Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

So I liked this, like everything else Diego writes, but this graf doesn't ring true to me:

Joe and Wayne work on building something they know GooBook could acquire without looking stupid. Something they might be able to do in-house, except their most talented engineers are desperately working on ways to extract more money out of ads, or to reduce the costs of their gargantuan infrastructure. Some are stationed in Antarctica building a self-cooling datacenter; others are diverted from creative projects into the new 99.9999999999% uptime initiative: one second of downtime costs a million dollars. Forget that stupid 18% free-time web app project, and come help make some mon-ay. The quarterly report must look good. Shareholders demand it!

Working on self-cooling data centers sounds awesome to me, & also penguins. But more importantly: the 99.9999999999% uptime initiative that saves a million dollars for every second rescued sounds awesome to me. Developers are rarely so privileged as to work on problems that are simultaneously hard, well capitalized, and easily quantifiable.

"Mon-nay"? This paragraph reminds me painfully of how mouthy I was when I was 24 and had just had the company where I was an early employee be acquired by a BigCo.

Of course it's awesome to work on those problems. The point I was trying to make is that in this case the company has to choose between innovating for the long term, and solving urgent problems that mean lots of $ in the short term. Internal venture projects tend to be put on the back burner when your best engineers could save 50M by optimizing the hell out of your backend.

I took that point; it's just the way you wrote it: derisively (sorry, that's just the most appropriate word; I'm not harumphing at you).

No worries, you make a fair point and I take no offense :)

HOLY IT'S A HACKER NEWS MIRACLE SOMEONE TELL PAUL!

:)

I'm continually reminded of Neal Stephensons remark "I saw the best minds of my generation... writing spam filters." He talks a lot lately about how we've stopped trying to solve the really hard problems and instead are continually trying to sell digital "sugar water."

*Source: https://plus.google.com/116416314233992548280/posts/NxCMjiQX...)

Truly defeating spam in all its guises (SEO, commercials, daily offers, junk mail) is a pretty difficult problem. How do you recognize cleverly concealed data? Spammers constantly adapt to spam filters and new/pristine communications channels which catch on precisely because they are relatively spam free. Of course, spam filters also evolve, this kind of runaway adversarial co-evolution is what leads to systems which can effectively lie/manipulate perception, or detect such.

By "difficult" he doesn't mean "technically non-trivial."

He means world hunger, building spaceships, developing new sources of clean energy, etc.

I'd rather have spaceships AND spam than no spaceships and no spam.

From Google: dif·fi·cult/ˈdifiˌkəlt/ Adjective: 1. Needing much effort or skill to accomplish, deal with, or understand. 2. Characterized by or causing hardships or problems.

I don't see lack of spaceships causing hardship, so that's really more of a definition #1 type of thing. Society built spaceships in the 60's, contrast that against the effectiveness of a spam filtering system built with hardware, software, algorithms and statistical inference techniques available in the 1960's.

While I appreciate and admire the work put into into accomplishing space fight, the existence of manned spaceships really doesn't contribute much to my existence, whereas spam sucks away a bit of my life, every day.

OK how about I rephrase: I meant "OMG-big-deal-game-changing problems." Difficult is just a proxy for that.

To Stephensons point, which he makes in the video in the link, he really means dreaming up and solving big problems. The example he gave was building the worlds tallest building. I'm paraphrasing him here: <paraphrase> Typically accomplishing the goal of building the worlds tallest building is measured only in contrast to the current record holder. So when people aim to set this record, it's only incrementally bigger. If you actually do the research you'll find that it's possible to build a building 20x taller than the tallest existing building. Why aren't we thinking on that scale?</paraphrase>

How would you get in and out of the upper (or even middle) floors of a 3000 story building? Atmospherics would be a serious concern at 10 miles up. Sounds like the kind of project the North Koreans would start and then abandon when they ran out of money.

So I guess now all marketing is spam.

Pretty much.

Wait a second. Isn't Neil working on a realistic sword fighting video game? Kind of hypocritical, don't you think?

Don't forget his employment at Intellectual Ventures -- which is largely regarded as a patent troll.

Do you have a reference for the IV link?

EDIT: Should have googled it myself. For reference http://web.mac.com/nealstephenson/Neal_Stephensons_Site/Inte...

Making a realistic sword fighting game would be quite the feat for the advancement of human creativity and virtual entertainment.

Not exactly spaceships, fusion, and feeding Africa, though.

Allow me to quote myself:

In the '60s, the best and the brightest were being lured by NASA, to put a man on the Moon. 50 years later, the best and the brightest are being lured by the Silicon Valley, to sell ads on social media. Biggest anticlimax ever.

That might sound bad, but selling adds on social media is actually more useful for society as a hole and takes a lower percent of our GDP than the moon missions. As to cool tech, we are actually discovering earth sized planets orbiting other stars, that's IMO far more interesting that having people play golf on the moon and a lot harder. We are also getting ever closer to building things at the atomic scale. As well as consumer robots be they roomba's or self driving cars.

