Why don't rich people do more awesome things? | Hacker News Reader

Why don't rich people do more awesome things?

115 pointspeteforde95 comments

I saw Paul Graham's post today (http://paulgraham.com/saveelan.html) about how someone should buy the building a restaurant he likes is located in. Isn't this sort of like a capable developer complaining to the core team of an open source project that they should implement a new feature. Why the heck doesn't he just buy it?

I don't mean to single out PG, who is a hero of mine. I'm more confused that this kind of thing seems to happen a lot: you'll see prominent, successful people mention that someone needs to raise $25k to X or $100k to Y, and I know that if I owned 5-8% of 300+ startups, I'd be cutting a lot of cheques.

Buying a car or a house in cash is showoff-y, singlehandedly saving a cause makes you a hero. Why doesn't this happen with regularity in SF and beyond?

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I can't afford to. If I could afford to, I would have quietly done it. But real estate in Palo Alto is very expensive, and most of YC's investments are still illiquid. (Not that I have 5-8% in any case. We assume we get diluted down to 2% by exit, and I am one of several partners in YC.)

It's also not worth it and you'd be rewarding the building owner. Bistro Elan could move two blocks in either direction, reduce rent and recoup moving costs in months. (and I hope they do)

Yeah, when I saw Paul's post, the first thing I thought was that it would encourage every landlord of a place that a lot of very rich people love to triple the rent and force a rich person to buy it at a favorable price.

investing in restaurants is a great way for a rich guy to become a poor guy. One case of food poisoning and you'll be dealing with lawsuits that will force you under.

plus it's not scalable, so it's difficult to make a lot of money, unless the food is so good or unique that you can franchise it. But I'm guessing the appeal of Elan has more to do with the atmosphere than the menu...

Anyway, it doesn't matter, the reason the landlord is raising the rent is because he/she assumes that there is someone willing to pay more for the space, which indicates that there is a more economically viable operation that can be run in that area than that particular restaurant.

Business leasing is usually longer-term (often 10 years) and any rent increases are negotiated. The fun starts when the lease is up for renewal:

- Landlords can refuse to renew it. I know of cases where the landlord changes and the new landlord decides not to continue the lease. When the business owners leave, the landlord restarts the same business in that location - hires his cousins to run shop. Often the businesses, despite being profitable (a lot of small businesses are just ramen-profitable) can not afford to move out so they leave everything behind.

- Landlord wants a lot more rent to reflect market conditions. This increases fixed costs, which make the business harder to run, and much more unattractive to potential buyers.

Most landlords want the businesses who rent from them to succeed and try to be reasonable with their demands because they prefer to have a stable cash-flow from their investments.

In the case here you're not really dealing with the restaurants itself, but with the building. You rent your space to the restaurant.

I thinking maybe the question was in regards to your willingness to take financing on an undertaking of your own.

Why quietly, i think cash flow generation is a good example to lead.

Of course if you get to the point of investing in 200-300 companies per year, and lots of them do well, prices of PA real estate will get even more expensive.

Loved your honest response,Paul.

I'm not about to second-guess PG, or any other single person. Maybe the capital they have isn't liquid enough; maybe they have other obligations; who knows?

And it's worth pointing out that doing more awesome things doesn't require wealth. Why don't more poor people clean up their neighborhoods? Why don't more startups choose to solve problems that would really improve peoples' lives?

We should never point our fingers at anyone else before looking hard at ourselves.

All that said, the accumulation of wealth tends to require a mindset change that is not conducive to working on awesome things unless there's a reasonable chance of those awesome things making even more money, in the future if not immediately.

For one example: I recently moved in to a house, which I'm renting, which was a real dump and eyesore in its neighborhood. It was located next door to a nice Victorian bed & breakfast; most of the places in the neighborhood were a lot better by comparison. In the last 7 months I've completely transformed the yards, repaired or replaced plumbing, put interior walls into the garage -- all out of my own pocket -- with the help of my friend & my girlfriend. We often get comments from others in the neighborhood; those with more money tend to ask us if we're planning to buy it, and those with less money tend to just express appreciation that we're doing it.

So there ya go.

For some reason this post by alnayyir is dead:

>Why don't more startups choose to solve problems that would really improve peoples' lives?

People keep bringing this up, but I never see examples. If I saw one, I'd chase it like an alcoholic that's spotted Jim Beam at the bottom of a hill.

To my detriment, and with gusto.

Out of curiosity, what would you think about a startup that aims to protect the 401k investments of Joe Trader? Is that something that would really improve peoples' lives?

Why not an investment company that invested in startups and small businesses by pooling the resources of Joe Traders? I would assume that, since much of the smart money right now seems to be in startups, the return can't be all that bad, and you'd have a shot at leveraging three different groups in such a way as to improve all their lives, which would be a neat trick all on its own.

