* Software R&D Amortization - taxes on make-believe profits
* Patent law - protect small businesses from patent trolls
* Automate government-driven compliance standards - enable small businesses to sell into large companies/government entities, automatic certification when using pre-approved cloud solutions.
* Healthcare insurance - employees of SMBs automatically get access to medicare
> * Automate government-driven compliance standards - enable small businesses to sell into large companies/government entities, automatic certification when using pre-approved cloud solutions.
I don't see how this will end well. I appreciate the reasoning behind it, but this is not a good solution.
I'd prefer to see more "startup friendly" compliance frameworks that don't require tens to hundreds of thousands of dollars and make both the startup and their customers satisfied with the outcome. Something like a SOC2-lite that isn't so onerous but still provides a decent snapshot of their current situation from a third party's perspective.
I'd also prefer to see these standards go away. I haven't seen any proof they are providing meaningful security at any company I've been at and several of them have had massive hacks despite being SOC2 on paper. They also eat up InfoSec time instead of being productive on meaningful stuff like "Hey, are patching everything?"
Most of these compliance just seem like barber licenses. A way for existing entities entrench themselves.
Here here. The only thing SOC2 has done in my opinion is to create a multibillion dollar business that mainly just drains resources from companies that may not have them, with no guarantees you're actually secure. This usually devolves into security theatre where the CISO and underlings are putting in tools that drown teams with so much noise it's hard to detect the signal.
The people running these programs rarely understand the security space well enough to even tell you what a lot of the hits even mean, which ramps up disdain and division between the groups. This is arguably more detrimental to security as the scanners give execs/management a false sense of security while the noise makes it incredibly difficult to run a holistic security strategy.
(It’s "hear hear," since you want people to hear it. Honestly I have no idea whether to say something or not. But I’d want to know, so, just in case it’s helpful.)
I agree that regulatory compliance and industries around that can often be theater and it creates regulatory barriers that inhibit startups and competition generally but there must be some method of oversight to ensure that people can trust a system or company without needing to see the internals. For example, we trust our food is healthy because the firm that made it is authorized to do so by the FDA as they comply with the rules established by those regulators. Obviously there are flaws, loopholes, etc, and obviously software is different than health but to an extent we want some guarantees from an externally trusted actor. What is needed in the current SOC2 world that might solve some of the issues you outlined without getting rid of it, or the idea of it, entirely?
>What is needed in the current SOC2 world that might solve some of the issues you outlined without getting rid of it, or the idea of it, entirely?
IMO, nothing. It's not redeemable at all. Since you asked though, here is some thoughts:
Be more like FDA process where software is extensively reviewed, rollback procedures established, and you launch specific version with compliance. So basically two releases, maybe 4 a year.
Disallowing risk mitigation because IMO, that's result of most of problems. Oh yea, we are doing "Terrible Security thing but since fixing is too expensive, here is a bunch of lies about how we have mitigated it."
There is also option to make a government audit with criminal liability for falsifying/misleading auditors. This third-party system where auditors are getting paid results in problems. I've seen plenty of audits where bosses write up auditor requests is extremely specific ways that creatively leave out thing that should never be approved. I've also seen auditors be made aware of problem, then people backtrack, and auditors accept it because "They are also our customer and we need repeat business."
Vanta/Drata and other are starting to build solutions that are somewhere in-between checkbox compliance and real security. To the extent they integrate with your cloud providers and security tools, they can validate you have secure settings, active monitoring, and have remediated the things that have been flagged in a timely manner. Doesn't mean you are secure, but does ensure some baseline tablestakes.
They are goldmine of enumerated attack surface. But it would likely require some kind of secondary exploit of the identified vulns. The API connections are generally scoped to read-only access of security settings. Though it wouldn't surprise me if there was some way to get lateral movement from the access these tools have to monitor an environment.
At $LastCompany, someone gave them Contributor (Create/Read/Update/Delete) access to Azure because it was easier than scoping to 5 roles they required. I wouldn't be shocked if we were not only ones.
Edit: Their software should really check and refuse to work if someone does that but obviously Vanta doesn't care. They can begin scanning and billing.
It's what's annoying about NIST and DFARS: you can be fully compliant despite having made stupid decisions as long as you have documented that you are in fact making this stupid decision.
Thanks for the feedback. What we should probably do is take the credential, start scanning, and then nag them with a failing test about overly-permissive roles. Our own role is an easy check because we know what to expect, but there's other best practices here we can check for (and in some cases do, though not 100% comprehensively across all clouds.)
Try ISO 27001. Everyone says it's more onerous, but for startups, it's actually a lighter lift. It is a lot worse for big companies than SOC2, but it's a lot easier for startups.
Interesting! Do you have any resources or tips on how startups / small companies can keep the ISO 27001 process lightweight?
On a first scan, it seems that the amount of mandatory processed and documents is quite high...
Yeah, the only thing worse than the current status quo would be giving some SV startups a privileged position as gatekeepers for regulatory compliance (the Watershed strategy).
Couldn't agree more. In the SMEs that I've been involved with, this has had a huge chilling effect on both hiring and innovation. I think that the change is a primary contributing factor to the layoffs and offshoring that have seized the market ever since.
I'm not convinced that this wasn't the intent of the change in the first place.
Could someone elaborate this for an uninformed like me? Does it mean if you (a company) pay $1M as salary this year, only $0.2M can be treated as cost?
Essentially. An extremely oversimplified scenario: On paper if you made $1M in revenue, and had $1M in salary expenses that were all R&D, you would deduct $200k of that salary and be left with $800,000 in "profit" that you have to pay taxes on.
Yikes. I kept wondering why R&D has been dead for so long. I have made comments here on HN about how R&D is responsible for so many tech advancements we still use, especially at Bell Labs.
To be fair; the pressure to use office space again helps US workers. A lot of us don’t like it, but it’s a fair bit better than someone in Guatemala getting your job.
(Better for the US engineers, not for the Guatemalan, who is probably a competent engineer himself. But the topic is the outlook for US engineers).
The house passed a bill, but the senate is working on their own version. I havent looked too deeply at either proposal, I just hope it doesnt make it even worse. I am waiting till the final proposal gets voted on.
No one cares because most software developers are employed at big companies that can amortize. Even YC will probably just increase its seed instead of complain and consider it a "cost of business". This affects only marginal people. I am interested to talk with you about this if you want (feel free to reach, my email is in my profile).
Why do you speculate that number? With $1M in revenue and $1.2k in profit, there must have been $998.8k in expenses. I assume "pay yourself" was part of the $998.8k. But I don't know the answer to the other part of your question: I don't know if the $90k in taxes are included in the $998.8k expenses.
Given you’ll eventually get that full software deduction tax break back, just spread across several years, I am surprised there aren’t companies that will finance that to have the money upfront (with a fee of course :( )
But most startups get broke in several years, and codebases can't be repurposed as easily as, say, a fries-making machine, so the fee need to be very high to compensate the risk.
