No. If anything he exaggerated the value of those PayPal shares at the time of contribution. Assuming he made the contribution for tax year 1998, then PayPal hadn't yet raised any money and had no external valuation. The company was worthless at the time and the price-per-a-share was a formality of the initial incorporation. This is similar to most other early stage startups that are similarly worthless at founding.
You're splitting hairs. Treating gains from startup founder stock like gains from an investor who put in substantial amounts of money is just silly, and that part of the tax code should be fixed. It's just as abusive as the carried-interest provision.
If the person who started the company had zero access to capital, then claiming the company had no value at the beginning would be credible. Peter had substantial access to capital even in 1998-99. There was no question he was going to raise a boatload of money quickly after starting the company. Contributing shares of such a company to an IRA by claiming they're worth $1700 is just an abuse of the system.
I agree that Thiel did stretch the law, but all of this only matters because PayPal was exceptionally successful. Almost all founders who buy their early shares prefunding and place them in a Roth IRA will end up with worthless equity for retirement.
Further, there are disadvantages to having this portion of his wealth in a Roth IRA. For one, you cannot borrow against equity in a Roth. So while he can sell and buy something else tax free, none of these assets are available to him until retirement age. Whereas his PayPal shares outside of retirement accounts can serve as collateral for loans, which would allow him to access a portion of these assets tax free , while allowing the equity to continually appreciate.
I'm surprised to see this downvoted. My understanding is that one can only contribute to a Roth IRA if their income is below a certain limit. For the 2021 tax year that is $139k. Plenty of founders are receiving salaries below that threshold in 2021, even after raising money.
If Thiel made this contribution for tax year 1998, then this would be before they even took any external funding. It's quite conceivable that he received an exceptionally low salary that year and relied on savings.
> Plenty of founders are receiving salaries below that threshold in 2021, even after raising money.
Yeah, that's the mechanism, but being in a position to decide what what your taxable income will be is a loophole in itself, one that's pretty much only available to the wealthy and people who run businesses. I'm sure Thiel was both at the time.
> but being in a position to decide what what your taxable income will be is a loophole in itself
mmmm not a loophole, the government encourages entrepreneurship and created tax deferred plans because social security is flawed and inadequate and pensions also shouldnt be expected by the general population
Having a self directed IRA with some good trades in it is the expected outcome
But the shares truly were worth basically nothing at founding. If he made the contribution for tax year 1998, then they hadn't even raised any money and therefore there was zero external valuation.
Anyone can found a company with a $1 market cap and have full ownership from their one dollar investment. But it's meaningless unless they turn that into an actually valuable company with a market cap in the billions. Thiel just got exceptionally lucky, in addition to a bunch of hard and smart work.
I think this is a concept a lot of us struggle with when imagining the extreme wealth of the most elite tech entrepreneurs. Bezos, Gate, Zuck, and the rest all started with worthless companies and had substantial ownership as founders. Their wealth came from turning those large stakes in worthless companies into slightly smaller stakes into companies worth hundreds of billions.
We'd need more numbers to figure this out, but the article discloses that within the same month "the company sold a slice of itself to investors for $500,000." That should clearly establish the value of the company at the time. If that slice grew by a factor of 295, that is, the 500k divided by the 1.7k he invested, then he fairly valued the amount of stock he purchased. If not, the information presented suggests to me that he committed tax fraud.
I don't know where to find the documents on Paypal's valuation and early ownership transactions to be able to dig further into this. One would imagine Propublica would have done so if it were feasible, and reported on it.
Note there's significant limits on stock held in a Roth. Last I looked at it, you can't own more than 10% of the company, and you can't be an operating officer:
26 U.S. Code § 4975(2):
(H)an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10 percent or more shareholder, or a highly compensated employee (earning 10 percent or more of the yearly wages of an employer) of a person described in subparagraph (C), (D), (E), or (G)
The propublica article says Thiel put shares of his own company in his IRA. If true, that's not something you can do anyone.
Yep, this is called cross-device matching. Generally consists of some modeling for devices seen together on the same IP address. One of the notable AdTech companies in cross-device modeling is Drawbridge (purchased by LinkedIn).
When I defended my PhD in 2013 at Georgia Tech Chemistry, the first half was the public defense, including Q&A. The second half was closed-door, consisting of just the committee and the PhD student. This second half was known to be more combative and it was common for the committee to request additional work. It was very rare for any one to flat out fail, since the student’s advisor wouldn’t allow them to defend until they had sufficient novel research.
In my program, many of us would strategize for the 30-60 minutes of the closed door grilling. We sought to give our committee members obvious things to criticize with the PhD student having prepared arguments to defend against these criticisms. E.g., I ashamedly included quite a few spelling and grammar errors in the first few pages of the summary section of the thesis (the only part anyone would actually read) and we spent at least 15 minutes on my horrible writing ability.
In general, the main outcome of the closed door portion of the defense was requests for additional work. It was common for committee members to suggest additional things that could “improve” the thesis work. Not surprisingly, many of these suggestions involved applying a committee member's methods, even if not plausibly applicable, so that one would publish another paper citing the committee member’s work. Some students, including myself, would have a job lined up before the defense to timebox the amount of additional work that could be requested.
hahaha I had a PhD defence in 2018 in the UK. Criticisms included:
"I don't trust your maths"
"I don't feel this analysis is right, but I can't describe in what way"
"you are clearly not very knowledgeable"
and many other similar things.
