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Last week the news broke that WhatsApp was sold to Facebook for $19 billion. The sale turned founder Jan Koum, previously on food stamps, into a billionaire.

The next day, one of my Facebook friends posted words of encouragement. You too, he said, have it within yourself to make something that can be sold for billions of dollars. His message was that anyone can join the 1%.

The comments on that post were a mixture of attacks and support, the usual messages from both ends of the political spectrum. A few focused on the dangers of extreme economic inequality and mostly comments were from friends of the poster who were angry about "envy" of the wealthy. I pointed out that his advice was good if you were looking out for was only your own personal wealth, but less useful if you were also concerned about other people.

Don't get me wrong, I love and appreciate the idea that I too can make something that turns me into a billionaire. It could happen. Maybe if I really give it a shot, I can think up something to sell to Mark Zuckerberg, pay off my debt and fulfilling my dreams of travel.

Anyone can invent something awesome and get bought for millions. But not everyone can.

Hey, anyone could get a job in the financial industry, where profit at any cost is the norm. But not everyone can, for their ethics and interests make it impossible. Which is why we need affordable housing for people who choose to work in nonprofits, hospitals and schools.

Any one child can be picked in the lottery for a Charter School. But not every child. That is why we need public schools with the resources and stability to support children and teachers.  

Anyone could move to higher ground and live off of limited food and water supplies when climate change makes our coastal cities uninhabitable, but not everyone can. That is why we need courage from everyone to create a sustainable energy economy.

Anyone might just overcome family cycles of poverty, drug addiction and/or abuse to excel in school and live a life of health and financial stability. But not everyone can. Which is why we need a living minimum wage, comprehensive homeless support and well-funded mental health services.

And anyone can pull themselves out of a poor childhood to create a software that lets people communicate anywhere on the planet, call it WhatsApp, and become famous and wealthy over night. But not everyone can.

Some have a vision of society where we all aspire to the success of each individual.  Dream big, they say. But really, that is the opposite kind of dream. That is small vision, a vision for only one. Even Facebook doesn't have enough money for the Apps of all the people I care about.

Originally posted to millerz on Sun Mar 02, 2014 at 04:45 PM PST.

Also republished by Community Spotlight.

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Comment Preferences

  •  The good news is that the $19 billion (5+ / 0-)

    will generate $4.5 billion in state and federal income taxes so the founders and investors in WhatsApp will be making a significant societal contribution as well.

    "let's talk about that"

    by VClib on Sun Mar 02, 2014 at 04:59:49 PM PST

    •  Where do you get that number? (1+ / 0-)
      Recommended by:

      I find it pretty unlikely the taxes will be that high until and unless they sell their Facebook stock.

      We were not ahead of our time, we led the way to our time.

      by i understand on Sun Mar 02, 2014 at 06:18:57 PM PST

      [ Parent ]

      •  You are right that the taxes won't be paid (3+ / 0-)
        Recommended by:
        nextstep, greengemini, FarWestGirl

        until they sell their new Facebook shares. However, assuming that the Facebook shares at least maintain their current value they will have to pay long term capital gains taxes when the shares are sold. I took the current top long term capital gains rate of 23.8%, but I forgot to add the California tax which would be a net of 10.1% for a total of 33.9% or $6.4 billion.

        "let's talk about that"

        by VClib on Sun Mar 02, 2014 at 06:29:27 PM PST

        [ Parent ]

        •  Well, that applies to any sell of FB stock. (1+ / 0-)
          Recommended by:

          Regardless of a WhatsApp deal.

          And I'm fairly certain tax liability will be minimized by very well paid accountants. I wouldn't bank on those funds showing up any time soon, or ever.

          We were not ahead of our time, we led the way to our time.

          by i understand on Sun Mar 02, 2014 at 06:32:49 PM PST

          [ Parent ]

          •  iunderstand - the lowest rate is the long term (4+ / 0-)

            capital gains rate so that will be the minimum tax paid. Some holders of Facebook shares purchased the shares at a much higher basis and would owe less. Except for the founders and very early employees the Facebook employees who received stock options will be paying earned income rates, which when you add the California tax adds up to a marginal rate of 43.4%. Charitable deductions, mortgage interest and a few other items are deductible but it doesn't matter how good your accountant is the tax bite can't change much post the Tax Reform Act of 1986.

            I assumed that the employees and investors in WhatApp have a basis close enough to zero that at a value of $19 billion isn't going to matter much.  

