
The Man Who Sold His Fate to Investors at $1 a Share - sk2code
http://www.wired.com/business/2013/03/ipo-man/
======
Delmania
I suspect I'll get downvoted for this, but for some reason, I find this quote
chilling, “Children are a financial drain,” Merrill wrote. “The time
investment of raising a child is immense. The responsibility is epic. The
impact on future projects would be drastic. In light of these factors, it
makes sense to reduce the chances to nearly zero and have a vasectomy
performed.”

It seems to completely remove the joy and satisfaction that comes from raising
children. Only a few things should be viewed from a financial lens. Wealth is
not money, wealth is discretionary time.

~~~
Pkeod
YMMV. Not everyone wants kids, plenty of people are already having kids, many
people who do have kids regret it entirely, and many people correctly
recognize that you can't live your dreams and raise your kids right. It's not
just a financial lens for many people it's a time lens too.

Having kids whose lives you very probably won't even be allowed to be a part
of is a reality for many guys too. Even if you have kids in marriage the
reality is you will probably get a divorce, the kids will go to the mother,
and you will pay.

Why risk it if you know you can avoid it? Having kids it's a guarantee of joy
or satisfaction. Writing books, creating epic things can give just as much joy
and satisfaction.

10 year at a time male birth control is coming so vasectomies will no longer
be necessary. <http://www.parsemusfoundation.org/vasalgel-home>

<http://reddit.com/r/childfree>

~~~
rayiner
This is why India is ultimately destined to overtake the western world. Either
directly or from within.

Having had occasion to debate about this on /r/childfree, I feel like a lot of
their arguments are based on one of the following fallacies:

1) That there are "too many people." That may be true in parts of Africa, but
in the developed world, the positive economic contribution of each additional
person still vastly outweights the cost of their incremental strain on natural
resources.

2) That depopulation in the future doesn't affect people in the present. If
you're thinking of investing in a startup, what does it do to your calculus if
you know that your customer base won't be any bigger in 20 years than it is
today, and will be older?

3) There is no positive externality to having kids. Your average person is
going to contribute millions of dollars in labor and social value (how much
would you pay to save the life of a loved one?) over his or her lifetime.

4) Failure to look at the value of alternatives in incremental terms. The
question isn't: what is the value of having kids versus doing a startup, it's:
how much does having kids reduce my probability of doing a startup, and what
is the weighted value of that relative to having kids.

5) Failure to account for the correlation between parent-child incomes. I'd
say 90% of the kids from my high-income suburban middle school are now making
median or above incomes. Maybe 7-10% are in the top 1% of income for their age
bracket. High income people create a larger positive externality when they
have kids.

6) Failure to weight the value of alternatives by probabilities. Your average
person has very few alternative courses of action that is going to generate as
much economic value as raising kids. Your high income person has has a greater
probability of doing these things, but writing a best-selling book or founding
a successful startup is far from guaranteed. So the relevant question is not:
what has higher external social value, doing a startup or having a kid, but
rather which of those has higher social value weighted by the probabilities
that your startup will have any real success (low), or by the probability that
your kid will achieve at least median economic success (quite high).

This is of course not to argue with anyone who chooses not to have kids.
Nobody needs to justify personal decisions like that. But to the extent that
they do try to justify it (and that's largely what /r/childfree is--people who
feel the need to justify their decision), it's useful not to rely on
fallacious reasoning to do so.

~~~
Pkeod
/r/childfree is still a useful place for people to gain some perspective -
that there are actually people who never want kids and have mostly good,
personal reasons for this. Not everyone cares about the fact that other
countries will likely dominate in the future. Hey, good for them.

For individuals who weigh the risks and rewards in our society it is easy to
make the judgement having kids does not make sense. A lot of things we do in
modern society is that individuals value their own welfare more than the
welfare of the group, and are unwilling to sacrifice in exchange for the
group's future prosperity. I refuse to be a disposable slave. I value my time
and my life, and I am worth more long term by not taking what seems to me as
stupid risks.

