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I can't presume to understand Carl Icahn (as you admitted as well) but IMHO, this is untrue and can lead fellow HNers into an echo chamber. First, Wall Street'

by dpcheng2003 13y ago

I can't presume to understand Carl Icahn (as you admitted as well) but IMHO, this is untrue and can lead fellow HNers into an echo chamber. First, Wall Street's role in capital markets towers over Silicon Valley. Venture Capital Assets Under Management is approximately $200 billion. Blackrock, the world's largest fund, has $4.3 trillion AUM. Second, while I believe pmarca acted entirely in good faith and is legally in the clear, there is enough "there" to begin fighting a proxy war. For example, the (tech) market was more forgiving when Dan Loeb fought Yahoo because it got the outcome we wanted (Marissa joining, Yahoo focusing). Let's not conflate what is arguably an ill-advised but legally legitimate proxy war with a misdirected turf war between finance and tech. As a point of reference, I'm a tech co-founder (who poorly codes) and a former investment banker.

eruditely 13y ago
Also, I do not agree, the wealth created by tech companies is legitimate progress, whereas finance is more rent-seeking/pushing tail-risk off to the government. The link below informs much more of my world-view however. http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc
- dpcheng2003 13y ago
  While you can be 100% correct, it's a straw man and irrelevant to my point. You can simultaneously believe finance is rent-seeking and still 100% agree with my points in response to the original post: 1) finance is much larger in capital markets; 2) Icahn has legitimacy even if he turns out to be wrong; 3) We should not dovetail into a finance vs. tech argument.
argumentum 13y ago
> First, Wall Street's role in capital markets towers over Silicon Valley. True, but what's the delta? Where are the sources of new power (and subsequently wealth) being generated? Why, for that matter, are you a former investment banker and now a tech-cofounder and coder? As I'm sure you know, you're not the only one who's made that (smart) move. What moving around money was to the 19XXs, moving around information is to the 20XXs. That's the crux of "software is eating the world". AUM doesn't seem a useful metric for power, in fact it's debt and so it all depends on what you do with it. What % of those assets are depreciating? How fast are the % of assets that are appreciating doing so? I know little about capital markets, but these seem like the obvious begged questions, don't they?
- dpcheng2003 13y ago
  New power/wealth generation is and will be in finance for the foreseeable future. I can go into great detail on this but for TL;DR purposes, I will generalize: finance > tech in making aggregate money because finance only cares about making money and tech cares about a lot of other things, which in turn generates money. I moved into tech because I liked it, not to make money. If I were still in investment banking, I'd be making 7figures a year (and killing my soul in the process). This is not a judgment call; it's a personal choice. There exists good-willed bankers as well as selfish, rent-seeking coders. Moving money around has not been limited to the 19XXs. It's been around since humans put a face of an important person on some piece of metal (actually earlier, but it lacks the imagery).
  - argumentum 13y ago
    Power and money aren't the same thing. Power is the ability to control your environment .. i'd say that's exactly the "lot of other things" that tech cares about. Power derives from generating wealth, which is making people's lives better. Of course, people have always moved money (and information) around (and always will). Just as we've always moved goods around. That wasn't my point. When "Brittania rules the waves" became Britain's national anthem, it was because ruling the waves (and moving goods) was the main source of power in those days. Since then, shipping has become a commodity. This is now happening to finance.
    - dpcheng2003 13y ago
      Agree to disagree my friend. I wish you well.
  - nostrademons 13y ago
    Andreessen has very publicly said that he wants to replace money with tech. His Bitcoin bets are public statement that he believes that this new technology will disrupt an industry: that industry is finance. The majority of the financial industry probably doesn't think the threat is credible ("First they ignore you..."), but Icahn is a bit more forward-thinking than most, and he probably realizes that Andreessen is going straight after his power base.
Adrock 13y ago
> First, Wall Street's role in capital markets towers over Silicon Valley. Venture Capital Assets Under Management is approximately $200 billion. Blackrock, the world's largest fund, has $4.3 trillion AUM. This isn't really an apples to apples comparison. Most of the money managed by the big players like Blackrock is in funds that are tied to specific benchmarks and have very restrictive mandates. Relatively little of it can be redirected towards funding new companies.
- dpcheng2003 13y ago
  Who said anything about funding new companies? We're talking about leverage and wealth generation. Big AUM means bigger fees. Non-VC funds like hedge funds and private equity are incentivized to have huge funds because they get the fees. Since most of their work is financial engineering, more AUM means more leverage and is an advantage. Large VC funds are disadvantaged because they're investing in growth. A 20x return off a $5M investment is more common than a 20x return off a $100M investment. I don't think it helps either community to pit one against the other. Finance and tech are different and serve different purposes and let's leave it at that.
  - argumentum 13y ago
    If "AUM" is so crucial to power, why does the market value BlackRock at less than a third of Facebook? AUM is debt .. so its value depends on what is being done with it. To what extent that these assets can be used for "financial engineering"? They seem rather illiquid to me (and apparently the market, which feels that BlackRock's 11k employees and $4.2 trillion generate less than a third as much wealth as Facebook's 6k employees and $18 billion in total assets "under management"). And how is funding successful new companies not wealth generation? Y-Combinator has invested a total of ~$10m invested for approx a 5% share of ~500 new companies with a valuation greater than $20b and growing. It's annualized RoR is north of 50% for nearly a decade, and likely to increase henceforth. By contrast, Berkshire Hathaway grew at ~20% for ~50 years. I predict YC will blow those numbers out of the water.
    - dpcheng2003 13y ago
PakG1 13y ago
I can't help but think that Icahn is jealous of Loeb's run with Yahoo and wants a similar modern day feather in his cap. Looking at the way he publicly attacks and debates with peers like Ackerman in the Herbalife situation, I wouldn't be surprised. This is purely only speculation, of course.

