* 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
I would think that the biggest obstacles for small startups
in the AI space is the expense and availability of suitable
hardware.
Then the expense of the electricity itself.
Big Cloud companies, who are also AI companies, with huge wallets
have a huge advantage to start with.
The regular answer is of course go to the cloud, which is by far the easiest
approach. I would think the cost of intense "AI compute" over a long timespan
in the cloud is really expensive as well. And you are paying your competitors for your work.
If any of that is correct, which it might not be, then building the initial models would cost more than a startup couldl afford.
You can also go to the cloud and used "AI APIs" usually proprietary in one
way or another to the cloud vendors themselves and limiting the scope of
what can be accomplished. (Plus paying the competing in order to compete)
> First, let’s prioritize open source models and more tailored AI applications to shape the competitive landscape and create real opportunities for startups
My read on this is YC believes that small companies will (are?) be locked out of the AI arms race, and are pushing for legal action to hold the door open for them.
Pushing disruptive technologies has made YC insane hoards of wealth- the fact that they feel like they need government intervention for this to continue is scary. It feels like a canary in the coal mine in regards to who is in control of AI's future.
He is referring to laws like SB1047 that will make open source model makers liable for who uses them, and may scare companies like Meta from releasing any more. E.g., preventing the release of llama 3 400b, which might be the first GPT4-grade OSS release.
Locked out maybe, but more about 'not closing the door' vs 'keeping the door open'.
I'm tempted to be cynical about this, especially since me and Garry Tan really don't seem to have the same political alignment, but I'm honestly pretty glad this happened. The tech community (outside of big tech) ought to be more politically active rather than complain when senile politicians get behind a law that doesn't make sense. I want to say there are about as many software developers in the US as there are farmers, and yet the latter has enormous political power, while we have virtually none. I mean, imagine if we could get the federal government to subsidize us in the same way it subsidizes corn farmers.
Don't get me wrong, I kind of fear what laws and legislation a tech voting bloc would pass, but I'm also optimistic that we could push forward some genuinely progressive legislation as well. Maybe we could pass laws that encourage more housing development. Perhaps some bureaucratic reforms similar to the ones that occurred in Estonia, the kind that result in major cost reductions without any loss in quality of service. Universal healthcare? Those slightly strange policy ideas we like to talk about that are clearly progressive, even "socialist", but are also palatable to libertarians?
Mixed feelings about lobby for open source AI, but nonetheless, glad it happened. Hope to see more of it.
I am assuming YC will be lobbying on their own interests, which, at least for typical VCs is getting some of their small companies to go big, rather than promoting success among all their companies. They probably won't be lobbying for the companies that do not get/take VC funding, which are the less capatilized ones that probably need more representation. And, their interests with go big or go bust doesn't always align with the funded companies' interests, since optimizing for their portfolio of many is different from optimizing for the founders' portifolio of one.
It is interesting that you have current YC head lobbying for small and open, while previous lobbies for large and private and is a big driver in why the government wants to regulate so much already.
Thought experiment, if YC had not allowed for or jump started OpenAI would they even have to be lobbying now for openness and “little tech” (at least for AI side of things)?
Somewhat with you on this one, I assumed the title was YC (being big tech) were upping their lobbying game - it was after reading it that I came to your point of view.
> We need decisive action to compel more interoperability by the largest firms and curb self-preferencing so we restore competition and innovation, similar to measures called for in the American Innovation and Choice Online Act that Big Tech lobbying killed at the eleventh hour in 2021. At the end of the day, we need an open and neutral app ecosystem where consumers and developers can maintain a direct relationship.
Cure this, and the rest will follow. Two companies gating access to the app market is what is destroying competition at its core.
The line about being the voice of "little tech" rubbed me pretty hard the wrong way. Nothing's stopping me or my clients from contacting senators, reps, and regulators, joining political organizations, or signing open letters. We have our own voices. Some of us know enough to use them.
It's hard to tell what, exactly, the position on "open source AI" was. It's presented here in glittering generalities. Given the many conversations I've had on-theme with not-public-tech-co people, I don't think it's fair to say all of "little tech" has one view or position, when you really get down to details. I rather doubt the whole YC-o-Verse sees it all one way, either, given its burgeoning size.
