Travis Kalanick did far worse with Uber. He illegally spied on political opponents to Uber's expansion. As far as I know he's still out there free as a bird.
Private equity is a different problem, which hits closer to the real problems at the edge of the market where prices don't signal reliable information.
We've known for over a century monopolies are bad, but the actual finding is more like concentrated pricing power for goods with inelastic demand is pretty bad. PE exploits these corners with devastating efficiency and often bad results.
Rewarding entrepreneurship for example a good thing, but I'm also very much of the opinion that a single person controlling a billion dollars is extremely bad for the society while spreading some of that wealth out would do a lot of good.
The big problem we as a society face right now (in my opinion) is that a lot of political energy (votes and discourse) is spent on things that don't fix the economic imbalance right now. Poor poeple vote for politicians making the poor poorer and rich richer.
It's a shame. Both AOC and PG are often right in their own way, and then deeply entrenched in others.
>AOC: “There’s a certain level of wealth and accumulation that is unearned. You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that”
there's some truth there in that PG is talking about capital gains as the owner of a company and AOC is talking about earnings as payment for labour which are different things both in reality and in tax policy and law.
The capital gains can be unfair in that most of them go to founders and VCs and not much to other employees and stakeholders who have contributed as well.
I don’t think a definition of “earn” that excludes cases like that captures the generally understood meaning.
"Earning" is a subtle word with a variety of usages. One usage is limited to wages or return on labor or effort, and in that sense can refer to anything where a reward is due and proportionate to an effort, like a treat after a hard workout, buying a car after saving for years, or wages. Another usage focuses on profit. When AOC talks in the zone of this first sense, it should be understood that there is only an implied fair reward for sweat and tears, and that past a certain point it's really entirely unrelated to wages or effort.
How does he get the money to do that?
(And in California where the most profitable crops are perennial fruits and nuts, probably outright stealing water from the aquifer or state irrigation system.)
You mass exploit labor at scale to exfiltrate 1B$.
You commit wage theft to obtain 1B$ (the largest theft category).
You union bust and fire workers who try to fight for better working conditions and wages.
You engage in monopoly practices to obtain 1B$.
You engage in corruption via 'campaign donations' to lay down laws that benefit you and harm others.
Doctors earn. Engineers earn. Scientists earn. LABOR EARNS.
But billionaires never *earn* 1B$. They exfiltrate, steal, and corrupt.
But Labour Theory Of Value has been debunked and is mostly not used anymore.
- Upton Sinclair
And, well, you are right that there are 'debunkments' of Labor Theory of Value. Of course, they are put out by hard right-wing laissez faire capitalist enclaves, like Mises. I would never expect them to take a dispassionate view of capitalism, given their extremist position.
https://mises.org/mises-wire/three-arguments-debunking-marxs...
"who is the single one contemporary person who took labour theory of value seriously in an academic sense?"
ChatGPT: G.E Cohen.
(G.E Cohen is an Analytical Marxist BTW)
Here's what G.E Cohen has to say specifically on LTV:
1. "labour theory is, moreover, false" [1]
2. "The labour theory of value is not a suitable basis for the charge of exploitation laid against capitalism by Marxists, and the real foundation of that charge is something much simpler which, for reasons to be stated, is widely confused with the labour theory of value." [2]
[1] https://andrewmbailey.com/money/readings/cohen
[2] https://www.versobooks.com/blogs/news/3128-the-labour-theory...
So here you have the one guy who took this flawed concept seriously, * from the side of Marxism * and then has to conclude that it is false.
Both theories use the SAME formula.
Final Price = Raw Materials + Labor + Overhead + Profit
The difference is that Marx pushed that labor is what makes a thing have value. Wheres Musk pushes that humans have 0 value, and should be removed whereever possible.
Same thing, different conclusion.
And know what happens when we get "perfect idiot index" of 1.0? There are no workers, no money, and wealth is accmulated purely in the hands of the elite. Hell, even Ford saw this in tge early 1900's - who'd buy cars if nobody can afford them?
There are very very simple proofs to invalidate the LTV, for example the fact that two items requiring identical amounts of socially necessary labor can have very different prices. In my experience, I have only met one person who earnestly believed it (an old college classmate) and his basis was self-admittedly purely ideological. In the end, I think the most elegant way to think about it is to reverse the causal arrow. Labor does not create value; perceived value decides which labor was worth doing.
The easiest way to earn a million dollars is to start a business that makes sense and work your ass off running it well. Maybe that's even the easiest way to reliably earn ten million dollars, a million isn't what it used to be.
But at some scale that's far short of a billion the game becomes about asymmetry.
This asymmetry takes many forms. For Steve Cohen it was trading on inside information, for Jim Simons it was (as far as anyone can tell) novel mathematics.
For most of the technology companies in the 21st century it was about privatizing the commons and/or externalizing costs that a well-refereed market would place on your company.
The United States used robust public/private partnerships and a vibrant, thriving university system to build the greatest pile of latent wealth in the sum history of humanity during the 20th century. Everything from the transistor to the integrated circuit to the laser to Velcro to tang to the internet to the web was a product of this holy Trinity of innovation: defense and related public money, well-refereed private companies (even a notable natural monopoly or two under muscular regulation), and a paved path between the Academy and the other two. The gains accrued enough to individuals to keep everyone motivated but largely in the form of status, which confers a desirable station in life but does not compound directly into political power. Feynman and von Neumann and Einstein all seem to have led very enviable lives and are easily as smart and accomplished as anyone in the front row at the last Inauguration (and if we're honest, a lot more), but none of them had a billion dollars or untoward access to the levers of government. All of them paid far more into the ocean of latent wealth deeded to the body politic than they took out of it.
