"Do people really believe that infrastructure is not the purview of the government?"
I don't think anyone is arguing that the government shouldn't be responsible for certain infrastructure, it's the degree to which the government should be involved, and what its role should be. If I put on my more conservative hat for a minute to make an argument, I think the idea is that the government should be somewhat of a last resort for things, and that less is more when it comes to government involvement.
Part of the reason for that is that once the government is involved, it changes the incentive structure quite a bit. Using other infrastructure projects (e.g. roads, bridges, etc) for examples that others have pointed out, they're a great way to raise taxes earmarked for those projects, but then that's when politicians start to play games and move money around to their own projects, and now the roads are falling apart, so we need to raise taxes to pay for the roads!
It's also somewhat tricky because once something is a government project, it's basically that forever. It's fairly rare for something to go back to the private sector once it has become a government program. What is more likely is that the solution is more government involvement, and that's something that conservatives tend to view as a bad thing.
Obviously I'm not speaking for all conservatives, and this isn't even necessarily my own viewpoint, but I wanted to push back against the idea that "conservatives just want what's worst".
> once something is a government project, it's basically that forever
Hardly. In my lifetime the UK government has privatised electricity, water, gas, telephones, British Aerospace, British Steel, British Petroleum, Rolls Royce, Rover, British Airways, railways, coal mining, and Royal Mail. Experiments have been made with roads, bridges, schools and hospitals.
BAe and BA are still in business. British Steel were owned by Tata for years and the few remaining sites are now spun off and trading under the original name. BP are making a profit except when they spill in the Gulf of Mexico. The railways are a mess. Rover were looted by their directors who narrowly escaped jail.
> Success of these has varied. The utilities make a big profit while people struggle to pay utility bills
That kind of thinking absolutely kills infrastructure investment. To use British Telecom as an example. After privatization, BT kept its monopoly on the last mile, but rates were set to ensure that it was quite profitable. (About as profitable as say Time Warner in the US.) That ensures that BT had the incentive to invest and keep pushing fiber deeper into its network. Today, broadband speeds in the UK are significantly faster than in say France. But it also results in huge political backlash. “BT makes 20% profits while people can’t pay their utility bills!”
Sure. But it’s money that motivates BT to spend money on infrastructure investments. No matter how you structure your infrastructure markets, ensuring adequate investment is the single most important thing. You can do this with markets or quasi markets, or you can do it through government agency decision making. With the former, you need to ensure attractive returns on investment. Not merely bare profit, but enough profit so that the billions of dollars don’t get invested elsewhere. Having the government make the decisions doesn’t magically eliminate the issue of ensuring adequate investment. It makes it even harder! With the government is on the hook for making investments, you’re always subject to pressure from other priorities. There is a reason roads and bridges and water systems in the US are crumbling. We’ve dramatically underinvested.
Isn't the obvious objection in this case that the incentive structure at the moment is terrible? Hence the lack of competition in most markets? Without needing to endorse one philosophy or the other, I'd say the telecom system in the US is a failure (for ordinary customers, it's been a ringing success for the telcos), and municipal broadband is worth a try (being less terrible than Comcast & Co is a fairly low bar...).
According to MacRumors, it's a deal "that could be worth $400m". If I were to guess (based on just public information which is almost nothing), the stock is not going to be worth much. Obviously Apple is going to pay the least they can, so I wouldn't be shocked if they're paying exactly what investors need to either get their money back or maybe a slight profit (if the recent investors had conditions for it). Employees will probably get nothing, except a new plan. The total sum of that new plan would depend on hitting some very aggressive numbers, that are unlikely to be hit (no idea what they'd put the metrics on). And the bulk of that is probably going to the CEO who has to stick around for 4 years to cash in.
Is it actually profitable? "Profitable" is a fun term to throw around to make your business look good, but it can mean a lot of different things (net margin profitable, gross margin profitable, pre tax profitable, etc). I'd be surprised if they really were all that profitable (meaning they would end each year with more money than they started with).
Fair point, guess we'll see when Apple discloses more details on financials.
