[chychiu]

"His net worth isn’t something he says he ever thinks about. “I don’t waste time on it. Because at the end of the day, it’s a theoretical number that has no relevance. It’s not as if we have a bank account full with all that money and liquidity. I’m sorry, it’s not cash. It’s assets that are necessary so that people can do their jobs."

I wish more people can see it that way instead of touting the successes of billionaires just by virtue of their theoretical net worth

[caymanjim]

I get his point, but it's not purely theoretical. He moved into a $6M house, he surely never has to work again, never has to worry about medical insurance, about paying the bills, and can do basically anything he wants. All without liquidating any meaningful amount of those assets and without hurting a single person's job.

I think it's nice that he's laying low, trying to find something he's passionate about, is willing to work hard, isn't a playboy, etc. He has a humble attitude. But his wealth is real, not theoretical, and he's still too detached to realize that.

[jblwps]

> his wealth is real, not theoretical, and he's still too detached to realize that.

This may be true, but it may not; he may be very aware of that, but is projecting himself as less wealthy than he actually is. I could imagine myself doing something similar if I had that kind of wealth.

[cbzoiav]

I think this is almost what he's saying. Once you're past say $100M that is the case anyway - being the 83rd richest person on the planet has little to no real additional impact.

[hn_throwaway_99]

I think that's silly. A sizable portion of my net worth is my home equity, and thus I could say "Because at the end of the day, it’s a theoretical number that has no relevance. It’s not as if we have a bank account full with all that money and liquidity. I’m sorry, it’s not cash. It’s assets that are necessary so that I can live somewhere."

While I guess that's somewhat true, it's not a "theoretical number", and there is a very straightforward way to turn that into cash if I want (of course, I'd have to find somewhere else to live). The same is true of this billionaire's net worth.

[mikestew]

The same is true of this billionaire's net worth.

No, because while you own your house, the billionaire owns every house on the block. What happens when all of those houses get liquidated at once? First, local market is flooded, they no longer hold their original value. More importantly, and the part of the quote you left out, is that in this analogy, the houses can no longer be rented and a revenue stream dries up.

So no, it’s nothing at all like your home equity.

[elsewhen]

his net worth is calculated by taking his share of the FMV of the assets he owns. presumably, he could sell his share of the company to a buyer and he would then become liquid.

[furyofantares]

> he could sell his share of the company to a buyer and he would then become liquid.

What buyer? At the time of the article, he's #79 on Forbes, so there's only 78 potential individual buyers here and they're probably all in the same pickle so far as getting liquidity.

Maybe you're thinking of a merger with some other company. How many companies had 7 billion dollars in liquid assets in 2007 and also thought owning FEV would be the best use of that money? I'm thinking not many, but I really don't have any idea.

[growt]

He doesn't have to sell to an individual. I'm sure there are a lot more funds, banks and companies with more then that amount of money around. Also he doesn't have to sell to a single entity, but can sell shares to the public market. That said, it still wouldn't be easy and probably tank the market value of his companies.

[furyofantares]

> That said, it still wouldn't be easy and probably tank the market value of his companies.

Right, my read is that this is what makes the number theoretical

[bluGill]

Same problem: none of those funds have several billion sitting around they can access. It would crash the market for all other stocks if he offered everything for 3 billion : At half price there are funds with enough assets to liquidate their other holdings and buy. It would send the market down significantly. There just isn't enough free cash in the world to actually buy him out. (free cash meaning money not already allocated to food and other requirements of daily living)

[gowld]

Sure, there's a discount factor. But the discounte value isn't <1%, not even close.

[mtnGoat]

It is somewhat theoretical, as all heavily asset tied wealth is, because if you were to sell all your shares/assets at once, it would devalue it, how much wouldn't be known until you tried to fire sale your assets and learn what the market will bear.

[conductr]

It’s not like he’d log into his etrade account and sell 7853256788943 shares or start selling his physical assets. This is M&A, it’s negotiated and he’d likely get a premium as the buyer would have some strategic interest

[mtnGoat]

but you're saying it would be negotiated, which would mean it's theoretical until those are complete. therefore we can not take todays stock price and multiply it by share count to arrive at net worth.

[hinkley]

If you own your house outright, you can put it up as collateral on a loan. As long as your luck holds you can make money off of that asset without selling it.

(However houses, as assets, leak a lot of worth in the form of upkeep and property taxes. Most times it’s better than rent, but not in all scenarios. And getting a cheaper house and investing the rest often gets better returns, once all costs and inflation are accounted for.)