More broadly, I'd expect positioning off as "little tech" to flop. Policy players know how to follow the money. They know "Big Tech" brings the money that buys startups—they've read about it in exec summaries of the committee reports. They're also plenty aware that startups get founded by, and recruit from, a lot of the same pools of people. They've been lobbied by various policy groups speaking for smaller tech companies, often funded by the bigger tech companies, for years. If they dig just a little bit, they'll see the barriers to entry, and resulting big-co dependencies, for small-cos doing AI work.
There's bipartisan support for "going after Big Tech" competition-wise. I don't think the pols need a tech-co splinter group as reinforcement there. Unless and until IPO becomes the main path of successful ascent again—perpetually private isn't popular—I don't have great arguments against generalizing startups to Big Tech Farm League. There are plenty of gripes up from startups against the Great Houses, especially from investors. But that's feudalism for you.
Compare, say, DHH's lobbying. 37signals had the Bezos investment, but it was an unusual deal, not within the usual system. Speaking from a different place.
I would consider YC a pretty clear representative of "little tech", albeit little tech with startup/hyperscale ambitions. So, IMO it's not out of touch, it's very on-point.
Great call out. Who can claim with a straight face the USA was built on the idea of equal opportunity.
Who would say that country that sprang from the metropolises of the east were built on individualism?
This kind of capital-C conservative appeal to the past is a political signal to light a fire under the Dems and court Republicans.
Not that you’d expect such a statement to turn into a truth telling commission or a treatise on the evolution of the United States but it’s interesting it was brought up.
I was hopeful YC coming to DC would've meant YC would've been tapping into DC's startup scene.
Wishful thinking. Linked is the more common reason (lobbying), but I'm looking forward to more institutions recognizing the talent we have in the DC region.
There's talent in every region, and I think it should be a priority to figure out ways to unlock it without re-siting companies in SFBA and NYC, but it's worth noting here that YC's SFBA-centricity is not an outcome of their belief that there's no talent outside SFBA. It's the opposite: they assume they're importing that talent to the area.
The YC SFBA thing is about network effects from companies working in close proximity, and about the investor market (1) believing the same thing and (2) having themselves an even more significant network effect that keeps them all in the same area.
woah, locking your investments into a single geographic area, how innovative and forward thinking! especially for a tech company! I really hope nothing bad happens that reduces the value of in-person networking or shared commercial office space, or God forbid someone invents a gadget that lets people work from places other than where they live
You don't have to like it, and it doesn't have to rationalize with whatever your conception of how innovation works is. I don't like San Francisco either. My point is that you have to at least engage with the SFBA argument that YC is making.
I work for a large-ish all-remote YC company in which none of the founders live in the Bay Area (or in the same city, for that matter). People have some odd ideas of how YC actually works.
As someone who was in DC area but isn't any more, talent in DC area is not anything to write home about. We have a ton of talent on paper because government requires gobs of tech workers and prefers they have advanced degrees but since it's just boring enterprise work, the spark of innovation is snuffed out quickly.
Most of startups in the area are catering to the government. There are already VC/PE/Startup accelerators more equipped for the unique market.
Having lived in the DC area for almost two decades, I don't agree. There are absolutely pockets that match your description but, if that's all you see I think you might be stuck in a bubble. I see so much more. There are cool companies that have been and are being built here (I was going to list them, but the Washingtonian "DC Tech Titans" list has lots of good examples), many not B2G... and people who still have 'the spark' (and many more who I think could rekindle it).
There's also a hugely educated workforce, many of whom don't love their daily grind (hiring opportunity). There's a creative community in DC and even more so if you include the greater DMV or mid-Atlantic. A ton of compute and infrastructure (including us-east-1) is based here, which has its own benefits for businesses.
In my opinion, one of the things that would benefit the region is a less conservative (read: more risk-tolerant) investment community. YC isn't the only way to get that done, but I think it would be a helpful catalyst.
Washingtonian is very pay to play. However, I'll point some that appear private like Cvent are in DC area because their early customers were trade groups that put on big conferences. These trade groups are here because they lobby the government. So doesn't appear government focused at first but is.
Others may have private sector customers but do huge amount of business with government. Appian, looking at you.
Yes, almost all my work in DC area was with companies nowhere near the government but it was very difficult and I stayed with jobs longer than I wanted. Also, hiring was very very difficult. We would churn through tech resumes and interviews because either inflated salary due to clearance or just people who wanted to push button and get paid well for it. It was always very frustrating.