Given that Apple seems to compensate junior engineers with compensation packages north of $300k, it wouldn't be too surprising if they overpaid for Shazam too. Apple also has $74.2B in cash and short-term investments, so paying $0.6B for Shazam doesn't really move the needle.
If you own the share (exercised the option to buy it, were granted a share, what-have-you), you'll get a letter once the deal is finalized. If they were bought for $100m, you'll likely get a letter saying that your share is worth $0.
Depends on the deal, and how many shares of Shazam has been issued. If its a straight up 100 mill deal, and there are 1 mill shares, and you have 1 stock, well you get 100 usd. But the deal might be structured way more advanced, or Shazam might have a lot of debt etc.
Basically it's who you'd think. Some investors will get their money back, some will get a bit more than others. The founders will be fine, but probably more due to their role than their stock.
Common stock will probably be worth $0, and the employees Apple wants to keep will get a new stock vesting schedule for Apple stock.
To me, this is another implementation of the housing bubble:
- People see college graduates making a lot of money
- Politicians make it a priority to make it easier for people to get loans to go to college
- More people take out loans to go to college
- Colleges realize there is no downward pressure on price and raise tuition.
- Politicians continue to make it easy for people to go to college
- People take bigger loans to go to any school they wish
Until the music stops, things are sort of OK. People's kids can go to any school they can get into, regardless of cost. Colleges can raise their tuition with no consequences.
Politically it's a difficult problem, because the old solution of making more money available is getting out of hand, but what politician wants to stand up and tell people they can't go to the college of their dreams just because they can't afford it?
During the housing bubble, it was the cycle of "people want to own a home" => "politicians say everyone should be able to own a home and make loans available" => "companies make money packaging up these loans" => "prices go up" => "people can't afford homes" => "politicians make more money available". Until the music stops, everything is great -- everyone is making money, everyone is getting what they want. Then it unravels...
The thing I don't understand is, how does it unravel?
It feels like politically acceptable short-termism of shunting education costs onto future generations. No-one's going to 'lose' money over it. Who will suffer? It doesn't look like it will be corporations that will suffer, save some institutions will close when the endless supply of money suddenly dries up. It looks to me like it will be governments, a political ticking time-bomb much worse than the growth of numbers of pensioners vs number of workers. Is it a potential social disaster where a lot of people will end up sent to a new version of debtors prison for a bit? Or will it massively impact future GDP of developed countries, as people won't be able to spend, they'll be paying back this onerous loans. Having the exact opposite effect that it's supposed to, instead of growing GDP by growing skills, it'll be killing it by curtailing worker spending potential. Tax revenues might fall due to higher education instead of grow.
Governments seems to be making these student loans rock-solid backed by government assurances to the detriment of future generations.
I haven't looked into it enough to know and am lucky enough to have paid all mine off as it was much smaller than today's crazy amounts.
It unravels because it's one of many systematic cuts taking wealth out of the hands of the middle and lower classes. Income after graduation is routed back into the student loans instead of going into savings (and getting max compounding early on), or going into the economy (giving steam to GDP..). Will it the straw that breaks the back of our current economic expansion? Or will it combine with current tax cuts to pull so much money out of "main stream" economic circulation that we hit another recession? I'm not sure anyone really knows.
I think it unravels over time. The feedback loop is very long.
At some point, large amounts of young adults will accept loans that exceed the value-add of college by a significant amount. Then, those who chose not to attend college and pursued a trade will be more visibly affluent. The trend will swing the other way, universities will experience downward pressure on tuition, and trade schools will be inundated as universities are now.
Until there is a political solution, I don't see how the cycle rights itself.
Maybe better information dissemination will give young adults more ability to make the rational choice whether or not to get large loans (or what amount of loans to get). Until then, the feedback loop is too long. Furthermore, for those who chose wrongly, there's no remedy. It's a bad situation.
