How to Run a Ponzi Scheme for Tech People(callmenish.com)
callmenish.com
How to Run a Ponzi Scheme for Tech People
https://callmenish.com/how-to-run-a-tech-ponzi-scheme/
263 comments
>How does one break out when everyone's taking glamorous selfies in Thailand but I'm working in a dingy apartment trying to build the next big app?
Isn't the idea of building the "next big app" itself based on the same kind of get-rich-quick mindset those schemes are exploiting?
Only except for the "nomad lifestyle" or "selling courses", etc, it's supposed to happen by coding in a dingy apartment. But it's equally unlikely, and too starry-eyed, the tech nerd version of the kind of dream the stereotypical bus-arriving Midwestern teenagers had of "becoming famous in Los Angeles".
How about merely building a business? Think small indie developer or Basecamp at best, vs Facebook and Amazon.
Isn't the idea of building the "next big app" itself based on the same kind of get-rich-quick mindset those schemes are exploiting?
Only except for the "nomad lifestyle" or "selling courses", etc, it's supposed to happen by coding in a dingy apartment. But it's equally unlikely, and too starry-eyed, the tech nerd version of the kind of dream the stereotypical bus-arriving Midwestern teenagers had of "becoming famous in Los Angeles".
How about merely building a business? Think small indie developer or Basecamp at best, vs Facebook and Amazon.
I write software because I have always liked computers and always spent all my free time figuring out coding, linux, networking, and hacking in general. I don't expect to become the next Zuckerberg and I think that's the equivalent of telling kids they can make it in professional sports. I'm just content making a comfortable living building systems for someone else.
I think I could have made roughly as good of a living being a plumber, an electrician, or a welder! A good electrician around here makes 150k a year. I think the best career advice I heard was pick something you can stand doing and work as hard as you can at it, try and be as good as you can, not measured against someone else but for your self. If you pick a career where expertise matters and it has demand and you work harder and smarter than other people you will do fine.
I think I could have made roughly as good of a living being a plumber, an electrician, or a welder! A good electrician around here makes 150k a year. I think the best career advice I heard was pick something you can stand doing and work as hard as you can at it, try and be as good as you can, not measured against someone else but for your self. If you pick a career where expertise matters and it has demand and you work harder and smarter than other people you will do fine.
The thing is, some people don't want to do well and merely be part of the upper middle class. Some people want to get rich. And the strategies you must employ to be comfortable are much different than those required to make serious money.
Different strokes, different folks.
Different strokes, different folks.
That's naive and unexperienced view on life values and true achievements.
These days, money isn't impressive. What you actually do in your life is. For some of it, some amount of money is important, and if you have plenty its easier to achieve. But that's about it. I live in place swarming with rich folks, both old rich and new rich, while being neither. Most of them live such boring lives it would be sad if I cared for them. Never once met one of them that I would want to swap my adventurous life with. Had to go through a bit of hardship to get where I am obviously but not that much.
What I want to say - striving to get rich from the start is a stupid strategy of a clueless person. Be good at something you do, and more importantly be good at living a great life, being a good kind person. Being rich becomes just a gimmick, whether it happens or not.
These days, money isn't impressive. What you actually do in your life is. For some of it, some amount of money is important, and if you have plenty its easier to achieve. But that's about it. I live in place swarming with rich folks, both old rich and new rich, while being neither. Most of them live such boring lives it would be sad if I cared for them. Never once met one of them that I would want to swap my adventurous life with. Had to go through a bit of hardship to get where I am obviously but not that much.
What I want to say - striving to get rich from the start is a stupid strategy of a clueless person. Be good at something you do, and more importantly be good at living a great life, being a good kind person. Being rich becomes just a gimmick, whether it happens or not.
> I live in place swarming with rich folks, both old rich and new rich, while being neither. Most of them live such boring lives it would be sad if I cared for them.
I was half-expecting the next sentence to be "Sign up for my webinar and I'll teach you how to make your life as fun as mine!"
Seriously though, what do you mean by "adventurous life"?
I was half-expecting the next sentence to be "Sign up for my webinar and I'll teach you how to make your life as fun as mine!"
Seriously though, what do you mean by "adventurous life"?
> Seriously though, what do you mean by "adventurous life"?
If the post you were replying to wasn’t composed while skydiving above shark-infested waters with a supermodel by their side, I’m going to be terribly disappointed.
If the post you were replying to wasn’t composed while skydiving above shark-infested waters with a supermodel by their side, I’m going to be terribly disappointed.
Low-cost backpacking in 3rd world (obviously not during covid), hiking, alpinism, climbing, via ferratas, ski touring/alipinism, skiing, paragliding, diving... plus some more usual sports/activities like biking, running, swimming.
It doesn't have to be that many (which is hard to manage with 100% employment), even 1 would suffice if done properly. I have a kid now, second possibly on the way, so even without covid some of this is/will be massively scaled down. But I still want to pick up new ones - right now its precision target shooting and archery.
Its more about mindset - if you feel you have a great life, money is just a tool to keep it. For that you don't need terribly much, heck some full time climbers live in camper vans for the whole time. On the other hand if you don't enjoy your life, money won't make it magically better, sometimes the opposite.
And no I don't sell some stupid coaching :) Those are just my own experiences
It doesn't have to be that many (which is hard to manage with 100% employment), even 1 would suffice if done properly. I have a kid now, second possibly on the way, so even without covid some of this is/will be massively scaled down. But I still want to pick up new ones - right now its precision target shooting and archery.
Its more about mindset - if you feel you have a great life, money is just a tool to keep it. For that you don't need terribly much, heck some full time climbers live in camper vans for the whole time. On the other hand if you don't enjoy your life, money won't make it magically better, sometimes the opposite.
And no I don't sell some stupid coaching :) Those are just my own experiences
Why can't you be rich and be exciting things? I know many definitely rich, and definitely exciting (maybe too exciting) people.
I probably should’ve become a fisherman then.
> How about merely building a business?
More people need to be told this.
The combination of work ethic, of risk tolerance, and of perseverance against ridiculous odds that is required to build a Tesla, or an Apple, or a Whatever, is extraordinarily rare
More people need to be told this.
The combination of work ethic, of risk tolerance, and of perseverance against ridiculous odds that is required to build a Tesla, or an Apple, or a Whatever, is extraordinarily rare
I'd say the combo of "work ethic, risk tolerance, and perseverance against ridiculous odds" involved in Tesla/Apple/etc, is orders of magnitude more commonly found than actual Tesla/Apple/etc level success...
I'd say the combo of "work ethic, risk tolerance, and perseverance against ridiculous odds" involved in Tesla/Apple/etc, is orders of magnitude more commonly found than actual Tesla/Apple/etc level success...
Agreed. For every tech millionaire there are a thousand guys who are just as smart and worked just as hard and it didn’t work out for whatever reason. Maybe their timing was off by a mere 6 months for example. There’s a lot of survivorship bias in what is in large part a lottery.
Agreed. For every tech millionaire there are a thousand guys who are just as smart and worked just as hard and it didn’t work out for whatever reason. Maybe their timing was off by a mere 6 months for example. There’s a lot of survivorship bias in what is in large part a lottery.
> Maybe their timing was off by a mere 6 months for example.
First job I had (1995) was "Classified Ads on the Internet" - back then it was expensive to host a website and hugely expensive to add CGI (I think Demon wanted maybe £300 a month for that?) and the money ran out after a year. If they'd been able to keep it funded for, say, another 2-3 years, until home internet was more accessible, I think they'd have been in a pretty good position to own UK classifieds on the web (at least for a while.)
First job I had (1995) was "Classified Ads on the Internet" - back then it was expensive to host a website and hugely expensive to add CGI (I think Demon wanted maybe £300 a month for that?) and the money ran out after a year. If they'd been able to keep it funded for, say, another 2-3 years, until home internet was more accessible, I think they'd have been in a pretty good position to own UK classifieds on the web (at least for a while.)
Webvan vs. Instacart. So many dead startups that are brought back because they were just too soon.
> So many dead startups that are brought back because they were just too soon.
I recently had a recruiter from color.com reach out to me...
I recently had a recruiter from color.com reach out to me...
Dang that's fascinating
You forgot two factors: capital (which excludes the vast majority of people om earth), and an enormous amount of luck.
It's pretty easy for a technology business to get capital these days.
It’s not that easy, even in SV and within my batch at 500 startups (arguably one of the better credentials a startup can have at an early stage) the struggle to raise was real. And then back in the Midwest a lot of startups I’ve advised have had a hell of a time raising.
If you aren’t well connected or hyper credentialed (or if you’re a minority founder), raising capital is very hard. It’s easier than it’s ever been, but it’s not « easy »
If you aren’t well connected or hyper credentialed (or if you’re a minority founder), raising capital is very hard. It’s easier than it’s ever been, but it’s not « easy »
I don't want that capital though. All it's doing is ossifying the power structures that are the cause of the major problems we are facing. It's a trap.
Indeed. Who are these people, why do they get to decide what gets built and what do people labour on? I want democratisation of capital.
Sure, democratize capital. Then it will be decided by a few thousand voters in swing states, with “who are you and why should you get to decide” problems that put VC to shame.
A lot of VC capital is democratized: an elected official appointed a pension fund manager who decided to allocate some funds to a particular VC firm.
A lot of VC capital is democratized: an elected official appointed a pension fund manager who decided to allocate some funds to a particular VC firm.
Who said anything about swing states, and how is an opaque political appointment a democratic way to decide anything?
I'm all ears.
Check the footer of the website you’re on right now? The whole thing is content marketing for an offering of capital.
But how much capital do you need to get in front of YC in the first place?
It's a genuine question. Who's the poorest YC founder? Least family wealth, least angel/seed investment. Who genuinely managed to get YC funding without putting in any money of their own?
It's a genuine question. Who's the poorest YC founder? Least family wealth, least angel/seed investment. Who genuinely managed to get YC funding without putting in any money of their own?
Tesla was built by a billionaire. There was little to no risk involved.
Musk had about $140 million when he ~started~ bought (sorry) Tesla. That's a pretty far cry from a billion. On top of that, there was no guarantee that electric cars would ever be embraced, especially by Americans, who traditionally, love ICE muscle cars.
>On top of that, there was no guarantee that electric cars would ever be embraced, especially by Americans, who traditionally, love ICE muscle cars.
Generous subsidies for electrics in the US and other countries helped with that.
Like generous government money funnelled through NASA contracts helped Space X repeat what NASA did in the late 60s/early 70s, slightly improved, 40 years later...
Generous subsidies for electrics in the US and other countries helped with that.
Like generous government money funnelled through NASA contracts helped Space X repeat what NASA did in the late 60s/early 70s, slightly improved, 40 years later...
Yes, I remember when NASA was launching reusable rockets as regular supply missions and weren't using 5% GDP, and did such a great job they didn't end up giving $400MM/year to Russia to hitch rides on the Soyuz for the last decade.
That would be the "slightly improved" part, "50 years later".
And NASA hasn't used "5% GDP" for 40 years. It has been less than 1% since 1973. Actually scratch that, it has been less than 1% the federal budget, which is much much less than the GDP.
Of course all that 50-years of IP got handed to the "private visionaries" of SpaceX for free, or rather, along with money paid to them...
And NASA hasn't used "5% GDP" for 40 years. It has been less than 1% since 1973. Actually scratch that, it has been less than 1% the federal budget, which is much much less than the GDP.
Of course all that 50-years of IP got handed to the "private visionaries" of SpaceX for free, or rather, along with money paid to them...