~~~
rayiner
You make an important point, which is that the value of kids is a positive
externality that is not easily captured for yourself. And that's certainly
true with regards to kids: you spend hundreds of thousands of dollars raising
them, but it's their employers and society at large that capture their
millions of dollars in productive labor. If you care more about yourself than
your tribe (and there's nothing wrong with that), it does indeed make sense
not to have kids.

My objection, again, isn't to people who choose not to have kids. My objection
is to the people (and I think they make up the bulk of /r/childfree) who rely
on specious arguments to justify their decision, and act like they're doing
society a big favor in not having kids so they can focus on their music
career.

------
maxent
The idea of selling equity in oneself is the topic of a great book (written in
2000) called "Future Wealth" by Chris Meyer and Stan Davis:

<http://www.amazon.com/Future-Wealth-Stan-Davis/dp/1565113942>

David Bowie sold bonds backed by his IP in 1997:

<https://en.wikipedia.org/wiki/Celebrity_bond>

The book talks about equity being a logical next step and about the value of
being able to diversify and distribute risk. I think there is definitely one
possible future where this is very common. It probably starts with athletes
and celebrities - as you can see, this guy has gotten a terrible valuation
(for several reasons).

For years, I have been talking myself out of starting a company that serves as
an exchange for people selling equity in themselves. It is inevitable that
someone tries this because the crowd-funding industry is so sexy. It will be
an interesting experiment, but I'm not sure the effects on society will be net
desirable. At its best, it would give people the ability to sell a fraction of
themselves for some up-front cash and give them the ability to take bigger
risks in the projects they do. Anyway, if you want to talk more about this,
hit me up.

------
PaulHoule
I think the amount of money involved is shockingly small.

To get some idea of what the present-time value of a person's work is, if you
make $50,000 a year and work for 20 years, you make $1M in that period of
time. He could make the $100,000 by working another 4 hours a week over the
next 20 years and not need the $1K.

I mean, my wife and I regularly make small business investments in our
activities of up to $500 without ever asking each other. We'd usually ask each
other if it's more than that.

This guy is having to talk to a committee just to make a $90 investment that's
just nuts. But I guess it's just a matter of time before cargo cult investing
gets celebrated in Tired magazine.

~~~
redblacktree
Yeah, it seems that he undersold on the IPO. I guess investors were nervous
about a new asset class.

------
VexXtreme
I don't think this is about money at all. More likely than not it's some kind
of sexual fantasy or something similar. No sane person would sell themselves
for a couple thousand bucks like this just for the possibility of turning
profit in the future.

~~~
lelandbatey
I don't know. Many people do odd things for no reason other than their own
curiosity. For example, there's the guy making soylent in an effort to create
something that lets him avoid eating. Many would ask "why?" while they say
"why not."

Also, selling only 10,000 shares lets him back out if he where to encounter a
problem (such as one person buying all his shares and then demanding he act in
ways he's uncomfortable with).

~~~
pavel_lishin
According to the article,

> _He kept the remaining 99.1 percent of himself but promised that his shares
> would be nonvoting: He’d let his new stockholders decide what he should do
> with his life._

So how does that really let him back out?

~~~
maxerickson
Well, he could just go ahead and back out. Which is separate from the
discussion about the details of the ownership and corporate structure letting
him back out, but still sort of successfully renders it moot.

------
zavulon
I haven't had my tea yet this morning, so I'm a little slow.. This isn't real,
right? There's no way this is real.. Right?

~~~
theDoug
It is real, there was also this piece[1] in The Atlantic earlier this month,
and Mike's on the Today show this morning.

I'm Doug Stewart[2] (mentioned in the interactive "Who Owns Mike Merrill?"
graph). If anyone has questions, I'll try my best.

[1]:
[http://www.theatlantic.com/magazine/archive/2013/04/putting-...](http://www.theatlantic.com/magazine/archive/2013/04/putting-
the-i-in-ipo/309255/) [2]: <http://www.kmikeym.com/users/137>

~~~
phpnode
Just curious, do you really make more money as a photographer than as a
developer? Or is one firmly _work_ and the other firmly _hobby_?

~~~
waterlesscloud
Or perhaps both are work?

He wouldn't be the first person in history to work two jobs when one paid more
than the other.