            "let's talk about that"

            by VClib on Sun Mar 02, 2014 at 07:13:18 PM PST

            [ Parent ]

          •  here's how it's done (ps I know) (5+ / 0-)

            When WhatsApp stock converts to FB stock there is no taxable event. So no tax is paid. The cash is likely taxable, depending upon how they structured the deal.

            What few people realize is that one does not need to sell a single share of stock, creating a taxable event, to get the benefit of having a big stock portfolio.

            What one does is obtain a margin loan, literally borrowing against the value of the stock. If you keep your stock with a brokerage account they'll probably give you nearly zero interest on the margin in the hopes of future business.

            So what one does is borrow $1 million, pay zero taxes, buy $1 million in goods or services and pay only the property transfer tax or sales tax on the purchase.

            Someday far, far in the future your heirs will inherit the stock, payoff the margin loan, and thanks to people like the Koch brothers buying a few US Senators the inheritance tax will be quite low.

            Oh, and I'm not even proposing special off-shore tax dodges

            I'm a tech founder and this is what the expensive accountants suggest.  I've had 2 companies acquired with zero taxable events, but unfortunately the dot bomb pretty much wiped us out. So I've done a couple since then.

            •  Margin loans can be dangerous (1+ / 0-)
              Recommended by:

              I knew a Microsoft multimillionaire (on paper) who used margin loans against his MS stock to try and multiply his investments - not a bad strategy if the stock you are taking the margin loan against keeps its value (or grows in value) AND the investments also keep or grow their value.  

              Of course, all the technology stocks he was invested in AND his Microsoft stock took a dive in 2000, margin calls came in, his other investments were tanking too, and he got wiped out.

          •  The stock will be placed into an (1+ / 0-)
            Recommended by:
            i understand

            "accelerated charitable remainder" trust, from which Mr. Koum will be paid a stipend. The stock will be sold, tax-free by the trust, and a (small) portion donated to some charitable cause.

            The most egregious form of "accelerated charitable remainder trust" was nixed by the Treasury department (drain 96% of the fund over 2 years, then fold the fund and donate the remaining 4% to charity), but a modified form, known as "son of accelerated charitable remainder trust" is still going.

            It's worth checking out your local library or bookstore for a copy of "Perfectly Legal, the covert campaign to rig our tax system to benefit the super rich and cheat everyone else."

            There are all sorts of amazing and effective schemes for hoarding wealth, if you have enough of it. Alas, if you're lower on the economic ladder, there isn't even a way to save, anymore.

    •  Tax $ are nice if paid. But does WhatsApp (0+ / 0-)

      contribute to humanity?  

  •  It is way more complicated than it seems (11+ / 0-)

    I mean truly, anyone can hit the lottery too. Luck, circumstance and timing have far more to do with it than anything else. Hard work is good, but far more people in this world work hard than are given credit for, same way there are far better actors toiling in obscurity for many reasons. But you are far more likely to hit a million in a state lottery in this country than get  discovered and make a million developing a web app, or as  an actor, or various other pursuits. The stats are actually ptretty clear if you look at them. But people look at the lower odds one as something they just need to work harder for.

    •  It is a false dream, (12+ / 0-)

      a mirage.  That some tiny percentile of the population "makes it big" is not a valid encouragement to the rest of us.  There needs to be a wider bandwidth of opportunity.  Millions and Billions of dollars need not be the sole motivator - success has many facets.

      An illusion can never be destroyed directly... SK.

      by Thomas Twinnings on Sun Mar 02, 2014 at 06:47:16 PM PST

      [ Parent ]

      •  Thank you! (4+ / 0-)

        Exactly! Well put. I see too many signs that many in our culture feel that the number of dollars you have is the sole indicator of success.  Of course, money is important because it translates into being able to take care of your health and a certain level of freedom. But one does not need a billion dollars to do live a great life.  And there are people, people we admire in our society, who have billions and still want more.

        •  Millerz (2+ / 0-)
          Recommended by:
          sethtriggs, RiveroftheWest

          Have you thought about setting up a wifi network ,that can connect people  to computers  up to 35 miles from thier point of origin ,they have wifi antennae that reach that far ,that cost less than 100 dollars  ,you do  not have to have  permission from the FCC ,you can build private network for people to access thier  computers form long distances ,without being connected too the internet and share content with the people , only that you want too have access, think of the unlimted possibilities with all the smartphone and tablets in a city  of million and it free without building a network ,that cost companies billions

      •  Agreed, but... (1+ / 0-)
        Recommended by:

        "Success" need not be based upon money.

