Poor Billionaires

Can one become a billionaire through crooked means, lies, and deceit? The key word is “become”: that excludes those who inherited the money. And no, I did not use “billionaire” as a synonym for stinking rich; I mean literally a billionaire, i.e., not a dollar less (it can be a lot of dollars more beyond the first billion). Plenty of people can and do become millionaires by exploitation. But billionaires?

 

I think the answer to that varies with the level of government control involved. The more tightly the government controls all economic aspects, the more likely that the billionaires in those countries got there via crooked means – bribes, kickbacks, using influence to scuttle rivals, even the use of force etc. Think of Russia, or even India before the reforms.

 

But nowadays, in a country where governments control less aspects, I am wondering if Paul Graham is right in his assessment that nobody becomes a billionaire by “exploiting people”. In fact, most self-made billionaires in such cases formed their own company from scratch. Could the founders of Microsoft, Google, Facebook, Amazon (all US), Ali Baba, TenCent (all China), Infosys or most recently Nykaa (all India) have become billionaires with crooked means as the primary reason?

 

Graham is a venture capitalist, i.e., he invests in startups. By definition, most of a venture capitalist’s investments go down the drain, but the few that succeed make it really big. Like Facebook-big. Or Nykaa-big. Graham starts off with a tongue-in-cheek remark:

“If the key to becoming a billionaire — the defining feature of billionaires — was to exploit people, then I, as a professional billionaire scout, would surely realize this and look for people who would be good at it.”

But no venture capitalist looks at “good at exploiting others” as a criteria to make an investment, he says.

 

Another point Graham makes is that every startup billionaire could have stopped long back, if money was their sole criteria. That’s an interesting point. Mark Zuckerburg didn’t stop with Facebook; he acquired and grew Instagram and WhatsApp by leaps and bounds. Bill Gates didn’t stop with MS DOS; he went to create Windows and MS Office. The founders of Google went on to own and grow YouTube and Android. Narayan Murthy and Nandan Nilekani didn’t cash out and retire young. Amazon’s founder went on to form AWS, Alexa, and his own rocket company. You see the pattern with self-made billionaires… Working endlessly seems to be the common theme, not exploiting others.

 

Why then do so many people equate billionaires with exploiters, asks Graham. He has an interesting answer:

“I think they start from the feeling that it's wrong that one person could have so much more money than another… If they limited themselves to saying that it made them feel bad when one person had so much more money than other people, who would disagree?... The mistake they make is to jump from feeling bad that some people are much richer than others to the conclusion that there's no legitimate way to make a very large amount of money. Now we're getting into statements that are not only falsifiable, but false.”

 

Such a maligned lot. Poor billionaires. Just kidding. But there’s a lot to what Graham says. To end the blog on a lighter note, I sometimes feel sorry for Bill Gates. He decided to run the world’s largest philanthropic organization, using his oh-so-many billions, and convincing his rich pals to do the same. When Gates retired in 2000, his net worth was $85 billion. Today, he is worth even more - $124 billion. One can almost hear him cursing current Microsoft CEO, Satya Nadella, for running the company so well! Poor Bill is making money faster than he can give away, even in retirement…