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No, it's actually really horrible. In a Ponzi scheme you: 1. Fraudulently promise returns. 2. Payout imaginary returns with other people's money. >at a certai

by rortian 16y ago

No, it's actually really horrible. In a Ponzi scheme you: 1. Fraudulently promise returns. 2. Payout imaginary returns with other people's money. >at a certain level a Ponzi scheme is any business that lives entirely off a positive and growing first derivative while heading faster and faster toward a certain death. This is really silly because you don't even specify what quantity you are taking a derivative of. Ponzi schemes are a certain type of fraud. There are many kinds of fraud. Amazingly, the author never asserts any sort of fraud. I think you and the author of the blog post are thinking: "Ponzi schemes are bad and I don't like facebook so they are kinda similar." Anything substantive you'd like to add, or would you like to concede that absurd contrarian claims usually just confuse and waste everyones time?

rhl 16y ago
Woo. Let's chill out a bit. 1. I actually do like Facebook, and am very impressed by what they are pulling off. 2. I learned about Ponzi schemes a while back in macro theory class, before they were mainstream and irremediably tainted by the vileness of Bernie Madoff. The story of Ponzi himself -- as I remember our macro professor telling it five years ago -- is pretty 'funny', or at least provided welcome distraction between two utility maximization derivations in econ class; he's supposed to have been a 16th century Venitian who ended up in the Venice lagoon once the bankers he was pulling his cash from realized what happened. I didn't think of it as a crime. All this to say that I never implied nor intended to imply that Facebook was committing any sort of fraud, immoral behavior or else. 3. What I mean by this derivative thing is quite simple -- imagine the movie Speed with a bomb that explodes, not when the speed goes under X mph, but when the bus's acceleration goes below X mph/h, forcing the bus to keep on accelerating, driving faster and faster and faster. Eventually you'll hit the physical speed limit of the bus, acceleration will converge to zero, and the bus will explode. That's a very silly metaphor for what I was trying to explain - being that, if indeed FB had to rely on an ever growing in-flow of first time ad buyers to keep the lights up, they are would be in as desperate a situation as was Mr Ponzi in 16th century Venice. Just to cool everyone's mind -- I really don't think this will happen. The team is least extremely smart to have gotten where they are, and I trust Facebook to eventually find as ridiculously profitable a business model as AdSense, with high probability. As a user I do hope it will respect my privacy, and as an entrepreneur I do hope it will allow some cool new distribution models.
- btilly 16y ago
  You have Charles Ponzi's history mostly wrong. See http://en.wikipedia.org/wiki/Charles_Ponzi http://en.wikipedia.org/wiki/Charles_Ponzi for a more accurate version.
  - starkfist 16y ago
    "Mostly??"
    - rhl 16y ago
      Yes, it's actually totally wrong. If you read carefully though, I'm not reporting Ponzi's story as it happened, but as I heard it for the first time from an econ professor, which may or may not have been pulling our legs.
    - btilly 16y ago
      The story claimed Venetian which implies Italian. He was actually born about 70 miles away, but that was still in Italy. And he swindled lots of people. That is why I said "mostly".
  - tedunangst 16y ago
    There's some oddities in the WP timeline. Nov 1, 1920 goes to jail. Spends 3.5 years in jail. Released and then "almost immediately" indicted by the state. Challenges indictment, it goes to Supreme Court, settled on Mar 27, 1922. How could he spend 3.5 years in jail between those dates when there aren't 3.5 years between those dates?
    - jjs 16y ago
      Now that you've uncovered these irregularities, we can blow this Wikipedia scandal wide open!
  - rhl 16y ago
    Ha! I knew something was fishy in that econ class. :) Thanks a lot though. This is far more sinister than I suspected.

by rortian 16y ago

rhl 16y ago

Woo. Let's chill out a bit. 1. I actually do like Facebook, and am very impressed by what they are pulling off. 2. I learned about Ponzi schemes a while back in macro theory class, before they were mainstream and irremediably tainted by the vileness of Bernie Madoff. The story of Ponzi himself -- as I remember our macro professor telling it five years ago -- is pretty 'funny', or at least provided welcome distraction between two utility maximization derivations in econ class; he's supposed to have been a 16th century Venitian who ended up in the Venice lagoon once the bankers he was pulling his cash from realized what happened. I didn't think of it as a crime. All this to say that I never implied nor intended to imply that Facebook was committing any sort of fraud, immoral behavior or else. 3. What I mean by this derivative thing is quite simple -- imagine the movie Speed with a bomb that explodes, not when the speed goes under X mph, but when the bus's acceleration goes below X mph/h, forcing the bus to keep on accelerating, driving faster and faster and faster. Eventually you'll hit the physical speed limit of the bus, acceleration will converge to zero, and the bus will explode. That's a very silly metaphor for what I was trying to explain - being that, if indeed FB had to rely on an ever growing in-flow of first time ad buyers to keep the lights up, they are would be in as desperate a situation as was Mr Ponzi in 16th century Venice. Just to cool everyone's mind -- I really don't think this will happen. The team is least extremely smart to have gotten where they are, and I trust Facebook to eventually find as ridiculously profitable a business model as AdSense, with high probability. As a user I do hope it will respect my privacy, and as an entrepreneur I do hope it will allow some cool new distribution models.

btilly 16y ago
You have Charles Ponzi's history mostly wrong. See http://en.wikipedia.org/wiki/Charles_Ponzi http://en.wikipedia.org/wiki/Charles_Ponzi for a more accurate version.
- starkfist 16y ago
  "Mostly??"
  - rhl 16y ago
    Yes, it's actually totally wrong. If you read carefully though, I'm not reporting Ponzi's story as it happened, but as I heard it for the first time from an econ professor, which may or may not have been pulling our legs.
  - btilly 16y ago
    The story claimed Venetian which implies Italian. He was actually born about 70 miles away, but that was still in Italy. And he swindled lots of people. That is why I said "mostly".
- tedunangst 16y ago
  There's some oddities in the WP timeline. Nov 1, 1920 goes to jail. Spends 3.5 years in jail. Released and then "almost immediately" indicted by the state. Challenges indictment, it goes to Supreme Court, settled on Mar 27, 1922. How could he spend 3.5 years in jail between those dates when there aren't 3.5 years between those dates?
  - jjs 16y ago
    Now that you've uncovered these irregularities, we can blow this Wikipedia scandal wide open!
- rhl 16y ago
  Ha! I knew something was fishy in that econ class. :) Thanks a lot though. This is far more sinister than I suspected.