She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars).

pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.

Impressed at the commentary here, which correctly points out Paul dodges the entire issue at hand.

Three things can be true: 1. Growing at a rapid rate over long periods of time is hard, doable and rewarding 2. Incentivizing the discovery of these things is good for society. 3. Nonethless there is and should be a limit to wealth acquisition, given moral hazard.

To make a similarly glib counterargument to Paul G:

If it's the founders who earned the same monetary value of the companies they created ("because they're responsible for it"), they should bear the same moral and legal responsibility for the externalities.

So far, only SBF is in jail. Lots more of these companies have broken the law.

Let's throw the founders in jail too - they can keep their money!

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.

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.

Weird to see Graham take AOC's quote out of context:

Graham: So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars. I felt like a skating coach hearing someone say that it's impossible to do a triple axel. Of course it's possible. It's hard, but it's possible.

Per his link in the article:

AOC: there is a certain level of wealth and accumulation that is unearned. You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn

The pursuit of everlasting growth that pg describes inevitably results in cheating. At a certain point the market reaches a saturation point and if you're capitalising on every possible opportunity to retain your high growth rate, that will include hoarding resources and circumventing consumer protections.

First question: why? Why should I (or anyone) earn a billion dollars? PG made it seem like that's the ultimate goal somehow. Also, why only a billion dollars, PG? You see your infinite cancerous growth machine doesn't stop?

This article did not sit well with me. I have found myself rereading Beyond Smart, How to Write Usefully, The Need to Read, Life is Short. But this one is harmful; nobody needs a billion dollars.

We can't romanticize making money, it's a ruthless field where mostly politicians, the military complex, and drug traffickers thrive, and a few startups that cater to the global economy, which are very very rare, so rare than only 30 out of more than 6000 have succeded in Paul's own words.

Amazon was first, then Uber went world wide, so did Airbnb, and now OpenClaw, so yes, the AI gold rush opened the gates for new opportunities but only a few will make it. We all can run the race for sure but most of us will only get tired at the end while the lucky few will take all the prizes and our corpses will be their podium, as it's supposed to be.

Still, we have to run because there is a chance, a very slim chance which is more than zero hope.

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.

> She was getting richer at a stupendously rapid rate. And yet she hadn't been doing anything bad. The reason her startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong that politician was. She wasn't exploiting anyone.

I presume it's a company that just has co-founders then? Or everyone is getting an equal % of the share? In which case SHE's not getting 93% richer just cause her start up is.

The people who create real value rarely make any money.

Linus Torvalds created Linux which allowed companies to use commodity hardware. Before Linux, every company had to pay massive taxes to Sun (Solaris) or IBM (AIX) to run a server. With Linux, commoditty hardware ecosystem blossomed, and the first companies like Google built massive datacenter. This wouldn't have been possible if they had to buy Solaris servers to run their datacenters.

The value created by Linus is probably tens of trillions of dollars. I don't think he is a billionaire. There is a guy who is a trillionaire today. It is hard to make an argument that Musk created more value than Linus. Tesla is a trillion dollar company with negative YoY growth.

Linus Torvalds is not a visionary: https://www.youtube.com/watch?v=I-YL0BeWZyU

The people who become billionaires are experts at becoming billionaires, creating value probably has nothing to do with it. They have either inherited wealth or in the right networks. The example PG gives of starting with 2 million USD is someone who is already incredibly wealthy and in the top 1% (1% globally, not just US). As always, there may be some rare exceptions where the founders actually created value and became billionaires.

>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.

This assumption is depressing. That the only alternative to "earn" is "cheat".

A system of diminishing work (i.e. where money makes money), especially combined with inheritance, means every dollar is arguably less earned than the last. That system is fine and actually very useful, but that diminishment becomes a big problem at large enough scales. We've been operating at that scale for many decades.

I've been able to calculate logarithms for well over 20 years.

That's not the problem.

The problem is even simpler mathematics. Proportions. How much do we give to first employees? How realistic is that John Smith, first salesman of the company is getting 2% and should consider himself lucky, while I, Peter Boss retain most of the company?

We always talk about the dilation of the founders' shares and its relation to the VC portion.

What is the usual proportion of the shares held by the founders and the first 10 or 100 employees?

Is that proportion usually realistic with regards to the effort put in and the risk assumed?

Is that risk usually really that heroic or most of us in the "can found a startup" caste can usually go back to jobs that already pay well over average?

I am the founder of a company. I want it to succeed. I don't want to become a billionaire, but I want the people that help me build it to have similar successes to mine.

If we succeed, I don't want my car or house to be 10x more expensive than of those people who joined me first.

There's something seriously rotten about telling university students about billions. The issue isn't whether anyone can earn a billion dollars. Nobody actually needs a billion dollars.

The question they should be pondering is given the excess of talent and opportunity they have, how can they help the people around them and give something back to society.

Technically if you look at AOC's statement he mentions

>AOC: “There’s a certain level of wealth and accumulation that is unearned. You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that”

there's some truth there in that PG is talking about capital gains as the owner of a company and AOC is talking about earnings as payment for labour which are different things both in reality and in tax policy and law.

The capital gains can be unfair in that most of them go to founders and VCs and not much to other employees and stakeholders who have contributed as well.

  So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars [...] that it's impossible to get that rich without doing something bad — without cheating in some way.

To me, earning something means deserving something.

I don't think that the current system rewards those deserving the largest cuts of the pie.

If you want to argue how to get a billion dollars, sure. But to me that is different than earning it.

The thing about "compound growth", even in the most general sense, is that it ALWAYS ends, and that end is typically a crash of some sort.

In biology there's the notion of a growth curve. It starts out with the familiar "compound interest" exponential growth, but unlike Econ-101 textbooks, that curve then proceeds to resource depletion (overshoot), followed by "die-off", followed by extinction, where (N -> 0, where N is usually something like yeast-cell count, but if you're applying this model to something else, it could be stuff like well-being or money).

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.

I think the distinction the politician tried to make, was that you don't "earn" a billion dollars the same way the vast majority of people make their money. You become a billionaire by company ownership, not getting cold hard cash.

The hierarchy of wage looks something like:

1. hourly pay (how many hours you can work sets the maximum possible salary)

2. base pay + cash bonus (the cash bonus starts to increase your earning potential. Sometimes the bonus can be huge, for traders, salespeople, etc.)

3. base pay + stock options (the stock options can outsize your base pay by big margins)

4. stock ownership (almost all your wealth is tied up to the stocks)

The vast, vast majority of people are stuck at (1), and will never move to (2). Nearly all billionaires are at (4).

The average worker will work around 100k hours in their lifetime. If you started working today, with a 2% inflation rate, you'd have to start getting paid close to $6000 / hour in order to reach a billion dollars (pre-tax) in total income by the time you retire 50 years from now.

Another factor to consider, is that salaried workers can't use leverage to increase their earnings. A startup founder can find investors and raise money, which works as rocket-fuel for their company. You can practically outspend your competition. That is simply not possible for regular workers, without breaking rules (as in outsourcing your job, taking on several jobs and outsourcing those, while collecting).

There's a kind of Efficient Market Hypothesis of career advice that I wish PG took better notice of.

If a career path (e.g. startup founder) outperforms at time T1, then this fact will diffuse quickly throughout society, causing the path to become overcrowded, which pushes down the average performance. So at time T2 the path will no longer outperform. This is analogous to a stock becoming overpriced due to hype. I consider the founder path to be enormously overcrowded at this point.

