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It is that 95 to 99% of the ones that go the Musk, Bezos or Kalanicks way fail and be left with no payout. In return the ones succeeding will have 20 to 100 tim
by Lionga 4y ago
It is that 95 to 99% of the ones that go the Musk, Bezos or Kalanicks way fail and be left with no payout. In return the ones succeeding will have 20 to 100 times the payout.
Its almost the same as if you just take your salary and bet everything on 13 at the roulette. Small chance of huge payout, high chance of failure.
- gentoo 4y agoall the engineers at an early stage company are "gambling" with exactly the same stakes as the founder. If they fail, they're all out of a job. The founder risks nothing more than that: he's gambling with other people's money. Why should one of those people reap generational wealth while everyone else ends up in the upper-middle class?
- monero-xmr 4y agoHmmm it seems like the engineers bounce around jobs whenever they feel like it while the founder is locked in for 5 to 25 years. Way different stakes.
- Lionga 4y agoYou have to invest a lot of time and effort to convince other people that they should "gamble" their money on you and your idea. The early engineer has a pay check from the start. Again if you want your shot at generational wealth just bet all at the roulette. Or convince someone that they should gamble their money on you.
- Haga 4y ago[dead]
- bryanlarsen 4y agoBut is that true? Every VC-backed founder I know "failed up". They pulled a more-than-dev salary from the company during the failure, and then after the failure they just started a new company and had an inside track on VC. OTOH, the bootstrapped founders have my respect. They had their houses as collateral for their company's operating loan. They also succeeded at a much higher rate than the VC backed founders I've known.
- freedsoftware 4y agoI've seen this as well. VCs are actually terrible at their investments by and large. They mostly use gut instinct or personal networking as their determiner of whether to invest in stuff. That's a poor heuristic and it is why so many people continue to fail upward.
- lordnacho 4y agoThis is among the problems of capitalism. We act like it makes sense for the winners to decide about the resources (money, businesses) they've won because their success suggests they are good at administrating it. What happens? They spunk their money on kids who are playing League of Legends during meetings. I've not often been in an investor meeting where the investors asked smart questions. They send people who aren't equipped to think about what they're shown. They think DD means making sure your accounts can't be stolen by the boss.
- acchow 4y agoI believe what you're describing is an anomaly from a decade+ of negative real interest rates due to quantitative easing. Getting rich while failing upwards in the future will be an exceptional rarity.
- bryanlarsen 4y agoReal interest rates are lower today than they have been for the last few decades. 4.5% interest with 6.5% inflation is lower than anything we've had in the period of 1.5% - 2% inflation.
- acchow 4y agoYou are using backwards-looking inflation figures and comparing against forward yields. If you believe that the Feb 2024 price level will be 6.5% inflated compared to Feb 2023, then please go ahead and take that 4.5% loan. The rest of the market believes that inflation will continue to fall and infinite money has ended. Basically, if you borrow at 4.5% today with the assumption that it is effectively a negative real rate, you will be pretty disappointed in a year.