App Academy took a percentage of your first years salary. It felt pretty fair to me because it was free upfront. I don’t like the regular way tuition works where you pay a ton upfront and they have no incentive to get you a job. App Academy actually had an aligned interest in getting me a high paying job right after their program. Could I have done it without them? Probably, but I didn’t mind paying them back after they helped triple my salary basically. Not sure if they offer this payment method anymore though.
>I don’t like the regular way tuition works where you pay a ton upfront and they have no incentive to get you a job.
Agreed. And to be fair, typical four-year colleges were never meant to be vocational training programs. Employers have successfully shifted training costs onto those colleges, and thus onto students and taxpayers.
Colleges are meant to be repositories of human knowledge; whether or not that knowledge is useful in the job market is not immediately relevant to them. Students don't understand this, so they go to college thinking a degree is some kind of job certificate. And it's not really their fault for that misunderstanding; the myth is perpetuated across society, and it's very convenient for employers who can now select from a more educated labor pool at no cost to themselves.
Lambda did it for a while, but it was only for 2 years, not a decade or two. It looks like they've now move to a slightly more conventional loan structure.
Probably not. The majority owner would have a fiduciary duty to the minority owner. With a person that tends to lead to uncomfortable questions about compelled work/income.
>The brothers were quiet for a long moment. A wealth tax, in fact, could disrupt their scheme: young people, valued by shares in their own futures, would be taxed as wealthy before they’d ever been rich.
That's pretty funny. You can kill your success in the cradle by being taxed to death on your future potential.
> Which they prefer is largely just a question of which ones shift the tax burden to other people.
What about Georgists? Their main argument for it is that there's zero deadweight loss, not that it's more "fair" because certain people do and don't have to pay it.
Everyone I know who hates taxes on unrealized capital gains will happily tell you which other taxes they would prefer to raise the same amount of revenue from them. There are better and worse kinds of taxation!
It causes issues with illiquid assets etc, but over a long enough timeframe taxing unrealized gains is equivalent to a vastly larger capital gains tax. That says little about taxing all capital gains and a lot more about just how huge a tax break this is.
Then don't tax unrealized gains but also don't have loopholes that allow the untaxed use of unrealized gains (collateralized loans) or that eliminate unrealized gains like the stepped up basis.
If the borrower defaults, and thus cedes the collateral to the lender, does the borrower also get to default on their tax obligations now that the shares aren’t theirs? Or is that added to their debt mountain?
There’s lots of schemes around borrowing but never paying it back, deferring payment until death, paying it back such a way the money is just returned to you via some other entity, etc.
>If the borrower defaults, and thus cedes the collateral to the lender, does the borrower also get to default on their tax obligations now that the shares aren’t theirs? Or is that added to their debt mountain?
Would a person selling shares of themselves owe a fiduciary duty to the shareholders? That could get a little awkward if someone were to come along and offer to buy for more than the current market cap. You'd kind of be obligated to sell. I think there's a word for that.
Imagine getting sued because you posted an Instagram chilling in the middle of the week. Shareholders expect total commitment to shareholder value, slacking off is clearly an issue.
ftio's comment spells out "slavery". catchnear4321's comment spells out "consume".
I'm not sure why your shareholders would want you to consume. The more time you spend consuming the less time you spend producing value for your shareholders.
You think my shareholders aren’t market makers that also hold shares of Alphabet, whatever it may be called at that point? That’s the bright future I was envisioning.
If I’m watching YouTube while producing, my shareholders get paid twice. I may even get a “most valuable me” award from them. Nobody else comes close to me at being me.
Shoot, if I worked for YouTube and was watching YouTube, that’s three times.
By the way, America needs to understand that there is a huge risk of my me being superseded by some foreign me, which is bad for America. So if Congress could find it in their hearts to think of the country and throw a little IRS scratch my way… I’ll double down on me, maybe even clone another me in America rather than overseas. Definitely not for dividends. I promise. Pinky swear. (Nancy pick up the phone.)
How much profit does Alphabet gain from you watching YouTube more on your additional monitor? How much productivity is lost due to you watching YouTube more on your additional monitor?
I would assume the productivity hit would outweigh whatever gain Alphabet gets. And this is assuming the ownership percentages are the same. If the shareholders hold 50% of you but only 1% of Alphabet, then their preference for your productivity would be 50x greater.
Very soon the traders will write a program that will warn them of things that look like the well-known "go long yourself then make lazy yourself" strategy, and afterward it'll have negative expected value.
There are some of those contracts active in the USA right now, and the people who sell part of their future income do not have a fiduciary duty. I predict that this will not change in our lifetimes.
