Elon Musk is now a trillionaire, SpaceX has a valuation that can only be explained — wait, it can't be explained — and some people think it's immoral for people to be able to become billionaires and now trillionaires. I don't care for Elon, but I certainly don't have a problem with people creating lots of wealth for themselves. In fact, I think it's the outcome we want, provided we do the things necessary to maintain a healthy middle class.
Nevertheless, there are people who believe you cannot earn a billion dollars without bad behavior. I'd like to think that nobody really believes this and they have simply recognized it makes for good politics or some other self-serving purpose, but maybe I'm wrong.
Paul Graham recently responded to this argument with an essay called "How to Earn a Billion Dollars." With the experience of funding and investing in about 6,500 companies under his belt, he puts it very simply: The most common way to earn a billion dollars is to start a startup that many people like, and then have it grow very quickly for a period of time.
He provides some math:
If your revenues grow at 15% a month, how much more will you be making 5 years from now? To calculate that, we need to find 1.15 to the 60th power (since 5 years is 60 months). So go to Google again and this time type 1.15^60. The answer should be about 4384. Meaning in 5 years your startup will be making 4384 times as much. If you're currently making ten thousand a month, in five years you'll be making about 44 million a month, or 526 million a year. And at that point, if you own as much of the company as founders typically do, you will be a billionaire.
He then goes on to argue that a key founder trait is, in fact, the opposite of exploitation:
There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy. What do users really want? What could you do for them that would make their lives dramatically better? That kind of empathy is what we look for in founders, and what we cultivate in the ones we accept [at Y Combinator].
If you're interested, here's the full essay.
Waymo just launched a new $29.99-per-month "Premier" service in a select few of its cities. The member benefits include priority pickups, 10% cash back (sometimes more during busy times), early access to new Waymo cities, and flexible cancellations (up to five per month). Generally speaking, it feels pretty similar to Uber One, except it's 3x the cost. But if you spend more than $300 per month on Waymo trips, then the 10% cash back does pay for the service. We're now also talking about autonomous vehicles. Will that make a difference?
One of the early promises of Uber was that it was going to disrupt car ownership. People would just ride-hail. But as far as I can tell, that has not happened at scale. In the case of autonomous vehicles, one of the early promises was that if you took out the labour-cost component of ride hailing (i.e., the driver), you could then make rides really cheap and that would induce demand. But that too has not been the case thus far. In fact, riders seem to be willing to pay a premium to be in the car alone. This premium appears to be reflected in the price of Waymo Premier.
Where we got it wrong with Uber is that it ended up replacing taxis, not car ownership. But will autonomy and a nicer car experience change this? I like my car because I picked it, I use it to get where I have to go, and I store some of my stuff in it (including a fancy new car seat). But broadly speaking, I hate driving. If Waymo could fulfill my needs for, say, C$300/month, it would be in my economic interest to switch. I would have a very high willingness to pay if this is what I were replacing.
Changing consumer behaviour is hard, especially when we've built entire cities around a particular mode of transport. But sometimes products and services have seemingly subtle differences that surprise us in the way that the market responds to them. Will that be the case with Waymo? We shall see.
We talk a lot around here about the obstacles to missing middle housing and one of the key themes is that it's not a singular problem, it's a "many-things" problem. It's zoning, single-stair code requirements, elevators, environmental policy, servicing, and so much more. So we need to treat it like a multidisciplinary problem and collectively chip away at the barriers.
Today, let's focus on one important item on the list: servicing. My friend Brendan Charters from Eurodale forwarded me a letter that he submitted to City Council this week concerning Toronto Hydro policies. It does a great job outlining the issues, the impact on housing delivery, and the potential costs that new housing projects must bear. So I thought I would share it verbatim here on the blog.
The costs outlined in the letter below are just one example of the direct and indirect costs (time value of money) that get added onto every new home in the city, provided the new home even gets built. There are also too many instances of housing projects that never get off the ground because the costs are deemed too great right from the outset.
For those of you who are in the industry, or who just care about this issue, here's the agenda item. The City is hoping that the industry will use this opportunity to clearly articulate the challenges they have had with Toronto Hydro when it comes to multiplexes and housing development in general. Here's your opportunity. Write to the City and share Brendan's letter. This is how we work to solve our "many-things" problem.
Photo by Pavel Polansky on Unsplash