Entertaining anecdote that didn’t make it into the blog post: people sometimes mistook us (juicer.io) for Juicero, you know, the infamous $400 machine that squeezed a juice packet. The day the Juicero news blew up, we got some especially hateful posts on our Facebook page.
> Being employed by someone is by its very definition, an exploitative relationship, even if your job is great. Your employer can only afford to hire you if you make more money than you cost [] so no matter what, you are getting paid less than your true value.
Weird fallacy. If I am paid to dig ditches in Haiti, is my true value different from digging ditches in Monaco?
The amount someone brings in depends on their context: what organisation, what country, what city.
It's a hoot when you hear someone say something like that. I mean, nobody works in a vacuum. The boss used her capital and labor to put in place all the resources that enable you to work, and has to use his capital and labor to maintain a going concern, and deserves to earn something for their labor as well as a return on risked capital which is a risk you as the worker don't take. I'm pretty happy to take a salary and go home at the end of the day without having to worry about losing my entire investment due to the vagaries of business or an employee's bad attitude.
People also underestimate the sheer legal and regulatory BS you have to deal with as an employer. The employee doesn't have to worry about keeping books, filing quarterly taxes, or dealing with any legal entanglements (and for larger companies, there are a lot of legal entanglements).
Employees are insulated from all this work, which requires, not just manpower, but also a ton of mental space.
Exactly. One of my more frustrating lessons was the sheer amount of time I had to spend on Government related activities whilst running my previous business. I was already a Libertarian going in, but it only served to entrench my stance further.
Even when you outsource those things to accountants, lawyers, payroll company, HR, etc... you quickly come to realize how much time, money and effort goes into the cost of maintaining government-related compliance.
It's even worse in my line of work because most governments, mine included, have just not caught up to the modern model of work. The legal frameworks for dealing with products that might be hosted in one country, have payments processed in another, and have customers from all over the globe are just wonky.
I predict the country that understands the modern internet-enabled venture and creates laws specifically for them will benefit a great deal in the future. I'm told that Estonia is on that path, but I haven't studied it enough to affirm it
Estonia (heck, Israel too!) is really good at this - the problem is local tax law. Jurisdictions almost uniformly have rules and regulations such that decision making is deemed to happen in the jurisdiction of residence and declaration. This is more or less a worldwide phenomenon.
> The boss used her capital and labor to put in place all the resources that enable you to work
Capital accrued through the exploitation (yes, that's the legal and technical term) of labour.
There is 0 evidence that we wouldn't have a more productive society overall, if capital was more uniformly distributed across society; enabling more individuals to work for themselves or in co-ops.
Capitalist organisation structures are a pyramid with a very small few at the top collecting the vast majority of generated value. I don't think even the staunchest capitalism proponents can argue that a CEO no matter how good, is generating millions of times more value than a line worker at any org. Yet that's the kind of income deltas we see.
And we already know what happens when capitalist orgs reach a certain size. Rent seeking. They direct their resources towards preventing anyone else from competing in their niche through regulation and other barriers to entry. 'Why don't you go off and do your own thing?' Because it takes several million dollars to overcome the barrier to entry and even take a shot in any profitable industry. Exactly the kind of capital that average people don't have with the currently massively skewed wealth distribution curve.
If everyone suddenly had 5m in their bank accounts, you can bet your ass of millions of people would quit their jobs and go off to start their own things.
tl;dr: your employer isn't doing you any favours by hiring you and exploiting your labour. The fact that they happen to possess the capital necessary to profitably exploit you while you don't, doesn't turn them into a charity.
> There is 0 evidence that we wouldn't have a more productive society overall, if capital was more uniformly distributed across society; enabling more individuals to work for themselves or in co-ops.
How would we maintain this equal distribution? Some people would invest their capital in tools, training, and trade. Other people would spend it on entertainment. Before you know it, bam! Inequality!
It only really takes two mechanisms. Simple progressive taxation with no loopholes, and investment into education which mostly removes the 'other people would spend it on entertainment' factor. There will always be some quantity of deadbeats, but the societal cost of providing them with a minimum standard of living is far smaller than the societal cost of putting the overwhelming majority of wealth/power into the hands of a tiny number of individuals.
I'm not advocating for evenly sharing all wealth between all people. I'm advocating for compressing the extreme outliers on both sides of the wealth distribution curve and uplifting the bottom 10% while also exponentially taxing the top 10%.
If we taxed the top 10% of income earners on a curve from 50% to 99% marginal tax rate for 90th to 99.9th percentiles respectively, pretty much all the major problems like expensive healthcare, poor infrastructure, lack of social safety nets, etc, would be completely financially covered with billions of dollars left to spend on other stuff. Instead we write PR-piece headlines every time some billionaire is 'charitable' and donates to some cause that he personally chose.