If it was that low risk and easy for Musk, why didn't NASA just do it themselves? Or why not some other person? There seems to be quite a lot of space x competitors not doing as well as space x.
Where is the will in the federal government? If we handed 20% of the War On Terror budget to NASA would it make Americans more safe? Or feel more safe? (an important distinction since the TSA is mostly dog and pony shows).
Standard Fed'Gov contract hustle -- provide a service for less than what they're currently playing and leach off that gob'mnt teat.
Standard Fed'Gov contract hustle -- provide a service for less than what they're currently playing and leach off that gob'mnt teat.
Yeah, just look at all the other profitable companies in the space which did it too!
Can't turn around without bumping into an electric car / reusable rocket company these days.
Can't turn around without bumping into an electric car / reusable rocket company these days.
[deleted]
140 million is a lot closer to a billion (7x) than most people are to 140 million (>140x.)
Additionally, during the 2008 financial collapse Elon Musk took the last of his personal fortune and put it back into Tesla. The company very likely would have folded if he hadn’t put up his own money, and Elon Musk would have no longer been worth very much at all.
Once you get past a few million dollars, the extra money is just bargaining power and losing it doesn’t affect your day to day quality of life
Lol you clearly are mistaken about how human emotions and happiness works
However it works, it's still true to "losing it doesn’t affect your day to day quality of life".
Butthurt emotions is not the same as lower quality of life (e.g. less access to food, entertainment, travel, housing, health, studies, taking care of kids/relatives, etc).
Butthurt emotions is not the same as lower quality of life (e.g. less access to food, entertainment, travel, housing, health, studies, taking care of kids/relatives, etc).
Tesla was built by someone else and was purchased by a young man who grew up rich and insisted that as part of the transaction that his title be founder.
Grew up rich? I don't think that's accurate. I know a lot of Musk-hating articles have been played up, particularly on socialist Twitter circles, alleging that Musk inherited family wealth from an emerald mine. But this is simply not true. The emerald mine story is dubious and vague, and it's only real mention is from Ashlee Vance's book on Musk, and her source is Elon's father. Elon and his mother fled an allegedly abusive relationship with the father, and had nothing in terms of wealth. It's why Elon had to work odd jobs after moving (https://www.cnbc.com/2020/01/03/odd-jobs-elon-musk-had-when-...).
It is well know that Elon's father is a successful owner of an engineering company in South Africa. If something was missing in his youth it was not money. Of course, his father being rich didn't immediately translate into personal wealth for him, that's why these people like to claim that they are "self made".
Elon later got thousands of dollars from his dad to start Zip2 so it's not like he ran away without a safety net. He did what so many other trust fund babies have done: He slummed. Stop contributing to the Horatio Algers narrative that Musk spins, among hundreds of other yarns,
Per https://en.wikipedia.org/wiki/Zip2
> In Ashlee Vance's biography of Elon Musk, it is claimed that the Musks' father, Errol Musk, provided them with US$28,000 during this time,[4]:Ch.4 but Elon Musk later denied this.[6] He later clarified that his dad provided around 10% of US$200,000 as part of a later funding round.[7]
I feel like someone who is able to get 90% of their funding round could either convince an existing investor in the round or convince someone else to join the round. This doesn't sound like money to "start Zip2" as you claim.
Also, note that Elon had to shower at a YMCA while starting up Zip2 (https://www.cnbc.com/2018/06/19/how-elon-musk-founded-zip2-w...). Does that really sound like a "trust fund baby" to you? I feel like a lot of the myths trying to tear down Elon Musk's successes are all sourced from Ashlee Vance's book, which in turn are based on, as I understand it, interviews of Errol Musk himself (the father).
> In Ashlee Vance's biography of Elon Musk, it is claimed that the Musks' father, Errol Musk, provided them with US$28,000 during this time,[4]:Ch.4 but Elon Musk later denied this.[6] He later clarified that his dad provided around 10% of US$200,000 as part of a later funding round.[7]
I feel like someone who is able to get 90% of their funding round could either convince an existing investor in the round or convince someone else to join the round. This doesn't sound like money to "start Zip2" as you claim.
Also, note that Elon had to shower at a YMCA while starting up Zip2 (https://www.cnbc.com/2018/06/19/how-elon-musk-founded-zip2-w...). Does that really sound like a "trust fund baby" to you? I feel like a lot of the myths trying to tear down Elon Musk's successes are all sourced from Ashlee Vance's book, which in turn are based on, as I understand it, interviews of Errol Musk himself (the father).
This whole comment thread is hilarious. “Oh tesla, no big deal, anyone could have made it including me if I just had the same capital.” You guys are living in outer space!
Well, it's an intersection of having the right venture, the right person, with the right leverage, at the right time. Elon Musk is perhaps close to unique in that intersection.
Are there other people who could do it but were not in the right place in the right time or didn't have the right leverage (money, connections, etc.)? Lots. If you took away those parameters, if Elon was just an engineer working for Boeing with just enough money to go on vacation every year, then he probably wouldn't have founded Tesla. He'd be some middle manager somewhere like lots of other smart/capable people.
Are there other people who could do it but were not in the right place in the right time or didn't have the right leverage (money, connections, etc.)? Lots. If you took away those parameters, if Elon was just an engineer working for Boeing with just enough money to go on vacation every year, then he probably wouldn't have founded Tesla. He'd be some middle manager somewhere like lots of other smart/capable people.
Working as a software engineer remote is easy mode compared to everyone else. You don't have to spend your time coding in a dingy apartment. There are plenty of people that will pay you a descent wage to work and you can do that from a nice cafe in Thailand. Living costs are low enough that you can pay your bills working part time while spending the rest working on your get rich long term side hustle. I'm writing this as we speak from an airbnb in Turkey with much lower living expenses than when I was in san francisco.
> How about merely building a business?
But that's the thing right? You aim to make the next big app, and fail into the comfortable existence of "merely" building a business, or aquihired. Certainly better than aiming for moviestar and ending up a waitress.
But that's the thing right? You aim to make the next big app, and fail into the comfortable existence of "merely" building a business, or aquihired. Certainly better than aiming for moviestar and ending up a waitress.
>Isn't the idea of building the "next big app" itself based on the same kind of get-rich-quick mindset those schemes are exploiting?
Perhaps, depending on the app, a ponzi scheme is based on wanting to get rich by taking advantage of people's gullibility and non-understanding of how ponzi schemes work.
I suppose some apps could have that kind of disregard for how users of the app are harmed, but I think in most cases people building apps also think they are helping their users in some way. Ponzi schemers know they're only helping themselves.
Perhaps, depending on the app, a ponzi scheme is based on wanting to get rich by taking advantage of people's gullibility and non-understanding of how ponzi schemes work.
I suppose some apps could have that kind of disregard for how users of the app are harmed, but I think in most cases people building apps also think they are helping their users in some way. Ponzi schemers know they're only helping themselves.
> How about merely building a business? Think small indie developer or Basecamp at best, vs Facebook and Amazon.
I think you're getting hung up on my qualifier of "big" -- really, I'd be very happy to make 250k yearly off of a project (a far cry from Basecamp's $25MM yearly revenue), but even ramen profitability is hard, let alone getting to quarter-of-a-million.
I think you're getting hung up on my qualifier of "big" -- really, I'd be very happy to make 250k yearly off of a project (a far cry from Basecamp's $25MM yearly revenue), but even ramen profitability is hard, let alone getting to quarter-of-a-million.
Reminds me a lot of this talk from the Pinboard guy: https://www.youtube.com/watch?v=5Vt8zqhHe_c
Or this talk from the Bandcamp guy about financial sustainability: https://www.youtube.com/watch?v=MaUkS-lr-ZM
Or this talk from the Bandcamp guy about financial sustainability: https://www.youtube.com/watch?v=MaUkS-lr-ZM
/r/wallstreetbets exists for a different reason, but it got exacerbated by everything you mentioned above.
WSB members have come to realize that so-called "financial professionals" by and large have no scrying crystal into the market. WSB got there because of the democratization of knowledge that the Internet has caused.
And before you cite some unicorn like Renaissance, that's generating 40% YOY for 20+ years, keep in mind that unicorns, while rare, do exist. Microsoft, Uber, Google, Apple, etc., so forth. How many "investment professionals" would have recommended you dump all your money into these companies when they were but fledging entities? Or even when they went through tough times?
No, I think WSB is doing a service to humanity. They're exposing the smoke and mirrors behind Wall Street.
Good on them.
WSB members have come to realize that so-called "financial professionals" by and large have no scrying crystal into the market. WSB got there because of the democratization of knowledge that the Internet has caused.
And before you cite some unicorn like Renaissance, that's generating 40% YOY for 20+ years, keep in mind that unicorns, while rare, do exist. Microsoft, Uber, Google, Apple, etc., so forth. How many "investment professionals" would have recommended you dump all your money into these companies when they were but fledging entities? Or even when they went through tough times?
No, I think WSB is doing a service to humanity. They're exposing the smoke and mirrors behind Wall Street.
Good on them.
This is based on a common misunderstanding of what “Wall Street” does.
The Hollywood-inspired folk concept of Wall Street is that they trade stocks. That’s what everybody in those big buildings in Manhattan does all day. They yell buy/sell orders into red phones and drink Scotch.
Except they don’t. Wall Street firms like Goldman Sachs make money by providing services such as mergers and acquisitions, IPOs, market making, etc. That is, they make money by selling shovels in a gold rush, not by speculating on where gold will be found. Other firms are in the business of buying and selling illiquid assets such as private companies and commercial real estate (with illiquid assets, there is far lower price efficiency, and thus it is possible to generate excess returns). Still others are in the business of managing people’s money for them—an industry which is mostly about managing volatility, not about generating excess returns (a pension fund usually cannot afford to have its portfolio go down by 50%, even if it’s temporary, so they’re not going to put it all in the S&P 500).
Proprietary trading (where firms use their own money to buy and sell public securities) has been in decline for decades at the big banks, precisely because they don’t have a scrying crystal, and they know it. Public stock trading on Wall Street is mostly the domain of companies in niches like high-frequency trading (such as Jane Street). HFT firms gain an edge through arbitraging different prices faster than anyone else (for example, sell Exxon in New York a few microseconds after oil futures drop in Chicago). In other words, the only people on Wall Street who do what Hollywood-Wall-Street does are the few who do have a scrying crystal.
WSB is not “exposing” anything except the fact that most people (understandably) have no idea what the financial industry does.
The Hollywood-inspired folk concept of Wall Street is that they trade stocks. That’s what everybody in those big buildings in Manhattan does all day. They yell buy/sell orders into red phones and drink Scotch.
Except they don’t. Wall Street firms like Goldman Sachs make money by providing services such as mergers and acquisitions, IPOs, market making, etc. That is, they make money by selling shovels in a gold rush, not by speculating on where gold will be found. Other firms are in the business of buying and selling illiquid assets such as private companies and commercial real estate (with illiquid assets, there is far lower price efficiency, and thus it is possible to generate excess returns). Still others are in the business of managing people’s money for them—an industry which is mostly about managing volatility, not about generating excess returns (a pension fund usually cannot afford to have its portfolio go down by 50%, even if it’s temporary, so they’re not going to put it all in the S&P 500).