The key to finding a good career is to play a kind of Money Ball - find paths that, for whatever reason, are mispriced and thus undercrowded.

“Billionaires v. the underclass” is such an unsophisticated discussion. Markets have all kinds of externalities, equilibrium traps, information asymmetry flywheels, and hundreds of other phenomena that interplay to trip people’s sense of fairness in all kinds of ways.

To pick just one example, infinite scrolling can be seen as a modern equivalent of cigarettes— a product that made people billionaires, and that consumers obviously want but are not free to stop using because of hyper-sophisticated dark patterns.

Is Elon a trillionaire because he created a trillion dollars of value from thin air, or is it because he created an information asymmetry flywheel that lets him allocate capital more efficiently than other actors?

It’s genuinely unclear to me whether the universe in which we incentivize this kind of scale is better than the universe in which we do not (because the counterfactual universe has massive externalities too). But this is obviously not just a matter of compounding value creation and becoming a billionaire fair and square in ten years.

You can aquire a billion dollars. Nobody has ever earned a billion dollars.

Why would you even WANT to become a billionaire?

Wealthy, sure, but becoming a billionaire effectively destroys your place in any of your social circles. It obliterates any dynamics of trust and interdependence you may have and replaces them with a gnawing unease about if they’re still hanging out with you, or if they’re hanging out with the money.

Not to mention, Graham entirely fails to differentiate between EARNING a billion dollars and HAVING a billion dollars. You can be part of a structure that earns a billions dollars without “cheating”, there are all kinds of companies that do that. But if you let that wealth accumulate in yourself? There’s something wrong there. You are almost guaranteed to be under-valuing the contributions of others, or the externalities of the systems in which you operate or SOMETHING.

And even if you’re not? That’s a dragon’s hoard of money. You’d have a very difficult time spending that much money on yourself and your lifestyle, and I find it hard to justify sitting on the rest, just to have it. It is literally a hoarding problem at that point. You do not need that money, it is actively making your life worse (look up the Billionaire’s Social Calendar: it’s the list of ultra-wealthy-only events that billionaires must attend if they want even a chance of interacting with people as peers instead of dependents), just let it go.

> What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.

She certainly frames it in a way that you have to personally cheat, or personally create the myth that you've earned it, or at least it can be interpreted that way. But I think it is the system itself that causes unearned[1] money to accumulate. Money begets power begets money, with or without any intention of the actors to exploit this is any bad way.

I don't think we know a better system, but I do think we can point to the level of wealth accumulation and say this is a bad property of this overall very good system, and we should try to do something about it.

[1] Or rather: Money to accumulate disproportionate to the earning. We can say that many billionaires have earned something very significant and ALSO say the accumulation is disproportionate to that, and that there is an opportunity here for improvement.

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.

There is an argument to be made that societal structure enables much of that wealth to be made. J K Rowling can make a billion dollars not just because people want her stuff and give her money for it but because we have a system of intellectual property and a bunch of guys who enforce it. We all pay for that and Rowling benefits. It’s true that this happens, but our system of taxation takes care of this pretty well.

There are exploitable gaps in the logic where loaning against owned collateral is not considered a realizable taxable event and it’s reasonable to attempt to close these.

But like most things I find that things fall down when actual policy needs to be written. The only example is the SEIU proposition in California which is backdated and requires many people to give up half their ownership in a company.

I can’t be brought around to supporting those outcomes.

I've read (and re-read) all of PG's essays over the years. Often they're wonderful fonts of wisdom. Sometimes they're myopic and poorly supported, but never just plain wrong.

This is, sadly, a first for him.

AOC (the politician referenced) did not mean that earning a billion is "impossible". She, very clearly, stated within the context of that interview that Billionaires must be an extractive class at the cost of normal market efficiencies due to the rent-seeking behaviors of the monopolies that must exist to attain that level of wealth.

"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.

lots of moving parts on this discussion but I'll boil it down to:

the ratio of the average individual's wealth to 'illionaire's wealth feels "wrongly asymmetric" for a lot of people (CEOs making ~300x that of average worker)

the question is basically about how that startup scaling at 94% translates to scaling up the individual's life (who faces alleged "stagnant wages")

or in other words, how can entrepreneurs create an approach for society that facilitates individuals scaling up their wealth?

There is for example a perception that a person working all waking hours on a low amount of pay - like minimum wage, and without investments - could never become a 'illionaire through their "honest hard work"; ergo becoming a 'illionaire requires something beyond this "honest hard work" (implying illegal and or unethical means)

> So how do you find startup ideas without looking for them? By working on projects with your friends. That's where the very best startups come from. Initially they're not even meant to be companies. They're just something people built because they thought it would be cool. That's how Apple and Google and Facebook all started. None of them were meant to be companies at first.

That’s cool and it’s a cool post, sure, but it sounds ridiculous when you look at how many dumb GPT wrappers there are in YC batches nowadays.

> Since we started it in 2005 we've funded about 6500 companies.

> Starting a successful startup is the most common way to become a billionaire, so in effect I've spent the last 21 years training people to become billionaires. So far about 30 of them have, but there are many more in the pipeline.

Seems to me that right off the bat he completely undermines his own point - less than .5% of the founders being funded at basically the best connected best financed incubator become billionaires. Easy, right?

I won't even go into the embarrassing math that follows... pyramid scheme salesman levels...

What occurred to me reading this was the wage. Initially, and famously, the hours put into building a startup result in sub-par wages. But the amount of work by an individual never increases as it is limited by human capacity. In a successful startup with continuous growth the wage is ever increasing, to the point of absurdity.

That’s weird. I grew up around farming and farmers. A group also very proud of the work they do, in a profession where the wage is also indirect — sometimes negative, sometimes a fortune, always based directly on the work they’ve done. Year after year, the work.

That’s different.

I’ve always identified two sets in the realm of entrepreneurs: those that want to “be rich”, and; those that want to “become rich”. The latter group is perhaps more admirable as they acknowledge the process and the value creation whereas the former seek only the status. But neither are often interested in the work of it.

This article reads like a rather flippant dismissal of the original concern that "earning" a billion dollars cannot be done without some moral compromise.

Sure, if you start off with $2 million and double it 9 times, you end up with $1 billion. Exponential growth is a powerful thing, so it comes as no surprise that maintaining a large growth rate over time very quickly grows a starting sum into a much larger pool of money.

However, his only response for how you should achieve exponential growth is this hand-wavy "make something you yourself want". His only acknowledgement of the concern that maintaining exponential growth may require cheating is a casual dismissal, and his only acknowledgement of the concern that the growth rate will drop off over time is "you'll still get there eventually".

So, while the original concern was that you cannot earn a billion dollars without some wrongdoing, PG's response can be boiled down to "nuh uh".

>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.

The real problem is his example, "you start off with 2 million dollars and 95% growth rate".

Fine, show me the average person who can come up with 2 million dollars. I sure as hell can not. I even went to banks and founders with my ideas, cash flow sheets and customer list looking for a loan.

No, I am convinced, the rich already have 2 million dollars, and make themselves a billionaire. The system is rigged against "normal" people.

I think Paul left out the fact that in order to grow that fast, you often need to commit crime.

