7 ms·

Why People Don't Get Wealthy

40 points by Ozzie_osman 8y ago

lacey 8y ago
How about: - investing time in things that ultimately do not pay off - taking risks - lots of small poor choices that add up - bad luck (yes, to some extent you can make your own luck but sometimes things are outside of your control) Honestly I find his list pretty poorly thought through, especially in comparison to the recent blog post by Sam Altman: http://blog.samaltman.com/how-to-be-successful http://blog.samaltman.com/how-to-be-successful
- dwd 8y ago
  Luck is making the better decision in a timely manner based on incomplete knowledge where each option appears equally valid. However, people generally are poor at calculating probability combined with risk/reward and simply make bad decisions. And sometimes, all choices lead to bad outcomes.
  - Blackstone4 8y ago
    >Luck is making the better decision in a timely manner based on incomplete knowledge What?! So going through a green light and getting hit by someone going through a red is a bad decision? Getting cancer is a bad decision or bad luck?!
    - dwd 8y ago
      Seems his list was missing an important one: Not playing the victim. Yes, sometimes other people will cause you harm. Could you have avoided it, probably not as you can't always predict the future. How you move on from a bad situation is your decision. Wallowing in self-pity because the world has done you wrong is a good way to never succeed. As an aside: your chances of getting a particular cancer can be affected by your lifestyle choices so you can make better decisions to avoid it.
      - apacheCamel 8y ago
        > How you move on from a bad situation is your decision. Wallowing in self-pity because the world has done you wrong is a good way to never succeed. I agree with this but it doesn't have to do with luck. You could pick yourself up and keep going after a stint of bad luck but if you continue to have bad luck then you will still have a hard time succeeding.
      - jasonmcalacanis 8y ago
        This might be one of the biggest issues in America today. We have a seemingly large number of folks, or perhaps a small number of highly vocal ones on social media, that believe the system is so rigged against them and that they have no chance of improving their lot in life. At the same time as this pessimism has permeated America, a global, friction-free marketplace for services and products has emerged that anyone can tap into: the internet and mobile phones. This network is not only available to all, it also hosts the keys to the kingdom, with every single skill and clever strategy for building these products and services unlocked, for free, for everyone, on YouTube, Coursera, etc. That's the disconnect I'm concerned about... so many people in America are giving up on the American dream, while other countries are copying it (i.e. China).
  - imtringued 8y ago
    I regret not abandoning my blood related family to find a better one when I was a 2 week old infant.
- johnmarcus 8y ago
  here here. Very well said.
marssaxman 8y ago
Most people who chase wealth will not succeed. Desiring and pursuing wealth therefore seems like a path to disappointment. Doesn't it make more sense to reframe one's perspective on life and accept that outcomes are almost entirely out of your control?
- simonh 8y ago
  Just because not all succeed, that does not mean that success is random. Taking entrepreneurial risk is a choice, and some people do succeed and build huge businesses employing thousands of people that way. Also those that succeed tend to be very smart and hard working, so the choices they made clearly contributed to their success, otherwise being smart and choosing to work hard would not have made a difference. Conversely I have generally taken the safe road in my career, while still being willing to move on when the time was right. This strategy has served me well. I've seen others takes risks I would not have, for some it worked out well but for others it was disastrous. For example a friend had catastrophic health problems, but he was working as a contractor so it was financially disastrous too. If the same had happened to me, I was on a very generous benefits package and I and my family would have been well looked after. Individual choices really do matter. Sure you can still be hit by a bus, but most of the things that happen in our lives are tractable to mitigation strategies. Conversely luck certainly can be a factor in success, but even when it is you still need the sense to recognise it and take advantage of it, and that can often involve taking calculated risks.
smadge 8y ago
A more parsimonious explanation is that people’s incomes are less than or equal to their expenses (rent, healthcare, food, taxes, etc) preventing them from accumulating wealth. Until we reverse the trend of stagnating wages and rising expenses and pay people more for their work and/or reduce the cost of living, people will not be wealthy.
mbfg 8y ago
Mostly it's bad luck of your circumstance.
programminggeek 8y ago
It is worth listening to the Dave Ramsey podcast just to understand how people spend their money foolishly. Yes, there is bad luck and lack of opportunity, and there is also boatloads of foolish spending and borrowing too. There are plenty of people who could build wealth on the average salary in the US if they were on a budget, were reasonably frugal, and in general lived like our grandparents did say 1950-1970 or so.
- arisAlexis 8y ago
  while I was putting aside at work 25% of a very good salary most of my peers with higher salaries spent it all on luxury until huge layoffs came. No luck involved there
  - simonh 8y ago
    A colleague remortgaged his house when prices went up and spent 30k on a new car and big holiday. A few years later the housing market crashed and he had to sell his house because he got a new job in another city, saddling him with crippling debt. Ouch. I have relatives on one side of my family who are all on relatively low incomes, but they make terrible financial decisions. When my uncle retired he sold his house, moved into a bungalow and gave the difference in price to his sons. They all had mortgages and children, but instead of saving it they all spent big on new cars and big holidays. It seems to be a bit of a pattern. My wife and I are considerably better off, but in many ways we live far more careful and frugal lives.
temp1928384 8y ago
Man I can't wait for this wave of "VC as pseudo social media philosopher" to end.
- arisAlexis 8y ago
  who can philosophize better about wealth than the people that became successful and wealthy? The other kind of social media philosophers is the Socialist type that were never successful but blame the system and everything else
  - djmips 8y ago
    Being successful does not make you uniquely qualified to assess how to be successful. In my experience most people will rationalize success stemming from their own superiority and minimize the role of luck and standing.
    - alexgmcm 8y ago
      Or it could just be like Skinner's superstitious pigeons - it was mostly chance and now they attribute it to some series of events that really have nothing to do with it.
