making customer happy is one thing, didn't huxley specifically wrote about how consumer hedonism is how tech bros gain control? lol honestly are we at the end stages that billionaires are trolling oxford union... so DIRE

A reminder that in a recent Paul Graham blog post, he vowed to help the 2nd Trump Admin crush woke youth, and asserted that racism isn't bad as the left thinks.

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.

It’s a shame Graham has failed to understand the point of the statement he’s trying to critique.

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.

If we assume that YC funded about 6,500 companies and produced about 30 billionaires...That is 0.46% using the most flattering denominator possible. And the best reason not to apply to YC.

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.

Some disrespect to PG, but the entire thing reads like:

"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.

I know an easier 3 step hack if anyone's looking for one:

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!

Yikes.

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.

Absent circumstances of four digit inflation rates, one cannot earn a billion dollars… one can only accumulate a billion dollars.

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

Words of wisdom. PG is always worth Reading.

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...

Even AOC doesn't believe what she said. She's saying it because she has a startup of her own which sells ideas, and gets paid in votes. It may not be 93%, but she's had a pretty good growth rate, and when you get to about 50 million, you have a great shot at being President. Ideas which bash rich people have had a growing market for a while, and she's good at it, and people are telling their friends about her.

> 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

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!

And yet, the vast majority of startups fail. This essay about exponential growth is clearly not the whole story.

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.

1) Start a company

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

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

We dont want a billion dollars. We want a life that’s worth living. Not hamster wheels in a world of corporate T.rexes looking to consume the young. Go f@ck yourself.

But doesn’t he mixing up the concepts of startup revenue vs being billionaire?

Clearly the system has vulnerabilities. Billionairs managed to exploit these. Asking whether this is good or bad is liking asking if hacking is good or bad for society. If vulnerabilities exist someone will exploit them, thats the arbitrage.

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.

Paul focused on the most beneficial pathway - finding product market fit and growing into it - what many of us here aspire to provide.

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.

I feel like a primer on Labour Theory of Value is important in this thread. This a debunked theory that is still being used by populists to justify their anger on the System TM and in particular, the billionaires.

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.

I've always respect PG's articles (obviously), but him pointing to a sole founder at a high growth rate (which founder btw, what is the product) as 'proof' that no bad has been done to reach that level of growth is so incredibly naive!

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.

It would be so much better if PG was not forced to write this essay. Everyone and that includes AOC has a right to free speech, but I believe that mandatory platform context would really help the internet. For example, here:

"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."

last time I waded into this discussion with my own examples, the "billionaires exploit people" maximalists kept moving the goal post indefinitely

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.

How astonishingly tone deaf. Per Paul Graham, you become a billionaire by working really hard for 9 months with the growth rate is jacked at 93%. Or you work five years to keep a growth rate jacked to 15%. Literally nothing else to it. He literally says that exponential growth is like magic.

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.

> The reason her startup was growing so fast was that she and her cofounder had been working their asses off

Just the co-founders eh? Fuck off Paul.

You do not EARN 1B$.

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.

What will become of this site once its userbase turns against its corrupt oligarch owners on the basis of it propagating evil things like Flock?

Man I am so tired of rich people. Can they all just go f each other on a little island and leave the rest of us alone to enjoy a normal life?

We're just temporarily embarrassed billionaires.

Make a billion / deserve a billion. Ok.

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.

> Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That's why I'd use the word naughty rather than evil. They delight in breaking rules, but not rules that matter. This quality may be redundant though; it may be implied by imagination.

> 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.

"What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way."

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

Here's a fun exercise, go look at the current tech billionaires and tell me which guys (it's basically all guys) you're super stoked about having a billion dollars because they're using it to do so much good for the world?

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.

- So I would like you all to do me a favor please. I would like you to take out your phones and calculate a number. I know this may seem contrived, but I promise it will be useful for you.

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

Working under Steve Jobs at NeXT and then Apple it was always about excellence and could grandma use it. Money as the key to everything never came up. That kind of thinking led to iPhone and Apple as it is today. Seems like this money first thinking leads to relatively shallow achievements. Also notable that making a billion dollars appears to slam the brakes on innovation as billionaires focus on shell games like mergers and acquisitions.

More sanctimonious billionaire apologism. Nope, all wrong. You can't earn a billion dollars, and nothing in this essay shows you can. You can get a billion dollars, and maybe you can even wind up with a billion dollars without being mostly evil (although I'm skeptical), but you can't earn it. Graham is confusing "I did some stuff and my net worth increased to a billion" with "I earned a billion".

Doing a quick search in comments, and I see the prefix “enshit” used 5 times so far. That is telling.

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.

Sure in some out even most cases growth starts in this nice way. There’s two problems though. In order to sustain that growth number, usually ever greater interventions become necessary. Second, there’s the marxist critique that while it’s true that owners add management decisions, it’s their employees that actually do most of the valuable work and are then underpaid relative to their contribution. If they were fully remunerated then there would be no profits. Third, while it is good to incentivize building things people want, it doesn’t make sense to reward people with class status that crushes everyone under them. It should get exponentially harder to make money like levels in a video game at best.

I have no problems with PG or with the existence of billionaires in general, but this is just a poorly thought essay. All of the arguments about growth are specious, and he frequently makes unsound leaps of logic. If I saw this in the wild, sorry PG, but I'd think this is an amateur blogger posting yet another something he edited longer than he thought about.

Yes, growing at average 15% a month will make you a billionaire in so many months. But somewhere along that trajectory you've tipped the balance from "eveyone is benefitting" to "in order to grow larger we need to exploit and extract."

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

Those criticizing those earning billions of dollars think of money as some anonymous fixed pie that magically belongs to everyone. On that completely false view of production (and money), of course it would be offensive for people to grab so much for themselves.

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.

What AOC is trying to do here is shift the debate from extracting retribution on people who have violated specific laws (a fair and an honest way to enforce justice in a civil society) to extracting retribution on people who she insinuates "must have done something immoral" based on their net worth (a selfish, dishonest, envious and greedy way to run a society). It's a clever play, and unfortunately for the people of the world who value freedom and a high standard of living, it's going to work. There is enough of the population filled with envy and greed that they'll lap up whatever a politician tells them bogie man of the day is. Historically it's been the aristocracy, Jews, immigrants, but those don't work any more, so now it's generally "the rich". Billionaires are the thin end of the wedge. After them it will be business owners of all kinds, people with second homes, people who send their children to private schools, and generally anyone who has anything else that someone might envy. It's clear that the way society is going people are going to keep lapping this stuff up.

