Ask HN: Gambling & smoking limited but not entrepreneurship and stock trading? | Hacker News Reader

Ask HN: Gambling & smoking limited but not entrepreneurship and stock trading?

3 pointsamichail16 comments

There are dangers involved in gambling and smoking. Consequently, governments provide limits/warnings to mitigate those dangers.

But why do governments not do the same with entrepreneurship and stock trading?

For example, 3rd party developers could receive a warning that gives them the expected profit from a particular platform. Without such warnings and in cases with very low expected profit, companies would be essentially getting free labor to promote their products.

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I assume you are joking. Gambling is a closed system with fixed rules. The expected winnings form a Gaussian bell curve. Entrepreneurship is an open system. You can change the game. The idea of expected profits assumes that profits will follow a bell curve. But in fact they don't. There is really no upper bound. To use the terminology of Taleb's Black Swan, entrepreneurship profits are Mandelbrotian. The outliers can completely change the average, to a point where the concept of the average or expected becomes meaningless.

You could give the median profit, which is not sensitive to outliers.

Why should the government be required to help you out here. Contact the company and find out some more about their platform. If they won't give you some straight answers, then it's time to move on. It's a private company, and it's totally within their right to refuse your information request, but they will also be driving themselves out of business...

Why would a company voluntarily give out information that would discourage third party developers?

Does Facebook for example give out the median profit from a Facebook app?

They wouldn't. And if they lied to you, that's fraud, and you can press charges against them.

If they don't lie, but they don't tell you good things about their platform (you'll have to judge the amount of 'spin' on your own)...then move on. It's really that simple.

From your example, you could contact Facebook and ask for some stats about their application platform (telling them that your company is thinking about building an app for that platform). If they refuse to give you stats, either ask to be transferred to a 'higher-up', or tell them you're sorry you couldn't work together and get off the phone. If they do give you stats, you need to judge for yourself if building your app will be profitable on that platform.

There is absolutely no company (or person) in the world that is going to be able to quote you a hard number on the amount of profit your app is going to make before it exists.

Oh, yes, more government involvement in the tech industry is exactly what we need at this juncture in American history. It's worked so well for automobiles, railroads, health care, and drugs, what could possibly go wrong?

I think that if you develop something for a 3rd-party platform without knowing what you're getting into, any negative (i.e. non-profitable) outcome is 100% your fault. I'm certainly not going to ask for my tax dollars to go toward someone that was so excited by greed that they didn't even bother to google around a bit and find out some more about that platform.

If you do some preliminary web searches on small business statistics or entrepreneurship, you'll find that plenty of them fail right off the bat. I think that a large part of the reason that people love 'corporate culture' is because it's very secure, unlike when you start your own business and have to actually take some risks with your future.

I see the difference between gambling and stock trading as this: Gambling has a negative long-term percentage, but stock trading is the opposite: a positive long-term percentage.

If you gamble at roulette for long enough with any strategy, you'll lost 2.6%.

If you play the stock market for that long, again randomly, you'll GAIN 2.6% (just a made up number - it could be 1% depending on the economy).

Postscript: At stock trading, like in a casino, you have to make enough to cover the "house cut", which is the fees you pay to brokers to sell and buy stocks (in roulette, it's 2.6%).

I suspect most people lose money in the stock market because they need the cash so they may end up selling low.

It's called Risk Aversion:

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

Actually...it's a little different. In the stock market, that gain you're talking about comes from investing in the 'market portfolio', which is equivalent to investing money in every single stock on the market. That would be like betting on all of the numbers on the board at once -- because of the payouts on individual numbers, 35 to 1, you'll eventually still go broke.

You could easily make back-to-back-to-back-... poor decisions and end up broke, because 'broke' is an absorbing state and most math models assume you're stuck at 0 once you hit 0.

See "Martingale" at wikipedia: http://en.wikipedia.org/wiki/Martingale_%28betting_system%29

Close to 20% over many years... at least that was the number before the current crisis. I'm guessing it's still well over 10%.

There are dangers involved in eating at McDonald's, going to grad school, talking to strangers, thinking things through very carefully, dressing funny, starting religions, getting married, staying single, doing meaningless homework, getting a cubicle job, and heeding the advice of your high-school guidance counselor. The dangers are quite severe, including heart disease, getting beaten up, and living a wasted, unfulfilling life (a fate worse than death).

Why not right? You may soon get more than just protecting 3rd party developers when the bill to regulate VC funds is passed. I think it will be big blunder. Nobody who is an entrepreneur has any delusions of safety, we know the risks we are taking. The whole reason that this model has worked so far is because people have the freedom to take these risks. Take that away and you will probably end up killing a lot of innovation.

Nobody who is an entrepreneur has any delusions of safety, we know the risks we are taking.

Not true! http://news.ycombinator.com/item?id=683810

Sorry, an article in businessweek doesn't disprove the fact that fact that Apple, Microsoft, Sun and a gazillion other startups were created by entrepreneurs and VCs who were willing take those risks.

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