And at some point (my money is on the kneecapping of Brooksley Born, whose architect is now resigning in disgrace from everything for Epstein affiliation and whose most recent post was on the board of pg's protege) the flow reversed. The access caste started to be d away from the competence caste and the singular fortune deeded to the public started to accumulate as a dozen private fortunes that were substantially just the 20th century stuff with a named owner.
You get a billion dollars by stealing it, this is qualitatively different, a distinction of kind not of degree, from how you get a million or even a few tens of millions.
To get a trillion dollars as we have now seen, well first you steal a billion.
1. In pre-industrial society there is less technological leverage, so that it’s very difficult for an incidental or group to help very many people.
Perhaps the closest analog before then was land discovery or conquest (taking other people’s stuff).
2. Post-enlightenment society is one of the first which doesn’t predefine your social role by birth. So you can claim new roles and status from your own wealth.
America has a much stronger sense of 2 which is why European attitudes towards wealth differ.
Early pg wrote about Lisp and engineers should do their own testing and commodity FreeBSD on commodity Intel was better than Oracle on Sun for starting a company.
He wrote that makers and managers needed different schedules. He wrote that math has asymmetrical upsides. He wrote that you do things that don't scale while you're in the garage.
In his wheelhouse he was best in the genre, maybe not the Balzac he fancies himself as an essayist or the painter he fancies himself at all, but the best guy to listen to if you were doing a garage band startup that involved the Internet. He was surrounded by legitimate legends like Robert Tappan Morris and Trevor Blackwell, and he wrote about things he understood.
Late Soviet Paul Graham exists as the lobbyist for Garry Tan Y-Combinator, which isn't even really prestigious anymore. As far as the signalling value goes? I'd rather have a strategic from NVIDIA before YC. I would think about YC's money if literally no one else was interested. This is "ChatGPT Tha License Dawg", "die motherfuckers die motherfuckers die" tweets tagging elected officials Y-Combinator he's defending, and the vampire companies he cites as his clean wins are suitable filleted in the rest of the thread that mine would be redundant.
And the real mile marker of a guy whose audience has exceeded his depth is that he's lecturing a room full of people about how a single operation on the iPhone calculator app can teach you more about government and economics than is apparently understood by someone who has survived eight years in Congress designed to destroy people like her, who has an Economics degree cum laude from Boston University that she got while working as a bartender to support herself and her family after her father died, a situation with no parallel in pg's life or that of anyone adjacent to him in either it's highs or lows.
I got into this business substantially because pg's writing was so motivating to twenty year old me, and for that I'm still grateful. And just like I hope Kanye gets back on his Lexipro and starts making great music again, I hope that pg goes back to his roots and starts printing great technical and startup essays again instead of spewing solid waste.
But just like I can't follow Kanye down the "death con three to the jews in hollywood" road, I can't follow pg down the "think about the billionaires and don't listen to the honors economist multiple-term congresswoman" road.
One is dramatically more offensive in it's form, one is dramatically more toxic in it's substance, because there are people who take it seriously.
Given that, how can some people be worth as much? There has to be some capture of wealth somewhere such that even though nobody can actually earn as much, they can be worth as much.
There is a "hack" to wealth, and PG has explained it here. You need a large addressable market with little competition where you can capture a small amount of value from a huge number of people at scale.
Individually, that value is often not worth much. A surgeon can save your life, and you'd give up most of your fortune for it. A starving person would do almost anything for food. Most startups don't create that kind of value for any one customer. They create a little bit of value for a lot of customers, and at scale that turns into enormous wealth.
That's what people are arguing when they say scale is a form of cheating. Maybe you got into the position to own it through harder work, smarter decisions, more risk taking, more grit, or more luck. But not a billion times more. Once you own it, you've locked yourself into a growth curve that scales with little additional work. In many cases, it gets easier as it grows.
Past a certain point, wealth is no longer tied to your work. It's tied to your ownership.
That's also why CEOs want equity. They don't want to be paid solely for their labor. They want ownership in large scale production so they can benefit from the growth of the system itself and eventually sell that ownership for far more than they could ever earn through wages alone.
This is why, as a software engineer, I favor equity compensation and have benefited from it myself. But I don't think I've worked harder than countless people in jobs that don't have this characteristic.
I wasn't paid more because I worked more. I was paid more because I owned something that scaled.
That's the "cheat."
You start by ignoring what a "billion dollars" means, and most people don't think it's stock. Then you have to ignore what "earn" means, which most people don't think is getting stock on the assumption that the company you own a portion in will turn a profit one day, possibly many years ahead.
Getting investment without having profitability, getting to keep a portion of this investment, even if the banks that are insured with taxpayer money lose that money, is not what the constituency of AOC think is earning money.
There is a huge amount of technological advancement and personal fortune that I enjoy from this system, but I'm not trying to bullshit anyone that the system is fair.
In conclusion, I do think this attitude is cope that allows a high performing individual to focus on this game and be successful, and Paul Graham seems to be successful, so it's natural.