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

Great article by PG! Too bad he did not specify the play book, i.e. to enter the public market at highly unrealistic inflated valuations so that VCs and founders can make bank while the general public become bag holders for next 5-10 years. I got mine, up yours!

Wow, Paul Graham REALLY missed the point.

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".

Is it "bad" to hoard the money? As founder/CEO seeing insane growth, should she share some of it? How much can she hoard before it becomes bad?

I wonder - to grow, say, 15% per month people have to pay the founder specific money for the product. Why exactly they pay that amount, and not less, say? Is it because they want founder to become a billionaire? The growth is measured in money, not product/service transactions.

you can also yolo on 0 dte options like 10 times in a row and become one too lol. i fail to see his point in that calculation, he takes an obvious truth, which is sustained growth rate = billionaire and nothing evil about that, but then mixes it in with the fact that 99% of companies stall out and then you have to play politics and extraction to get yourself over the hump. show me a company does that without compromising deals and making deals w/ the devil, etc.

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.

Paul has to update to trillion dollars now

Growth for the sake of growth is the ideology of the cancer cell.

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?

What an out of touch buffoon. AOC is right, billionaires are a policy failure, and pg is making her point.

Paper trillionaires are a myth

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

change the title to "How to make a billion dollars", no one earns at that level...

It’s like fertilizer, for jealousy.

Very disappointing.

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.

"Now you see why, when I meet a founder, the first thing I ask about is their growth rate."

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

I think “earn” is the wrong word.

Here's a fun query to try with Google AI overview:

"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!!

The labor theory of value is the idea that a commodity’s economic value is ultimately determined by the amount of socially necessary labor required to produce it. I'm not a Musk fanboy and I don't know what the idiot index is, but if he buys into the LTV, he's incorrect.

There are very very simple proofs to invalidate the LTV, for example the fact that two items requiring identical amounts of socially necessary labor can have very different prices. In my experience, I have only met one person who earnestly believed it (an old college classmate) and his basis was self-admittedly purely ideological. In the end, I think the most elegant way to think about it is to reverse the causal arrow. Labor does not create value; perceived value decides which labor was worth doing.

The really just question to ask though is: how rich can a politician get? And I'm not talking --even though that's despicable-- about a billionaire-now-president that enriches himself and his family.

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.

This is so stupid.

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.

He makes it sound simple, and in some ways, it is. You have to not only build the thing, but also find the thing that people want. It’s the latter that’s as hard if not harder than the former.

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.

He's right. You don't have to cheat to become a billionaire. Stepping on everybody else's throats is a legit part of the capitalist playbook. No cheating involved.

The issue with billionaires is that some of them got insanely rich while being net negative from a societal perspective.

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.

A true, but vapid speech. You can grow to be a quintillionaire if you start as a trillionaire and grow at 990% a month for X months, too. It's almost as though the devil is literally in the details? I don't even think it's wrong, it just says almost nothing about anything that isn't blindingly obvious.

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

He is mixing apples and oranges here...he really should know better.

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.

Elon Musk easily earned the billions for SpaceX. It's providing space internet to Ukraine, an innocent democracy that's under attack. The technological feats of rocket reuse and the vision of Mars don't even matter, insofar as they're just tools to attract the capital. Any other method that supports Ukraine just as well would have also been worth a billion.

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 read this and see two possibilities.

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.

> starting from 2 million && 93% growth > 9.45 months to become a billionaire (500x growth)

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

Well... but the billionaires, or billion dollar companies DO "break rules, abuse labor laws, pay people less than what they’re worth"... also manipulate markets, bribe politicians, evade taxes, sell user data etc. Even Trillionaire(s) and trillion dollar companies do that. Why do they do that then, if the only things they need are those two numbers and a product that people love ^_^?

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.

Did he... totally miss the point of AOC?

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

Now this is a thoughtful consideration of the billionaire topic: https://news.ycombinator.com/item?id=48536483

the main concern here is what is needed to create and sustain that growth rate.

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.

Money, property, limited companies, intellectual property laws, patents, contract law, etc. etc. are things on which all successful businesses depend. These are social constructs - societal "technologies" if you like. They work because as a society we agree that they should and enforce them through the rule of law.

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.

PG seems be becoming more and more disingenuous. People using the word "earn" almost always mean "you can't get this from wages." This doesn't mean that the effect of growth isn't real - almost any business that scales even moderately, but none the less scales, and is profitable, can make its owners millionaires or better. But this does not mean that those riches were "earned." Or that the person who started the business had more glorious suffering than some rando who works 80 hours a week of part time jobs to keep a roof over their kids' heads. Rather, it is inherent to finding a scalable business and not screwing it up.

I didn't know there'd be so many anticapitalists on a forum by a VC company.

Purposefully obtuse.

This is a strawman argument. It is of course mathematically possible to obtain a billion dollars (although notably much harder to do in a way that is liquid, but let's gloss over that). My somewhat more charitable reading of that claim (shared by other readers here, I see) is that ‘earn’ refers to moral desert. I'm not really a desert-oriented person but let me try to steelman it a bit:

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.

Um, did i just get mansplained compound interest by Paul f*ing Graham? I feel like this has been the subject of condescending advice since the beginning of time.

"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?

He seems to be regressing, he said this in January:

> 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.

As a committed market-socialist, the extent that the HN commentariat has turned into a reflexively nihilistic anti-free-enterprise is a fairly astonishing turn. It’s like my belief system turned into the maximally idiotic version of itself.

“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.

Start further back. You need to defend that allowing that much money to accumulate in any person's hands is indeed a "perverse systemic bug".

The default framework is one of private property. If you make it, it's yours, and (modulo taxation), nobody has the right to take it from you. In that framework, it's not a bug that, if someone makes a billion dollars, they can accumulate a billion dollars.

So, do you reject that framework? If so, on what authority? Given that it's the default framework, "I reject it" doesn't cut it. "I think it's immoral" is slightly better, but you need to demonstrate that someone accumulating that much money is more immoral than taking it from them would be.

Or are you claiming that it's immoral for any one person to receive that much money? In a free economy, if others voluntarily exchange that much money for what the person supplies, why is it immoral? What is your moral authority for claiming that voluntary transactions are morally wrong, just because too many of them go to one person?

Interesting bug! Why not tell us about this assertion by providing your own examples?

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.

Okay but the quote in question and this topic generally is more than just the billionaires you know of and the value you personally get from them -- it's about how billionaires exist in the system as a whole, and what it takes to become one.

You didnt write it. You slop machined it.

I quit after this: "I asked ChatGPT this:"

Even I had enough respect to respond with my words and my intellect. Even if my thoughts are in possible error. You didnt have enough respect for even that.