Also, why do people seem to think there is tech hubs around big cloud datacenter? When did people start caring about being close to their workloads?
Completely agree those lists are pay to play, but they also include some cool companies that underscore my point.
Rocket Money (nee True Bill; Silver Spring) is fintech. Optoro (Bethesda) is retail supply chain. Alarm.com (Tysons) is home security. FrameBridge (also Tysons) is home goods. (Beyond that, you've got companies like Mapbox, ID.me, Opower, Motley Fool, and Capitol One.)
Cvent - agreed on causation, but don't agree that it's government focused. The US Government spending is something like 1/3 of GDP. It has massive ability to influence policy and national investment. It makes sense that non-profits, associations, and others would congregate in the DC region. It's why we have at least 2 nuclear fusion companies based here (one of which has a freaking rail gun in Chantilly).
I should really do the math, but it feels like a significant portion of the Fortune 500 have "more than just lobbying" footprints within ~25 miles of DC.
On hiring I agree that it can be hard, but I do still see cool small companies in the "#DCTech" scene. I think there's talent out there that could be moved to companies doing interesting impactful work.
As for data centers, I'll concede that point. I almost omitted it originally because I couldn't connect the dots either.... I should have.
Sure, with the money involved, there is some private companies. I worked for one you named. However, startup scene will always have government focused entities and therefore non-government specialized VCs (like YC) probably don't see juice worth the squeeze to try and find a few diamonds in the rough.
As for talent moving to companies doing interesting impactful work, I'm not sure I see it. Tech people moving into area seemed to be drawn by government work so they are gone. Home grown tech workers are mixed bag of which I'm one. Some followed their parents and join the ranks of government employees/contractors. Others did find private employment. Really good ones seemed to depart the area. I wasn't really good one, I just moved for my partner.
everyone is moving away from us-east, the talent is mostly in northern virginia and focused on defense not actual tech talent,
i took a brief look at that "Tech Titans" list and frankly it is not that impressive, compared to an actual hub like SF, NYC, Seattle or even compared to tier 2 hubs like Boston or LA.
i mean they're counting "Vox Media" as a tech startup... which is very DC, I guess. many of the others also are due to regulatory reasons, like Revature or Wirewheel.
Some people may be moving away from us-east, but new datacenters are going up. That wouldn't happen unless someone thinks there's growth ahead.
As for "not actual tech talent," I don't agree. There's talent from Richmond to Baltimore. But something is missing, which was the point of my original post in this thread... a mindset shift could be impactful.
For the tech titans, it's not a complete list, but I used it as a shortcut. There are companies on there you may have overlooked (Rocket Money, Optoro, Alarm.com)
Maryland has companies across edtech, health tech, bio/pharma, hospitality, and cyber (not enumerating since many aren't household names, though Marriott is).
NoVa has regional/global HQs for Amazon, Capital One, CustomInk, E-Trade, Google, Iridium (and several other satellite companies), Mars (the candy people), Microsoft, Nestle, Rolls-Royce, USA Today (and Gannett), and Volkswagen.
DC itself is largely focused on gov and gov-adjacent companies, but the community is rebuilding. There are still people pushing tech forward here.
I'm not affiliated with either but DC Tech has a meetup Wednesday, and TEDXMidAtlantic happens Saturday. Sounds like you might not live here anymore but, if you're at either, I'd love to say hi and continue the conversation.
There's still movement in the region. Anzu-Green today announced a $100 million fund [1] and two weeks ago Andreessen Horowitz announced they're opening a DC office this quarter [2].
The e/acc guy that drunkenly posts about how he wants his political enemies to die slow has decided that he’s needed in national politics? Color me astounded!
This PR blurb does not make any sense; YC is not interested in "little tech" that wants to stay little. YC are the ones that promoted the idea of "unicorns". YC needs these "little tech" companies to execute on ridiculous levels of non-linear "growth" to deliver a grossly inflated expected return on meagre investment. This led to the "growth hacking" nonsense that everyone was complaining about.
It is absurd to pretend that YC is on the side of "little tech". YC is only interested in companies that will grow large and deliver an enormous return. PG loves people like Zuckerberg and basically stated he wished all founders were similarly sociopathic^Wambitious.
"Lifestyle" software/web companies that stay small can be a good thing. Perhaps they could deliver much better than "Big Tech" if they had the chance; thanks to Silicon Valley VC greed and "Big Tech" anti-competitive practices we are prevented from knowing. YC is after "unicorns" not lifestyle or other small companies. The "success stories" YC pitches are companies like Dropbox and AirBnB. This is the furthest thing from "little tech".