Airbnb/Bed Boat, Neighbor, Swimply, Uber/Lyft, Bird/Lime, BlackJet, Waymo/Cruise, Splacer/Peerspace, Zenefits, Tilt, Loomis/Stablecoins, Coinbase, Worldcoin, Stripe, AngelList/Sydecar, Polymarket, Uniswap Labs, Doordash/Instacart/Postmates, CloudKitchens, Shef, Done Health, Forward Health, Cerebral, Pacaso, Sonder, 23andMe, Ro/Hims/Hers, Viome, Juul Labs, Oura Ring, Particle Health/Moxe Health, Roblox, YouTube, Popcorn Time, Kickstarter/Indiegogo, Republic/Wefunder, Deel/Remote, Lambda School, Make School, Mission Bit, WeWork, Oyster/Papaya Global, HiQ Labs, FlexPort, Katerra, Zipline, Starship Technologies/Serve Robotics, 3D Robotics, Anduril Industries, DraftKings/FanDuel, Cydia, Eaze, MindMed, Odin, Swarm Technologies, Starlink, Convoy/Uber Freight, Carvana, Tesla, VoltShare.... oh yeah, and OpenAI.

What do all of these companies have in common? They all manipulated markets, bent and broke laws in order to get that "exponential growth". They didn't want to wait around and find out if their businesses would be legally allowed to grow. So they just broke or worked around the law, with the intention of becoming billionaires. But that's okay, because growth rate! We're not doing anything bad, people want these things! Who cares if it might be illegal or the spirit of the law frowns on what we do? Money!!!

This is just one of the reasons why becoming a billionaire requires you to cheat. There's also the tax loopholes, the inducement to harm (both of the customer and by the customer), anti-competition, etc. In order to get these gains, you need to cheat, because if it were easy to do legally, ethically, and quickly, somebody already would have. It's corporate doping.

You can tell that he doesn’t really think too deeply about any of this, because the way he wants to illustrate the point is by typing the numbers into a calculator.

It’s as if the money comes right up out of thin air, isn’t it?

He inadvertently gets close when he talks about Facebook being about people doing stalking. PG, is stalking a good thing or a bad thing, hmmm?

The arguments for or against it being possible to earn a billion units of currency seem to hinge on differences in understanding of the term "earn".

The pg view seems to assume that if there is a causal relationship between your actions and a billion dollars appearing in your bank account, then it counts as having earned that money.

The countering viewpoint seems to consider the words "earn" and "build" as having a similar relationships to money and buildings respectively. If I tell you I built the shed in my garden, then you'll probably take my word for it. If I tell you I built a skyscraper, you'll either call me a liar or understand me to mean that a large number of individuals built it at my request.

I think the second version is more useful and more accurate.

The problem is in accounting. A stake in a speculative asset that's valued at an absurd multiple of ARR isn't exactly the same kind of thing as owning all the property of a slum and extracting rent. I am for a wealth tax so long as it discriminates on the type of wealth, but we aren't ready for that conversation.

Paul has to update to trillion dollars now

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.

Growth for the sake of growth is the ideology of the cancer cell.

Not all companies are growing because they are making their customers happy. Some are fully exploiting their customer, users, environment, etc.

This mindset is what makes capitalism very ugly, and im not sure how one backs off the throttle a bit to grow responsibly?

"You not only don't have to cheat to make this happen, it will happen automatically if you just keep making customers happy."

Call me cynical but ...

AOC’s point is simply that when growing exponentially from 250M to 500M to 1B usually whether using exploitive rails one is conscious of or not - someone is bearing an unfair burden. That in 60 out of 60 examples of YC billionaires and all billionaires with maybe a few exceptions - people do not go out of their way to ensure nobody is getting hurt and everyone participates fairly. People are too excited about the exponential growth and their goals. I don’t even think it’s AOC’s main point that these people are at fault. Just that the system is at fault for not ensuring exploitation is minimized further for the rest of the 99%.

(Great essay on how to be a billionaire though. Could billionaires give back more? Yes. But creating market value like that is both worth celebrating and evolving.)

So who was the woman he mentioned growing her company at 93% a month?

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

Not quite on topic. But I feel there is an issue in politics where many non-wealthy people vote as if they are "temporarily inconvenienced billionaires." That is they endorse policies that favor billionaires, as they have some hope of being one someday.

How to make a billion:

Step 1: Have millions

The lack of genuine desire to understand each other is what is astonishing.

I don’t know where “the politician” went with that comment, but for me the more pressing conversation is whether we want a society where many are struggling and some make a billion dollars.

You benefited from society, clearly, which is not to say you didn’t work hard. But it seems entirely reasonable to me to ask you at that point to give back. We can knock plenty of people back to mere “hundred millionaire” status, they’ll be fine, and we can do a whole lot with that money.

> So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars. I felt like a skating coach hearing someone say that it's impossible to do a triple axel. Of course it's possible. It's hard, but it's possible.

"Earning a billion", to the skating coach, is like pulling off a dodeca-axel.

It's not gonna happen through mere pluck, and it's probably gonna involve a lot of other folks' work if it ever happens, who probably aren't gonna get that much of the glory.

"“Destruction becomes the principal commodity produced by capital. Militarism will lead accumulation, which will theoretically demolish any limit to capital.”

The Accumulation of Waste, Kadri, https://brill.com/display/book/9789004548022/front-7.xml

Monopoly Capitalism, Baran and Sweezy

https://archive.org/details/monopolycapitale00bara

Labor and Monopoly Capital, Harry Braverman https://ia801604.us.archive.org/12/items/023978561/Braverman...

This is slightly disappointing, but it's probably necessary cope. If you want to build startups which move fast and break things, you have to ignore many problems and many people of this state, country, and world.

You start by ignoring what a "billion dollars" means, and most people don't think it's stock. Then you have to ignore what "earn" means, which most people don't think is getting stock on the assumption that the company you own a portion in will turn a profit one day, possibly many years ahead.

Getting investment without having profitability, getting to keep a portion of this investment, even if the banks that are insured with taxpayer money lose that money, is not what the constituency of AOC think is earning money.

There is a huge amount of technological advancement and personal fortune that I enjoy from this system, but I'm not trying to bullshit anyone that the system is fair.

In conclusion, I do think this attitude is cope that allows a high performing individual to focus on this game and be successful, and Paul Graham seems to be successful, so it's natural.

Even if we agree that Billionaires are better capital allocators and power yielders than elected govs, let's see what happens after they die.

Their money goes to heirs who did not earn billions and do not know how to allocate it, or to questionable non-profits. So it ends up being a huge drag for the society.

Thank you for publishing this. I've been following Paul Graham and his works for a long time. It's refreshing to see everything written down in a document like this. This is the bible for startups. Honestly, it's beautifully simple but not easy.

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.

This post hand waves away the inflection point(s) of maintaining high growth rates as you grow. He hints at it saying year 4 growth is harder, but it is _vastly_ harder.

Companies focus of the Rule of 40 and struggle to keep above it. And this struggle is where many in management lose their way.

Enshitification begins. The margins get harder. More corners cut. Employees get treated less well, customers get treated less well.

Instead of telling us "it is just exponential growth bro," do case studies on billionaires and their dealings. In the US, you have billionaire business leaders who have full time employees who require government assistance every month.

The couple of billionaires and near-billionaires I have worked with (and helped build their companies) have not been bad people. But working at their companies pre and post IPO is way different. Less perks, more pressure. If the company culture isn't solid, it becomes bad fast.

> A couple days later I was talking to the founder of a startup I'd funded. I began by asking, as I usually do when I meet a founder, what her growth rate was. 93% last month, she said. I pointed out that this meant her net worth was also growing at 93% a month. She was getting richer at a stupendously rapid rate.

This is such a weird statement to see. The idea that a startup founder whose company is growing at 93% month-over-month has a net worth growing at the same rate is just so logically wrong that it's bizarre to see someone stating this.

