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 idolize them), it takes a toll on your grasp of things. It's a king eating rich foods for decades.

Like his "wealth tax" piece, he's very proud of doing elementary maths that ignore a major part of the reality at the start (in that case, he was assuming that their money wasn't growing, just being taxed, which... my man). It's sad to see, and I hope anyone who gets financially successful takes the lesson to try as hard as possible to keep living like normal people do. Buy your own groceries. Cook your own meals. Keep close to the friends you made before you were rich.

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.

There is no way anyone responding to him has a lazier argument than he does.

This is a technology + investing forum and all of us agree that in general creative destruction processes are enormously net positive, but they frequently do kick off a toxic byproduct in the form of said destruction (e.g. Uber and displaced taxi drivers), so there is moral entanglement between creation and destruction. Morally speaking, figuring out how to mitigate this toxic byproduct is part of our remit just as it was part of the remit of earlier industrialists to figure out how not to discharge so much flammable goo into the river that it lit on fire. We neglect this at our peril, because society merely pinches its nose if the toxic byproducts are small, but they are increasingly not small.

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 is used to underscore the fact that founders (and early investors) are paid ridiculously disproportionately to their employees. There is no labor that a single person can do (without the help of their employees, family, friends, network) that justifies earning $1B.

>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.

Maybe the politicians position is that the whole system is based on cheating and everyone who partakes is acting immorally?

Is it fair that the founder got education and some money to start his company while other people are living on the street or have to care for relatives? If they come from a relatively privileged position and manage to build a company that ends up being successful, did they earn that money?

I don’t think the cheating people criticize is necessarily criminal fraud.

Edit: and the second thing people seem to criticize is that just keeping your company growing often seems to involve some unethical things. Basically every company that’s manufacturing hardware is doing that in Asia under inhumane conditions, so they probably can’t really claim they earned their money and it’s just maths.

I presume it's a company that just has co-founders then? Or everyone is getting an equal % of the share? In which case SHE's not getting 93% richer just cause her start up is.

This assumption is depressing. That the only alternative to "earn" is "cheat".

A system of diminishing work (i.e. where money makes money), especially combined with inheritance, means every dollar is arguably less earned than the last. That system is fine and actually very useful, but that diminishment becomes a big problem at large enough scales. We've been operating at that scale for many decades.

pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.

And to the people criticizing, this is cheating. To them, a billion dollars enterprise is not possible without the exploitation of employees, customers, or at least the environment.

Also, the most important thing to understand about a society is how people gain status, not just money/wealth. If you focus on money, you won't have an explanation for political movements or artistic endeavors.

I don't think that the current system rewards those deserving the largest cuts of the pie.

If you want to argue how to get a billion dollars, sure. But to me that is different than earning it.

That's not the problem.

The problem is even simpler mathematics. Proportions. How much do we give to first employees? How realistic is that John Smith, first salesman of the company is getting 2% and should consider himself lucky, while I, Peter Boss retain most of the company?

We always talk about the dilation of the founders' shares and its relation to the VC portion.

What is the usual proportion of the shares held by the founders and the first 10 or 100 employees?

Is that proportion usually realistic with regards to the effort put in and the risk assumed?

Is that risk usually really that heroic or most of us in the "can found a startup" caste can usually go back to jobs that already pay well over average?

I am the founder of a company. I want it to succeed. I don't want to become a billionaire, but I want the people that help me build it to have similar successes to mine.

If we succeed, I don't want my car or house to be 10x more expensive than of those people who joined me first.

There's something seriously rotten about telling university students about billions. The issue isn't whether anyone can earn a billion dollars. Nobody actually needs a billion dollars.

The question they should be pondering is given the excess of talent and opportunity they have, how can they help the people around them and give something back to society.

  So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars [...] that it's impossible to get that rich without doing something bad — without cheating in some way.

The hierarchy of wage looks something like:

1. hourly pay (how many hours you can work sets the maximum possible salary)

2. base pay + cash bonus (the cash bonus starts to increase your earning potential. Sometimes the bonus can be huge, for traders, salespeople, etc.)

3. base pay + stock options (the stock options can outsize your base pay by big margins)

4. stock ownership (almost all your wealth is tied up to the stocks)

The vast, vast majority of people are stuck at (1), and will never move to (2). Nearly all billionaires are at (4).

The average worker will work around 100k hours in their lifetime. If you started working today, with a 2% inflation rate, you'd have to start getting paid close to $6000 / hour in order to reach a billion dollars (pre-tax) in total income by the time you retire 50 years from now.

Another factor to consider, is that salaried workers can't use leverage to increase their earnings. A startup founder can find investors and raise money, which works as rocket-fuel for their company. You can practically outspend your competition. That is simply not possible for regular workers, without breaking rules (as in outsourcing your job, taking on several jobs and outsourcing those, while collecting).

If a career path (e.g. startup founder) outperforms at time T1, then this fact will diffuse quickly throughout society, causing the path to become overcrowded, which pushes down the average performance. So at time T2 the path will no longer outperform. This is analogous to a stock becoming overpriced due to hype. I consider the founder path to be enormously overcrowded at this point.

The key to finding a good career is to play a kind of Money Ball - find paths that, for whatever reason, are mispriced and thus undercrowded.

There are exploitable gaps in the logic where loaning against owned collateral is not considered a realizable taxable event and it’s reasonable to attempt to close these.

But like most things I find that things fall down when actual policy needs to be written. The only example is the SEIU proposition in California which is backdated and requires many people to give up half their ownership in a company.

I can’t be brought around to supporting those outcomes.

Amazon was first, then Uber went world wide, so did Airbnb, and now OpenClaw, so yes, the AI gold rush opened the gates for new opportunities but only a few will make it. We all can run the race for sure but most of us will only get tired at the end while the lucky few will take all the prizes and our corpses will be their podium, as it's supposed to be.

Still, we have to run because there is a chance, a very slim chance which is more than zero hope.

Very, very rarely does someone actually build or provide something so significant that it results in them profiting enough to become that wealthy.

Instead, they (possibly unknowingly) play a complex game that essentially defines complex rules that result in outsized rewards while obscuring the real process of gaining those rewards.

Most of this revolves around magic numbers. The best example is "valuation". Valuation in theory is reasonable. But after just a couple of iterations of mixing leverage with hype and gambling (with other people's money, of course), there is now enough artificial wealth to invest in new ventures to get some % ownership. And based on the amount paid and the percent received, the venture now has this official value. There's no legitimacy behind this calculation other than the fact that everyone agrees to play this game.

Now that your startup has a nice big valuation, you go through several successive rounds of funding - where each round serves two purposes: 1. give you more cash to burn so you can move faster than regulatory bodies can keep up (Uber) or enough spare cash that you can slow the regulatory processes by throwing lawyers at it, and 2: pay the previous investors a nice reward.

Repeat this process several times, eventually resulting in an IPO where you dump all this false value on the general public (or nowadays, all the pension funds and government-forced personal investment accounts). In other words, the last buyers pay for all of the false value. Then they wait for a reward that often doesn't come.

Ironically, part of why this system spawned and has worked so well is that once large, publicly traded companies became fixated on quarterly EPS numbers (so the execs can hit their bonus targets), those companies became slow and useless for innovation. But they had magic money with which they could buy up startups who are actually trying new things.

This entire system is astounding in its perversion compared to how business worked 40+ years ago.

The counterfactual, a society in which the means of production are allocated by those that did not create them and do not stand to lose in their inefficient operation, is already familiar to many, in government services and old oligopolies with low insider ownership.

That’s cool and it’s a cool post, sure, but it sounds ridiculous when you look at how many dumb GPT wrappers there are in YC batches nowadays.

If we extrapolate to trillionaires, we know for a fact that you need to be an all-around dousche that manipulates politics and literally cuts government funding to the poorest and most vulnerable groups to get there.

And since this post has a numbers focus, zuck is worth 195 billion. Would Facebook’s negative influence be noticeably less if they spent 194.9 billion on reducing the harms of Facebook, and zuck remained a millionaire? I believe so.