Proprietary trading (where firms use their own money to buy and sell public securities) has been in decline for decades at the big banks, precisely because they don’t have a scrying crystal, and they know it. Public stock trading on Wall Street is mostly the domain of companies in niches like high-frequency trading (such as Jane Street). HFT firms gain an edge through arbitraging different prices faster than anyone else (for example, sell Exxon in New York a few microseconds after oil futures drop in Chicago). In other words, the only people on Wall Street who do what Hollywood-Wall-Street does are the few who do have a scrying crystal.
WSB is not “exposing” anything except the fact that most people (understandably) have no idea what the financial industry does.
There is a cottage industry of financial advisors who do work with people on their personal wealth management. Of course there is a big difference between an investment bank, trading firm, and a person who does wealth management (I'd google it for precise terms, but I'll get hounded by ads for it for weeks). I know because my parents have a "wealth management guy"/broker and some of my friends' parents growing up were also in that business. And there are also of course mutual funds and pensions as you mention.
I am not super plugged into the financial industry so I can't say for certain, but I think while people may not understand the difference between traders shouting on phones, "wall street", and wealth management, people think about wealth management the most in the context of "wall street", because that's what they're personally most familiar with. They think that even though wealth management seems to me to be very decentralized and not really something physically centered around Wall St.
I think wallstreetbets is mostly a pretty unsophisticated subreddit (which somehow declined in quality even more as it grew) but I think the parent was valid in pointing out that they willingly eschew the old-school strategy of diversification + "value investing" done by a third party on your behalf and the new-school (boglehead) strategy of putting literally everything in the S&P 500 or a bond index with the allocation mix dependent on retirement date/age.
There has undoubtedly always been a group of people micromanaging their personal portfolios with less risk-averse strategies like this, and WSB mostly takes things way too far, but at least for me it exposed me to the idea that maybe I could personally do better picking stocks on my own than just blindly throwing everything into VOO (and for people not plugged into the online-personal-finance-geek community, it could be the first time they even realize they don't need to have a third party manage their investments for them).
I am not super plugged into the financial industry so I can't say for certain, but I think while people may not understand the difference between traders shouting on phones, "wall street", and wealth management, people think about wealth management the most in the context of "wall street", because that's what they're personally most familiar with. They think that even though wealth management seems to me to be very decentralized and not really something physically centered around Wall St.
I think wallstreetbets is mostly a pretty unsophisticated subreddit (which somehow declined in quality even more as it grew) but I think the parent was valid in pointing out that they willingly eschew the old-school strategy of diversification + "value investing" done by a third party on your behalf and the new-school (boglehead) strategy of putting literally everything in the S&P 500 or a bond index with the allocation mix dependent on retirement date/age.
There has undoubtedly always been a group of people micromanaging their personal portfolios with less risk-averse strategies like this, and WSB mostly takes things way too far, but at least for me it exposed me to the idea that maybe I could personally do better picking stocks on my own than just blindly throwing everything into VOO (and for people not plugged into the online-personal-finance-geek community, it could be the first time they even realize they don't need to have a third party manage their investments for them).
> /r/wallstreetbets exists for a different reason
If anyone wants to know that other reason, I used to be a mod there (low bar, but keep reading)
WSB existed in a void surrounded by personal finance forums full of the dumbest financially illiterate crowd being spoonfed Robert Kiyosaki and Suzi Orman all obviously sponsored by Vanguard. In fact, it still exists in that void. If you wanted to talk about trading volatility derivatives without being in some 1990s-layout investment banking forum, there was no place to go. WSB was the light, its forum rules specifically saying its the place where trading the VIX is normal.
That is its utility. A place for people with a risk tolerance slightly above an undocumented wage slave. Okay, that was hyperbole, I don't like personal finance forums and Wall Street Bets is the opposite of them. Not everyone is born sucking at basic money topics and not everyone is too risk averse to consider financial products outside of the mold. Actually, let's take it one step further, not everyone was raised around a stigma of money and maybe isn't completely ignorant as a product? Obviously that isn't the prevailing culture, and there aren't many communities that catered to it.
Anyway, outside of WSB the only other communities at the time were in trading guru chatrooms, the ones you subscribe to get into. Now everyone might be joking around but they are worshiping the guru. Its pathetic.
WSB was made for options traders to make jokes and wild trades that had a week to pay off. It then got co-opted by penny stock traders pretending like it was the new Yahoo finance board, and now it got co-opted again by the most denegerate options traders in history and it is marvelous! Its even better than what it originally was and the financial meme niche is new and hysterical.
Hopeless 20 year olds fueling the flame? Sure, that is pretty much what happened. I'm glad they made the venue, it is wildly popular now, and the options market is wildly liquid in ways I could have only dreamed of.
If anyone wants to know that other reason, I used to be a mod there (low bar, but keep reading)
WSB existed in a void surrounded by personal finance forums full of the dumbest financially illiterate crowd being spoonfed Robert Kiyosaki and Suzi Orman all obviously sponsored by Vanguard. In fact, it still exists in that void. If you wanted to talk about trading volatility derivatives without being in some 1990s-layout investment banking forum, there was no place to go. WSB was the light, its forum rules specifically saying its the place where trading the VIX is normal.
That is its utility. A place for people with a risk tolerance slightly above an undocumented wage slave. Okay, that was hyperbole, I don't like personal finance forums and Wall Street Bets is the opposite of them. Not everyone is born sucking at basic money topics and not everyone is too risk averse to consider financial products outside of the mold. Actually, let's take it one step further, not everyone was raised around a stigma of money and maybe isn't completely ignorant as a product? Obviously that isn't the prevailing culture, and there aren't many communities that catered to it.
Anyway, outside of WSB the only other communities at the time were in trading guru chatrooms, the ones you subscribe to get into. Now everyone might be joking around but they are worshiping the guru. Its pathetic.
WSB was made for options traders to make jokes and wild trades that had a week to pay off. It then got co-opted by penny stock traders pretending like it was the new Yahoo finance board, and now it got co-opted again by the most denegerate options traders in history and it is marvelous! Its even better than what it originally was and the financial meme niche is new and hysterical.
Hopeless 20 year olds fueling the flame? Sure, that is pretty much what happened. I'm glad they made the venue, it is wildly popular now, and the options market is wildly liquid in ways I could have only dreamed of.
Front running is literally scrying and also the reason Robinhood options trading is "free." (Because traders aren't the customer. Front running quant firms are.)
WSB has been duped.
WSB has been duped.
What you're talking about is not frontrunning, it's purchasing order flow for market making. Frontrunning is an illegal activity with a specific definition. Purchasing order flow is not illegal.
While we're at it, quant firms occupy a family of trading strategies which are a superset of HFT; not all quants are market making, trading intraday or pursuing low latency strategies.
With all due respect, please stop perpetuating popular finance misconceptions of the Flash Boys variety. If this is something you'd like to learn more about, I suggest you read the following:
- https://blog.headlandstech.com/2017/08/03/quantitative-tradi...
- Flash Boys: Not So Fast
While we're at it, quant firms occupy a family of trading strategies which are a superset of HFT; not all quants are market making, trading intraday or pursuing low latency strategies.
With all due respect, please stop perpetuating popular finance misconceptions of the Flash Boys variety. If this is something you'd like to learn more about, I suggest you read the following:
- https://blog.headlandstech.com/2017/08/03/quantitative-tradi...
- Flash Boys: Not So Fast
So what if one of those non-market making firms buys order flow?
That's not really a thing, but even if it was, it would still not be frontrunning. Order flow is purchased for the specific purpose of making a market with the wider bid-ask spread acceptable to retail investors. They tend to place market orders and don't particularly care if their trade is off by a cent or two.
You can quibble with the academic arguments on whether or not this facilitates liquidity and price discovery (and therefore helps retail investors). Or you can just place a limit order and move on. Either way, nothing illegal or nefarious is happening. Just because they're purchasing order flow and executing your trade doesn't mean the national best bid and offer (NBBO) is being violated.
You can quibble with the academic arguments on whether or not this facilitates liquidity and price discovery (and therefore helps retail investors). Or you can just place a limit order and move on. Either way, nothing illegal or nefarious is happening. Just because they're purchasing order flow and executing your trade doesn't mean the national best bid and offer (NBBO) is being violated.
And capital requirements are done with the specific purpose of maintaining capital strength of banks. Didn’t really stop Lehmann from doing “balance sheet optimization” intra-month.
Just like if market makers say the only thing they do is flow, doesn’t really mean it’s the only thing they do.
Just like if market makers say the only thing they do is flow, doesn’t really mean it’s the only thing they do.
[deleted]
People want to believe in get-rick-quick schemes, and will go by the flimsiest evidence they can find.
I think the trick is to realize those glamorous selfies are mostly a mirage. If you were having the best day of your life on the beach, maybe, just maybe, you wouldn't be on your phone trying to get the perfect selfie.
I think the trick is to realize those glamorous selfies are mostly a mirage. If you were having the best day of your life on the beach, maybe, just maybe, you wouldn't be on your phone trying to get the perfect selfie.
> I think the trick is to realize those glamorous selfies are mostly a mirage. If you were having the best day of your life on the beach, maybe, just maybe, you wouldn't be on your phone trying to get the perfect selfie.
Well said, but the optics are still there. The selfie is bound to get more hits on social media, more coverage, etc.
Well said, but the optics are still there. The selfie is bound to get more hits on social media, more coverage, etc.
That's why I make a point of not following people who broadcast glamorized versions of their lives.
> For a classic example, just look at /r/wallstreetbets -- young people are frustrated because there's no end to this tunnel
That's a bad example. By many measures retail investors have outperformed institutional investors since March. The simple reason is that options have a built in exit strategy, the thing that's missing when most people lose in scams - including Ponzi schemes!
On the flip side, why then do they outperform? High risk, high reward. Opportunities where you lose your entire principle, like out of the money options, turned out to be wildly underpriced, simply because institutions never buy them.
Anyway, I get it, those people are stupid. But they made money.
That's a bad example. By many measures retail investors have outperformed institutional investors since March. The simple reason is that options have a built in exit strategy, the thing that's missing when most people lose in scams - including Ponzi schemes!
On the flip side, why then do they outperform? High risk, high reward. Opportunities where you lose your entire principle, like out of the money options, turned out to be wildly underpriced, simply because institutions never buy them.
Anyway, I get it, those people are stupid. But they made money.
> That's a bad example
I don't think it's a bad example, because if you spend some time on that subreddit, you'll quickly realize people are literally gambling with their life savings. In no small part due to disillusionment and cynicism with the current economic realities -- we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k.
I don't think it's a bad example, because if you spend some time on that subreddit, you'll quickly realize people are literally gambling with their life savings. In no small part due to disillusionment and cynicism with the current economic realities -- we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k.
>we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k.
This is what nearly everyone in tech who isn't spending their free time shitposting about their side projects and the nuances of programming languages is doing. Sure you can't work your whole career at one company anymore but that's just a reflection of macroeconomic conditions, the stability is still there for the people who's skills are in demand. Pretty much no competent programmer, or electrician for that matter, is unwillingly unemployed for long enough to matter.
This is what nearly everyone in tech who isn't spending their free time shitposting about their side projects and the nuances of programming languages is doing. Sure you can't work your whole career at one company anymore but that's just a reflection of macroeconomic conditions, the stability is still there for the people who's skills are in demand. Pretty much no competent programmer, or electrician for that matter, is unwillingly unemployed for long enough to matter.
> the stability is still there for the people who's skills are in demand
Saying this after 2008 is just empirically false. You do realize that people lost their entire 401(k)s, right? My dad worked at IBM for over a decade and was laid off. More recently, my buddy (late 20s) was laid off by IBM after working there for the past 7 years; I know people in their 40s and 50s (at big companies and startups alike) that were laid off at the drop of a hat once the pandemic hit.
