I'm sure SEC has done their homework and knows what they are doing, but to me this is not that clear-cut case. Bechtolsheim heard a rumour that Acacia had gotten offer and traded based on that. But my reading is that to him it was just a rumour, he didn't know for certain that the deal was happening or what the terms of the deal were. Of course as a senior executive he should have known better, but still to me this is not the most heinous crime and closer to just a lapse of judgement.
Read it again. He didn't hear a "rumor". He got it direct from a manager involved in the acquisition. Nothing in business is certain, but he knew that the acquisition was highly likely. Then he used the account of a relative (doesn't say he tipped off the relative, says he used the account), to hide his involvement most likely. If the SEC didn't have a strong case he wouldn't have settled so quickly.
Even as other commenters have pointed out his age, let's be realistic at what $1B is (let alone 16!)
Suppose you have an interest rate of 5% over the year. That's a pretty safe level and I'm sure he gets more. That means you're getting $50m for doing nothing (passive income), or just under $137k/day (overly simplified calculation based on yearly return divided by 365. No compounding, so consider lower bound). Try spending that much money a day! Then consider trying to spend that much money AFTER you've already bought a few nice homes, cars, and hell throw in a private jet (cheap is a few million, most are 10-20, and Elon's is $78M[0]). (At 16B, you're closer to $800m/yr or $2.19m/day!!!! $900k in fines isn't even half a day's "sitting on his ass doing nothing" for him, let alone work. [1])
The thing that often baffles me is why these people still work. You can do almost anything you want with that kind of money. But I think this also says something about money, power, and how these people think. It also makes me wonder why people get mad at tech workers with our high salaries (definitely not complaining!).
Maybe I just don't understand business (I'm a researcher, not a MBA, so assume this is correct). But I just don't see how these salaries do anything for these people other than be a high score. The only way I can personally think of spending $10m in a year is by buying a house and I can't imagine wanting more than 2 (and even a $10m house is often too big! In most locations. Yes, I'm aware SF exists).
I just wonder, can't you undercut everyone by taking a lower salary? Which would increase the company value? Or stop pushing deadlines so fast so there's higher quality? Or many other things because there's a ton of C-suit execs getting these salaries. I just don't understand, why work? I have to imagine, a key part must be addiction. Which I can get, I like a fair amount of work, but would rather take money to work as I see fit (but I guess they get this. But you're not at the technical level and personally (thus, highly biased) I find it is far less fun managing people).
I think there's a real disconnect. In how we see billionaires, how they see us, and how they see themselves. That money is just an insane level. fwiw, I'm not even against billionaires. I just don't understand why once people have $100m they don't pull a Anderson or John Bogle. Because money isn't real anymore.
Edit:
let's add some nice numbers at this 5% rate. If you have $20m invested (earning that 5%) you're going to make $1m/yr for life. $100m gets you $5m/yr and $500m gets you $25m/yr. 10B gets you 500M, and $20B means you're a forever billionaire.
Looking at Forbe's list, we got Bernard Arnault, Bezos, Musk, Zuckerberg, and Ellison (in order). That's $11.3B/yr ($31m/day), $9.9B/yr ($27.1M/day), $9.9B/yr ($27.1M/day (nearly tied)), $8.6B/yr ($23.7M/day), and $7.75B/yr ($21.2M/day) respectively.
With $7.3B you make the $1M/day, which makes you the 367th richest person in the world.
[1] (edit add) Let's say that's half a day's work for you and you're a L4 at Google. Using Levels.fyi data, you got a base salary around $178k/yr and so this is equivalent to you dropping $200 ($320 if you include equity) if compared to his passive income alone (which again, is probably >5%). Let that sink in. Technically it is even less than you should value that $200 because he doesn't need to save anything.
[2] If some billionaire wants to drop $50m on me, I'll go live my life reading math books, buy a B200 node (maybe even 2! Or a few more!), and research AGI for the rest of my life. I mean I'll also do that for a lot less too, but hey, that's 2 days of nothing for you Elon or Bezos. I'm sure it is worth more than that in publicity alone. ;)
If you spend it on things for yourself, you can't spend that kind of money. But if you use it on other people, it quickly evaporates the more you want to get to do with it.