Even putting aside the fact that "growth" can be tracked by various metrics (revenue, customers, registered users, etc.), the idea that any given "growth" rate tracks 1:1 to the paper valuation of illiquid equity in an early-stage private company is so naive to be silly.

> And yet she hadn't been doing anything bad. The reason her startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong that politician 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.

Delve, anyone? Startups can lie, cheat and steal, and their customers "love" them until they find out they've been duped. And let's not forget that more than a few have been accused of lying about how much "love" they really have (by misrepresenting their traction). Fake it until you raise it.

Also, this reasoning is very narrow. A company's customers might love it because it allows them to benefit from something that has external costs that disadvantage other groups, if not society at large. Cheap outsourced labor, regulatory capture, network/monopoly rents, tax shenanigans, etc.

A lot of companies also try to hack referrals, which sometimes involves using dubious tactics to get users/customers to sign up for something under questionable pretenses. In other words, people recommend products and services to their friends not solely because they love them but because they're given a personal incentive to. These can be really effective even when it's pretty obvious people are doing something that won't benefit their friends.

> 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

> The reason her startup was growing so fast was simply that users loved what she'd built.

> In the real world, growth rates tend to slow down a bit. A very successful startup will probably be growing faster than 15% a month in year 1 and slower than 15% a month in year 4.

It turns out that the people who will invest in your startup when 93% MoM gains are possible want you to do pretty much anything to keep growth as high as possible--also your career, net worth, and employment are tied to this so you're similarly motivated--including squeezing and manipulating those users who loved you so much. But hey, as long as you personally get rich it's fine I guess.

> How people become rich in your society is one of the most important things to understand about it. You can't let your beliefs about this be determined by ideology, or movies, or historical examples that are centuries old.

The idea of becoming rich is as old as society itself but it has not been a static concept. It is an idea shaped entirely by the things mentioned - ideology, culture and history. There is no wealth accumulation without ideology of one sort or another.

It's fair to resist a view of wealth that may seem flawed but it's disingenuous to assume this can be done from a neutral position.

But "earning" does not mean "obtain without cheating"! Nobody (that I have spoken to) speaks of earning their lottery winnings. The claim is that owning a company worth a billion dollars is more like winning the lottery than it is like earning money. And it is!

The whole discussion about exponential growth is idiotic and not worth responding to. But if you think of what he actually means - having a total addressable market of at least a billion dollars and being able to effectively capture it - it is obviously primarily due to factors outside of your control. The sort of company PG is talking about typically revolves around a good technology that has a network effect somewhere that leads to market concentration. People do not get good ideas by working hard, and markets are not made easily monopolizable by hard work. Execution of an idea requires hard work, but companies that are only good at execution do not win.

Obviously you can engage in hard work to improve your odds. But the returns are out of scale with the hard work. This is all people mean when they talk about "earning" money - if it's in proportion with your work, you earned it; if it isn't, you didn't.

How many businesses are there that are worth at least $1 billion and employ no-one but the founders?

When people say that it's not possible to earn a billion dollars, they're talking about the discrepancy between the wealth gained by those employed by the company versus the shareholders of the company. For example, when WhatsApp was sold to Meta for $19 billion, how many of WhatsApp's 55 employees walked away with hundreds of millions of dollars?

The fundamental problem is that it's possible for an employee to generate a hundreds of millions of value for a business, and yet be compensated for a vanishingly small fraction of that. Even if the employees agreed to a particular salary, is it ethical to pay them so little in comparison to the worth they generate, or is it exploitative?

Most, if not all billionaires, reach that status by paying people far less than the value they generate. If you want to become a billionaire, you need to find people who are willing to be paid thousands or tens of thousands of times less than they're worth. You need employees who will generate you $100 million in exchange for being given $100 thousand.

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.

> So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars.

> She wasn't saying, of course, that it's impossible to become a billionaire.... What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.

> But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues. If it's impossible to make a billion dollars without cheating, which of those two numbers is impossible?

AoC quote:

> There’s a certain level of wealth and accumulation that is unearned. You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that.

Come now @pg.

$2 million * 9.45 months * 93% growth rate = earning a billion dollars, ok. Does that really address what AoC was saying? She wasn't saying that the math doesn't math.

Paul Graham seems pretty self-centered...

Does that work always without fail with anyone anywhere anytime?

(underscores to visually identify mag)

--

// 8bn world population / 3,500 billionaires:

0.000000_44

--

// 300mm US population / 1,000 billionaires

0.00000_333

--

// Odds of winning billion dollar powerball

0.00000000_3422298 (play once)

0.0000000_68446 (play twenty times)

0.000000_34223 (play 100 times)

--

// Global net worth vs billionaires

0.03636364

--

// US net worth vs billionaires

0.0942029

Yes, growing at average 15% a month will make you a billionaire in so many months. But somewhere along that trajectory you've tipped the balance from "eveyone is benefitting" to "in order to grow larger we need to exploit and extract."

Clearly nothing is universally the case, but this pattern repeats in enough freqeuncy that it's effectively the case.

I read pg's collection of essays (Hackers and Painters) in my 20s, and it single-handedly prevented me from being radicalized by leftist ideologies. The one insight from the book that I will always remember from the book is this: if you want to be rich, make something people want. Money is fiat to the value you've generated in growing the economic pie. It is in fact possible gain wealth ethically.

However, there are several addendum to this argument:

1. Most billionaires are hedge fund or private equity managers whose name no one has ever heard of. They provide liquidity or allocate capital or something. It's actually a major PR failure that people think Jeff Bezos or Elon Musk when they think of billionaires; If we can ignore their character for a second, these guys are actually hyper-productive and they've created immense wealth for society and are compensated in a power law sort of way.

2. Rich people make money with money - in the form of dividends, interest, rent, etc. Poor people trading labor for money. Salary only scales linearly; therefore, generating value for society is only half of the equation, you must also have ownership, or slowly invest your earned capital to eventually make money with money (i.e. retirement).

3. There must be a growing economy, otherwise it's a zero-sum game; a fixed-sized pie. In a stagnant economy, the customers you gained are customers another company lost. The wealth just shuffle hands from laid off workers to your employees. I think this is why Jeff Bezos once remarked that a stagnant economy is incompatible with free democratic society.

4. There must be a new frontier, otherwise the chance of success is pretty much zero. Software is this generation's new frontier. There are no bars to entry. You just need a laptop and the skill to arrange symbols on a screen in the right order. It's literally alchemy. On the other hand, non-software startups can't just do things. In many cultures, maybe due to their lack of growth, "entrepreneur" is actually very low status. It's synonymous with ne'er-do-well who can't find proper work. In the case of USSR before its collapse, it's synonymous with literal thieves and black market thugs.

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

Phew this guy hasn't had a new idea in a long time.

What AOC is trying to do here is shift the debate from extracting retribution on people who have violated specific laws (a fair and an honest way to enforce justice in a civil society) to extracting retribution on people who she insinuates "must have done something immoral" based on their net worth (a selfish, dishonest, envious and greedy way to run a society). It's a clever play, and unfortunately for the people of the world who value freedom and a high standard of living, it's going to work. There is enough of the population filled with envy and greed that they'll lap up whatever a politician tells them bogie man of the day is. Historically it's been the aristocracy, Jews, immigrants, but those don't work any more, so now it's generally "the rich". Billionaires are the thin end of the wedge. After them it will be business owners of all kinds, people with second homes, people who send their children to private schools, and generally anyone who has anything else that someone might envy. It's clear that the way society is going people are going to keep lapping this stuff up.