How about health insurance not being tied to profits. Startups pay the full brunt of health insurance since they don't have real profits they have nothing to write off. Meanwhile large orgs get to write off a ton of profits as Healthcare costs for employees.
So startups tend to have real garbage insurance. As someone older with kids startups are getting more and more prohibitive because I need that Healthcare. Maybe startups should be a young man's game. Maybe not.
Here’s a radical suggestion: stop calling welfare-for-doctors insurance. If you want insurance, those are known as major-medical policies under which the sniffle visits are still the patient’s responsibility — just like how insured car owners pay for their own oil changes.
With “health” “insurance,” neither side has price sensitivity. Patients ask whether it’s covered and if so, back the truck up to get as much as possible. Physicians see enormous pots of money in tax-favored plans and seek to scoop out as much as they can. The inevitable result of such an awful system — that traces back to workarounds on executive pay limits imposed during the FDR administration — is unbounded price increases. Politicians scream about getting spending under control, and regulators impose rationing. This is a terrible system, but it’s a self-inflicted wound.
In the U.S., at least, we’re seeing cash-only practices become more common. Their fees are affordable because their customers pay out of pocket and because they don’t have to hire entire departments just to deal with “insurance” providers.
Take a look at Switzerland's medical system for how nationalized health insurance can work well. When the insurance system isn't privatized, it isn't for profit. This drives prices down to become affordable, even without insurance.
Just FYI, Switzerlands medical system is not nationalized. It is private and run for a profit (though there is centralized price setting for necessary procedures and basic insurance is mandatory and regulated well)
No one but the US considers Swiss healthcare to be affordable, and prices are certainly not being driven down. And as insurance is legally mandated, “even without insurance” is not something that can be properly evaluated here.
I am not sure where you got this info but it is very wrong.
What you are saying makes sense IN THEORY. however in practice in the US most people have the shittiest insurance, at the highest cost. A chunk of america doesn't have insurance and we all pay a lot extra for their problems, and a friend of mine is in the chunk who is taking medication he is alergic to, because the stuff he isn't he can't afford, and finally we have the wealthy who have the best healthcare in the world.
Insurance for an optional thing makes sense: You don't _have_ to drive (okay, I'm in NYC), but you can, and you need insurance if you do. And mainly its to cover damage _you_ do to others.
For health insurance. Everyone in the world will need healthcare. Period. The only exception is if you're super healthy and then get your head suddenly cut off and are dead instantly. Other than this one case, you will need health care. The problem is that in america, breaking your arm, or getting alcohol poisoning may bankrupt you. And as any doctor will tell you: An ounce of prevention is worth 2 in cure. Let people get treated before things get bad, and they can stay productive members of society. As John Oliver said "the national anthem should be people holding out their medical bills and complaining in unison, because it is the only experience that ever single american has in common"
There is no particular linkage between health insurance and profits. Small businesses such as early-stage startups tend to have worse and more expensive employee health plans because they lack the scale to go self-insured or to negotiate lower premiums with payers for fully-insured plans. Profitable small businesses face the same problem.
Can you remind me what the issue with software R&D amortization (or point me to something that explains it)? I remember reading about the issue in the past and thinking it was a problem, but I've forgotten all the details.
This seems like a very strange take on 174. The author seems to be saying that all developer expenses can be expensed under old 174, but that’s not true (under my reading). My take was that exclusively research and development - where you are unsure of the outcome - is eligible under old 174.
Notice the analysis of big companies and their tax bills. Author notes that Google only expensed software development expenses until the software met some qualification threshold. After that, it’s not research anymore.
Read 26 CFR section 1.174-2. “Activities intended to discover information that will eliminate uncertainly concerning the development or improvement of a product.”
Specifically, check out example three in this section. I would be very careful about sweeping all my expenses in this category, but my familiarity with this part of the law is not deep.
I’d love a 174 practitioner to jump in here but that might be asking a lot.
For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.
We've heard a mix of advice from various tax professionals on what should be classified as R&D or not. The messaging gets expecially mixed since the R&D tax credit is often handled by a 3rd party that specializes in it. The company specializing in the tax credit may be incentivized to classify as much of your activity as R&D as they can, since they are usually paid a percentage of the total credits they are able to claim for your company.
It certainly complicates running a software company. My cofounder and I need to look at the amortization schedule before making any engineering hire as we basically need to consider their salary nearly 100% R&D. I imagine it's even more complicated for founders with overseas teams.
It would certainly be easier for us to do business if Section 174 was revised :)
As to software “development,” when you finish your software and publish it and get customer installs, then what happens? More software development? Or is ongoing operation/bug fixes still R&D under (c)(3)? I think your average software person has a strong belief about the answer to this question but having read some of the code® in the area, I share your opinion that this section needs more detail.
Pretty sure any updates to the software count as additional R&D. Just running software you've already created doesn't count though. Something interesting we were asked was how much of our cloud costs involved developing software vs running existing software to determine if those costs must also be amortized over 5 years.
> Automate government-driven compliance standards - enable small businesses to sell into large companies/government entities, automatic certification when using pre-approved cloud solutions.
This is something the market can solve. You can't lobby it into existence.
> * Healthcare insurance - employees of SMBs automatically get access to medicare
Perhaps better decouple healthcare insurance from employment status? (Perhaps remove the tax dodge where companies can buy health insurance cheaper than individuals can?)
While you're there, try to help the Army National Guard Incentive Management System, or GIMS, not have multi-year downtimes, while the corporate sector wrings their hands over minutes. It's funny, yet hurtful to read. They exist in different universes.
> the system crashed in late 2018 and was inoperable for about 10 months; another 10-month outage occurred in 2021. While the system was down, bonuses had to be filed through a complicated manual process, creating a backlog that states are still trying to fix. (2023 story) [1]
> Two adjutants general, top commanders in their respective states, described discovering their staff tracking enlistment bonuses on dry-erase boards or through email traffic and handwritten notes. [1]
Sorry, your bonus is goin around on somebody's handwritten note somewhere. Also, see if you can maybe do something about that VA medical data system. Heard they still hate it last reference.
Healthcare insurance - employees of SMBs automatically get access to medicare
This puts you in the same company of abusing the system as Walmart, the nation's biggest welfare queen.
Employers should just have to give health benefits. You want workers, you pay benefits. Period. Maybe then you all will get on board for a single payer system. Its what you want, but only in fits and starts. quit fucking around already.
I really don't want my at-will employment status to be the arbiter of whether an unforeseen health issue will bankrupt me. Tying either private insurance or public insurance eligibility to your employer seems like a bad pattern we should be trying to get away from.
It's a bad pattern for the employee, but a good pattern for employers and the healthcare industrial complex. The possibility that you could be bankrupt if you let your insurance lapse is an enormous concern for employees that may want to leave but can't; much more powerful, and cheaper, than golden handcuffs.