This article is light on organizational and financial details. You don't just go to DC once, have some meetings, and announce what has to be done, if you're serious.
You open a permanent office, meet with people on the Hill regularly, and spread campaign contributions around liberally. DC is crawling with people whose life it is to help you do that. Just drive around Chevy Chase and see all the luxury shops catering to those people.
There's a not entirely rigorous, but empirically weighty analogy here to Silicon Valley. Why don't startups just fly into SFO, rent an AirBnB for a few days, hit Sand Hill Road, and split back to wherever overhead is cheaper?
in SV, the idea is that you can hire people to do almost anything a growing company needs. That's true in DC as well, but it's also that the important people who can decide your future are there and continually meeting with your enemies.
"If you're not at the table, you're on the menu." they like to say.
Remember when YC leadership yelled on Twitter about how DC should have more regulation and should guarantee FDIC funds past 250k for wealthy VC's and startups when their Silicon Valley Bank collapsed? This obviously had the effect of entrenching large banks, because people now know that big banks are too-big-to-fail and have infinite FDIC insurance, while the little guys can kick rocks because they're not systemic enough. So they effectively lobbied for big financial business.
Now they want to lobby for less regulation of their own industry in favor of the little guy? Personally, I'm a more principled libertarian-leaning type than "government for me, free market for thee."
From a communication strategy standpoint, I'm just curious what the thinking was to go with 'Little Tech' to refer to new tech startups? I understand the purpose is to succinctly stand in contrast to 'Big Tech', but the word 'Little' somehow feels a bit more cutesy or infantilizing to me than saying 'Small Tech.'
YC is not interested in fixing any of these problem despite their words and actions. Real solutions are bitter pills to this industry, poison pills to investors and venture capitalists.
The two universal solutions that work for every other industry:
* Liability
* Licensing
When I say liability and I mean both personal liability, as in suing the developer(s) for harms of the software, as well as business liability. When I say licensing I do not mean product licensing. I mean human professional licensing. There is an astonishing lack of professionalism and ethics in software. None of this is fixed with band-aids or wishful thinking. Go directly to the problem: the money funnel and the often absurd absence of competence.
Yes, this is scary. Get over it. You cannot both be an entitled child free from the harms of the world and simultaneously be absent from the harms that result. The upside, though, is that increased risk and liability, in financial and compensatory terms, means fewer people doing the work each owning a fair share of the rewards that otherwise just go to investors and not even as dividends.
Big Tech has been allowed to operate with little scrutiny or oversight — to disastrous effects, in the form of social media harms, anti competitive practices, and more. Despite recent efforts to rein them in, a small handful of mega companies continue to wield enormous power in our economy and in Washington
Garry, I’m a bit confused. I totally agree with the sentiment, but isn’t YC part of the whole machine? Seed funding to VC to Wall Street IPO exit to big billion dollar corporation? Sam Altman is a product of YC culture, he ran the place, same as you do now.
I wanted to join YC in the past 12 years and applied multiple times. We never made it to the interview, but I have gotten an outsider’s perspective on the industry and the root causes of the problems you currently really want to solve with government. Instead what if I told you YC under YOUR leadership can solve them worldwide and far better? Hear me out…
Peter Thiel who invested the first $500K into Facebook famously taught that “competition is for losers, build a monopoly”, and I imagine the lessons to capture and extract maximum value from the ecosystem for shareholders has affected many founders, including Mark Z:
https://www.wsj.com/articles/peter-thiel-competition-is-for-...
Mark Zuckerberg was an open source guy on the east coast. He open sourced Synapse instead of selling it to Microsoft. He wanted to make Wirehog, a peer to peer file sharing system, but Sean Parker and the VCs “put a bullet in that thing”. I was there at TC Disrupt in NY where Parker proudly told the story: https://techcrunch.com/2010/05/26/wirehog/
Sean Parker himself learned that lesson bitterly when his company disrupted a different but similar industry that was about owning and monetizing intellectual property - RIAA, MPAA, etc. After Napster was defeated he opened Plaxo and learned to play the “correct game”. He wanted to make sure Mark didn’t follow his open sensibilities too far, letting the public share stuff too freely, because shareholders need profit!