> If everyone suddenly had 5m in their bank accounts, you can bet your ass of millions of people would quit their jobs and go off to start their own things.
1. Read about lottery winners - that is a real life experiment on what people do with 5m dollars.
2. In first world countries, we all are given a mostly equal amount of extremely valuable years. How we use those hours matters.
> The fact that they happen to possess the capital necessary to profitably exploit you while you don't
Many business owners are just average people that were given zero capital by their family, instead betting their time and their own savings. “Capital” applies in some cases (inherited farm? France?) but it is radically wrong thinking for a significant number of “owners” that started out with the same random playing pieces as everyone else in this game.
If you hate “the man”, then work for a small business owned by someone dealt a similar hand in life as you were (if they will employ you - they tend to dislike being told they were born with everything on a silver platter).
Lottery winners are selected from the population of lottery players which probably skews toward impulsive consumption and away from entrepreneurialism.
"Capital accrued through the exploitation (yes, that's the legal and technical term) of labour."
I started my businesses with capital I accumulated by being "exploited".
"If everyone suddenly had 5m in their bank accounts, you can bet your ass of millions of people would quit their jobs and go off to start their own things."
For sure they would, "their own things" in most cases being a spending binge on who knows what, followed by someplace they could be "exploited" again.
So can we equeate the term 'offering employment' to 'offering exploitation'?
Unless exploited by force (slavery). The employed/expolited are free to find their true value by alternavtive means? Find another job - less exploitive, or make your own job.
There are many problems with capitalism, I would argue taxation, or more appropriately lack of taxation is a greater concern.
As for the scenario if everyone had 5m in their accounts in the morning, only the most foolish would quit their jobs as inflation would render the windfall as null and void.
We all cannot be equally well-off. Value will always flow, and eventually concentrate.
57% of all americans have less than 1 paycheck worth of savings in their bank. They don't have the option to shop around for other work or invest in personal growth to attain their 'true value'.
https://en.wikipedia.org/wiki/Wage_slavery
> We all cannot be equally well-off. Value will always flow, and eventually concentrate.
And eventually revolutions topple the structures where value has concentrated when wealth disparity gets too big, and the cycle begins again. After several risen and fallen civilisations/empires, maybe its time to try something other than the one strategy that we for sure know the outcome of.
We don't need to be all equally well off, but we do need to compress the top and bottom 10% of the income disparity curve. No one on this planet should have billions of dollars in personal wealth, and no one on this planet should be too poor to afford shelter healthcare and food.
You've changed your comment while I was typing: youu mentioned a delta between CEOs and average workers. But we're likely to share common ground. Your new comment regarding revolutions. Not so fast!
The Chinese sufffered the same problems of inequallity and the plebs made the same comparisons - for centuries.
So a delta is to be expected, the magnatude I'm not sure if that matters as CEOs are outliers. I think the point you are leaning to is:
despite working full time, the average US resident cannot afford what we perceive to be a 'good quality of life' (many people from developing countries will find that statement hard to believe). This is subjective, and not likely an issue of labour being exploitative.
It is a question on what type of a society Americans want (and vote for), which is an entirely different discussion covering taxation, education, health care, corpotate political donations/lobbying etc.
From a market perspective the delta represents supply and demand.
I didn't change my comment. The only edit I made was to separate a para for formatting. Maybe you were reading something else.
From a market perspective the delta has nothing to do with supply/demand. Microeconomics and supply/demand theory doesn't really have any answers to the fact that wealth and power tends to acrete. The textbook answer will be along the lines of 'but then smaller more agile entities will arise that displace the incumbents' but the incumbents have long ago figured out strategoes such as rent seeking to prevent that.
Capitalism is fundamentally broken in several clear ways:
* It assumes that individuals are rational actors who are sufficiently informed to make generally optimal self-interest decisions
* It assumes that there's a force or mechanism to modulate or prevent acretion of wealth. So far the only such mechanism historically has been bloody revolutions
* It assumes that we know the 'true value' of things including externalities. The climate crisis is a huge example of how utterly wrong that is. If car and fossil fuel costs accounted for externalities, they'd cost somewhere in the vicinity of 10-100x more than they currently do. Would that have prevented the boom that led to current quality of life in the developed world? Probably. Would it also have prevented an existential threat to us? Certainly.
The pursuit of continuous growth has become clearly a self-terminal strategy that not only failed multiple times in history before, but is threatening our entire species via anthropogenic climate change now.
I'm advocating that we stop pursuing continuous growth and focus on collapsing the insane wealth disparity and dismantling the structures that have acreted unprecedented wealth and power into the hands of <100 people worldwide.
Someone who acreted sufficient wealth to extract profit from your labour more effectively than you can alone, is not doing you favours, is not being charitable, but merely exploiting you to acrete more wealth to exploit more people ad infinitum.
