Another way to think of it is "A founder is, necessarily, the marginal buyer for their own labor, which suggests there is A Story as to why that is true."
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(Suffice it to say after having done a bit of column A and a bit of column B I have complicated and nuanced thoughts on the tradeoffs here which will probably not fit in a tweet.)
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"I don't really think a firm adds three orders of productivity to workers, Patrick." It is very plausibly more than that, depending on the particular individual.
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"You're going to need to work harder than that." OK, math it out. Pretend you're a pharmacist. How many prescriptions can you fill in 3 months given you're working for Walgreens? How many prescriptions can you fill in 3 months given nothing but a degree and your iPhone?
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Pretend you're a mortgage underwriter. How many mortgages can you underwrite sufficient for resale into a GSE in 3 months given you're working for Bank of America? How many mortgages can you underwrite sufficient for resale into a GSE in 3 months with just an iPhone?
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Firm: we can add orders of magnitude productivity to your labor. Also Firm: We're going to need to you to spend 30-40% of that leveraged time doing expenses, training, and other miscellany.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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That doesn’t add up, and seems directly contrary to marginal value analysis. As a firm, I don’t care at all about someone producing relatively more value for me than they would otherwise. All I care is that their marginal value is greater than their comp.
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Likewise, it could be perfectly rational to start a company even if you think you’ll be less productive outside the firm if you think you’ll more easily be able to capture a larger share of the value you create.
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Is this model compatible with a place of employment in which it is not shocking for employees to do independent consulting on the side? If so, what am I missing?
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If the employee can get as much consulting as they want, then the employer is probably serving as an income smoother. Employee pays to have someone else handle hunting clients, collecting invoices, and negotiating healthcare.
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