I live in West LA and make a "comfortable" engineer's salary. Guess what, I'll never be able to afford a house here (unless one of my startups takes off or some other equally-unlikely miracle happens). I don't care if you blame this on "macroeconomic conditions," it just happens to be the reality of my generation. To touch on the loneliness/isolation angle, while doing the whole startup thing, particularly in my 20s, I was putting off dating; although I've recently said screw it: even if I die poor†, I'd rather be with someone.
I'm very much a libertarian "pull-yourself-up-by-the-bootstraps" entrepreneur's entrepreneur but let's be real: it's not surprising there's so much cynicism.
† Relatively, of course. I grew up in post-Communist Eastern Europe in actual poverty, so my life is much better than it used to be.
Saying this after 2008 is just empirically false. You do realize that people lost their entire 401(k)s, right? My dad worked at IBM for over a decade and was laid off. More recently, my buddy (late 20s) was laid off by IBM after working there for the past 7 years; I know people in their 40s and 50s (at big companies and startups alike) that were laid off at the drop of a hat once the pandemic hit.
I live in West LA and make a "comfortable" engineer's salary. Guess what, I'll never be able to afford a house here (unless one of my startups takes off or some other equally-unlikely miracle happens). I don't care if you blame this on "macroeconomic conditions," it just happens to be the reality of my generation. To touch on the loneliness/isolation angle, while doing the whole startup thing, particularly in my 20s, I was putting off dating; although I've recently said screw it: even if I die poor†, I'd rather be with someone.
I'm very much a libertarian "pull-yourself-up-by-the-bootstraps" entrepreneur's entrepreneur but let's be real: it's not surprising there's so much cynicism.
† Relatively, of course. I grew up in post-Communist Eastern Europe in actual poverty, so my life is much better than it used to be.
Unless it was 100% invested in Enron or Lehman Brothers, nobody using a competent financial firm "lost their entire 401K". The markets only took 4 years to completely recover to the 2008 top levels.
[deleted]
How do you measure competency? Does not the speed of that recovery, in the face of ongoing and growing pressures on the consumer class that floats the economy-at-large, leave you wary of its fundamental foundation and stability?
Have you thought about cutting down your expenses, living frugally to build up your investments?
I find it hard to imagine someone making an engineer’s salary can not afford a house, even in LA.
I find it hard to imagine someone making an engineer’s salary can not afford a house, even in LA.
Then you're just woefully disconnected from real estate markets in big cities. The cheapest, crappiest, smallest house in a neighborhood like Santa Monica (which is nice, but not Bel Air or Malibu nice) is $1 million dollars. Maybe I shouldn't complain, because I have friends in San Francisco that have it even worse. The "making six figures and living with 4 roommates" is basically a meme at this point if you live and work in SF.
The solution here is to move to Austin (which a ton of people have been doing recently) or just travel the world because, thankfully, I can do my job remotely (but many people cannot). This was actually my plan, but the pandemic kind of killed that -- maybe next year.
The solution here is to move to Austin (which a ton of people have been doing recently) or just travel the world because, thankfully, I can do my job remotely (but many people cannot). This was actually my plan, but the pandemic kind of killed that -- maybe next year.
Santa Monica is not a good choice for affordable living in a good neighborhood with a good school district in Los Angeles. Look a bit further afield in cities like Torrance, or even North OC cities like Fullerton or Garden Grove. If you insist on living in an expensive coastal city like Santa Monica, expect to pay for that privilege.
You missed the point. Of course Santa Monica is expensive, but the point is that it shouldn't be. In fact, until a few decades ago, it wasn't -- it's not like people just recently started liking the beach. Your argument also doesn't work because most LA tech jobs are in Santa Monica. The idea that it should be status quo to commute to your job because you can't afford to live around where you work is nonsensical. Not to mention that Santa Monica real estate (like a lot of CA real estate, including OC) is propped up by foreign investment and screws the actual locals that live in those communities -- unless, like my parents, you just happened to get lucky and get a house at the bottom of the bubble (a house which now almost doubled in price).
Professional, educated, well-off young people can't afford to buy houses in California (I've had this conversation with dozens of friends). Market forces or not, even as a part-time libertarian, it's clear to me that this isn't tenable and people are frustrated.
Professional, educated, well-off young people can't afford to buy houses in California (I've had this conversation with dozens of friends). Market forces or not, even as a part-time libertarian, it's clear to me that this isn't tenable and people are frustrated.
> Of course Santa Monica is expensive, but the point is that it shouldn't be
Not sure if your "should" is in the sense that logically it doesn't make sense to be, or that morally or ethically it had no right to be. For the first meaning, neighborhoods rise and fall in popularity based on trends, often driven by the tastes of young people, and is a natural cycle just like clothing fashion. Thus logically it should not be surprising that certain locations rise in housing costs as it increases in popularity. If you intend the second meaning, I'd be interested in your reasons.
> Your argument also doesn't work because most LA tech jobs are in Santa Monica.
I'd be interested in seeing the numbers, but there are a large amount of tech jobs in the South Bay area as well, along the 405 going south around Gardena and such.
> The idea that it should be status quo to commute to your job because you can't afford to live around where you work is nonsensical.
The problem is that traffic around Santa Monica is horrendous, making the housing more expensive. My previous commute from Torrance to Culver City was 40 min in the morning and 20 at night, but going from Culver City to Santa Monica was an extra half an hour. If you pick some of the worst traffic areas in LA, I don't think you should be surprised or incensed that people will pay to cut that traffic time down. It's an infrastructure problem, really.
> Professional, educated, well-off young people can't afford to buy houses in California
There are still lots of cities with affordable house prices, unless they insist on competing to live in the worst traffic areas of California.
Not sure if your "should" is in the sense that logically it doesn't make sense to be, or that morally or ethically it had no right to be. For the first meaning, neighborhoods rise and fall in popularity based on trends, often driven by the tastes of young people, and is a natural cycle just like clothing fashion. Thus logically it should not be surprising that certain locations rise in housing costs as it increases in popularity. If you intend the second meaning, I'd be interested in your reasons.
> Your argument also doesn't work because most LA tech jobs are in Santa Monica.
I'd be interested in seeing the numbers, but there are a large amount of tech jobs in the South Bay area as well, along the 405 going south around Gardena and such.
> The idea that it should be status quo to commute to your job because you can't afford to live around where you work is nonsensical.
The problem is that traffic around Santa Monica is horrendous, making the housing more expensive. My previous commute from Torrance to Culver City was 40 min in the morning and 20 at night, but going from Culver City to Santa Monica was an extra half an hour. If you pick some of the worst traffic areas in LA, I don't think you should be surprised or incensed that people will pay to cut that traffic time down. It's an infrastructure problem, really.
> Professional, educated, well-off young people can't afford to buy houses in California
There are still lots of cities with affordable house prices, unless they insist on competing to live in the worst traffic areas of California.
> you'll quickly realize people are literally gambling with their life savings
Gambling, yes. But the stock market is not a ponzi scheme.
Gambling, yes. But the stock market is not a ponzi scheme.
It kind of is. 1. Debt accumulates 2. Return on investment grows faster than the economy 3. Capital starts to strangle economy through rent causing political tensions. 4. Suffering 5. Economic reset through war, revolution, plague.
If you're willing to dilute the meaning of "ponzi scheme" so broadly, then yes, the economy is a ponzi scheme.
> But the stock market is not a ponzi scheme.
That depends on who you ask. https://www.hughescapital.com/the-stock-market-is-a-ponzi-sc...
That depends on who you ask. https://www.hughescapital.com/the-stock-market-is-a-ponzi-sc...
From that link:
> In 2010, its stock price was $20 and by 2017 had risen to $380 a share, yet Tesla reported a loss of $4.3 billion. How is this possible? The only way to explain this bizarre scenario is to recognize that the market is not efficient
I will pass on buying/reading that book based on this excerpt alone.
I am far away from a tesla fan (I actively encourage my friends/family to not buy teslas, or invest in tesla, etc), but saying "the only way to explain this" is pretty unbelievable.
> In 2010, its stock price was $20 and by 2017 had risen to $380 a share, yet Tesla reported a loss of $4.3 billion. How is this possible? The only way to explain this bizarre scenario is to recognize that the market is not efficient
I will pass on buying/reading that book based on this excerpt alone.
I am far away from a tesla fan (I actively encourage my friends/family to not buy teslas, or invest in tesla, etc), but saying "the only way to explain this" is pretty unbelievable.
How would you explain it then?
I don't believe Tesla would be valued so highly or fluctuate so violently if the market was actually efficient.
I don't believe Tesla would be valued so highly or fluctuate so violently if the market was actually efficient.
The market is efficient in the sense that it aggregates all knowledge between market participants. Nevertheless, no one actually has a crystal ball to predict events far in the future. Tesla's valuation and volatility can both be explained by some market participants expecting huge growth over a long period of time, with a correspondingly huge uncertainty over the actual outcome.
Just to put some simple numbers on things, a commonly held expectation is that Tesla will grow revenue at ~50% a year until 2030 while maintaining high margins. At that point Tesla's revenue would be approximately 1T with perhaps 100B in net income. A fair valuation would then be around 3T, assuming there is still some future growth left.
This largely explains today's 500B valuation - if there is a 30% chance of this scenario playing out (and Tesla goes bankrupt in the other 70%) then this is a reasonable bet compared to buying other stocks.
As for the volatility, imagine if the average market participant changes their mind and believes that Tesla is only likely to achieve a 40% growth rate over the next decade. This would drop 2030 revenue and profits by more than 40% compared to the previous scenario, and today's stock price would fall significantly as well.
Just to put some simple numbers on things, a commonly held expectation is that Tesla will grow revenue at ~50% a year until 2030 while maintaining high margins. At that point Tesla's revenue would be approximately 1T with perhaps 100B in net income. A fair valuation would then be around 3T, assuming there is still some future growth left.
This largely explains today's 500B valuation - if there is a 30% chance of this scenario playing out (and Tesla goes bankrupt in the other 70%) then this is a reasonable bet compared to buying other stocks.
As for the volatility, imagine if the average market participant changes their mind and believes that Tesla is only likely to achieve a 40% growth rate over the next decade. This would drop 2030 revenue and profits by more than 40% compared to the previous scenario, and today's stock price would fall significantly as well.
> How would you explain it then?
I am not expert enough to know, but just off hand declaring that something is "the only way" with literally no justification or reasoning puts a really bad taste in my mouhth
I am not expert enough to know, but just off hand declaring that something is "the only way" with literally no justification or reasoning puts a really bad taste in my mouhth
> can no longer work at a stable company
Been wondering lately, why is a position in a stable company also generally considered stable?
I mean, it’s a scalable system designed to survive, running on cash flow. Say load reduces, or flow reduces, wouldn’t it be only sane to immediately cut down on worker nodes? Why keep, except as strategic reserves?
I suppose because strategic planning up top used to be harder in the past so reserves tended to be large?
Been wondering lately, why is a position in a stable company also generally considered stable?
I mean, it’s a scalable system designed to survive, running on cash flow. Say load reduces, or flow reduces, wouldn’t it be only sane to immediately cut down on worker nodes? Why keep, except as strategic reserves?
I suppose because strategic planning up top used to be harder in the past so reserves tended to be large?
Come on. WSB is people goofing with real or fake money for fun and lulz. It's not for desperate people trying to survive.