Ahh, so you’re conflating what’s legal — which at times has included chattel slavery, genocide that suited the state, actual torture, and, for the moment at least, unlimited betting by members of the executive branch on the outcomes of military actions that are facially illegal under international law — with what’s moral.

Yes, under what you’ve accepted as the default it’s legally acceptable to accumulate all the money and avoid any taxation while doing so. Thank you for summarizing and explaining to yourself and others precisely the perverse systemic bug I described earlier.

Charging someone money that they voluntarily pay in return for getting something of value themselves is not stealing.

What's morally indefensible about that?

Why haven't you saved a baby's life?

What differentiates the thing me and my friends want from a scaling business is the whole business. I know young people excited about making fantasy figurines or simplifying 10 minutes of daily administrivia, but that’s not going to fly.

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.

Regarding the scale of what a billion dollars even means, I've recently been thinking of an example which I think might work (but I haven’t tried it on many people yet).

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.

pg should just get every founder to trade wallstreetbets style for a few days. they'll be doing this calculator exercise intuitively

The arguments for or against it being possible to earn a billion units of currency seem to hinge on differences in understanding of the term "earn".

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.

This essay is unfortunate because he isn't addressing the true misunderstanding of politicians like AOC, he's not explaining the consumer surplus (why the world gained 50x more from Google than the founders), and he's not explaining that wealth is craeted not taken.

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

A deeply repugnant man, carrying out painfully-obvious sleight-of-hand to obfuscate the clear gaps in a cancerous philosophy. I'm pleasantly surprised to see the comments being so critical.

Even if we agree that Billionaires are better capital allocators and power yielders than elected govs, let's see what happens after they die.

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.

Isn't his entire point on this short talk that one can become very wealthy by creating a product that people love and want to tell their friends about? I think it's also a nudge to students at one of the most prestigious universities in the world to consider building a startup. That's it.

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.

The people who create real value rarely make any money.

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's probably possible to earn a $1B as a good startup. I think this article is right that it is a lot more possible to ethically get there as a startup than through other means, which are often much more political and thus overwhelmingly reward the people who are willingh to do whatever is necessary.

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

Mr. Graham is making 2 mistakes:

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.

It's interesting to me how different the tone sounds if every time he said "users" you substituted "people" (or if that didn't make sense in context, substitute "customers"). I find the post positive and encouraging as written, but I've realized that "users" has become a tainted word in the mass public.

I think it's missing the outflow. Any startup could have a big growth rate, but founders who are empathetic will also have an outflow from their own resources to the resources they are managing, meaning to sustain the growth rate as the years pass more of the earned growth has to be distributed to increase the growth rate. In summary acquiring new customers costs more money the bigger you are.

"You not only don't have to cheat to make this happen, it will happen automatically if you just keep making customers happy."

Call me cynical but ...

> There are two numbers that determine how big a startup gets, and thus how rich its founders become: the growth rate and how long it continues

> 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.

I literally didn't read any comment that spoke to the context to which PG was speaking - Oxford Union.

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.

You can tell that he doesn’t really think too deeply about any of this, because the way he wants to illustrate the point is by typing the numbers into a calculator.

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?

The problem is in accounting. A stake in a speculative asset that's valued at an absurd multiple of ARR isn't exactly the same kind of thing as owning all the property of a slum and extracting rent. I am for a wealth tax so long as it discriminates on the type of wealth, but we aren't ready for that conversation.

If pg doesn't understand that the way he uses the way "earn" is very different from the way that AOC uses "earn", then I guess he is just not that smart.

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.

> 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.

"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.

Please don't bury the lede here of how the author completely and epically misses the point of the statement.

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.

Paul Graham seems pretty self-centered...

This post hand waves away the inflection point(s) of maintaining high growth rates as you grow. He hints at it saying year 4 growth is harder, but it is _vastly_ harder.

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.

I asked ChatGPT how many billionaires the US can have if every one of them has "just" 1 billion and if everyone else has basically nothing (i.e. zero net worth).

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.

Suppose you own a thing. And it becomes extremely profitable to own. And so you're able to pay people extremely generously to help maintain the thing. So everybody you pay feels like they're getting a good deal by working for you.

And the thing you own becomes so valuable it's worth a billion dollars.

You are now a billionaire. But through your telling, you don't deserve it, and that might be right. We didn't discuss how this amazing thing came into existence, and if it just magicked into being then sure, you don't deserve it.

But suppose that without you, this thing never existed. How should credit be distributed?

Now there are lots of problems here and there are lots of ways to criticize startups and many of them are legitimate. Oftentimes companies do exploit their employees, or use exploitative contracts, or are exploiting some resource that we don't like them exploiting. But almost every conversation like this implies that this is the only way, that it's theoretically impossible for a company to do things legitimately. And honestly, that's often fair because corporations often become extremely extractive / exploitative (see the new book by Eric Ries if you need examples and counterexamples)

But I would like it if everybody could correctly realize: the problem isn't making a billion dollars. It's how we do it, and it's the incentives that we place on companies for continued growth. If you're a politician you should work to fix _that_, not the existence of billionaires.

No, both are wrong, the war crimes are more wrong.

Yes but yours is more of an edge case than mine is.

Trades are almost always positive sum with some externalities.

Trades aren’t exploitative like you claim.

Does the highwayman earn his toll or does he steal it?

I doubt it. "Stealing" functions as a thought-terminating cliche; I suspect that very few people will think past it.

Market cap is based on people making estimates of future cash flow. (Especially for growth companies.) Predictions aren’t physical and can be wrong.

It’s also true that these companies raise and spend money and that results in physical changes in the world, but angry people on the Internet aren’t necessarily well-informed about what those changes are. There are lots of myths.

I get the impression that a rather large number of HN commenters hereabouts have a very favorable view of https://www.theguardian.com/commentisfree/2026/jun/04/a-good... by Thomas Picketty.

Why would you want to earn a billion dollars? You must have the maturity to handle the money. Hopefully you’ll mature sufficiently through the process of making that money but if the money’s fast, that might not happen. I’ve seen people get 9-figure rich overnight. Didn’t change them at all, they are still the wonderful folks they were. But I’ve also seen people drink themselves to death as it turns out a few mill in the bank does not answer the question “wtf do I do when I don’t have to do anything?”

I don’t know if this take is just naive or dishonest…

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.

Extremely disappointing post from pg. conflating income with revenue, assuming one can extrapolate a week-on-week growth rate to any other week (never mind 9 consecutive months or 5 consecutive years), giving as positive examples Google and Facebook.

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.

Generally a PG defender (at least nowadays), but he is deliberately misrepresenting what she meant, and/but I think a good % of the students/attendees know that.