Many companies provide matching funds for retirement accounts, but don't allow you much say in where you invest. You can be given a basket of stocks and told to pick, or told which fund managers you're allowed to use.

That aside, individual investors usually like their current funds and are loathe to leave them just for something that promises better results.

What I envision is a site that simplifies the current technical and quantitative trading tools into something usable by the common trader.

That way if your company says pick from stocks A to Z to invest in June, you can decide which stock to pick. For example, don't pick A because seasonal trends dictate they always fall 8% in June. Or don't pick B because it is overbought because it is nearly touching a resistance band and has only broken resistance once in the past 5 years.

My examples are from technical analysis, but quantitative techniques work just as well.

The tools available are good, but require a lot of theoretical knowledge before use.

For a common investor, using a algorithmic tool with fewer options, sensible defaults, and automatically applied backtesting would be a huge step upwards from listening to Fast Money or the musings of their coworkers.

> Many companies provide matching funds for retirement accounts, but don't allow you much say in where you invest. You can be given a basket of stocks and told to pick, or told which fund managers you're allowed to use.

You do realize that the 2nd sentence isn't necessarily supporting evidence for the first, that the basket and the funds matter.

Regardless, the big 401(k) providers already have advice services. (Schwab's is provided by a 3rd party.) And, independent financial advisors will take your company's list and generate a plan. (such as ricedelman.com .)

Yes, I realize that there are employers who don't use such providers or won't pay for the advisor service, but how can your service address that problem?

What I see is a split in the market.

People who aren't provided financial services by their employer or investment company simply take their financial advice from free or traditional sources. Or they attempt to do stock planning themselves, which is only ideal if you are already knowledgeable about the market and can invest time each day to study it.

The service could bridge the 'knowledge gap', allowing those who want to plan themselves to do so without pitfalls. And since its a system of sensible defaults as their knowledge of the market increases they can tweak the parameters of the program to better suit their needs. In a black box program such as a neural network on the algorithmic side, or a financial planner on the human side, this is impossible.

> People who aren't provided financial services by their employer or investment company simply take their financial advice from free or traditional sources.

Yes, but since those folks are already ignoring the many for-pay services, what are you going to do differently.

The answer better not be "I'll take their list of choices and produce a plan" because folks at ricedelman.com (among others) have done that for years. (I mention him because he has a nationally syndicated radio show advertising his services. There are many others who don't. How are you going to complete with that?)

You seem focused on how the plan is created. I doubt seriously that that will be enough to make you successful in the 401(k) advice biz.

My free advice is to sell your investment tools as tools instead of saying that you're in the 401(k) advice biz. The tools are independent of 401(k)s.

Which reminds me, you keep saying "stocks". Do you really think that there are many 401(k)s that allow specific stock purchases but don't have employer-paid advisors? I haven't looked at a lot of 401(k)s but in my sample the (few) employers who allow individual stock purchases also have employer-paid advisors. Some of the plans with lots of fund choices (but no "individual stock" option) also have employer-paid advisors.

For the most part, the plans with no employer-paid advisors are the ones with crappy mutual fund choices and no "buy specific stock" option (with the possible exception of the employer's stock). What can you do for them?

> don't pick A because seasonal trends dictate they always fall 8% in June

I don't believe that such a stock exists.

No, this is not where the smart money goes, as I understand the term "smart money." Perhaps you meant something else, like "the money of smart people with whom I am familiar."

Yeah, I saw that. Unfortunately, I spent a little too much time on HN the last couple of days, and I'm feeling a little cynical and bitter, so I was having trouble coming up with any response other than, "I've had this conversation so many times that I'm not really up to it right now. Only once, out of all those times, has anyone ever decided to take one of the examples and run with it, and they did so primarily for their own profit."

If anybody's really actually serious about wanting their very own windmill to tilt at, and having trouble finding one on their own, my email address is in my profile.

Wow, I must admit I would probably never invest so much into a place I am just renting. Your landlord won the lottery.

Still, it makes me feel uncomfortable. Yes, society is cheering on the people who sacrifice themselves (just watch any movie from the US, that message gets driven home with a sledge hammer). But I doubt that is for the best of the individual. Of course people are cheering if they get something out of you for free.

Hmm. I'm not sure how to respond, honestly.

I don't feel like I'm investing into a place I'm renting; I feel like I'm investing into my home, and by extension, myself. Every time I walk outside, I feel like I've accomplished something, even if it's a relatively small thing. No matter how anything else is going in my life, that feeling is still there.

If the owners decided to boot us out this month and sell the place for more than they could have otherwise, or even rent it out to someone else now that they can get more for the rent, I still would not feel like I had done something foolish. I still, for a while, will have made a place better. Even if new tenants or owners stopped maintaining it and let it go to ruin, that would only be a decision they have made, and still not change what I had done.