It's only threatening our species coz space research was quite purposefully stalled while old world global political tensions were simmering at their hottest.
Once there is an off-planet colony i expect the resource pressure that is starting to show will ease up considerably. Capturing asteroid/mining other planets for resources - there are a lot of ways for things to course correct. Everything we're facing right now is coz of an artifical bottleneck in our species expansion
It will also render existential threats moot coz there will be off planet resources to rebuild a civilization in case things do go catastrophically wrong.
Wow, a hundred million times minimum wage in the US should be something like, I don't know, a trillion dollars per year? That's amazing! I can surely understand why people are so upset about income equality now.
There's the game we play which is often very stupid about triaging the imaginary values between things, then there is the value of an hour of human effort. On the whole these two things have very little to do with each other, but the second is the only one which has any merit. The game needs to exist, but the extent to which people prioritize it over the human side is troublesome. Money makes people do stupid things, think about the world in ridiculous ways. To be specific, money makes people abstract away from any reasonable morals and in this case devalue people based on the random circumstance life put them in the game.
> Weird fallacy. If I am paid to dig ditches in Haiti, is my true value different from digging ditches in Monaco?
Yeah your true value is different in that case. Being at the right place at the right moment represent quite a bit of value actually (even if most of the time you have no control over it).
You clearly see "true value" as some kind of intrinsic value, which has to be kind of universal by that definition, but that's not the true value he was talking about, nor does that true value exist as you said in the last sentence.
The true value he talk about is the actual value you bring by the work you do. The thing is we want profit, thus unless you make all the profit, what you get out of your work isn't the full amount that your actual works represent.
Exorbitantly so when it's obviously nonsense. Imagine I have an apple, and there are two apples out of my reach so I say I'll give you my apple if you climb on my shoulders and get the two apples to give to me.
Imagine the same situation, except you say "Climb on my shoulders and get the two apples and you can keep one".
In both situations, we start with you having 0 apples and me having 1 and we end with you having 1 apple and me having 2. In the first, I employed you and in the second, you employed me.
So which one of us was paid less than the true value?
Right, and by that same logic, the author was just exploited by the buyers of Juicer, who thought they could make more money off his IP than they paid him for it.
There is no such thing as “true value”. Value is only what other people are willing to pay for something. Brad Pitt can make more money squinting into a camera holding a pair of sunglasses for 5 minutes, than a laborer might make in his whole life. But that’s because Brad Pitt makes the sunglass company more money by doing so.
By all means let’s clean up systemic issues that encourage an uneven playing field, but by “being exploited” we’ve increased the size of the pie for (almost) everyone in a way never before seen in history.
> If I am paid to dig ditches in Haiti, is my true value different from digging ditches in Monaco?
Wording aside (true vs. relative vs. real, etc.) there is a point to this concept and I think we all know it instinctively. Perhaps it could be called "global value" vs. "local value".
Your "true" (global) value is digging the most valuable trench you could possibly dig. Whether the trench is in Haiti saving millions from famine, or in Monaco saving priceless casinos from collapsing. Digging a lesser trench simply means you are not achieving your true value but limiting yourself to a lower value that your employer extracts from you.
The best coder in the world could make billions of $ or improve billions of lives with some genius piece of code. But if they choose to dig trenches in Haiti helping 3 people it means much of that true value is lost.
True value was probably the wrong phrasing here. More accurate would be “relative value”; The value you as an employee bring in vs your cost. Employers are arbitraging between these values to generate a profit. Businesses have to make more money than they pay their employees.
This particular phrasing just happened to strike a chord for me. It’s likely Marxism 101 but I’m not well versed on economics.
If you're working in a team of 10 people, it's unlikely you could get whatever it is you're doing done in 10x the time it takes the team. In many cases, you couldn't do it at all, and your value without the employer would be 0.
I don't see how this refutes anything GP or GGP is saying.
What I mean is, when you join a team and that team is more productive than if each member were working alone, then every member of the team's value is higher when they are a member of that team.
You require capital to survive. If you have no capital, the ways to get some are welfare, charity, inheritance, or employment. Barring the first three, your only option to get capital is to seek and get employment. The operative word being "only" here, this relationship is inherently nonconsensual, and a power dynamic emerges between employer and employee where the employee is cornered to bending to the employer's demands. If another employer offers better terms, you may "choose" to switch employers, but this is a false choice as that power dynamic never goes away. How this relationship plays out in practice comes down to the employer's behaviors and how much they want to exploit that power dynamic, and by transitivity the employee.
You might be surprised by the amount of youth and counter-culture that believe this nonsense. The same people who believe capitalism can't exist without exploitation.
