In his latest essay, “How to Earn a Billion Dollars”, Paul Graham does his best impression of a condescending prick while trying to explain that it is possible to have a billion dollars without cheating. This was in response to Alexandra Ocasio-Cortez’s comment that:
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.
This is my interpretation of Ocasio-Cortez’s words: no one deserves to have one billion dollars of their own. You can get to them by ways both lawful — underpaying your workers, abusing labor laws, etc. — and, of course, unlawful, but you can’t earn them. Somewhere on your path to a billion, in fact in too many places to count, you will have broken a moral, ethical, personal or public standard, sold your soul piece by piece, through acts diabolical when written down and thought about for more than a moment but which tend to go down smoothly, like nothing at all, just doing regular business as taught and practiced by people like Graham. No one described it better than C.S. Lewis in his essay “The Inner Ring” and, more viscerally, in the third book of his space trilogy.
This is how Paul Graham seems to have interpreted those same words: it is impossible to have one billion dollar net worth without cheating. He then uses basic math — start with a few measly million, grow it at 93% per month, see magic happen — to show that no, it is mathematically impossible not to get to a billion with that kind of growth. The only reason you are not a billionaire is that you are not trying hard enough, not producing the magical technology that will get you to a 93% monthly growth rate. Left unsaid, for this was initially a talk he gave at the Oxford Union debate society, are the many assumptions that are to me unpalatable but to Graham either so common that they have become like water or equally unpalatable and therefore hidden deep in his hindbrain. I can’t tell which is worse.
Assumption one: growth is a universal good. Without even going into what it is that you are growing (gambling, recreational drugs, surveillance systems, etc) the easiest way to grow a thing good or bad is to provide more to the customer than what they are paying. If I gave people a dollar for every quarter they spend my growth would be through the roof! Normally you grow because the perceived value to the customer is greater than the monetary one, but we are long past that. Getting thousands of dollars worth of tokens for a $200 per month subscription is the latest iteration, but Uber did it before on wheels, as have many companies before and since. Welcome to step one of enshittification.
Assumption two: to the founder go the spoils. Well, not just the founder — spare the thought for the investor — but notice how it goes without saying that by getting the company to a billion dollar valuation it is the founder who would become the billionaire. You see in this kind of thinking one of the reasons why CEOs, board members and investors are so enthusiastic about AI: widespread implementation would absolve them of the moral injury they get by shafting their workers. Well, those who still have morals to be injured.
Assumption three: these are not, I repeat — not — shark-infested waters. The second assumption is that the workers should be happy with their salary and a few lottery-ticket options, and that only a handful of people, the founders, should get a lion’s share of the company. The third is that the financial ecosystem will let the founders keep the money. Alas, from banking and legal fees to business partners and investors claiming their share, our newly not poor founder may find herself in an Old Man and the Sea situation. This is much more common in biotech where the academic founders regularly get mere crumbs once they cede most business to people presenting themselves as the adults in the room.
Assumption four: all assets are equal when it comes to net worth. The Internet has been flush with graphic depictions of what one trillion dollars means in physical terms — even one of my favorite popular science outlets was in on it — without stopping to think whether Elon Musk actually has access to that kind of money. Founder shares are particularly susceptible to melting down once the founder starts liquidating them, so the answer is no, Musk would not be able to get his one trillion and lock them in a vault Scrooge McDuck-style. Which is fine, as long as you can buy, borrow, die, but then what have you “earned”, exactly? The right to cheap credit and no taxation?
Assumption five: to be a billionaire, you have to want it. This one is in fact the correct assumption! There are no accidental billionaires, though not for the reason you think. You can be purposeful and diligent in building a great business; alas this is not sufficient. Mr. Market won’t just hand you gobs of money after it sees what you have done, no, you have to absolutely want to be a billionaire, make those small sales of your soul, shaft the workers, avoid the sharks and buy into the lifestyle. Balk at any one of those steps and wham, even if the number of whatever tracker you use gets to ten figures you won’t stay there for long. Well, conditional on inflation being under control, or soon enough we will all be billionaires!
There are many, many people in the tech and biotech circles who could have become billionaires but haven’t, and kudos to them! They tend to be silent, but Jeff Atwood comes to mind as an exceedingly decent human being who is also unusually outspoken and kudos to him. Whether there are even more people who would desperately want to be billionaires but can’t — or aren’t yet — I cannot say for certain, though my brief exposure to the ecosystem tells me that the answer is sadly yes.