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Rockefeller's wealth was ~420 billion (inflation adjusted) at its peak. That's significantly more than Bezos and Gates combined. So no, Standard Oil won't look

by iooi 5y ago

Rockefeller's wealth was ~420 billion (inflation adjusted) at its peak. That's significantly more than Bezos and Gates combined. So no, Standard Oil won't look like a lifestyle business compared to FAANG giants. You can make a point without using hyperbole. > also control the infrastructure running a huge portion of the internet AWS has less market share than Microsoft. The Cloud is a pretty competitive space. > are working on creating a new ISP This is great, look what Google Fiber did to fiber availability in the US. More competition is great in this space. I find it ironic that you're complaining about FAANGs in the context of ISPs, who control literal monopolies in several regions.

ransom1538 5y ago
"Rockefeller's wealth was ~420 billion (inflation adjusted) at its peak." Dumb question. Why do people use inflation? Like Rockefeller would take the cash and put in a %2.5 account for 100 years? He probably would have put it in an investment at minimum gaining %7-10 account for 100 years - giving him multiple trillions.
- majormajor 5y ago
  It's because the question isn't "how much money would Rockefeller have now if he'd time traveled while his investments sat there," it's "how much did he have relative to today's wealthy" and the easiest comparison point we have there is to inflation-adjust and compare that to our existing mental feeling for "how rich is Bezos."
- brtkdotse 5y ago
  Because the point is to give an apples-to-apples comparison of the value represented. It’s not Rockefeller’s fortune and it’s growth that’s interesting but rather how many Big Macs his fortune could buy in 1921 vs how much that many Big Macs would cost in 2021.
  - cma 5y ago
    But they were comparing Amazon to STD oil, not Bezos (diluted in divorce) to Rockefeller. Rockefeller owned a full third, Bezos 11%, Gates 1% (but similar foundation setup to Rockefeller maybe, and at one point was 49% or something, but of a much smaller MS than today).
- gopalv 5y ago
  > Why do people use inflation? Because it is very hard to think about the currency values in terms of purchasing power. Inflation is the lowest metric in that count, but reflects a somewhat uniform drop in purchasing power (per dollar) across the whole market. My friend's mom told me her mortgage for a Bay Area house was 75$ a month, the two cars parked in front were worth more than a 2 bed house when she got the cars. So it was much cheaper to buy a house, but much more expensive to get a car and I can't even have a ballpark figure for what a gigabyte of computer memory would have cost in 1971. So, inflation adjustment is at best a rough proxy for purchasing power at current costs.
- canadianwriter 5y ago
  Because it helps the average person get a sense of scale - instead of saying '100 million, but that's 5 times ore than....' you just do the inflated number and people get a better sense of scale.
- ysavir 5y ago
  I don't know why people are downvoting this. I want to say thank you for taking the time and asking a question, and for actively making an effort to understand something better. I hope the downvotes don't dissuade you (or anyone else) from asking questions in the future.
- lhball 5y ago
  Even if you factor in investment returns you're not getting the full picture IMO unless you take into account price increases over time as well. A common refrain is that Carnegie Hall only cost $1M ($29,581,868.13 when adjusted for inflation) to build, so why do we still credit its founder with their name? Shouldn't we rename it in honor of someone who's contributed more to the Hall? What this doesn't take into account is what it would cost to _build_ a new Carnegie Hall today. Labor is far more expensive (highest $/hr ever in 2019 if I'm not mistaken [1]) today and so are building materials [2]. So it's true he'd see compounding returns from investing, but to do what they did back then would cost significantly more today. IE, their dollars took them