        A lousy human being is not transformed by money. A great human being who obtains money can (and in experience of the people I know)  remain a great human being.

      •  Nonsense (0+ / 0-)

        There's a whole spectrum of earnings in between not doing a damned thing and striking gold.  Your invention may not net your first billion, but it could secure a comfortable salary on the path to exit (or growth).

      •  I know someone (3+ / 0-)
        Recommended by:
        buddabelly, sethtriggs, samddobermann

        who developed and sold an app to Google for millions of dollars a few years ago.  Whoo-hoo!  Self-made man!

        Well... if you don't look at the fact that his parents were able to put him through private school.

        And then prep school.

        and then paid for his undergraduate and graduate degrees -- he has a Ph.D.

        All the while providing him with generous stipends, and the family apartment in NYC, during the development of three other apps that didn't get sold to Google.

    •  your stats are wrong - (5+ / 0-)

      Each year in the US the average is less than 100 people have $1 million + in a lottery over the past 25 years.

      Less than 100 a year become lottery millionaires.

      About 90 people are killed by lightning each year in the US.

      Over 200,000 Americans became millionaires in 2011.
      source: according to a report from Chicago-based Spectrem Group

      in 2000 I was one of them, on paper, when our startup was acquired. But the dot bomb changed that.

      In 2007 I was within about a month of it happening when the  bond rating agencies wrote down the value of commercial mortgage backed securities, wiping out my commercial real estate value.

      We have a new mobile app to enhance productivity for small businesses and self-employed. In perhaps 2 years we may have an exit.

      Nobody ever said it's easy, but it is much more possible than wishing and buying lottery tickets.

      •  I get your point but..... (2+ / 0-)
        Recommended by:
        Dog Chains, Egalitare

        out of 300 million Americans (or whatever the number is), only a relative handful have the combination of requisite intelligence, temperament, education, and opportunity to create a successful disruptive invention, app, etc.  

        My own opinion is that in 40 years or so many Americans will not have to work, and the government will have to provide a minimum living salary.  Much of today's labor will be done by robots and computers.  The country, and companies, will be more productive, but a large slice of the country will be unemployable.

        My guess is that the highly educated will still have jobs, and the lower class will continue to do gardening and other menial tasks.  But the middle - the high school grads and so forth - will find themselves replaced by robots and computers.  

        PS:  It is fewer than 100, not less than 100.  I was an English major.

      •  actually, you are wrong on both accounts, but I (0+ / 0-)

        Get your point. Between scratch tickets, daily games, keno and multi states games, there  were 108 over million dollar winners announced in MA alone (which does not include unannounced or any other states). Th a t is one state. If you use population, it extracts to be an inexact 2,200 or so. Using a 25 year average is pretty false since lotteries 25 years ago were fewer and far between.

        But where you really miss my point is I am not comparing it to any type of work, I specifically stated specific disciplines. The amount of total new millionaires plays no point, as not every will play the lottery, nor will everybody attempt each specific discipline that makes tht 200,000 folks new millionaires. 200,000 in a country of 370,000,000.

      •  Nonsensical. (0+ / 0-)

        According to IRS statistics, there are only 300,000 taxpayers in the US with an adjusted gross income of $1 million or higher. That's 300,000 total. In the whole country.

        If you don't watch news, you're un-informed. If you watch Fox news, you're mis-informed. (paraphrasing Mark Twain)

        by edg on Mon Mar 03, 2014 at 09:52:35 AM PST

        [ Parent ]

  •  It's more a testament to the poor FB valuation (4+ / 0-)

    The stock is so flimsy they have to give away "$19 billion" of it for a chat app.

    We were not ahead of our time, we led the way to our time.

    by i understand on Sun Mar 02, 2014 at 06:13:08 PM PST

  •  I hope this at least gets spotlighted (3+ / 0-)
    Recommended by:
    greengemini, millerz, Skyye

    If everyone had a better shot, and if it were less easy for anyone to run away with the whole game, that would be a start.

    Damn good diary

  •  Simple math: only 1% can ever be in the top 1%. (7+ / 0-)

    (OK, technically, it could be a little more, over time, because a few people leave the top 1%, making room for more, but the point stands).

    •  2+2=5 for adequately large values of two (2+ / 0-)
      Recommended by:
      Egalitare, RiveroftheWest

      You make an excellent point.  What this is all about is changing the meaning of "top 1%."

      Competent, successful, and well off is great and how it should be.