Imagine you've been getting 1M/year (bull market, and overall a very successful swe), then recession comes, your income drops to 200k/year and you're jailed for lowering the standard of life for your alimony beneficiaries.
This concept completely fixes inequality and fully replaces all forms of social welfare - no more wasted potential because a smart person is born in a bad environment due to genetic lottery. Advantage from growing up in a rich family would shrink to the point of irrelevancy. Investors would filter out ghettos in search of high iq kids to buy their shares early. No more need for public schools - because everyone would get the quality they actually deserve, all paid for by private investors. Same would apply to literally every form of social welfare that exists anywhere. Right now there's no market pricing of people at all - everyone either gets less than they deserve, or more, with the fair outcome statistically borderline impossible. The outcome is a horrific waste of human potential.
I think effective tax rate would go way down - because bidding wars on people would reduce it to the market rate, and given the increasing global abundance of capital, I'm pretty sure that's going to mean low single digit taxes (ie. selling only single digit percentage of ownership).
While the end result would be a utopia, it's hard to see how it could become the norm anytime soon. The concept directly takes power away from politicians, so to become the norm a large scale collapse of the state is required. Perhaps it needs a completely new environment - like space colonies in O'Neill cylinders, in which case we're sadly centuries too early.
You are insane to think this "fully fixes inequality."
Thought experiment: who can buy the most shares of others? And if they buy "well", how does the distribution of wealth shift?
Second thought experiment: what if your stock is valueless on the market? What does it mean to sell shares when you get pennies for them? You sell all your shares because you need to eat, does someone now own your output for the rest of your life?
>Thought experiment: who can buy the most shares of others? And if they buy "well", how does the distribution of wealth shift?
It shifts to the sellers, not the buyers. That's because buyers are competing with each other which drives the expected return close to the general market rate.
Assume there's a magical oracle that tells you: this kid will generate $100M of wealth over their lifetime - to not get bogged down into discounted future value, lets say the risk free rate is 0% - but needs $500k for education and resources early.
Without any investment the kid will become stuck in a local maximum in a shitty environment and generate $100k instead.
Market competition will bring the total sale amount close to 0.5%. Lets say it's 1%, although that's very high. Funds bought shares that are 'fairly' worth $1M for $500k, for a profit of $500k - not bad. The person gained $99M. Total distribution of wealth becomes more fair, not less.
that sounds great on paper, but it could never work in reality.
why not just organize society to educate everyone, and thus enable everyone? it seems like that would maximize outcomes. nobody has a magical oracle, as you've proposed.
>why not just organize society to educate everyone
Because it was tried and it's a massive failure. The entire western education system is geared to help slowest learners at the expense of everyone else. It's actively harmful for those that are exceptional. Only those from rich families can escape it.
And that's only inside developed countries. The reality in rest of the world is much worse.
>nobody has a magical oracle
Yes, no perfect oracle exists, but it's enough to have something that's substantially better than random, like intelligence tests. A direct economic incentive would lead to development of more reliable predictors.
What happens if, instead of making $100M, the kid just takes the money, slacks off, and refuses to work? Can he be sued for breaching fiduciary duty?
Or, what happens if he/she works really hard, but never makes it, and their investor decides to sue for their money back? Often times, legal representation costs 10s, even 100s of thousands.
You’re really just legalizing either fraud or indentured servitude here. In real life, magic oracles don’t exist.
Yes, new laws and probably technology would be needed for that too.
Ideally there would be an implant that records their entire life - which can be used to determine if they slacked off in breach of the purchase agreement.
There's a tried and tested solution for that, simply transfer your debt to a relative, spin them off, then let them starve to death while you sell off their possessions.
The usual form of these contracts is that (a) the Human in question will pay X percent of their income to the Company for the next Y years, and (b) the Human is not otherwise constrained by contract. If they want to just surf on a beach for Y years, they can.
Selling shares in people isn't a new idea. Upstart started by doing this exact same thing in 2012 (they pivoted to personal lending and were very successful). But Upstart couldn't make the investing in people marketplace work.
There's too much information asymmetry. The highest-potential people (i.e., the ones you'd want to invest in!) know they're rockstars. And they value their future earnings potential as such. But it's very difficult to evaluate someone's potential as an ordinary investor. Just look at the hit rate on hiring people into jobs (not ideal) – and hiring likely has more diligence than here.
The highest-potential people therefore feel the deal the investors would give them is bad (and don't take it). The mediocre people will take the deal. But investors won't get a good return, and the company will need to make the deal less and less advantageous to the mediocre people until the mediocre people even find it unappealing.