further back then. Also, worth noting Rockefeller donated 6% of his salary to charity every pay check every single year of his life, not just when he could "afford" it [3]. So if you take into account the _missed_ compound returns of those charitable contributions, you can start to get a sense for just otherworldly their charitable efforts were. Not trying to say these guys were angels. And yet, as rich as they were, I think too often that overshadows the gargantuan contributions to charity they made. [1](https://fredblog.stlouisfed.org/2018/02/are-wages-increasing-or-decreasing/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog https://fredblog.stlouisfed.org/2018/02/are-wages-increasing...) [2](https://tradingeconomics.com/united-states/consumer-price-index-cpi https://tradingeconomics.com/united-states/consumer-price-in...) [3](https://www.philanthropyroundtable.org/almanac/people/hall-of-fame/detail/john-rockefeller-sr https://www.philanthropyroundtable.org/almanac/people/hall-o...)
  - nicoburns 5y ago
    > And yet, as rich as they were, I think too often that overshadows the gargantuan contributions to charity they made. Is it really such a great thing to give away money you don't need. IMO tha should be the absolute minimum baseline expectation for someone who controls so much wealth.
    - codegrappler 5y ago
      I think it is a great thing. They could just as easily keep it all to themselves and pass it down to generations. It’s fully within their legal rights to do so.
- naveen99 5y ago
  I prefer fraction of total global wealth as the units. it’s hard to get good estimates though.
- jhgb 5y ago
  Presumably to compare purchasing power. Your investment idea actually distorts the comparison since it involves additional labor and wealth creation.
flutas 5y ago
>AWS has less market share than Microsoft. The Cloud is a pretty competitive space. They didn't say a "majority" though, they just said a huge portion. In the context of the internet and how many devices are out there, I think he would absolutely be right in saying "a huge portion."
vxNsr 5y ago
> AWS has less market share than Microsoft. The Cloud is a pretty competitive space. According to gartner[0] AWS has over double Azure’s market share by revenue. What metric are you using for your stat? [0] https://www.gartner.com/en/newsroom/press-releases/2021-06-28-gartner-says-worldwide-iaas-public-cloud-services-market-grew-40-7-percent-in-2020 https://www.gartner.com/en/newsroom/press-releases/2021-06-2...
- rospaya 5y ago
  Microsoft likes to throw around cloud figures that include Office 365 to make their market share sound bigger in comparison with AWS.
phscguy 5y ago
Well actually, Standard Oil peak market cap was about $1 trillion. Rockefeller owned about 25% of this. The rest of Rockefeller's wealth came from the rise in share values post-split. Standard Oil at it's peak actually had lower market cap than any of Apple(2.5T), Google(1.7T), Amazon(1.9T), Microsoft(2.1T) have today, and is about on par with Facebook (1T). FAANG is huge and market caps already greatly exceed that of the old-school monopolies.
- tomarr 5y ago
  It is fair to say this is quite distorted by the impact of very low interest rates on expectations of future profits though, which is a key component in the share price.
  - phscguy 5y ago
    The parent comment was using Rockefeller's peak net worth as compared to FAANG CEO's net worths to show that FAANG is smaller than Standard Oil was. I mainly wanted to point out that if you instead compare company valuations, each of FAANG is bigger. Also, at it's peak Standard Oil was worth about 6% of the US stock market. Apple is currently worth 5.3%. This comparison should be robust to differences in interest rates. In this light, Apple is slightly smaller than Standard Oil was. But, the market is broader now and there are more lines of business in existence. So a company that dominates an entire line of business would be expected to have a lower proportion of total stock market cap now than in 1910. At the very least 2021 Apple and 1910 Standard Oil are very comparable in size. There might not be a clear way to tell which is bigger.