HN used to be open minded about people creating wealth. The change is shocking to me, actually.

Ew

> starting from 2 million && 93% growth > 9.45 months to become a billionaire (500x growth)

There is a much simpler way to become a billionaire. No Revenue (Silicon Valley): https://www.youtube.com/watch?v=BzAdXyPYKQo

I don’t know if this take is just naive or dishonest…

building something people love can make you a billionaire, but most billionaires did not build something people love, and most people who’ve built something people love are not billionaires.

Generally a PG defender (at least nowadays), but he is deliberately misrepresenting what she meant, and/but I think a good % of the students/attendees know that.

I've always respect PG's articles (obviously), but him pointing to a sole founder at a high growth rate (which founder btw, what is the product) as 'proof' that no bad has been done to reach that level of growth is so incredibly naive!

His founder is not at the level we are talking about. They obviously would not represent the 'bad' that AOC was trying to make a point about. Why don't you pick your actual billionaires?

Airbnb - Ignored and exploited local housing regulations, over time the blowback has been HUGELY negative. Here the 'bad' is the commoditization of housing in peoples' homes, causing housing problems.

Coinbase - For years, they built their business on bitcoin being used on dark nets for illegal purposes. There's the bad. If they were truly good they would have done KYC from day 1. Why would they? Billionaires gotta break rules.

DoorDash/Instacart - Exploitation of cheap labor, they _consistently_ underpay workers, hire undocumented laborers for that purpose, and pit laborers and consumers against each other rather than improving the system.

These, Paul, are the actual billionaires AOC was talking about. Not your young founder making the 200th to-do app.

Really unimpressed and disappointed by the shallowness of his thinking here.

"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.

- So I would like you all to do me a favor please. I would like you to take out your phones and calculate a number. I know this may seem contrived, but I promise it will be useful for you.

I’m thinking of vibe coding a calculator app How Many Babies Died For This where you input your startup idea, life(style) goals and AI token usage and the machine spits out the Net Babies Dead for you to achieve your dreams

Why would you want to earn a billion dollars? You must have the maturity to handle the money. Hopefully you’ll mature sufficiently through the process of making that money but if the money’s fast, that might not happen. I’ve seen people get 9-figure rich overnight. Didn’t change them at all, they are still the wonderful folks they were. But I’ve also seen people drink themselves to death as it turns out a few mill in the bank does not answer the question “wtf do I do when I don’t have to do anything?”

I don't think this article properly engaged with the criticism from the politician. That's fine, I wasn't expecting it to, but this isn't valuable commentary on the politician's point. I suppose it does serve to demonstrate that Graham and people in Graham's orbit are unable to see a distinction between "have a billion dollars" and "earn a billion dollars".

It's a very sf-bubble type article.

I don't disagree with the essay, but is there any benefit to being a billionaire? Almost anything I could possibly want could be satisfied by being a humble multi-millionaire.

"So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars..."

Paul, playing dumb doesn't suit you.

The first definition of "earn" on merriam-webster.com is "to receive as return for effort and especially for work done or services rendered".

Your chose a straw man, "doing something bad", to argue against because it's so easy to beat.

Much harder to justify that anyone's doing $1B of effort. Being a billionaire doesn't mean you're bad. In fact, it doesn't even matter if they are all bad -- there are always going to be bad people. It means a system that allows, encourages, and protects billionaires might be a problem that needs to be fixed.

Scary idea, I know. But we all only get to go around this world once. Might as well spend our time trying to make it better rather than rationalizing why it's OK to spend all your time trying to make it worse.

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!

There's an older tradition of thought on the matter with better intellectual pedigree and epistemological hygiene: "Behind every great fortune lies a great crime."

The easiest way to earn a million dollars is to start a business that makes sense and work your ass off running it well. Maybe that's even the easiest way to reliably earn ten million dollars, a million isn't what it used to be.

But at some scale that's far short of a billion the game becomes about asymmetry.

This asymmetry takes many forms. For Steve Cohen it was trading on inside information, for Jim Simons it was (as far as anyone can tell) novel mathematics.

For most of the technology companies in the 21st century it was about privatizing the commons and/or externalizing costs that a well-refereed market would place on your company.

The United States used robust public/private partnerships and a vibrant, thriving university system to build the greatest pile of latent wealth in the sum history of humanity during the 20th century. Everything from the transistor to the integrated circuit to the laser to Velcro to tang to the internet to the web was a product of this holy Trinity of innovation: defense and related public money, well-refereed private companies (even a notable natural monopoly or two under muscular regulation), and a paved path between the Academy and the other two. The gains accrued enough to individuals to keep everyone motivated but largely in the form of status, which confers a desirable station in life but does not compound directly into political power. Feynman and von Neumann and Einstein all seem to have led very enviable lives and are easily as smart and accomplished as anyone in the front row at the last Inauguration (and if we're honest, a lot more), but none of them had a billion dollars or untoward access to the levers of government. All of them paid far more into the ocean of latent wealth deeded to the body politic than they took out of it.

And at some point (my money is on the kneecapping of Brooksley Born, whose architect is now resigning in disgrace from everything for Epstein affiliation and whose most recent post was on the board of pg's protege) the flow reversed. The access caste started to be d away from the competence caste and the singular fortune deeded to the public started to accumulate as a dozen private fortunes that were substantially just the 20th century stuff with a named owner.

You get a billion dollars by stealing it, this is qualitatively different, a distinction of kind not of degree, from how you get a million or even a few tens of millions.

To get a trillion dollars as we have now seen, well first you steal a billion.

Benefits of being a billionaire are vastly overstated. To live a happy life, you don't need to be a billionaire.

its even easier with a 9999% month over month growth

Elon Musk easily earned the billions for SpaceX. It's providing space internet to Ukraine, an innocent democracy that's under attack. The technological feats of rocket reuse and the vision of Mars don't even matter, insofar as they're just tools to attract the capital. Any other method that supports Ukraine just as well would have also been worth a billion.

Patriot interceptors cost many millions, so 100-200 are already worth a billion! Is SpaceX internet worth 200 Patriot missiles? Easily.

I think politicians restrict "earning" to "wage income", which is kind of an arbitrary line in the sand, and would also be untrue. SpaceX/Tesla would also have paid Musk billions in cash if stock wasn't allowed.

We're just temporarily embarrassed billionaires.

This essay is unfortunate because he isn't addressing the true misunderstanding of politicians like AOC, he's not explaining the consumer surplus (why the world gained 50x more from Google than the founders), and he's not explaining that wealth is craeted not taken.

Politicians spend their lives in one of the purest zero-sum systems in existence. Of course they don't have a gut level understanding of the creation of wealth.

But consumer surplus matters most of all. Imagine the net benefit to consumers of Robotaxi and Optimus (ok, ok, assuming they work, for the doubters in the room). Entrepreneurs capture

What will become of this site once its userbase turns against its corrupt oligarch owners on the basis of it propagating evil things like Flock?

Well... but the billionaires, or billion dollar companies DO "break rules, abuse labor laws, pay people less than what they’re worth"... also manipulate markets, bribe politicians, evade taxes, sell user data etc. Even Trillionaire(s) and trillion dollar companies do that. Why do they do that then, if the only things they need are those two numbers and a product that people love ^_^?

Because there are more than 2 numbers even in pg's simplistic example. Third number: You make $10K monthly today. How? If your cost is $9.9K this doesn't mean anything right? Everyone can do that. So how you earn that $10K is more important than those other 2 numbers. You want more profit and less cost. That's when you start breaking the rules and doing bad things. You have to compete, and it's easier to win if you cheat. If there are cheaters in the game, they would win the competition, not you. And there are always cheaters in the game.

