
Hotshot Tech Founders Face a Dilemma: Lie Low or Live Large - jkuria
https://www.wsj.com/articles/hotshot-tech-founders-face-a-dilemma-lie-low-or-live-large-1510787899?tesla=y
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cyberferret
Many startup founders go through months, and _years_ of living on beans,
struggling to pay bills and making do on a shoestring budget. Why should they
not enjoy the benefits of their spoils if they do make it?

I recall a chapter that struck me from Bob Taylor's book (of Taylor Guitars).
The first half of the book was all about him building guitars in a shed, then
loading them in a car and visiting guitar shops one by one, trying to convince
them to buy his guitars and display them next to the Martins and Gibsons etc.
that had a lion's share of the market.

Many years later, when he became one of the most successful guitar companies
in the US, he built himself a nice house, and he used to invite his staff
around for an annual BBQ to show his appreciation of them.

Then one day, at the BBQ, he overheard some senior management pointing at his
new pool rockery and saying "So THAT's where my bonus went this year...". He
stopped inviting staff to his house after that incident.

"Tall poppy syndrome" exists in all industries and cultures. Personally, I
don't see why people who have sacrificed a lot in order to make money in the
early days cannot enjoy it later when they _do_ make it. As long as they
maintained a high standard of ethics and principles doing so, of course.

~~~
lovich
I'm not sure how much of it is tall poppy syndrome when it comes to employees
vs bosses. Its might be uncomfortable to talk about, but every dollar the boss
keeps _is_ a dollar that the employees don't get and the boss is the one
deciding how much both sides get.

Tall poppy syndrome would be more applicable if it was peers being upset at
the success of one of their own, not between subordinates and leaders

~~~
Trundle
Are you an indentured servant? The boss certainly doesn't get to decide how
much both sides get. Those that hand out high salaries aren't doing it as some
form of charity. It'd be absurd and stupidly inefficient if they were, most of
the world lives on US$10 or less.

~~~
anothertraveler
In my opinion, it is easy to feel like an indentured servant as an employee,
especially if that employee lives paycheck to paycheck or is servicing a lot
of debt (mortgage, car payment, health insurance premium and bills) that I see
a lot in the American economy.

There is also a lot of pro-management literature that defines a work culture
where employees should be loyal to their company, boss, etc., give two weeks
notice when quitting, among other things that psychologically disenfranchise
employees.

In reality though, at least right now in the tech industry, if you don't like
your salary, job or work environment, it isn't hard to re-tool and find a new
job...

In blue-collar/unionized industries, it might be totally different. I don't
totally understand the work cultures of other industries, especially lower
paying ones.

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closeparen
They’re talking about _buying a house_ like it’s some kind of baseline.

The baseline six-figure software engineer lifestyle is a room in a shared
apartment in Oakland or the deep East Bay. Living in San Francisco, having
your own place, and (gasp) buying a tiny condo are the various degrees of
living an exorbitant lifestyle. Buying any sort of freestanding structure is
approaching a pinnacle of decadence that’s an extreme stretch to even the most
elite tech employees. But oh, they’re “lying low” because they’re buying
houses where the qualifying income is $300k instead of $500k. Give me a break.

~~~
eldavido
Sorry but this is just wrong. I rent in Lake Merritt just off the 17th St BART
stop for 2200/month. I split it with my wife. If you can't make a 2k/month
rent payment on 100k/year of income, you're not managing your money well.

~~~
austenallred
Ya I have a two bedroom townhome in the east bay, have kids and my wife
doesn’t work. When I made $120k I saved over $2,000/month.

It’s expensive, but it’s not _that_ bad.

~~~
closeparen
When did you buy? Ownership was much more attainable even 5 years ago.

~~~
rconti
Which is the exact thing they were saying 5 years ago..

~~~
closeparen
Five years ago, a simple San Francisco house cost what a luxurious Midwestern
second-tier city house cost. This was sort of reasonable; you're buying
premium housing, but the premium part is the location rather than the house
itself.

Growing up, I went to a handful of parties in rich friends' stunning lakefront
mansions that cost barely $1.2m. The nicest houses my parents and I could even
conceive of are worth less than a median San Francisco house now. So I dunno.
Feels like something has _really_ changed.