We are LUCKY that Mark Z still retains some of his original open source sensibilities because his company has been the only one giving away models trained for large amounts of money, to the community. Ok maybe Llama research edition leaked but they OWNED that thing, and became to openness what Apple is to privacy.
I mean when Silicon Valley Bank collapsed (set off by the same Peter Thiel), we found out that most VCs even banked at the same bank! There has been a LOT of centralization.
This article goes into more depth than my post can, about how the incentives to enrich shareholders leads not just to enshittification of their own ecosystem but surveillance capitalism, and generally externalizing cost to society. Across the board! Teen girls have highest rates of depression. Adult men are on opiates and 20% of middle-aged women are on antidepressants. Elderly are in nursing homes and kids are in public schools (which pg once compared to prisons) and medicated for ADHD to sit still while their parents work long hours with less and less job certainty. Some even just do the gig economy, while Instacart ir Uber collects HALF of every driver’s fare for its shareholders!
Our society is perpetually angry now because algorithms select for more engagement, and it turns out clickbait and outrage maximizes it even more than sex. So the market selects for one sided stories that evoke outrage, and publishers pick an audience to pander to. While social network algorithms produce echo chambers and radicalization. And this is before we get to any AI bot swarms.
I believe there is ONE WEIRD TRICK that YC can do to help society at large A LOT over the next decade. I would like to see a way to transition shareholders organically to utility tokenholders before the public offering. Kind of like the differenc between Disney Dollars and shares of Disney Corp. Disney’s shareholders don’t live in Disneyworld and thus dont have the incentives that customers and workers do. They become an everpresent landlord class extracting rents forever, holding earnings calls even after the original investors had sold their shares. Same with other ecosystems.
The founders don’t need THAT machine necessarily, to be handsomely rewarded to the tune of billions of dollars and have the startups become worldwide movements that serve humanity. YC and VCs could still have their exits while preventing the parasitic rent extraction from getting out of control post-IPO. YC being upstream of most VCs could operate a HUGE lever, and like Archimedes, could move the world towards a better system, as you once did with SAFE notes! That’s would solve a lot of the incentive problems without the need for heavy-handed government regulation!
Two years ago, a different very ambitious and politically connected Sam — Sam Bankman Fried - also went around begging for his space to be regulated. But the incentives inherent in shareholder profits (instead of stakeholder accounting) and competition (instead of cooperation) are what leads to negative externalities, in many ways, and that includes pollution, ecosystem collapse, factory farms and much more. You guys can consider introducing that one SMALL change — transitioning shares to utility tokens gradually.
I would be very happy to come meet and explain more if it is of any interest. Just reply to my message and let me know how to reach out if you see potential here.
PS: In addition to utility tokens, open source and protocols help create maximum value for the world, through collaboration over competition. For decades, the US government wielded its mighty antitrust regulations over Ma Bell and the phone companies it split them into. And yet long distance calls were still $3 a minute. Then, VOIP open protocols democratized the pipes and turned the telcos into dumb replaceable infrastructure. It was open protocols that brought the cost of not just calls but video and broadcasting down to near-zero, something government couldn’t do. Wikipedia beat Britannica. The Web beat AOL and all closed systems. I could go on, but open and free beats closed in the end, AND each open platform (Linux, the Web, etc) leads to far more wealth creation than when gatekeepers extract rents. That’s another aspect. And meanwhile, since 2014 people have discovered that utility tokens can help to monetize open source and digital content including journalism, in healthier ways than ads and surveillance capitalism. As my VC friend Albert Wenger from Union Square ventures wrote a book along the same lines: https://worldaftercapital.org
Please don't take HN threads on tedious generic flamewar tangents, let alone nationalistic ones. They're repetitive and nasty and we're trying for something else here.
>"Quit fucking around" and institute a national, single-payer plan that covers everyone, like every other modern industrialized country.
Except we're not starting from a blank slate. So short of heavy-handed, dictatorial decisions how would you propose to get to a single-payer plan that covers everyone? You'll have to work with the existing hospital infrastructure, insurance companies, and citizens who don't want a single-payer system. They all get a say, too. People who act like its a straightforward solution don't really understand the problem. But to avoid sounding overly cynical, I'll throw out a couple of recommendations.
1) Expand the VA system to cover all vets, regardless of whether it's a service-connected health issue or not, without insurance. This is politically possibly the easiest step because its hard for a politician to stand up and say they aren't an advocate for better care for the troops. However, the VA is entwined with medical schools and you'd have ensure you expand the funding proportionately to avoid pissing off that constituency.