[hkmurakami]

The key is ones value system. Do you see yourself as a steward to the business, or do you see the business as your possession.

(Contemporary) American culture tends to lean towards the latter while the old world (and particularly Germany) seems to lean towards the former.

While it may be true that the assets could be liquidated via M&A, oftentimes those st the helm genuinely believe that it is their duty to serve the company and its stakeholders and employees rather than use it/them to the owner’s maximum benefit.

[veryworried]

Both views are valid in different circumstances.

If your business is a well automated machine where technology acts as a force multiplier for some level of human input that is approaching 0 over time, then it becomes a possession. Most tech people aspire to have this kind of business. It is easier to do with it whatever you please, including taking it in a risky new direction or even shutting it down completely. The only person you hurt is yourself.

If however your business is driven mostly by raw human labor and more and more families are depending on the jobs you create as you grow, then you are mostly in the stewarding category. You will lie awake at night knowing that many people are counting on you to make the right decisions and to be merciful to them.

[njepa]

I agree. Try buying another house in the same area without that capital and see how theoretical it is.

[Abishek_Muthian]

There are several such Billionaires who stay away from flaunting their wealth & like to stay obscure.

There are Billionaires like James Simons, Robert Mercer, Azim Premji etc. who steadfastly keep a low profile; whether it is humility or if it fits their agenda is a topic for another discussion.

If we count the number of Billionaire names we remember, I'm sure we wouldn't even cover the top 25; so I don't think the list matters for anything significant except for the Income Tax departments of their respective countries.

[hkmurakami]

I would posit that, in this day and age, it is second and third parties rather than the first party billionaires themselves that create and continue this sort of adulatory narrative.

[jjeaff]

With the exception of course of the self declared members of the "3 comma club" and others like our current president.

[matz1]

Not sure why it's not relevance, it's not theoretical number either. Sure it's an not cash but it can be turned into cash if he want to.

[cgriswald]

It is theoretical because it is based on the estimated, guessed, or made up value of assets. If all you have to your name is $100, your net worth is $100. If all you have to your name is a used Nintendo Switch, your net worth is theoretically $100.

[esoterica]

If the going price for a used Nintendo Switch is $100 then that is your net worth, not your “theoretical“ net worth. You don’t get to redefine common phrases with specific definitions.

[kmonsen]

The difference is that you have to find a buyer for your switch if you want to eat, while the supermarket is required to take your cash.

This becomes even more difficult for owner large amounts of shares in the same company since you selling could have a negative effect on the shares. The reason they have the value could be that the market thinks you are in it for a long time and will provide additional value, once you start selling it could trigger a larger sell-off.

Or there could be a financial crash and the value could be cut in half.

So cash and cash-equivalent assets are special and worth more if you need to eat right now.

[eschutte2]

Is the supermarket required to take your cash?

[bluGill]

There are laws in place in most countries meaning yes.

Even ignoring legal issues, for practical purposes society has accepted cash as the way to do trade. Everybody has cash (credit cards and checks are a proxy for cash) Thus a supermarket that doesn't accept cash is going to have problems selling anything because most people won't really know.

[cgriswald]

My point is that all net worth is theoretical as measured in currency D except the extreme edge case where your only asset is cash or cash equivalent in currency D.

I am not redefining net worth so much as I am pointing out its theoretical (read: unrealized) nature.

[matz1]

While it might not be exactly equal to $100 cash. That Nintendo switch still represent real value. The value could be based on what the market price.

[Iv]

Debts also are theoretical numbers. Good luck saying they are not relevant.

[Iv]

I wish I could say my net worth is a theoretical number I don't really need to think about.

> It’s assets that are necessary so that people can do their jobs.

And the main point of capitalism is that these assets have a price and are transferable. It is necessary that they exist for people to do their job, it is not necessary though that you own them.

[skookumchuck]

This plays counter to the popular idea that rich people are hoarding their wealth in cash. They don't, the money is all in investments which create things and employ people.

[shadowprofile76]

I don't get why this was downvoted, except perhaps out of a silly emotional reaction. You just summed up the essence of what a large percentage of the whole comment thread for this link explains in detail in different ways. Many rich people got rich by creating growing value for others with their capital assets and they continue to do so by doing more of the same. What they "hoard" is being deployed in the economy in crucially productive ways that benefit thousands or even millions of others. Not all cases but plenty of them fit this profile among the extremely rich.

[skookumchuck]

Actually in all cases. Even cash "hoarded" in a bank account winds up invested in the economy, because that's what banks do - loan out some multiple of their deposits to people who spend/invest it.