      - stumbellina 8y ago
        What? He had superstitious pigeons?? I know his daughter killed her self so apparently the skinner box wasn’t as seamless as planned..
        alexgmcm 8y ago
        https://en.wikipedia.org/wiki/B._F._Skinner#Superstition_in_the_pigeon https://en.wikipedia.org/wiki/B._F._Skinner#Superstition_in_...
  - watwut 8y ago
    > who can philosophize better about wealth than the people that became successful and wealthy? The other kind of social media philosophers is the Socialist type that were never successful but blame the system and everything else Sociologist who studied average outcomes, successes and failures. Also, an independent person not personally invested in making oneself sound as awesome. Also, someone not having personal interest in changing how other people act for own benefit. Obvious example: If 10 people takes same risk and 9 of them ends up super poor and 1 super rich, then the risk taking philosophy wrote by the 1 will be significantly different then the one that takes into account also those where risk part happened.
bsh 8y ago
Something missing is that there's a difference between how owners and employees are rewarded. An owner's income doesn't necessarily scale with effort. Instead, it scales with impact (not necessarily theirs, either). An owner can make a decision or do some work and get exponential rewards. Or someone they employ can make a decision or do some work, and the owner can get exponential rewards. An owner can also completely stop working, and by virtue of being an owner still reap the rewards. Employees on the other hand don't have this leverage. Your income basically scales with effort. Working hard or having a huge impact can get you a promotion and increase your income, but only a little. You won't get a million dollar bonus by earning the company a million dollars. Importantly, if you stop working, you stop earning (this is a big roadblock for many people who do want to try starting their own business, people who want to be an owner). Besides aptitude and opportunity, the economy wouldn't function if everyone started their own company. Many things truly do need teams working together to get things done. Perhaps we should be talking about how to reward workers in a way that scales with their collective impact rather than their effort.
timavr 8y ago
Probably, because for 99% of people, this is not a goal. Most people want physical/mental health and tonnes of dopamine.
profalseidol 8y ago
Easy. The Capitalism system is about predators and those who get eaten. There's a food web where Lions and Eagles keep everybody else bow down to them. Most of the other comments tell you to level up and become predator yourself. That's one solution, but that is to become Eagle yourself and then you'll have the problem of defending your territory against others. So much stress in this system. Those indoctrinated to this won't see this big picture and believe that this is all we can do as humans. I suggest you listen to Anthropologist like David Graeber instead of Economist.
- simonh 8y ago
  >Easy. The Capitalism system is about predators and those who get eaten. The primary ways people in capitalism get successful is by developing new technology or products, providing valuable services and employing people. The heroes of capitalism most celebrated here are people like Steve Jobs, Bill gates and Elon Musk. All of them have built fantastically successful companies, developing innovative and valuable new products and payed the wages of thousands or tens of thousands of people directly, and built ecosystems employing millions. All of those people benefited. Their customers benefited from useful products. Their suppliers benefited, their employees benefited otherwise why work for them? That is what capitalism is about. But ok, you disagree, that's fine. I'm sure you must have good reasons. Please, tell me what non-capitalist system is better, how does it work and where has it been shown to be successful?
  - imtringued 8y ago
    When you look at the success of people like Bill Gates or Mark Rober (he didn't build the glitterbox but got the credit) or Elon Musk the first step is to already have money. Then the "hero" uses that money to get the new product from someone else and then do something the inventor couldn't do because the "hero" has better connections: sell the thing to a (big) customer.
    - simonh 8y ago
      Bill did have a wealthy parent but didn't really leverage that in the early days. Anyway Steve Jobs and Steve Wozniak founded Apple from a garage, but I notice you ignored my mention of them for the purposes of your response. Elon Musk stated with pretty much nothing, and has talked about how he lived off a dollar a day when he founded Zip2. If you go looking for people from wealthy backgrounds you'll find them, although you actually failed even at that, but they aren't the only kind. As another example Zuckerberg and Saverin founded TheFacebook.com with $2,000 scraped together while they were students. Google was also founded out of a garage. Anyway, what's wrong with people with money using it productively to found successful companies, and employ people and provide valuable services? Surely that's a good thing? It seems to have worked well for China over the last 30 years, certainly compared to the previous 30.
thundergolfer 8y ago
This is just oblivious pontificating on politics and economy. He's obviously been immensely successful in tech, but here he's not connecting at all with the issues of young people, or with left scholarship. > Conversely, if we pursue free services and money we will drive more power into the hands of a larger and larger incompetent government, and I think we know where that will end up — and it won’t be great for anyone. Sure you can just state this, but no one has to buy it. My government has more than adequate at providing "free" healthcare to everyone, and it's pretty stupid to broadly dismiss that like it "won't be great for anyone". It's actually great for everyone. "Incompetent government" is a pernicious anti-social idea. Modern governments have a myriad problems but Government itself has proven its competence over and over again at addressing very difficult societal problems. > Entrepreneurship has created the greatest gains in our standard of living to date, even if it’s hard to grasp the wild polarization of wealth in society. You can sub in one of [Capitalism, Entrepreneurship, Western Civilisation] in this statement, and find it repeated over and over again like it's self-evident. Many "greatest gains" in our society had blatantly nothing to do with Entrepreneurship, take for example the Civil Rights movement, which certainly contributed greatly to overall standard of living. The Capitalist model can't slap a dollar figure on that though, so let's just ignore it. Overall this piece is so confidently slap-dash I don't think Calacanis is actually listening to or reading any of the best opponents to his world view.
rongenre 8y ago
https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias

40 points by Ozzie_osman 8y ago

How about: - investing time in things that ultimately do not pay off - taking risks - lots of small poor choices that add up - bad luck (yes, to some extent you can make your own luck but sometimes things are outside of your control) Honestly I find his list pretty poorly thought through, especially in comparison to the recent blog post by Sam Altman: http://blog.samaltman.com/how-to-be-successful http://blog.samaltman.com/how-to-be-successful

dwd 8y ago
Luck is making the better decision in a timely manner based on incomplete knowledge where each option appears equally valid. However, people generally are poor at calculating probability combined with risk/reward and simply make bad decisions. And sometimes, all choices lead to bad outcomes.
- Blackstone4 8y ago
  >Luck is making the better decision in a timely manner based on incomplete knowledge What?! So going through a green light and getting hit by someone going through a red is a bad decision? Getting cancer is a bad decision or bad luck?!
  - dwd 8y ago
    Seems his list was missing an important one: Not playing the victim. Yes, sometimes other people will cause you harm. Could you have avoided it, probably not as you can't always predict the future. How you move on from a bad situation is your decision. Wallowing in self-pity because the world has done you wrong is a good way to never succeed. As an aside: your chances of getting a particular cancer can be affected by your lifestyle choices so you can make better decisions to avoid it.
    - apacheCamel 8y ago
      > How you move on from a bad situation is your decision. Wallowing in self-pity because the world has done you wrong is a good way to never succeed. I agree with this but it doesn't have to do with luck. You could pick yourself up and keep going after a stint of bad luck but if you continue to have bad luck then you will still have a hard time succeeding.
    - jasonmcalacanis 8y ago
      This might be one of the biggest issues in America today. We have a seemingly large number of folks, or perhaps a small number of highly vocal ones on social media, that believe the system is so rigged against them and that they have no chance of improving their lot in life. At the same time as this pessimism has permeated America, a global, friction-free marketplace for services and products has emerged that anyone can tap into: the internet and mobile phones. This network is not only available to all, it also hosts the keys to the kingdom, with every single skill and clever strategy for building these products and services unlocked, for free, for everyone, on YouTube, Coursera, etc. That's the disconnect I'm concerned about... so many people in America are giving up on the American dream, while other countries are copying it (i.e. China).
- imtringued 8y ago
  I regret not abandoning my blood related family to find a better one when I was a 2 week old infant.
johnmarcus 8y ago
here here. Very well said.

