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Two brothers selling shares in themselves
- frankthedog 4y agoWasn’t this the initial business model of Upstart? https://www.upstart.com https://www.upstart.com
- mrosett 4y agoBasically, yeah.
- rogerkirkness 4y agoHighly recommend reading 'The Unincorporated Man' for anyone interested in this.
- MerelyMortal 4y agoI second this, very highly.
- Animats 4y agoDidn't some hacker boot camp try this a few years back? Customers paid by committing some fraction of their earnings for a decade or two.
- weird-eye-issue 4y agoLambda School
- dimitrios1 4y agoThey rebranded as "Bloom Institute of Technology"
- reidjs 4y agoApp Academy took a percentage of your first years salary. It felt pretty fair to me because it was free upfront. I don’t like the regular way tuition works where you pay a ton upfront and they have no incentive to get you a job. App Academy actually had an aligned interest in getting me a high paying job right after their program. Could I have done it without them? Probably, but I didn’t mind paying them back after they helped triple my salary basically. Not sure if they offer this payment method anymore though.
- SantalBlush 4y ago>I don’t like the regular way tuition works where you pay a ton upfront and they have no incentive to get you a job. Agreed. And to be fair, typical four-year colleges were never meant to be vocational training programs. Employers have successfully shifted training costs onto those colleges, and thus onto students and taxpayers. Colleges are meant to be repositories of human knowledge; whether or not that knowledge is useful in the job market is not immediately relevant to them. Students don't understand this, so they go to college thinking a degree is some kind of job certificate. And it's not really their fault for that misunderstanding; the myth is perpetuated across society, and it's very convenient for employers who can now select from a more educated labor pool at no cost to themselves.
- mrosett 4y agoLambda did it for a while, but it was only for 2 years, not a decade or two. It looks like they've now move to a slightly more conventional loan structure.
- matheweis 4y agoHow is this not indentured servitude 2.0?
- diob 4y ago
- bb88 4y agoThis would be a really bad Web 3.0 invention.
- JohnHaugeland 4y agoYou say this as if there's some other kind
- catchnear4321 4y agoWell, yeah, but there’s bad, and there’s bad. Just imagine a hostile takeover. Of a person. Through buying NFTs. With whale-pumped shitcoins.
- bb88 4y agoOr do put options on a person predicting there will be an untimely death...
- 2Gkashmiri 4y agoWhat happens if the "shareholders" wish to wind you up?
- MonkeyMalarky 4y agoThe year is 2036 and 4chan users have formed a PEC to invest in vulnerable young men for the lulz.
- wittycardio 4y agoNo
- kennywinker 4y agoI believe there’s a constitutional amendment that makes this illegal in the united states, except in the case of prisoners.
- daenz 4y ago>The brothers were quiet for a long moment. A wealth tax, in fact, could disrupt their scheme: young people, valued by shares in their own futures, would be taxed as wealthy before they’d ever been rich. That's pretty funny. You can kill your success in the cradle by being taxed to death on your future potential.
- bpodgursky 4y agoI mean, this is why people hate proposals to tax unrealized gains.
- Retric 4y agoPeople hate taxes. Which they prefer is largely just a question of which ones shift the tax burden to other people.
- josephcsible 4y ago> Which they prefer is largely just a question of which ones shift the tax burden to other people. What about Georgists? Their main argument for it is that there's zero deadweight loss, not that it's more "fair" because certain people do and don't have to pay it.
- djbebs 4y agoTheres plenty of issues with georgist taxes...
- bpodgursky 4y agoThe proposal to tax unrealized gains was criticized by many people who support higher taxes on income and capital gains. It was really only supported by people who were willing or able to methodically think through the consequences.
- pjscott 4y agoEveryone I know who hates taxes on unrealized capital gains will happily tell you which other taxes they would prefer to raise the same amount of revenue from them. There are better and worse kinds of taxation!
- yoyopa 4y agothis is some dumb shit. how about just paying taxes? what happened to democracy?
- dehrmann 4y agoSeems ill-advised to buy shares from someone with that much inside information who wants to sell.