Everyone needs to hear this. Each dollar represents a favor exchanged between people. A billion dollars is a billion favors. A billionaire is someone who did a ton of favors for others.

How to make a billion:

Step 1: Have millions

Putting aside that PG does not engage with AOC's point, he also doesn't engage with the much stronger argument against them: Billionaires are clearly a national security risk.

Reading this, I realize that I don't have confidence in winning under capitalism, so I think it would be quicker to just try to break the game of capitalism altogether. But communism, in my opinion, seems like a concept that is unlikely to arrive, so please wait just a little while until I come up with a new ideology.

I don't disagree with the essay, but is there any benefit to being a billionaire? Almost anything I could possibly want could be satisfied by being a humble multi-millionaire.

if you wanna make a billion, you need to help a billion people.

"So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars..."

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.

There is nothing more evil in this world than the pursuit of power and wealth.

It is more impactful to me to instead think of it like this: Elon Musk's net worth is roughly 1 million times the median American's. So Elon "earned" as much as the combined life savings of a city roughly the size of Houston or Phoenix.

I miss the days when PG articles were actually worth reading, and not just spurious drivel from yet another person that hasn't been in touch with reality for decades.

This horrible mentality is what ails tech bro culture today and ruined the tech world for me - chasing billions

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?

The post of this man (Paul) motivated me, although not for the reasons I assume he intended. If someone like this guy can achieve success, then really anyone can. His logic is truly idiotic, and if someone whose mind creates that can be successful, then success is open to everyone for sure.

its even easier with a 9999% month over month growth

Exploitation Luck

> 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?

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?

PG missed her point to an astounding degree. I’m sort of dumbfounded at this level of misinterpretation.

  -- Upton Sinclair

It's a bit rich that pg uses Facebook and Airbnb as examples in an article about earning lots of money without cheating.

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.

Benefits of being a billionaire are vastly overstated. To live a happy life, you don't need to be a billionaire.

I am a capitalist. But I feel most capitalists are shortsighted. The problem isn’t a person being wealthy. It’s a person capturing a market and making competition impossible.

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

Paul, we know you're not stupid so please engage with the real argument, not a strawman.

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.

Predictions aren’t physical and can be wrong.

I exclusively build stuff that I think is cool for me and my friends but I have little drive to market these things and plus they are designed to be completely free forever so I don't think I'll ever be a billionaire.

> What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.

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

Own a significant chunk of a rapidly growing large company, or be LeBron james.

I've read (and re-read) all of PG's essays over the years. Often they're wonderful fonts of wisdom. Sometimes they're myopic and poorly supported, but never just plain wrong.

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.

Woof. This article is pretty impressively tone deaf and seemingly missing the point (on purpose?)

The answer is easy, steal the value created by thousands of your employees.

Impatiently waiting for the follow-up "Why Earn a Billion Dollars". I believe it is a few keystrokes from being finished. Any minute now...

First question: why? Why should I (or anyone) earn a billion dollars? PG made it seem like that's the ultimate goal somehow. Also, why only a billion dollars, PG? You see your infinite cancerous growth machine doesn't stop?

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

The lack of genuine desire to understand each other is what is astonishing.

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.

You cannot EARN a billion dollars.

(Unless there is hyper inflation)

You can only get a billion dollars.

> A couple days later I was talking to the founder of a startup I'd funded. I began by asking, as I usually do when I meet a founder, what her growth rate was. 93% last month, she said. I pointed out that this meant her net worth was also growing at 93% a month. She was getting richer at a stupendously rapid rate.

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.

This is slightly disappointing, but it's probably necessary cope. If you want to build startups which move fast and break things, you have to ignore many problems and many people of this state, country, and world.

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.

> Since we started it in 2005 we've funded about 6500 companies.

> 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.

Having a billion dollars means the rules no longer apply to you. That is incompatible with functioning capitalism—incentives are no longer aligned with the rest of humanity—or personal freedom—rules for thee but not for me.

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.

Does that work always without fail with anyone anywhere anytime?

I do not want to earn a billion dollars. I want to earn a billion minutes to live longer.

You know, there seems to be a hidden thought here that it's either just (A) let the Founders do their thing and of course they will provide great value and happen to become billionaires as a result or (B) tax those crooked cheaters who are taking our wealth.

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.

I think maybe the fundamental issue is something that he said really late in the essay:

> 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...

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

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.

How many businesses are there that are worth at least $1 billion and employ no-one but the founders?

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.

Phew this guy hasn't had a new idea in a long time.

(underscores to visually identify mag)

--

// 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

> So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars.

> 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.

This is what HOAs are for. To ban the model of home sharing city wide is heavy handed if you're simple goal is to make existing tenants more comfortable. In a free market, people should be able to shop for what they want and make tradeoffs on the basis of price.

Thank you. I stand corrected.

Sure, it is logical that opening a previously restricted or infeasible product space is an easy way to produce business opportunities. Like the legalization of gambling in Nevada.

A few million means you own your house outright and could retire right now. It's success for yourself but it's not political control the way a few billion is. You couldn't afford a big misleading media campaign to change a law. It's not even generational - your kids will have a good upbringing but won't be set for life (other than housing maybe)

Totally a realistic scenario that's totally happened before! Totally a reasonable concern and not something that's a made up bullshit scenario!

$10M is a pretty high amount. FIRE numbers top out around $4M and can be as low as $1M.

>I don't know about home ownership - but not having random strangers I

I mean, this is just garden variety NIMBY-ism. Having a quiet farmhouse in the middle of midtown would also be a definite improvement just for you, but you're choosing to live in the most economically productive center in the world, and there are practical tradeoffs for that.

So nice of pg to mention AirBnB as one of his examples of what a successful startup who "doesn't cheat" means. They just were great people with a great idea who found a market for something people wanted that no one had thought about before, and poof, exponential math billionaires who earned it!

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!

> What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.

> 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?

I like how the fact that most likely this theoretical company is not a company of 1. What about the employees frankly doing most of the work? Are the customers getting a good product at a fair price? Are their vendors getting paid a fair and sustainable amount? Are the regions they exist in getting paid the correct taxes to repay them for the services and infra they provide? Contrast how Steve Jobs treated most Apple employees when Apple went public vs. how Steve Wozniak did. I do agree a founder that creates something valuable (in both financial and societal ways) is mostly a good thing. But when you look closely enough at how gig workers are treated you start wondering if the billionaires minted at Uber, Amazon, etc. can ever fantasize that they have clean hands.

Pg is such a POS.

Not sure if it's someone finding out about compound interest for the first time, or a veiled advert for start-ups.

"“Destruction becomes the principal commodity produced by capital. Militarism will lead accumulation, which will theoretically demolish any limit to capital.”