marssaxman 8y ago

Most people who chase wealth will not succeed. Desiring and pursuing wealth therefore seems like a path to disappointment. Doesn't it make more sense to reframe one's perspective on life and accept that outcomes are almost entirely out of your control?

simonh 8y ago
Just because not all succeed, that does not mean that success is random. Taking entrepreneurial risk is a choice, and some people do succeed and build huge businesses employing thousands of people that way. Also those that succeed tend to be very smart and hard working, so the choices they made clearly contributed to their success, otherwise being smart and choosing to work hard would not have made a difference. Conversely I have generally taken the safe road in my career, while still being willing to move on when the time was right. This strategy has served me well. I've seen others takes risks I would not have, for some it worked out well but for others it was disastrous. For example a friend had catastrophic health problems, but he was working as a contractor so it was financially disastrous too. If the same had happened to me, I was on a very generous benefits package and I and my family would have been well looked after. Individual choices really do matter. Sure you can still be hit by a bus, but most of the things that happen in our lives are tractable to mitigation strategies. Conversely luck certainly can be a factor in success, but even when it is you still need the sense to recognise it and take advantage of it, and that can often involve taking calculated risks.

smadge 8y ago

A more parsimonious explanation is that people’s incomes are less than or equal to their expenses (rent, healthcare, food, taxes, etc) preventing them from accumulating wealth. Until we reverse the trend of stagnating wages and rising expenses and pay people more for their work and/or reduce the cost of living, people will not be wealthy.

mbfg 8y ago

Mostly it's bad luck of your circumstance.

programminggeek 8y ago

It is worth listening to the Dave Ramsey podcast just to understand how people spend their money foolishly. Yes, there is bad luck and lack of opportunity, and there is also boatloads of foolish spending and borrowing too. There are plenty of people who could build wealth on the average salary in the US if they were on a budget, were reasonably frugal, and in general lived like our grandparents did say 1950-1970 or so.

arisAlexis 8y ago
while I was putting aside at work 25% of a very good salary most of my peers with higher salaries spent it all on luxury until huge layoffs came. No luck involved there
- simonh 8y ago
  A colleague remortgaged his house when prices went up and spent 30k on a new car and big holiday. A few years later the housing market crashed and he had to sell his house because he got a new job in another city, saddling him with crippling debt. Ouch. I have relatives on one side of my family who are all on relatively low incomes, but they make terrible financial decisions. When my uncle retired he sold his house, moved into a bungalow and gave the difference in price to his sons. They all had mortgages and children, but instead of saving it they all spent big on new cars and big holidays. It seems to be a bit of a pattern. My wife and I are considerably better off, but in many ways we live far more careful and frugal lives.

temp1928384 8y ago

Man I can't wait for this wave of "VC as pseudo social media philosopher" to end.

arisAlexis 8y ago
who can philosophize better about wealth than the people that became successful and wealthy? The other kind of social media philosophers is the Socialist type that were never successful but blame the system and everything else
- djmips 8y ago
  Being successful does not make you uniquely qualified to assess how to be successful. In my experience most people will rationalize success stemming from their own superiority and minimize the role of luck and standing.
  - alexgmcm 8y ago
    Or it could just be like Skinner's superstitious pigeons - it was mostly chance and now they attribute it to some series of events that really have nothing to do with it.
    - stumbellina 8y ago
      What? He had superstitious pigeons?? I know his daughter killed her self so apparently the skinner box wasn’t as seamless as planned..
      - alexgmcm 8y ago
        https://en.wikipedia.org/wiki/B._F._Skinner#Superstition_in_the_pigeon https://en.wikipedia.org/wiki/B._F._Skinner#Superstition_in_...
- watwut 8y ago
  > who can philosophize better about wealth than the people that became successful and wealthy? The other kind of social media philosophers is the Socialist type that were never successful but blame the system and everything else Sociologist who studied average outcomes, successes and failures. Also, an independent person not personally invested in making oneself sound as awesome. Also, someone not having personal interest in changing how other people act for own benefit. Obvious example: If 10 people takes same risk and 9 of them ends up super poor and 1 super rich, then the risk taking philosophy wrote by the 1 will be significantly different then the one that takes into account also those where risk part happened.

