
Why don't rich people do more awesome things? - peteforde
I saw Paul Graham's post today (http://paulgraham.com/saveelan.html) about how someone should buy the building a restaurant he likes is located in. Isn't this sort of like a capable developer complaining to the core team of an open source project that they should implement a new feature. Why the heck doesn't he just buy it?<p>I don't mean to single out PG, who is a hero of mine. I'm more confused that this kind of thing seems to happen a lot: you'll see prominent, successful people mention that someone needs to raise $25k to X or $100k to Y, and I know that if I owned 5-8% of 300+ startups, I'd be cutting a lot of cheques.<p>Buying a car or a house in cash is showoff-y, singlehandedly saving a cause makes you a hero. Why doesn't this happen with regularity in SF and beyond?
======
pg
I can't afford to. If I could afford to, I would have quietly done it. But
real estate in Palo Alto is very expensive, and most of YC's investments are
still illiquid. (Not that I have 5-8% in any case. We assume we get diluted
down to 2% by exit, and I am one of several partners in YC.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So there ya go.

~~~
nitrogen
For some reason this post by alnayyir is dead:

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

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

To my detriment, and with gusto._

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

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

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

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

\--

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

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

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

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

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

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

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

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

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

~~~
true_religion
What I see is a split in the market.

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

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

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

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

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

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

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

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

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

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

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

[1]: <http://en.wikipedia.org/wiki/Paul_Allen#Assets> [2]:
[http://en.wikipedia.org/wiki/SpaceShipOne#Development_and_wi...](http://en.wikipedia.org/wiki/SpaceShipOne#Development_and_winning_the_X_Prize)

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

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

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

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

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

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

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

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

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

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

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

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

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

~~~
steveh73
I think buying a car on credit may be an American thing - at least I don't
know of anyone who has bought a car on credit. It seems like an absurd waste
of money to do so - why not just buy a secondhand car you can afford outright?

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

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

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

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

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

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

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

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

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

Is that allowed to count?

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

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

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

But me, I DO NOT CARE.

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

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

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

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

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

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

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

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

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

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

------
B_
This rich guy:

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

Does a pretty awesome thing:

<http://www.strictlybluegrass.com/>

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

------
quattrofan
I think there are a couple of things here:

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

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

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

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

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

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

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

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

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

They're called philanthropists.

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

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

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

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

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

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

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

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

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

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

------
r22
A lot of young wealthy people I know don't do awesome things, same for heirs
to fortunes. They just spend more money, maybe give some to charity but
overall they aren't doing things that help society or their local community in
significant ways. Oh but they can spend $3K on bottle service, no problem
there.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

------
MenaMena123
This may not apply to PG or alot of others, but you would be surprised how
much money people don't really have. I knew someone that I thought had cash.
In reality he was broke and had all his money tied up in deals or stocks etc.

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

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

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

[http://techcrunch.com/2011/05/25/absolute-must-watch-
office-...](http://techcrunch.com/2011/05/25/absolute-must-watch-office-hours-
with-paul-graham-at-tc-disrupt/)