- catchnear4321 4y agoIt’s just an IPO. Do your DD. Can I short someone?
- raydiatian 4y agoGo for the kneecaps
- catchnear4321 4y agoThis is starting to sound like market manipulation.
- raydiatian 4y agoTweeting would become absolutely illegal. “Thinking about moving to Dubai. Apartment secured.”
- emptyparadise 4y agoThis idea gives "hostile takeover" a whole new meaning.
- bandyaboot 4y agoWould a person selling shares of themselves owe a fiduciary duty to the shareholders? That could get a little awkward if someone were to come along and offer to buy for more than the current market cap. You'd kind of be obligated to sell. I think there's a word for that.
- herval 4y agoImagine getting sued because you posted an Instagram chilling in the middle of the week. Shareholders expect total commitment to shareholder value, slacking off is clearly an issue.
- catchnear4321 4y agoDepends on whether or not the post got enough organic reach. Bots can complicate this. Influencer struggle is real. So ignore instagram, how’s cash flow looking? Probably need to make that public if there’s shares involved. No, no, this wasn’t the right choice. Flamethrowers, quickly.
- markvdb 4y agoThis could be framed as taking care of your mental health. Long term investors would still be in I imagine...
- ftio 4y agoSeems Like A Very Extreme Risk, Yes?
- catchnear4321 4y agoCould ordinarily never see ulterior motives easily.
- rakejake 4y agoIs this a cryptic crossword clue for "slaves"? I know the parent comment spells slaves.
- faeriechangling 4y agoI'd start embezzling myself in a heartbeat.
- nootropicat 4y agoThis concept completely fixes inequality and fully replaces all forms of social welfare - no more wasted potential because a smart person is born in a bad environment due to genetic lottery. Advantage from growing up in a rich family would shrink to the point of irrelevancy. Investors would filter out ghettos in search of high iq kids to buy their shares early. No more need for public schools - because everyone would get the quality they actually deserve, all paid for by private investors. Same would apply to literally every form of social welfare that exists anywhere. Right now there's no market pricing of people at all - everyone either gets less than they deserve, or more, with the fair outcome statistically borderline impossible. The outcome is a horrific waste of human potential. I think effective tax rate would go way down - because bidding wars on people would reduce it to the market rate, and given the increasing global abundance of capital, I'm pretty sure that's going to mean low single digit taxes (ie. selling only single digit percentage of ownership). While the end result would be a utopia, it's hard to see how it could become the norm anytime soon. The concept directly takes power away from politicians, so to become the norm a large scale collapse of the state is required. Perhaps it needs a completely new environment - like space colonies in O'Neill cylinders, in which case we're sadly centuries too early.
- washbrain 4y agoYou are insane to think this "fully fixes inequality." Thought experiment: who can buy the most shares of others? And if they buy "well", how does the distribution of wealth shift? Second thought experiment: what if your stock is valueless on the market? What does it mean to sell shares when you get pennies for them? You sell all your shares because you need to eat, does someone now own your output for the rest of your life?
- nootropicat 4y ago>Thought experiment: who can buy the most shares of others? And if they buy "well", how does the distribution of wealth shift? It shifts to the sellers, not the buyers. That's because buyers are competing with each other which drives the expected return close to the general market rate. Assume there's a magical oracle that tells you: this kid will generate $100M of wealth over their lifetime - to not get bogged down into discounted future value, lets say the risk free rate is 0% - but needs $500k for education and resources early. Without any investment the kid will become stuck in a local maximum in a shitty environment and generate $100k instead. Market competition will bring the total sale amount close to 0.5%. Lets say it's 1%, although that's very high. Funds bought shares that are 'fairly' worth $1M for $500k, for a profit of $500k - not bad. The person gained $99M. Total distribution of wealth becomes more fair, not less.
- washbrain 4y agoNo. God no. What capitalist nightmare brain came up with this idea? Better not be experience mental illness, injury, disability, career burnout, time off for parenting, a bad choice, etc. Holy fuck this is a terrible idea. Humans are so much more than their work output.