bsh 8y ago

Something missing is that there's a difference between how owners and employees are rewarded. An owner's income doesn't necessarily scale with effort. Instead, it scales with impact (not necessarily theirs, either). An owner can make a decision or do some work and get exponential rewards. Or someone they employ can make a decision or do some work, and the owner can get exponential rewards. An owner can also completely stop working, and by virtue of being an owner still reap the rewards. Employees on the other hand don't have this leverage. Your income basically scales with effort. Working hard or having a huge impact can get you a promotion and increase your income, but only a little. You won't get a million dollar bonus by earning the company a million dollars. Importantly, if you stop working, you stop earning (this is a big roadblock for many people who do want to try starting their own business, people who want to be an owner). Besides aptitude and opportunity, the economy wouldn't function if everyone started their own company. Many things truly do need teams working together to get things done. Perhaps we should be talking about how to reward workers in a way that scales with their collective impact rather than their effort.

timavr 8y ago

Probably, because for 99% of people, this is not a goal. Most people want physical/mental health and tonnes of dopamine.

profalseidol 8y ago

Easy. The Capitalism system is about predators and those who get eaten. There's a food web where Lions and Eagles keep everybody else bow down to them. Most of the other comments tell you to level up and become predator yourself. That's one solution, but that is to become Eagle yourself and then you'll have the problem of defending your territory against others. So much stress in this system. Those indoctrinated to this won't see this big picture and believe that this is all we can do as humans. I suggest you listen to Anthropologist like David Graeber instead of Economist.

simonh 8y ago
>Easy. The Capitalism system is about predators and those who get eaten. The primary ways people in capitalism get successful is by developing new technology or products, providing valuable services and employing people. The heroes of capitalism most celebrated here are people like Steve Jobs, Bill gates and Elon Musk. All of them have built fantastically successful companies, developing innovative and valuable new products and payed the wages of thousands or tens of thousands of people directly, and built ecosystems employing millions. All of those people benefited. Their customers benefited from useful products. Their suppliers benefited, their employees benefited otherwise why work for them? That is what capitalism is about. But ok, you disagree, that's fine. I'm sure you must have good reasons. Please, tell me what non-capitalist system is better, how does it work and where has it been shown to be successful?
- imtringued 8y ago
  When you look at the success of people like Bill Gates or Mark Rober (he didn't build the glitterbox but got the credit) or Elon Musk the first step is to already have money. Then the "hero" uses that money to get the new product from someone else and then do something the inventor couldn't do because the "hero" has better connections: sell the thing to a (big) customer.
  - simonh 8y ago
    Bill did have a wealthy parent but didn't really leverage that in the early days. Anyway Steve Jobs and Steve Wozniak founded Apple from a garage, but I notice you ignored my mention of them for the purposes of your response. Elon Musk stated with pretty much nothing, and has talked about how he lived off a dollar a day when he founded Zip2. If you go looking for people from wealthy backgrounds you'll find them, although you actually failed even at that, but they aren't the only kind. As another example Zuckerberg and Saverin founded TheFacebook.com with $2,000 scraped together while they were students. Google was also founded out of a garage. Anyway, what's wrong with people with money using it productively to found successful companies, and employ people and provide valuable services? Surely that's a good thing? It seems to have worked well for China over the last 30 years, certainly compared to the previous 30.

thundergolfer 8y ago

This is just oblivious pontificating on politics and economy. He's obviously been immensely successful in tech, but here he's not connecting at all with the issues of young people, or with left scholarship. > Conversely, if we pursue free services and money we will drive more power into the hands of a larger and larger incompetent government, and I think we know where that will end up — and it won’t be great for anyone. Sure you can just state this, but no one has to buy it. My government has more than adequate at providing "free" healthcare to everyone, and it's pretty stupid to broadly dismiss that like it "won't be great for anyone". It's actually great for everyone. "Incompetent government" is a pernicious anti-social idea. Modern governments have a myriad problems but Government itself has proven its competence over and over again at addressing very difficult societal problems. > Entrepreneurship has created the greatest gains in our standard of living to date, even if it’s hard to grasp the wild polarization of wealth in society. You can sub in one of [Capitalism, Entrepreneurship, Western Civilisation] in this statement, and find it repeated over and over again like it's self-evident. Many "greatest gains" in our society had blatantly nothing to do with Entrepreneurship, take for example the Civil Rights movement, which certainly contributed greatly to overall standard of living. The Capitalist model can't slap a dollar figure on that though, so let's just ignore it. Overall this piece is so confidently slap-dash I don't think Calacanis is actually listening to or reading any of the best opponents to his world view.

rongenre 8y ago

https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias