[sofard]

I think there are many arguments against AOC's comments, but I agree that PG here is misrepresenting her point.

I don't think anyone reading PG's blog is clueless about the power of compounding or the difference between salary and wealth through asset growth.

Her point is essentially whether the entire capital system is "fair." And to be fair to PG I don't think AOC articulated a particularly strong point either.

[cco]

I disagree, I think she articulated it very well. At scale you have sound bites, that's it.

She captured the truth, that our current system vastly favors capital over labor (etc etc etc), and did that in around six or seven words.

You can't really do better than that when communicating ideas at scale. What she said is true, it's for essays, economic papers, and laws to provide the nuance.

[csallen]

He very explicitly engaged with her claim that the system is unfair/unethical, and whether you agree with him or not, he argued against it:

> What [AOC] meant was that it's impossible to get that rich without doing something bad — without cheating in some way... The reason [my founder's] startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong [AOC] was. She wasn't exploiting anyone. Exactly the opposite in fact. The reason her startup was growing so fast was that she and her cofounder had been working their asses off to make their users happy, and as a result the users had been telling their friends. And that gets you exponential growth.

In other words, he's saying that rapid wealth creation can (and often does) come from creating and selling things of value to willing buyers, at scale, and that that's not unethical to do.

I do agree with you that AOC's point is not particularly strong, though :)

[danlitt]

He only really addresses the fact that the system can be nasty. It can be and regularly is, but he only argues that a company doesn't have to be nasty, so he can conveniently ignore specific examples. But the system is not just nasty (and AOC mentions this). It also disproportionately rewards good fortune. That's not cheating, since anyone can have good fortune, but it is unfair, since fortune is not a consequence of hard work or ethical behaviour.

[lkjdsklf]

He also doesn’t engage with the fact that this company required funding from y combinator to get to that point

Which is something that is not an option for most people.

Look at where y combinator founders come from. It’s 99% people from elite institutions

That is a core part of AOC’s point

Getting a startup funded is just not something that is possible for most people. They just aren’t in the right circles. Does not matter how good of an idea you have

However, if you’re in the right circle, you’ll get shitloads of chances even after repeatedly failing. Just look at how many of these founders that “made it” drove multiple companies into the ground before making it. It’s a lot easier to find “good fortune” when you have a lot of chances than when you have 0 chances

[callmeal]

>They just aren’t in the right circles. Does not matter how good of an idea you have

And if you do have a good idea but are not in the right circles, someone from the "right circle" has the "right" to use your idea as their own.

[csallen]

Yes, you have to accomplish extraordinary things to get extraordinary results.

How else should it work?

Should investors give funding to people who haven't built anything, whose startups don't have any users, who had bad test scores and did poorly in school, and who have no references? If you think so, why? And how is that fair?

If you believe that, should professional sports teams draft mediocre players? Players who didn't play in college or even in high school? Players who didn't make the JV team? If so, why? If not, why not, and how exactly is that so different?

We all know there is no such thing as a perfect meritocracy. There never will be. Things will never be perfectly fair. That's life. But we can try to come as close as we can. And that obviously requires offering more opportunities to people who perform the best. Otherwise, what incentive is there to even strive and try to do well? The alternative isn't fairness, it's randomness.

[danlitt]

This reply is so far removed from the comment you replied to I'm worried you replied to the wrong one. They did not mention anything about people who haven't built anything, startups with no users, and having no references - you invented that. They literally only mentioned elite schools. "drafting mediocre players" is incredibly bad faith, when one of the only things they claimed was "does not matter how good of an idea you have". Having a good idea is the only qualification for an incubator!

Look, if you think people who go to elite schools have all the good ideas, just say that. You don't have to wrap it up in high-minded pragmatism.

[csallen]

> Look at where y combinator founders come from. It’s 99% people from elite institutions

Your comment and the one I'm replying to are so far removed from reality that I'm worried you know nothing about Y Combinator, elite institutions, or startups in general.

You do not just waltz into elite institutions. Let's take my alma mater, MIT, for example. The average SAT score there is probably around 1500-1550. The average GPA is near perfect. College admission are insanely competitive. Pretending like getting into these institutions is zero signal is bad faith.

Followed by the claim that it "having a good idea is the only qualification for an incubator." What? No it's not! Out of the thousands of admission advice poss that are publicly available online, written by YC's founders, partners, and successful applicants over the past 20 years, I challenge you to find a single one that even kinda sorta comes close to echoing that sentiment. What matters WAY more is demonstrating technical, sales, and marketing prowess by building something and attracting users at a high growth rate.

[ryan_n]

> Should investors give funding to people who haven't built anything, whose startups don't have any users, who had bad test scores and did poorly in school, and who have no references? If you think so, why? And how is that fair?

This is very obviously not what the person you responded to was saying. It's so far off that it's hard to believe you are even arguing in good faith anymore...

[theptip]

But his N=1 anecdote doesn’t prove anything. He shares a feel-good story about an early stage company with very high growth on a small base. This person is not a billionaire yet.

The actual comparison would be to look at all the startups with billionaire founders (so likely $10B companies) and then analyze the market dynamics that enable them to keep growing so fast.

[edouard-harris]

What AOC actually said was (linked in the essay): "You can’t earn a billion dollars. You just can’t earn that." That is a strong claim - a claim of universal impossibility - but it's the claim she chose to make. Because she made a universal claim, an N=1 anecdote is enough to disprove it by counterexample.

[theptip]

Fwiw I agree that the universal impossibility statement is too strong.

But his example doesn’t demonstrate anyone earning $1b. It just demonstrates a very high growth rate at $1-2m.

[nfw2]

You can disprove an absolute statement with n=1

[theptip]

And yet the N=1 he chose doesn’t disprove the statement.

