I’ve heard quite a bit about there being a kind of wealth tax among the poor. But you also claim that there is a wealth tax among startups. I’m pretty skeptical about this being widespread. Firstly, I suspect that startups tend to have less experienced CEOs, so they are more likely to engage in irrational spending rather than become the bad guy by reigning it in. Secondly, I suspect that startups are worried about the signalling implications of cutting back spending as this may trigger employees to jump ship and may indicate to potential investors that they aren’t confident that they’ll get funding from other people as well.
There are different kinds of start-ups. I don’t think this effect applies to start-ups that are actually doing business. If you’re making and selling widgets, wealth pays dividends rather than being taxed. But I do think that if you’re basing around venture capital rather than profitability, the effect is quite real.
Vendors charge you very differently if they think you’re cash-rich, employees demand far more pay, venture capital holds out until you’re broke, and so forth. You could think of this as a subsidy for being cash-poor (you get out of the charges that would normally apply to trying to get high-quality people and services to come together and build something for you) rather than a wealth tax, but functionally both are the same. It also doesn’t help that yes, being concerned about money sends the signal you’re not successful, and everything is compounding so fast, so there’s huge pressure to spend everything you have all the time. There’s jump-ship worries, but it goes far beyond that.
Then, because you end up poor from all that, you get the anti-poor wealth tax hitting you as well, now that you’re actually cash constrained. I think of the whole thing as, doing things for real is such a hugely productive thing to be doing that there’s a ton of ruin in the system.
I’ve heard quite a bit about there being a kind of wealth tax among the poor. But you also claim that there is a wealth tax among startups. I’m pretty skeptical about this being widespread. Firstly, I suspect that startups tend to have less experienced CEOs, so they are more likely to engage in irrational spending rather than become the bad guy by reigning it in. Secondly, I suspect that startups are worried about the signalling implications of cutting back spending as this may trigger employees to jump ship and may indicate to potential investors that they aren’t confident that they’ll get funding from other people as well.
There are different kinds of start-ups. I don’t think this effect applies to start-ups that are actually doing business. If you’re making and selling widgets, wealth pays dividends rather than being taxed. But I do think that if you’re basing around venture capital rather than profitability, the effect is quite real.
Vendors charge you very differently if they think you’re cash-rich, employees demand far more pay, venture capital holds out until you’re broke, and so forth. You could think of this as a subsidy for being cash-poor (you get out of the charges that would normally apply to trying to get high-quality people and services to come together and build something for you) rather than a wealth tax, but functionally both are the same. It also doesn’t help that yes, being concerned about money sends the signal you’re not successful, and everything is compounding so fast, so there’s huge pressure to spend everything you have all the time. There’s jump-ship worries, but it goes far beyond that.
Then, because you end up poor from all that, you get the anti-poor wealth tax hitting you as well, now that you’re actually cash constrained. I think of the whole thing as, doing things for real is such a hugely productive thing to be doing that there’s a ton of ruin in the system.