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ashark
Taking Fussell’s _Class_ as a guide, this seems normal. New money will act
like middle or upper-middle folks, but their kids or kids’ kids will be lower-
key, fully upper-class. If they keep money in the family long enough they may
enter Fussell’s “top out-of-sight” class, largely leaving public life and
retreating to secluded country estates and various havens for the ultra-rich.

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osrec
There is something endearing to me about the ones who choose to lie low
despite their new found wealth. I think it displays a sense of contentment
that existed even before they "made it". People like that are rare in my
experience; individuals who have an inner stillness that is unruffled by the
elevating or depleting circumstances they find themselves in. I have met a few
in my time, and have often enjoyed their company, not least because they seem
to live life with a more meaningful purpose, rather than with a drive to "make
lots of money".

~~~
AznHisoka
a lot of rich people in China are like this. They live modestly even though
they have millions. But the main reason is because they are afraid if they
show their wealth, people will attempt to kidnap their children and hold them
for ransom. Apparently that is a popular thing in China.

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austenallred
I find it funny that an $8 million, 3,500 square foot house in downtown SF for
a single person is “laying low.” I mean I get that they could have much more,
but most wealthy people I know would actually prefer 3,500 sq feet over
30,000. I don’t think it’s all an image thing, it’s just knowing that adding n
square feet to your home doesn’t do much for you.

~~~
javajosh
More than that, every extra square foot is an added ongoing maintenance hassle
and expense. It would be interesting to study where the "status = big house"
thing arose in our cultural history. There are other measures of status, like
staff, participation in civic events, charitable giving, etc.

~~~
sliverstorm
Big houses are a display of wealth, plain and simple, and precisely because of
that maintenance expense. Think back two or three hundred years ago when land
was cheap or free. Who had gigantic houses? Only people who could retain
enough slaves or staff to keep it for them.

~~~
thaumasiotes
> Think back two or three hundred years ago when land was cheap or free.

That's a very odd perspective. It applies to the United States, but the United
States is at best 500 years old. In the Old World land hasn't been cheap at
any time in recorded history.

~~~
barry-cotter
I suggest you look up the Drang nach Osten and the expansion of Russia or the
history of the Cossacks. There’s land in Western Europe that was cultivated
before the Black Death that hasn’t been since. Europe has absolutely had
frontier in the past 500 years. Manchuria, both what’s now Russian and what’s
now Chinese also had abundant freeish land when the Qing dynasty opened it up
for Han settlement.

You’re wrong.

~~~
thaumasiotes
Ok. What do we mean by "when land was cheap"?

There's plenty of land available cheap or free _right now_ because it's
worthless. That's always been true; it would make no sense to think of it as
something that changed in the last few hundred years. Land cultivated before
the Black Death and left unused since then would fall into this category.

I was aware that the Black Death severely depopulated Europe such that
everyone left was much wealthier (well, the peasants -- the nobility were
poorer, in that their wealth included their supply of peasants), but it seems
odd to say that land was cheap then since as far as I know European feudal law
prohibited the owner of land from selling it. I'm aware of some other examples
of land going unused despite high potential for productivity:

Ukraine was historically very underpopulated because unrelenting slave raids
kept the population down.

Most of tropical Africa never experienced much population pressure because
human populations were suppressed by diseases and elephants.

What is now Xinjiang would have been pretty depopulated by the Zunghar
genocide. On the other hand, it's not like the Chinese rushed to settle it
voluntarily -- it was settled by forced relocations.

The existing population of what is now the United States was wiped out in
advance of European settlement, and the land was highly fertile. Cultivating
it was purely a manpower problem - you could go out, settle land, produce
enough food for a household of a dozen people, and not be subject to much in
the way of environmental dangers, or competition from other people who wanted
your land.