I think that's debatable, but it's most definitely people being cynical about the current state of the economic realities we face. It's all fun and games, until someone commits suicide[1]
[1] https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide...
[1] https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide...
I dropped ~$1000 of my last savings into options earlier this year because "DIS is going to print." Actually, it's because I was unemployed and staring down the barrel of a rent payment that that money would not be able to cover. I figure I lose the money and not make rent, just as if I'd done nothing, or it makes the money back and then some, and I'm able to cover another month. If I'd sold about a week into holding, I'd have made ~50%. Then our Fed Chairman made the totally sane and not completely unprecedented decision to pump $2 trillion dollars into the economy. The underlying stock shot up and my options values evaporated overnight, amidst the issuing corporation announcing that all of its revenue streams would be effectively dead for the foreseeable future.
Just sensible market behavior.
Just sensible market behavior.
I think the second half of your comment is sarcastic but also... entirely correct?
Well, no. The bailout was unprecedented in size, it was completely insane (in that it clinches the imminent and extremely messy doom of either the American middle or investor class, depending on whether populist fear or populist rage prevails), and there is zero percent chance that the coming maelstrom is "priced in."
Most Americans have been so fully shut out of capital that they're practically begging for asset values to get rocked. They'll encourage it, even. (What do you think this lockdown backlash is, unconsciously?)
All of Disney's revenue streams shut down for 3 months and its stock went up. The market needs to be reflective of conditions and not simply the desperation to never see a bubble corrected, or people are going to start calling the bluff.
Most Americans have been so fully shut out of capital that they're practically begging for asset values to get rocked. They'll encourage it, even. (What do you think this lockdown backlash is, unconsciously?)
All of Disney's revenue streams shut down for 3 months and its stock went up. The market needs to be reflective of conditions and not simply the desperation to never see a bubble corrected, or people are going to start calling the bluff.
For most on there it is with a small amount of disposable income or house money. But there are some doing it with the money they need to survive or retire. Or just don't understand the naked position they just screwed themselves with.
Trading on the stock market (by and large) doesn't create value. If someone makes a killing, it's because someone lost it. You hear about those who make money - because it's the story you 'want' to hear.
People don't understand how money comes from value created, in the long run. People think they can game the system. Everyone feels they are not a part of the average.
People don't understand how money comes from value created, in the long run. People think they can game the system. Everyone feels they are not a part of the average.
>If someone makes a killing, it's because someone lost it
Not true, companies can create value, that value is reflected in the stock price. The economy is not zero sum. Did all the people that got rich off of apple, google, microsoft, nvidia, etc get rich because someone else lost money?
Not true, companies can create value, that value is reflected in the stock price. The economy is not zero sum. Did all the people that got rich off of apple, google, microsoft, nvidia, etc get rich because someone else lost money?
Exactly! Which is why my comment talks about 'Trading' not 'Investing'.
https://www.investopedia.com/ask/answers/12/difference-inves...
https://www.investopedia.com/ask/answers/12/difference-inves...
[deleted]
Those companies got value via selling products with a margin to their customers.
So, technically their customers lost money for those companies to gain money.
Not that there is anything wrong with that. Just pointing out how I think your logic is flawed.
Not that there is anything wrong with that. Just pointing out how I think your logic is flawed.
Eh, depends on how you defined ‘lost’ a lot of money —
Many of the calls that have hit recently only capped out people’s gains - so yes there was an opportunity cost to that lost, but people didn’t literally lose invested capital. Not as much money as you think has gone into the red this year - even on the way down.
Many of the calls that have hit recently only capped out people’s gains - so yes there was an opportunity cost to that lost, but people didn’t literally lose invested capital. Not as much money as you think has gone into the red this year - even on the way down.
Trading creates liquidity, which supports a healthy capital market which companies can access for capital.
(I mean so does heavy taxation of capital ~hoarders~ holders, to be redistributed among the country's labor base, who will then tend to spend it immediately on goods or personal investment, but we don't talk about that.
OR
The point of liquidity is to get people doing things, but the status quo today seems more like giant firms trading above our heads to manage the risk of rent-seeking on an increasingly precariously-positioned consumer class.)
OR
The point of liquidity is to get people doing things, but the status quo today seems more like giant firms trading above our heads to manage the risk of rent-seeking on an increasingly precariously-positioned consumer class.)
Neither of your points seem based on an accurate understanding of the financial markets.
I don't know why another user's comment,
Neither of his points seem based on Economic dogma shoved down your throat during undergrad.
was flagged, as it was neither inflammatory nor uncouth, but I agree with it. You seem to have an entirely elementary conception of the market and an inability to understand the ways those assumptions have fallen apart in the face of market and regulatory conditions.
Neither of his points seem based on Economic dogma shoved down your throat during undergrad.
was flagged, as it was neither inflammatory nor uncouth, but I agree with it. You seem to have an entirely elementary conception of the market and an inability to understand the ways those assumptions have fallen apart in the face of market and regulatory conditions.
ajmadesc(1)
Not trying to sound aggy but... Do you have a source for retail investors out performing institutions since march? I'd like to know more about this and I haven't heard anything but I've been pretty disconnected from news so excuse my ignorance please!
There’s no credible way to precisely define this, especially because success of investing is not purely based on returns of a half year horizon or so.
> Anyway, I get it, those people are stupid. But they made money.
They are absolutely not stupid. Everything they're doing is entirely rational. It doesn't seem that way, because clearly you're not in the same circumstances as they are. Neither am I.
However, I completely understand it. If you're 22-25, not married, and have far more liabilities than asset, you have no reason not to trade on high margin with an options play and try to turn $50,000 into $2 million or more.
If you lose the $50,000, you can recover. If you end up horribly in debt, you file for bankruptcy and move on.
Given the current state of affairs, its completely understandable.
They are absolutely not stupid. Everything they're doing is entirely rational. It doesn't seem that way, because clearly you're not in the same circumstances as they are. Neither am I.
However, I completely understand it. If you're 22-25, not married, and have far more liabilities than asset, you have no reason not to trade on high margin with an options play and try to turn $50,000 into $2 million or more.
If you lose the $50,000, you can recover. If you end up horribly in debt, you file for bankruptcy and move on.
Given the current state of affairs, its completely understandable.
[deleted]
It's hard to believe that OTM options are wildly underpriced. Institutional investors might be unable to trade them but there are plenty of hedge funds with no such restrictions. 0
>That's a bad example. By many measures retail investors have outperformed institutional investors since March.
The average retail investor might have outperformed institutional investors, but it's a leap to suggest that wsb outperformed institutional investors. Foe one, the average retail investor isn't buying otm options like wsb users are.
> The simple reason is that options have a built in exit strategy, the thing that's missing when most people lose in scams - including Ponzi schemes!
Not really? Options can have their value go to zero if they remain unexercised, just like if a ponzi scheme goes bust.
The average retail investor might have outperformed institutional investors, but it's a leap to suggest that wsb outperformed institutional investors. Foe one, the average retail investor isn't buying otm options like wsb users are.
> The simple reason is that options have a built in exit strategy, the thing that's missing when most people lose in scams - including Ponzi schemes!
Not really? Options can have their value go to zero if they remain unexercised, just like if a ponzi scheme goes bust.
>Not really? Options can have their value go to zero if they remain unexercised
true. but as a person who plays with options, I should point out that when you buy an option contract, you don't want it to expire worthless.
However if you are an options seller, that is the best possible outcome.
true. but as a person who plays with options, I should point out that when you buy an option contract, you don't want it to expire worthless.
However if you are an options seller, that is the best possible outcome.
You can win in a single year or two. But winning year over year for 10 years? That's not possible, unless you are .. wait for it .. being part of them?
If you think OTM options are underpriced you're in for a rude awakening. Sure, you can make lots of money with OTMOs, but don't expect to do this regularly.
To be fair he didn't they are. He said they were, which might have been the case in March after the corona crash.
After the March crash, volatility was really high. So I doubt even far OTM options were that cheaper back then.
> By many measures retail investors have outperformed institutional investors since March
Source please?
Source please?
Don't try build the next big app? If you're frustrated by the status quo, reject it and live life by your own values. Also nothing (bar the pandemic) is stopping you going to Thailand or another cheap location and building your app from there. The flight tickets will pay themselves off in cost of living savings pretty quickly.
I thought the point of those nomadic lifestyles is to earn the same trifling money anyone can earn over the internet with a little effort, but live where the money goes farther.
[deleted]
Life is a pyramid scheme.
jariel(5)
Seen so much of this bullshit while travelling around SE Asia. I swear 90% of nomads are dropshipping/life coaches running ponzi schemes, and the other 10% are geeks like me who lucked into remote-friendly coding gigs.
Sprinkled with some truly fascinating folks who genuinely discovered some new and interesting way of making this work for them.
Sprinkled with some truly fascinating folks who genuinely discovered some new and interesting way of making this work for them.
I'd say 95% of digital nomads are just online marketers who market their own lifestyle so that they can sell a course on how to imitate them. And obviously, their customers will imitate them and sell a course on how to imitate them. And so the cycle continues.
> I'd say 95% of digital nomads are just online marketers
It’s strange ‘cuz I’ve been working in digital nomad hotspots for years and have met very very few people like that. Lots of translators, programmers, and then a complete mishmash of other people, but very few people selling courses, and the ones who _were_ selling courses generally nothing to do with being a digital nomad
It’s strange ‘cuz I’ve been working in digital nomad hotspots for years and have met very very few people like that. Lots of translators, programmers, and then a complete mishmash of other people, but very few people selling courses, and the ones who _were_ selling courses generally nothing to do with being a digital nomad
If you can afford to rent a table in a coworking space, then you have already separated yourself from the other 95% of digital nomads.
When I was working remotely from Asia, I sometimes went to cafes in the backpacker areas and there would be lots of people working online and posting selfies about their dream life, but their entire monthly budget was like $300. Even in Asia, that's not enough to rent a good office, let alone for apartment +office +food.
Also, maybe you just didn't dig deep enough. I myself was once feeling quite impressed about someone getting rich from making iOS children's games. But when I had issues with my own apps and asked him for advice, it turned out that he was actually making a living from selling an Udemy course on how to get rich by selling apps... And as usual, the revenue from Udemy was presented as if it had come from the apps.
When I was working remotely from Asia, I sometimes went to cafes in the backpacker areas and there would be lots of people working online and posting selfies about their dream life, but their entire monthly budget was like $300. Even in Asia, that's not enough to rent a good office, let alone for apartment +office +food.
Also, maybe you just didn't dig deep enough. I myself was once feeling quite impressed about someone getting rich from making iOS children's games. But when I had issues with my own apps and asked him for advice, it turned out that he was actually making a living from selling an Udemy course on how to get rich by selling apps... And as usual, the revenue from Udemy was presented as if it had come from the apps.
Same here.
I’ve been nomading for ten years. I haven’t met a single person who was not legit doing something of value. The closest I came to one was an online poker player in Chiang Mai back in 2010.
Maybe we just hang out in the “right” circles?
It’s probably just like in real life. I have never met anyone offering me a generic (non nomad) Ponzi scheme. But I sure had several legit investment opportunities thru my circles.
I’ve been nomading for ten years. I haven’t met a single person who was not legit doing something of value. The closest I came to one was an online poker player in Chiang Mai back in 2010.
Maybe we just hang out in the “right” circles?
It’s probably just like in real life. I have never met anyone offering me a generic (non nomad) Ponzi scheme. But I sure had several legit investment opportunities thru my circles.