Man, what an interesting discussion, and a lot of good points here. As someone involved in education in US (research faculty at major private school in the South), and more recently, in Germany, I've become increasingly concerned with the large number of students graduating these days with bachelor and graduate degrees with little hope of employment, holding huge debt they have scant chance of paying off in any short time frame. This hobbles them severely. More and more I start to wonder if we could not accomplish more by shifting much of burden of instruction in all fields (arts, sciences, language, etc.), back to high school, rather than impoverishing students and loading them with college debt so early in life. Student Loan program seems to mostly be a way to transfer wealth from taxpayer to universities and of course the banks, but not necessarily producing a broadly educated populace. Agree with above comment that running education as a "business" with students as consumers produces a terrible result.
Agreed, having mandatory Physics and Chemistry classes seemed wasteful to me. I enjoyed them immensely, and I would have taken them as electives.
Most of my classmates didn’t get much out of them, and would have done better with personal finance classes or other practical classes instead.
For the time being, all but two or three college majors (zoology, social work, sadly enough) are still cost-effective over a lifetime, given the median undergraduate student loan amounts. This gap is closing however.
Trades shouldn’t be considered a complete panacea, pay varies widely by regions. Some trades only pay well in one or two places.
But as far as I know student loans aren't securitized and leveraged in the same way as mortgages were, so I'm not sure that the fall out will be as bad.
The root problem (as others have noted) is too many people are encouraged to go to college and even though most majors don't make economic sense students (rightly) feel that they need a college degree to be a competitive applicant for good jobs. Maybe I'm just in an ideological bubble, but it seems like there's pretty good agreement on this issue, but no real way to do anything about it.
That is the major difference, mortgages had people underwater on actual physical things like property. They would go bankrupt and foreclose which would have a domino effect on other things.
Student loans are ignored in bankruptcy and there is no domino if they fail to pay since a degree isn't transferable to another person.
If there were to be a bubble burst, the people impacted are those that can't pay loans back and the institutions that handed out the loans. Sure there could be a backlash but a lot of those loans are from the Fed, right?
Right, and that doesn't seem good to me, but I don't think the fallout from student loans will be anywhere near the fallout from defaulted mortgages in 2008ish because they just aren't as as levered.
So it's terrible for the people involved, but not directly bad for society as a whole (but probably still bad in its second and third order consequences).
I'd say it's less bad for the people involved - it "only" trashes their credit. It makes life difficult, for sure. I'm sub-400 I believe. But a mortgage foreclosure trashes your credit and you lose your home. I /just/ need to come up with 12 months security, so I essentially can never move.
> Politically it's a difficult problem, because the old solution of making more money available is getting out of hand, but what politician wants to stand up and tell people they can't go to the college of their dreams just because they can't afford it?
Presumably the same politicians that were around when foreclosure mania (a la 2008) occurred and ultimately were forced to change regulations that now make it much more difficult to get away with issuing subprime loans. Or in your line quoted above, substitute "college of their dreams" with "home of their dreams." The net effect, of course, is that those politicians are now telling people they can't get the home of their dreams because, gasp, they can't afford it.
> People who came from my alma mater who majored in drama can't say the same.
Don't worry, your salary gives them a way out too. And I'm not just saying that to be snarky, I think it's very likely what will end up happening: you'll end up paying for their poor choices one way or another. If it's not directly via taxes to pay off their student loans, it'll fund their retirement.
> Don't worry, your salary gives them a way out too. And I'm not just saying that to be snarky, I think it's very likely what will end up happening: you'll end up paying for their poor choices one way or another. If it's not directly via taxes to pay off their student loans, it'll fund their retirement.
Social Security benefits, without any other retirement savings, puts you right around poverty level. I would not consider that "retirement".
Being a software engineer, who makes more than many other professions, doesn't automatically make you better for doing so. It just means you've optimized for a specific system. Congrats! The world still needs plenty of professions where the pay sucks and college is required (teachers, civil engineers, LPNs), that are arguably far more useful/noble/whatever you want to call real value. Consider that when you're sending your kid(s) off to school, crossing a bridge on your way to work, or are in the hospital being cared for.
I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job. I imagine there are many more people who have foregone retirement savings to pay off their massive college loans.
Politically, the story would be something like this: why should you, a multi-millionaire SW engineer who hasn't paid taxes on your 401k not pay your fair share so that these other folks can spend some time with their families? After all, they were the victims of predatory lending! Close the loophole that allowed your opulent lifestyle!
