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Actually I'd like some evidence on that. Do founders really care for money all that much? Does it make a world of difference for them if they make 100 million v

Actually I'd like some evidence on that. Do founders really care for money all that much? Does it make a world of difference for them if they make 100 million vs 1 billion from their startup (versus just the success of the company itself, i.e. how many users you reach)? I think the effect of valuation may not be so significant on the founders motivation, specially given how you have no idea how large the startup will get from the beginning.

Kalium 11y ago
It sounds to me like what you're asking is actually "Do people and markets respond to incentives?". Broadly, I think the answer is yes. Yes they do.
- vec 11y ago
  I think the real question is "does the existence of unicorns provide an incentive to the average founder?", and I'd say that question's a lot less definitive. Sure, some founders have gotten filthy stinkin' rich off their startups, but those are lottery-ticket odds. Most founders seem to be aiming for either a self-sustaining small business or an acqui-hire, both of which are middle- to upper-middle-class career paths, but neither are by and large own-your-own-helicopter-class career paths.
  - Kalium 11y ago
    I think you may have overlooked the power of optimistic biases. A fair number of young founders do believe they stand a good chance of becoming very much upper class and base their financial decisions on this. Failing that, some people are willing to play lottery-ticket odds even with full appreciation of the risks. That said, I think the answer hold even if you restrict the question to small self-sustaining lifestyle-businesses-size. You correctly state that there is no way of knowing how big a company will get at founding time. However, if there's an upper limit, then this may significantly affect risk evaluation. People will respond to the incentives they see, and you can't kill the incentives without affecting how people behave.
- darkmighty 11y ago
  The qualitative aspect seems pretty clear (people respond to monetary incentives), but quantification is important here. When making decisions shaping policies and legislation, you'd want to know how much innovation would be affected by increasing taxes on the high end of the income curve versus the benefit this could generate by using the additional income to fight poverty, for example.
  - Kalium 11y ago
    That's a difficult question to weigh at the best of times. Among other things, you have to consider questions like the relative efficacy of small business grants versus ongoing cash transfers. There's also questions of policy preferences in non-financial terms. The list items to be considered is considerable and I won't pretend to know what's all on the list. Anyway. I don't think it's an easily evaluated question, in large part because there are good ways to fight poverty (as a government) and ones that are no better than cash-fuelled bonfires. It's difficult to evaluate a kinda-sorta-semi-vaguely-known (change in private spending from higher taxes) against a total unknown (result of hypothetical anti-poverty programs), though. Which is a long-winded way of saying you're right about it being a quantitative question, but I don't think it's a readily answerable one.
- brooklyndavs 11y ago
  I would argue in some cases they don't. Take for example the artist who works for years, decades even, on their art without expectation of large monetary gain. In a broad sense some people don't respond at all to incentives (assuming monetary) and others do respond but its not a recipe for personal happiness. Personally, that's why I'm such a fan of some sort of basic income. While it reduces inequality it keeps the monetary incentive response as a choice, which ultimately equals more personal freedom.
  - Kalium 11y ago
    Let me rephrase, then. People, as a population, respond to financial incentives. People respond to incentives around things they value - your artist is absolutely an example of this. Financial markets respond to financial incentives. No basic income is going to make people feel useful and productive. Personal freedom isn't the same as personal fulfillment, after all. Basic income also isn't going to change the kind of inequality you see in the Bay area - where highly skilled professionals make multiple times the basic wage. I assume you mean some kind of basic income indexed to the local cost of living. Without that people would need to do what people will raise nine kinds of Hell to avoid even thinking about - moving to an area they can afford.

Kalium 11y ago

It sounds to me like what you're asking is actually "Do people and markets respond to incentives?". Broadly, I think the answer is yes. Yes they do.

vec 11y ago
I think the real question is "does the existence of unicorns provide an incentive to the average founder?", and I'd say that question's a lot less definitive. Sure, some founders have gotten filthy stinkin' rich off their startups, but those are lottery-ticket odds. Most founders seem to be aiming for either a self-sustaining small business or an acqui-hire, both of which are middle- to upper-middle-class career paths, but neither are by and large own-your-own-helicopter-class career paths.
- Kalium 11y ago
  I think you may have overlooked the power of optimistic biases. A fair number of young founders do believe they stand a good chance of becoming very much upper class and base their financial decisions on this. Failing that, some people are willing to play lottery-ticket odds even with full appreciation of the risks. That said, I think the answer hold even if you restrict the question to small self-sustaining lifestyle-businesses-size. You correctly state that there is no way of knowing how big a company will get at founding time. However, if there's an upper limit, then this may significantly affect risk evaluation. People will respond to the incentives they see, and you can't kill the incentives without affecting how people behave.
darkmighty 11y ago
The qualitative aspect seems pretty clear (people respond to monetary incentives), but quantification is important here. When making decisions shaping policies and legislation, you'd want to know how much innovation would be affected by increasing taxes on the high end of the income curve versus the benefit this could generate by using the additional income to fight poverty, for example.
- Kalium 11y ago
  That's a difficult question to weigh at the best of times. Among other things, you have to consider questions like the relative efficacy of small business grants versus ongoing cash transfers. There's also questions of policy preferences in non-financial terms. The list items to be considered is considerable and I won't pretend to know what's all on the list. Anyway. I don't think it's an easily evaluated question, in large part because there are good ways to fight poverty (as a government) and ones that are no better than cash-fuelled bonfires. It's difficult to evaluate a kinda-sorta-semi-vaguely-known (change in private spending from higher taxes) against a total unknown (result of hypothetical anti-poverty programs), though. Which is a long-winded way of saying you're right about it being a quantitative question, but I don't think it's a readily answerable one.
brooklyndavs 11y ago
I would argue in some cases they don't. Take for example the artist who works for years, decades even, on their art without expectation of large monetary gain. In a broad sense some people don't respond at all to incentives (assuming monetary) and others do respond but its not a recipe for personal happiness. Personally, that's why I'm such a fan of some sort of basic income. While it reduces inequality it keeps the monetary incentive response as a choice, which ultimately equals more personal freedom.
- Kalium 11y ago
  Let me rephrase, then. People, as a population, respond to financial incentives. People respond to incentives around things they value - your artist is absolutely an example of this. Financial markets respond to financial incentives. No basic income is going to make people feel useful and productive. Personal freedom isn't the same as personal fulfillment, after all. Basic income also isn't going to change the kind of inequality you see in the Bay area - where highly skilled professionals make multiple times the basic wage. I assume you mean some kind of basic income indexed to the local cost of living. Without that people would need to do what people will raise nine kinds of Hell to avoid even thinking about - moving to an area they can afford.