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...

An obvious calculation. The real world cannot be calculated so easily, It is changing unexpectedly and quickly.

AOC’s point is simply that when growing exponentially from 250M to 500M to 1B usually whether using exploitive rails one is conscious of or not - someone is bearing an unfair burden. That in 60 out of 60 examples of YC billionaires and all billionaires with maybe a few exceptions - people do not go out of their way to ensure nobody is getting hurt and everyone participates fairly. People are too excited about the exponential growth and their goals. I don’t even think it’s AOC’s main point that these people are at fault. Just that the system is at fault for not ensuring exploitation is minimized further for the rest of the 99%.

(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.)

For future readers of this thread, check out a related thread based on an article by the same author -

Billionaires Build

https://news.ycombinator.com/item?id=25302527

520 points on Dec 4, 2020 916 comments

Is this the same Paul Graham who says that founders need to be the kind of people who are prepared to break the rules? That is, cheat.

Not quite on topic. But I feel there is an issue in politics where many non-wealthy people vote as if they are "temporarily inconvenienced billionaires." That is they endorse policies that favor billionaires, as they have some hope of being one someday.

> 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.

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.

Buy a wish willow stick and break it in half

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

However, there are several addendum to this argument:

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

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

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

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

Impressed at the commentary here, which correctly points out Paul dodges the entire issue at hand.

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!

If you draft Tom Brady in the sixth round, you can win seven Super Bowls.

But "earning" does not mean "obtain without cheating"! Nobody (that I have spoken to) speaks of earning their lottery winnings. The claim is that owning a company worth a billion dollars is more like winning the lottery than it is like earning money. And it is!

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.

We dont want a billion dollars. We want a life that’s worth living. A world without corporate T.rexes looking to consume the young. Go f@ck yourself

I don't think this article properly engaged with the criticism from the politician. That's fine, I wasn't expecting it to, but this isn't valuable commentary on the politician's point. I suppose it does serve to demonstrate that Graham and people in Graham's orbit are unable to see a distinction between "have a billion dollars" and "earn a billion dollars".

It's a very sf-bubble type article.

Ew

Thank you for publishing this. I've been following Paul Graham and his works for a long time. It's refreshing to see everything written down in a document like this. This is the bible for startups. Honestly, it's beautifully simple but not easy.

This reeks of "Billionaires are persecuted" a la Silicon Valley (https://m.youtube.com/watch?v=JBZTHxZvOwg).

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!

So who was the woman he mentioned growing her company at 93% a month?

There's an older tradition of thought on the matter with better intellectual pedigree and epistemological hygiene: "Behind every great fortune lies a great crime."

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.

Air BNB guests are a net drain on my neighborhood. You do not add anything to the community. I can't ask you for a cup of sugar. You're a party of strangers who I'll never see again. I'm not on vacation trying to introduce myself to the locals, I'm catching up with my neighbors. Your tourist dollars would flow to my city just fine if you stayed in a hotel.

Hey man no offense but I would much prefer to know someone for 365 days than for 2. That’s awesome you want to visit, stay in a hotel and maybe I’ll run into you at some event in my city but I don’t need you staying in what should be permanent housing.

Why is it unethical? I'm both a freelance engineer and a business owner that sells software, and I've both sold my labour for equity/revenue share, and for a flat hourly rate.

If I charge a client $50k for some software and they made $1 million profit from it, good for them? As long as they pay our mutually agreed upon rate on time and there was no hostile negotiation, why should I feel suddenly entitled to more money if that wasn't in our contract? How do I know how much of the value is from my work and not their marketing or idea?

What you're saying seems as crazy as me saying that someone who bought my software for $99 and used it on a multi-million dollar project is being unethical unless they give me more money. How on Earth does that make sense? Should I be forced to switch to a royalty model? What if I make more selling copies at a flat rate, what if I don't want to have to investigate the finances of thousands of customers and have to deal with that whole trouble?

For me it's the same thing regardless of whether I'm selling my labour or a product. I can choose whether to accept a flat hourly rate, equity, or a mix of both, and usually the better deal is the hourly rate.

If I find a way to hire a software engineer for market rates (say, $200k/year in the US) and get $2M revenue from their work, good? They can ask for a raise or a bonus, we can renegotiate, they can leave if they're unhappy, but I'm not obligated to give them more money than was in our agreement anymore than they're obligated to give me their salary back in the project fails.

Every company, from the small business to mega-corps, needs to extract more value from their employees than the produce; otherwise it will likely go bankrupt.

Even within successful companies, it is a challenging task to figure out just how much value each employee produces. Some positions are required, but do not produce revenue. Sometimes whole departments are a sunk cost.

It is up to each employee at review time, to argue that the value they produce is far greater than their salary; in order to negotiate a raise. No one is automatically entitled to anything extra, just because the company had a good year.

IH is doing well, but I stopped the podcast years ago. No plans to bring it back currently. Although it's certainly an exciting time for startups and the last few years of it would've been pretty nuts.

The housing crisis has one problem and it is identical to this one:

Taylor Swift is coming to the local stadium to play a concert. There are 1,000,000 fans in the area that would like to see her live. The stadium seats 100,000. How do we reconcile the imbalance between demand and supply of tickets?

Solve this problem, and the housing crisis is also solved.

No because Airbnb bans are basically political bike shedding. Yell at the guys sprinkling oil on the fire because taking on the NIMBY's flooding the region with oil is too difficult.

"Multiple causes" is just mealy-mouthed pussy-footing, there is one big cause and then a bunch of other distractions as the numbers now prove.

I know the Spanish case. The hotel lobby does not only push for airbnb restrictions but also for banning new hotels (so that they can push prices up). For example famously there are no new airbnb or hotel licenses since more than 10 years and obviously the problem has only worsened. Regardless, the problem is in general still a demand that grows roughly at 2.5x the supply growth rate.

Externalize all the problems, but its "not cheating!" - its just making us all pay for your growth while you take advantage of the current structure of society and generally making things worse.

Ah got it. Where are you now? I'm traveling around the US this summer so would be cool to make something happen if possible.

I knew pg was full of shit from about September 2007 because that is when he wrote this piece of garbage https://paulgraham.com/philosophy.html

So do you have a counterpoint to his argument that 1 and 2 enabled new methods and scales of wealth creation?

If you're not aware, in addition to being generally frowned upon on HN because it's zero-signal snark, the no doubt satisfying BU diss is also such a meme about socially awkward teenagers that it's a bit in a hit movie: https://www.youtube.com/watch?v=HtMmhcNKn0o.