It's made the other people in the neighborhood happy. It's made me happy. It's made the landlords happy. Maybe I could have spent the time and money on something else, but that's true no matter what I do. So, why not do something that makes so many people happy?

> Yes, society is cheering on the people who sacrifice themselves...

On my good days, I think that might be because society is looking for leaders that they can look up to. On my bad days, I think that might be because society has gotten lazy and just wants someone else to take care of it.

> But I doubt that is for the best of the individual.

It might not be best for many individuals, because it's easy to feel like you're being taken advantage of, or that you're giving up something you shouldn't be.

But, for some individuals -- a growing number of them, I hope -- some forms of sacrifice can be so rewarding that it doesn't feel at all like sacrifice.

> Of course people are cheering if they get something out of you for free.

Sure, but maybe you're getting to do something you enjoy anyway. If you go out for a hike or visit a river or beach, why not pick up some trash while you're out there? If you're going to live in a home, why not improve it a bit while you're there? If you're going to get together with some friends, why not bring some food? And if people cheer you on for that, is that so bad?

Anyway, the most powerful motivation, for me, is that I can see as clearly as if I were living in it now a world in which everyone else did things like this -- looked out for each-other, helped each-other up, cleaned up and improved the things around them, and invested in great little bistros and sandwich shops and bookstores and parks and such because they recognized the value of having such things in their community.

I've found that it's impossible to tell anyone else what that kind of world looks like, or to get them to believe in it by talking about it. So, instead, I try to make it.

One run-down house at a time. :-)

If you are happy, who am I to argue with that. Maybe you just really like your landlord.

"living in it now a world in which everyone else did things like this -- looked out for each-other, helped each-other up, cleaned up and improved the things around them, and invested in great little bistros and sandwich shops and bookstores and parks and such because they recognized the value of having such things in their community."

I like that, except for the part where the house still belongs to the landlord, not to the community or you. I would pick up trash in the mountains, because the mountains belong to everyone (or the government, which in theory is everyone).

With the sandwich shops, I think capitalism could deliver: if people would realize the value of having sandwich shops in the park, they would perhaps be willing to pay for sandwiches, making it profitable to build nice sandwich shops.

Sandwich shop owners as well as people living near the park would be motivated to keep it nice, as it would improve both the sandwich shop and the value of the houses around it.

Maybe there are aspects of what you are doing that I don't see, though. As long as the landlord lets you live there, maybe you get to live in a nice place for a low rent. If you ever have to move, your landlord might write you a glowing letter of recommendation and make it easy for you to find another nice place. Then again, as they seem of the "not caring" kind, maybe they won't :-/

I'm seriously amused by your last paragraph. It actually made me smile, because, despite explaining precisely why I'm doing this kind of stuff, you're still looking for the "angle", and that's the best example of why I find this attitude so difficult to communicate in an effective way to so many other people (and why I've all but given up at it).

Yes, I am now living in a place with lower rent than I might be otherwise, but the rent is not lower than the total amount of money and time I have put into it; yes, the landlords might write an amazing letter of recommendation, but my experience so far has been that it's nearly impossible to wrest any kind of letter out of a landlord, no matter how good your relationship.

As far as capitalism goes ... y'know, I don't dislike it, but I don't think it's an answer to everyone's needs, either. In order to work, capitalism requires that everything have a measurable, monetary value, and that most people agree on that value. Talk about the Mona Lisa to a capitalist, and the capitalist will tell you that whatever is spent on insuring and protecting the Mona Lisa is representative of its value; talk about the Mona Lisa to an art expert, and they'll use a term that is utterly foreign to a capitalist: "priceless".

If people had money to spend at capitalist parks, and capitalist parks realized that they could rent space to vendors (and make some money too), then capitalist vendors would move in and compete for the same spaces, and discerning customers would visit the best vendors, and everyone would be happy! ...except, the story doesn't end there, because eventually the capitalist park realizes that it has developed more value in its space by drawing people to a park where there's great food, so they raise the fees on the vendors, and the vendors realize that they can make more money by advertising more aggressively, or, better yet, by opening up side-businesses and operating those in the same park also ... eventually, this system corrupts itself and the park is no longer a park or the people can no longer afford to go there or any of a number of outcomes. For real world examples, look no further than the article that spawned this whole thread, or the huge number of empty commercial spaces that are still asking for ridiculous rents.

So, I am skeptical of capitalism's ability to be anything more than a better economic model than anything else that's currently viable.

And, the house does belong to the community, in a way, because it's a part of it, and it belongs to me, in a way, because I live in it.

I think when I said "value", I was thinking of something different than what you were when you read it.

"In order to work, capitalism requires that everything have a measurable, monetary value, and that most people agree on that value."