2) Gradually ratchet down the age for medicare, over decades.
(I'd also argue you'd have to get money out of politics first for any really change to have a chance)
Oh no the vultures in the system will go hungry whatever shall we do
> citizens who don't want a single-payer system
Buy premium insurance above and beyond the public option, same as every other modern industrialized country. If you don't like the offering for free, the market can cover whatever gap exists.
Ignoring that a “stroke of the pen” is a dictatorial solution almost by definition…
Considering Medicare/Medicaid are currently approaching $1T annually to serve less than 20% of the population how dues your stroke of the pen plan pay for the increase when everyone is enrolled?
Hospitals are forced to accept Medicare, but in many cases this is at a loss, subsidized by private charges elsewhere. So you’ll need to find out how to shore up that cost, too.
These types of naive solutions assume everyone else is very very stupid or very very corrupt (or else why didn’t such a simple solution get implemented already?)
Medicare covers the most expensive part of the population.
The US spends 2-3x what the rest of the OECD spends per-capita, with about the same outcomes. Our system is the least cost efficient system in the entire developed world. It’s hard to see how Medicare-for-all could manage to do worse.
I agree with the population part. But more nuance is that a huge part is the last few weeks of life because of cultural aspects regarding protecting life by all means necessary.
However, they’re a saying in healthcare that you can optimize for quality, access, or cost but you only get two.
The US system is largely focused on optimizing for quality and access (although I admit the latter isn’t necessarily done well and generally relies on reactive care). So to open up access further, you’d probably need to address the other two levers, and I’m not seeing anyone discuss that. There’s also the disproportionate amount of R&D done by the US which effectively subsidizes the rest of the world to help keep their costs down. All that to say, none of the simple solutions bandied about really talk about those effects, let alone how to manage them.
> Considering Medicare/Medicaid are currently approaching $1T annually to serve less than 20% of the population how dues your stroke of the pen plan pay for the increase when everyone is enrolled?
Most countries manage on ~12% or less of GDP, the US takes ~17% of GDP to pay for healthcare [0]. For example, the UK manages to cover everyone for about 12% of GDP. If the US adopted a plan as ubiquitous as the UK, in the same manner as the UK, it'd be cheaper than the current system. Expense seems to be correlated more with the presence of insurance than with the ubiquity of healthcare.
This is the frustrating part of these conversations because people act like you can just swap one country for another like they are interchangeable. They aren’t.
For example, other countries get to keep drug costs low because the companies that make them get huge profits in the US. If the US charges the same, the profits and R&D also dry up unless you set up another system.
Also, the US tends to rely on extreme measures more often very late in life. I’ve heard (but can’t confirm) this drives a huge proportion of costs. This is rooted in cultural ideas of the sanctity of life. You can’t just pull the rug out unless you’re prepared for backlash about “death panels” and such.
There’s a lot of nuance and the “just do what other countries do” misses it completely.
That's simply misinformation. The US government funds some of the basic research that produces candidate molecules. But the vast majority of the cost in drug development comes in phase 3 human clinical trials. Almost all of that is paid for by pharmaceutical companies, and many trials fail.
> Seven of the 10 largest drugmakers by revenue in 2020 spent more money on selling and marketing existing drugs than on research and development for new drugs, according to an analysis published Oct. 27 by America's Health Insurance Plans.
> GlaxoSmithKline spent $15 billion on sales and marketing in 2020 compared with $7 billion on research and development. Bayer spent $18 billion on sales and marketing compared with $8 billion for research and development. Johnson & Johnson spent $22 billion on sales and marketing, compared with $12 billion on research and development.
I think this is missing the point. I don't think anyone is arguing that pharma spends a lot on marketing and that this cost is passed on to consumers. Rather, the point being made is that the US system disproportionately funds pharma R&D. Meaning, if the idea is to have parity with other countries, at least one of several options needs to happen: 1) other countries start funding more R&D, 2) other countries drug prices increase, 3) we accept that less R&D occurs, or 4) we find alternative sources for funding R&D.
Glib answers like "just do what other countries do" don't address any of that.
At least according to ChatGPT, over 40% fail. If true that’s surprising, since you don’t start a Phase 3 unless a lot of very smart people are convinced it’s going to work, and lab results (including human) back that up.