The real thing they have is a collective agreement that allows them to have the power to direct a bunch of capital toward production. If they ever just decided to cash in their chips and buy a dragon hoard of gold instead, the paper wealth would vaporize really quickly.

The problem that really exists here is that this small group of individuals has too much power. The feudal system existed for a long time, there's arguably a tendency to return to it, and this is the thing that truly makes people uneasy about the concentration of power outside democratic processes. How do we get rid of the despots? At least with democratic process there's a way to vote them out, their terms expire, etc. With hoarded wealth, and especially (as we see with cases like the Waltons and now the Ellisons) generational mega-wealth, we have zombie feudalism clawing its way out of the grave.

I don't think there's a problem with someone earning the trust of a bunch of investors and being granted a lot of power to direct resources in their lifetime, but the intergenerational transfer of unearned power is a place where a crackdown is certainly warranted.

Airbnb/Bed Boat, Neighbor, Swimply, Uber/Lyft, Bird/Lime, BlackJet, Waymo/Cruise, Splacer/Peerspace, Zenefits, Tilt, Loomis/Stablecoins, Coinbase, Worldcoin, Stripe, AngelList/Sydecar, Polymarket, Uniswap Labs, Doordash/Instacart/Postmates, CloudKitchens, Shef, Done Health, Forward Health, Cerebral, Pacaso, Sonder, 23andMe, Ro/Hims/Hers, Viome, Juul Labs, Oura Ring, Particle Health/Moxe Health, Roblox, YouTube, Popcorn Time, Kickstarter/Indiegogo, Republic/Wefunder, Deel/Remote, Lambda School, Make School, Mission Bit, WeWork, Oyster/Papaya Global, HiQ Labs, FlexPort, Katerra, Zipline, Starship Technologies/Serve Robotics, 3D Robotics, Anduril Industries, DraftKings/FanDuel, Cydia, Eaze, MindMed, Odin, Swarm Technologies, Starlink, Convoy/Uber Freight, Carvana, Tesla, VoltShare.... oh yeah, and OpenAI.

What do all of these companies have in common? They all manipulated markets, bent and broke laws in order to get that "exponential growth". They didn't want to wait around and find out if their businesses would be legally allowed to grow. So they just broke or worked around the law, with the intention of becoming billionaires. But that's okay, because growth rate! We're not doing anything bad, people want these things! Who cares if it might be illegal or the spirit of the law frowns on what we do? Money!!!

This is just one of the reasons why becoming a billionaire requires you to cheat. There's also the tax loopholes, the inducement to harm (both of the customer and by the customer), anti-competition, etc. In order to get these gains, you need to cheat, because if it were easy to do legally, ethically, and quickly, somebody already would have. It's corporate doping.

Wealthy, sure, but becoming a billionaire effectively destroys your place in any of your social circles. It obliterates any dynamics of trust and interdependence you may have and replaces them with a gnawing unease about if they’re still hanging out with you, or if they’re hanging out with the money.

Not to mention, Graham entirely fails to differentiate between EARNING a billion dollars and HAVING a billion dollars. You can be part of a structure that earns a billions dollars without “cheating”, there are all kinds of companies that do that. But if you let that wealth accumulate in yourself? There’s something wrong there. You are almost guaranteed to be under-valuing the contributions of others, or the externalities of the systems in which you operate or SOMETHING.

And even if you’re not? That’s a dragon’s hoard of money. You’d have a very difficult time spending that much money on yourself and your lifestyle, and I find it hard to justify sitting on the rest, just to have it. It is literally a hoarding problem at that point. You do not need that money, it is actively making your life worse (look up the Billionaire’s Social Calendar: it’s the list of ultra-wealthy-only events that billionaires must attend if they want even a chance of interacting with people as peers instead of dependents), just let it go.

> Starting a successful startup is the most common way to become a billionaire, so in effect I've spent the last 21 years training people to become billionaires. So far about 30 of them have, but there are many more in the pipeline.

Seems to me that right off the bat he completely undermines his own point - less than .5% of the founders being funded at basically the best connected best financed incubator become billionaires. Easy, right?

I won't even go into the embarrassing math that follows... pyramid scheme salesman levels...

Graham: So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars. I felt like a skating coach hearing someone say that it's impossible to do a triple axel. Of course it's possible. It's hard, but it's possible.

Per his link in the article:

AOC: there is 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

However, it's still sure as hell a lot easier to earn it as an exploitative startup than as a good one.

Fine, show me the average person who can come up with 2 million dollars. I sure as hell can not. I even went to banks and founders with my ideas, cash flow sheets and customer list looking for a loan.

No, I am convinced, the rich already have 2 million dollars, and make themselves a billionaire. The system is rigged against "normal" people.

In biology there's the notion of a growth curve. It starts out with the familiar "compound interest" exponential growth, but unlike Econ-101 textbooks, that curve then proceeds to resource depletion (overshoot), followed by "die-off", followed by extinction, where (N -> 0, where N is usually something like yeast-cell count, but if you're applying this model to something else, it could be stuff like well-being or money).

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.

Sure, if you start off with $2 million and double it 9 times, you end up with $1 billion. Exponential growth is a powerful thing, so it comes as no surprise that maintaining a large growth rate over time very quickly grows a starting sum into a much larger pool of money.

However, his only response for how you should achieve exponential growth is this hand-wavy "make something you yourself want". His only acknowledgement of the concern that maintaining exponential growth may require cheating is a casual dismissal, and his only acknowledgement of the concern that the growth rate will drop off over time is "you'll still get there eventually".

So, while the original concern was that you cannot earn a billion dollars without some wrongdoing, PG's response can be boiled down to "nuh uh".

To pick just one example, infinite scrolling can be seen as a modern equivalent of cigarettes— a product that made people billionaires, and that consumers obviously want but are not free to stop using because of hyper-sophisticated dark patterns.

Is Elon a trillionaire because he created a trillion dollars of value from thin air, or is it because he created an information asymmetry flywheel that lets him allocate capital more efficiently than other actors?

It’s genuinely unclear to me whether the universe in which we incentivize this kind of scale is better than the universe in which we do not (because the counterfactual universe has massive externalities too). But this is obviously not just a matter of compounding value creation and becoming a billionaire fair and square in ten years.

I don't think there's anything insidious or controversial or misleading here. It's a simple talk to a bunch of clever students using contrived examples that emphasise this point.

You might not believe you've done anything "bad" to become a billionaire, but the mere fact that you accumumated so much wealth necessarily means others, somewhere, had to work for it. The mere existence of billionaires is the mark of an unhealthy economy, that doesn't distribute wealth in an efficient or fair manner.

Aristotle describes four causes, and pg has given two; not because he doesn’t know the rest, but because this post is not intended to guide people, but to tamp down the demonizing of success, lest it usher in a Cold War on Capitalism.

There’s much to criticize, but today politicians are desperately herding outrage to make up for their ineffectual performance, so instead of criticism resulting in field-leveling regulation, we’re just seeing haircuts that send the rats scurrying off the boat and fuel for the fires consuming it.

She certainly frames it in a way that you have to personally cheat, or personally create the myth that you've earned it, or at least it can be interpreted that way. But I think it is the system itself that causes unearned[1] money to accumulate. Money begets power begets money, with or without any intention of the actors to exploit this is any bad way.

I don't think we know a better system, but I do think we can point to the level of wealth accumulation and say this is a bad property of this overall very good system, and we should try to do something about it.

[1] Or rather: Money to accumulate disproportionate to the earning. We can say that many billionaires have earned something very significant and ALSO say the accumulation is disproportionate to that, and that there is an opportunity here for improvement.

the ratio of the average individual's wealth to 'illionaire's wealth feels "wrongly asymmetric" for a lot of people (CEOs making ~300x that of average worker)

the question is basically about how that startup scaling at 94% translates to scaling up the individual's life (who faces alleged "stagnant wages")

or in other words, how can entrepreneurs create an approach for society that facilitates individuals scaling up their wealth?