There are many examples of failures in people-related investment products. The information asymmetry leaves someone holding the bag – typically the investor. 3 examples:
1. Income share agreements (ISA) for education. Many companies and even states (e.g., Oregon) have tried this to poor effect. People majoring in STEM degrees didn't take the deal (as it was a bad deal for them given their future earnings power). And people majoring in humanities did take the deal (as it was a good deal for them given their lower future earnings power). Also, many people who actually may benefit from ISAs don't really understand them and also won't take them. Note: Bloom Tech seems to be making ISA's work through force of will. But they also are in a specific niche where the ROI is much clearer and the ISAs are therefore easier to underwrite.
2. Life insurance for people with illnesses. There's a market for paying ill people money now in exchange for being the beneficiary on their life insurance. It provides the ill people a better living now and provides a return later for the investors. But, the information asymmetry and potential fraud with medicals can lead to a bad outcome for investors. For example, if I agree to pay someone $50k per year until they die in exchange for being the beneficiary on a $500k life insurance policy, then I'm in the red if they live for more than 10 years. The medicals may indicate the person may have 3 to 5 years to live. But what if they live 20? So while this market exists, it's very niche and very risky due to the information asymmetry.
3. Buying shares in an athlete. Fantex pioneered this starting with NFL players. Players took the deal because they are injury-prone and many have short careers. There was information asymmetry at work again. And nearly all investments in athletes went poorly (shorter careers, less than expected earnings).
So overall, I think we'd all love to see a model work where we can bet on individual people to succeed and share in their success. However, it just doesn't work. It's not the same as investors betting on the founders of companies – those founders have to have the money for success. The individuals probably don't need substantial capital (and even if they were using the money to create something – wouldn't you rather have the piece of the company than a piece of their earnings?).
It's probably a lack of imagination on my part, but how could this possibly work for any but a tiny minority of people? Or, worse, how could this not become a new form of indentured servitude?
It does seem curious to look at the world and think: this has insufficient financialization of people's lives. But then, while we can buy life insurance policies, we can't, say, buy a policy insuring against being poor by middle age. Not a pension, not shares in one's future: insurance. That seems more likely to work as a product. That could work now.
For such a puffy piece their resume is pretty underwhelming for people getting so much attention.
One of their plaudits was figuring out that the release of a bad version of the Snapchat app coincided with user loss? Really? Isn't that like basic telemetry queries? Oh look all the missing users are on one platform. Oh look, they all start dropping the same day we rolled out a major release. We should load that up on some phones and see what's up...
It just feels like the article is really stretching for us to believe that these are indeed wiz kids.
I had this idea in 2015. A way for teachers to get equity in the students they teach. A way to lower college tuition. Where is my twelve thousand word write up?
This is such a terrible investment. Let’s try a thought experiment:
Option A: Invest in a specific company. You have a business plan etc and you can talk to the founder(s) to see what you think of them. If the business makes money hopefully you get some kind of exit. This is VC. You can make a decision based on the idea, what you think of the founders, the general market for exits or a bit of all of the above. It’s pretty uncertain but the companies that work out make you returns that hopefully compensate for the others.
Option B: Invest in those two brothers. They may or may not come up with a viable business at some point in the future. This has all the downside and risk of option A except that you also don’t know what business idea they may come up with, how much capital that idea will need (ie you could be further diluted or they may not be able to deploy all the capital, reducing your rate of return) and how long you have to wait until they do that.
Now, if they had a good idea, why would they not tell you about it as part of their sales pitch for investment? (Ie why would they not insist on option A?). This would decrease risk for investors and thereby mean they wouldn’t need to sell as big a slice to raise the capital they need. It feels like by going down this route, they are self-declaring that they don’t have any business ideas likely to stand up to scrutiny.
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[ 4.1 ms ] story [ 71.0 ms ] threadAgreed. And to be fair, typical four-year colleges were never meant to be vocational training programs. Employers have successfully shifted training costs onto those colleges, and thus onto students and taxpayers.
Colleges are meant to be repositories of human knowledge; whether or not that knowledge is useful in the job market is not immediately relevant to them. Students don't understand this, so they go to college thinking a degree is some kind of job certificate. And it's not really their fault for that misunderstanding; the myth is perpetuated across society, and it's very convenient for employers who can now select from a more educated labor pool at no cost to themselves.
Just imagine a hostile takeover. Of a person. Through buying NFTs. With whale-pumped shitcoins.
That's pretty funny. You can kill your success in the cradle by being taxed to death on your future potential.
Which they prefer is largely just a question of which ones shift the tax burden to other people.