eruditely 13y ago

Also, I do not agree, the wealth created by tech companies is legitimate progress, whereas finance is more rent-seeking/pushing tail-risk off to the government. The link below informs much more of my world-view however. http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc

dpcheng2003 13y ago
While you can be 100% correct, it's a straw man and irrelevant to my point. You can simultaneously believe finance is rent-seeking and still 100% agree with my points in response to the original post: 1) finance is much larger in capital markets; 2) Icahn has legitimacy even if he turns out to be wrong; 3) We should not dovetail into a finance vs. tech argument.

argumentum 13y ago

> First, Wall Street's role in capital markets towers over Silicon Valley. True, but what's the delta? Where are the sources of new power (and subsequently wealth) being generated? Why, for that matter, are you a former investment banker and now a tech-cofounder and coder? As I'm sure you know, you're not the only one who's made that (smart) move. What moving around money was to the 19XXs, moving around information is to the 20XXs. That's the crux of "software is eating the world". AUM doesn't seem a useful metric for power, in fact it's debt and so it all depends on what you do with it. What % of those assets are depreciating? How fast are the % of assets that are appreciating doing so? I know little about capital markets, but these seem like the obvious begged questions, don't they?

dpcheng2003 13y ago
New power/wealth generation is and will be in finance for the foreseeable future. I can go into great detail on this but for TL;DR purposes, I will generalize: finance > tech in making aggregate money because finance only cares about making money and tech cares about a lot of other things, which in turn generates money. I moved into tech because I liked it, not to make money. If I were still in investment banking, I'd be making 7figures a year (and killing my soul in the process). This is not a judgment call; it's a personal choice. There exists good-willed bankers as well as selfish, rent-seeking coders. Moving money around has not been limited to the 19XXs. It's been around since humans put a face of an important person on some piece of metal (actually earlier, but it lacks the imagery).
- argumentum 13y ago
  Power and money aren't the same thing. Power is the ability to control your environment .. i'd say that's exactly the "lot of other things" that tech cares about. Power derives from generating wealth, which is making people's lives better. Of course, people have always moved money (and information) around (and always will). Just as we've always moved goods around. That wasn't my point. When "Brittania rules the waves" became Britain's national anthem, it was because ruling the waves (and moving goods) was the main source of power in those days. Since then, shipping has become a commodity. This is now happening to finance.
  - dpcheng2003 13y ago
    Agree to disagree my friend. I wish you well.
- nostrademons 13y ago
  Andreessen has very publicly said that he wants to replace money with tech. His Bitcoin bets are public statement that he believes that this new technology will disrupt an industry: that industry is finance. The majority of the financial industry probably doesn't think the threat is credible ("First they ignore you..."), but Icahn is a bit more forward-thinking than most, and he probably realizes that Andreessen is going straight after his power base.

Adrock 13y ago

> First, Wall Street's role in capital markets towers over Silicon Valley. Venture Capital Assets Under Management is approximately $200 billion. Blackrock, the world's largest fund, has $4.3 trillion AUM. This isn't really an apples to apples comparison. Most of the money managed by the big players like Blackrock is in funds that are tied to specific benchmarks and have very restrictive mandates. Relatively little of it can be redirected towards funding new companies.

dpcheng2003 13y ago
Who said anything about funding new companies? We're talking about leverage and wealth generation. Big AUM means bigger fees. Non-VC funds like hedge funds and private equity are incentivized to have huge funds because they get the fees. Since most of their work is financial engineering, more AUM means more leverage and is an advantage. Large VC funds are disadvantaged because they're investing in growth. A 20x return off a $5M investment is more common than a 20x return off a $100M investment. I don't think it helps either community to pit one against the other. Finance and tech are different and serve different purposes and let's leave it at that.
- argumentum 13y ago
  If "AUM" is so crucial to power, why does the market value BlackRock at less than a third of Facebook? AUM is debt .. so its value depends on what is being done with it. To what extent that these assets can be used for "financial engineering"? They seem rather illiquid to me (and apparently the market, which feels that BlackRock's 11k employees and $4.2 trillion generate less than a third as much wealth as Facebook's 6k employees and $18 billion in total assets "under management"). And how is funding successful new companies not wealth generation? Y-Combinator has invested a total of ~$10m invested for approx a 5% share of ~500 new companies with a valuation greater than $20b and growing. It's annualized RoR is north of 50% for nearly a decade, and likely to increase henceforth. By contrast, Berkshire Hathaway grew at ~20% for ~50 years. I predict YC will blow those numbers out of the water.
  - dpcheng2003 13y ago

PakG1 13y ago

I can't help but think that Icahn is jealous of Loeb's run with Yahoo and wants a similar modern day feather in his cap. Looking at the way he publicly attacks and debates with peers like Ackerman in the Herbalife situation, I wouldn't be surprised. This is purely only speculation, of course.