Silicon Valley's system is different than the rest of the world. They give the founders some sort of an infinite money glitch (for a limited time). They don't care about the third number. They care only about the Growth number. Because what they really care about is the Market Domination. They want to BURN money to BUY that market. In most cases, globally. That's why billions of people in the world are using Facebook's products daily. Not because Zuck had a great idea in his dorm room. Not because Poke feature was that viral. But because US needed to dominate the upcoming social media world. For profit, but more importantly for politics, for gathering information, for tracking people, for controlling (social) media and narrative, for security. So the system funded his startup, along with other similar startups in case any of them becomes the winner. And they didn't give just money, they give all the network, permission and privileges to win.

That's why Hans Zuckerberg from the Berlin startup scene hasn't become a billionaire but Mark did.

This is exactly the same playbook with the AI game today. My 70+ parents at the other side of the World use ChatGPT daily for FREE. They will never be the paying customers of OpenAI. OpenAI gives its expensive services for free, because they want absolute dominance in the global market. They can't lose that. Note that such a game plan is impossible for any company outside of Silicon Valley. Only state-controlled companies can play that game in the rest of the world. But for SV, it's not really clear who's controlling who.

And yet, the vast majority of startups fail. This essay about exponential growth is clearly not the whole story.

How does your startup avoid failing? By skirting local laws? Exploiting employees? Destroying the environment? Replacing jobs in a way that makes the standard of living better for the few but worse for the many? Making weapons or systems that coordinate weapons? Submitting to and therefore tacitly supporting oppressive governments?

Sure, there are examples of startups that don’t do these things. But looking at billionaire-class startups (there’s not that many of those to analyze!), there are far more of them in the other category.

Regarding the scale of what a billion dollars even means, I've recently been thinking of an example which I think might work (but I haven’t tried it on many people yet).

There are 86,400 seconds in a day (24 hours * 60 minutes * 60 seconds = 86400). Now let’s say you spend an average of 1$ every second. That’s every second, including when you’re sleeping or on the toilet. That’s 86,400$ per day, which I hope we can all agree is a lot of money.

If you had one million dollars, to spend it all it’d take you over 11 days (1,000,000 dollars / 86,400 seconds = 11.57).

If you had one billion dollars, to spend it all it’d take you over 31 years (1,000,000,000 dollars / 86,400 seconds / 365 days = 31.71). That is an obscene amount of money.

Mr. Graham is making 2 mistakes:

a) thinking that others don't understand exponential. Any reasonably college educated grad understands it well.

b) thinking that growing 93 percent every month means the founder has put in 93% more effort than the prior month.

Their argument relies upon the ideology that just because you thought and executed an idea profitably means you should continue to "earn" from it.

In the LLM age, more and more people are questioning this, and rather want to goto: effort == earnings.

Reading this, I realize that I don't have confidence in winning under capitalism, so I think it would be quicker to just try to break the game of capitalism altogether. But communism, in my opinion, seems like a concept that is unlikely to arrive, so please wait just a little while until I come up with a new ideology.

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

The answer is easy, steal the value created by thousands of your employees.

It’s like fertilizer, for jealousy.

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.

The issue with billionaires is that some of them got insanely rich while being net negative from a societal perspective.

The most famous ones ended-up in prison (Sam Bankman Fried, Elizabeth Holmes, Jeffrey Epstein, Bernie Madoff) but anyone with a basic grasp of statistics and criminal behavior know that many others will escape the justice system forever.

It does not mean that all billionaires are bad, the criminals are not the majority, but there are enough criminals to justify skepticism and scrutiny.

PG seems be becoming more and more disingenuous. People using the word "earn" almost always mean "you can't get this from wages." This doesn't mean that the effect of growth isn't real - almost any business that scales even moderately, but none the less scales, and is profitable, can make its owners millionaires or better. But this does not mean that those riches were "earned." Or that the person who started the business had more glorious suffering than some rando who works 80 hours a week of part time jobs to keep a roof over their kids' heads. Rather, it is inherent to finding a scalable business and not screwing it up.

He makes it sound simple, and in some ways, it is. You have to not only build the thing, but also find the thing that people want. It’s the latter that’s as hard if not harder than the former.

In addition, the converse is not true. Just because you’ve found something that grows fast and in large market, doesn’t mean you’ll become a billionaire. With all humility, I’ve been lucky to have done that twice, but in a large company. I’m not complaining, I’m just saying that doesn’t necessarily make you a billionaire.

Wow, Paul Graham REALLY missed the point.

How ironic. Extremely successful person tries to justify why he's better or smarter than you, and the way he does it proves that he doesn't even understand what the other person has said.

He kind of proved the point he intended to disprove.

It's not quite as bad as a lottery winner saying "anyone can earn the jackpot", but it's in that direction.

AOC wasn't even being easy to (deliberately) misunderstand, here, like Obama was when he said "you didn't build that".

Of course, like the tan suit critique, the "you didn't build that" pearl-clutchers were all arguing in bad faith.

I don't think Paul Graham is arguing in bad faith here. This post is just, for lack of a better word, "stupid".

> Since we started it in 2005 we've funded about 6500 companies.

> I've spent the last 21 years training people to become billionaires. So far about 30 of them have

Since it's a post about math, let's do it.

6500 companies with 2 founders each - 13000 founders.

30 of them became billionaires - 0.2% of them.

So being a tech founder at the most famous startup accelerator in the world give you about 0.2% chance of becoming a billionaire.

Or put another way, only 1 out of every 500 YC-combinator founded startup makes one of it's founders a billionaire.

As a committed market-socialist, the extent that the HN commentariat has turned into a reflexively nihilistic anti-free-enterprise is a fairly astonishing turn. It’s like my belief system turned into the maximally idiotic version of itself.

“Externality” is thrown about as a term almost completely disconnected from any economic grounding of the term. If you make externality mean “anything I find aesthetically displeasing”, then yeah, sure, billionaires create and benefit from externalities, if your aesthetic is egalitarian comity.

But if you mean “legitimate societal goals, legislated and agreed on by a representative body” are being violated left and right by billionaires, gimme a break.

Go ahead and tax capital gains way more. Ending the estate step up in basis sounds great. Break up the “borrow” part of buy-borrow-die, while you’re at it, and treat encumbrance on capital as a taxable event, we could probably make that work, too, although the middle class might foam at the mouth if that was applied broadly.

But, man. The cynicism, confiscatory and controlling instincts on display are enough to make me upgrade Ayn Rand from “hypocritical nut” to “maybe she was on to something when the general population gets tall poppy syndrome.”

Markets work. There are externalities, but we can, and should, legislate fixes for social goals that we actually agree on. But stiflingly heavy regulation is really bad for incentivizing creation of new knowledge and wealth. You can still believe in caring about people, and building (incentive aligned) social safety nets without destroying people’s incentive, and thus, because intellectual capital formation depends heavily on network effects, people’s ability, to create many kinds of value in the world.

Actual socialists recognize that capital is incredibly useful, and incredibly valuable. Leveraging capital is incredibly beneficial to the world. Pretending that the people leveraging that capital are somehow guilty of an original sin just by leveraging capital markets, which is really what these screeds against anyone holding controlling interests in companies they were instrumental in creating, seem to be about, leads down a terrible path.

Demonizing people creating things is petty and unbecoming for a political movement.

Man I am so tired of rich people. Can they all just go f each other on a little island and leave the rest of us alone to enjoy a normal life?