And remember, 401ks are a multi-trillion dollar market of untaxed dollars. Do you really think tomorrow's politician in 30-40 years is going to miss that, never mind their constituents?
Taxes are at historically low rates, and current governments have continually borrowed from the future to fund wars and tax cuts (outstanding US government obligations are in the trillions of dollars [1]).
Of course taxes are going to go up. Plan accordingly. If you've put millions of dollars in a pre-tax retirement account, you're a fool if you think it's coming out at anything near current tax rates. You're banking on a political climate that cannot exist existing. That's your fault.
And before blaming your average citizen, look how little anyone cares about what citizens want regarding net neutrality, a tax bill that is going to gut entitlements to support tax cuts for the top 1%, and so on.
> Of course taxes are going to go up. Plan accordingly
They already did. The GOP tax bill specifically targeted our demographic as a way to finance tax cuts for the wealthy and businesses. The GOP doesn't even deny it.
Like it or not, we are the scapegoats for all the problems afflicting the poor. And it's not a stretch to believe the GOP is going to use popular support to extract every dime from us until we are homeless too.
Medicare cuts->Elderly dying off faster->Voter demographic change. Law of unintended consequences? Possibly. I can see the political winds shifting back hard over the next 3 years.
Enough Puerto Ricans might have moved to Florida already to turn the state blue. Won't know until next elections.
A lot of people Puerto Ricans are moving to traditionally blue Florida locations. SE Florida, Orlando, Tampa are the 3 most populous areas and all are strongly blue. Through gerrymandering they'll continue to get the same representation.
If these new residents makes the statewide elections close, things would be improved (because in general in close elections, candidates have to appeal to the tiny amount of voters on the other side that switch parties, so toning down extremism), plus as Puerto Ricans, they had pretty much no say in the federal government versus some say after they moved from the island to the mainland.
>>I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job.
It's interesting that you believe people with $5M+ networth would have service workers as neighbors. :)
I live in the Peninsula (San Mateo County, CA). My side of the street is mostly rentals (2BR townhouse duplexes) costing about $4k/mo. The other side of the street is single homes, 3BRs that go for $1.6M. If you want good schools for your kids in the Peninsula, $4k/mo isn't a crazy rent, you might be able to go somewhere else in the area and pay $3k, but maybe you care enough about your kid's future to pay the extra $1k/mo for better schools... so you have a lot of people who are tradespeople or who are struggling to save much after they take care of their kids, but a lot of the homeowners are probably worth $5M at retirement.
My former next door neighbor had to move far away because she just couldn't afford it anymore, but probably at least a half-dozen families on my block could plausibly have net worths in the $5M range. In a neighborhood like this you see $70k and $10k cars parked next to each other.
Why is that interesting? After working for 40 years, saving religiously, it’s entirely possible that they’re living a solid middle class lifestyle not much different from someone else who also lives the same lifestyle but rents and doesn’t save money.
Strangely enough that proposal was floated around in earlier versions of the currently proposed tax bill: the 401(k) yearly contribution cap was going to drop from $18,000/year to $2,400/year. That would have driven savings into Roth 401(k)s/Roth IRAs so that the tax income would be realized sooner rather than later.
I currently save at a 50/50 mix of 401(k)/Roth 401(k) just in case the scenario you described comes true. I expect that as I age I'll contribute more post-tax dollars to my Roth and fewer to my 401(k).
I was a bit miffed to learn that the max contribution for an IRA and Roth IRA combined is only $5,500. I did some reading and understand the point of it but I would much prefer to be in control of my own money and where it is invested than some of the limited options given through an employer's 401k.
When you change jobs, you can rollover your 401(k) into an IRA, so if you're in an industry where change jobs every 3-5 years, the extra savings makes the difference pretty small (you can always put your money into a low-fee index fund in the 401(k) and then manage it more when you rollover).
Further, a lot of 401(k)s at larger companies that use Fidelity (at least, possibly others) have a feature where you can allocate money into a general brokerage sub-account, where you can invest in anything you could if you opened an IRA at Fidelity.