[csallen]

That's an argument for AOC to make. This post is about PG responding to the argument she actually did make.

She has made vague, handwavy, and (depressingly) oft-repeated statements that "there are no ethical billionaires" and that "it's impossible to earn a billion dollars," but she has rarely supported with these statements with any facts or evidence whatsoever.

[stouset]

The statement that there are no ethical billionaires who’ve gotten there by creating something approximating a billion dollars of value can be trivially disproven through a single counterexample.

The fact that her detractors have spilt gallons of ink arguing against her point without providing such a counterexample speaks volumes.

[csallen]

Plenty of counterexamples have been provided, people just don't accept them because the definition of ethical is subjective. And when you have circular reasoning that defines making money itself as unethical, then you become impossible to please.

But here's a quick list from the top of my head: Judy Faulkner of Epic Systems, Hamdi Ulukaya from Cobani, the founders of Canva, the founders of Stripe, Tobi Lutke from Shopify, Paul Graham himself, Taylor Swift, Beyonce, George Lucas, Roger Federer, J.K. Rowling. Probably dozens/hundreds of others.

If you do something that somebody likes and they give you $1000, that's ethical. But if you do something a million people like, and they give you $1000, then you're a billionaire, somehow you must be unethical?

[callmeal]

I just took a quick look at the first person on your list: Judy Faulkner of Epic Systems

Umm - a healthcare company selling patient health records. I'm willing to bet a lot of those records were not obtained through ethical disclosure and most patients would refuse to have private details of their health sold to anyone who wanted it.

Ok, let's take a look at the next: Hamdi Ulukaya from Chobani

https://www.kirkland.com/news/in-the-news/2014/04/chobani-ce...

Right. I'd better stop now.

[chasd00]

Isn’t Oprah Winfrey the left’s beloved billionaire and the one who actually “earned it”? I wonder if AOC would say Oprah is unethical and immoral.

Edit: I’d like AOC to publicly say Taylor Swift is unethical and immoral too. Heh the swifties would have her head over that.

[inigyou]

She said there are no ethical billionaires.

He said nonsense! If you start as a two millionaire and grow 95% every month you can be there in 9 months!

I say if I start with one cent and grow 10000000000000% every millisecond I can be there in a millisecond.

[pohl]

I wonder why he didn't argue against the point by using an actual billionaire to illustrate. Instead he chose someone who is not a billionaire, and imagined them becoming one with nine and a half months of constant 93% growth. Couldn't his counterargument become stronger without the underpants gnome logic?

[nostrademons]

He is probably the actual billionaire in question, but doesn't want to highlight that point given the populist backlash against billionaires.

[chasd00]

Funny that it use to be the millionaires everyone hated. I guess there are too many millionaires these days and vilifying them means turning yourself or someone you know into the villain. That’s probably a little too uncomfortable.

[SpicyLemonZest]

Well, I would reframe it. A comfortable retirement nest egg is now over a million in most parts of the US, and the people who used to rail against millionaires were never intending to argue that people shouldn’t be allowed to enjoy a comfortable retirement.

[swiftcoder]

Inflation has made so many "millionaires" (8% of US households), and at the same rendered it a meaningless title - a salaried worker who paid off their 30 year mortgage and has a little in their 401k is quite likely to cross the million net worth threshold.

A million is hardly buying mansions, yachts, and champagne-filled swimming pools in the current economy

[deaux]

Popular, or "common", rather than populist.

[nostrademons]

I actually meant populist, meaning affiliated with populist ("of the ordinary people") political parties on both right and left.

[deaux]

Meaning is derived from real usage, not from dictionaries. Descriptivism has won. And in the real world, it's simply used as a cheap shot to claim that certain policies or thoughts are only for the winning of votes rather than well thought out or other "ideology" based.

[beepbooptheory]

Do all the non politically affiliated people who hate billionaires not count? Or why is the granularity here important? Your point is stronger the other way!

[Demiurge]

How often does this actually happen? People have been studying capitalism for more than a 100 years and this argument has been rehashed for a long time. Free market capitalism will only allow a startup to gain ground via innovation and offering of a superior product or service if the market is not totally free and monopolies are not allowed to form. Monopoly is the natural end state for capitalism.

Furthermore, the company motivated by profit that does not have to pay for polluting the environment will also pollute the environment. Regulation is also necessary to pay for long term externalities and other boom and bust cycles. There is nothing new in PG take except COPE and blame shifting about the increasing inequality and other societal and environmental issues.

[csallen]

In my view, there is no such thing as free market capitalism without regulation. The only thing that could create anything resembling a "free market" in the first place is regulation. The whole point of the endeavor is to enact regulations that essentially play whack-a-mole in making every means of profit illegal, except for means that serve the greater good, i.e. producing, serving, innovating, and/or lowering prices, or investing in those that do.

Without regulations (just a fancy word for "laws"), few people would bother to do any of these things. As it would be much more profitable to simply sabotage competitors, form cabals or monopolies, oppress and steal from the populace, conquer and loot your neighbors, lie and deceive and trick your partners, etc. And even if it weren't, anyone who did want to truly innovate or produce something useful would be discouraged by the fact that, due to others engaging in the above activities, they wouldn't see any profit.

So, to answer your question…

> How often does this actually happen?

All the time! Hundreds of thousands of times per year! Because we don't live in an unregulated free market, because there's no such thing and the concept is absurd on its face.

There are plenty of gaps and inefficiencies where new businesses can provide value to customers at scale who will happily part with their money in return.

Not to mention the fact that the constant march of technology (as well as changes in policy, culture, environment, knowledge, etc.) are constantly tearing open new holes in the market.

[nfw2]

This is a transcript to a speech originally made to students at Oxford, not to his blog readers.