> I’ve been nomading for ten years.
The most i've ever been able to do was half a year. How can you choose to be without a real home that long?
The most i've ever been able to do was half a year. How can you choose to be without a real home that long?
> How can you choose to be without a real home that long?
Depends what you mean by "real home" I guess. I have a tiny apartment in Bangkok, where we would normally spend ~ 8 weeks a year in total a year, and then we rent ad-hoc or stay with family the rest
Depends what you mean by "real home" I guess. I have a tiny apartment in Bangkok, where we would normally spend ~ 8 weeks a year in total a year, and then we rent ad-hoc or stay with family the rest
Ah ok you are married. Do you have long term friends locally ? Is your wife your anchor to a local community ?
I've travelled single and as part of a couple. Doing this as a couple is hands-down easier. Cheaper, less stressful, and a lot less lonely. Not only because constant companionship, but also because striking up random friendships is easier if the whole "is he hitting on me?" thing is off the table because the girlfriend is right there too ;)
> Do you have long term friends locally?
Not really sure what that means, but most places we go we have friends we’ve known for many years, and those are often other nomadish types.
> Is your wife your anchor to a local community?
No, she’s from even further away than me
Not really sure what that means, but most places we go we have friends we’ve known for many years, and those are often other nomadish types.
> Is your wife your anchor to a local community?
No, she’s from even further away than me
Right but actual roots / connection to a local community, besides fellow travelers / tourists?
I personally never felt more than a temporary resident in most places i've been.
I personally never felt more than a temporary resident in most places i've been.
I didn't say I was homeless :D I have a home base, but I spend 6 months or more outside of my home country.
What utopia have you found? I couldn't stop meeting these people on the road.
Last year I was in Kohub, Hub Hoi An, Outpost Penestanan, and some time at Hubud. This year, due to Covid, just Kohub.
Yeah, Hubud is cool, or was last year. I understand the whole of Ubud has been shocked by COVID killing the tourism industry so it'll be interesting how it goes when we can travel again.
But yeah, you won't find the budget backpackers trying to scrape a couple hundred bucks a month monetising their awesome travel blog about their amazing life in Hubud. It's too expensive (relatively speaking). Find a cafe close to a cheap hostel, that'll let you spend the whole morning abusing their decent wifi for the cost of a single americano. You'll be able to tell them because of the number of inappropriately-dressed white folks somehow covering an entire 4-seat table to use their 13" MacBook.
But yeah, you won't find the budget backpackers trying to scrape a couple hundred bucks a month monetising their awesome travel blog about their amazing life in Hubud. It's too expensive (relatively speaking). Find a cafe close to a cheap hostel, that'll let you spend the whole morning abusing their decent wifi for the cost of a single americano. You'll be able to tell them because of the number of inappropriately-dressed white folks somehow covering an entire 4-seat table to use their 13" MacBook.
Kohub is the coliving on a thai island right? I've been really interested to check that out but never ended up making it there.
My email is in my profile. I'd be really interested to jump on a chat with you for a few minutes and hear about your experience if you are open to it. Get in touch if you are open to talking.
My email is in my profile. I'd be really interested to jump on a chat with you for a few minutes and hear about your experience if you are open to it. Get in touch if you are open to talking.
I've fantasised about the vanlife, living the nomad lifestyle out of a van. When looking for build inspiration videos on YouTube, I ended up seeing a lot of vanlife "influencers", but what I notice is many videos just have a few thousand views, which is surely not enough to make a living..
It's a meme, man. I did the van thing for a year while working in Australia on the NBN (big fibre optic project).
Drove around and spliced and oversaw fibre projects.
It gets old pretty fast, has tons of hidden costs, and looks quaint and romantic to people who've never had to do it. Fun for a year, but I probably would have paid almost as much just booking into hostels or AirBnB's and renting a car on occasion.
I was able to go and see some cool places -- but breaking down in remote South Australia was scary and frustrating. And you get really, really tired of the lack of space.
What made it tolerable was being able to get out of the van and chill in places like the library or a coffee shop-- likely all no-gos in the COVID era
It gets old pretty fast, has tons of hidden costs, and looks quaint and romantic to people who've never had to do it. Fun for a year, but I probably would have paid almost as much just booking into hostels or AirBnB's and renting a car on occasion.
I was able to go and see some cool places -- but breaking down in remote South Australia was scary and frustrating. And you get really, really tired of the lack of space.
What made it tolerable was being able to get out of the van and chill in places like the library or a coffee shop-- likely all no-gos in the COVID era
Most influencers can't make a living. There's so many of them that it's a buyer's market.
When I was still selling naughty bikinis online, I did a few promotions with Instagram yoga teachers and I was always surprised by how low their asking prices were.
I guess most of them valued having any success to show for it much higher than being paid a livable wage.
When I was still selling naughty bikinis online, I did a few promotions with Instagram yoga teachers and I was always surprised by how low their asking prices were.
I guess most of them valued having any success to show for it much higher than being paid a livable wage.
Yeah, my running joke while living in Thailand was that it was a circular pyramid scheme, the yoga teachers are buying life coaching, the life coaches are all learning to become drop shippers, and the drop shippers are all getting training to become yoga teachers. They just buy and sell services from each other in a circle trying to grow their own thing until they give up and go home.
I'm just a layperson, but it seems like you've described an economy.
Especially when you realize that
>buy and sell services from each other in a circle
isn't true at all.
I don't know anything dropshipping - the name certain implies something scammy, but our economy is full of things like that.
It's a weird aspect of society - which lies are we all going to agree to accept - and since each person answers those questions differently, it leads to a lot of tension.
Especially when you realize that
>buy and sell services from each other in a circle
isn't true at all.
I don't know anything dropshipping - the name certain implies something scammy, but our economy is full of things like that.
It's a weird aspect of society - which lies are we all going to agree to accept - and since each person answers those questions differently, it leads to a lot of tension.
I get what both of the comments are saying here, but this is really nothing like how a real economy works.
None of these people are solving any of the core needs of any of these other people (food, clothes, transportation, housing, any physical goods at all) and very little new money is entering this system at all, maybe some on the drop shipping side but that can also be a net loss in some cases. So yes this represents an economy but the denizens of that economy would be impoverished and miserable, constantly waiting for some outsider to come solve their problems. This is seen in the fact that most people do this as long as their pre existing savings can sustain it because they are doing it at a loss and then they give up when they have eaten through their existing wealth.
So yeah, i don't think it's much of a profound insight to point out the similarities to other economies just because of the existence of people engaging in trade with each other. The quality of the trade is the issue, not its existence.
None of these people are solving any of the core needs of any of these other people (food, clothes, transportation, housing, any physical goods at all) and very little new money is entering this system at all, maybe some on the drop shipping side but that can also be a net loss in some cases. So yes this represents an economy but the denizens of that economy would be impoverished and miserable, constantly waiting for some outsider to come solve their problems. This is seen in the fact that most people do this as long as their pre existing savings can sustain it because they are doing it at a loss and then they give up when they have eaten through their existing wealth.
So yeah, i don't think it's much of a profound insight to point out the similarities to other economies just because of the existence of people engaging in trade with each other. The quality of the trade is the issue, not its existence.
> this represents an economy but the denizens of that economy would be impoverished and miserable, constantly waiting for some outsider to come solve their problems
The outsider in this case is the government bailing out industries like when these digital nomads(businesses) failed, they'd go back to their parents (government). When their parents(gov) run out of money, they'd put it on the credit card (print more money by the Fed) and the cycle continues...
It's funny how this sounds exactly like how our economy works LOL
The outsider in this case is the government bailing out industries like when these digital nomads(businesses) failed, they'd go back to their parents (government). When their parents(gov) run out of money, they'd put it on the credit card (print more money by the Fed) and the cycle continues...
It's funny how this sounds exactly like how our economy works LOL
That’s a microcosm of how a real economy works, actually.
Dropshipping someone a life coach, now there's an idea
Really postmodernist take on mail-order brides.
Can confirm. I was a lucky geek nomad who worked remotely. I had a regular software developer job just like I would if I was "back home".
The "nomad" posts always bugged me, especially when it's someone traveling around the world by working odd jobs and relying on the kindness of strangers. They're always presented in a way to make you feel bad about having a steady 9-5 working for "the man" when you could be seeing the world and being free. They conveniently leave out the fact that their lifestyle is completely dependent on the majority of people working steady jobs, and if everyone was a nomad like them, they'd have no picturesque villages to visit, roads to hitchhike on, or restaurants willing to give you food in exchange for washing some dishes.
Isn't this true of any job - If the world was all software engineers it'd be missing lots of stuff too. I get the point you're making about nomads being (more) dependent on others, but I honestly think that's true for everyone now.
I think being a digital nomad implies working a remote job that's not tied to your location? If you work odd jobs you're just a regular nomad.
This is correct.
I would argue that the ponzi scheme is much broader than what is described here.
1) Try to start an online business. It doesn't really matter what you're doing or if it succeeds as long as it's marketable to people aspiring to create an online business
2) Make a big fuss about the launch on all social platforms (Twitter, HN, PH, IH, your blog, etc) and hope someone with a big audience signal boosts you or you get lucky
3a) If you start making money, awesome! Constantly post revenue numbers, things about Building in Public (TM) and "you can do it too!". Your audience (And therefore revenue) will compound exponentially
3b) If you 'fail', make a blog post retrospective called "Lessons Learned" and blast that out everywhere as well
4) Repeat steps 1-3 until you hit 3a. Throw in a few "6 Months of Building in Public" type posts if you're really having trouble
In reality, I strongly believe that very few people end up making it through this type of process and success mostly comes down to luck or connections (Anyone who already has an audience can easily pull you up).
1) Try to start an online business. It doesn't really matter what you're doing or if it succeeds as long as it's marketable to people aspiring to create an online business
2) Make a big fuss about the launch on all social platforms (Twitter, HN, PH, IH, your blog, etc) and hope someone with a big audience signal boosts you or you get lucky
3a) If you start making money, awesome! Constantly post revenue numbers, things about Building in Public (TM) and "you can do it too!". Your audience (And therefore revenue) will compound exponentially
3b) If you 'fail', make a blog post retrospective called "Lessons Learned" and blast that out everywhere as well
4) Repeat steps 1-3 until you hit 3a. Throw in a few "6 Months of Building in Public" type posts if you're really having trouble
In reality, I strongly believe that very few people end up making it through this type of process and success mostly comes down to luck or connections (Anyone who already has an audience can easily pull you up).
How is that a Ponzi Scheme? Self-promoting and narrative-building to make it sound easy, but if you’re building something that someone will pay you money for, you’re literally just building a business...?
Slightly tongue-in-cheek, but it's a ponzi scheme when they start selling courses on "how to become an entrepreneur".
I know a kid who ended up doing that for his comp sci "internship." I feel so bad for the guy but he really didn't even learn how to code so it's frankly all on him.
Yes, you are. As the article says, you are actually making money and gaining followers.
It's not a ponzi scheme in the literal sense, but these businesses are built off the back of other people who believe they can do what you're doing supporting you (In the article this is by paying for your course).
Some of them will go on to create their own successful businesses (And perpetuate the cycle), but most will most likely fail.
There was a post on Indie Hackers not long ago about a guy who said he lost thousands of dollars trying to build a business. I'm sure there are many more people who got into similar situations.
It's not a ponzi scheme in the literal sense, but these businesses are built off the back of other people who believe they can do what you're doing supporting you (In the article this is by paying for your course).