by iooi 5y ago

ransom1538 5y ago

"Rockefeller's wealth was ~420 billion (inflation adjusted) at its peak." Dumb question. Why do people use inflation? Like Rockefeller would take the cash and put in a %2.5 account for 100 years? He probably would have put it in an investment at minimum gaining %7-10 account for 100 years - giving him multiple trillions.

majormajor 5y ago
It's because the question isn't "how much money would Rockefeller have now if he'd time traveled while his investments sat there," it's "how much did he have relative to today's wealthy" and the easiest comparison point we have there is to inflation-adjust and compare that to our existing mental feeling for "how rich is Bezos."
brtkdotse 5y ago
Because the point is to give an apples-to-apples comparison of the value represented. It’s not Rockefeller’s fortune and it’s growth that’s interesting but rather how many Big Macs his fortune could buy in 1921 vs how much that many Big Macs would cost in 2021.
- cma 5y ago
  But they were comparing Amazon to STD oil, not Bezos (diluted in divorce) to Rockefeller. Rockefeller owned a full third, Bezos 11%, Gates 1% (but similar foundation setup to Rockefeller maybe, and at one point was 49% or something, but of a much smaller MS than today).
gopalv 5y ago
> Why do people use inflation? Because it is very hard to think about the currency values in terms of purchasing power. Inflation is the lowest metric in that count, but reflects a somewhat uniform drop in purchasing power (per dollar) across the whole market. My friend's mom told me her mortgage for a Bay Area house was 75$ a month, the two cars parked in front were worth more than a 2 bed house when she got the cars. So it was much cheaper to buy a house, but much more expensive to get a car and I can't even have a ballpark figure for what a gigabyte of computer memory would have cost in 1971. So, inflation adjustment is at best a rough proxy for purchasing power at current costs.
canadianwriter 5y ago
Because it helps the average person get a sense of scale - instead of saying '100 million, but that's 5 times ore than....' you just do the inflated number and people get a better sense of scale.
ysavir 5y ago
I don't know why people are downvoting this. I want to say thank you for taking the time and asking a question, and for actively making an effort to understand something better. I hope the downvotes don't dissuade you (or anyone else) from asking questions in the future.
lhball 5y ago
Even if you factor in investment returns you're not getting the full picture IMO unless you take into account price increases over time as well. A common refrain is that Carnegie Hall only cost $1M ($29,581,868.13 when adjusted for inflation) to build, so why do we still credit its founder with their name? Shouldn't we rename it in honor of someone who's contributed more to the Hall? What this doesn't take into account is what it would cost to _build_ a new Carnegie Hall today. Labor is far more expensive (highest $/hr ever in 2019 if I'm not mistaken [1]) today and so are building materials [2]. So it's true he'd see compounding returns from investing, but to do what they did back then would cost significantly more today. IE, their dollars took them further back then. Also, worth noting Rockefeller donated 6% of his salary to charity every pay check every single year of his life, not just when he could "afford" it [3]. So if you take into account the _missed_ compound returns of those charitable contributions, you can start to get a sense for just otherworldly their charitable efforts were. Not trying to say these guys were angels. And yet, as rich as they were, I think too often that overshadows the gargantuan contributions to charity they made. [1](https://fredblog.stlouisfed.org/2018/02/are-wages-increasing-or-decreasing/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog https://fredblog.stlouisfed.org/2018/02/are-wages-increasing...) [2](https://tradingeconomics.com/united-states/consumer-price-index-cpi https://tradingeconomics.com/united-states/consumer-price-in...) [3](https://www.philanthropyroundtable.org/almanac/people/hall-of-fame/detail/john-rockefeller-sr https://www.philanthropyroundtable.org/almanac/people/hall-o...)
- nicoburns 5y ago
  > And yet, as rich as they were, I think too often that overshadows the gargantuan contributions to charity they made. Is it really such a great thing to give away money you don't need. IMO tha should be the absolute minimum baseline expectation for someone who controls so much wealth.
  - codegrappler 5y ago
    I think it is a great thing. They could just as easily keep it all to themselves and pass it down to generations. It’s fully within their legal rights to do so.
naveen99 5y ago
I prefer fraction of total global wealth as the units. it’s hard to get good estimates though.
jhgb 5y ago
Presumably to compare purchasing power. Your investment idea actually distorts the comparison since it involves additional labor and wealth creation.

flutas 5y ago

>AWS has less market share than Microsoft. The Cloud is a pretty competitive space. They didn't say a "majority" though, they just said a huge portion. In the context of the internet and how many devices are out there, I think he would absolutely be right in saying "a huge portion."

vxNsr 5y ago

> AWS has less market share than Microsoft. The Cloud is a pretty competitive space. According to gartner[0] AWS has over double Azure’s market share by revenue. What metric are you using for your stat? [0] https://www.gartner.com/en/newsroom/press-releases/2021-06-28-gartner-says-worldwide-iaas-public-cloud-services-market-grew-40-7-percent-in-2020 https://www.gartner.com/en/newsroom/press-releases/2021-06-2...

rospaya 5y ago
Microsoft likes to throw around cloud figures that include Office 365 to make their market share sound bigger in comparison with AWS.

phscguy 5y ago

Well actually, Standard Oil peak market cap was about $1 trillion. Rockefeller owned about 25% of this. The rest of Rockefeller's wealth came from the rise in share values post-split. Standard Oil at it's peak actually had lower market cap than any of Apple(2.5T), Google(1.7T), Amazon(1.9T), Microsoft(2.1T) have today, and is about on par with Facebook (1T). FAANG is huge and market caps already greatly exceed that of the old-school monopolies.

tomarr 5y ago
It is fair to say this is quite distorted by the impact of very low interest rates on expectations of future profits though, which is a key component in the share price.
- phscguy 5y ago
  The parent comment was using Rockefeller's peak net worth as compared to FAANG CEO's net worths to show that FAANG is smaller than Standard Oil was. I mainly wanted to point out that if you instead compare company valuations, each of FAANG is bigger. Also, at it's peak Standard Oil was worth about 6% of the US stock market. Apple is currently worth 5.3%. This comparison should be robust to differences in interest rates. In this light, Apple is slightly smaller than Standard Oil was. But, the market is broader now and there are more lines of business in existence. So a company that dominates an entire line of business would be expected to have a lower proportion of total stock market cap now than in 1910. At the very least 2021 Apple and 1910 Standard Oil are very comparable in size. There might not be a clear way to tell which is bigger.