~~~
theDoug
Exactly/thank you. They're complimentary, and like most things in life, one
single thing can't really satisfy all our creative hopes/needs.

------
alexjeffrey
this is insane - the investors' plans are very unlikely to align with his
personal wants and needs (unlike a business where the goal of making money is
shared between the business and its shareholders).

some of the examples in the article make this abundantly clear:

* the sleep experiment, where he was obviously suffering by the end

* the gay relationship which, while the article doesn't mention whether Merrill is bisexual, certainly seems to imply that he isn't and went through with the relationship to appease his shareholders

~~~
heiska
It's not insane. By definition, insanity is doing the same thing over and over
again expecting different results.

He changed his sleeping routine and had a homosexual relationship, found out
they didn't work out for him, gave up on them. Nothing insane about that.

~~~
tjic
> By definition, insanity is doing the same thing over and over again
> expecting different results

That's a pithy cliched phrase, but it's not the definition.

One really needs to read through the DSM (it's a flawed political document
firmly embedded in the prejudices of its day (i.e. today) that's more pre-
scientific taxonomy than science), but the short version:

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

Insanity, craziness or madness is a spectrum of behaviors characterized by
certain abnormal mental or behavioral patterns. Insanity may manifest as
violations of societal norms...

------
svag
As a single page <http://www.wired.com/business/2013/03/ipo-man/all/>

------
chiph
This is essentially the plot of _The Unincorporated Man_. Only with micro-
managing.

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

------
jcr
The previous HN discussion mentioned in the article is here:

<http://news.ycombinator.com/item?id=723408>

------
antihero
What's to stop a rich asshole buying up a massive majority and then just
making him do fucked up stuff?

~~~
geoffschmidt
It's sort of a microcosm of capitalism in that respect, don't you think? It's
a wonder that our system works as well as it does.

~~~
slygent
Because people can choose whether to "sell shares" or not? A controlling stake
would be worth rather more than a minority one, surely?

------
blablabla123
It's quite funny, and a consequent move in a robotic system. We can all live
like robots if we want, he is taking it seriously.

At least on average, the more robotic you live your life, the more money you
get. 9 to 7 instead of 9 to 5? Working on weekends? He is taking it to the
extreme, he will be working 24/7. He is selling responsibility for his life
for anyone giving enough money.

------
RyanMcGreal
There are a number of relationship types in human interactions:
family/communality, reciprocity, and dominance.

At a minimum, any attempt to expand one relationship type (in this case,
reciprocity) to encompass an entire life can be expected to entail high levels
of _awkwardness_ \- the feeling a person gets when they realize their
understanding of a relationship type with someone else is different from that
other person's understanding.

The evidence also indicates that when the norms of reciprocity are imposed on
erstwhile communal relations, the reciprocity paradigm consumes the
communality paradigm and the relationship changes from communal to reciprocal.
In effect, turning your entire life into a market transaction makes
communal/familial relations impossible.

For most people, I can't imagine this would be conducive to good mental and
emotional health. (Presumably, psychopaths won't have a problem with it.)

------
shanelja
I can't help but feel that if this was financially legally binding - for him
to have to pay these dividends - it would be a great way to fund your way
through college, E.G: I'm too poor to afford college, if you fund me the
$40,000, you can have 10% of my life income.

It makes sense, assuming you pick your candidates wisely and aren't scammed
(and that's a big if!):

$40,000 down-payment for 10%

10% per year for $3,500 per year [1] over a career of around 30 years:

30 * 3,500 = $105,000

Average profit: $65,000

[1]
[http://en.wikipedia.org/wiki/Personal_income_in_the_United_S...](http://en.wikipedia.org/wiki/Personal_income_in_the_United_States#By_educational_attainment)

~~~
mootothemax
From the article:

"Upstart.com, a company founded last year by Google exec David Girouard,
offers a bit of capital in exchange for a cut of a college graduate’s future
earnings."