Some of them will go on to create their own successful businesses (And perpetuate the cycle), but most will most likely fail.
There was a post on Indie Hackers not long ago about a guy who said he lost thousands of dollars trying to build a business. I'm sure there are many more people who got into similar situations.
This is what people think is a ponzi scheme for tech people. In fact it's actually a Ponzi scheme for all the same suspects as last time. i.e. the same guy who gets into Amway or the pyramid marketing schemes falls into this.
Tech people don't fall into these Ponzi schemes. They fall into a different variety where a serial entrepreneur who has repeatedly received funding is assumed to be more capable than a guy new to the game.
Tech people don't fall into these Ponzi schemes. They fall into a different variety where a serial entrepreneur who has repeatedly received funding is assumed to be more capable than a guy new to the game.
I disagree, many tech people lap this kind of thing up because it makes them believe that starting a highly profitable side-project is easy.
The VC dream is for an entirely different segment of tech people than those wanting to be indie hackers.
The VC dream is for an entirely different segment of tech people than those wanting to be indie hackers.
>Won’t people call me out when they buy my course and fail to become rich?
This should gets it's own article. So many products and services totally unremarkable but survive simply because they've managed to peddle a brand image whereby it is fashionable to talk them up and unfashionable to say "I blew a bunch of money on them and the results were crap".
This should gets it's own article. So many products and services totally unremarkable but survive simply because they've managed to peddle a brand image whereby it is fashionable to talk them up and unfashionable to say "I blew a bunch of money on them and the results were crap".
Isn't there a bigger Ponzi scheme in tech? The one where you sell a product at a screaming loss, double your revenue each year (without ever showing a profit), and then each year raise capital at double the previous year's valuation to fund the ever-growing loss-making sales. It's just the suckers in that scheme are the investors...
This is what I thought the article would be about: You get to be startup-rich not by convincing people to buy your product, but by convincing investors that people will buy your product. That's a much different sell, and you can ride it multiple times for a long time, getting rich without ever making a sustainable product. Your product, essentially, was selling hope (later turned to regret) to investors.
Investors don't have regret when that happens, they count on it. They spread their bets across many small startups. It only needs one investment to succeed and the other dozen or so can fail. Most startups will and are expected to fail.
It's part of the game that you need to convince investors that you still have a chance in being the unicorn.
It's part of the game that you need to convince investors that you still have a chance in being the unicorn.
Legit question: is [1] an instance of this kind of scheme? The guy came out of nowhere boasting how he left his $500K job at amazon and whatnot (first red flag for me) and I've seen his content popup pretty often.
1: https://gumroad.com/l/aws-good-parts
1: https://gumroad.com/l/aws-good-parts
I know Daniel, his work is not a ponzi scheme. Because you asked this question in good faith, I'll give you a summary in good faith:
1. The book you linked is just technical content. It teaches you how to use AWS, not how to sell books about using AWS.
2. Unlike the tongue-in-cheek examples of the original post based on minimal success, this book is written based on years of professional experience as a developer building AWS.
3. His content pops up pretty often because people like it.
Of course, if the book was part of a ponzi scheme, then part of that scheme would be having people like me defend it on HN :)
1. The book you linked is just technical content. It teaches you how to use AWS, not how to sell books about using AWS.
2. Unlike the tongue-in-cheek examples of the original post based on minimal success, this book is written based on years of professional experience as a developer building AWS.
3. His content pops up pretty often because people like it.
Of course, if the book was part of a ponzi scheme, then part of that scheme would be having people like me defend it on HN :)
And yet, this is the same guy that peddles a “here’s how to become Twitter famous” course[0].
If you check the testimonials of those who have achieved success, it’s exactly as the article describes. Someone going from 100 to 150 followers going “OMG ITS WORKING!”
[0]: https://mobile.twitter.com/dvassallo/status/1263160316277350...
If you check the testimonials of those who have achieved success, it’s exactly as the article describes. Someone going from 100 to 150 followers going “OMG ITS WORKING!”
[0]: https://mobile.twitter.com/dvassallo/status/1263160316277350...
I've bought and implemented the strategies in that course. I mean, it does work, at least for those who put the effort in.
100% is - see a comment I made in this thread further down. From what I can tell, this is the guy that doesn’t seem to have any substance short of talking platitudes on Twitter about life philosophy, how he quit his cushy job, and how we all need to pursue our dreams. Oh, and buy his book and Twitter audience growth course.
That guy is me. What would convince you that I'm not running a ponzi scheme or anything dishonest?
I think Ponzi scheme might not be the right term here, and to be fair (thanks for reaching out) my goal is not to have you prove anything.
I’ll address one thing - the Twitter audience course. There is no secret/hidden Twitter audience strategy. Post good stuff, engage with others with insights that provide value, don’t post BS. That’s it. That’s the strategy. Anything beyond that is made up stuff. People on Twitter follow those that provide meaningful content that is useful. Short of that, any other automation schemes, follow/unfollow tactics, are just for inflating low quality numbers.
I’ll address one thing - the Twitter audience course. There is no secret/hidden Twitter audience strategy. Post good stuff, engage with others with insights that provide value, don’t post BS. That’s it. That’s the strategy. Anything beyond that is made up stuff. People on Twitter follow those that provide meaningful content that is useful. Short of that, any other automation schemes, follow/unfollow tactics, are just for inflating low quality numbers.
He was on a podcast recently, I think indie hackers, explaining his path in great detail.
IMO he’s legit, not a scheme
IMO he’s legit, not a scheme
I would not think about what this post is saying in literal terms.
I'm pretty sure Daniel has good intentions, though he has most definitely benefitted from this type of 'scheme' given that a lot of his brand revolves around the lifestyle he has managed to create for himself due to the success of his info products.
I'm pretty sure Daniel has good intentions, though he has most definitely benefitted from this type of 'scheme' given that a lot of his brand revolves around the lifestyle he has managed to create for himself due to the success of his info products.
I thought this was going to be an article about working at a tech company. How they sell you the idea of a career of fulfilling and noble work. Then the people at the top (who got in early) make all the money on the fruits of your labor. All while you can't get a promotion even though you're doing the job above you (no future).
I found that the road to success is very different for everyone and for all circumstances. It can't be taught because everyone has different skills and is in a different situation. Only very general tools can be taught.
Even if person X is successful and writes down every step, it will be very hard for anyone to repeat it.
Even if person X is successful and writes down every step, it will be very hard for anyone to repeat it.
I'm cited in the comments as an instance of this scheme [1].
If you want to see how I make it all work, check out my interview on Indie Hackers: https://www.indiehackers.com/podcast/177-daniel-vassallo
[1] https://news.ycombinator.com/item?id=25249523
If you want to see how I make it all work, check out my interview on Indie Hackers: https://www.indiehackers.com/podcast/177-daniel-vassallo
[1] https://news.ycombinator.com/item?id=25249523
What a fantastic blog post. It's nice to occasionally see someone calling out all the bullshit.
I don't know if it is the same for everyone, but here in France, YouTube advertisement have been just that since the coronavirus began.
Almost all advertisement is young people posing with expensive car (probably rented) trying to sell you their seminar/conference. It has become so shameless that they even try to sell course on "how to dropship properly". Its scamming all the way down.
I find the one trying to sell dropshipping course very funny because it is really scammer trying to scam other scammer.
While there are indeed lots of people doing this sort of thing, I notice people being accused of it who are in fact successful and are giving out actionable advice. (They're easy to spot if you look, because they don't ask you to buy their course).
Imagine, for example, that you had stumbled across a Magic Formula to create a niche Software as a Service business that brings in $5,000/month while only taking up 10 hours of your time each week. Why would you give that formula away when you could just use it yourself over and over and become a zillionaire?
Well, let's think about it. Assuming you do have that Magic Formula and have used it once, what are your options?
1. Go live on the beach in Thailand. Forever.
2. Build another business that brings in $5,000/month for 10hrs/week effort.
Notice that each spin of the Magic Formula cuts another 10 hours/week out of your schedule of growing your hair and hanging out with that blonde girl from the article. Spin it 4 times and you're back to having a full time job like the rest of the world.
So you don't do that. You hang out on the beach, wondering why more people don't do what you're doing. And you from time to time try to nudge a few more people into doing so themselves.
At least that's my take on it, having spun that formula twice.
Imagine, for example, that you had stumbled across a Magic Formula to create a niche Software as a Service business that brings in $5,000/month while only taking up 10 hours of your time each week. Why would you give that formula away when you could just use it yourself over and over and become a zillionaire?
Well, let's think about it. Assuming you do have that Magic Formula and have used it once, what are your options?
1. Go live on the beach in Thailand. Forever.
2. Build another business that brings in $5,000/month for 10hrs/week effort.
Notice that each spin of the Magic Formula cuts another 10 hours/week out of your schedule of growing your hair and hanging out with that blonde girl from the article. Spin it 4 times and you're back to having a full time job like the rest of the world.
So you don't do that. You hang out on the beach, wondering why more people don't do what you're doing. And you from time to time try to nudge a few more people into doing so themselves.
At least that's my take on it, having spun that formula twice.
Have you written about the magic formula? Care to share?
Yes. A bit. Check out my comment history here for more detail but mostly it’s this:
Work remote contracts to fund yourself while building a saas business targetting real problems that companies will spend money on. Repeat as necessary until you hit a niche that works.
My first success was on try number six or so. The second was half a dozen tries later.
Good luck!
Work remote contracts to fund yourself while building a saas business targetting real problems that companies will spend money on. Repeat as necessary until you hit a niche that works.
My first success was on try number six or so. The second was half a dozen tries later.
Good luck!
It's basically what I'm doing however I have steered clear of B2B as I suspect the 10 hours a week will be hard to stick to once I have paying customers who have support requirements. How do you contain expectations in that regard?
My experience with businesses is that the bigger they are the less support they need.
All in, I spend maybe an hour a week on support, across my 2 paying products. Nearly all of that is for the cheapest accounts. Companies with money have people who know what they're doing, who can quickly figure out what the product does and how to set it up, and who then go use it as intended without needing any hand holding.
I picked 10 hours a week in my example because that's where it was when I was building those things "full time". Now that they are feature complete, it's a lot closer to zero. I haven't opened the IDE for either of my rent paying products since the summer.
All in, I spend maybe an hour a week on support, across my 2 paying products. Nearly all of that is for the cheapest accounts. Companies with money have people who know what they're doing, who can quickly figure out what the product does and how to set it up, and who then go use it as intended without needing any hand holding.
I picked 10 hours a week in my example because that's where it was when I was building those things "full time". Now that they are feature complete, it's a lot closer to zero. I haven't opened the IDE for either of my rent paying products since the summer.
If you want to eyewitness an even tighter Ponzi scheme loop, look at YouTubers in the trading industry. Boats of them sell a course/book and use YouTube for marketing & ad money. Bonus points if they advertise beating the market.
My college roommate followed this one guy and even bought his courses. He claimed he's made double his money since paying for his "insider trading tips" or whatever. My roommate claimed he was a self made millionaire.
I looked the guy up, he's just a college dropout whose parents owned a very successful real estate agency to which he was placed in. He then got absurd amounts of capital from the commissions only people like his parents could get.
My roommate believed this guy knew the ticket to wealth but all I saw was basically the xkcd comic of "but lottery tickets! It works!"
I looked the guy up, he's just a college dropout whose parents owned a very successful real estate agency to which he was placed in. He then got absurd amounts of capital from the commissions only people like his parents could get.