There is for example a perception that a person working all waking hours on a low amount of pay - like minimum wage, and without investments - could never become a 'illionaire through their "honest hard work"; ergo becoming a 'illionaire requires something beyond this "honest hard work" (implying illegal and or unethical means)

That’s weird. I grew up around farming and farmers. A group also very proud of the work they do, in a profession where the wage is also indirect — sometimes negative, sometimes a fortune, always based directly on the work they’ve done. Year after year, the work.

That’s different.

I’ve always identified two sets in the realm of entrepreneurs: those that want to “be rich”, and; those that want to “become rich”. The latter group is perhaps more admirable as they acknowledge the process and the value creation whereas the former seek only the status. But neither are often interested in the work of it.

Andrew Wilkinson has a whole part in his book about what it's like to be on the billionaire side of this speaking to former employees who feel that you took more of the value than you deserved it was an interesting read.

Any sane, rational person would offer different advice to people they see as "future prime ministers and billionaires" or at the very least people influential in future policy decisions, than they would to society in general.

The pg view seems to assume that if there is a causal relationship between your actions and a billion dollars appearing in your bank account, then it counts as having earned that money.

The countering viewpoint seems to consider the words "earn" and "build" as having a similar relationships to money and buildings respectively. If I tell you I built the shed in my garden, then you'll probably take my word for it. If I tell you I built a skyscraper, you'll either call me a liar or understand me to mean that a large number of individuals built it at my request.

I think the second version is more useful and more accurate.

Their money goes to heirs who did not earn billions and do not know how to allocate it, or to questionable non-profits. So it ends up being a huge drag for the society.

Linus Torvalds created Linux which allowed companies to use commodity hardware. Before Linux, every company had to pay massive taxes to Sun (Solaris) or IBM (AIX) to run a server. With Linux, commoditty hardware ecosystem blossomed, and the first companies like Google built massive datacenter. This wouldn't have been possible if they had to buy Solaris servers to run their datacenters.

The value created by Linus is probably tens of trillions of dollars. I don't think he is a billionaire. There is a guy who is a trillionaire today. It is hard to make an argument that Musk created more value than Linus. Tesla is a trillion dollar company with negative YoY growth.

Linus Torvalds is not a visionary: https://www.youtube.com/watch?v=I-YL0BeWZyU

The people who become billionaires are experts at becoming billionaires, creating value probably has nothing to do with it. They have either inherited wealth or in the right networks. The example PG gives of starting with 2 million USD is someone who is already incredibly wealthy and in the top 1% (1% globally, not just US). As always, there may be some rare exceptions where the founders actually created value and became billionaires.

It said that the theoretical maximum is 174,000. In a country of 340 million.

That sounds to me like the chance to make it is a lot lower than 0.05%

Maybe we should just stop pretending that everyone can make it and that it's mostly people who already come about with vast amounts of luck (means = luck, opportunity = luck) who have even a chance to make it.

People with cool startup ideas cannot just make it. Working hard is not enough. Growth is not good enough. They will likely just be destroyed in an increasingly unfair and predatory market.

AOC also doesn't say anything about "moral", etc. You can behave perfectly morally in US society and "earn" a billion dollars. It is just that, no matter what exactly you did, you didn't actually "earn" it.

Of course pg is smart enough to understand that there are two different meanings of "earn" at play here. It is just that he chooses to ignore the second one, because the second one is hard to define exactly, and it puts him out of his comfort zone. He likes being right more than finding the truth (like most of us), and so ignoring the second meaning is the easy way out.

The trouble is, just because something is difficult to define, doesn't mean it isn't essential, or important.

Call me cynical but ...

> The reason her startup was growing so fast was simply that users loved what she'd built.

> In the real world, growth rates tend to slow down a bit. A very successful startup will probably be growing faster than 15% a month in year 1 and slower than 15% a month in year 4.

It turns out that the people who will invest in your startup when 93% MoM gains are possible want you to do pretty much anything to keep growth as high as possible--also your career, net worth, and employment are tied to this so you're similarly motivated--including squeezing and manipulating those users who loved you so much. But hey, as long as you personally get rich it's fine I guess.

It’s as if the money comes right up out of thin air, isn’t it?

He inadvertently gets close when he talks about Facebook being about people doing stalking. PG, is stalking a good thing or a bad thing, hmmm?

"Earning a billion", to the skating coach, is like pulling off a dodeca-axel.

It's not gonna happen through mere pluck, and it's probably gonna involve a lot of other folks' work if it ever happens, who probably aren't gonna get that much of the glory.

Companies focus of the Rule of 40 and struggle to keep above it. And this struggle is where many in management lose their way.

Enshitification begins. The margins get harder. More corners cut. Employees get treated less well, customers get treated less well.

Instead of telling us "it is just exponential growth bro," do case studies on billionaires and their dealings. In the US, you have billionaire business leaders who have full time employees who require government assistance every month.

The couple of billionaires and near-billionaires I have worked with (and helped build their companies) have not been bad people. But working at their companies pre and post IPO is way different. Less perks, more pressure. If the company culture isn't solid, it becomes bad fast.

This is, sadly, a first for him.

AOC (the politician referenced) did not mean that earning a billion is "impossible". She, very clearly, stated within the context of that interview that Billionaires must be an extractive class at the cost of normal market efficiencies due to the rent-seeking behaviors of the monopolies that must exist to attain that level of wealth.

Money is a made up idea that we use to benefit everyone. It's a game that, largely, has positive returns for society. When that is no longer the case, when someone breaks the game and removes themselves from the rules, you have to change the rules.

There could be alternatives. For example, laws that ensure ownership of said companies is more widely held, so that the wealth is more evenly distributed among those who created it, for instance.

This article did not sit well with me. I have found myself rereading Beyond Smart, How to Write Usefully, The Need to Read, Life is Short. But this one is harmful; nobody needs a billion dollars.

I don’t know where “the politician” went with that comment, but for me the more pressing conversation is whether we want a society where many are struggling and some make a billion dollars.

You benefited from society, clearly, which is not to say you didn’t work hard. But it seems entirely reasonable to me to ask you at that point to give back. We can knock plenty of people back to mere “hundred millionaire” status, they’ll be fine, and we can do a whole lot with that money.

This is such a weird statement to see. The idea that a startup founder whose company is growing at 93% month-over-month has a net worth growing at the same rate is just so logically wrong that it's bizarre to see someone stating this.

Even putting aside the fact that "growth" can be tracked by various metrics (revenue, customers, registered users, etc.), the idea that any given "growth" rate tracks 1:1 to the paper valuation of illiquid equity in an early-stage private company is so naive to be silly.

> And yet she hadn't been doing anything bad. The reason her startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong that politician was. She wasn't exploiting anyone. Exactly the opposite in fact. The reason her startup was growing so fast was that she and her cofounder had been working their asses off to make their users happy, and as a result the users had been telling their friends. And that gets you exponential growth.

Delve, anyone? Startups can lie, cheat and steal, and their customers "love" them until they find out they've been duped. And let's not forget that more than a few have been accused of lying about how much "love" they really have (by misrepresenting their traction). Fake it until you raise it.

Also, this reasoning is very narrow. A company's customers might love it because it allows them to benefit from something that has external costs that disadvantage other groups, if not society at large. Cheap outsourced labor, regulatory capture, network/monopoly rents, tax shenanigans, etc.

A lot of companies also try to hack referrals, which sometimes involves using dubious tactics to get users/customers to sign up for something under questionable pretenses. In other words, people recommend products and services to their friends not solely because they love them but because they're given a personal incentive to. These can be really effective even when it's pretty obvious people are doing something that won't benefit their friends.

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.

> But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy.

There is no doubt that Graham is right in saying there is a formula to becoming a billionaire and that formula involves creating products that help your users in some way.

However this is very narrow, reductionist interpretation of AOC's comment. You need to put it into perspective of the massively increasing global wealth inequality.

In 2011, billionaires owned 4.5 trillion USD of wealth. Today, fifteen years later, it's 20.1 trillion USD. This amounts to about 20% of the entire planet's GDP. That means 0.000003% of humans capture 20% of the value globally created. The top 12 billionaires own more than 50% of the bottom half of humanity.

