How to earn a billion dollars

CamelCaseName

pg should just get every founder to trade wallstreetbets style for a few days. they'll be doing this calculator exercise intuitively

smallmancontrov

In creative destruction, you can do an accounting sleight of hand by attributing credit for creation while ignoring blame for destruction even though the two are linked. This is a technology + investing forum and all of us agree that in general creative destruction processes are enormously net positive, but they frequently do kick off a toxic byproduct in the form of said destruction (e.g. Uber and displaced taxi drivers), so there is moral entanglement between creation and destruction. Morally speaking, figuring out how to mitigate this toxic byproduct is part of our remit just as it was part of the remit of earlier industrialists to figure out how not to discharge so much flammable goo into the river that it lit on fire. We neglect this at our peril, because society merely pinches its nose if the toxic byproducts are small, but they are increasingly not small.

sanswork

I don't personally subscribe to this belief but the people saying it's impossible to earn a billion dollars without doing something bad would say that your founders are doing something bad by exploiting the employees by not returning to the value creators a fair share of the value generated and instead hoarding it for themselves. pg is arguing a strawman to the actual argument when there are far better arguments around rewarding risk though I feel like most people shouting that don't value risk either so maybe that's not a better argument? Andrew Wilkinson has a whole part in his book about what it's like to be on the billionaire side of this speaking to former employees who feel that you took more of the value than you deserved it was an interesting read.

tsimionescu

So nice of pg to mention AirBnB as one of his examples of what a successful startup who "doesn't cheat" means. They just were great people with a great idea who found a market for something people wanted that no one had thought about before, and poof, exponential math billionaires who earned it! Of course, we'll ignore the huge issues that Airbnb created for cities, customers, and providers. We'll ignore the way they knowingly helped ignore any regulations on tourism as much as they could. We'll ignore the business model of simply being the biggest middlemen around. We'll ignore the fact that their business is slowly being outlawed in major cities, at least in Europe, because of all of the above. And, surprisingly, if we ignore all of the things these founders do to ignore the law and cheat the market or their competition, we can say that they earned their billions without cheating! We'll also ignore the fact that the brilliant magic math that us lay people and politicians just don't understand also predicts that the founder whose business is growing 93% per month will not only be a billionaire in 9 months, but a trillionaire 9 more months after that, and surely the world's first quadrillionaire within 5 years. You might think this is implausible, but that's just because you don't understand how exponential growth works!

goyozi

Holy smokes, one could call this condescending but assuming both politicians and an average reader don’t understand how exponents work feels a step above. And that’s before you get to the part where it’s all about a great idea and hard work and definitely zero exploitation while mentioning examples like Apple, Facebook or Airbnb.

wg0

Does that work always without fail with anyone anywhere anytime?

haritha-j

I enjoyed this, but the thesis is misleading. Paul’s own examples here were Facebook, apple etc. I imagine that the politicians point was that beyond a certain point, you do have to be unethical to continue that growth rate. Facebook is notorious for doing plenty of this. Apple too is known for exploiting developers. If we extrapolate to trillionaires, we know for a fact that you need to be an all-around dousche that manipulates politics and literally cuts government funding to the poorest and most vulnerable groups to get there. And since this post has a numbers focus, zuck is worth 195 billion. Would Facebook’s negative influence be noticeably less if they spent 194.9 billion on reducing the harms of Facebook, and zuck remained a millionaire? I believe so.

filup

I exclusively build stuff that I think is cool for me and my friends but I have little drive to market these things and plus they are designed to be completely free forever so I don't think I'll ever be a billionaire.

andai

>There are two numbers that determine how big a startup gets, and thus how rich its founders become: the growth rate and how long it continues. You get the first by making something users like so much they tell their friends. You get the second by being in a big market. If you grow exponentially into a big market, your startup will become valuable, and you, as a shareholder, will become rich. You not only don't have to cheat to make this happen, it will happen automatically if you just keep making customers happy.

thrance

What people mean by "you can't earn a billion dollar" is that there's no work that's useful enough, alone, to be worth that much in reward. How can we live in a world where a moron can have a trillion to their name, while others work arduous physical labor all their lives and end up with nothing? You might not believe you've done anything "bad" to become a billionaire, but the mere fact that you accumumated so much wealth necessarily means others, somewhere, had to work for it. The mere existence of billionaires is the mark of an unhealthy economy, that doesn't distribute wealth in an efficient or fair manner.

NoOn3

An obvious calculation. The real world cannot be calculated so easily, It is changing unexpectedly and quickly.

cnees

"It's impossible to earn a billion" means it's impossible to work hard enough to deserve to have a billion dollars in a world where so many people died for lack of money, not that it's impossible to get it without cheating.

blfr

But the accounting difference is real. It is virtually impossible to earn a billion dollars. What is possible but still difficult is to create something worth a billion dollars which you can then sell if you choose so. And to the people criticizing, this is cheating. To them, a billion dollars enterprise is not possible without the exploitation of employees, customers, or at least the environment. Also, the most important thing to understand about a society is how people gain status , not just money/wealth. If you focus on money, you won't have an explanation for political movements or artistic endeavors.

givinguflac

Woof. This article is pretty impressively tone deaf and seemingly missing the point (on purpose?)

masfuerte

Is this the same Paul Graham who says that founders need to be the kind of people who are prepared to break the rules? That is, cheat.

echoangle

Playing devils advocate here: Maybe the politicians position is that the whole system is based on cheating and everyone who partakes is acting immorally? Is it fair that the founder got education and some money to start his company while other people are living on the street or have to care for relatives? If they come from a relatively privileged position and manage to build a company that ends up being successful, did they earn that money? I don’t think the cheating people criticize is necessarily criminal fraud. Edit: and the second thing people seem to criticize is that just keeping your company growing often seems to involve some unethical things. Basically every company that’s manufacturing hardware is doing that in Asia under inhumane conditions, so they probably can’t really claim they earned their money and it’s just maths.

JKCalhoun

"So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars… What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way." Not exactly the way I interpreted it (emphasis on earn ). Right or wrong, I think the vast majority of us think that "deserved money" is money earned from "work". A simple example would be the billionaire Walton children: their fortunes inherited. Most people would argue that they did not really earn those billions of dollars. On an admittedly slippery slope, for many, investing and other means where the money makes money is also not regarded as work (and therefore is not earned money). To wave around the idea of "the American Dream", I suspect that many American's disapprove of any means of obtaining wealth that the average Joe or Jane are not privy to. This idea that you have to be born into money or have money to make money—we are (perhaps naturally) repugnant to.

yawpitch

Absent circumstances of four digit inflation rates, one cannot earn a billion dollars… one can only accumulate a billion dollars. If one ever does so, one has definitely done something morally indefensible.

vrganj

Yikes. There is no ethical way to become a billionaire. It always involves exploitation and cheating, including in the very examples named by Graham. Airbnb got rich by creating a housing crises all over the world and skirting hotel laws. The factories making Apple products are so bad they installed nets to catch people trying to commit suicide by jumping from windows. Facebook... do we even need to talk about that one? I'm not sure if it's malicious manipulation or wilful self-deception, not being able to come to terms with the consequences of his actions. Either way, it's a bad look and he'd be well-advised to reflect on his actions and statements some more instead of giving grand speeches trying to impart his supposed wisdom.