COBRA is a joke, as if most could afford multi-thousand dollar a month bill when unemployed.
What that communicates to me is that those in power, both of the gov and of businesses, are primarily concerned with forcing productivity to make line go up than they are with incentivizing treating people humanely. But really I don't think that's so surprising considering the timeline we find ourselves in.
IME, COBRA is almost always a better deal than the marketplace offerings typically, unless you qualify for marketplace-only subsidies. COBRA premiums for whatever reason are hundreds of dollars (or more) cheaper than marketplace plans.
I've also had the opposite experience. My workplace plan through COBRA was around $500/mo, while only the highest-end marketplace plans were around that range. I took a middle-end plan at ~$300/mo.
To be fair I hadn't looked closely at what all my workplace plan covered, but I was doing physical therapy when I switched that wasn't covered (had to reach high deductible) on my workplace plan and was covered on my marketplace plan!
It depends heavily on location. When I last ended up on Cobra in California it was a touch more expensive than the marketplace plan but my work plan was much better than the best available on the marketplace so it was worth it to go Cobra.
And it’s great how your employer can change which insurance provider they offer every year and along with it your coverage, provider network, prescription costs, etc.
Sometimes even more frequently than once per year if an acquisition takes place.
It's a frustrating situation for employees (and their dependents) but the ability for self-funded employers to shop around and switch health plans is one of the only things that is preventing healthcare prices from rising even faster than they already are. Most of those "insurers" no longer really do insurance, they largely construct provider networks and administer claims on behalf of self-insured group buyers. Some payers drive harder bargains with providers and you can see significant price differences in the price transparency files.
Sure, the employer is doing what is best for them in the current system. Everyone is. But the results can be rough for real people to actually live with.
One of the big scary talking points when politicians start talking about changing our insurance system is that people like their current plans and doctors and are scared to change things.
I just think this is silly since my plan has changed roughly annually since I've been in the workforce due to a combination of employers shopping plans, employers changing ownership and moving to the new company's plans, and switching jobs.
An in-between step to single payer would be to let me pick a marketplace plan and then let my employer reimburse it directly, provider a voucher, or something like that. At least that way I have the freedom to switch jobs without entering a whole new health insurance world, and which health plan I pick is none of my employer's business.
Nice, I hadn't heard of that but yeah I think that's a much better system than employer group plans. If more of the market went that way, insurers would have to actually compete at a consumer level and not just offer "go away" pricing when you try to get insurance outside of a group plan.
Fuck that employers should be legally barred from offering health benefits. Combining the two might have been one of the worst things to happen the health system in this country.
I’ve never understood the idea that employers like Walmart are “abusing the system” or “welfare queens”. If Walmart employees were capable of getting jobs that paid enough that they weren’t eligible for public assistance, they wouldn’t work for Walmart. Conversely, if Walmart didn’t employ those people, they would be an even greater burden on the welfare state.
> [...] history shows that once we assign power to governments, they're loathe to subsequently give that power back to the people. Policy is a ratchet and things tend to accrete over time. That means whatever power we assign governments today represents the floor of their power in the future - so we should be extremely cautious in assigning them power because I guarantee we will not be able to take it back.
I'm curious what history Jack Clark is referring to here.
If I think of the last thirty years of policy in most of Europe and the US I'm thinking of a strong trend of deregulation and giving more powers to markets, removing international trade barriers and so on.
That seems to be a dynamic opposite to the one the quoted article is suggesting.
> If I think of the last thirty years of policy in most of Europe and the US I'm thinking of a strong trend of deregulation and giving more powers to markets
That's been the PR spin, but it's not actually true. It's a smoke screen to help governments avoid actual accountability.
For example, the crash of 2008 was blamed on too much market and not enough regulation, but in fact it was the opposite: regulatory thumbs on the scale, for example the US government wanting to encourage home ownership and skewing the mortage market and the money supply and requiring lenders to accept more default risk, and governments implicitly giving a "too big to fail" guarantee to large financial institutions and then being extremely arbitrary in when that implicit guarantee was broken. A true free market would never have produced such a thing.
> removing international trade barriers and so on.
Globalization of trade has been going on for much longer than the last 30 years. If anything, the last 30 years have seen more of things like trade wars (for example between the US and China) and other disruptions to smooth international trade.
> for example the US government wanting to encourage home ownership and skewing the mortage [sic] market and the money supply and requiring lenders to accept more default risk
Are there economists who share your view on this? I don’t see how the issue of repackaging CDS and related products by a financial rating agency has anything to go with the government.
If you’re saying that the government forced buyers to abandon due diligence… I think we will have to disagree about the facts of the GFC
> I don’t see how the issue of repackaging CDS and related products by a financial rating agency has anything to go with the government.
The financial rating agencies are creatures of government regulation.
> If you’re saying that the government forced buyers to abandon due diligence
I said no such thing. I said that government regulations forced lenders to accept more default risk--meaning they were forced to lend to people they would not otherwise have lent to because the risk of default was too high. That's what "subprime mortgages" means, and those were a huge contributor to the crash.
> said that government regulations forced lenders to accept more default risk--meaning they were forced to lend to people they would not otherwise have lent to because the risk of default was too high. That's what "subprime mortgages" means, and those were a huge contributor to the crash.
The ratings agencies are free to rate things as they wish - unless maybe you’re saying there’s a government directive to misrate things?
Also, please clarify how the government is compelling lenders to make loans that don’t pass the lender’s underwriting criteria… this is news to me
It's a half truth; the truth is somewhere in the middle of this and another theory. I'm not an economist, but the start of my professional life was marred by the experience of 2008 so I spent a lot of my time reading about it.
In reality, there were a lot more sub-prime loans but only one of those lenders was actually expected to take on sub-prime loans. That's to say, taking on more sub-prime loans was a choice reflected in an ecosystem of incentives where profits were falling because a few lenders started a campaign to lower borrowing standards and the rest of the herd followed to stay afloat. What also happened was that lenders were essentially over weighting sub-prime loans into these packages and then using their relationships with the privately controlled ratings agencies to rate them the way that would be if they were filled with primes. If you read between the lines lenders found the solution to their profit problem and were trying to justify its stability post-hoc through package ratings. The reality is that sub-primes are highly profitable when they work out because they have high interest rates. When they don't they're not that expensive because generally the property is offloaded but this only works up to a magical threshold depending on a lot of risk variables. Once you go beyond that threshold and the dominos begin to fall, they all fall spectacularly. Risk traditionally should be leveled by packaging them with less risky loans.
> please clarify how the government is compelling lenders to make loans that don’t pass the lender’s underwriting criteria
It didn't. Instead it required the lenders, by law, to change their underwriting criteria so that loans which the lenders would previously have chosen not to make, because they were not within their underwriting criteria, were now within their underwriting criteria. It also passed laws forbidding lenders from refusing loans to people who met their underwriting criteria. This was all done on the theory that encouraging home ownership was a good thing and that lenders had been arbitrarily refusing loans to people and needed to be stopped from doing that.
