[dahart]

The entire reason someone takes the risk is for the chance to have a ‘positive’ expected value, which in startup land means the company gets really big, hires a lot of people, and makes a lot of money for the owners (founders & investors) by selling a product for more money than they pay the workers.

Startup investors often treat this like an odds game, expecting that while 9 out of 10 investments might fail, one of them will return better than 10x, which turns into a net profit on investments.

The “risk” might be relatively big for small investors, but it’s quite low for the bigger savvier institutional investors.

Startups are economically interesting, but they are not the majority of the economy. When evaluating parent’s argument, don’t forget to think about companies like Walmart, Amazon, Exxon, and Disney.

[AstroBen]

> Startup investors often treat this like an odds game

Yeah, it's not free profit though. If you're not good at choosing investments you end up with 9 out of 10 failing, and 1 only making 2x. That's what I mean by there are no guarantees of it

It's very easy to look at an isolated case where they made 10x and see it as unfair.. and miss the 9 other shots they took which lost money. Or hell the 90 other shots, and they're still in the hole overall

> When evaluating parent’s argument, don’t forget to think about companies like Walmart, Amazon, Exxon, and Disney.

Yeah these are definitely a different ballgame. Not sure where I stand on it - I don't know enough about the economics of that

[dahart]

I agree, and it’s objectively true, that there are no guarantees on investment. I don’t think GP was making any arguments that implied otherwise.

> It’s very easy to look at an isolated case where they made 10x and see it as unfair

“Unfair” is subjective and an insanely deep topic we can’t even begin broach here thoughtfully. It’s always true that a profitable company has incomes that exceed its costs, by definition. Since costs include employee pay, it’s always true in a profitable company that employees are collectively providing a greater value to the company than they are capturing for themselves. You’re still arguing from a failed startup perspective, and by and large, failing and failed startups are not running the economy, nor are even a significant portion. The majority of people in the economy are working for someone else’s profitable company. People who have money do take risks on startups for the chance make it big, but those people had money to begin with.

[AstroBen]

Yeah unfair was the wrong word. I mean just to focus on exploitation in the Marxist sense suddenlybananas was using it

The economics are the same for a startup and established company, no? I was just talking about that because that's what Bluey was. Walmart was also once a tiny business and the returns are still happening today. We're all free to own part of them through publicly traded stocks. Of course the returns are a lot lower now simply because there's less risk

If they're extracting so much extra from employees that they're overpriced in the market, that leaves room for a competitor to offer lower prices. "Your margin is my opportunity"

If they're getting outsized margins by paying tiny salaries, it opens up room for a competitor to get the best people to work for them by paying more

Worker co-ops are still an option under capitalism, also

It's not a perfect system but it seems to work fairly well?

> those people had money to begin with

Well.. are we not posting this on a VC firm's website? There are options to getting money if you're starting with none

I can very much get behind removing generational wealth. That benefits no-one

[dahart]

> The economics are the same for a startup and established company, no?

No, I don’t think so at all. A startup founder and a startup investor are starting from completely different places and have completely different risks from a minimum wage Walmart or McDonalds employee, and they usually occupy different social classes.

Workers in a co-op are part owner, so they become, in part, the capitalists. They might be fractional capitalists, but they are part worker and part owner. That’s fine, and it’s not what Marx was worried about. Marx was worried about the plight of the laborer who gets no share of the ownership at all. Startup founders are sometimes also owners, they are capitalists. Investors are more pure capitalists, they use their money to buy ownership of companies in hopes of making more money. Stock purchases are also a way to be a fractional owner in a way, that’s one way to look at it. Most minimum wage employees don’t have any stock, most of the lower class doesn’t have any stock.

Nobody said that owners don’t take risks in capitalism. They do take risks with their capital when they invest.

> Your margin is my opportunity

Tell that to the low-paid & minimum-wage workers across the country. Somehow competition has failed to result in the minimum wage going up on its own. Somehow competition hasn’t eliminated the working poor.

BTW most of the ultra rich capitalists are wildly in favor of generational wealth, since it benefits them and their families. Historically it was true that the majority of ultra-wealthy people had inherited their wealth, despite all the rags-to-riches and startup stories we’re told.