Yes, that's what I did after leaving my last job and read up more on IRAs. For retirement savings, the plan is for index funds. I was more annoyed by the max on IRAs since a lot of the companies I've worked for have either not offered 401ks or just had poor options.
This Bogleheads post had some good replies about why this is the way it is in terms of contribution max:
Plus you cannot contribute at all to an IRA once your income is above a number (132,000? last year) that is way below valley software average salary. It's kind of a way to encourage one to work for a company that has a 401K I guess.
> Congrats! The world still needs plenty of professions where the pay sucks and college is required (teachers, civil engineers, LPNs), that are arguably far more useful/noble/whatever you want to call real value.
Shame on you for working in tech and not a more noble profession. I recommend that you resign from your job next week and become a high school math teacher.
(I got a job in tech because I feel it adds the most value to the world so I'm not a hypocrite)
>The world still needs plenty of professions where the pay sucks and college is required
Quite a self-contradictory statement. I mean, if the world was in such a dire need of said professions in such quantities, then their pay wouldn’t suck in the first place.
>Value is the compensation others are willing to give you in exchange for your goods/services.
Value includes far more than that. It includes all kinds of tangibles and intangibles, including compensation in exchange for absolutely nothing, such as in the case of nonworking shareholders being paid dividends, such dividends arising from the expropriation by owners of surplus value created by workers.
Nonworking shareholders are being paid for their investment risk. The company pays them for taking said risk instead of investing their capital somewhere else.
Workers are paid wages for creating said surplus value using the company’s capital. If the shareholders’ capital were indeed not necessary for producing said surplus value, then why wouldn’t the workers create it by themselves, thus avoiding the expropriation?
>Workers are paid wages for creating said surplus value using the company’s capital.
Workers are paid wages to produce. Wages, stagnant for the last forty-plus years, have proven unlinked to productivity, which has risen very sharply over the same time. Wages are also unlinked from investment risk, which compels no rise in wages when it retires.
> then why wouldn’t the workers create it by themselves, thus avoiding the expropriation?
They do - you have described cooperative ownership of an enterprise. To tie back to value: given the fundamental conflict of interest under capitalism in the apportioning of value between creators and expropriators, I think we should expect cooperative ownership to grow in popularity.
It's important to allow that value reasonably includes the satisfaction of workers, customers, neighbors, and the taxpayers who subsidize the enterprise. It's understandable that these things would escape the category of "value" under a system that enshrines the satisfaction of shareholders as the prime motive of the enterprise.
There's no other way in my opinion too. This is super stressful to me. I started working a few years ago, working my ass off with a full time job and part time one at night and I wonder if it's going to be of any worth someday or if I'm just working against my own later benefits by putting myself in the "too wealthy compared to my age class future average" fringe.
Unless you're a C-level employee, you're not going to have the choice. And even then you're probably still not going to have a choice except in very rare cases (e.g. Uber's new CEO might have some decent protections). If you're "just" an employee, you're going to get laughed at if you demand anything besides common stock.
Why not? No one's stopping you from starting your own venture. What makes you entitled to a larger piece of the pie if you aren't putting in the extra work or shouldering the extra risk of a founder?
founders give up ((potential salary + RSU at a megacorp - salary at the startup) multiplied by number of years at the startup) while employees give up ((potential salary + RSU at a megacorp - salary at the startup) multiplied by number of years at the startup). Did you notice any significant difference? I mean there may be difference between megacoprs and numbers of years at the startup, yet does it warrant like 100x and larger (like div by 0) difference in the outcomes?
Founders usually give up their family lives, social lives, leisure time, and sometimes their reputation, sanity, initial investment in the startup and self-esteem on top of what you list, depending on the outcome. The stress level for a founder is usually quite high, and the success rate is quite low.
When you are the person worrying about making your number on a monthly basis, so you can pay your team ... whom aren't worried about this, because they get a salary ... and you sometimes/often can't pay yourself, so that you make sure that everyone else gets paid ...
... yeah.
When you do that, you are putting real skin, real risk into this game. Your reward should be commensurate with that risk if it pays out.
In my case, it didn't.