At "Glad you agree" we've left plausible benefit of the doubt that you're arguing in good faith and so I'll bow out with one procedural grade discharge, which is that the LLM accusation is quite trivially prohibited in the stare decis of dang's rulings over the years, but still sometimes rallies downvotes, so my credentials as a human are that no LLM I'm aware of (and I work in AI) has YouTube channels of code streams.

Chain of custody on that: https://news.ycombinator.com/item?id=48511333 -> https://www.youtube.com/@b7r6-c3t so no, I'm not an LLM. I have Opus read my comments after I post them so I don't persist in trivial errors of reasoning, but I credit LLMs for their output just as I expect mine credited.

"Since we started it in 2005 we've funded about 6500 companies."

"... 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."

"I felt like a skating coach hearing someone say that it's impossible to do a triple axel."

Imagine a skating coach who has been training skaters to execute triple axels. If he has spent 21 years training 6500 skaters and only 30 of them are able to perform triple axels, would you take him seriously

That's less than 1% (0.0046%)

With that extremely low success rate, how valuable is the "training"

Maybe there is no causal link between the "training" and success

Less than 1% succeed

It's easier to argue that there may be a causal link between the training and failure, or that "training" has no effect at all on the success rate

Over 99% of those who "train" with this "coach" fail

Maybe it's not a bad deal for the coach is he gets paid fees by his real clients, the limited partners, regardless of outcome

But is it a good deal for the skater given a less than 1% success rate

The coach, on behalf of his clients, the limited partners, is providing a loan to the skater. If the skater learns to perform the triple axel, i.e., becomes a billionaire, this will enrich the coach's clients and the coach. The skaters are not paying the coach. If they are one of the more than 99% who fail to perform the axel, then they are only wasting their own time and effort

"Thanks to Trevor Blackwell, Jared Friedman, Jessica Livingston, and Garry Tan for reading drafts of this, and to Arwa Elrayess and the Oxford Union for hosting me.

Funny that none of these the proofreaders caught the misspelling of "billionaire"

The new rich have warped concepts about how they "earned" their wealth.

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.

How do you know that someone is about to lose their computing chops? They waste a paragraph explaining a convoluted roundabout way to answer question "how many months of 93% growth it takes for something to grow 500x" with useless precision. A kid just started with BASIC learns by heart in a week that 512=2^9 :)

The thing about billionaires is that it's almost entirely paper wealth.

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.

I think Paul left out the fact that in order to grow that fast, you often need to commit crime.

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.

Why would you even WANT to become a billionaire?

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.

> Since we started it in 2005 we've funded about 6500 companies.

> 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...

"It's impossible to earn a billion" means it's impossible to work hard enough to deserve to have a billion dollars in a world where so many people died for lack of money, not that it's impossible to get it without cheating.

Weird to see Graham take AOC's quote out of context:

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

The real problem is his example, "you start off with 2 million dollars and 95% growth rate".

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.

The thing about "compound growth", even in the most general sense, is that it ALWAYS ends, and that end is typically a crash of some sort.

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).

>There are two numbers that determine how big a startup gets, and thus how rich its founders become: the growth rate and how long it continues. You get the first by making something users like so much they tell their friends. You get the second by being in a big market. If you grow exponentially into a big market, your startup will become valuable, and you, as a shareholder, will become rich. You not only don't have to cheat to make this happen, it will happen automatically if you just keep making customers happy.

This article reads like a rather flippant dismissal of the original concern that "earning" a billion dollars cannot be done without some moral compromise.

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".

What people mean by "you can't earn a billion dollar" is that there's no work that's useful enough, alone, to be worth that much in reward. How can we live in a world where a moron can have a trillion to their name, while others work arduous physical labor all their lives and end up with nothing?

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.

“Billionaires v. the underclass” is such an unsophisticated discussion. Markets have all kinds of externalities, equilibrium traps, information asymmetry flywheels, and hundreds of other phenomena that interplay to trip people’s sense of fairness in all kinds of ways.

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'm amazed that PG can't see his own arguments clearly lead to massive social harms.

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.

You can aquire a billion dollars. Nobody has ever earned a billion dollars.

Holy smokes, one could call this condescending but assuming both politicians and an average reader don’t understand how exponents work feels a step above. And that’s before you get to the part where it’s all about a great idea and hard work and definitely zero exploitation while mentioning examples like Apple, Facebook or Airbnb.

> What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.

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.

She's saying nobody can truly work a billion times more, a billion times harder, a billion times smarter, so nobody can actually earn a billion dollars.

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.

What occurred to me reading this was the wage. Initially, and famously, the hours put into building a startup result in sub-par wages. But the amount of work by an individual never increases as it is limited by human capacity. In a successful startup with continuous growth the wage is ever increasing, to the point of absurdity.

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.

lots of moving parts on this discussion but I'll boil it down to:

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)

How to actually make a billion (the YC formula): 1. Work hard to build a great product. 2. Get VC money. 3. Offer great product for free by spending ridiculous amounts of VC money. 4. Switch to a paying model once you have starved any competition with your free offering.

I remember when Facebook, I think it was, was going public. There was a ton of consternation about avoiding a “Google chef” situation. Google had a chef that got paid a bunch of equity as if they were an engineer, and they got filthy rich when Google went public. This was, of course, an outrage. A lowly chef getting rich from a startup IPO! We all know that the founders are supposed to get wealthy beyond all reason, regular engineers are supposed to get fairly rich depending on how early they started, and regular people aren’t supposed to get anything special.

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.

I don't personally subscribe to this belief but the people saying it's impossible to earn a billion dollars without doing something bad would say that your founders are doing something bad by exploiting the employees by not returning to the value creators a fair share of the value generated and instead hoarding it for themselves. pg is arguing a strawman to the actual argument when there are far better arguments around rewarding risk though I feel like most people shouting that don't value risk either so maybe that's not a better argument?

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.

It's not the verb "earning" that's different, it's the (implied) noun it is referring to: "wage" (AOC) vs. "capital" (Graham).

A cursory search says 74-90% (in the US), but also that’s just tech companies and usually you need to be early. It’s also often in the form of options that take years to exercise and companies have gotten very creative lately in how they screw people out of them.

Looooots of caveats here.

Classic is based on votes from older accounts: https://news.ycombinator.com/lists

It tends to filter out trite topics and lower-quality submissions, though I have the feeling that it has become less effective for that in recent times.

Yet they keep talking about an emphasizing how he was a hardworking welder first when, frankly, it’s borderline irrelevant to his being a millionaire.

The thumbnails often just tell the welder story, for instance. It’s very clever (misleading).

If your life analogy is a closed system competition you’re going to be disappointed.