- SturgeonsLaw 4y agoThere's a tried and tested solution for that, simply transfer your debt to a relative, spin them off, then let them starve to death while you sell off their possessions.
- pjscott 4y agoThe usual form of these contracts is that (a) the Human in question will pay X percent of their income to the Company for the next Y years, and (b) the Human is not otherwise constrained by contract. If they want to just surf on a beach for Y years, they can.
- im_down_w_otp 4y agoI can just hear the VC elevator pitch for this now, "We're democratizing chattel slavery on the blockchain!"
- bradwschiller 4y agoSelling shares in people isn't a new idea. Upstart started by doing this exact same thing in 2012 (they pivoted to personal lending and were very successful). But Upstart couldn't make the investing in people marketplace work. There's too much information asymmetry. The highest-potential people (i.e., the ones you'd want to invest in!) know they're rockstars. And they value their future earnings potential as such. But it's very difficult to evaluate someone's potential as an ordinary investor. Just look at the hit rate on hiring people into jobs (not ideal) – and hiring likely has more diligence than here. The highest-potential people therefore feel the deal the investors would give them is bad (and don't take it). The mediocre people will take the deal. But investors won't get a good return, and the company will need to make the deal less and less advantageous to the mediocre people until the mediocre people even find it unappealing. There are many examples of failures in people-related investment products. The information asymmetry leaves someone holding the bag – typically the investor. 3 examples: 1. Income share agreements (ISA) for education. Many companies and even states (e.g., Oregon) have tried this to poor effect. People majoring in STEM degrees didn't take the deal (as it was a bad deal for them given their future earnings power). And people majoring in humanities did take the deal (as it was a good deal for them given their lower future earnings power). Also, many people who actually may benefit from ISAs don't really understand them and also won't take them. Note: Bloom Tech seems to be making ISA's work through force of will. But they also are in a specific niche where the ROI is much clearer and the ISAs are therefore easier to underwrite. 2. Life insurance for people with illnesses. There's a market for paying ill people money now in exchange for being the beneficiary on their life insurance. It provides the ill people a better living now and provides a return later for the investors. But, the information asymmetry and potential fraud with medicals can lead to a bad outcome for investors. For example, if I agree to pay someone $50k per year until they die in exchange for being the beneficiary on a $500k life insurance policy, then I'm in the red if they live for more than 10 years. The medicals may indicate the person may have 3 to 5 years to live. But what if they live 20? So while this market exists, it's very niche and very risky due to the information asymmetry. 3. Buying shares in an athlete. Fantex pioneered this starting with NFL players. Players took the deal because they are injury-prone and many have short careers. There was information asymmetry at work again. And nearly all investments in athletes went poorly (shorter careers, less than expected earnings). So overall, I think we'd all love to see a model work where we can bet on individual people to succeed and share in their success. However, it just doesn't work. It's not the same as investors betting on the founders of companies – those founders have to have the money for success. The individuals probably don't need substantial capital (and even if they were using the money to create something – wouldn't you rather have the piece of the company than a piece of their earnings?).
- Borrible 4y agoDoesn't the idea comes up again and again? Somehow that bullshit sounds familiar to me. ... ah, there it is: https://www.fool.com/investing/mutual-funds/2006/01/18/selling-stock-in-yourself.aspx https://www.fool.com/investing/mutual-funds/2006/01/18/selli... And here: https://www.wired.com/2013/03/ipo-man/ https://www.wired.com/2013/03/ipo-man/ Of course one can also find it in some form here and there on some crowdfunding platform: https://www.indiegogo.com/projects/buy-stock-in-a-person-sell-stock-in-yourself#/ https://www.indiegogo.com/projects/buy-stock-in-a-person-sel... https://www.youtube.com/watch?v=rdwc9EBmOk0 https://www.youtube.com/watch?v=rdwc9EBmOk0 You know that mostly 1% of human population have a say in their own fate? And there I am already optimistic. And yes, coincidentially there is a large intersection with that 1% in which investing is predictably profitable. But even then, I remain conservative, do not put all eggs in one nest and invest in organized groups of people, aka the businesses of those 1%.