Singapore has an authoritarian police state which prevents many of the chronic substance abuse problems that drive a significant fraction of US healthcare spending. I don't think Americans would be willing to accept that trade-off. Singapore is also nearly 100% urban which makes care delivery much more efficient.
The US healthcare system is a mess and needs reform. But we can't just copy other countries. We don't want to lose the best parts of our system or stifle innovation in (expensive) new drugs and medical devices.
An interesting aspect of cancer survivability is the jump in cancer rates in the US right around age 65. The implication is people aren't being seen until they qualify for Medicare, pointing to preventative healthcare access problems.
Just to add to the nuance, you're comparing a country with 6MM people to one with 370MM people. What dynamics do you think that difference of scale has on the overall healthcare outcome?
I very much doubt there are either large economies or diseconomies of scale in healthcare. Certainly no indication of it in spend western Europe I can see.
The UK has IMO created diseconomies of scale by having a monolithic system.
Would it outweigh the diseconomies of scale seen in the NHS? It is pretty clear that the less centralised systems in other western European countries are more efficient, nor can I see any evidence that smaller western European countries face consistently higher costs than larger ones.
What are you seeing as the drivers of those diseconomies of scale? That might help me better answer the question.
Again, though, I think it’s an error to treat each country as if it’s interchangeable. In other words, we need to understand the systemic causes of those costs to understand the impact as it relates to other nations.
In the above example with Medicare, the cause is due to negotiating power through volume. So it’s pretty clear that scale matters there.
Come on--obviously OP meant a "stroke of the pen, held by duly elected representatives". Nothing dictatorial about that.
We currently can almost get enough of those representatives in office to do it (and a president to sign it), if it weren't for things like the electoral college, gerrymandering, and grossly unequal representation in the Senate, things that currently give disproportionate power to the "team" that happens to oppose single-payer.
I meant it as an executive order, which is really the only stroke of a pen that would work. Otherwise you’d have to build the political capital to get enough representatives to sign on, and that’s exactly the non-simple task I was alluding to. Those are the same reps who make the rules you’re complaining about, and the same ones who can’t agree on a budget when we don’t have a massive increase in Medicare entitlements. Maybe I’m too cynical, but pretending like there’s the political capital to do it just in the horizon feels like a pipe dream to me. I’m old enough to remember politicians talking about a single payer system in the 1990s and yet here we are.
I see. Except Medicare isn’t currently an option for most people employed. I think there are some benefits to employer sponsered healthcare, particularly with large employers who can negotiate lower prices. But I’m not sure it’s better on balance.
Most developed countries don’t have single payer healthcare. Obamacare is actually modeled on the system used in the Netherlands.
And why is “national” a criteria? California doesn’t get single payer unless Montana also gets it? Neither Californians nor Montanans want that. It’s just political games.
Before Obamacare, if California's taxpayers became the single payer behind medical care in California, then millions of poor chronically ill people would have moved to California from the other 49 states for the free medical care
--unless I am wrong in my belief that there is nothing California voters can do to prevent US citizens from moving to California.
This works just fine in other contexts. Eg. when you move to Alaska, you only start getting your Permanent Fund dividend only when you’re Alaskan resident for a full calendar year. You are only eligible for resident hunting permit after 12 months of residency. There are many more examples.
No, Obamacare was modeled after the Heritage Foundation market based proposal, Assuring Affordable Health Care for All Americans, which was trialed in Massachusetts by Mitt Romney.
But you’ve got a point, it’s probably fairer to say that the ACA and the Dutch and Swiss systems are all modeled on common ideas regarding managed competition: https://jacobin.com/2016/02/gaffney-single-payer-sanders-hea... (“The 2006 Dutch reforms were based in part on a school of health policy thought associated with the US economist Alain Enthoven, a man who got his start analyzing military strategy for the Pentagon before becoming the foremost proponent of competing private-sector health plans (so-called ‘managed competition’). Outside the Netherlands, Enthoven’s ideas have influenced health reform efforts in both his home country — first under Bill Clinton, then President Obama.”)
It's really more of an historical fact than a political talking point, as per Forbes, contemporaneously:
ROMNEY: Actually, Newt, we got the idea of an individual mandate from you.
GINGRICH: That's not true. You got it from the Heritage Foundation.
ROMNEY: Yes, we got it from you, and you got it from the Heritage Foundation and from you.