He's right. You don't have to cheat to become a billionaire. Stepping on everybody else's throats is a legit part of the capitalist playbook. No cheating involved.

What an out of touch buffoon. AOC is right, billionaires are a policy failure, and pg is making her point.

This is a strawman argument. It is of course mathematically possible to obtain a billion dollars (although notably much harder to do in a way that is liquid, but let's gloss over that). My somewhat more charitable reading of that claim (shared by other readers here, I see) is that ‘earn’ refers to moral desert. I'm not really a desert-oriented person but let me try to steelman it a bit:

In aristocracies we traditionally assume or imply that a person can deserve a certain wealth or power simply by being born into it. Capitalism, however, sells us the dream of the meritocracy: your (financial) success in life should depend not at all on factors of chance like birth or genetics but simply how much of yourself you choose to sell to the market.

At any point in time you have control of some tangible or intangible capital, including wealth, physical health, social connections, equipment, information, trained skills, et cetera. Some of these assets are gained by luck, e.g. accident of birth; some of them are gained by trading your time; and some of them are gained by spending another asset (whose origin reduces, recursively, to some combination of luck or time). At any point you can, assuming the market is appropriately liquid, spend some of these assets to get cash.

Some of these assets have force-multiplier effects on your future output in certain domains, from which exponentials naturally arise; but the time spent on them remains linear, and so, if we want to ignore inherited factors (the opportunity to spend the time on things without immediate feedback, say, or handed-down insight about which of these investments will produce the most value in the future, or access to the required tutors) the increase in earnings these things _merit_ has to remain linear as well. There is no way to compound your time and therefore, under an assumption of meritocracy, there is also no morally acceptable way to compound earnings, which I would assume is the point the politician is attempting to make. Under this worldview, any exponential compounding that occurs must, mathematically, be a result of systematically undervaluing the time of an exponential number of other people, since each person can only spend a linear amount of time.

In practice, of course, the assumption of meritocracy is simply wrong, and arguably the concept as a whole is internally incoherent (or at least I don't believe we've yet managed to articulate it coherently: we would have to settle the nature vs nurture debate and completely sever the value of a person's spent time from the accidents of their birth, if such a thing is even meaningful). But I think that's where the claim falls down, not in failing to understand the mathematics of exponentials.

Please don't bury the lede here of how the author completely and epically misses the point of the statement.

It's not about the math of the thing, it's about the arguably necessary exploitation that must occur to hit those kinds of numbers.

And in fact, IMHO, you don't even need to get to "exploitation" to criticize this mentality.

Any normal human would (and if not would, SHOULD) want to stop "earning" well before they hit those ridiculous numbers. Let's say -- at about 50 million, a normal person should realize, yes, that's enough. Time to pivot to something that doesn't cause so much accumulation. This does happen, we just don't hear about it enough.

I feel like a primer on Labour Theory of Value is important in this thread. This a debunked theory that is still being used by populists to justify their anger on the System TM and in particular, the billionaires.

Folk LTV interpretation is that people's wages are supposed to be proportional to their hours worked. Obviously this is false -- everyone knows this but people still repeat it because it has populist memetic value.

That LTV is debunked and proved to be useless is very easy to demonstrate -- the single person (who was a Marxist) who took this theory seriously abandoned it. He's not the only one though.

I asked ChatGPT this: "who is the single one contemporary person who took labour theory of value seriously in an academic sense?"

ChatGPT: G.E Cohen.

(G.E Cohen is an Analytical Marxist BTW)

Here's what G.E Cohen has to say specifically on LTV:

1. "labour theory is, moreover, false" [1]

2. "The labour theory of value is not a suitable basis for the charge of exploitation laid against capitalism by Marxists, and the real foundation of that charge is something much simpler which, for reasons to be stated, is widely confused with the labour theory of value." [2]

[1] https://andrewmbailey.com/money/readings/cohen

[2] https://www.versobooks.com/blogs/news/3128-the-labour-theory...

So here you have the one guy who took this flawed concept seriously, * from the side of Marxism * and then has to conclude that it is false.

Money, property, limited companies, intellectual property laws, patents, contract law, etc. etc. are things on which all successful businesses depend. These are social constructs - societal "technologies" if you like. They work because as a society we agree that they should and enforce them through the rule of law.

The assertion that it should be "impossible" to be a billionaire (or trillionaire, gazillionaire, whatever) is really an assertion that a just and moral society would design all of these things to prevent that outcome.

And I think it's pretty reasonable to say that we ought to set society up such that as someone gets wealthier we take money away from them at faster rates, so that beyond some level of wealth it is very difficult to continue to get richer.

Unfortunately, a lot of people are captured by rather libertarian ideas about government, money, property, etc. that seem to prevent many people (at least in the US, UK, et al.) from behaving in anything but the most selfish, individualistic, and antisocial of ways.

I think maybe the fundamental issue is something that he said really late in the essay:

> There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy.

> How people become rich in your society is one of the most important things to understand about it. You can't let your beliefs about this be determined by ideology, or movies, or historical examples that are centuries old. You must look at the world around you and see how it's actually done.

The "it's impossible to do morally" people are looking at how it used to be done, and how it's sometimes still done. They are right to be opposed to that. But oppose the immoral aspects of it, not doing it at all.

And those who hard-core define a billion as immoral are I think signalling something else: They want the government to take that money, from every billionaire. (If we're talking immorality, we could discuss the morality of that.) But they don't understand that there will probably be second-order consequences of doing so...

Um, did i just get mansplained compound interest by Paul f*ing Graham? I feel like this has been the subject of condescending advice since the beginning of time.

"But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues."

What could possibly be false in a two-parameter model of reality?

He seems to be regressing, he said this in January:

> The rational fear of those who dislike economic inequality is that the rich will convert their economic power into political power: that they’ll tilt elections, or pay bribes for pardons, or buy up the news media to promote their views.

> I used to be able to claim that tech billionaires didn't actually do this — that they just wanted to refine their gadgets. But unfortunately in the current administration we've seen all three.

Now he's claiming he's trained all these billionaires and they are a blessing to the world, not avaricious sociopaths.

This horrible mentality is what ails tech bro culture today and ruined the tech world for me - chasing billions

Greed mixed with analytical thinking on industrial scale - graham, thiel, musk, hoffman, bezos, zuck all symptoms of “smart” people who screwed this country ultimately - all for what?

Has the changed world that resulted been for the better?

> Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That's why I'd use the word naughty rather than evil. They delight in breaking rules, but not rules that matter. This quality may be redundant though; it may be implied by imagination.

> Sam Altman of Loopt is one of the most successful alumni, so we asked him what question we could put on the Y Combinator application that would help us discover more people like him. He said to ask about a time when they'd hacked something to their advantage—hacked in the sense of beating the system, not breaking into computers. It has become one of the questions we pay most attention to when judging applications.

- Paul Graham, "What We Look For in Founders"

I also want to add my own characterization.

It is my personal experience with YC founders that YC has coached them in business practices and philosophy that could be characterized less than charitably as "how to con people and get away with it."

I understand the PG doesn't believe this himself and every partner has different advice. But there is a consistent pattern of dishonesty and manipulation that is not innate to founders but taught to them directly by YC partners and it is impossible for me to square this essay with how those founders PG has coached over the last 20 years behave.

Maybe it's possible to become a billionaire without cheating. But all I know is YC won't teach you how.