What about Georgists? Their main argument for it is that there's zero deadweight loss, not that it's more "fair" because certain people do and don't have to pay it.
It was really only supported by people who were willing or able to methodically think through the consequences.
There’s lots of schemes around borrowing but never paying it back, deferring payment until death, paying it back such a way the money is just returned to you via some other entity, etc.
They are taxed for the sale yes.
Can I short someone?
https://www.upstart.com
So ignore instagram, how’s cash flow looking? Probably need to make that public if there’s shares involved.
No, no, this wasn’t the right choice. Flamethrowers, quickly.
I'm not sure why your shareholders would want you to consume. The more time you spend consuming the less time you spend producing value for your shareholders.
Then add one more. For YouTube.
If I’m watching YouTube while producing, my shareholders get paid twice. I may even get a “most valuable me” award from them. Nobody else comes close to me at being me.
Shoot, if I worked for YouTube and was watching YouTube, that’s three times.
By the way, America needs to understand that there is a huge risk of my me being superseded by some foreign me, which is bad for America. So if Congress could find it in their hearts to think of the country and throw a little IRS scratch my way… I’ll double down on me, maybe even clone another me in America rather than overseas. Definitely not for dividends. I promise. Pinky swear. (Nancy pick up the phone.)
I would assume the productivity hit would outweigh whatever gain Alphabet gets. And this is assuming the ownership percentages are the same. If the shareholders hold 50% of you but only 1% of Alphabet, then their preference for your productivity would be 50x greater.
There could be a whole commune or collective of people who blend their shares into a composite, and guarantee they are watching YouTube.
Sure, the amount generated by an individual would be small. But think about at scale. Whole cities full of people watching YouTube.
> Load up on Puts on yourself
> Intentionally be extremely lazy
Infinite profit glitch?
Markets are always efficient ;)
If you make 200k as a swe and owe 50%,you are legally obligated to maintain that. You can not decide to become a poor artist for example
I think effective tax rate would go way down - because bidding wars on people would reduce it to the market rate, and given the increasing global abundance of capital, I'm pretty sure that's going to mean low single digit taxes (ie. selling only single digit percentage of ownership).
While the end result would be a utopia, it's hard to see how it could become the norm anytime soon. The concept directly takes power away from politicians, so to become the norm a large scale collapse of the state is required. Perhaps it needs a completely new environment - like space colonies in O'Neill cylinders, in which case we're sadly centuries too early.
Thought experiment: who can buy the most shares of others? And if they buy "well", how does the distribution of wealth shift?
Second thought experiment: what if your stock is valueless on the market? What does it mean to sell shares when you get pennies for them? You sell all your shares because you need to eat, does someone now own your output for the rest of your life?
It shifts to the sellers, not the buyers. That's because buyers are competing with each other which drives the expected return close to the general market rate.
Assume there's a magical oracle that tells you: this kid will generate $100M of wealth over their lifetime - to not get bogged down into discounted future value, lets say the risk free rate is 0% - but needs $500k for education and resources early. Without any investment the kid will become stuck in a local maximum in a shitty environment and generate $100k instead.
Market competition will bring the total sale amount close to 0.5%. Lets say it's 1%, although that's very high. Funds bought shares that are 'fairly' worth $1M for $500k, for a profit of $500k - not bad. The person gained $99M. Total distribution of wealth becomes more fair, not less.
why not just organize society to educate everyone, and thus enable everyone? it seems like that would maximize outcomes. nobody has a magical oracle, as you've proposed.
Because it was tried and it's a massive failure. The entire western education system is geared to help slowest learners at the expense of everyone else. It's actively harmful for those that are exceptional. Only those from rich families can escape it.
And that's only inside developed countries. The reality in rest of the world is much worse.
>nobody has a magical oracle
Yes, no perfect oracle exists, but it's enough to have something that's substantially better than random, like intelligence tests. A direct economic incentive would lead to development of more reliable predictors.
Or, what happens if he/she works really hard, but never makes it, and their investor decides to sue for their money back? Often times, legal representation costs 10s, even 100s of thousands.
You’re really just legalizing either fraud or indentured servitude here. In real life, magic oracles don’t exist.
Ideally there would be an implant that records their entire life - which can be used to determine if they slacked off in breach of the purchase agreement.
Better not be experience mental illness, injury, disability, career burnout, time off for parenting, a bad choice, etc.
Holy fuck this is a terrible idea. Humans are so much more than their work output.
There's too much information asymmetry. The highest-potential people (i.e., the ones you'd want to invest in!) know they're rockstars. And they value their future earnings potential as such. But it's very difficult to evaluate someone's potential as an ordinary investor. Just look at the hit rate on hiring people into jobs (not ideal) – and hiring likely has more diligence than here.