How can you sensibly argue that this is not exploitation?

When people say that it's not possible to earn a billion dollars, they're talking about the discrepancy between the wealth gained by those employed by the company versus the shareholders of the company. For example, when WhatsApp was sold to Meta for $19 billion, how many of WhatsApp's 55 employees walked away with hundreds of millions of dollars?

The fundamental problem is that it's possible for an employee to generate a hundreds of millions of value for a business, and yet be compensated for a vanishingly small fraction of that. Even if the employees agreed to a particular salary, is it ethical to pay them so little in comparison to the worth they generate, or is it exploitative?

Most, if not all billionaires, reach that status by paying people far less than the value they generate. If you want to become a billionaire, you need to find people who are willing to be paid thousands or tens of thousands of times less than they're worth. You need employees who will generate you $100 million in exchange for being given $100 thousand.

Not exactly the way I interpreted it (emphasis on earn). Right or wrong, I think the vast majority of us think that "deserved money" is money earned from "work".

A simple example would be the billionaire Walton children: their fortunes inherited. Most people would argue that they did not really earn those billions of dollars.

On an admittedly slippery slope, for many, investing and other means where the money makes money is also not regarded as work (and therefore is not earned money).

To wave around the idea of "the American Dream", I suspect that many American's disapprove of any means of obtaining wealth that the average Joe or Jane are not privy to. This idea that you have to be born into money or have money to make money—we are (perhaps naturally) repugnant to.

> She wasn't saying, of course, that it's impossible to become a billionaire.... What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.

> But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues. If it's impossible to make a billion dollars without cheating, which of those two numbers is impossible?

AoC quote:

> 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.

Come now @pg.

$2 million * 9.45 months * 93% growth rate = earning a billion dollars, ok. Does that really address what AoC was saying? She wasn't saying that the math doesn't math.

--

// 8bn world population / 3,500 billionaires:

0.000000_44

--

// 300mm US population / 1,000 billionaires

0.00000_333

--

// Odds of winning billion dollar powerball

0.00000000_3422298 (play once)

0.0000000_68446 (play twenty times)

0.000000_34223 (play 100 times)

--

// Global net worth vs billionaires

0.03636364

--

// US net worth vs billionaires

0.0942029

Of course, we'll ignore the huge issues that Airbnb created for cities, customers, and providers. We'll ignore the way they knowingly helped ignore any regulations on tourism as much as they could. We'll ignore the business model of simply being the biggest middlemen around. We'll ignore the fact that their business is slowly being outlawed in major cities, at least in Europe, because of all of the above.

And, surprisingly, if we ignore all of the things these founders do to ignore the law and cheat the market or their competition, we can say that they earned their billions without cheating!

We'll also ignore the fact that the brilliant magic math that us lay people and politicians just don't understand also predicts that the founder whose business is growing 93% per month will not only be a billionaire in 9 months, but a trillionaire 9 more months after that, and surely the world's first quadrillionaire within 5 years. You might think this is implausible, but that's just because you don't understand how exponential growth works!

The Accumulation of Waste, Kadri, https://brill.com/display/book/9789004548022/front-7.xml

Monopoly Capitalism, Baran and Sweezy

https://archive.org/details/monopolycapitale00bara

Labor and Monopoly Capital, Harry Braverman https://ia801604.us.archive.org/12/items/023978561/Braverman...

(Great essay on how to be a billionaire though. Could billionaires give back more? Yes. But creating market value like that is both worth celebrating and evolving.)

the "hard" part isn't sustaining 15% growth over years, it's doing that in a way that is as reductive as he tries to make it "just build something people like!" and not having VCs and other bullshit trying to backstab and force you into making questionable decisions.

The idea of becoming rich is as old as society itself but it has not been a static concept. It is an idea shaped entirely by the things mentioned - ideology, culture and history. There is no wealth accumulation without ideology of one sort or another.

It's fair to resist a view of wealth that may seem flawed but it's disingenuous to assume this can be done from a neutral position.

However, there are several addendum to this argument:

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

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

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

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

Because as far as I can tell they're just creating a massive surveilance state while engaging in naked class warfare. Whether you can "earn" a billion dollars, I'm not convinced those people should have a billion dollars.

The whole discussion about exponential growth is idiotic and not worth responding to. But if you think of what he actually means - having a total addressable market of at least a billion dollars and being able to effectively capture it - it is obviously primarily due to factors outside of your control. The sort of company PG is talking about typically revolves around a good technology that has a network effect somewhere that leads to market concentration. People do not get good ideas by working hard, and markets are not made easily monopolizable by hard work. Execution of an idea requires hard work, but companies that are only good at execution do not win.

Obviously you can engage in hard work to improve your odds. But the returns are out of scale with the hard work. This is all people mean when they talk about "earning" money - if it's in proportion with your work, you earned it; if it isn't, you didn't.

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!

It's a very sf-bubble type article.

I’m thinking of vibe coding a calculator app How Many Babies Died For This where you input your startup idea, life(style) goals and AI token usage and the machine spits out the Net Babies Dead for you to achieve your dreams

If that's what production was about, humanity never would have left caves.

The ancestors of the fix-pie idea were the ones who would have sneered at the first hut built outside of a cave, at the first crops deliberately sown into the ground, at the first villages built up to provide better living conditions for groups of people including as a trade center.

Everything from 100,000 years ago to today is the result of productive human beings who made more of the world. It's an ongoing process.

Clearly nothing is universally the case, but this pattern repeats in enough freqeuncy that it's effectively the case.

HN used to be open minded about people creating wealth. The change is shocking to me, actually.

Not all companies are growing because they are making their customers happy. Some are fully exploiting their customer, users, environment, etc.

This mindset is what makes capitalism very ugly, and im not sure how one backs off the throttle a bit to grow responsibly?

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.

This obsession with growth instead of progress or value rubs me the wrong way, given the trend for enshittification of services sooner or later, also remind me of a video I watched yesterday when a founder gives examples of private equity people trying to force growth no matter what: https://www.youtube.com/watch?v=k4vNIsVY-0Y&t=412s

"How many of the top 20 billionaires in the world have companies that have NOT been in legal trouble for anti-worker, anti-consumer or anti-competitive practices."

The answer begins with "Exactly zero" and goes from there. It's the same answer up to the top 50 billionaires, but up to 20 it might even give you a summary of infractions for each billionaire.

Not only were the extrapolation calculations in TFA very https://xkcd.com/605/, what was funnier was when PG tried to counter AOC's point ("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.") by talking about how he personally knows like 30 founders who have become billionaires. And I was like, no way is he thinking about Chesky and AirBnB, who literally started off with multiple regulation-skirting shenanigans and whose effects on neighborhoods have been heavily criticized...

And then he mentions not only AirBnB, but also Facebook!!

1. This is a strawman. Mention a startup but not what it does. Wave your hands at growth as much as you want, but it doesn't prove you didn't hurt anyone to make your billion. I think people would find it quite easy to pick apart the actual named companies like AirBnB, Facebook, Apple, Google. Lots of people got hurt by these companies in the name of growth and profit.

2. The distinction between having and earning a billion is irrelevant. You make a billion? Cool, now stop. Give someone else a slice of the supposedly infinite pie. We. Are. Starving.

pg is way too smart to believe even half of this nonsense. I guess he thinks future UK politicians (the audience of his speech) are that stupid.

Or maybe that speech was just to vehicle to make himself heard spewing this nonsense. Heard by whom?

Very disappointing indeed.

Billionaires are great when the tide is rising. However the challenge for the young generation now is the tide is going out: Housing is expensive, there fewer good jobs, AI is coming for these jobs if they arent outsourced (or we bring in guest workers), plus the specter of supporting all the seniors. This is a problem is every developed and developing country.

Maybe it's worth reflecting on how billionaires could inspire the next generation and help drive society in a better direction. If you are gonna argue capitalism is good (it is) you need to make a credible argument to individuals who arent doing well. Society (or the country) doing better doesnt make people feel better if they personally cannot find a job or afford housing.