The book Fault Lines: How Hidden Fractures Still Threaten the World Economy makes a claim to that effect, that US government created some unfortunate incentivizes towards risky credit. It was of course not the only problem that led to the 2008 GFC, but it certainly was a part. I recommend the book, it was detailed and has a global focus, as the author was the Chief Economist at the IMF for some years.
Right, and many of those deregulation moves turned out poorly in hindsight. Governments have ratcheted up control in some cases, but stating that it is a universal law is patently false, although it sounds good as a quip.
Regulations are kind of like security practices. When done well they are often taken for granted, but poor ones get a lot of negative attention. I'm glad that I don't have to wonder if the cereal I buy at a store is filled with rat poison. I'm fine if the government never relinquishes the power to oversee that.
Unfortunately the current leaders in the latest AI craze have not inspired much confidence that they will act responsibly in the future. Maybe if different people were running these companies it would make sense for the government to keep out of it, but in this world we're going to need some reasonable regulation.
Deregulation is not returning power to the people, it's bestowing carte blanche privatization of profits to corpos, in the wake of near complete regulatory capture, while they dump the negative externalities on the public.
At least for Europe this is wrong. I mean yes, there are new trade treaties but internally EU regulations and at least for Germany its regulations increase by the day. Just this year the personal tax declaration form got 10 or so additional pages. And the new supply chain law needs medium to large companies to prove that all their purchases are morally correct (sorry not sure how to phrase this properly). And I don't even follow new laws closely.
I don’t disagree with this assessment but it’s also a narrow view[0] that allows the problem to persist in the first place.
Rather, I’d like to see what positive oversight would look like, but that has not been put forth by any of these organizations thus far. It all comes down to “trust us” which is also hard to stomach
[0]: most often but not exclusively held by Americans (of which i am one). We collectively fail to imagine government being a positive force and what that would look like.
This is a relatively new and carefully cultivated state of things.
I mean, the early phases of this era are a half-century old at this point, but it’s not like it’s a law of nature that at least half the population of the US and about half the politicians must regard government as rarely-useful. It didn’t used to be that way. It’s not an American trait in some holistic historical sense.
perhaps our government has become less competent? Having worked in the federal government briefly (and growing up in a place with lots of feds), it makes perfect sense that our government is generally incompetent/low-capacity.
In the wake of the civil rights movement, lots of government civil service exams became presumptively illegal. The pay bands are also pretty trash.
If we wanted a competent government, we should have far fewer people paid a lot more and hired in a more aggressively merit-based process. Our current government is from an era without computerization where you needed lots of grunts to process things like SS claims, etc. That is simply not this era.
> If we wanted a competent government, we should have far fewer people paid a lot more and hired in a more aggressively merit-based process. Our current government is from an era without computerization where you needed lots of grunts to process things like SS claims, etc. That is simply not this era.
This.
IMHO, the military's regular reassignment also solves a lot of bureaucracy-at-scale problems (even if it creates different ones around competency and long-duration projects).
Preventing people from becoming entrenched in a single role/office is important to ensuring a healthy overall system and providing space for new ideas.
What makes you believe the military is immune to "bureaucracy-at-scale" problems? From my vantage point, it may have both large bureaucratic issues and massive churn. (And it's not immediately clear to me that the former isn't partially a result of the latter.)
The rotating post thing is mostly to avoid empire-building and disrupt personal loyalty to leadership, because standing armies are incredibly dangerous things to keep around and that reduces the risk.
It has side-benefits particular to the military mostly related to how adaptable the organization is when lots of its members are being killed and disabled at a high rate.
I don’t think you’d find a lot of takers for a rotating-post offer in the broader public sector, without far higher wages. I think most of the folks willing to do that for low wages are already in the military or the foreign service.
I don't disagree that it solves the "in this job until I die". But as you allude to, it creates its own issues and it's not clear to me if, on balance, its better. Churn can also create an ineffective (or superficially effective) organization because the hardest problems can't really be solved in a short tenure. (If it could the Executive Branch would be considered highly effective because it has churn every 4-8 years).
On the whole, I think it's still a net positive. The drag of unmotivated, apathetic, and/or inflexible employees is incredibly high, and then there's the additional efficiency drag of the systems that must put in place to ensure they meet minimum performance (i.e. filling out make-work forms to track performance).
Better to simply create a system by which they're weeded out.
Which I guess dovetails with the military "up or out" process.
From a giant organization perspective, there's a lot to admire in militaries. They're the worst systems, except for all the other ways organizations as large as them could be organized...
>Better to simply create a system by which they're weeded out.
I agree with this. It's really just another way to say there should be mechanisms to hold people accountable.
>Which I guess dovetails with the military "up or out" process.
I don't think the military does a great job of this. From what I could see, it only forces out the absolute absymal performers (e.g., those who can't pass a PFT or have multiple DUIs etc.) I would argue it takes far too long (often only implemented once they've been in a decade or more and haven't made SNCO). This does a disservice to both the organization (the person is still around for a decade) and also the service member (they have now dedicated over a decade to a career that is a dead end, and usually over halfway to retirement).
>but there's also much stronger gating of promotions by competency tests there, right?
I think it heavily depends on the branch and what is considered “competence”. I remember meeting Airmen who could cite all the stats about weapons systems because that was on their test, but the couldn’t shoot. And Marines where it was the opposite. It’s also generally possible to get promoted by just hanging out, keeping out of trouble, and having reasonable fitness tests
The military has lots of waste and graft, but it is also not terrible at hiring very competent/smart people through their commission system (unlike a lot of the rest of government). I am skeptical that churn is a cause of problems, almost everywhere I have worked in government has by far the opposite problem.
The smartest people I've met either have plum book positions, military officers, or work as prosecutors.
(by plum brook, do you mean NASA? If so, I've met some smart people from there and other NASA posts, but also met some of the worst employees that epitomize some of what the discussion is against - very toxic, against any new ideas, refusing to retire, shirking duties etc. at one point one org had an average age of 59+, that's very indicative of a refusal to move on).
>it is also not terrible at hiring very competent/smart people through their commission system
I suspect you would get a very different perspective if you talked to enlisted servicemembers (or subordinate officers). I would argue the commissioning system is better than the previous aristocratic commissioning system, but still relatively poor at mating skills to positions.
I think churn is a couple of problems for a couple of different potential reasons:
1) constantly moving positions tends to leave the more complicated problems unsolved. For one, it's difficult to truly understand the dynamics of a complicated system in a short period. Secondly, if someone is concerned with promotion, attacking small problems tends to get you a win during your tenure, while it's unlikely you'll make much headway on a really difficult or complicated problem. Even worse is the commander who has all kinds of great ideas they want implemented even before they really understand the problem (ie the 'good idea fairy' dilemma)
2) military churn can bias toward giving people responsibility beyond their capability, simply because they need someone to fill that role. This is especially with younger organizations (and the military definitely biases young). Meaning you tend to people with a lot of power/responsibility before their frontal lobe is even fully developed.