Most people with millions do not become billionaires. So yes, there is an exclusive pool of players who can play the game. But within that pool there is incredibly different outcomes.

A better analogy is being born as a child of D1 basketball athletes and then making 100 million in the NBA. Being born into a family with no interest in athletics makes it almost impossible to be a professional athlete. Life isn’t fair. It’s still impressive to become one.

If I can pay property taxes on the unrealized value of my house, a notoriously illiquid asset with a notoriously subjective and noisy valuation, then billionaires can pay property taxes on their galactic piles of unrealized gains, which are more liquid than a firehose and easier to value than a $2 bill. This could crash the economy if done too aggressively, but the same can be said of every important economic decision ever made.

We've been pushing all the money into the capital economy and all the taxes into the labor economy and this can't go on forever.

Of course - at founding, if $20M goes into the company at $1 per share, and the CEO gets a 10% equity stake (usually subject to restrictions), then the CEO has $2M on paper (or will have after possible vesting.) Real money in this case came from the original investors that flowed into the company in exchange for ownership, but the CEO can't really do anything with his shares yet. At this point the original investors are taking a huge risk with their money - chances are, they just lost $20M dollars, and probably even more, as it can often take a long time of putting good money after bad.

Once a company starts operating, but before revenue (and hopefully eventual profitability), the valuation is trickier. The share price _should_ be the number of shares divided by the sum of all future profit (minus current debt.) Which is hilarious of course, because no one actually knows the denominator.

That original $2M equity stake can grow to billions if the company ends up making something that a lot of people want or need, so the sum of all future profit is large. Or, much more likely, it will be worth nothing, or a modest amount.

Graham's essay kind of avoids the point of whether ownership of a vastly appreciating asset is "fair", if a bunch of other people help that asset to appreciate.

Only a moron would hold $50b in cash, and certainly not one who understands finance.

There are no Scrooge McDuck cash vaults.

> Let's put this math in a mirror and do the leftie version of the exponentials

The plot twist is that the 'rightie' and the 'leftie' are both entirely correct. Which is why most developed economies try to remove sources of wasteful, unearned rent and also include significant amounts of redistribution/social insurance rather than relying on pure market outcomes. This doesn't erase the compounding dynamics altogether, but it hopefully ensures that folks at the lowest end of the distribution can keep a tolerable standard of living that doesn't have them 'paying' too much.

    gains = investment * rate_of_return

We also want a compounding (progressive) tax rate to address compounding wealth (and perhaps we need a wealth tax?).

"leftie"… kind of a red flag when I see it in comments.

If you start with a mere two million and get really lucky, you, too, can be a billionaire!

Now, if that isn't inspiring, I don't know what is! Some of my rich buddies got to be super rich following my advice!

I really don't know why the average person hates the rich. Those poors are so out of touch!

Sure I'd acknowledge the risks taken. Arguably though, there should be some degree of a known benchmark just so people don't get overly taken advantage of.

> Yeah I’m not sure “people gather knowledge and guidance from their families and culture” is on the table, or desirable.

Are you missing something like "getting rid of", as in getting rid of that is a way to make things more equal? Because you are aware there are more than one way to make things more equal, right? For knowledge, a well-funded public education system (i.e., not the US apparently) goes a long way, and most people consider that a public good.

Most people concerned about inequality, I would wager, would be more focused on things like nepotism and access, for example I don't have a mum that could get me a meeting with the CEO of IBM to pitch ideas to.

A robust social safety net would probably be helpful if enabling non-already-rich people to take entrepreneurial risk is considered desirable, among other benefits.

If you can buy a $44B company on a whim, then what you hold is indistinguishable from cash.

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I'm pointing out the reality.

As I said, I'm not a person that thinks that correct allocation of capital isn't a useful role. Really good VCs and investors are really really important.

However like art - it can be both simultaneously true that art has intrinsic value and that the art market is seriously corrupt.

Sure Paul adds value - but I'd humbly suggest not as much as he has extracted.

I agree with the sentiment, but taxation isn’t the answer. Govt is just as irresponsible as any corporation. Taxation winds up just being a way to manipulate interest rates.

> A restaurant won't scale - most ideas won't scale - because they're not useful enough

Counterexample, a restaurant worth $202 billion: https://stockanalysis.com/stocks/mcd/market-cap/

One of the arguments against billionaires really deserving that much money is that while they own the shares, the scaling up is done by a labour force that doesn't capture this growth, "only" (so goes the argument, I do know about share options) "their wages".

How many burger flippers get compensation in the form of shares in the parent company? I genuinely don't know, but I do expect it to mostly be in the form of pension funds rather than stuff they can see in their working lives. Pension funds are a lot of money, they need to be so those with them can retire, same logic as FIRE because being a pensioner is the first three initials of FIRE.

This is probably for the best, owing to something not explicitly mentioned in the article: startups are risky. This is as much a lottery question as it is an effort question, because "cool idea" absolutely does not mean "make it and they will come", no matter how hard working the founders (and first hires) are.

> they just offer them products and ecosystem and most people are dumb enough to ruin their life with it.

Also an argument for El Chapo and friends (if we didn't criminalize their products and add the violence around the trade, see Alcohol and Tobacco).

> - but I hate them too.

Why do you hate them if you don't think they are bad?

You seem to be saying, "it's not illegal; I will hate it, but it is not bad". What is "illegal" is an arbitrary classification that different countries choose. That's the point of what the unnamed politician (it's AoC I think?) is saying: those things should be illegal.

It is not like the money is in his bank account.

And it’s not like he took the money from somebody else.

He spent a ton of time to create something that he owned the majority of and to make that thing more valuable. He paid other people to help him and they were happy with that exchange. The government also helped them and they were happy with that exchange.

Suddenly, people have assigned a concrete value to the thing via the IPO and it is very valuable.

It’s not like he suddenly has $1 trillion in his account. It’s just the thing that he made and has ownership of is suddenly worth that much.

> But those founders be content with merely making a hundred million?

What does this mean? Without some insane wealth tax this is literally impossible. No founder chooses to become a billionaire. They just keep growing a business that is solving a billion dollar problem.

The only other was is if after 100M they start turning down customers or restricting services.

How about we set a maximum wage instead of a minimum wage? But it's not a set number. It is a maximum multiple of the lowest paid employee at a company? 10x should do it. If the CEO wants a million each year then the lowest paid employee still gets 100k. I'm trying to think of why this wouldn't work.

> it's possible for bright, motivated founders to create startups that your kids can work in, but those founders could be content with merely making a hundred million dollars?

Making a billion dollars doesn’t require becoming a billionaire. Someone who makes a billion dollars in a balanced society generates wealth and taxes. (One who does in an unbalanced one has the choice to donate.)