The founder of Huawei is the right billionaire role model- not PG -and he at one point stated when you employ thousands of people, you start being responsible for their welfare!

(Unless there is hyper inflation)

You can only get a billion dollars.

building something people love can make you a billionaire, but most billionaires did not build something people love, and most people who’ve built something people love are not billionaires.

If he truly believes those companies didn't cheat, then I think his definition of "cheat" is far removed from what most people might think.

For most of my adult life technology was associated with unquestionable improvement and progress. We got used to a series of “revolutions” where you felt that your quality of life improved, even if a few ruthless and amoral business people amassed all the resulting wealth. We assumed that is just how the system works.

But now technology is just as likely to be associated with scams, rug-pulls and using investor capital to capture a market and destroy competition. We are being trained to assume trickery with every software update, forced terms of service change, or company acquisition. Not to mention the absurd corruption when tech billionaires collude with incompetent politicians. It’s just a trend in sentiment I’m seeing that goes against the “just build anything and the world will give you billions” cheerleading from 2000s.

Step 1: Have millions

Just the co-founders eh? Fuck off Paul.

Paul, playing dumb doesn't suit you.

The first definition of "earn" on merriam-webster.com is "to receive as return for effort and especially for work done or services rendered".

Your chose a straw man, "doing something bad", to argue against because it's so easy to beat.

Much harder to justify that anyone's doing $1B of effort. Being a billionaire doesn't mean you're bad. In fact, it doesn't even matter if they are all bad -- there are always going to be bad people. It means a system that allows, encourages, and protects billionaires might be a problem that needs to be fixed.

Scary idea, I know. But we all only get to go around this world once. Might as well spend our time trying to make it better rather than rationalizing why it's OK to spend all your time trying to make it worse.

To have illegal hotels that then help keep a generation out of home ownership?

To have an exchange for cryptographic tokens that are used almost entirely for financial scams and organized crime payment infrastructure?

To have an online forum that made so many long-time contributors who built the content and appeal feel so betrayed, that often the top solution to a posted problem (you find in search) has been deleted in protest?

To have a non-profit spun off, ostensibly for the benefit of humanity, and attract talent and funding that way, then coup and rug pulled?

Other big successes?

The middle class is shrinking. Social mobility is decreasing. There's now a man who is worth a trillion dollars. Something is broken. Say something about that please.

That's not what she meant. What she meant was that he was misusing the word "earn".

Instead of hating the hacker, we should ask can we have a system that is not vulnerable to"exploitation", which naturally leads to the old Capitalism vs Communism debate.

Capitalism is still the most decentralized system we have, if a worker is feeling exploited they can leave and work elsewhere but most importantly they have the option of starting their own business and utilize their skills. But capitalism's main vulnerability is that of investors that can buy up whole industries and collude and bring centralization.

Communism is inherently centralized, only works on a small scale like a village, on larger scale it requires strong leadership that can resist the temptations that come from centralized power, but strong leadership doesn't last forever.

Facebook once existed as "How is a company going to make money from undergrads stalking one another online?" but that company didn't make it big. It was only when it turned into an addictive harmful website that thrives by massively raising the suicide rate of kids, that's when they made it big!

AirBnb once existed as "Who's going to pay to sleep on an airbed on someone's floor?" but they didn't make a billion dollars doing that. It wasn't until it turned into a DYI hotel that displaces local resident, concentrates wealth, and makes housing unaffordable. That's when it made serious money.

So yes, nominally, each of these startups sounds good. But many of them turn into rent seeking, closed ecosystems, that prey on users.

> You must look at the world around you and see how it's actually done.

Correct. I wish PG would do that. Instead of telling this idealized fantasy.

What comes after?

Both things can be true:

- the incredible benefit brought about by YC companies as they grow into their markets and mint billionaire founders... - monopolizing, price fixing, what can feel like gouging, etc. as the temptations of what may be currently possible war with what may be ultimately wise (and for whom)...

Kind of like: - the temptation to appeal to the increasingly common set of hash-taggable moral & political absolutes... - the more measured, wisdom-dense sharing the best possible, and fortunately (hopefully? maybe?) most common form of billionaire-minting...

Is, or was there previously, a different, more American-value-compatible status quo?

... Historically did we IPO earlier, leaving more of the exponential on the table, leading to greater public wealth, resilience, opportunity, and capability? ... Is the profit-margin gas pedal ever pumped a tad aggressively preceding this, inducing trust wobbles in the public and customers as prices are raised and services degraded the quarter before, with share price corrections the quarter after? ... Do we (should we) maintain relatable humility in the face of success and wealth - surely earned, though perhaps better enjoyed by more enduring trophies (disease eradication; public works enhancements; life extension progress) than a mega-yacht in the Mediterranean?

Very easy to be a keyboard-warrior. Very hard to provide $1B in new capability and value.

Good read as always. Back to work.

2) Sell 0.000001% of it to a friend for $1

3) Congratulations, you are now a billionaire (on paper)

You can’t “earn” a billion dollars doing the thing that the vast majority of people do for money, which is selling your labor.

No one can argue with this.

We all understand that if people who own a lot of capital give a lot of it to you, you can grow that capital into more than a billion dollars.

Most people do not have access to the kind of capital required to do this. Most people never will. The avenues open to the vast majority of people on Earth cannot lead to becoming a billionaire.

Paul Graham knows this, and he is being deliberately obtuse.

How does your startup avoid failing? By skirting local laws? Exploiting employees? Destroying the environment? Replacing jobs in a way that makes the standard of living better for the few but worse for the many? Making weapons or systems that coordinate weapons? Submitting to and therefore tacitly supporting oppressive governments?

Sure, there are examples of startups that don’t do these things. But looking at billionaire-class startups (there’s not that many of those to analyze!), there are far more of them in the other category.

As if the chef didn’t contribute. People have to eat!

We have weird ideas about who deserves the rewards. This idea that starting a company that gets big counts as “earning” a billion dollars makes some strong assumptions about who deserves what.

"Earning your fruits of labor morally as opposed to the mere market value of labor and capital is a concept derived from Karl Marx' Theory of Alienation. More than 15 million people have died under socialist rule from starvation alone."

His founder is not at the level we are talking about. They obviously would not represent the 'bad' that AOC was trying to make a point about. Why don't you pick your actual billionaires?

Airbnb - Ignored and exploited local housing regulations, over time the blowback has been HUGELY negative. Here the 'bad' is the commoditization of housing in peoples' homes, causing housing problems.

Coinbase - For years, they built their business on bitcoin being used on dark nets for illegal purposes. There's the bad. If they were truly good they would have done KYC from day 1. Why would they? Billionaires gotta break rules.

DoorDash/Instacart - Exploitation of cheap labor, they _consistently_ underpay workers, hire undocumented laborers for that purpose, and pit laborers and consumers against each other rather than improving the system.

These, Paul, are the actual billionaires AOC was talking about. Not your young founder making the 200th to-do app.

Really unimpressed and disappointed by the shallowness of his thinking here.

Yeah, no kidding. A mathematical formula where the magic of speculative markets and a stupendous amount of money floating in the stock market can just float right up your alley. Just take your place on the top of a pyramid of growth and stay there!

How does one write this with a straight face?

Most people work linear jobs, with linear creation. The amount of work that they actually do in a day is what they can accomplish with their hands, their minds, their intellect. Whether it's laying bricks or polishing gemstones or cleaning toilets, or teaching kids for that matter...most people cannot just become a billionaire. They can't just growth it real hard. They have to first escape the very real linearity of making a living wage, providing for a family etc. They don't have the luxury of throwing around capital they don't have. They can't just issue their own cryptocurrency or stock and get the market to start funneling it all to them. Hell, their limited investments in stock will only get them piddly millions if they're lucky.

It shows how absolutely broken the system is that people will just say this in a straight face and expect us to not just guffaw at it.