Now I do think the military does a pretty good job at accountability, which can mitigate some of those factors. But if that's the case, we should be trying to optimize for "accountability" and not "churn".
The better military organizations seem to have "churn" in the uniformed services in charge but a steady cadre of professional civilian staff supporting them.
the plum book is a list of politically appointed positions in the federal government, including positions at NASA and elsewhere. i wasn’t referring to the plum brook facility
I dunno. When I read the founding fathers, they seem pretty skeptical of power structures, both public and private. The way they configured the government, it’s clear that they had little trust that we’d have competent or honest politicians at the helm. Hence all the checks and balances and limitations to federal powers.
Well said, also applies to many human dynamics - friendships, relationships, work relationships, etc. Ceding power is a ratchet and you either put your foot down to start with or it grinds away.
Healthy relationships include negotiating when potential boundaries are in question, or if things change that require re-aligning boundaries.
It's reasonable to give more to the other party from time-to-time, and reasonable to discuss with the other party if it becomes a point where it feels unfair.
Instead we (Americans) take an unnecessarily adversarial stance against what our government could do, ensuring it is perpetually unprepared.
In reality, the vast majority of relationships aren’t actually healthy in this way. Most people get that only from their parent and family, if that. So parent’s advice is important.
I love to give more. That’s what life’s about. But it should be done freely and without expectation. What I’m talking about is taking - do this or I’ll be annoyed. It’s overt vs covert contracts. I ask you to do X because it would be helpful/make me happy. Versus I ask you to do X because it’s helpful and also I want to feel in control of you, and maybe you’ll be more willing to do Y later.
I don’t agree with the last comment, maybe I am a cynic.
It is true that sometimes you learn something at time T2 that invalidates something you learned at time T1 (T2 > T1), and thus you do need a de-ratcheting system of some sort.
But what actually drives the ratchet is experience with current policy (or lack thereof). "Oh, we had no plans to deal with X, and we got screwed, so lets add policy for X".
The ratcheting aspect of policy reflects the ratcheting aspect of societal experience accumulation.
Largely because they feared that large language models would be useful for large scale disinformation, election interference, impersonation, automated phishing, etc.
> First, let’s prioritize open source models and more tailored AI applications to shape the competitive landscape and create real opportunities for startups.
How does YC square this statement with the fact that their ex-president closed their models with the explicit intention of slowing down competitors [1]? Or is the argument "we want politicians to discourage people like us from doing what we did"?
"How does YC square this statement about the organization's current stances with the fact that someone who doesn't work there anymore but who had previously communicated similar stances has now apparently changed his mind?"
Why would they need to square anything there? There's nothing contradictory about a former exec not matching the current values of a company.
How can YC be responsible for something their former executive does?
And more importantly, doing one thing while advocating a policy prohibit the exact thing isn't necessarily wrong. If the tax rate is 20%, and I advocate a 25% tax while not paying the extra 5% until the law is passed, I would say there isn't any contradiction in my actions.
Late is better than never in my view, and in spite of whatever happened in the past I will support the people doing the right thing today.
I’m likewise a little wary given some of the history, so maybe a little “wait and see” is in order, but this sounds like a really positive thing to be doing.
I mean, they parted ways long ago, and pg released a statement recently as to the nature of that breakup. People and organizations can change their mind.
It's well and good to advocate for change within the industry (large and small) but realistically, all of this is missing the forest for trees, or equating symptom with the cause.
The only way out of this long term, is to take money out of politics, repeal citizens united, revolving doors and other methods of lining politicians' pockets.
While I agree toward the harm it's done, Citizens United v. Federal Election Commission is a Supreme Court ruling; you can't "repeal" those. It must either be reversed/overturned by the Supreme Court or a constitutional amendment be made by the states. Those are both extremely hard and rare.
So you think it should be illegal to make documentaries critical of Hillary Clinton? Because that's what Citizens United was about, but most people who are against Citizens United don't seem to understand what the case was actually about.
I'm pretty unsure about CU, but the context is the film was created by a political action committee to get standing so they could challenge election law, it's not like they were a bona-fide commercial film-maker (which is why the FEC blocked the film in the first place)
Well, I think even that may be missing a bit of forest. How about: institute far more redistributive tax policies to prevent individuals or companies from gaining undue market power by becoming extremely wealthy.
It is frankly challenging to reconcile 1st amendment protections and a CU repeal. I'm not sure what the solution is, but think recent events should show that govt can abuse campaign finance law to pick winners and losers in the town square.
> It is frankly challenging to reconcile 1st amendment protections and a CU repeal. I'm not sure what the solution is, [...]
Reconciliation: Companies aren't human entities.
Non-human entities aren't entitled to 1st amendment protections.
Campaign finance is equally simple: run your campaign on public funding. Give all candidates who meet a threshold equal amounts of money.
I have yet to hear a convincing argument about what benefit a democracy receives from campaigns having different amounts of funding. That feels like the tail wagging the dog (your supporters fund you, so you can spend that money to buy more supporters).
I'm not so convinced about that reconciliation! Most media in general is not conducted through individual entities.
Even the small film maker or newspaper is usually going to be organized as an LLC, even if it is just a single person trying to submit their film to a festival or something. These should be subject to governmental regulation if they touch on political topics? I think this is significantly thornier than you're making it out to be.
> Campaign finance is equally simple: run your campaign on public funding. Give all candidates who meet a threshold equal amounts of money.
Right, where it gets tricky is with unaffiliated individuals and what counts as a campaign expense versus speech or normal business.
If you mandate that non-human entities have an 1st amendment right, you cannot have meaningful campaign finance limits.
Ergo, because it's worth having campaign finance limits, in the interest of allowing the best candidate / idea to win, I think it's worth threshing through stripping 1st amendment rights from non-human entities.
Regarding how one weighs what sort of speech would then be allowed and disallowed is a difficult problem, but the above needs to happen before it can even be started on.
Now, we have a frankensystem where reality (unlimited finance) and policy (limited finance) differ, which is never a healthy state.
my point is that stripping non-human entities of 1st amendment is effectively repealing the 1st amendment in the US, if it allows the government to regulate newspapers/printmakers/movies based on political content. so your point is essentially that campaign finance trumps 1A, which might be true but i am not so sure
What a terrible idea. Giving government the power to regulate newspapers/printmakers/movies can't possibly produce better outcomes than what we have now. Preserving maximum freedom of expression is far more important than any election result.
It's an interesting point. Whether non-human entities are entitled to 1st amendment rights. Since they have the potential longevity that far exceeds humans, and also can't be punished in same manner for potential wrongdoing (i.e. send an entire company or lobby) to prison.
