[greenyoda]

It would be an extremely risky bet which I would never make. There's no guarantee that the grad wouldn't take your money and live the rest of his life as a heroin addict -- lots of smart people don't live up to their potential. Also, he might get hit by a bus tomorrow.

Similarly, lots of companies run by smart people don't live up to their potentials, or are not lucky enough to be popular long enough to make billions of dollars.

[aclements18]

To be clear, you wouldn't pay $100 to get half of his signing bonus at Facebook?

All of those factors (risks) have to be taken into consideration, and you price it as such. It's still a > zero figure.

[XorNot]

Definitely not, because at that valuation the offer is suspiciously too cheap - in fact it's so cheap it's unlikely he'll pay out because the first thing he'll do is hire a lawyer to get out of that contract.

[Anderkent]

You're nitpicking. It's a hypotethical. He's trying to show how something that is not profitable right now might still have positive value.

The point of the question is whether you expect the person to earn enough that getting 50% of their life income would be worth 100, 1k, 10k etc. today, not 'how likely that person is to actually keep the deal'.

[XorNot]

But that's exactly relevant to the point - the issue is that the details of the arrangement matter, which is relevant to the wider point: how are we expecting profit to be made? Gesticulating to size doesn't actually monetize something.