Asking me a question and then before I can open my mouth answering it yourself, and then insulting me for not answering it was the start of the viva defence and it set the tone for the rest.
I was also heavily criticised for not having cited a paper that came out in-between submitting my thesis and the defence, despite this being literally impossible to have done so, and, despite having already had gotten a job in that time, was given limited time to do additional experiments, write whole new chapters, new code, do new experiments, etc. Ended up adding 90 pages of material to the thesis.
In the end I had to quit the job I had just got, because It would have been impossible to not fail my PhD program and keep the job.
Afterword's, in behind closed doors discussions it was revealed that one guy had pushed for almost all of the required extra work deliberately to try to make me fail, because I had done something he could not.
These people should be getting treatment at least on par with what they got with #metoo, why is that not the case?
I mean, personally, I don't really care about reputation of academia, but given that you described a horrible story where somebody basically tried to ruin your career, and given that you decided not to name specific people or institutions, it seems that the whole (UK) academia will have to take the reputation hit for the alleged scandal.
Given that they succeeded in completing the poisoning of my opinion of academia and scientific research there is no career there at all. I say complete because PhDs can feel unpleasant, but that's mostly a result of high stress, difficult work, no security, and complete lack of a social life and interaction with other people for 4 years, rather than science itself but it does set an emotional impression of what research is like that is somewhat difficult to overcome.
I defended my PhD in 2009 at George Mason University (GMU). It had two halves, but they were reversed: the first half was private, the second half was public. I think that's a better system.
In the first half I was privately grilled by my committee. They wouldn't let the dissertation go to a public defense until they'd satisfied themselves that it was fine.
As far as I can tell the public defenses usually look ceremonial at GMU (at least in its engineering department), but they aren't actually ceremonial. Anyone from the public can ask questions at a public defense, so they aren't ceremonial. However, the goal of the (first) private half was to try to make sure that the defender is ready for arbitrary questions (because he understands the material). So it's unusual for the public to ask questions that the defender isn't able to answer. I got some questions I hadn't heard before in my public defense, but I was able to handle them.
Category Net sales Operating expenses Operating income Margin
North America 236.3 227.6 8.7 3.7%
International 104.4 103.7 0.7 0.7%
AWS 45.4 31.8 13.5 29.7%
Dollar amounts in billions.
I added profit margins to show just how little profit they're making in the retail business, particularly in the international market. AWS is the profit machine.
I couldn't find a further breakdown of different markets in their 10-K. That might be because its difficult to assign expenses to the market for a single country.
What if far more drivers want to work 10:00-16:00 than are needed? In the current situation, the spot price drops and some drivers leave while more riders enter.
As employees, Uber cannot dynamically vary the pay/minute rate, especially if it falls below minimum wage combined with vehicle/gas reimbursement.
Many employees will be assigned inconvenient hours regardless. That is a key difference between employees and gig workers.
When there are more people who prefer convenient hours than shifts available, some will only have the option to take inconvenient ones. As hourly employees, Uber can't use dynamic pay to manage supply and demand imbalances.
I dealt this as a teenager working at McDonald's. Most of us didn't want closing shift, and occasionally at 25 cent/hour incentive would be added. But more often than not, the demand for any hours was sufficient. Labor supply simply exceeded demand.
Still think Uber and likes should be regulated away until we have true self driving cars. That may take a decade or more.
Similarly, many of us don't want to be chained to a comparably sociopathic and unaccountable government entity. We'd instead prefer to independently manage our own unique needs using our own individual economic agency.
How can anyone look at the atrocities committed by every major government over the centuries of its existence and not see that large governments are orders of magnitude more sociopathic than the worst corporations? Its just a general feature of large and powerful organizations; shared by governments and corporations alike. Governments simply hold the power to commit larger atrocities.
Just look at how the city of Flint, MI poisoned their own citizens water while suppressing knowledge of their actions. [0] While in the grand scheme of government atrocities this actually appears relatively minor, this issue happened in very recent times.
One could fill pages listing government atrocities before even getting to basic incompetence and mismanagement. While inefficiencies happen in all bureaucratic organizations, governments hold singular power over their citizens in a way that no corporation could ever dream of.
This is not an argument against government. There are some services that only the government can provide. E.g., a strong military. Nor is this an argument against government playing some role in promoting general welfare.
I just personally would like the option to not be further dependent upon our government and would rather use my own economic agency to provide for my own unique needs. Many other people feel similarly and therefore reject this further intrusion of government in dictating our labor relations with employers.
Bad government is everywhere, but many governments use power broadly responsibly. Private entities are less accountable than elected officials, and they get more scrutiny from the press. That power you talk about is real, but frankly we tried having 0 labor standards in the 19th and start of the 10th century. The vaunted powerful middle class of the 50s and 60s also took place after the largest government programs in our history (the war, the interstate highway system, etc) and also along with very strong labor protections and high taxes that have been all erased since the 80s. Faith in the US government in particular took a nosedive during and after the Vietnam war.
I guess I don’t understand why this is the line in the sand, and why we must depend on private profit-motive entities to provide for basic welfare and an economic safety net when we can see it working in developed countries around the world.
