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They are getting rich because of their exposure to the financial markets and because tech is currently an industry that lots of capital is flowing into. It has

They are getting rich because of their exposure to the financial markets and because tech is currently an industry that lots of capital is flowing into. It has less to do with what consumers are willing to spend money on than it does on that. If it were just about what people want to spend money on then people in agriculture would be getting rich too.

thrill 6y ago
Investment flows into the the tech where there are expectations of consumer interest.
- Ericson2314 6y ago
  It's been little but "expectations" and Ponzie schemes for a decade. What do you expect next?
Ericson2314 6y ago
Yeah the shocking thing about tech is how little revenue there is relative to investments. GP is exactly wrong.
- asdfasgasdgasdg 6y ago
  Maybe in startups. The companies that are generating these vast amounts of wealth are large tech cos like Apple, Google, Facebook, Microsoft, Oracle, Netflix, etc. which all are making absolute craptons of profit over the medium term.
  - Ericson2314 6y ago
    Right. The thing we saw before was expectation of the latter influencing expectations of the former, but that might be finally starting to change.
paulpauper 6y ago
a good tech product, especially in consumer and info tech, generates high profit margins and reliable recurring revenue protected by intellectual property , network effect,s and high intellectual barriers to entry. Other industries and sectors have lower margins and low barriers. This creates an incentive to spend a lot on capital, such as human capital, to produce such tech products.
- jeffreyrogers 6y ago
  I understand what you're saying and I agree with it, however, the exposure to the financial markets is what drives the high compensation in tech. If they were not exposed to financial markets in the way they are then they would not pay their employees nearly as much. This is true of nearly every field with high average compensation in the American economy: real estate, finance, oil and gas, and tech. The other two big ones are medicine and law. The high paying law jobs are basically serving finance. Medicine's high compensation is due to screwed up regulatory stuff and an artificially limited supply of doctors (due to how AMA sets the number of residencies). Edit: What I'm trying to say is, the easiest way to get rich in America is to work in an industry that is exposed to the financial industry. It embeds leverage into what you earn. Let's say you own a company making $10mm in revenue and you own the whole thing. You can probably sell that to a PE firm for $20mm, much more than you would make in a comparable amount of time just from owning it yourself. I'm not making a value judgment or anything of that nature. This is the way it works.
  - franciscop 6y ago
    I agree that the exposure drives it higher, but it's also cost of opportunity. If my tech job was not paying me enough, I'd quit and try to launch my own thing because cost of entry are laughably low (which are not in the other industries you mentioned) and potential to have a good self-started business is decently high. In real estate, finance and oil and gas I believe you need to either start with big bucks yourself, or convince people to loan/let you manage them to you. Tech is ridiculously easy to get started with compared to almost any other legal high paying job, you can learn just following a few free courses and from that build apps that people are willing to pay.

thrill 6y ago

Investment flows into the the tech where there are expectations of consumer interest.

Ericson2314 6y ago
It's been little but "expectations" and Ponzie schemes for a decade. What do you expect next?

Ericson2314 6y ago

Yeah the shocking thing about tech is how little revenue there is relative to investments. GP is exactly wrong.

asdfasgasdgasdg 6y ago
Maybe in startups. The companies that are generating these vast amounts of wealth are large tech cos like Apple, Google, Facebook, Microsoft, Oracle, Netflix, etc. which all are making absolute craptons of profit over the medium term.
- Ericson2314 6y ago
  Right. The thing we saw before was expectation of the latter influencing expectations of the former, but that might be finally starting to change.

paulpauper 6y ago

a good tech product, especially in consumer and info tech, generates high profit margins and reliable recurring revenue protected by intellectual property , network effect,s and high intellectual barriers to entry. Other industries and sectors have lower margins and low barriers. This creates an incentive to spend a lot on capital, such as human capital, to produce such tech products.

jeffreyrogers 6y ago
I understand what you're saying and I agree with it, however, the exposure to the financial markets is what drives the high compensation in tech. If they were not exposed to financial markets in the way they are then they would not pay their employees nearly as much. This is true of nearly every field with high average compensation in the American economy: real estate, finance, oil and gas, and tech. The other two big ones are medicine and law. The high paying law jobs are basically serving finance. Medicine's high compensation is due to screwed up regulatory stuff and an artificially limited supply of doctors (due to how AMA sets the number of residencies). Edit: What I'm trying to say is, the easiest way to get rich in America is to work in an industry that is exposed to the financial industry. It embeds leverage into what you earn. Let's say you own a company making $10mm in revenue and you own the whole thing. You can probably sell that to a PE firm for $20mm, much more than you would make in a comparable amount of time just from owning it yourself. I'm not making a value judgment or anything of that nature. This is the way it works.
- franciscop 6y ago
  I agree that the exposure drives it higher, but it's also cost of opportunity. If my tech job was not paying me enough, I'd quit and try to launch my own thing because cost of entry are laughably low (which are not in the other industries you mentioned) and potential to have a good self-started business is decently high. In real estate, finance and oil and gas I believe you need to either start with big bucks yourself, or convince people to loan/let you manage them to you. Tech is ridiculously easy to get started with compared to almost any other legal high paying job, you can learn just following a few free courses and from that build apps that people are willing to pay.