Not to mention stuff that's useful in space and at home. http://en.wikipedia.org/wiki/File:PVeff(rev120404).jpg

I think the key point was diverted from. The employees aren't doing what they want anymore, so some stable "we can always get acquihired by google again when we fail" startup is attractive. As employee 3, they will walk away with a huge 0.5% of the exit while the founders walk away with 35% each.

how mouthy I was when I was 24

Welcome to The Bay Area: where self worth is measured by frat-like posturing and manipulation to level up at any cost.

Ahhhhh there it is. Whew. I thought there was a risk that this was going to be a boring civil conversation.

It's like hypoglycemia, but for upvotes.

Anti-success or "insiders manipulating the system" rants tend to bring the love. It's all Method. I'm just another SV washout.

Also, $6m really isn't that much these days. Might get you a nice house in the Silly Valley and a few years of living expenses, but that's not "set for life" money if you're in your 20s.

Are you serious? $6m sounds like more than enough to retire on at any point for most people.

If you want to live like a 20-something for the rest of your life, sure. Your cost structure changes as you get older and have things like houses, spouses, cars, and children.

Do you have a house or kids? I do. The near-certainty that I could afford college, house payments, and a humane retirement would be an intense motivator for me. I'm not conservative by any means --- I work for a company I cofounded --- but I think it's easy to forget that adults like us live with a pretty fucking high cortisol load.

If you have high expectations about the amount and 'quality' of your personal possessions, then sure. I'm sure most every one else can make due on that amount.

I think with wise spending and decent investments I could easily make that amount last my entire life and have quite a bit to give away at the end.

$6MM invested with a 6% return provides a $360k pa lifestyle just living off the interest. That seems like quite enough for houses, spouses (well—maybe spouse; alimony could eat into that quite a bit), cars, and children.

Zero risk return is way below 6% right now. I'm not sure where you're going to find anything like that.

Berkshire Hathaway is willing to guarantee you a $205,000 annual income from that sum in an annuity, which is not a bad deal at all, but it's not 'never worry about money again', it's just a really nice salary, and would be substantially depleted in the case of any inflation at all.

No need to go zero risk when the investment starts in your 20s. But of course, yes, inflation. But of course, you can draw from principal as well—that's how retirement funds usually work.

I'll put it another way: Maybe it's not 'never worry about money again'—people are prone to worrying, after all—but $6MM is more than the lifetime earnings of the vast majority of Americans.

If you can't make it on more than what nearly everyone else will ever see in their entire lives, that's your problem.

Right now 10-year T-Bills are pulling about 1.65, and inflation is having a nice bounce between 1.7 and 3. Let's even it out at 2 - either way, yes, you're losing money on ultra-low-risk investments. All you can hope for is to reduce the wages of inflation on your balance sheet.

BH annuity is not a bad deal, but losing 2% of your income a year will sound tolerable until about year 5... =)

If you retire mid-twenties on $5M, there's no way you'd make it through 70 on that, if you did nothing else active (read: risky) to increase your income.

You want to spend 50 years on vacation?

I said nothing of the sort.

Follow the thread UP, and you'll see it's the core of the conversation - as to whether one can live off of 6MM for the rest of your life. I call "ceasing working and living on the money you made previously" retirement, you can call it what you like.

Let's assume your investments keep up with inflation but no more, which is very easy to do. Then essentially you are just living off of your principle. 5MM goes a long ways. 75k a year (in today's dollars) will last you 67 years. That's more than most people make. I'd take that.

A mixed portfolio can provide both a solid annual income and a hedge against inflation. $6M well-invested in your 20s means you don't have to worry about money again.

Earlier in the year, you could get a 12 month CD in Australia for almost 6%.

The inflation rate in Australia was pushing 4% last year. That's a nominal return of 2.X%.

It's a real return of ~2%, it's a nominal return of 6%. "Nominal" in this case means "in name only" - it's the face-value of the return, not the actual value.

If a guaranteed six-figure passive income is not "never worry about money again", I don't know what is.

You'd have to worry about inflation. It can quickly turn that six-figure income into a low five-figure income in today's dollars.

Suppose someone said that to you in 1975, and you'd put your money into something that didn't adjust for inflation.

You'd be 37 years older and making less than 1/4 of the income, adjusted for inflation.

Bullshit. I live on roughly $18k a year net. buy a house, maybe doubles or PERHAPS triples my housing allowance. Have a wife and kids and things, in total, probably triple.

I don't think people understand how to not waste money any more.

Does this mean you're not going to be buying the new disposable laptops from Apple? How will you live with yourself?

A modest house in the valley costs something like $500k. With a typical mortgage you can expect to pay about 1% of the total price ($5k). That's more than triple your total expenditures, let alone housing costs.

I assure you, it's quite possible to live an enjoyable life in a place that's much cheaper the valley.

I'd rather spend my time writing software then repairing my old socks. As a bonus, writing software makes me about 100x what repairing my old socks nets me per hour.