Paul, I hope you read stuff here because growthism is exactly why the system is so fucked up right now, and enshittification is the proof positive of how little all the oversized monsters out there give a shit about how anything works in reality.

Just 93% growth your way there. Good idea, thanks for the tip, Paul.

Given how tech has gone from nerdy underdog to Orwellian, Machiavellian, dopamine-peddling overlord, I’m actually a bit surprised people aren’t more angry / upset.

Over the last 40 years there has been two career paths with “disproportionate leverage”: tech and finance.

I believe in capitalism, contracts and the rule of law. A founder starting a company and attracting capital, employees and customers and generating tremendous wealth I see as an opportunity, not a bug.

But if I were in a normal career the wealth generated by tech & finance would certainly look & feel like some form of cheat code.

The last forty years have been a huge transient. Massive. AI will probably push it even further.

I hope we as a society and democracy can survive the strain.

Politicians spend their lives in one of the purest zero-sum systems in existence. Of course they don't have a gut level understanding of the creation of wealth.

But consumer surplus matters most of all. Imagine the net benefit to consumers of Robotaxi and Optimus (ok, ok, assuming they work, for the doubters in the room). Entrepreneurs capture

There are 86,400 seconds in a day (24 hours * 60 minutes * 60 seconds = 86400). Now let’s say you spend an average of 1$ every second. That’s every second, including when you’re sleeping or on the toilet. That’s 86,400$ per day, which I hope we can all agree is a lot of money.

If you had one million dollars, to spend it all it’d take you over 11 days (1,000,000 dollars / 86,400 seconds = 11.57).

If you had one billion dollars, to spend it all it’d take you over 31 years (1,000,000,000 dollars / 86,400 seconds / 365 days = 31.71). That is an obscene amount of money.

a) thinking that others don't understand exponential. Any reasonably college educated grad understands it well.

b) thinking that growing 93 percent every month means the founder has put in 93% more effort than the prior month.

Their argument relies upon the ideology that just because you thought and executed an idea profitably means you should continue to "earn" from it.

In the LLM age, more and more people are questioning this, and rather want to goto: effort == earnings.

The problem with most analysis about capitalism is that it fails to appreciate that, over time, capitalism will destroy itself as winners capture the market, stifle competition, and the very ecosystem that created their wealth in the first place.

If you love the benefits of capitalism: the price setting function, the innovation, the broad wealth creation, you have to prevent the accumulation of market power that leads to monopolies or you will watch as the market evaporates and monopolies turn into aristocracy and collapse

AOC was right.

Airbnb disregarded their impact on rents in touristic cities, and competed with hotels by running faster than regulations.

Kalshi is gambling.

Doordash leveraged underpaid delivery drivers on unfair contracts.

Instacart cheated con consumer fees.

Reddit was based on (milked and abused) volunteer moderators.

I stop because I don't know all the 30 billionaires that YC created... But this subset of companies should cover 30% of them.

I am happy we have innovation in the world, but claiming these things are not bad for society and ways to cheat to the top is... Lying

Maybe the most interesting observation is a buried point near the end that the natural cap on this is market size. There's a much more interesting speech there about expanding the size of your market, both to governments and to businesses leaders. But this isn't that speech

When he asks "how fast are you growing", to any business operator, that refers to revenue. That's not at all the same as "how fast is your net worth growing". Net worth for a publicly traded company is what the market thinks your future cash flows are worth, NOT your revenue growth. Obviously, more revenue growth is better, but it doesn't automatically translate into higher net worth. You could imagine a situation where revenue is growing like crazy, but net worth declines...because the stock price is based on the expectation that growth will occur at an even faster rate, or that profitability isn't living up to expectations.

It's not about the math of the thing, it's about the arguably necessary exploitation that must occur to hit those kinds of numbers.

And in fact, IMHO, you don't even need to get to "exploitation" to criticize this mentality.

Any normal human would (and if not would, SHOULD) want to stop "earning" well before they hit those ridiculous numbers. Let's say -- at about 50 million, a normal person should realize, yes, that's enough. Time to pivot to something that doesn't cause so much accumulation. This does happen, we just don't hear about it enough.

In addition, the converse is not true. Just because you’ve found something that grows fast and in large market, doesn’t mean you’ll become a billionaire. With all humility, I’ve been lucky to have done that twice, but in a large company. I’m not complaining, I’m just saying that doesn’t necessarily make you a billionaire.

The most famous ones ended-up in prison (Sam Bankman Fried, Elizabeth Holmes, Jeffrey Epstein, Bernie Madoff) but anyone with a basic grasp of statistics and criminal behavior know that many others will escape the justice system forever.

It does not mean that all billionaires are bad, the criminals are not the majority, but there are enough criminals to justify skepticism and scrutiny.

Patriot interceptors cost many millions, so 100-200 are already worth a billion! Is SpaceX internet worth 200 Patriot missiles? Easily.

I think politicians restrict "earning" to "wage income", which is kind of an arbitrary line in the sand, and would also be untrue. SpaceX/Tesla would also have paid Musk billions in cash if stock wasn't allowed.

> I've spent the last 21 years training people to become billionaires. So far about 30 of them have

Since it's a post about math, let's do it.

6500 companies with 2 founders each - 13000 founders.

30 of them became billionaires - 0.2% of them.

So being a tech founder at the most famous startup accelerator in the world give you about 0.2% chance of becoming a billionaire.

Or put another way, only 1 out of every 500 YC-combinator founded startup makes one of it's founders a billionaire.

1) PG honestly believes that his audience is unfamiliar with compound growth - i.e., an insult to the audience's intelligence.

Or

2) PG honestly believes that the founder of a successful startup is directly and wholly responsible for the level of magnificent growth a company achieves.

The 2nd one is some Ayn-Rand-like school of thought. That there are great people who have 1000x the work output of those around them. PG more or less alludes to this when he says stuff like

> The reason her startup was growing so fast was simply that users loved what she'd built.

Notice how the credit for the startup's growth is credited to the founder?

> The reason her startup was growing so fast was that she and her cofounder had been working their asses off to make their users happy, and as a result the users had been telling their friends

Again, crediting founders for the entirety of the company's growth. This is obviously flawed thinking in any company that has employees beyond the founder. Those employees are doing a significant amount of the work. And in any company with more than say, 5 people, they are doing the majority of the work.

PG and people who think like him believe ownership==credit. That's the whole problem.

There is a much simpler way to become a billionaire. No Revenue (Silicon Valley): https://www.youtube.com/watch?v=BzAdXyPYKQo

Because there are more than 2 numbers even in pg's simplistic example. Third number: You make $10K monthly today. How? If your cost is $9.9K this doesn't mean anything right? Everyone can do that. So how you earn that $10K is more important than those other 2 numbers. You want more profit and less cost. That's when you start breaking the rules and doing bad things. You have to compete, and it's easier to win if you cheat. If there are cheaters in the game, they would win the competition, not you. And there are always cheaters in the game.

Silicon Valley's system is different than the rest of the world. They give the founders some sort of an infinite money glitch (for a limited time). They don't care about the third number. They care only about the Growth number. Because what they really care about is the Market Domination. They want to BURN money to BUY that market. In most cases, globally. That's why billions of people in the world are using Facebook's products daily. Not because Zuck had a great idea in his dorm room. Not because Poke feature was that viral. But because US needed to dominate the upcoming social media world. For profit, but more importantly for politics, for gathering information, for tracking people, for controlling (social) media and narrative, for security. So the system funded his startup, along with other similar startups in case any of them becomes the winner. And they didn't give just money, they give all the network, permission and privileges to win.

That's why Hans Zuckerberg from the Berlin startup scene hasn't become a billionaire but Mark did.

This is exactly the same playbook with the AI game today. My 70+ parents at the other side of the World use ChatGPT daily for FREE. They will never be the paying customers of OpenAI. OpenAI gives its expensive services for free, because they want absolute dominance in the global market. They can't lose that. Note that such a game plan is impossible for any company outside of Silicon Valley. Only state-controlled companies can play that game in the rest of the world. But for SV, it's not really clear who's controlling who.

https://github.com/PersianHodHod/wealth-in-pixels/blob/maste...

here are three potential issues:

1. there is a short term incentive for lying -- tricking people can get you a long way (e.g. delve)

2. there's a genuine long term incentive for selling products that have short term benefit but long term harm (e.g. gambling, cigarettes, etc).