      Ungodly wealthy and owning everything to the detriment of the nation is not sustainable.

      o caminho d'ouro, uma pinga de mel: Parati

      by tarkangi on Mon Mar 03, 2014 at 04:00:09 PM PST

      [ Parent ]

  •  There were slaves in the south that negotiated or (1+ / 0-)
    Recommended by:

    bought their freedom.  Does that make slavery not so bad...???  Shouldn't the slaves just have 'pulled themselves up by their bootstraps'?

    (The sad thing is, I sense a new fox news talking point being generated.)

    And we love to wear a badge, a uniform / And we love to fly a flag But I won't...let others live in hell / As we divide against each other And we fight amongst ourselves

    by ban48 on Mon Mar 03, 2014 at 03:39:16 AM PST

  •  beautifully put (1+ / 0-)
    Recommended by:
  •  Tip rec hotlisted Printed! (1+ / 0-)
    Recommended by:

    Thank you bringing to light this very important concept.

    My minds eye sees, in this diary, that until we raise our level of consciousness to one of inclusiveness, it remains that anyone can perhaps but not everyone can.

    This is a new thinking, again in my opinion that we are beginning to see more clearly, as we visit the consequences of our habits and choices and the concept of what success is.

    I could see a billionaire or a group of inclusive billionaires who could focus that financial freedom to greatly assist others to reach that same mark and through intentional repetitive action, grow the group and raise the level of those who are able to assist in being their brothers keepers, where the sick, frail, afflicted as example are cared for and included.

    Thank you for this diary, it assists me in remembering the vision I visit when I do my vision play. It is hotlisted and saved in my computer.  It is such a huge value to me.

    I am thankful for those of you, who can put to text or voice, these ideas & concepts for consideration and for creating vision of what we will choose to create forward.

  •  Fighting "Envy" Is A Nazi Theme (1+ / 0-)
    Recommended by:

    Tell them to be careful about those Third Reich themes of "envy" and "class warfare"

    And there is a war on. We hate them from the bottom of our souls because they threaten our very life, because they oppose our national existence out of envy, jealousy, and ill-concealed national pride.
    -Joseph Goebbels (1933)

    The Führer drove arrogance and contempt, envy and hate of labor and possessions, from Germany.
    -Robert Ley (1936)

    ‘Anger, envy, hatred, rage,
    Are in the blood of the Jew,
    German anti-Semitic childrens book (1938)

    People’s comrades, we have spoken of those all to eager to accuse others, who are driven by envy,
    -Hermann Goring (1933)

    Once each was the enemy of his neighbor. Envy, mistrust, and hatred were everywhere;
    -by Robert Ley (1937)

    Meanwhile, the base yellow press of our enemies has forced us to defend our lives with guns in our hands against the envy and resentment and threats of our enemies.
    "How They Lie"

    They hope to realize their infernal destructive goals, driven both by their political and economic envy as well as their Old Testament hatred, by shaking German war morale.
    “Die Aktivierung der Partei!” (1943)

    We are fighting to save our children from the unbearable threats of the Western democracies, driven by envy and hatred
    Nazi propaganda magazine (1939)

    Mr. Roosevelt recently told the nation, he retired to his bedroom to write a prayer ....that (God) will help them enslave a part of the world that is attempting to live modestly from its own resources. This they cannot tolerate, out of greed and envy.
    -Joseph Goebbels (1944)

    Men are so necessarily mad, that not to be mad would amount to another form of madness. -Pascal

    by bernardpliers on Mon Mar 03, 2014 at 04:48:22 AM PST

  •  Previously on food stamps (4+ / 0-)
    Recommended by:
    sentinalnode, rustypatina, elfling, Chi

    Previously on food stamps is the one statement from this diary that I really took to heart. There are just so many jackasses who say that these benefits should be taken away, but how many of them use whatsapp?  If it wasn't for food stamps I wouldn't have made it through university, my girlfriend (at the time) wouldn't have either, and her daughters would also not be in university now getting science degrees (and not on any assistance either).

    Good on Mr. Koum for "making it". I hope that he remembers that it was the people paying their taxes that helped get him there.

    If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. -George Washington

    by Tank Mountaine on Mon Mar 03, 2014 at 05:23:51 AM PST

    •  Right (0+ / 0-)

      How much harder would it have been to keep going without them, to keep the hope and determination alive.

      •  pretty fucking hard (0+ / 0-)

        we were even going to the food bank AND I worked, sometimes at two jobs - night shifts at a newspaper and grocery store, t-shirt shop, convienence store. We only needed the food stamps for a couple of years, but I can't imagine having gotten by without them.