My roommate believed this guy knew the ticket to wealth but all I saw was basically the xkcd comic of "but lottery tickets! It works!"
The denouement is You didn’t read anything, did you? No, you will actually get 500 new followers, and actually make $5,000. The ones who won’t are the suckers who buy your course.
Sucker being the operative word.
(also, its satire, the real denouement is his last guidance: "make things of value, don't seek money, seek problems of high value to solve")
Sucker being the operative word.
(also, its satire, the real denouement is his last guidance: "make things of value, don't seek money, seek problems of high value to solve")
Many blog posts pontificating some advice read like:
"How to double your money gambling everything on a coin toss"
Sure, you can win a coin toss, but unless you can reproduce that experiment consistently it's not a viable advice.
And that pretty much to everything... if a process is not better than random chance then it's worthless.
"How to double your money gambling everything on a coin toss"
Sure, you can win a coin toss, but unless you can reproduce that experiment consistently it's not a viable advice.
And that pretty much to everything... if a process is not better than random chance then it's worthless.
> if a process is not better than random chance then it's worthless
Nice distillation of what many might dismiss as common sense.
Nice distillation of what many might dismiss as common sense.
This reminds me of a killer new startup I'm thinking of investing in. They sold me on it as soon as I heard their elevator pitch: International Stamp Arbitrage.
Kurosagi, a Manga about a black (Kuro) swindler (Sagi) swindling other Swindlers. It has covers a lot of schemes.
https://mangakakalot.com/read-iw9hn158504903371
https://mangakakalot.com/read-iw9hn158504903371
It's kind of weird to read this meta sarcastic article yet see that their journal is full of...articles of the type they critique...?
The only people who made money during the gold rush were the ones selling pickaxes and shovels.
My hypothesis is that all the Tech People turned into Ponzi schemes (er, sorry, info products) after trying showing their tech products here on HN and getting roasted in the comments.
This is a pretty good checklist, but it really needs more blockchainz.
Yeah, no reference to crypto and blockchain? This article didn't cover the most worrying ponzi scheme I've seen since public pension plans.
blockchain is more like a Pump and Dump scam. You can run it just once. Ponzi schemes require several iterations of the scam to be successful.
You say that because you haven't heard of the latest crypto investment form. You put $140 at least 6 month in a new cryptocurrency deposit. In exchange, you get paid every tuesday during this time, you also get sent a red visa card and a premium Spotify account (you never have to pirate again!). Plus, if you're referred, you and your referrer will get $25 dollars free.
Now, when I asked where did that money come from, the guy on Twitch told me "it's like a bank, the money comes from you". The difference here is, of course, this gives you much, much higher returns than a bank while a bank can actually invest your money, and this "entity" cannot. Also the interface of some of these "investment" agencies look like a game, I guess to be more attractive [1].
In the end, the idea is always the same: crypto will only go up. So far that's been the case, though.
[1] https://pbs.twimg.com/media/EjI5hTcU0AAnUO0.png
Now, when I asked where did that money come from, the guy on Twitch told me "it's like a bank, the money comes from you". The difference here is, of course, this gives you much, much higher returns than a bank while a bank can actually invest your money, and this "entity" cannot. Also the interface of some of these "investment" agencies look like a game, I guess to be more attractive [1].
In the end, the idea is always the same: crypto will only go up. So far that's been the case, though.
[1] https://pbs.twimg.com/media/EjI5hTcU0AAnUO0.png
I think this one of the best content marketing posts I have seen in a long time. Funny and the call to action in the end is so subtile :D The fake sign up form is build with https://formcrafts.com/ the product Nishant is working on.
I think some would call the various vaporware concepts out there a ponzi scheme for tech people.
I almost feel bad for this guy. I believe he deserves everything he's got coming his way, good or bad. It's a repulsive and idiotic article written by someone who is naive, arrogant and presumptive on life and how to make it in the world.
I do admire the hustle and ingenuity, but what is ambition but a form of love and hope? The entire article had a meticulously cynical view on business and his customers. I think the idea of responsibility is shocking to the author, who obviously has never experienced something meaningful. He's a fraud and he knows it.
Humans find meaning by helping other humans. The article is perverse and I really wish the author go back to wherever trash hole he came from. The western world does not need this kind of parasitic thinking.
I do admire the hustle and ingenuity, but what is ambition but a form of love and hope? The entire article had a meticulously cynical view on business and his customers. I think the idea of responsibility is shocking to the author, who obviously has never experienced something meaningful. He's a fraud and he knows it.
Humans find meaning by helping other humans. The article is perverse and I really wish the author go back to wherever trash hole he came from. The western world does not need this kind of parasitic thinking.
Hmmmm... you realise it's satire, right?
Brilliant :) And don't forget to look at the signup link for the "How to Run a Ponzi Scheme" Master course.
That said, don't all the cool kids call it "Mastermind" these days?
That said, don't all the cool kids call it "Mastermind" these days?
Easier.
Step 1. Invent Bitcoin.
Step 1. Invent Bitcoin.
Back then when bitcoin is still in its infancy, there is not much to do with bitcoin in your wallet apart from gifting each other some coins (bitcoin faucet was pretty generous back then). So people on bitcointalk forum often openly running some ponzi scheme and a lot of people would join just for the heck of it. There was nothing shady about it as the organizer would openly admit its a ponzi scheme (something along "hey, I'm running a new ponzi scheme here. If you're interested here is the url").
No idea why you're getting downvoted. It's completely true and I participated in a few. The excitement was that you knew it could blow up at any time so it was like gambling.
When you got your profits you often sent it back to the scheme. It was a classic chicken race where you wanted to pull out just before it crashed.
When you got your profits you often sent it back to the scheme. It was a classic chicken race where you wanted to pull out just before it crashed.
I love this. For v2 you need to add a crypto angle.
I expected an article about Bitcoin or any other cryptocurrency but I was disappointed in that regard.
Cool article though.
Cool article though.
TBH I knew when I bought BTC at ~$10 that tech people were the first adopters and if it broke out from the tech crowd it would be like being near the top of the pyramid. It's precisely why I bought.
Good for you.
But Bitcoin is nothing.
It now has value because a lot of people - having a stake in it - artificially created demand with bullshit stories.
But Bitcoin is nothing.
It now has value because a lot of people - having a stake in it - artificially created demand with bullshit stories.
Cryptocurrency is the ponzi scheme for tech people.
Because the cryptocurrency ecosystem does not do investment -- likely in very large part because no one can buy anything legal with cryptocurrency -- returns for coiners who cash out must, by definition, come from later investments.
Paying earlier investors with the investments of those who follow is the definition of a ponzi scheme.
Because the cryptocurrency ecosystem does not do investment -- likely in very large part because no one can buy anything legal with cryptocurrency -- returns for coiners who cash out must, by definition, come from later investments.
Paying earlier investors with the investments of those who follow is the definition of a ponzi scheme.
This is pure hustle. Love it.
This probably made me laugh more than it should. Good job.
One of the best articles I read on hacker news
I think one of the biggest issues is that tech people are "know it alls".
They make lots of money, they must be smart right? So when a friend disagrees the person doesn't consider it.
And unlike their Engineering counterparts they won't search for proof. If you need to see real world examples, look at who buys brand name. It's telling.
They make lots of money, they must be smart right? So when a friend disagrees the person doesn't consider it.
And unlike their Engineering counterparts they won't search for proof. If you need to see real world examples, look at who buys brand name. It's telling.
Tech people are pretty smart, on average. It's a somewhat demanding professional career. There's a hell of a lot of difference between "smart" and "infallible".
They have one specific ability, which doesn't require much math at all.
Death to the halo effect https://en.wikipedia.org/wiki/Halo_effect
Death to the halo effect https://en.wikipedia.org/wiki/Halo_effect
They can solve complex open-ended tasks, and formulate long term plans that take into account information from multiple sources.
I understand that this is not a very high bar to set in comparison to other working professionals, but nearly everyone in the tech industry, and most other people who have a desk in a company's head office, are working at a level above the average person. Many of the posters on HN are biased by their personal and professional contacts and have an incorrect impression of what an IQ of 100 looks like, or how smart the average person is.
Going back to what I said originally, being smart is not the same as being infallible. Smart people can get themselves into all sorts of trouble that everyone else would have the humility and common sense to avoid.
I understand that this is not a very high bar to set in comparison to other working professionals, but nearly everyone in the tech industry, and most other people who have a desk in a company's head office, are working at a level above the average person. Many of the posters on HN are biased by their personal and professional contacts and have an incorrect impression of what an IQ of 100 looks like, or how smart the average person is.
Going back to what I said originally, being smart is not the same as being infallible. Smart people can get themselves into all sorts of trouble that everyone else would have the humility and common sense to avoid.
If you are implying those attributes are unique to coders, or that all coders have them, i'd have to politely disagree with both points.
Coding might imply a capacity to do other complex jobs, but not to become an expert in said field. There's only one way to do that, with time and effort.
Coding might imply a capacity to do other complex jobs, but not to become an expert in said field. There's only one way to do that, with time and effort.
They're attributes that are common in somewhat demanding professional careers, and related to having an above-average IQ, e.g. being smart.
My main problem with the original comment was that it implied tech people aren't actually smart, when they are usually well above average. The problem is confusing general intelligence with knowledge in specific areas, not that they're secretly stupid. I think this is close to what you're saying as well.
My main problem with the original comment was that it implied tech people aren't actually smart, when they are usually well above average. The problem is confusing general intelligence with knowledge in specific areas, not that they're secretly stupid. I think this is close to what you're saying as well.
I would respectfully disagree with your premise that there is such a thing as "smart". Ie. if you can do one thing well that requires a specific skillset, you can do another thing well too.
That's why Elon Musk got asked about COVID and Kayne about foreign policy. We need to stop doing that. Musk is great at building companies, knows nothing about virology. Kayne is a good at music, end of list.
That's why Elon Musk got asked about COVID and Kayne about foreign policy. We need to stop doing that. Musk is great at building companies, knows nothing about virology. Kayne is a good at music, end of list.
Smart, tech people, and average are all terms that need context. There are a lot of dumb programmers out there. There are a lot of really smart ones.
If you're defining "dumb" as "below average" then no, there really aren't.
If you're defining "dumb" as "below average for a programmer" then yeah that's... about half of us, turns out.
Programming isn't physics, but it is a profession that starts around +1 SD. Below that you're gonna wash out.
If you're defining "dumb" as "below average for a programmer" then yeah that's... about half of us, turns out.
Programming isn't physics, but it is a profession that starts around +1 SD. Below that you're gonna wash out.
My limited understanding of the brain is that programmers are able to put the pieces together by combining their memories and short term memory.
But that's drastically different than Engineering where calculations are done methodically.
But that's drastically different than Engineering where calculations are done methodically.
I think we all remember which group of people green-lit Soylent.
Soylent is actually not a bad idea IMO, and it kind of spawned a small industry of competitors (e.g. Huel), the problem there is that entrepreneurs have a tendency to make products that only appeal to other people in their techy/"product"/entrepreneurial bubble isolated to a small number of US cities. And I say that as someone who really likes Coffiest (or whatever they call it know)
They can code, yet many remain painfully ignorant about people and the world.
It also makes things harder for those of us that don't want to run Ponzi schemes: How does one break out when everyone's taking glamorous selfies in Thailand but I'm working in a dingy apartment trying to build the next big app?
It's a tough situation on all sides with no obvious solutions.