It is the job of the market to determine the value. Corruption of capitalist parks might be a problem, although I did not say the park has to be owned by a company - just the people living around it need to own their houses.

Presumably the cafe in question here will be replaced by something even more worthwhile. Who would be willing to pay the higher rent, if they can not put it to good use?

One problem I have with your model is that it leads to blaming people for being lazy and anti-social. That might sound not so bad, but in communism this blaming went so far as to put people against the wall and shoot them. They couldn't explain why their system wasn't working, so they only explanation seemed to be "sabotage" as in people not being social enough.

I just feel basing a system on selfishness (win-win) is more stable.

I want to finish this conversation with just one point, which I'll try to make as clearly as possible. I started this thread with a post that included the question, "Why don't more poor people clean up their neighborhoods?"

I was being rhetorical, but your comments here are a fine example of one of the reasons why they don't: lack of a sense of ownership.

Let's set aside for a moment all of the other factors into why poor neighborhoods tend to be run-down and crime-ridden -- lack of resources, hunger, hopelessness, crime, drugs -- and imagine a neighborhood filled with perfectly rational poor people.

We'll take Bob as an example. Bob rents a house for slightly less than he can afford from a landlord that, for whatever reason, is not interested in fixing the place up and demanding a higher rent. Maybe it's because the landlord also doesn't have the funds; maybe it's because all the other places in the neighborhood are run down too, so the landlord could never realize as much value from improvements.

In Bob's neighborhood, none of the houses are freshly painted, because it's in nobody's best personal interest to do it, because they don't own the places. None of the yards are weeded or landscaped, the plumbing leaks, and the wiring is hazardous. Bob commits as little of his own resources to his house, because it doesn't belong to him.

Eventually, the neighborhood becomes the victim of its own disrepair, and is no longer worth investing any money in at all. Bob, being perfectly rational, simply moves into a similar situation at another neighborhood.

A wealthy investor shows up, purchases the homes for the rather low amounts that they command, from landlords happy to be rid of them and getting anything at all for them, and kicks out the tenants who simply move into other neighborhoods and repeat the pattern. The investor razes the miserable houses to the ground, which is probably the right thing to do at that point, and builds whatever their market research firm tells them is most valuable there -- a shopping center, parking, condominiums.

This, indeed, is a cycle that is being played out every day all over the U.S.; I've personally seen it in more places than I could easily recall.

But, I question that system. I think, if Bob weren't a rational actor, if instead he moved into a community and decided to behave as though it belonged to him as much as anyone else there, and subsequently started fixing little things here and there -- and then his neighbors did the same, because they didn't want to suddenly have the worst place on the block, and so on -- then, perhaps, poor people could discover that they can afford to live in nice neighborhoods after all.

G'night.

I hope it is clear that I don't mean to attack you, I am just trying to understand.

We seem to agree that sense of ownership is the problem - and to me it is real, as those poor people really don't own the place they live in.

You are right that there could be a problem with people staying poor indefinitely and things only getting worse over time.

On the other hand, maybe the problem isn't "how can poor people live in nice places" but "how can poor people be less poor"? For example, apparently the poor people in your story seem to be good at renovating houses. Why shouldn't they be paid for it and hence become less poor (equivalently, be allowed to live in a nice house with lower rent in exchange for renovating said house). It seems it would cost the landlords nothing to give them a job, it is a win win situation.

I do think, or rather fear, that capitalism (or any real world instance of it) has some loopholes which might lead to the whole system collapsing, that is, everything belonging to just a few and the rest being poor. I am not sure that scenario is really happening (I just don't know), but there seem to be some signs of it.

> I hope it is clear that I don't mean to attack you, I am just trying to understand.

I didn't feel attacked at all. :-) Thanks for the conversation.

> In Bob's neighborhood, none of the houses are freshly painted, because it's in nobody's best personal interest to do it, because they don't own the places. None of the yards are weeded or landscaped, the plumbing leaks, and the wiring is hazardous. Bob commits as little of his own resources to his house, because it doesn't belong to him.

> But, I question that system. I think, if Bob weren't a rational actor

The above tells us more about your definition of "rational" than anything else. You're envy driven.

The guy above defines "rational" differently - he's greed driven. He fixes up the place that he rents because of the value that he gets.

IMHO, you're too concerned about what someone else gets. You don't even see how anyone else can think differently, hence your label "rational".

Envy is the stupid sin. It's the only sin that doesn't get you anything.

Envy driven? It sounds to me like he's driven by altruism and a simple desire to make the place he lives more pleasant.

I really don't know where you got envy from.

Reread the exchange. ("The guy above" is not Bob.)

I'm responding to someone who thinks that it's irrational to fix up one's own house when others get significant benefit.

The person who is doing the fixup is doing it because he gets significant benefit, regardless of what other people get. The person criticizing thinks that Bob, who won't do work that benefits others without being compensated, is rational.

That's envy-talk.

Envy is worrying about what other people have/get. Greed is worrying about what you get. A greedy person will do things that benefit himself even if other people benefit without paying. An envious person won't.

Just for the record, you got that about as wrong as you possibly could -- to such an extent that I'm scratching my head at your interpretation of what I wrote -- but I can't clarify it any further because I've already made this as clear as I can.

edit: it sounds like you may not be aware that "rational actor" means a specific thing in microeconomics. See also http://en.wikipedia.org/wiki/Rational_choice_theory . Specifically, in order for Bob to qualify as a rational actor, he must act in such a way as to maximize his benefit, where his benefit is defined in objective terms of monetary value. i.e., "I like having flowers in my yard" does not qualify as a benefit, thus a rational actor would not spend money to put flowers in their yard. The entire point of all that was to describe, in as simple of an example as I could construct, why I think that behaving only as rational actors -- i.e., measuring our benefits only in terms of monetary value -- can lead to undesirable outcomes, and why acting irrationally -- again, in the sense of microeconomics -- can lead to better outcomes for all involved.

I can't figure out where I went wrong in stating all that the last time 'round.

"Specifically, in order for Bob to qualify as a rational actor, he must act in such a way as to maximize his benefit, where his benefit is defined in objective terms of monetary value. i.e., "I like having flowers in my yard" does not qualify as a benefit"

If that truly is the definition of rational, then sorry, economics is sorely mistaken. Or at least the people who conduct economics that way. I always assumed it was clear that "monetary gain" is simply a placeholder for value gained. Of course "I like having flowers in my yard" does qualify.

Thinking in terms of monetary gain really makes no sense, especially since money doesn't actually have any value. It only has value if you can use money to put flowers in your yard, if you so desire.

I am not an economist but a mathematician by training, so I am not sure what economists are thinking. But they can't (all) be that stupid. Mathematically it is obvious that using such a strict definition of value (monetary gain) is unnecessary and hence should be done away with.

That said, I have problems following the "envy driven vs greed driven" argument.

>>"Specifically, in order for Bob to qualify as a rational actor, he must act in such a way as to maximize his benefit, where his benefit is defined in objective terms of monetary value. i.e., "I like having flowers in my yard" does not qualify as a benefit"

> If that truly is the definition of rational, then sorry, economics is sorely mistaken.

You're too kind - if that's the definition of "rational" that economics uses, economics is fundamentally useless.

> That said, I have problems following the "envy driven vs greed driven" argument.

My apologies.

"Greed" is concern with what you have. "Envy" is concern with what other people have.

A greedy person will do something that benefits himself regardless of whether it benefits others. An envious person will not do something that benefits himself if he thinks that other people get too much benefit from that thing.

Paul Allen single-handedly funded development of the private spacecraft SpaceShipOne.[1][2]

He apparently began funding that spaceship, to the tune of tens of millions of dollars, around 2001, several YEARS before he told anybody that he was doing so (in 2004). By definition, rich people who are doing things for non-showoff-y reasons are not necessarily showing off about it.

[1]: http://en.wikipedia.org/wiki/Paul_Allen#Assets [2]: http://en.wikipedia.org/wiki/SpaceShipOne#Development_and_wi...

Well, most of the rich people I know donate to all kinds of actual charities, and they also, you know, create lots of JOBS - that's why they're rich. Creating lots of jobs is pretty awesome. They also often work quite hard at ensuring those jobs stay where they are.

The interweb forums all make the same mistake of lumping in "Rich people" into a single category.

Do Directors and C-level executives of large corporations make possibly immoral, evil decisions? Seems like it. They're often rich people, sometimes because of the company they are working on, sometimes that's only part of it. Or none of it.

Are there dynastic families full of rich people with some useless people who don't really contribute anything of value to humanity and just kind of hang out and party their entire lives until they die of a drug overdose or cancer with no real friends? Sure.

Money and wealth are not what the average person who considers themselves "not rich" think they are.

I'm not rich by these VC standards, but most of the people in my country of residence would consider me rich - compared to them, I am, in their view. Not in mine.

So - at christmas I go out and buy toys for 300 poor kids. None of that money goes to fund anyone's paycheck - I wrap the stuff up in paper, write some notes, and load it onto the truck. It goes to be distributed. Is that an awesome thing? It sure is for those kids and their families every christmas.

What you do with what you have for reasons other than the accumulation of wealth is up to each of us individually. And the most valuable thing many people have to offer? Time.

You seem to have a quite white/black view of the world. Managers in most locations, in small or big companies, often try to do their best to keep employment local. Partly this has to do with the fact to be able to show "their" team physically and so showing their power. But mostly it is because they are just human beings working hard and feeling some responsibility for their people. At least that's how I see it in Germany where the economy is doing quite good due to that attitude.

