I wish more people would realize that those earning less than themselves are not necessarily less deserving but merely less valuable in a marketed job force.
He is an entrepreneur/founder. He isn't just a company hopping CEO with soft landings and golden parachutes galore. I think an entrepreneur deserves a solid risk premium.
They might be in a position where they don't have too much debt or it would not be tied to him and not put him in a difficult situation if it failed.
The bottom line might be that the risky part of founding the company is over.
When comparing stocks and bonds you use the risk free interest rate and take a stocks volatility compared to the broad market into account. Maybe the volatility of the business should be a consideration.
It's very common but do we have any proof?
Surely, personal circumstances are very important if you are going to try to start a business.
There is psychological circumstances like: did you grow up in a family or an environment where the idea of start a business was present?
And more practical like: Do you have technical abilities that you can sell if your project fail? Do you or your parents, wife, etc. have money that will stop your fall if the project goes wrong?
Was really Bezos or Gates or Page really "taking a risk"? And I mean a real risk.
Anyway, even if we, as a society, want to reward the "job creators", we probably don't want to live in winner take all world.
I'm curious about that statistic. A lot of these business could be hobby or other casual enterprises, tax avoidance schemes, and doomed businesses started by naive people. It doesn't mean a whole lot without some more context.
>Imagine taking a job where you had to pay for your office, office supplies, computer, and every thing else out of pocket.
Become a teacher!
>...that is a social discussion.
Social factors aren't irrelevant. People behave differently based upon socio-economic incentives. Not just entrepreneurs, either; take two engineers, one comes from a family with "fuck you" money, the other is a first generation college graduate. They both have started their own families and have young children at home. Now, imagine how their reactions might differ when placed in various ethical dilemmas.
All models are wrong, but some are useful. That particular stat covers a pretty good cross section of legitimate small businesses. Some small businesses may be a cover for an underground marinara sauce operation used by the mafia to funnel dollars to a dog fighting operation..... Sure we could muddy it up more, but I don't think that stat is all that malicious or disingenuous.
> Become a teacher!
This claim does seem to be a bit disingenuous and exaggerated. Sure teachers cover an unfair amount of supplies and get paid very little. Do they really rent their classrooms, buy their own computers, and pay for 100% of everything out of pocket?
> Social factors aren't irrelevant.
My post was refuting the claim that entrepreneurs aren't taking real risk. Granted if you come from a wealthy family you aren't taking as much risk starting a business as someone taking a small business loan. I still contend that the risk to an individual (relative to them-self, not others) is greater when starting a business than taking a job.
It was exaggerated a bit!
>Do they really rent their classrooms,
Of course not, but increasingly, my own resources are being put to use on behalf of my / my employer's students. Furthermore, remuneration in my field is easily several times what it is in education; and I think that's true for a lot of teachers. Sure, there are other benefits, but the pay is poor, approaching minimal, and that's not going to get you the best teachers.
>buy their own computers
Often enough, yes.
> and pay for 100% of everything out of pocket?
Far, far too much out of pocket.
> I was saying that entrepreneurs take significant personal and financial risks and there is a high rate of attrition for even good businesses.
I agree, and I think it's may just be a nasty feature of our country's demographics and the law of supply and demand.
I'm reminded of a post from a few years ago (I think I saw it here) examining someone's observation that a lot of engineering types were packing up and moving to Germany to start their company because failure would mean less financial hardship (that's not a great summary of the article). Here is an article in a similar vein (vane?). http://www.theatlantic.com/business/archive/2012/10/think-we...
Only a small number of bootstrapped companies (few of whom are represented on Hacker News) are risking their own money, and even then only the brave (or foolish) push it to the point where they can't sustain themselves if the business fails.
Also some business owners do leverage some retirement savings when starting a business. It's a pretty good way to get low interest money. They can sustain if things fail, but they certainly feel it if they fail.
Kind of interesting to think about what the negative consequences actually would have been for Bezos if Amazon couldn't survive the dotcom bubble.
And if you require a carrot that takes you from, say, $2M to $2.5M salary, maybe re-consider what motivates you and try to find something more intrinsic to the work & company itself.
Not that I disagree with you, I just think the numbers don't add up to be called massive.
Who are you to tell someone their motivations are wrong? I agree with you for myself wholeheartedly but I'm not about to go dictate to people what they should be motivated by. How incredibly arrogant.
The founder may have lost more money, but he had more money to gamble with. The employee does not, and losing his personal income stream is probably equally or more damaging to him.
Oh yes, I forgot about the masses of un-wealthy people who have equity.
There are great and horrible human beings who make lots of money. There are great and horrible human beings just scraping by.
Income and goodness are orthogonal.
She is much more valuable to society than I am.
edit: grammar
The value to 'society' of improving a toaster by a small percentage, or the hits to a website by a larger one, are hard to calculate except by a bottom line. Any emotional impact is so indirect as to be invisible. Still exist; but we don't see them so can't count them.
Add to this: one-on-one services are limited by the time and attention one person can put into them - two hands, one heart, 24 hours in a day. Absolutely no leverage at all, in the economic sense. Exceeding that (admittedly large and important) impact happens at some point in less-direct exchanges (economic, technological) and can go up from there geometrically.
So I console myself, as a technician, that what I do affects those unseen people. And if successful, it affects millions, not just tens. It adds up to something important too.
I'd argue the huge pay differentials are often because humans are TERRIBLE at judging long term... anything. A pro athlete can fill a stadium at some $$ per seat, yes. If a pro athlete stops playing, what happens? the stadium stops filling as much, we potentially lose some ancillary jobs from decreased viewing population (but given the number of sports stars and the nature of teams, losing one outside of a very few likely won't cause much), but in the long term, what is the cost?
Now let's remove an equal number of teachers as could be paid with that single salary. Even if this is a low end athlete, given teacher pay, you're losing dozen/few dozen teachers. What is the long term cost to students who can no longer be educated, or get a much poorer education (or simply now have far bigger classes)?
I realize there are many holes in this argument as it asserts a lot about how money is distrbuted/what externalities exist, but I see it as one facet.
There are also the more well explored aspects of "we like to lionize celebrity/success" and "teachers don't have much political or social clout given their resources/our prioritization in society" (although this links back to my prior statements about long term value and society preferences.)
In summary, I think there's plenty of reason to hate/feel guilt about it, and work to change it. Yes, the feelings alone do nothing, but if no one is getting angry then certainly nothing will ever change.
A star performer's pay is possible because millions of people can enjoy his/her performance at the same time, paying a relatively small amount of money (say, $80/ticket).
The software that the poster above developed can potentially be sold to a lot of customers with no extra work, so he makes an above average salary.
A teacher cannot teach millions of people at the same time, the limit is usually set at 20-25 students.
A care-provider can only take care of one person at a time, a few during the day.
Perhaps, but a natural effect of the way that capitalist economies work is that contributions aren't valued by social utility in a fair sense, but by utility weighted by the wealth of the people to whom that utility is provided.