> Non-human entities aren't entitled to 1st amendment protections.
The vast majority of speech that needs to remain protected for speech to remain meaningfully free happens through non-human entities. Removing that protection is an absolutely insane step.
Then we create some kind of liability for that situation. And then we figure out at what assemblage scale multiple people stop being a collection of individuals and start being something fundamentally different.
LLC et al. liability didn't just exist in a tablet given to humanity from god.
It was designed for a purpose, and we could design the same thing for people if we wanted, instead of granting legal corporations individuals' rights.
After some research I realized that since 2010 at least (probably true if you go back a bit, but I didn't) EVERY SINGLE PRESIDENTIAL CAMPAIGN has been fined for major violations of campaign finance laws (usually related to in-kind contributions, or expenses FEC decides to make election expenses later on).
In other words, it seems impossible to run for president without breaking the law.
This is not okay. One of the issues here is that by making candidates break a law, you basically now have some kind of weird leverage over them. You can make threats to prosecute or fine further and thus have them by the proverbial balls. You also naturally push away people who would be wanting to follow the law, which I argue is sorely needed in Washington DC.
This opens the door to a lot of bad bad bad blackmail opportunities.
If no party and no candidate is able to stage a presidential campaign without being fined, ranging from Trump's chaotic, high energy campaigns to Clinton's 'proper' campaign with lots of decorum to Biden's bring-back-normal campaign, then I think something is seriously the matter with campaign finance laws.
It was funny how the closing statement was admiring rugged individualism too when that philosophy is encouraging a lot of the damaging effects similar to how social media has been harming the world.
I'm not sure what I was expecting, but I had a surprisingly positive reaction to this piece. It will be hard to avoid, but I think that preventing GenAI from turning into yet another tech oligopoly is hugely important.
For one, it absolutely will stifle innovation if one or a few companies can control the market. Just look at what Google has done with their money printing monopoly money over the past decade.
Competition will be doubly important if modern AI can fullfill much of the current hype. That kind of power in the hands of a sophisticated used car salesman like Sam Altman will be bad in so many ways.
What’s ironic is that Michael Seibel has discussed many times on the YC podcast that you should avoid building whatever’s hot for VCs because their attention tends to change every year but you’ll be stuck building for a decade.
2020 was remote work, 2021 was web3, now we have the big LLM boom.
Honestly it seems there’s a lot of advantages to “riding a wave” and a lot of advantages to being contrarian. But if raising money is your priority I do think you should ride the wave. Being contrarian sounds romantic, but don’t expect funding from people who disagree with you.
The most charitable thing I’d say about YCs AI focus is it’s hard to think of a startup idea that couldn’t benefit from AI in some way.
Honestly, I think any person or organization that bought in to the blockchain hype should be barred from making any financial decisions of consequence. If they bought into a scam as obvious as the blockchain crap, they're clearly not capable of holding any real responsibilities.
Tbf I feel remote work really improved significantly in the past years, though I don't know if the contribution from those startups matters or not. Web3 and blockchain is a moot, there's little to no practical reason to have them.
AI though, will be very useful, at least a good one. Theoretically, AI can swim in a good ocean of company documentations and save time searching. They can help doctors diagnose a ct scan faster (if not already).
Definitely not, there are several other topical areas that currently have significant VC appetite.
If anything, the enormous amount of social media attention on AI has made it easier to raise VC in other trending areas because all of the low-quality "me too" startups have gotten pulled into the fashionable AI orbit. This has significantly improved the signal-to-noise ratio in these non-AI areas because the legions of trend-jumping founders are all doing AI, the startups that remain tend to be founded by people with substantial investment and expertise in their domain without regard for fashion. This is good for VCs and for founders.
> made it easier to raise VC in other trending areas because all of the low-quality "me too" startups have gotten pulled into the fashionable AI orbit
You are trying to say "adding IA to the pitch won't improve a founder's chances", but what you are saying is "granting money to founders that didn't add AI to their pitch improves a smart VC's chances".
Filling the form wasn't too hard. It's probably the kind of thing every founder should know and be able to answer. It's easier than most job applications. Definitely easier than college applications... if you wanted to compare it to college, getting financial aid has a tiny acceptance rate as well. YC is bundling the education and the financial aid.
Rejection isn't hard either. If you're a founder, you'll be rejected by VCs all the time, and many early stage investors offer far lower amounts and far worse advice. You'll be rejected by your product - MVPs often have to be reworked and pivoted. And then you'll face some more rejection when doing sales and product interviews.
I think it's important to be transparent about the rate though, but also important to make it clear that the low rate doesn't mean they're trying to push people away.
It's the same as selective universities telling every student that they should apply regardless of their chance. It makes sense they would do this since it's completely open.
It's not really a lottery, more like a messy matching algorithm for supply and demand. They give everyone a shot since they look at everything, but getting in is not evenly distributed :)
> I love the constant flex of their tiny acceptance rate. "We only accept 1% of applicants. Btw everyone should apply!"
I've seen this mindset among people promoting open positions at desirable companies that don't hire often. In most cases, applying is a waste of time because the company already made its decision to fill the position with an internal candidate.
For us, the application process was a big help in getting focus and better defining what we propose to build. And not getting in has led us to find some other, potentially much better programs which we will apply to. We don’t regret the effort at all.
My only complaint is that keeping everyone hanging on until May 29, ready to clear our plates in June, and then giving absolutely zero feedback for the rejection, was the sort of blatantly self-interested and founder-unfriendly move that, I suppose, it’s good to remember happens a lot in VC Land.
Out of curiosity, would you mind sharing some of those potentially better programs? I've also been trying to compile a thourough list, but the options don't seem better (in fact, all are plan B..Z)
e.g. Entrepreneur First ( especially their EU and UK offering), Founders Factory, Haatch, Seqouia Surge, ...
PearX is probably more selective than YC but at least if you're in the SF area, seems to be more of a real accelerator. (And not just for "get more money before demo day.")
There are others but these are the things that really stood out. We will go directly to investors too, hopefully someone in our network sees the potential and is willing to throw us some pre-seed to get it started.
I don't think the YC Standard Deal is bad, and I might try again next time, but there are things about the program that I think are not worth the time/money, and I'm not at all sure "access to their network" is any better than (even as good as) the same access from a different set of VCs.
He's not just out of touch he's actively pushing pretty horrific shit like the abolition of the state. He also agrees with Balaji about everything and therefore should not be trusted.
"Abolition of the state"? In the very article this thread is about he pushes for regulation against big tech, that does not sound like it could be achieved by abolition of the state
Well really think about the mindset of someone who collectively hates “the state” do you think that person is going to be honest about their actions? Of course not everything is about yourself over everyone else. This is free speech and not a personal attack.