Also, liquid versus illiquid. Founders shouldn’t be under obligation to cap their ambition or force liquidate if their companies do well.

Surely this would just create an industry of ways to dodge the “$100m tax”.

Just waiting for my company’s top 10 shareholders to be anonymous entities owned by other companies based in the Cayman Islands.

The primary issue with this is the way shares and equity work. Elon Musk is a trillionaire on paper. He pays himself famously little.

That net worth is, under our current system, tightly linked with his interest and control in his various enterprises.

He can borrow against it which gets around taxes and that should probably be addressed, but he like the hypothetical fresh billionaire startup founder don’t have that money. And the mega rich on paper can’t access more than a small percentage of that money without reducing their control of the company they built or are building.

Ideas like a wealth tax, or the new sovereign fund paid into by an equities tax or grant are all interesting, but they are all more complicated on the ground than “wouldn’t $100m be motivating enough?”

FWIW, I think that some sort of public endowment and/or sponsored healthcare, education and safety net and/or tax or management of hyper wealth is one of the problems of our age.

But part of that problem is that it’s not clear how to do that in a way that is workable in an increasingly multipolar world of tech and soon healthcare giants that are as powerful as small but growing nation states. Economically and in some cases militarily linked to great powers.

There is an alternative: 1) limit how much descendants can inherit. Allow them only a maximum amount of let's say: 10 million and make sure that either the founder finds a way to redistribute his/her wealth to the rest of the world, or make the government find ways of redistributing this money. 2) make it mandatory for corporations to share their wealth (income) with the employees -- as an example make it mandatory to redistribute 50% of the income generated to the employees working for the company rather than paying CEOs insane amounts of money to return 'shareholder value'. The whole motto of maximising shareholder value has poisoned capitalism: the goal of a company should not be to become a cancerous growth -- but to serve as a net good for humanity. 3) seal the tax loopholes that make it easy for the rich to avoid paying taxes. There is no reason why the poor and middle class pay a disproportionate amount in taxes compared to the rich.

> that is still so much money that said founder and their family and very likely their descendants can live in extreme luxury for the rest of their lives even if they stop working right then.

Professional athletes and lottery winners prove otherwise.

I don't understand why people argue for a limit on wealth - the line of reasoning, when reasoned out, concludes with a majority of people having the exact same amount of wealth.

How so?

Well, suppose we say, nobody should be a trillionaire - is this an arbitrary number, or is it aimed at the richest person? Clearly, the latter. Now if we carried this out, now there are billionaires remaining. Well, nobody should be a billionaire, one might say. Most will agree. So the wealth of billionaires is taken away, and redistributed evenly.

This will continue, with the majority of people below the average wealth level, demanding a more equal playing field. You can see how it ends

I think the most chronic misunderstanding in the "billionaire" rhetoric is that billionaires are in it for money.

People who work a job they don't like because they need money to live, view money as the objective in life, because the equivocate it to escaping and freedom. So wearing that lens, and looking at billionaires, these motherfuckers are greed driven psychopaths who blew past the "escape with freedom" bank account ages ago, and are now just taking money off the table from others trying to get ahead.

But that is not how it is at all. Virtually every billionaire is crazy focused on their work, and the money is a side effect that they don't really care that much about, besides it being a tool to enable more work they can do.

It's very hard to get this across when speaking to people who view work as an obstacle, money as god, don't have personal business experience, and whose passions are things that aren't very productive.

bear in mind, elon musk now has the wealth of 10k "100 millionaires" - we truly lack comprehension of how wealthy the wealthy have gotten.

Who is going to cap how much a company is allowed to be worth? Or how much of the company you start you are allowed to own? Why should anyone have the power to do that? That is a far more evil power than any billionaire has.

pg has an essay addressing exactly that: https://paulgraham.com/inequality.html

The problem is that when you cap earnings to $100m, most investors lose motivation to invest in startups, because their investment isn’t likely to yield a reward. Unless you think all investments should be less than $100m, this kills large investment rounds. That would have killed OpenAI, for example, since their recent round was larger.

In other words, it’s fine to say “you can only earn a hundred million dollars.” The hard part is implementing it without killing the investment ecosystem. Every investor is chasing the big return that covers the 20 investments that didn’t pan out. If that big return is capped, there won’t be investment, and hence no startups.

Just because people disagree with you does not mean "narrow reading".

OK, PG might have proved it's possible for someone to become a billionaire. But why is that a good thing?

The model is: rich old guys extract money from the populace with threats of violence (just try not paying taxes). The rich old guys get FOMO. They give this money to young people who work really hard. This means foregoing sleep in favor of vibe coding some BS that nobody ever asked for, and making it addictive.

Nobody in their right mind would give a penny to these very hard working young people. In fact they don't: their startups only make money through ads. Nothing they make is worth even a tiny subscription fee. And ads are paid for by resource strip-mining megacorps.

What we have is a two-tier population of a have-nothing underclass and a handful of nobility. If we continue down this path there will be a revolution. There always is. Now that is something you probably don't want your kids to live through.

Huh? Why do you require billionaires for your kids? There are so many alternatives

lol the next generation won’t be working in startups or anywhere else, all we have now is to hope and pray that we get a nice corner of the human zoo

Never thought I'd see "think of the children" as an excuse to requiring billionaires but HN will always find a way to surprise you.

I would want my kids to be happy. Who gives a shit about what job they have.

Ok

The worlds is grim because billionaires have a large part of the cake and the rest has to fight over the crumbs.

Billionaires are a sign of a failing systems because nobody earns a billion dollars.

What do you think why many important jobs are badly paid while some CEO gets a billion dollars.

Didn’t you see in the pandemic where the real important jobs are and did you realize how low their payment is?

BTW it’s interesting you see you kids working in a startup but not creating one.

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

> the alternative is too grim

The problem is, reality doesn't care whether you think it's grim or not.

I think the environmentalism movement faces this - it's easier to believe that everything is fine and we're not harming the planet and all is good, because the alternative is grim. But if the alternative is real then the fear of facing it is only going to make the reality even more grim.

Just because you managed to get a billion dollars of value attributed to your name does not mean that you know how to earn a billion dollars or that you have the first worthwhile clue to share to anyone else how they should do it. It's the blind trap of the successful. They lose situational awareness and can no longer accurately map their actions onto the world they actually live in.

Which is probably why this immediately devolves into a bunch of silly math and equally silly proclamations that don't seem rooted in any actual defined course of action. This is less than worthless, it's actively harmful.

> I've got kids

And this requires _a billion_ dollars? Perhaps an intentionally narrowed scope would be good for some of the HN audience.