        If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. -George Washington

        by Tank Mountaine on Mon Mar 03, 2014 at 06:26:19 AM PST

        [ Parent ]

    •  A charity could have helped instead. (1+ / 0-)
      Recommended by:

      This is what some of the RW food stamp cutters would tell you.  But charities can't help all of the poor and near poor who have been victimized by our predatory business climate.  Food stamps are available no matter who you are or where you live in the U.S.  No charity can say that.

      "There is no distinctly native American criminal class except Congress." - Mark Twain

      by rustypatina on Mon Mar 03, 2014 at 06:37:56 AM PST

      [ Parent ]

      •  Donations to charity... (2+ / 0-)
        Recommended by:
        rustypatina, sethtriggs

        Also tend to fall right when the economy is doing badly - precisely the point when they are most needed and the need is rising.  That's why the idea that government assistance can be completely replaced by private charity is plain stupid.

        This isn't to say that private charities don't do good (some of them).  But complete reliance on private charity is not a good idea.

  •  We need productive members of society. (2+ / 0-)
    Recommended by:
    Xavior Breff, Chi

       Of course we do. And they deserve rewards for being productive. But they have to be members of society. Acting in self interest to the detriment of others, like coming up with creative ways to steal pensions and savings is not productive and in a just society should be punished instead of rewarded. But when those who have taken the most are the ones who get to write the laws things get a little twisted.  

        Maybe it is just human nature. It seems to have happened so many times in human history that it just seems inevitable. Those at the top take a bigger and bigger share for themselves. Those at the bottom get less  and less rewards for the productive efforts they do contribute. The foundation of society weakens and falls apart. Civilizations crumble from within and collapse either due to internal revolutions or external invasions.

       If we ever find a form of government that is able to deal with this problem there is just a chance it may endure.

  •  I like the way you've shown the difference (2+ / 0-)
    Recommended by:
    elfling, Chi

    between "anyone" vs "everyone" in your very thoughtful diary.

    The spirit of liberty is the spirit which is not too sure that it is right. -- Judge Learned Hand, May 21, 1944

    by ybruti on Mon Mar 03, 2014 at 08:07:31 AM PST

  •  Thanka for rehashing the message of 'Ratatouille' (0+ / 0-)
  •  If every person on Earth ... (0+ / 0-)

    had created WhatsApp, each would have earned $2.71.

    If you don't watch news, you're un-informed. If you watch Fox news, you're mis-informed. (paraphrasing Mark Twain)

    by edg on Mon Mar 03, 2014 at 09:54:36 AM PST

  •  The only thing I would have posted on his page is (1+ / 0-)
    Recommended by:

    "If that's true, then why haven't you?"

  •  Because in the vision of this diary... (0+ / 0-)

    "And anyone can pull themselves out of a poor childhood to create a software that lets people communicate anywhere on the planet, call it WhatsApp, and become famous and wealthy over night. But not everyone can."

    Apparently that's contradictory to helping the people you care about.

    by DAISHI on Mon Mar 03, 2014 at 02:07:31 PM PST

  •  The "Lottery" economy is what I call it. (3+ / 0-)
    Recommended by:
    Chi, Egalitare, RiveroftheWest

    Another example, for writers now you are either a Major Brand writer or you will get a very small or no advance, BUT some writers hit the lottery like The Help.

    "The poor can never be made to suffer enough." Jimmy Breslin

    by merrywidow on Mon Mar 03, 2014 at 02:49:22 PM PST

  •  Well said. eom (2+ / 0-)
    Recommended by:
    Egalitare, RiveroftheWest

    "No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." -- JC, Matthew 6:24

    by Chi on Mon Mar 03, 2014 at 09:42:04 PM PST

  •  nice job! i, too, have commented about this re: (1+ / 0-)
    Recommended by:

    romney and his god-like rich boy status for ripping co's off--
    it's not like it's hard to take pensions away from failing business and keep them for yourself.
    it's just that many of us would NEVER do that.  
    COULDNT do that.
    and frankly, wouldn't want to do that!  
    how is that worth doing with this one life we are given?

    i'm reminded of a quote from "miracle on 34th" near the end of the movie after the first courtroom scene:

    (answering to Doris' question of who will be your clients now that you've quit the big firm, fred replies:)

    GAILEY: Probably people like Kris Kringle who are being bullied.  That's the only fun in law anyway.    

    I am tired of laughing at the irony of their stupidity.

    by stagemom on Tue Mar 04, 2014 at 01:52:46 PM PST

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