I wonder if there are common best practices on throttling growth for a lifestyle company or bootstrapped startup? I guess it can be as simple as turning off new registrations for periods of time or only allowing invitations at arbitrary times. Has this worked well for any SaaS businesses? Once you hit your financial goals, it could help forestall burnout, but I suppose there's a lot of risk there too - if there's enough unmet demand, someone could replace you.
1) Turn off any explicit advertising/marketing/drip/promotion systems, even if they’re automated and profitable — they’re hacks that distort your view of the product. Let people sign up, but organic word-of-mouth only.
2) Consider a more relaxed pace of life. Travel widely. The startup world is a microcosm, and if you haven’t personally experienced and understood how people live outside of it for several months or years, it’s easy to overwork yourself and think it’s completely normal. There’s a reason “digital nomad” is a thing — a recurring story is that people try it out on a whim or by chance and then get absolutely hooked.
3) If you still want to invest time, what are you personally interested in building into the product?
I think the traditional “talk to your customers” is great for staying grounded and understanding pain points, but you can get stuck in a local maximum. As an engineer/product person, you have a unique insight into what is technically possible in your space, which new technological capabilities will become relevant as time progresses, and the general direction of the market over longer time spans. This is an opportunity to be a long-term thinker and focus on building features or related products that are specifically targeted at highly technical early adopters, so that by the time the idea becomes mainstream, you’ll have a substantial head-start.
Be a craftsman and use your skill to more deeply address the problem space.
If you’ve hit sustainability, are as lean as most bootstrapped lifestyle companies, and churn is not a major issue in general, I think the risk of being replaced by new contenders is actually a very slow-motion risk — people are not so good at changing their habits. :-)
Adding a significantly high price barrier is enough to arrest growth of most B2C Saas companies. I’m not sure you’d even have a digital nomad life style if you’re running a B2B SaaS, especially if your product is expensive.
`Being employed by someone is by its very definition, an exploitative relationship, even if your job is great. Your employer can only afford to hire you if you make more money than you cost (again, with a few exceptions of course) so no matter what you are getting paid less than your true value.`
`It’s much, much easier to get to the top, or near the top of the wordpress plugin directory than it is google (essentially it’s making sure the description of your plugin has the right keywords, and then you’ll be there essentially instantly).`
>Your employer can only afford to hire you if you make more money than you cost (again, with a few exceptions of course) so no matter what you are getting paid less than your true value.
This seems like a somewhat simplistic way to view a company. The amount you "make" for the company isn't the same thing as your "true value," because that isn't a real concept. The value you are able to provide changes based on context and objectives. It's leverage in the moment, not "value" in some inherent sense. Do you think every employee in the world should be able to just quit their job and suddenly realize the same return without changing their costs at all?
I code, and probably get paid less than I output in value; but what I output would not be nearly as valuable if not for the others that contribute to the company. My boss, having created the initial value, and other investors and shareholders take the overage.
This is so important. I used to actually hate the sales team at my very first 'real job'...so much that any time I had to go to the bathroom I would walk down two flights of stairs to pollute the air on their floor. ¯\_(ツ)_/¯
Anyway, this dislike came from their tendency to stretch everything and over-commit to get a sale. It ended up souring my opinion of the entire profession and I had zero respect for it...until I tried it myself. I went through this process a few times until I really came to an understanding of how many different personalities and proclivities it takes to successfully run any company of appreciable size.
"Being employed by someone is by its very definition, an exploitative relationship ... so no matter what you are getting paid less than your true value" stuck out to me as well. But I think it's wrong. For example, imagine you're incredibly good at something very narrow. At a big company which has important needs that align with your skills, you could be making them enormous amounts of money and getting a solid chunk. Working independently, you can spend far less of your time on your top skill, and you may not be able to find any needs nearly as large as the ones big companies are hiring for.
It’s complete nonsense. Quit your job and sit at home doing whatever tasks you used to do at work, and see how much money you get paid. My guess would be $0.
Another way to think of it is the value you get paid as an employee, should reflect how much the labour market values you. I don't think it's fair to say it's unavoidably exploitative.
For every Ryan (OP) who started their own project and succeeded, there are many more who failed (or gave up too early) and lost money they would have earned if they worked for an employer.
Risk always have a premium, so taking risk (starting your own thing) will have a higher expected payoff; at the cost of more variance (risk).
Totally agree. It was a relatively simplistic way to think about employment. It also ignores all the downsides and stress that come from self employment. But there’s also many mental benefits around the agency you feel: not feeling like a cog in a wheel working towards unclear goals, being able to see the fruits of your labor, etc.
As somebody thinking of starting a SaaS soon, this was a great and insightful read. The one thing this does confirm for me, is that the best ideas are those that solve problems you already have (or create tools or services you wish you had, etc.) Well done!
Really interesting post, thanks for highlighting all of the inflection points in your journey to sale. Inspired me to think really hard about what pain points I have when I freelance.