3. there is a durable incentive to sell products that genuinely benefit for your customers but cause net harm to society -- this last one is a hard problem of capitalism, and imo it's the gov'ts job to make sure that such companies are not allowed to win.

The assertion that it should be "impossible" to be a billionaire (or trillionaire, gazillionaire, whatever) is really an assertion that a just and moral society would design all of these things to prevent that outcome.

And I think it's pretty reasonable to say that we ought to set society up such that as someone gets wealthier we take money away from them at faster rates, so that beyond some level of wealth it is very difficult to continue to get richer.

Unfortunately, a lot of people are captured by rather libertarian ideas about government, money, property, etc. that seem to prevent many people (at least in the US, UK, et al.) from behaving in anything but the most selfish, individualistic, and antisocial of ways.

> There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy.

> How people become rich in your society is one of the most important things to understand about it. You can't let your beliefs about this be determined by ideology, or movies, or historical examples that are centuries old. You must look at the world around you and see how it's actually done.

The "it's impossible to do morally" people are looking at how it used to be done, and how it's sometimes still done. They are right to be opposed to that. But oppose the immoral aspects of it, not doing it at all.

And those who hard-core define a billion as immoral are I think signalling something else: They want the government to take that money, from every billionaire. (If we're talking immorality, we could discuss the morality of that.) But they don't understand that there will probably be second-order consequences of doing so...

In aristocracies we traditionally assume or imply that a person can deserve a certain wealth or power simply by being born into it. Capitalism, however, sells us the dream of the meritocracy: your (financial) success in life should depend not at all on factors of chance like birth or genetics but simply how much of yourself you choose to sell to the market.

At any point in time you have control of some tangible or intangible capital, including wealth, physical health, social connections, equipment, information, trained skills, et cetera. Some of these assets are gained by luck, e.g. accident of birth; some of them are gained by trading your time; and some of them are gained by spending another asset (whose origin reduces, recursively, to some combination of luck or time). At any point you can, assuming the market is appropriately liquid, spend some of these assets to get cash.

Some of these assets have force-multiplier effects on your future output in certain domains, from which exponentials naturally arise; but the time spent on them remains linear, and so, if we want to ignore inherited factors (the opportunity to spend the time on things without immediate feedback, say, or handed-down insight about which of these investments will produce the most value in the future, or access to the required tutors) the increase in earnings these things _merit_ has to remain linear as well. There is no way to compound your time and therefore, under an assumption of meritocracy, there is also no morally acceptable way to compound earnings, which I would assume is the point the politician is attempting to make. Under this worldview, any exponential compounding that occurs must, mathematically, be a result of systematically undervaluing the time of an exponential number of other people, since each person can only spend a linear amount of time.

In practice, of course, the assumption of meritocracy is simply wrong, and arguably the concept as a whole is internally incoherent (or at least I don't believe we've yet managed to articulate it coherently: we would have to settle the nature vs nurture debate and completely sever the value of a person's spent time from the accidents of their birth, if such a thing is even meaningful). But I think that's where the claim falls down, not in failing to understand the mathematics of exponentials.

"But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues."

What could possibly be false in a two-parameter model of reality?

> The rational fear of those who dislike economic inequality is that the rich will convert their economic power into political power: that they’ll tilt elections, or pay bribes for pardons, or buy up the news media to promote their views.

> I used to be able to claim that tech billionaires didn't actually do this — that they just wanted to refine their gadgets. But unfortunately in the current administration we've seen all three.

Now he's claiming he's trained all these billionaires and they are a blessing to the world, not avaricious sociopaths.

How ironic. Extremely successful person tries to justify why he's better or smarter than you, and the way he does it proves that he doesn't even understand what the other person has said.

He kind of proved the point he intended to disprove.

It's not quite as bad as a lottery winner saying "anyone can earn the jackpot", but it's in that direction.

AOC wasn't even being easy to (deliberately) misunderstand, here, like Obama was when he said "you didn't build that".

Of course, like the tan suit critique, the "you didn't build that" pearl-clutchers were all arguing in bad faith.

I don't think Paul Graham is arguing in bad faith here. This post is just, for lack of a better word, "stupid".

The argument isn’t that earning money is inherently immoral. The argument is that you can’t earn a billion dollars without assigning a higher percentage of revenue to yourself than is fair. I’m not going to argue that one way or another here, because I don’t think it’d be a useful discussion: I’m just pointing out that Graham doesn’t engage with the key premise.

He also might want to check his percentages a bit. Funding 30 startups which have produced billionaires is nice. It represents 1% of the world’s billionaire population. You know who really knows how to make new billionaires? The world’s richest families, that’s who.

Greed mixed with analytical thinking on industrial scale - graham, thiel, musk, hoffman, bezos, zuck all symptoms of “smart” people who screwed this country ultimately - all for what?

Has the changed world that resulted been for the better?

He actually thinks he trained people to become billionaires.

I like how he thinks everyone else is an idiot - look, if you make a thing bigger many times - it grow big, reaaaal biiig! Take out your calculator, look, number go biiig!

“Externality” is thrown about as a term almost completely disconnected from any economic grounding of the term. If you make externality mean “anything I find aesthetically displeasing”, then yeah, sure, billionaires create and benefit from externalities, if your aesthetic is egalitarian comity.

But if you mean “legitimate societal goals, legislated and agreed on by a representative body” are being violated left and right by billionaires, gimme a break.

Go ahead and tax capital gains way more. Ending the estate step up in basis sounds great. Break up the “borrow” part of buy-borrow-die, while you’re at it, and treat encumbrance on capital as a taxable event, we could probably make that work, too, although the middle class might foam at the mouth if that was applied broadly.

But, man. The cynicism, confiscatory and controlling instincts on display are enough to make me upgrade Ayn Rand from “hypocritical nut” to “maybe she was on to something when the general population gets tall poppy syndrome.”

Markets work. There are externalities, but we can, and should, legislate fixes for social goals that we actually agree on. But stiflingly heavy regulation is really bad for incentivizing creation of new knowledge and wealth. You can still believe in caring about people, and building (incentive aligned) social safety nets without destroying people’s incentive, and thus, because intellectual capital formation depends heavily on network effects, people’s ability, to create many kinds of value in the world.

Actual socialists recognize that capital is incredibly useful, and incredibly valuable. Leveraging capital is incredibly beneficial to the world. Pretending that the people leveraging that capital are somehow guilty of an original sin just by leveraging capital markets, which is really what these screeds against anyone holding controlling interests in companies they were instrumental in creating, seem to be about, leads down a terrible path.

Demonizing people creating things is petty and unbecoming for a political movement.

If you count individual founders, the rate is even lower. So to insinuate this is some kind of training people to become billionaires, is like a lottery operator saying he teaches wealth creation because a few ticket buyers hit the jackpot.

PG is turning an extreme power law outcome into a moral argument. A tiny fraction of founders capture enormous upside, thousands do not, and PG presents the winners as proof that the system is fair. I could not think of more survivorship bias with a halo.

And thee political sneer is also absurd. Startups do not exist outside politics. They exist( or should exist) inside law, tax, infrastructure, courts, labor rules, housing rules, securities law, immigration policy, and government procurement. Uber S-1 warned that its business would be harmed if drivers were classified as employees rather than independent contractors...and described legal and regulatory obstacles as material business risks. In other words...regulatory arbitrage ( corruption? ) as a business model.

Airbnb is an even cleaner YC example. Its own filings describe short term rental law, host registration, tax collection, fines, city restrictions, and New York 2023 rules as materially affecting the business. Its a business that lives lives inside a fight over housing law and local regulation.