I got all the stress, pain, heartache, overdue bills, while dealing with skittish customers, people who demanded free things, etc.
All the while, growing a business from nothing to millions in revenue, with no VC involvement (not for lack of trying). To watch it shot in the head by the bank after sinking my entire worth into it.
I understand why founders/CEOs should expect excellent return upon a positive event. If they don't, then why, exactly, should the bust their behind as hard as they do?
> growing a business from nothing to millions in revenue, with no VC involvement (not for lack of trying). To watch it shot in the head by the bank after sinking my entire worth into it.
I'd be interested to hear more of the story if you're willing
Early startup employees are risking almost the exact same set of things. The moral of the story is that even as an employee, you're playing the lottery with a startup and you should only join on that will reward you as such if everything works out.
Depends a lot on the startup, especially outside the Bay. In other parts of the country, you usually don't get substantial stock grants from corporate employers, and you usually do get market salary or close to it from a startup. There's a relatively small difference between working for a startup and working for a corp, but there's a huge difference between founding a startup and working for a corp.
What i see around, ie. friends & acquaintances, is at some point, usually after a good stint at one or a couple places a midlevel manager/executive decides "time to make next level of money", and together with several like minded guys and established good connections they pick up some investors from a line up of the investors eager to get in, and the rest is a well defined process. There is no risk, no giving up of any live, reputation, etc. There is only improvement on all of these fronts. If their venture doesn't make it big, it will be acquired with a nice premium and they would end up somewhere at the same or higher positions anyway. One such is already a unicorn in a pretty short, even by SV standards, time. List of the advisers/investors and other involved people of another such venture, started pretty recently, is impossible to read while maintaining steady breath :)
It sounds like you're complaining, but if it is really so easy, just become a founder. In a way, it is impossible for there to be an unfair distribution of wealth between people who do A and people who do B if everyone has the choice whether to do A or B.
you've missed the important point. It isn't for everybody. I specifically mentioned that it is already successful people with a lot of good connections. Thus such a startup is just the next step in the career progression. For a plain engineer, like me for example, who can't make even a CTO/VP of engineering of a small company or a Director/division Chief Architect/etc. at a BigCo creating a startup would be exactly or even worse than described by grand-grand-parent. There is a reason that early stage VCs, for example YC, invest in people, not ideas/business. One of the friends got invested with "just name the number" amount right on the spot the moment he mentioned that he got his own startup even without telling what his startup is intended to do (of course there were due diligence done by small people afterwards before things formalized on paper) Where is couple other friends, engineers more like me, who went through a very harsh interviews at those few VCs who agreed to listen to them and got, unsurprisingly, nothing, and still sitting as engineers.
>It sounds like you're complaining,
there is huge difference between recognizing reality and saying that the reality is unfair (which it just can't be by virtue of being the reality)
Starting a business isn't for everybody, but not for the reason you stated. You're making the mistake of believing the VC hype. You don't need and probably shouldn't seek funding until you can articulate a need. So suggesting that you can't start a business because you won't get funded when you don't actually have any need for funding is absurd.
Starting a business isn't for everybody because it's a lot of stressful work. You have to wake up early and stay up late laying the foundation while your friends or spouse or kids or work are vying for your attention. You have to scrape together your savings or max out a couple credit cards to actually launch your product. Once you start hiring you are responsible for putting food on other people's tables. And even once you start making money, you have no idea what you're doing pretty much every step of the way.
If you actually do want to start a business, just fucking sit down and do it. There are a ton of profitable, bootstraped SaaS companies out there. Build a product, pay for the first couple months of hosting out of pocket, bill yearly, profit. (Notice "get funded" isn't a required step.) Complaining that VCs probably won't love you is just an excuse to take the path of least resistance and stay mediocre.
OK, sorry that I misunderstood you. But for what it's worth, lots of people with no connections have bootstrapped or gotten into incubators and then gotten funded or just hustled and got funded. For instance, just yesterday I talked to a woman with no connections or track record who got seed funding for her startup, but it took her over a year of "making friends with investors". Obviously it is a lot easier if you are well connected though.