- mrwh 4y agoInteresting article! It's probably a lack of imagination on my part, but how could this possibly work for any but a tiny minority of people? Or, worse, how could this not become a new form of indentured servitude? It does seem curious to look at the world and think: this has insufficient financialization of people's lives. But then, while we can buy life insurance policies, we can't, say, buy a policy insuring against being poor by middle age. Not a pension, not shares in one's future: insurance. That seems more likely to work as a product. That could work now.
- bragr 4y agoI do not think you lack imagination in this situation at least.
- DubiousPusher 4y agoFor such a puffy piece their resume is pretty underwhelming for people getting so much attention. One of their plaudits was figuring out that the release of a bad version of the Snapchat app coincided with user loss? Really? Isn't that like basic telemetry queries? Oh look all the missing users are on one platform. Oh look, they all start dropping the same day we rolled out a major release. We should load that up on some phones and see what's up... It just feels like the article is really stretching for us to believe that these are indeed wiz kids.
- raydiatian 4y agoI had this idea in 2015. A way for teachers to get equity in the students they teach. A way to lower college tuition. Where is my twelve thousand word write up?
- raydiatian 4y agoIs selling shares of oneself considered trichitolomania? Is buying back shares of yourself considered nose picking?
- deleted 4y ago[deleted]
- jacknews 4y agoSurely this is just a parody of our current financialized capitalist system, land rentiering, etc?
- seanhunter 4y agoThis is such a terrible investment. Let’s try a thought experiment: Option A: Invest in a specific company. You have a business plan etc and you can talk to the founder(s) to see what you think of them. If the business makes money hopefully you get some kind of exit. This is VC. You can make a decision based on the idea, what you think of the founders, the general market for exits or a bit of all of the above. It’s pretty uncertain but the companies that work out make you returns that hopefully compensate for the others. Option B: Invest in those two brothers. They may or may not come up with a viable business at some point in the future. This has all the downside and risk of option A except that you also don’t know what business idea they may come up with, how much capital that idea will need (ie you could be further diluted or they may not be able to deploy all the capital, reducing your rate of return) and how long you have to wait until they do that. Now, if they had a good idea, why would they not tell you about it as part of their sales pitch for investment? (Ie why would they not insist on option A?). This would decrease risk for investors and thereby mean they wouldn’t need to sell as big a slice to raise the capital they need. It feels like by going down this route, they are self-declaring that they don’t have any business ideas likely to stand up to scrutiny.
- Eddy_Viscosity2 4y ago"Improbably, though, the Libermans see this endeavor as part of an effort to stem twenty-first-century inequality. If they can sell life shares, they think, others can, too." This may work for them, but idea cannot be generalized and absolutely will not solve the problem they say it would solve which is inequality. Young people who haven't achieved anything yet will have very little potential value to investors, in general. But, those who have rich or well connected parents are statistically more likely to become wealthy themselves, and therefore are better investments and so those people, who already have systemic advantages, will be the primary beneficiaries of such a system. Also, it is the already rich that are making these investments, so if it pays off they become richer still. So inequality is re-enforced with this system. Exceptional people like prodigies in sports or music etc. might also get a higher prices for their shares, but for them its probably a bad idea to sell them because they will themselves lose out on future earnings because they will have to pay out to the shareholders. They would be better off getting a fixed rate loan if they needed funds as their success is very likely. In other words, those people that would make the best investments and get lots of money from this are the ones who don't really need it, and those that do need it won't get it because the investor would most likely lose money. Again, this idea may work for specific cases, but it is not generalizable.
- akomtu 4y agoLet me tell those brothers that there are tricks such as two classes of shares and the ability to create and dilute the common shareholders.
- kimchidude 4y agoIsn’t this what BitClout is trying (unsuccessfully so far) to do? I think the concept is interesting.
- errantmind 4y agoThis is the final form of rent-seeking.