~~~
count
How is this different from a student loan? Bank gives student $100k, student
pays bank $250/mo for 30 years (or whatever the terms are).

~~~
keenerd
The bank wants their money regardless of how much you earn. With this scheme,
if you don't earn anything you don't pay anything and when you do pay it is
always a managable amount. This sort of arrangement could be very handy for a
programmer-mendicant or compulsive volunteer.

~~~
Ygg2
Or a a nefarious person. Upstart deal sounds too good. With some Hollywood
accounting, you might even be able to skip paying them anything.

~~~
Evbn
This happened in the 90s with the Hope Scholarship, which failed for the
obvious reasons.

~~~
caw
The HOPE scholarship, if you're referring to the one in Georgia
(<http://en.wikipedia.org/wiki/HOPE_Scholarship>) is still alive. I went to
school, getting full tuition plus a book and fee stipend for my undergraduate
degree. Eligibility became more difficult sometime after I graduated, but it's
still around.

~~~
gwern
That can't be it; there's nothing in there about repayment or treating the
loan as equity rather than debt.

------
iopuy
Obviously this is a joke. Look at his sleeping excursion, it didn't work so he
stopped. It's a fun cute thing to do but little beyond that. Does he have the
same legal protections and obligations as a company? No. Would any of this
hold up in a court of law?. No. Congratulations to the hacker news reader who
got a comment in the paper. I also don't know what to make of the sentence
about "fooling around" with that guy. Can some explain what I just read there?

~~~
dubcanada
I think it's pretty obvious what you just read. But if you really need someone
to explain it, you can read up about male + male sex on pretty much any search
engine.

------
mhb
How much for a kidney?

------
troyastorino
Wouldn't this be illegal under the 13th Amendment? Isn't it equivalent to
partial slavery?

~~~
meric
He still controls 98+% of shares, which he is choosing not to vote with.

~~~
ryanbrunner
That probably changes things then. I mistakenly assumed that his shares were
actually non-voting shares, and that he had no contractual right to vote. If
he has voting rights but is just abstaining from using them, then that's quite
a bit less crazy.

~~~
Samuel_Michon
You weren't mistakingly assuming it, it was mentioned in the intro of the
article:

 _“He kept the remaining 99.1 percent of himself but promised that his shares
would be nonvoting.”_

There's also no mention of it in the FAQ on kmikeym.com, I'd say it'd be
pretty important information to disclose to (potential) investors.

~~~
ubercow13
There's a difference between actually non-voting and with voting powers that
he has promised investors he will not use.

~~~
Samuel_Michon
I'd love to see a source for that. I've browsed quite a few of his websites
and read several articles about the project, but I've not come across him
saying he has voting shares that he promised not to use.

------
daSn0wie
I think it's a great idea. I feel like I commonly give advice to people, but
not knowing what else is going on in the person's life. Also, the outcome of
my advice usually doesn't have a direct effect on me. At least a bad decision
(or multiple bad decisions) have a financial impact on the stock performance
and/or the willingness of the company to continue to participate.

------
brianbreslin
Brilliant ending. Would love to see a follow up. What happens when he wants
out? Does he ave to buy everyone out? File for ch 11?

~~~
TheCoelacanth
I can't imagine this arrangement is legally binding. The 13th amendment kind
of interferes.

~~~
brianbreslin
but he intentionally entered into this arrangement on his own free will.

~~~
TheCoelacanth
That doesn't matter. A voluntary agreement is only valid to the extent that it
is legal.

------
yohann305
At the frontiers of slavery. This guy is getting too much attention, he better
have a great lawyer, troubles ahead.

------
gamblor956
I think someone took _The Unincorporated Man_ a little too seriously.

The reason that we don't allow people to sell shares in themselves is because
it will inevitably result in indentured servitude, or even de facto slavery.

------
alexgrande
That is _so_ Portland.