Where do you live? This is HUGELY dependent on geography. $18k a month in NYC, Seattle, SF, etc., is pretty painful. Add two kids, private school (unless you live in a great district), college educations, saving for retirement, summer camp, braces, health care for 4, housing for 4 in a good neighborhood, helping out your retired parents who might not have saved enough, etc., it stacks up pretty fast.

$18k/yr in NYC or SFBA with a mortgage and a family is untenable.

$18k/yr in most major US cities probably implies:

* Subsistence diet

* Dependence on small selection of rental properties

* Extremely poor access to health care

* Dependence on informal "gratis" child care

* Near perfect job attendance

I call these out not to make the boring "gnash our teeth about the lives of the poor" case, but rather the suggest that your ability to care for a family on 18k/yr in a US metro is counterfeit: you can do it until you:

* Are ever hospitalized

* Lose your free child care

* &c ...

... at which point bang you're bankrupt. I think a lot of people who think they are getting by with low incomes are actually playing a kind of sick inverted Martingale betting strategy against life.

Well my point is not that everyone should be able to live off $18k a year. My point is that You don't need $500k a year to live decently. I have a new car, a good apartment and amenities such as cable TV and xbox live. Certainly geography plays a large role in individual costs. But again, I'm not trying to say everyone should live on $18k a year. I'm saying I (a single fellow btw) do, and it's a satisfactory lifestyle complete with all the necessities and a few luxuries.

Nope, you can do it with $500k in a Colorado suburb for example. This guy is a living example of it, with multiple kids, multiple cars, a house, furniture, etc:

http://www.mrmoneymustache.com/

Most people will never make $6M in their lifetime. The average college graduate will make less than $3M when it is all said and done.

If you can earn more, great. But the chances are exceedingly low to begin with.

assuming losing 30% off the top for taxes, taking 3% of the principle every year for "salary" is $126k. That seems like more than enough for me, too.

I would think the tax rate would be lower, considering that a sale of shares is treated as capital gains. 15%?

true. but that's only for long term. i have no idea what short term tax is, but i know it's also less than 30%.

i was trying to overestimate taxes (so that the reported annual income, if anything, would be less than actual annual income) and use a nice round number so i didn't have to use a calculator.

Long-term is holding the asset for a year or more. Short-term is treated as ordinary income.

true, but what's the interest rate for short term cap gains?

i know it's (15,30), but i can't rememeber if it's just 18% or something more like 25%. and since i am efficient (read: lazy :), i just overestimated to 30% instead of wikipedia-ing.

6MM is way the fuck more than almost anyone pulls out of their startup, but that aside, his point was you take the 6MM to buy breathing room for your next startup, which "really" swings for the fences.

What kind of money do people pull out of a startup, assuming VC funding? How big a salary are founders allowed to pay themselves?

Hacker News is one of the few forums where being able to lock in a six-figure salary (100k USD) for 60 years isn't viewed as being set for life. The wonders of entrepreneurship and the cost of living in the Bay Area.

This always amazed me too. There will always be greener grass somewhere. I was surprised to find that my mid-west mindset could be so stark in comparison to some of the valleys. For me, two years ago my dream was to do exactly what I'm doing now: writing code at a reputable tech company and learning more every day. That, and I make enough money to do everything else I want if I don't blow it on an overpriced car or <insert status symbol>.

Building a company and walking away with 6 million is life changing. Too many people seem to think selling your company means you should never need to work again. What it means, is that you're freer to continue to pursue the projects you want. Seems like a huge inflection point to me.

None of us want to work for 60 years, particularly not for someone else.

Also, our Bay Area apartments cost $2M.

The parent comment is pointing out that a $6M payout is equivalent to 60 years of 100k salary, for no further work.

Possibly true. However, I'd argue that the quantum difference between student debt and a few million in the bank is higher in terms of utility than the one between $5M and billions. Most of your money problems are solved with a few million: you get to work on what you want, can take a year off whenever, etc. You can still die of pancreatic cancer, suffer an ugly divorce, etc.

That's a different post, though.

This discussion seems to be mostly theoretical, so as someone who actually has $7 million, I'll provide my experience. In summary, not life-changing - my life is pretty much like the average engineer. I'm not spending like a rock star - your car, computer, stereo, clothes, etc are probably better than mine. (Although my house is a bit larger than average for Silicon Valley: 5br/3ba in an unfashionable city.) It's not enough money to feel even slightly important or rich in Silicon Valley. I don't feel like the "money problem" is solved; I plan to keep working for the foreseeable future.

I suppose I could move to somewhere like Kansas and retire, and live an upper-middle class life, but I don't see the point in that. (The "official" recommended spending rate of 4% would yield a high but not enormous income. Expecting 6-8% income is crazy talk.) The obvious HN answer is to start a company, but a) I'd be bad at it, b) I wouldn't enjoy it, c) I'd probably end up losing a pile of money, d) large opportunity cost, and e) health care.

Trying to summarize: the people who say a few million doesn't go far in Silicon Valley are right. It eliminates various problems (and I do sympathize with those with financial difficulties), but otherwise hasn't changed much for me. (Or maybe I'm just using it wrong.)

Reply on news.ycombinator.com