Owners of small company may need more engagement because they are more accountable and have much less of safety, but that's why they also get the jackpot when they succeed. Owning a company also takes a big toll on the family life. Being an executive is already a strain on the private life BTW. So everything has a price and a risk, some more and some less - telling that large corporations are evil brings nothing to the discussion I think.

Random off-topic response to one of your throwaway comments:

"Buying a car or a house in cash is showoff-y"

When did buying a car in cash become showoff-y? My parents and grandparents always paid cash for their cars, because it's a depreciating asset and taking out a loan for it is just throwing money away. I didn't buy a car until I could afford it in cash - and when I did, that's when I realized this wasn't terribly typical, as the dealership kinda looked at me funny and lamented that they couldn't give me any further discounts (possibly because they were already selling it to me for like $400 under dealer price).

I think buying a car on credit may be an American thing - at least I don't know of anyone who has bought a car on credit. It seems like an absurd waste of money to do so - why not just buy a secondhand car you can afford outright?

Because often interests on car credits are lower than the inflation, and maintenance costs on second hand are very hard to foresee.

Interest on car loan is still higher than any investment I can think of with equivalent risk characteristics. 3-year treasuries are currently yielding about 0.75%, 3-year car loans are about 3-4% on a quick Google search. I don't see how you could arbitrage that into a profit.

Also, paying off (non-tax-deductible) loans essentially buys you after tax dollars, while investments must be bought with pre tax dollars (though some are capital gains taxes if you hold them long enough). That's an additional 15-40% you have to chop off the return rates of investments when comparing them to paying off debt.

OK. Car-dealers loans (made by the car-marker banks) run usually around 1% where I live. Inflation is currently around 2.5% yty. Also some investments are quite tax-free, but most investment run about 25% taxes here in Germany.

Well, does 'cash' mean physical cash or does it mean 'not on credit'? You're assuming the latter, but that doesn't make any sense, because buying on credit is effectively buying for more 'cash', just spread over some time (taking net values of later amounts into account of course). So I assume it means the former.

Means "not on credit". And I don't see why that doesn't make sense, because if buying on credit = buying for more 'cash', why would you want to pay more for the car?

You wouldn't and it also wouldn't be considered showoffy, so I don't think that's the intended meaning.

That's when you take out the loan, get all the discounts, and pay it off the next month!

I thought about doing that, but the "discounts" are usually things like 0% financing for X amount of time or "we'll waive the financing charge", which means that if you take them, you are in exactly the same place as if you'd bought for cash in the first place, you just have to remember to pay off the loan early.

Usually, when this sort of thing happens, it's because the rent was artificially low due to a long-term lease without appropriate escalations. In other words, the tenant is getting a hell of deal, and then a lease rolls over permitting the landlord to again charge market rent. Not sure if that's what happened here. If not, then it was likely something similar. Real estate is a remarkably transparent market.

When you look it that way, it seems a little less "awesome". Subsidizing a losing business isn't the sort of activity that makes one rich.

Well, how many awesome things do you typically do? Awesome things don't necessarily have to involve large amounts of money. Ever stopped on the side of the rode to help somebody? Given somebody a ride across town when they were lost?

If you want to see more wealthy people do more awesome things, lead by example. Tomorrow go find somebody that needs help, and help them.

While I probably directly run the risk of sounding like a mega-douche, I truly believe that my startup buzzdata.com is going to make life better for millions of people.

Is that allowed to count?

Did you start it with the intention of profiting? I think the OP is specifically looking for unprofitable-but-awesome ventures. For example, curing AIDS because you want people to not have AIDS is awesome, but curing AIDS because you want to sell AIDS medicine is not awesome.

Dude. If you cure AIDS, I DO NOT CARE why you did it.

God may care, you may care, and that's all very important. Seriously.

But me, I DO NOT CARE.

This. Intentions for good deeds should not count - those are private and for your own use only. What should matter is things that you say or do, not think.

Make no mistake, you are only judged by your true intentions. People,and life, is imperfect and endlessly flawed, what was intended is really all you have in the end, all that really matters to the truth. Yes, results change circumstances and end pain, but the true measure of a man remains his thoughts. Not his wallet, or his treasures or his effect on his environment. What he is inside is what he would be with the power to do as he intended, because the truth wants only to know what he is with great power, because it is the wielding of power that determines the good, and usefulness of a man, to both individual people and to the whole truth of societies singularity.

Judged by whom? If you're talking about self-judgement, and judgement by G-d, then I fully agree. But as far as people judging other people - I think only actions and to a lesser degree words should count, because we never truly know other people's intentions.