---

Aside, it deeply bothers me how tone deaf pg is politically. There is a meta to AOC's messaging that he's not reading, which is that wealth is unattainable for the masses and there are oligarchs in our society manipulating our systems to empower and enrich themselves. You are making a rhetorical error by attempting to debate a single sound bite instead of addressing the systemic problems that AOC and progressive democrats are voicing.

If we assume that YC funded about 6,500 companies and produced about 30 billionaires...That is 0.46% using the most flattering denominator possible. And the best reason not to apply to YC.

If you count individual founders, the rate is even lower. So to insinuate this is some kind of training people to become billionaires, is like a lottery operator saying he teaches wealth creation because a few ticket buyers hit the jackpot.

PG is turning an extreme power law outcome into a moral argument. A tiny fraction of founders capture enormous upside, thousands do not, and PG presents the winners as proof that the system is fair. I could not think of more survivorship bias with a halo.

And thee political sneer is also absurd. Startups do not exist outside politics. They exist( or should exist) inside law, tax, infrastructure, courts, labor rules, housing rules, securities law, immigration policy, and government procurement. Uber S-1 warned that its business would be harmed if drivers were classified as employees rather than independent contractors...and described legal and regulatory obstacles as material business risks. In other words...regulatory arbitrage ( corruption? ) as a business model.

Airbnb is an even cleaner YC example. Its own filings describe short term rental law, host registration, tax collection, fines, city restrictions, and New York 2023 rules as materially affecting the business. Its a business that lives lives inside a fight over housing law and local regulation.

And if the claim is that politicians do not understand value creation, then SpaceX is a hilarious counterexample. SpaceX is a company completely entangled with the state and US tax payer. SpaceX has about $22B in government contracts, mostly NASA, and Reuters separately reported a $5.9B Space Force launch award in 2025.

And the biggest logic failure being used here is the so called exponential growth part. The world is not exponential. Population growth is not exponential forever. Demand is not exponential forever. Restaurants, supermarkets, apartments, drivers, cities, and disposable income are finite. Real markets saturate. Growth curves become S curves. Pretending that 15% monthly growth can simply continue for years is nothing more than spreadsheet intoxication.

So instead of the claim you can earn a billion by making users happy, what is reality is, that in a legal and financial system that massively rewards scalable equity ownership, a tiny number of founders can become billionaires if capital, timing, network effects, labor structure, regulation, and distribution all break their way. I don’t think its legal, and the best PG could do with this is a defense of the casino by pointing at the jackpot winners.

Just reflect on this: Of the 30 billionaires Paul Graham talks about, in an essay where, notably, he never once uses the word “entrepreneur” they come from these 14 companies:

Airbnb, Brex, Coinbase, Cruise, Deel, DoorDash, Dropbox, Flexport, Instacart, Loopt, Meesho, Reddit, Scale AI, Stripe.

Less than half of them are profitable as of 2026. None created a vaccine or cured a disease, discovered a new algorithm or mathematical theorem, developed the economies of poorer countries, created a new engine, or invented a renewable energy source. If all of them...disappeared tomorrow...you would probably just use some other payment system, maybe with higher or lower commissions, and argue on some other message board not called Reddit.

The impact on human lives would be zero... or maybe even slightly positive.

You do not EARN 1B$.

You mass exploit labor at scale to exfiltrate 1B$.

You commit wage theft to obtain 1B$ (the largest theft category).

You union bust and fire workers who try to fight for better working conditions and wages.

You engage in monopoly practices to obtain 1B$.

You engage in corruption via 'campaign donations' to lay down laws that benefit you and harm others.

Doctors earn. Engineers earn. Scientists earn. LABOR EARNS.

But billionaires never *earn* 1B$. They exfiltrate, steal, and corrupt.

A reminder that in a recent Paul Graham blog post, he vowed to help the 2nd Trump Admin crush woke youth, and asserted that racism isn't bad as the left thinks.

In the following weeks we saw Elon do two Nazi salutes in front of the presidential seal, and we saw the Trump admin hire tons of thugs to rip minority children out of their beds, and those same thugs have murdered a number of citizens, with Stephen Miller loudly shouting that they have absolute immunity.

I'm surprised Paul Graham and the signers of the blog post are not to embarrassed to continue posting their thoughts. At worst Paul should stop talking, better, he should apologize and admit he is a fool.

Some disrespect to PG, but the entire thing reads like:

"Oh, if we just operate in a vacuum, do not closely examine the systemic interactions of our accumulation of such vast sums of wealth, assume there's no moral or ethical quandary that would prevent us from utilizing every game theory strategy available to us, and have consistently high, compounding growth over time, then anyone can make a billion dollars if they follow my teachings, which in turn were formulated over thousands of students and with a success rate still in the single percentage points, at best."

Here's the thing none of these people will ever admit: not everyone can actually succeed at a goal, otherwise it wouldn't be a goal, but a baseline. This is the fundamental grievance I have with these sorts of "wealth whisperers" braying on (and on, and on, and on) about how with a good idea and hard work (and YC's guidance), you too can be a Larry Ellison or Elon Musk or Mark Zuckerberg type.

Which, no, you cannot. If you could, PG's success rate for billionaires would be 100%. It is not, so clearly hard work and a good idea (and a mentor) alone isn't enough. Yet enough leaders and populace have bought into this fairy tale that we've reoriented society around it wholesale. The presumption is that anyone lacking in obscene wealth has done so by choice, rather than examine systemic incentives and policy failures that make such an outcome the default, rather than a personal choice (or worse, some sort of personal failure).

I'm just so weary of having the same argument with the same people who refuse to bother learning anything that might remotely conflict with their world view anymore. If the response to "maybe we should improve society somewhat" is some banal wealth-building sales pitch relying on cherry-picked statistics and devoid of any wider context, then I think it's safe to presume you're either willfully arguing in bad faith or so colossally ignorant that you're beyond help.

EDIT: One thing I would add requires quoting PG.

> There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy. What do users really want? What could you do for them that would make their lives dramatically better? That kind of empathy is what we look for in founders, and what we cultivate in the ones we accept.

I will flatly reject that YC startups of late have any shred of empathy for their customer base, in general. If they had any shred of empathy for their customers, they all wouldn't collectively lean into the "permanent underclass" and "AI job replacement" narratives so often spouted by their predecessors. In fact, I would go so far as to argue the only groups with a shred of empathy for their customers might just be the non-YC startups or the FOSS groups cranking away in spite of all the headwinds.

Nobody - nobody - makes a billion dollars through empathy alone. At some point, one has to make a conscious decision to say "I demand more returns than reasonable relative to my costs, and I expect my customers and/or employees to bear that burden on my behalf." Otherwise we'd see a parade of companies demanding caps on margins to drive prices lower or wages for workers higher, thus creating more spending money among workers that in turn produces more economic activity. We do not see this outcome, therefore we cannot ascribe empathy as a source of wealth.

I know an easier 3 step hack if anyone's looking for one:

Step 1 ensure server connection is alive and you see pre-birth screen

Step 2 pick character starter pack of higher surface luck areas (e.g. father runs emerald mine in south africa)

Step 3 identify server grandmasters and rewrite unfavorable rules after birth

Unfortunately I skipped step 1 on this build so I'm looking to improve next time!

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.

There is nothing more evil in this world than the pursuit of power and wealth.

Even AOC doesn't believe what she said. She's saying it because she has a startup of her own which sells ideas, and gets paid in votes. It may not be 93%, but she's had a pretty good growth rate, and when you get to about 50 million, you have a great shot at being President. Ideas which bash rich people have had a growing market for a while, and she's good at it, and people are telling their friends about her.