It's not even necessarily up to the founders. In a VC-backed startup, the VCs make the call when it comes to compensation ranges. There is little diversity between companies on how that actually happens. We can pretend that it is a market equilibrium, but the analogy I would rather use is that of the medieval professional guilds, where prices were often rigged for the benefit of those at the top.
I am not claiming that the VCs are evil, or even a necessary evil. I don't think they are evil nor necessary. I think that they may be very inefficient when it comes to providing for a healthy economy that benefits everyone and not just themselves. Hate the game, not the player.
Honestly, I'd be surprised if any employees, C-level or not, get preferred stock. Unless you're putting skin in the game, you're probably stuck with common stock.
The reality of the situation is that it's not about what you do, but about how hard it is to find someone else to do what you do.
If it's easy to find programmers who will work for below-market rates, but hard to find investors who will contribute millions of dollars, then you can expect programmers to have much less negotiating power.
Exactly. In my experience it's hard enough to find investors, try insisting that they have the same liquidation preference as the employees. Good luck with that.
It's easier to find experience programmers who don't really care about liquidation preference than it is to find investors who don't really care about liquidation preference.
It is not. It is just a deal worse than average, not necessarily when it's possible to get a better deal (it's not that the early employees in startups are all rock stars, many just can't get a job in a better place).
Putting skin in the game is:
* paying from your own wallet when there's a cash shortage
* being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with
* being a face of a commercial entity and putting your reputation at stake. Most people on this planet don't see a difference between a billion dollar corporation and a penniless startup, and assume all companies are powerful and have unlimited funds. Hence, their key people are to be hated and mistrusted.
* and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature
> paying from your own wallet when there's a cash shortage
What's the difference between donating half your paycheck to the company, and only being given half your paychecks?
> being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with
VCs don't need to deal with the former. You don't get attacked in the case of the latter, you just get fired.
> being a face of a commercial entity and putting your reputation at stake. Most people on this planet don't see a difference between a billion dollar corporation and a penniless startup, and assume all companies are powerful and have unlimited funds. Hence, their key people are to be hated and mistrusted.
VCs make bad investments and founders make bad decisions all the time. The valley does not hold it against them for long.
> and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature
Here's where you're wrong - in a startup, engineers are the ones who get woken up at any given minute to fix an issue of any nature. Investors sure aren't.
> What's the difference between donating half your paycheck to the company, and only being given half your paychecks?
You really think there is a set percentage how much one needs to contribute?
Wait, you actually mean that "covering shortages" means "taking smaller salary", don't you?
>> being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with
> VCs don't need to deal with the former. You don't get attacked in the case of the latter, you just get fired.
I was about to reply with "hahaha" but then thought you really don't understand.
1. Not all startups (in fact, only a small share) are VC-funded. In many cases, the funds come from personal savings. In case I need to break it down to you, loss of personal savings is not necessarily taken kindly. 2. There is exactly 3,493,231 ways things may go south, it is not at all guaranteed it will all be limited to firing. As a matter of fact, when things get serious, it usually isn't. I witnessed it more than once firsthand, from different angles.
>> being a face of a commercial entity and putting your reputation at stake...
> VCs make bad investments and founders make bad decisions all the time. The valley does not hold it against them for long.
A couple of things: 1. America is not the entire world (shocking, I know). 2. Silicon Valley is not the entire America. 3. Bad reputation sticks for a very, VERY long time. Longer if you upset someone powerful.
>> and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature
> Here's where you're wrong - in a startup, engineers are the ones who get woken up at any given minute to fix an issue of any nature. Investors sure aren't.
I assume you mean "founders", not "investors" (because why would investors be working?).
While startup engineers are overworked (depending on a startup - I personally think it's a bad idea, and never do it to my employees), there is a million unseen things going on outside of development which nobody bothers to tell you.
Do you think these funds arrive on their own without a fight after the invoice is issued? Do you think these investors just act rationally and it works as if you lodge your job application? Do you think the interaction with lawyers, accountants, authorities is limited to 5 minute emails, and they are picked randomly, or shopping around takes half an hour?
Finally, who wakes up the engineers - do the founders do it in their sleep, in your opinion?