It makes sense that startup folks will gravitate to where there's VC interest as they always have (including the fakers and scammers). But regardless of the current hype cycle the same rules still apply: the reasons why you're doing the startup, if you're an expert in the space, whether you can build a 10x solution, your access to early adopters, your unique point of view on the market. AI is just a new set of tools to generate more value for your specific users, if applied in a unique way that makes a significant difference.
Season 9 Erlich: "Oh my god. It's an AI play. That's the frothiest space in the Valley right now. Nobody understands it but everyone wants in. Any idiot could walk into a fucking room, utter the letters A and I, and VCs would hurl bricks of cash at them.”.
Didn't stop YC from funding almost 100 of them[0] including signal boosting[1] this obvious scam that blatantly ripped off another's website and company too.[2]
I remember people saying the same about blockchain and, a little later, "the metaverse". A prominent, large tech company even changed its name to show its commitment to this promising technology!
Sure, but it was fairly obvious to the critical eye that neither blockchain nor VR/metaverse were likely to have much impact beyond a few niches. Neither solves problems many people actually have. And a lot of the tech world rightly scoffed at the whole Facebook/Meta "transformation".
But machine learning has been used for years behind the scenes in things like recommendations and clarification. And LLMs specifically, even in their current infancy, have shown immediate value in some cases (e.g. coding assistants) and obvious potential across a vast number of domains.
I mean there is absolutely no reason to think that AI (broadly) and blockchain are going to follow similar trajectories.
I agree that every company becoming an "AI company" is not in the cards. However, I think there is going to be a slow ramp where every startup just throws a few annoying problems at a LLM instead of hiring ML people.
And kinda like the internet it's just a tool that you use when appropriate, but the things where it's appropriate will continue to expand.
"Apple Computer CEO Steve Jobs, who got a sneak preview, said Kamen's creation was as big a deal as the PC, and that it would change the ways cities were designed. Renowned Silicon Valley venture capitalist John Doerr said it might be "bigger than the Internet" and invested millions in it."
I mean, small LiPo vehicles did take over the world, it’s just that they’re flying cameras instead. They even have some that can carry humans, so the jury’s still out on this one being false I think.
The current tech environment is very different from 6 months ago.
Now most VCs are actually somewhat cautious about AI largely because they over-invested in companies at ridiculous high valuations and aren't seeing the ROI. Especially with many companies simply not seeing the promised benefits from deploying AI.
YC is actually the one that is out of touch with reality.
> Open source AI models allow for greater transparency, collaboration, and innovation by making the underlying code publicly accessible and modifiable.
I feel like open models do virtually nothing for transparency, collaboration, or innovation, and are only modifiable in that they can be fine-tuned. It's "open source" training processes and data that will lead to "transparency, collaboration, and innovation", and I'm unaware of any large company that does this.
Correct. Worse is that there are models being touted as "open source" that don't allow for a bunch of different uses and specify their own custom licensing (look at what Falcon originally had, Meta's models with specific commercial carveouts, etc.), we need an rms of the new age to call these fake OSS approaches out as they feel more like they are being done to get the OSS marketing shine, without actually being free and open.
Your "source" is not open nor is it transparent if training code, original dataset, model architecture details, and training methodology are not all there.
Closest to this would be https://www.eleuther.ai whose training data is largely public and training processes are openly discussed, planned, and evaluated on their Discord server. Much of their training dataset is available at https://the-eye.eu (their onion link is considered "primary", however, due to copyright concerns)
[1] is the first result if I google "the pile torrent". It doesn't link to the torrent because of a DMCA notice, so I just used the wayback machine to retrieve a version from before the date of that notice. Don't tell the publisher.
You're correct if you're focused exclusively on the work surrounding building foundation models to begin with. But if you take a broader view, having open models that we can legally fine tune and hack with locally has created a large and ever-growing community of builders and innovators that could not exist without these open models. Just take a look at projects like InvokeAI [0] in the image space or especially llama.cpp [1] in the text generation space. These projects are large, have lots of contributors, move very fast, and drive a lot of innovation and collaboration in applying AI to various domains in a way that simply wouldn't be possible without the open models.
Taking the broader view of this nature feels like an attempt to change the narrative.
The entire point of having transparency is around building those foundations so they don’t inherit the biases of humans, for starters. Right now, we have zero introspection into this and no ability to improve upon it with the widely deployed models being used today, and that has already created problematic situations, let alone situations that are problematic and not known yet.
Transparency around this is a very good thing to prevent AI from inheriting negative human ideas and biases, and broadens access to improve training data that benefits everyone
I think they're parallel concerns and everyone has their own priorities. Openness of the models and their training is important but for most people, it wouldn't really matter anyway because they can't afford the computing power to do their own training.
I care about all that in the abstract but what I can download and use on my computer is more concrete and immediate.
I'm a big believer in not allowing the pursuit of perfection to cause us to lose sight of the good things that we have.
Yes, these open models could stand to be more open and I hope that we'll see that in the future. But at the same time I'm extremely grateful to the companies who have released their weights under reasonable terms. Them doing so has undeniably led to an enormous amount of innovation and collaboration that would not have been possible without the weights.
If we constantly downplay and disparage the real efforts that companies make to release IP to the world because they don't go as far as we'd like, we're setting ourselves up for a world where companies don't release anything at all.
>Yes, these open models could stand to be more open and I hope that we'll see that in the future
The most operative word here is hope. Which means we may not see more get open sourced over time. Especially, if there is no pressure for companies to do so.
>If we constantly downplay and disparage the real efforts that companies make to release IP to the world because they don't go as far as we'd like, we're setting ourselves up for a world where companies don't release anything at all.
I don't mean anything as disparagement or downplay, but companies aren't releasing this stuff because it makes everyone feel good. Its a tactic. They're only open sourcing something because they expect to get something out of it. That's fine, I'm all for that. That's a valid reason, and often it can be a 2 way street.
What it isn't though, is an attempt at any company saying "we are open sourcing this today because we want to encourage more transparency and auditability as AI takes on more critical roles in society, to ensure in the domains its being applied, to the best of our ability and the ability of our community, that it does not inherit negative human biases"
> companies aren't releasing this stuff because it makes everyone feel good. Its a tactic.
It's a tactic, but one of the primary reasons to expect it to be effective is building goodwill in the community. If the goodwill dries up then most of the reason to open anything up is gone.
> And finally, we need more steps like the FTC’s recent move to ban all employee noncompetes (no carve outs, no limitations, no exceptions).
YOU need to be out there beating the drum for a major exception to this. With out laws to ban raiding (and we dont have those on the federal level) this is a bad policy. It means that google doesn't have to aquire-hire your team, they can just poach all of them wholesale.
> Second, we need to prioritize forceful remedies to foster competition
If history does show us something its that outside a pure monopoly (ATT) these business have a shelf life. Roll the clock back 60 years, US Steel had the same market share as apple. ATT was a thing (and as a monopoly got smacked). But no one talks about GE or IBM or RCA as major players in tech... and they were tech giants of their day.