Judged by reality, by what really is, the truth. It's been called lots of things and names but it is just what is. People can't judge intentions accuratly, thus the incredible confusion over whether it matters. It's a matter of faith I suppose.

You will if they cure AIDS in order to charge you a fortune for the cure.

I am fairly sure that that's not a cure for AIDS.

AIDS being a contagious disease, if you don't wipe it out, you haven't cured it, it isn't a disability in one person, but a plague on the population.

I am the OP, and I'm not rich.

BuzzData is designed to be useful and profitable in equal quantities. It must succeed at making money in order to continue being useful to people.

If we work hard and stay focused on making something that people would be upset to lose, then I will become wealthy as a side-effect.

I plan to use my wealth to become an angel investor, which is something I can't do unless I change my current fiscal status.

"I plan to use my wealth to become an angel investor..." There's an old saying about counting your chickens before they're hatched.

I certainly don't plan to fail, if that's what you mean. :)

>but curing AIDS because you want to sell AIDS medicine is not awesome.

you've obviously never watched "First contact" :)

Truly amazing things take a while to do. I think most people will attest to doing a bunch of experiments to test the waters before they dip into doing something crazy and hard for the long run.

Even that simple example of buying the diner so they add hash browns to the menu is a good example of that. Buying a building, not to mention one already occupied, is not exactly a 5 minute transaction. I think it just comes down to the fact that rich people tend to understand the relationships between time, money and potential returns.

Also, the time it takes to keep people accountable. It's very easy to be taken advantage of in any business relationship if there is a lack of oversight. My friend's cousin stole tens of thousands from his business over years before the paper trail caught up to her.

I'm not going to defend PG, specifically, but you've got to realize that being a building owner/manager is a specific skill set. It takes a lot of time, too. Why would anyone who isn't passionate about commercial real estate put his money into it? It's kinda the principle of sticking to what one knows and is passionate about running/operating/building. In some way, Paul IS doing something awesome by putting his money where his mouth is AND mentoring entrepreneurs.

Once you have money, you have a lot more to lose, and become more conservative. Broke college students will throw their weight around as much as they can, but once they're rich, they're afraid (consciously or not) of losing it.

That's my impression, anyway. (Based on my own experiences, graduating and beginning to earn lots of money. I've had to fight the urge to become quite conservative.)

This rich guy:

http://en.wikipedia.org/wiki/Warren_Hellman

Does a pretty awesome thing:

http://www.strictlybluegrass.com/

IIR, he and his wife are also major contributors to the Haight Ashbury Free Clinic in San Francisco.

I think there are a couple of things here:

- a lot of these people ARE doing a lot of these things, but people with money who are in the public eye get deluged with requests for help. Can you imagine how after a while you might get "giving" fatigue? - for a lot of rich people, they are never rich enough. There was a great study recently about this (I'll try and dig it up and post here) about at every level they thought they needed a bit more to be truly secure. So my point is to them giving away money even to a worthy cause reduces their feeling of security.

In the last few years I have worked with a very wealthy hedge-fund manager (who is a philanthropist) and met a billionaire and I can assure you that these thoughts do go through their minds.

There's value given to a cause if someone important endorses it. Sure, a wealthy individual can write a check and cover the entire amount with ease, but why should he/she? You won't be rich for long if you hand out money every time you're asked. In the end, even the most generous wealthy individuals have to prioritize:

  -"I support X so much that I'll donate $100k."
  -"I like what Y is doing, I'll associate my name with it."
  -"I don't care for Z much/Z might be a scam, ignore them."

And sometimes the money will go toward a new house or a car. It's their money, and I assure you it's a lot harder to see from their perspective than you think.

I'm guessing that most (rich) people do one or maybe two "awesome things," since doing one thing to the degree of "awesome" is really, really hard to the point of almost everything else being a distraction.

It is difficult to be rich and do more awesome things, at least of the type that requires a lot of cash. There's only two ways to grow your wealth- make a lot of money, or don't spend any money- and you need to practice both ways heavily to actually be rich.

Ergo, there are potentially plenty of people who do awesome things with lots of cash- but they are not rich anymore, so "rich people don't do awesome things".

There are and have been plenty of people who've done great things with their money.

They're called philanthropists.

1) Merely possessing money does not mean you can necessarily deploy it efficiently to solve a problem. It requires, among other things, skilled human time and energy--a rare resource.

2) In an economy where trade is voluntary, rich people have already done awesome things in the first place to become wealthy. They offered a product, service or some kind of value of enough magnitude to get a lot of money from people.

What makes you think they don't? and that you should know when they do?

There is a whole lot of well financed good going on under the radar.

Absolutely! All the people that say "X should give more", typically assuming "X" doesn't give anything should read the lesson of the Widow's Mite and apply it to themselves rather than to "X". http://en.wikipedia.org/wiki/Lesson_of_the_widow%27s_mite

I usually get up before my wife. She asserts I don't have a quiet bone in my body. Well, from her point of view, I don't -- but she only hears me when I'm noisy, not when I'm quiet. Just because you don't hear something, doesn't mean it doesn't exist.