The highest-potential people therefore feel the deal the investors would give them is bad (and don't take it). The mediocre people will take the deal. But investors won't get a good return, and the company will need to make the deal less and less advantageous to the mediocre people until the mediocre people even find it unappealing.
There are many examples of failures in people-related investment products. The information asymmetry leaves someone holding the bag – typically the investor. 3 examples:
1. Income share agreements (ISA) for education. Many companies and even states (e.g., Oregon) have tried this to poor effect. People majoring in STEM degrees didn't take the deal (as it was a bad deal for them given their future earnings power). And people majoring in humanities did take the deal (as it was a good deal for them given their lower future earnings power). Also, many people who actually may benefit from ISAs don't really understand them and also won't take them. Note: Bloom Tech seems to be making ISA's work through force of will. But they also are in a specific niche where the ROI is much clearer and the ISAs are therefore easier to underwrite.
2. Life insurance for people with illnesses. There's a market for paying ill people money now in exchange for being the beneficiary on their life insurance. It provides the ill people a better living now and provides a return later for the investors. But, the information asymmetry and potential fraud with medicals can lead to a bad outcome for investors. For example, if I agree to pay someone $50k per year until they die in exchange for being the beneficiary on a $500k life insurance policy, then I'm in the red if they live for more than 10 years. The medicals may indicate the person may have 3 to 5 years to live. But what if they live 20? So while this market exists, it's very niche and very risky due to the information asymmetry.
3. Buying shares in an athlete. Fantex pioneered this starting with NFL players. Players took the deal because they are injury-prone and many have short careers. There was information asymmetry at work again. And nearly all investments in athletes went poorly (shorter careers, less than expected earnings).
So overall, I think we'd all love to see a model work where we can bet on individual people to succeed and share in their success. However, it just doesn't work. It's not the same as investors betting on the founders of companies – those founders have to have the money for success. The individuals probably don't need substantial capital (and even if they were using the money to create something – wouldn't you rather have the piece of the company than a piece of their earnings?).
Somehow that bullshit sounds familiar to me.
... ah, there it is: https://www.fool.com/investing/mutual-funds/2006/01/18/selli...
And here: https://www.wired.com/2013/03/ipo-man/
Of course one can also find it in some form here and there on some crowdfunding platform: https://www.indiegogo.com/projects/buy-stock-in-a-person-sel...
https://www.youtube.com/watch?v=rdwc9EBmOk0
You know that mostly 1% of human population have a say in their own fate? And there I am already optimistic.
And yes, coincidentially there is a large intersection with that 1% in which investing is predictably profitable.
But even then, I remain conservative, do not put all eggs in one nest and invest in organized groups of people, aka the businesses of those 1%.
It's probably a lack of imagination on my part, but how could this possibly work for any but a tiny minority of people? Or, worse, how could this not become a new form of indentured servitude?
It does seem curious to look at the world and think: this has insufficient financialization of people's lives. But then, while we can buy life insurance policies, we can't, say, buy a policy insuring against being poor by middle age. Not a pension, not shares in one's future: insurance. That seems more likely to work as a product. That could work now.
One of their plaudits was figuring out that the release of a bad version of the Snapchat app coincided with user loss? Really? Isn't that like basic telemetry queries? Oh look all the missing users are on one platform. Oh look, they all start dropping the same day we rolled out a major release. We should load that up on some phones and see what's up...
It just feels like the article is really stretching for us to believe that these are indeed wiz kids.
Is buying back shares of yourself considered nose picking?
Option A: Invest in a specific company. You have a business plan etc and you can talk to the founder(s) to see what you think of them. If the business makes money hopefully you get some kind of exit. This is VC. You can make a decision based on the idea, what you think of the founders, the general market for exits or a bit of all of the above. It’s pretty uncertain but the companies that work out make you returns that hopefully compensate for the others.
Option B: Invest in those two brothers. They may or may not come up with a viable business at some point in the future. This has all the downside and risk of option A except that you also don’t know what business idea they may come up with, how much capital that idea will need (ie you could be further diluted or they may not be able to deploy all the capital, reducing your rate of return) and how long you have to wait until they do that.
Now, if they had a good idea, why would they not tell you about it as part of their sales pitch for investment? (Ie why would they not insist on option A?). This would decrease risk for investors and thereby mean they wouldn’t need to sell as big a slice to raise the capital they need. It feels like by going down this route, they are self-declaring that they don’t have any business ideas likely to stand up to scrutiny.