Let's use $800m/yr or $2.19m/day. If a FAANG-grade employee costs $1mm/yr all in (including benefits, HR, managerial overhead, real estate,
etc; that's 800 people, or 66 teams of 12. how many random software projects can you think up, just within the realm of math books, B200 nodes, and AGI? Wouldn't you rather study that with other people than by yourself? And fund all the various possibilities you think will pan out?
Healthcare is another one. You have a sick niece suffering from a rare unknown disease. You could plow hundreds of millions of dollars into researching a cure for her disease.
General philanthropy is another easy way to burn money you don't need. take half that $800mm and donate it to all the charities in your immediate vicinity. every bit of pain in the world you can personally see, just give them a million dollars, no questions asked.
But yeah, if all you want to do is spend it on yourself, it's impossible to see how you'd spend it all, because you can't.
> If you spend it on things for yourself, you can't spend that kind of money. But if you use it on other people, it quickly evaporates the more you want to get to do with it.
There's a limit though, right? Gates is spending it pretty fast except he isn't. It can be hard to spend millions in a day because it takes time to spend that money and your money makes money in that time. At a large enough wealth, you can't ignore the compounding factor because it plays a significant role. If it were even the 2 days standard transaction, then that 2 days generates you another $4m right? And that $4m generates you another $200k/yr (or ~$500/day).
I ran a simulation, because it helps for framing. Start with 16bn, 5% yearly interest, 0 employees, and let your employee cost $400k/yr (L5). Each weekday, take daily interest, and pay the employee's daily salary. There are 104 weekend days, so we'll pay a daily rate of ~$3.5k (I used exact). If it is a weekend don't pay the employee.
In a year you have 261 employees and have made $767 million dollars. That's a pretty profitable year! Oh, yeah, your employees probably made you money too.
If you're a billionaire and did this, you would have lost $1.6m over that year. With $2bn, you profit just shy of $50m.
> Wouldn't you rather study that with other people than by yourself? And fund all the various possibilities you think will pan out?
Definitely. I got 261 this year and we've made a nice profit without delivering a product. Next year we'll double in size and make the same.
> General philanthropy
The reason to do that simulation is to try to guesstimate these things. MacKenzie Scott is well known to be a huge philanthropist. She's richer now than when she divorced Bezos. Of course, Amazon has done much better than 5% per year. But at the same time, she is trying to throw money away as fast as possible. Also according to Forbes last year she gave away $2bn and so far has given $16.5bn away...
That's someone who's twice as wealthy as the person we're talking about, has given away "one Andy Bechtolsheim" AND profited! This is since 2019 btw.
I really cannot stress how large these numbers are. And how different money is at these sizes, because if you do not consider compounding interest (a thing we can often ignore in our daily lives, even if we were multi-millionaires), you're not accounting for millions of dollars. I'm sure there's a way, but it is effectively impossible to spend $100bn. It takes a whole country to do that. Remember, at the start of the simulation you are paying out $1.5k/day, but at the end you're paying $400k/day. Your compounded rate of spending just can't catch up to your compounding rate of earning. The $2bn person doesn't start losing money until day 710.
Yeah, those are good, but they still treat money as static. And our brains just aren't wired like that. It's very hard to conceptualize because we think numbers like 1bn is close to 2bn due to the aggregation of the 0's but they just aren't.
I think people just keep on doing the same thing they were doing unless something dramatic happens in their life. He got to that point by doing some sort of work, he's going to keep on doing that sort of work until he dies. So many people get to retirement and...they don't really want to stop. Stopping would mean re-evaluating everything, which can be pretty tough on an older mind. Life expectancy takes a dramatic dip around retirement, the change can be overwhelming for some.
“The thing that often baffles me is why these people still work. You can do almost anything you want with that kind of money.”
Simple. They love the work. That’s what they want to do. To become a billionaire you usually have to put in an enormous effort. Not many people are willing to do that.