1) So, for "rich people" who give away money in a "noisy" fashion, walk through your local colleges, universities, and other public places and see how many buildings have a family name on the building. Those are rich people that have donated a lot of money to make that building a reality.

2a) For "quiet" rich people, note that pg said "If I could afford to, I would have quietly done it." For all the buildings (above) found with a name attached to it, realize there are hundreds of other people that gave substantial amounts and thousands that gave "widow's mites" to make that building a reality. My guess is that the "named" person gave 30-70% of the necessary amount and unnamed people made up the balance.

2b) In the USofA, 503(c) is the IRS section dealing with tax-exempt, nonprofit corporations or associations. http://en.wikipedia.org/wiki/501%28c%29 Those are all created and funded by people giving amounts both large and small to "do good." Those are all vehicles for people to silently (for the most part) give money to good causes.

Assignment: count the number of 503(c) nonprofits that are registered with the IRS... http://www.irs.gov/app/pub-78/search.do?resultsPerPage=500&#... (hint: 835000 gets you into the "Z"s).

A lot of young wealthy people I know don't do awesome things, same for heirs to fortunes. They just spend more money, maybe give some to charity but overall they aren't doing things that help society or their local community in significant ways. Oh but they can spend $3K on bottle service, no problem there.

Rich people do awesome things all the time. Most investment vehicles are essentially loans to businesses to help them grow. As long as the money is not in the mattress, it's probably doing something awesome for whatever business or person is indirectly borrowing it.

It seems to me that landlords trying to maximize rents in community centers runs counter to the goal of building a vitalm thriving community. I always wanted to design a town.

Btw I bet that building is $5-10m -at least-. If the landlord even wanted to sell it.

The purpose of working hard to become wealthy is to earn some measure of freedom to do things they'd enjoy doing. Owning real estate may not necessarily make sense. It can be a rather time consuming affair, which drains the wealthy of their most precious asset.

It is the same with start ups. You can't throw money at things and hope they work out. That'd be called government. It takes real effort, and there's a physical limit to the number of "office hours" a wealthy entrepreneur is willing to run before it starts to sound like work.

Spending 25k is a sure thing, and you have insurance in case of an accident or loss. 25k into a startup that can't raise vc or angel money is very risky.

If you can make the individuals popular, let's say by getting a frontpage article of them, or naming your startup after them, the investor would get something besides a ling shot to make money. Don't forget that 9/10 startups don't make it.

Paul Graham himself? Because he can't afford it.

I agree, and if anyone figures out how to persuade rich people to do this, I'd really like to know how. My goal in life is to become rich in order to do specific awesome things, but convincing rich people to do those awesome things seems like it could bring a much higher return on investment if I could pull it off.

there are plenty of rich people who do awesome things...i.e. Bill Gates.

But there are also plenty of rich people who only think of themselves and growing their bank accounts.

It comes down to a person...if you'd care about others when you are poor, you'd continue caring about others when you have the means to help.

Most rich people probably got rich making good investments, not charity real estate ventures.

I personally know many rich people. They didn't get rich by giving their money away. They're a shrewd lot who work hard to make more of what they've already got.

Even people who win big at lottery, etc often end up poor after a couple of years of being generous with their good fortune.

Don't get me started on Bill G. (using the above arguments he owes me a pub based on the accrued interest for the drinks I bought him the 80's.) Even his philanthropic activities are calculated business decisions with considerable tax and other benefits.

Arguably a generalization of the title question to span times beyond the present ("do") is more interesting: Rockefellers did and still do immeasurable philanthropy.

Rich people don't get rich by throwing money around. They do it with careful consideration and future planning.

I feel the same way every time I see the advertisement for "The Film Foundation" before watching a movie on DVD.

Does anyone have data on whether the "poor" or the "rich" are better entrepreneurs?

This may not apply to PG or alot of others, but you would be surprised how much money people don't really have. I knew someone that I thought had cash. In reality he was broke and had all his money tied up in deals or stocks etc.

At the end of the day he lost it all and had no money. Even when you have a percent of something, doesn't mean you have money to spend, if the cash is not in your bank account you can't buy.

This guy got rich investing small amts in young kids. he is a douche. douches are not awesome. His stupid post just proves his douchiness

If you really believe this, I suggest you watch the video of him doing "office hours" live at TC Disrupt last month. You might love or hate what he has to say, but his insight and ability to pick up often incoherent business models in faster-than-realtime is incredible to watch. I described it to a friend as "spooky in the good way".

http://techcrunch.com/2011/05/25/absolute-must-watch-office-...

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