Which of those sounds more like a period of "when land was cheap or free"? How
are you defining "when land was cheap or free" such that it's not cheap or
free right now?

~~~
barry-cotter
Land is cheap when it is literally being given away, or when it’s there for
the taking and no one takes it.

So, when Catherine the Great called for settlers, saying they could have free
land, didn’t have to pay taxes, and didn’t have to serve in the military that
land was not just cheap, but free. The Mennoninte of Canada and the USA are
descended from those people. They’re Protestants, so that’s the last 500
years.

What the hell is European feudal law? Property held in fee simple, dates from
the 1200s in English law. I’m not familiar with other European legal systems
but I know that Eastern European economic development is basically the story
of German settlement and the good burghers were not serfs. They owned their
own businesses and farms.

The Ukraine is an example of a place where land was cheap. You gave some of
the reasons why, but that does not detract from the fact that there have been
times since 1500 when land was cheap.

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anothertraveler
I think the key point here is that - if a founder is raising money for a
company from investors, and the founder simultaneously buys a mansion - the
founder is implicitly communicating that s/he doesn't believe that investing
that capital in the company is as valuable as a real-estate investment in the
mansion.

Founders have a very specific job to investors: to return their money with a
hefty return on investment. If the expected ROI is higher buying a mansion,
then maybe the investors should invest in mansions rather than the tech start
ups.

~~~
smileysteve
Investors also have a fairly specific job to founders and employees taking
equity vs salary: allow enough needs to be met such that seeking employment
elsewhere isn't a temptation/need.

A C suite (and often to developers and pos) position at a startup that has
raised funding is likely to experience 1) offers at or above market rate in
leadership positions 2) A professional network of people able to afford a
certain comfort 3) a stressful or dismal looking event at work.

~~~
anothertraveler
Great points.

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NelsonMinar
Consider the struggle for the poor startup founder who is living in a house he
owns outright that's only worth $4M. It's practically a vow of poverty.

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ChuckMcM
There were many examples in the dot com boom where people who sold stock and
bought real estate did better than people that held stock (the stock later
crashed). However, buying 'too much' house just increases your burn rate
unnecessarily.

~~~
whb07
Counter point to you is the well known case of Mark Cuban, who as soon as he
got his $X billion in Yahoo shares pre-bubble-pop he hedged his shares against
Yahoo indirectly by shorting the indexes holding tech shares to include Yahoo.

Of course everyone called him crazy and when the bubble popped he had
insurance for that. Friends of his and coworkers who didnt listen to his
advice lost most if not all their paper net worth.

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manigandham
Bad signaling due to spending large when a company is still shaky or raising
money is one thing - but the scrutiny over how other people spend their money
always seems rather strange.

On one hand, starting a business and being successful (at least financially)
is highly encouraged, however as soon as someone makes it, then it's all about
how they dare to spend what they've earned instead of considering the billions
of other people on the planet with every decision. Perhaps it's best to just
let people do what they want with what they have.

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personjerry
So people either spend their money, or they don’t?

~~~
anothertraveler
There are platitudes that money doesn't really matter. Money doesn't buy
happiness, etc... But in the US, money is very important. If you have to go to
work every day to survive, you are _working class_. If you get laid off, and
you have to find a new job to make a mortgage payment, you are _working
class_.

Having money is simply a means to an end. For some people, that end is the
freedom to not have to go to work every day. To focus on things they care
about. To have new experiences that don't involve sitting at a desk for 14
hours straight, 5 days a week. But there are many ends. For me, I respect
those who don't have to work to survive as having made it, because I know the
guy driving the BMW probably financed it and is driving to work.

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Kyragem
Founders cashing out early with investors like Goldman Sachs left holding the
bag? Not a bad proposition.

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trhway
why only these 2 alternatives? I don't understand (may be i'll understand when
i make $1B myself :) why so few Elon Musk-s around - i mean the guy made it
long time ago back then at PayPal and instead of either - lying low or living
large - he went ahead to move our civilization forward. Of course many others
do continue to invest after making it, yet they do it primary to make even
more money.

~~~
greglindahl
Most entrepreneurs are "one hit wonders".

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Anticapitalist
A 4 bedroom house in South palo alto is at least a $1 million property. Not
exactly modest.

~~~
rconti
If by "4 bedroom" you mean "2 bedroom" and by "1 million" you mean "2.1
million".

[https://www.zillow.com/homes/for_sale/19469270_zpid/globalre...](https://www.zillow.com/homes/for_sale/19469270_zpid/globalrelevanceex_sort/37.44832,-122.12313,37.445172,-122.127808_rect/17_zm/)

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seibelj
Some people feel like shit all day for succeeding. I choose to feel great.
Cest la vie

