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So do all the lottery winners. It doesn't really change how a lottery works, or the likely financial result.

by ikiris 1y ago

mgraczyk 1y ago
What fraction of lottery participants win, vs startup employees? It's rare and there is luck, but the quantities matter. You are much more likely to make money from a startup and it's much more under your control as an employee
- reillyse 1y ago
  That’s an interesting thought experiment actually. If you think about the amount of money given up as a startup employee you will definitely get some winnings. For example, say as a startup employee you are earning/being compensated 80,000 a year in equity. If you bought $80,000 of lottery ticket’s each year how much would you win. Depends on the lottery but most lottery’s have a rough payout of approximately 50-70%. Let’s say it’s 50%. So you would expect to receive back $40,000 per year. Do half of all startups equity turn into cash, I think not. So probably more likely to make money from the lottery.
  - paulddraper 1y ago
    Less than half of startups have exits… But most startup people don’t work at most startups.
    - reillyse 1y ago
      I've worked at startups that have had exits and the employees got zilch. I think even in the startups with exits the probability of an employee having their equity turn into cash money is very low (also I doubt 50% of startups have exits - I hear a number of 10% more often and even that seems high, I'd imagine 10% of YC startups have an exit and they are the most likely to succeed so I imagine when you add in all the other startups that percentage gets far far lower).
      - paulddraper 1y ago
        Skill issue
        reillyse 1y ago
        I thought this was sarcasm initially, but I think on looking at the rest of your comments that you are actually being serious. wow. Glad I've never had the pleasure of working with you.
        paulddraper 1y ago
        Building a business has some luck/lottery components, but not nearly as much as HN comments would lead you to believe. For the most part, outcomes largely track from strategy and execution.
      - deleted 1y ago
        [deleted]
  - mgraczyk 1y ago
    You are confusing expected value with probability of "winning". The purpose is to trade EV for a small probability of high payout. It's less extreme than the big ticket lotteries but more extreme than a scratcher. If that's not for you, don't do it Also your last point is either obviously not true (if you're talking about big lottery winnings) or trivially true (if you're talking about $1000 scratcher prizes). More people made life changing money from a single company (Facebook) than all California lottery winners combined across all time
    - reillyse 1y ago
      I think you are confusing how lotteries work, most lotteries have additional prizes not just the big grand prize. There are a range of prizes.
      - mgraczyk 1y ago
        Pick a prize amount that is anywhere in the same order of magnitude as any engineers total compensation. For any such amount, there are more people receiving prizes above this amount from startups than lotteries
        reillyse 1y ago
        But why can't you win n smaller prizes, money being fungible and all we can just tot up the smaller prizes.
        mgraczyk 1y ago
        The total number of lottery winners who have won, in total, an amount of say 50,000 USD is at least 2 orders of magnitude smaller than the number of people who have received that amount or more from startup equity You are making an empirical claim that can be made rigorous, it's just off by several orders of magnitude
        reillyse 1y ago
- deleted 1y ago
  [deleted]
paulddraper 1y ago
Of course. Also…the lottery and startups work very differently.
- coleca 1y ago
  Yes, the lottery has rules and governance. It's a much safer bet. Startups can decide to devalue their employees' shares. I'd venture that the odds are at least stated on the back of the ticket with the lottery. Employees of privately held startups are often sold a dream of future riches that rarely happens. Even where there is an exit, often even founding employees get taken for a ride.

So do all the lottery winners. It doesn't really change how a lottery works, or the likely financial result.

by ikiris 1y ago

So do all the lottery winners. It doesn't really change how a lottery works, or the likely financial result.

What fraction of lottery participants win, vs startup employees? It's rare and there is luck, but the quantities matter. You are much more likely to make money from a startup and it's much more under your control as an employee

reillyse 1y ago
That’s an interesting thought experiment actually. If you think about the amount of money given up as a startup employee you will definitely get some winnings. For example, say as a startup employee you are earning/being compensated 80,000 a year in equity. If you bought $80,000 of lottery ticket’s each year how much would you win. Depends on the lottery but most lottery’s have a rough payout of approximately 50-70%. Let’s say it’s 50%. So you would expect to receive back $40,000 per year. Do half of all startups equity turn into cash, I think not. So probably more likely to make money from the lottery.
- paulddraper 1y ago
  Less than half of startups have exits… But most startup people don’t work at most startups.
  - reillyse 1y ago
    I've worked at startups that have had exits and the employees got zilch. I think even in the startups with exits the probability of an employee having their equity turn into cash money is very low (also I doubt 50% of startups have exits - I hear a number of 10% more often and even that seems high, I'd imagine 10% of YC startups have an exit and they are the most likely to succeed so I imagine when you add in all the other startups that percentage gets far far lower).
    - paulddraper 1y ago
      Skill issue
      - reillyse 1y ago
        I thought this was sarcasm initially, but I think on looking at the rest of your comments that you are actually being serious. wow. Glad I've never had the pleasure of working with you.
        paulddraper 1y ago
        Building a business has some luck/lottery components, but not nearly as much as HN comments would lead you to believe. For the most part, outcomes largely track from strategy and execution.
    - deleted 1y ago
      [deleted]
- mgraczyk 1y ago
  You are confusing expected value with probability of "winning". The purpose is to trade EV for a small probability of high payout. It's less extreme than the big ticket lotteries but more extreme than a scratcher. If that's not for you, don't do it Also your last point is either obviously not true (if you're talking about big lottery winnings) or trivially true (if you're talking about $1000 scratcher prizes). More people made life changing money from a single company (Facebook) than all California lottery winners combined across all time
  - reillyse 1y ago
    I think you are confusing how lotteries work, most lotteries have additional prizes not just the big grand prize. There are a range of prizes.
    - mgraczyk 1y ago
      Pick a prize amount that is anywhere in the same order of magnitude as any engineers total compensation. For any such amount, there are more people receiving prizes above this amount from startups than lotteries
      - reillyse 1y ago
        But why can't you win n smaller prizes, money being fungible and all we can just tot up the smaller prizes.
        mgraczyk 1y ago
        The total number of lottery winners who have won, in total, an amount of say 50,000 USD is at least 2 orders of magnitude smaller than the number of people who have received that amount or more from startup equity You are making an empirical claim that can be made rigorous, it's just off by several orders of magnitude
        reillyse 1y ago
deleted 1y ago
[deleted]

paulddraper 1y ago

Of course. Also…the lottery and startups work very differently.

coleca 1y ago
Yes, the lottery has rules and governance. It's a much safer bet. Startups can decide to devalue their employees' shares. I'd venture that the odds are at least stated on the back of the ticket with the lottery. Employees of privately held startups are often sold a dream of future riches that rarely happens. Even where there is an exit, often even founding employees get taken for a ride.