Fair, I don't think I explained this well. Because even I would "work" (see [2]). But it is a completely different kind of work, not being bound. They can definitely run companies big or small with no concern of investors.
No doubt billionaires work hard to get there. And no doubt it is a hard task.
I guess part of it is why care about how much money you make anymore? If you care about "score" it seems odd to compare your assets when you can compare your companies' value. Because you can't actually do anything with that money in your bank, and the company's value is a more meaningful metric as to your "value." I think Jensen's rise says a lot more about his value than the $80B in assets or him being in the top 20 richest. (golden handcuffs aside) In that respect Jensen is doing much better than Musk or Bezos. Of course there's tons of metrics to consider but just using this to help ground a talking point.
“ I guess part of it is why care about how much money you make anymore?”
They are good at making money so it’s fun for them.
On an aside I think Jensen is very good at looking folksy but in the end he is another super driven high achiever. He just expresses himself differently. You don’t get to that level if you aren’t a hard nosed business guy.
I don't think you're understanding what I'm saying. Money in the pocket means nothing. Not even a good value for fictitious scoring. Arguably putting it in your pocket becomes shortsighted because you can make more money by putting it back into the company. Because really, it's doing nothing when you have it because you can't spend it. But if it is in the company then it can be spent. Reducing price of products increases number of sales. You can put it back into employees to make them work harder and be happier (more efficient workers). And so on. But you literally can't spend it if it is in your bank account. We're talking about divested fully liquidated dollars. That's the part I don't get.
Wealth and power, it's all relative. And the competition only becomes fiercer as those measures increase (the top performers being the most competitive).
The person with $5B is not thinking in terms of "enough." Their sights are set on surpassing the $6B guy.
It’s a competition or a hobby. Most hobbies are ultimately meaningless. I used to do boxing. Getting punched in the face and punching others is ultimately useless. But for some reason I enjoyed it and put an enormous effort into it. Others play golf and enjoy it. And billionaires like to make money.
I don't think you get it. I responded here[0] which motivated a simulation where you hire a $400k employee every weekday. You're hugely profitable if you're a multi-billionaire (>$1bn worth). You effectively cannot spend that money faster than you make it. These are amounts where you have to consider compounding interest because if you don't, you're missing daily profits that are on the scale of what we'd consider the net worth of a very wealthy individual.
A special class of robbers for sure. Some may even call it parasitism and it wouldnt be easy to disagree unless looked at it from an awkward distorted angle where it could look justified..
Insider trading is not illegal; providing a material benefit to (paying) someone to provide you inside information and then using that to insider trade is illegal.
There is some ambiguity about the definition of a "material benefit" - does that include friendship? Advice? Soft promises of future business arrangements? I assume the government didn't have a 100% solid angle on that element of the crime.
Insider trading requires material nonpublic information, but it also requires somebody violate a fiduciary duty. From the page you linked to (emphasis added):
>
Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security.
It seems the SEC is going after him with the latter clause. His long time business contact gave him sensitive non-public information, and he should have known better than to trade on it, because it was so sensitive and who it came from, a long time relationship of trust and confidence.
FTA:
> We allege that Bechtolsheim, while serving as the chairman of a publicly traded company, abused the trust of a longtime business contact who had shared highly sensitive information about an imminent corporate acquisition," said SEC market abuse unit chief Joseph G Sansone.
For someone as wealthy as he is ("Forbes lists Bechtolsheim's net worth at somewhere north of $16 billion"), a (less than) $1M fine seems more than gentle enough for "a lapse of judgement" and "not the most heinous crime".
It probably crossed a line given the amount, the person involved, and the timing. (And the fact that he tried to hide the transaction.) But lots of people get tips from friends or people at parties about things that aren't actually true or that fall through.
This wasn’t a rumour overheard at a party though. Someone in a company (presumably Cisco) consulted with him about their pending purchase of the company.
If you buy options on a company just before some kind of deal (particularly if you haven’t bought them before) your relationship with anyone that knew of the deal is likely to be investigated.
