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Problem is the employees aren't willing to bear the risk that early investors were willing to. If the entire society had a similar level of appetite for risk,

Problem is the employees aren't willing to bear the risk that early investors were willing to. If the entire society had a similar level of appetite for risk, we'd see a different asset distribution in society. Since most people are terribly averse to losing anything, they also shut down the perspective of winning big.

noncoml 5y ago
It’s not about being willing, it’s about being able too. Imagine there is a lottery where for every 10 million tickets you buy you get one that is giving you 20 millions back. No brainer, right? Except if you don’t have the 10 million to spare, buying lottery tickets instead of food doesn’t make sense. Labor/job is your single lottery ticket. Investors can afford to buy all tickets to make sure they win.
- robrenaud 5y ago
  Make a lot of friends, buy up the tickets together, and split the winnings. Applied another way, everyone in a given class of YC should share a bit of ownership with everyone else in their YC class, and then everyone of them is likely to end up a millionare.
  - twojacobtwo 5y ago
    This is where the analogy fails, I think, because it assumes a static market price, or a lack of competition for the tickets. Where the price changes or competition changes availability, we run into the same issues where those who already have power/money are more able to exploit the system than those who have to collude just to have a shot.
  - robocat 5y ago
    FYI this is an analysis of your average returns at YC: https://80000hours.org/2014/05/how-much-do-y-combinator-founders-earn/ https://80000hours.org/2014/05/how-much-do-y-combinator-foun... I still wish that YC would provide some more concrete figures, and ideally include separate figures for first employees as well as founders. From link: “Most of the returns have gone to a tiny minority of super-successes. The founders of AirBnB, Dropbox and Stripe are worth about US$7 billion, about 80% of all founders’ equity, although they account for 0.5% of the companies. Outside of the most successful companies, it was still possible to earn significant returns. 12% of companies from the first five years of Y Combinator are now worth US$40 million or more, and a further 10% have sold for US$5-40 million. The remainder probably earned little more than their (low) salaries.”.
- rmbyrro 5y ago
  Respectfully, if you think entrepreneurship has anything to do with lottery or has an "already-rich" requirement to start with, I'd suggest you double-check whether you have an accurate mental model to succeed in this area (assuming you have an interest in succeeding in this area, which, if not, it's totally fine).
  - noncoml 5y ago
    Respectfully if this reply is the best quality of posts you can produce I suggest you find another forum. Maybe 4chan is more appropriate for you.
heavyset_go 5y ago
> Problem is the employees aren't willing to bear the risk that early investors were willing to. Employees take on considerable risk by joining early startups, and they take on opportunity risk when working for other companies, as well. An early employee risks their ability to house and feed themselves and their family, along with their ability to afford medical care or retirement, by working at a company that could fold or fire them at any moment. An investor might experience some capital loss they can write off at tax time.
- rmbyrro 5y ago
  That's just how life and the universe works. The level of risk employees bear is one of the lowest possible. Reality won't let you go much below that. I'd bet in most early stage startups nowadays developers are paid way more than the founders themselves. And they work way less hours, with way less stressful problems than the founders. The difference in pay, hours dedicated and stress (along with damages to health and life in general) represents the founders' risk appetite for future earnings. Employees are not at all open to bear this level of risk and they should not be compensated for not bearing this risk. Founders and investors deliver value to society by bearing higher risks. We have better and cheaper services as a result. They should be compensated accordingly, so we keep them motivated to continue servicing us in increasingly better ways.

noncoml 5y ago

It’s not about being willing, it’s about being able too. Imagine there is a lottery where for every 10 million tickets you buy you get one that is giving you 20 millions back. No brainer, right? Except if you don’t have the 10 million to spare, buying lottery tickets instead of food doesn’t make sense. Labor/job is your single lottery ticket. Investors can afford to buy all tickets to make sure they win.

robrenaud 5y ago
Make a lot of friends, buy up the tickets together, and split the winnings. Applied another way, everyone in a given class of YC should share a bit of ownership with everyone else in their YC class, and then everyone of them is likely to end up a millionare.
- twojacobtwo 5y ago
  This is where the analogy fails, I think, because it assumes a static market price, or a lack of competition for the tickets. Where the price changes or competition changes availability, we run into the same issues where those who already have power/money are more able to exploit the system than those who have to collude just to have a shot.
- robocat 5y ago
  FYI this is an analysis of your average returns at YC: https://80000hours.org/2014/05/how-much-do-y-combinator-founders-earn/ https://80000hours.org/2014/05/how-much-do-y-combinator-foun... I still wish that YC would provide some more concrete figures, and ideally include separate figures for first employees as well as founders. From link: “Most of the returns have gone to a tiny minority of super-successes. The founders of AirBnB, Dropbox and Stripe are worth about US$7 billion, about 80% of all founders’ equity, although they account for 0.5% of the companies. Outside of the most successful companies, it was still possible to earn significant returns. 12% of companies from the first five years of Y Combinator are now worth US$40 million or more, and a further 10% have sold for US$5-40 million. The remainder probably earned little more than their (low) salaries.”.
rmbyrro 5y ago
Respectfully, if you think entrepreneurship has anything to do with lottery or has an "already-rich" requirement to start with, I'd suggest you double-check whether you have an accurate mental model to succeed in this area (assuming you have an interest in succeeding in this area, which, if not, it's totally fine).
- noncoml 5y ago
  Respectfully if this reply is the best quality of posts you can produce I suggest you find another forum. Maybe 4chan is more appropriate for you.

heavyset_go 5y ago

> Problem is the employees aren't willing to bear the risk that early investors were willing to. Employees take on considerable risk by joining early startups, and they take on opportunity risk when working for other companies, as well. An early employee risks their ability to house and feed themselves and their family, along with their ability to afford medical care or retirement, by working at a company that could fold or fire them at any moment. An investor might experience some capital loss they can write off at tax time.

rmbyrro 5y ago
That's just how life and the universe works. The level of risk employees bear is one of the lowest possible. Reality won't let you go much below that. I'd bet in most early stage startups nowadays developers are paid way more than the founders themselves. And they work way less hours, with way less stressful problems than the founders. The difference in pay, hours dedicated and stress (along with damages to health and life in general) represents the founders' risk appetite for future earnings. Employees are not at all open to bear this level of risk and they should not be compensated for not bearing this risk. Founders and investors deliver value to society by bearing higher risks. We have better and cheaper services as a result. They should be compensated accordingly, so we keep them motivated to continue servicing us in increasingly better ways.