I am all for restrictions on these sorts of enterprises. But the bigger major step we can take is taxing them appropriately, not letting them all get the pass they have. Shift the tax burden to the largest players and you make room at the bottom and solve a host of other issues.
As for the rest of these proposals, it sounds like a lot of bureaucracy. I feel like we need to revisit our history and re-read our Orwell desperately, were literally repeating the mistakes of the past.
An individual's immediate remuneration is not the only variable in the discussion. There's a balance of power in play, in which smaller companies are on the weaker side when large corporations are left unchecked. Sure, in the short term, it's always better to get a higher paycheck. But we also need to see if this is sustainable in the long run. If Big Corps can easily undermine competition progress will be impaired, the market will eventually become less diverse, leading to fewer jobs and lower salary pressure.
>. Google comes in and offers to buy you out. You decline cause you know that they are blockbuster and your Netflix. In retaliation google hires all your staff, and sends them to the roof to rest and vest.
If you know for certain that "they are BlockBuster, you are Netflix", then why are you not cutting them a deal to make it worth them staying?
This is absolutely about workers -- specifically, companies not wanting to pay workers anything close to what they are worth.
> why are you not cutting them a deal to make it worth them staying?
It’s a fair question. Workers absolutely deserve a fair cut of the pie in that scenario. Non-competes have been pretty ridiculous lately, and companies had to provide little to no justification.
But the incentives of workers might not be entirely aligned with the “Netflix” or even their coworkers. Blockbuster wouldn’t hire the whole team unless they had to: one or two people who understood the core algorithm is enough, and for 10x their old salary it would be hard to resist. That leaves the startup and everyone else who works there out in the cold.
The second thing is that people aren’t rational expected value maximizers. You can’t pay rent with equity, and a startup may not have the cash to compete on salary.
Finally, it’s possible that allowing the larger incumbent to hire all of a competitor’s employees is actually not in their best interest. After strangling/eliminating the competition, an incumbent has no further need for those employees it poached.
> Finally, it’s possible that allowing the larger incumbent to hire all of a competitor’s employees is actually not in their best interest. After strangling/eliminating the competition, an incumbent has no further need for those employees it poached.
And even if the do, it isnt at the inflated pay rate.
When apple uses its dominant position to tax everyone 30 percent apple benefits, and the market does not.
When apple uses its dominant position to pay your team 30 percent more and stifle the free market by driving competitors out of business. you benefit, Apple benefits more and the market does not.
Is apple being a giant market dominating force a good thing or a bad thing? Your getting the high salary does not reflect your value, or the market value of your skill. It reflects apples desire to put your former employer out of business.
Besides a lot of other reasons others already commented about: the noncompete wouldn't prevent that, as Google could hire them for any position that isn't connected to search - say, Android tech support - and allow them the roof access.
You would need to ban them from working ENTIRELY, and no sane person would accept that.
Alternatively, you might realize that NDAs and IP ownership is still a thing, Google can't just copy/paste your code, and if these people are truly irreplaceable, they should either be your cofounders or founding engineers with a significant equity stake.
Imagine a world where employees can’t take a better offer, but a business could have their employees invent the next Google search, and then immediately fire all the workers that made that happen and hire cheaper ones to operate it.
Sure, if you knew you were getting a $100M exit in 5 years a rational agent would even agree to a $0 salary. A bank would gladly give them a $1 million loan for all of their life expenses until then, given the certainty of being repaid.
Unfortunately, these things aren’t certain and are contingent on many things including those that have nothing to do with technology.
It’s unfortunate because people have a bias towards guaranteed present value (cash) over expected future value (equity) which gives incumbents a natural advantage.
I feel like if you're working at a startup, you value some things more than just straight cash. Hour for hour, I'm fairly certain FAANG pays more than all but a few startups.
If a dozen people worked hard enough to gain the knowledge that gets them “rest and vest” at Google, they deserve it. Monetary reward is the reason we’re working at all. It’s not for the greater good. You’re certainly not going to convince anyone to give the government power to deny them their right to take the money and run
It's not about the workers. It's not about the market.
Hiring all the staff at an inflated rate to put a competitor out of business is good for the staff that got hired.
Without competition the dominant player makes more, without other places to work dominant player pays less.
> It’s not for the greater good.
Your not getting paid because your valuable your getting paid out because its anti-competitive. Paying you more to bankrupt a competitor is no different than dumping product to put them out of business ... Secure your market position and then jack up the prices and lower the salary.
You’re absolutely getting paid because you’re valuable, otherwise Google wouldn’t need to buy you out to enact their anti-competitive behavior. You wouldn’t be a threat in the first place.
I'm curious how you define "raiding"? I could imagine cases where a well-capitalized company hires all the members of a competitor's team at 2x salary only to fire them six months later with the goal of destroying their competition.
But other than that I'm not sure I see a problem. If a company "can just poach all of [your team] wholesale" then they were probably being under-compensated to begin with and are better off at their new company. After all, the primary point of banning noncompetes is to protect employees from employers who use noncompetes to suppress their wages. The increased competition is a nice ancillary benefit, not the primary motivation.
"California law protects employers from raiding by competitors. An employee or competitor may not take a large proportion of your employees with the intent of driving you out of business. You must prove the employee or competitor had bad intent. Evidence of intent includes emails, texts, and witness testimony about what the bad employee or competitor did or said when soliciting your employees."
I would strongly oppose any governmental attempt to ban poaching/cold-calling and would see it as a blatant power grab for owners against workers. If you want to retain your team, match the offer.
lots of small companies are reliant on the cheap prices big tech companies offer. by taxing big companies all that does is shift the burden of costs to the small business, making it harder for them to grow.
The race to the bottom in terms of pricing is destroying a lot of value in many industries and in the longer term is harmful to everyone who isn't already a big company.
People and small companies kicking that addiction will be painful, yes, but important to everyone having a healthier life.
Please explain how certain players having more or less unlimited capital advantage that allows them to snuff out any potential competition leads to more aggregate freedom.
No thanks. (I am not in the USA, I am in a country where on-competes must be paid for and short)
Exemptions and carve out will be used for (and politically paid for, with the mind bending official bribery system the USA runs in politics) by the powerful to consolidate their power. Small firms have a lot of power over their employees.
Small firms have to give their employees a reason to work for them, money is part of the picture, and small companies have to be well capitalised to pay competitive salaries. But small companies need to be places people want to work.
Giving employees the power to contract an employee into not quitting is a recipe for very bad behaviour.
In my experience the best and the worst employers are small firms. We need more of the best and fewer of the worst, laws that incentivise being bad do not help
* Software R&D Amortization - taxes on make-believe profits
* Patent law - protect small businesses from patent trolls
* Automate government-driven compliance standards - enable small businesses to sell into large companies/government entities, automatic certification when using pre-approved cloud solutions.
* Healthcare insurance - employees of SMBs automatically get access to medicare