And if the claim is that politicians do not understand value creation, then SpaceX is a hilarious counterexample. SpaceX is a company completely entangled with the state and US tax payer. SpaceX has about $22B in government contracts, mostly NASA, and Reuters separately reported a $5.9B Space Force launch award in 2025.

And the biggest logic failure being used here is the so called exponential growth part. The world is not exponential. Population growth is not exponential forever. Demand is not exponential forever. Restaurants, supermarkets, apartments, drivers, cities, and disposable income are finite. Real markets saturate. Growth curves become S curves. Pretending that 15% monthly growth can simply continue for years is nothing more than spreadsheet intoxication.

So instead of the claim you can earn a billion by making users happy, what is reality is, that in a legal and financial system that massively rewards scalable equity ownership, a tiny number of founders can become billionaires if capital, timing, network effects, labor structure, regulation, and distribution all break their way. I don’t think its legal, and the best PG could do with this is a defense of the casino by pointing at the jackpot winners.

Just reflect on this: Of the 30 billionaires Paul Graham talks about, in an essay where, notably, he never once uses the word “entrepreneur” they come from these 14 companies:

Airbnb, Brex, Coinbase, Cruise, Deel, DoorDash, Dropbox, Flexport, Instacart, Loopt, Meesho, Reddit, Scale AI, Stripe.

Less than half of them are profitable as of 2026. None created a vaccine or cured a disease, discovered a new algorithm or mathematical theorem, developed the economies of poorer countries, created a new engine, or invented a renewable energy source. If all of them...disappeared tomorrow...you would probably just use some other payment system, maybe with higher or lower commissions, and argue on some other message board not called Reddit.

The impact on human lives would be zero... or maybe even slightly positive.

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.

I had asked "what about a fund manager earning the carry"

management fee and performance fee, employees not entirely necessary.

the main result was a brief back and forth to understand that role, because this class of people are completely separated from all the exceptions that break their argument, and then a brief moment of acceptance, before focusing on the prevalence of this kind of billionaire amongst all billionaires. Which I thought was funny because there are not many billionaires to begin with. 20 fund managers on the list would be a large percentage of billionaires.

I'm talking about the estimated wealth of the like of of Ilhan Omar (the somali woman politician).

Just like jesuit priests do take a vow of chastity, I think politicians should have a vow of poverty.

The only way to have a functional society is not to prevent the billionaires from getting to a billion: it's to prevent politicians from enriching themselves.

Folk LTV interpretation is that people's wages are supposed to be proportional to their hours worked. Obviously this is false -- everyone knows this but people still repeat it because it has populist memetic value.

That LTV is debunked and proved to be useless is very easy to demonstrate -- the single person (who was a Marxist) who took this theory seriously abandoned it. He's not the only one though.

I asked ChatGPT this: "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.

She said that no amount of "work" can "earn" billion dollars. So you earn billions through capitalism by rent, through owning companies, and having other people work for you. And ultimately, it should be obvious that societies have to cap this

> Sam Altman of Loopt is one of the most successful alumni, so we asked him what question we could put on the Y Combinator application that would help us discover more people like him. He said to ask about a time when they'd hacked something to their advantage—hacked in the sense of beating the system, not breaking into computers. It has become one of the questions we pay most attention to when judging applications.

- Paul Graham, "What We Look For in Founders"

I also want to add my own characterization.

It is my personal experience with YC founders that YC has coached them in business practices and philosophy that could be characterized less than charitably as "how to con people and get away with it."

I understand the PG doesn't believe this himself and every partner has different advice. But there is a consistent pattern of dishonesty and manipulation that is not innate to founders but taught to them directly by YC partners and it is impossible for me to square this essay with how those founders PG has coached over the last 20 years behave.

Maybe it's possible to become a billionaire without cheating. But all I know is YC won't teach you how.

---

Aside, it deeply bothers me how tone deaf pg is politically. There is a meta to AOC's messaging that he's not reading, which is that wealth is unattainable for the masses and there are oligarchs in our society manipulating our systems to empower and enrich themselves. You are making a rhetorical error by attempting to debate a single sound bite instead of addressing the systemic problems that AOC and progressive democrats are voicing.

In the following weeks we saw Elon do two Nazi salutes in front of the presidential seal, and we saw the Trump admin hire tons of thugs to rip minority children out of their beds, and those same thugs have murdered a number of citizens, with Stephen Miller loudly shouting that they have absolute immunity.

I'm surprised Paul Graham and the signers of the blog post are not to embarrassed to continue posting their thoughts. At worst Paul should stop talking, better, he should apologize and admit he is a fool.

"Oh, if we just operate in a vacuum, do not closely examine the systemic interactions of our accumulation of such vast sums of wealth, assume there's no moral or ethical quandary that would prevent us from utilizing every game theory strategy available to us, and have consistently high, compounding growth over time, then anyone can make a billion dollars if they follow my teachings, which in turn were formulated over thousands of students and with a success rate still in the single percentage points, at best."

Here's the thing none of these people will ever admit: not everyone can actually succeed at a goal, otherwise it wouldn't be a goal, but a baseline. This is the fundamental grievance I have with these sorts of "wealth whisperers" braying on (and on, and on, and on) about how with a good idea and hard work (and YC's guidance), you too can be a Larry Ellison or Elon Musk or Mark Zuckerberg type.

Which, no, you cannot. If you could, PG's success rate for billionaires would be 100%. It is not, so clearly hard work and a good idea (and a mentor) alone isn't enough. Yet enough leaders and populace have bought into this fairy tale that we've reoriented society around it wholesale. The presumption is that anyone lacking in obscene wealth has done so by choice, rather than examine systemic incentives and policy failures that make such an outcome the default, rather than a personal choice (or worse, some sort of personal failure).

I'm just so weary of having the same argument with the same people who refuse to bother learning anything that might remotely conflict with their world view anymore. If the response to "maybe we should improve society somewhat" is some banal wealth-building sales pitch relying on cherry-picked statistics and devoid of any wider context, then I think it's safe to presume you're either willfully arguing in bad faith or so colossally ignorant that you're beyond help.

EDIT: One thing I would add requires quoting PG.

> There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy. What do users really want? What could you do for them that would make their lives dramatically better? That kind of empathy is what we look for in founders, and what we cultivate in the ones we accept.

I will flatly reject that YC startups of late have any shred of empathy for their customer base, in general. If they had any shred of empathy for their customers, they all wouldn't collectively lean into the "permanent underclass" and "AI job replacement" narratives so often spouted by their predecessors. In fact, I would go so far as to argue the only groups with a shred of empathy for their customers might just be the non-YC startups or the FOSS groups cranking away in spite of all the headwinds.

Nobody - nobody - makes a billion dollars through empathy alone. At some point, one has to make a conscious decision to say "I demand more returns than reasonable relative to my costs, and I expect my customers and/or employees to bear that burden on my behalf." Otherwise we'd see a parade of companies demanding caps on margins to drive prices lower or wages for workers higher, thus creating more spending money among workers that in turn produces more economic activity. We do not see this outcome, therefore we cannot ascribe empathy as a source of wealth.

Step 1 ensure server connection is alive and you see pre-birth screen

Step 2 pick character starter pack of higher surface luck areas (e.g. father runs emerald mine in south africa)

Step 3 identify server grandmasters and rewrite unfavorable rules after birth

Unfortunately I skipped step 1 on this build so I'm looking to improve next time!

There is no ethical way to become a billionaire. It always involves exploitation and cheating, including in the very examples named by Graham.

Airbnb got rich by creating a housing crises all over the world and skirting hotel laws. The factories making Apple products are so bad they installed nets to catch people trying to commit suicide by jumping from windows. Facebook... do we even need to talk about that one?

I'm not sure if it's malicious manipulation or wilful self-deception, not being able to come to terms with the consequences of his actions. Either way, it's a bad look and he'd be well-advised to reflect on his actions and statements some more instead of giving grand speeches trying to impart his supposed wisdom.

If one ever does so, one has definitely done something morally indefensible.

The haters do not seem to be actually reading and comprehending PG's article.

I have news for you.

The article is not written for those of you who are comprehension challenged...