First, there are a lot more programmers than there are companies, and programmers are not unionized, so presenting a united front will be difficult if not impossible.
Besides, programmers want all sorts of different things. Plenty of us are happy to work for less pay at startups regardless of the equity situation, and the reasons vary: maybe it's a big step up from their last job, or the location is great, or they like small startup environments more than BigCo, or they didn't get the job at BigCo, or they're trying to build up a specific skillset, etc. It's not at all clear that common vs preferred shares is the hill that most of us would choose to die on.
Others have mentioned similar things, but there are a few things to consider.
Remember, $80k/year now may seem fine, but you have no idea what the future holds. First, you may average $80k/yr, but remember that volatility can be rough. If you got your $2.2m in 2007, you'd see losses for several years, and a decade before it recovered -- can you afford not to draw down on principle for a decade?
And then if you're aiming to live off of $80k/year, that's today's dollars. It sounds like you're pretty young (college), so if you're expecting to live another 60-80 years, you have to account for inflation. For example, if you had $100 in 1937, you'd need $1,666 today to have the same purchasing power[1]. If you do the same math going forward, you'll need $1.3m/year in 80 years to have the same purchasing power.
On top of that, there are other things to consider: having kids, unexpected costs, health care, rising taxes, etc. As has been posted even here on HN recently, a wealth tax would almost certainly blow your plans up in a big way. And if you have kids, they're not going to qualify for financial aid, because you're a multi-millionaire! So you'll be in an interesting pickle there.
This isn't to say that you shouldn't aim for this goal, just wanted to mention some things to at least consider...
> From the perspective of trying to get the budget balanced, taxing wealth is probably the single most efficient way to do it.
Why? As a total layman, wouldn't it be incredibly inefficient? If we tax the wealth of, say, the top 100 richest Americans, wouldn't that cause some pretty terrible downsides? If we force them to sell their holdings, wouldn't that ripple through the economy?
Take Jeff Bezos--if you forced him to sell a significant portion of his stock, wouldn't that depress the Amazon stock price, which affects a significant number of other individuals and businesses?
It takes some special sort of entitlement to believe that despite stealing most of their money, then asked to work and make up for the remainder of the population, they will continue to work after a while and contribute to your economy.
If you are not aware of what happens in situations like this, I would like to take you to pre-1990s India. Some of the most brightest, brilliant, hard working and industrious people used to leave the country and never to return the moment they attained working age.
The people and money from whom you can take the wealth to fund your socialist schemes shrinks every year. To a point you will have a country full of entitled people, who think they were born with rights to free stuff. And will always be angry at people capable of working who don't spend away their life to make it happen for them.
Let me add to the tirade. Somewhere on the web I saw: Taxing income, is like 9 wolves and 1 lamb deciding what's for dinner.
Quote (by probably Winston Churchill )- Any man who is not a socialist at age 20 has no heart. Any man who is still a socialist at age 30 has no brain.
Eru - did you notice the sarcasm ? We I got what i was looking for - many down votes! Anyway you do seem to have some objective thinking going on with your views on Georgism - I checked some of your posts. Keep it up!
I don't think anyone is arguing that the government shouldn't be responsible for certain infrastructure, it's the degree to which the government should be involved, and what its role should be. If I put on my more conservative hat for a minute to make an argument, I think the idea is that the government should be somewhat of a last resort for things, and that less is more when it comes to government involvement.
Part of the reason for that is that once the government is involved, it changes the incentive structure quite a bit. Using other infrastructure projects (e.g. roads, bridges, etc) for examples that others have pointed out, they're a great way to raise taxes earmarked for those projects, but then that's when politicians start to play games and move money around to their own projects, and now the roads are falling apart, so we need to raise taxes to pay for the roads!
It's also somewhat tricky because once something is a government project, it's basically that forever. It's fairly rare for something to go back to the private sector once it has become a government program. What is more likely is that the solution is more government involvement, and that's something that conservatives tend to view as a bad thing.
Obviously I'm not speaking for all conservatives, and this isn't even necessarily my own viewpoint, but I wanted to push back against the idea that "conservatives just want what's worst".