>Most developed countries don’t have single payer healthcare. Obamacare is actually modeled on the system used in the Netherlands.
No it's not. Most European countries that run private health insurance keep pretty strong regulatory regime where pricing and coverage is tightly controlled. In America, there is some basic regulatory scheme but pricing, coverage, limits and such is extremely open.
You're not contradicting the OP. He's right: most developed countries don't have single-payer healthcare. Their systems are more similar to Obamacare than to the UK's NHS.
You're correct too: these countries have strong regulations where pricing and coverage is tightly controlled, though they do use private health insurance.
> institute a national, single-payer plan that covers everyone, like every other modern industrialized country
The two (real, non-politicians are corrupt) downsides to contend with:
- countries do this by limiting what they will spend; in the US you have access to unlimited treatment. E.g. in the UK the NHS will spend £30k for each good year it buys you
- this one isn't fair, but the US is where health innovation happens. Companies sell into it to make money to survive. They then sell into the other countries to make much less margin, and if those countries were all they had as customers, they wouldn't exist. The US is why we have the advancements we have, and all us non-US countries have silly smug citizens who think our countries are better at negotiating deals. If the US didn't do what it did, we'd be a lot worse off.
I live in Canada and there isn’t a spending limit. The decision of how to treat is made by the doctor. The doctor is then paid. In my experience living on both sides of the border, you get far more care up here since there is no bullshit with finding a facility that accepts your insurance, and cost isn’t a consideration for doctors or patients.
People will occasionally travel to the states for drug/therapy trials not available in Canada, or for treatments that are not proven effective. These people will then loudly bitch about Canadian healthcare.
If you want the proof of it, remember that a huge majority of Canadians live close enough to drive to the US for health care, but don’t.
Yes. They are limited by facilities and labor that is dictated by provincial spending. Right now the government in Alberta is actively and publicly trying to reduce spending on the public system, and trying to use that as an excuse to go private. The number of doctors and facilities available is a direct function of money in other words. If you increased spending on doctors and facilities rather than reducing it like Alberta is doing, you will see a reduction in wait times.
You will find that triage is a fact of medical care in most places. I have waited hours in a private ER in the states multiple times. You have to wait months to see specialists in the states as well.
The US also has a triage system for care. First they filter by ability to pay, then they filter by doctor and facility availability like Canada does.
An American with no ability to pay will wait far longer than an Albertan for heart surgery.
>If you want the proof of it, remember that a huge majority of Canadians live close enough to drive to the US for health care, but don’t.
With Canada rapidly approaching third-world status, this is hardly surprising. Most Canadians cannot even afford to cross the border, much less pay American prices.
> If you want the proof of it, remember that a huge majority of Canadians live close enough to drive to the US for health care, but don't
I don't understand this point. Obviously Canada offers healthcare, and what it offers is no doubt good. That doesn't mean that it offers everything that can possibly be done. People just won't be aware of what can be done, and/or don't have US health insurance to pay for what can be done.
My point is that one of the arguments against universal healthcare in the States that gets trotted out is that Canadians have waits so long or that the healthcare is so restricted that they are dying or that they can't get care.
If people were actually having to wait that long that their health was seriously threatened, they would likely be engaging in medical tourism on a much bigger scale. If you needed surgery or you were going to die/be permanently disabled and the Canadian system wasn't able to provide it, people would be driving across the border, flying to Mexico/Thailand/wherever, or doing whatever else they needed to not die or have their life impacted.
But that doesn't happen. What it tells you is that, as much as some Americans paint a false picture to slander single payer healthcare, and as much as some Canadians complain about waiting, the Canadian system is still better than any alternative available to the participants, despite the alternative being a quick drive away for most of us.
I mean, normal Canadians also likely can't afford the cost of American surgery. And I can think of at least 1 time a prominent Canadian went to the USA for medical procedures that weren't available in Canada.
About how many people in the USA do you think are on an insurance plan that doesn't limit what procedures they can get, and/or can afford to pay out pocket for whatever other procedure?
Also, Healthcare companies are wildly profitable. If they were negotiating prices in the USA just like they do everywhere else, they would only be profitable. Woe is me.
No, you cannot craft an exploitation narrative out of tech startup founders. We have to draw the line somewhere. Say their directors of engineering and customer success are suffering under the lash of founders and investors, fine, but not one level of seniority higher than that.
* 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