The Most Powerful Force In The Universe Is Compound Interest

The Most Powerful Force In The Universe Is Compound Interest – There was an incredible amount of media coverage this week about the gender discrimination lawsuit at Kleiner Perkins and the negative outcome for Ellen Pao, but not all the news about gender equality in tech has been nearly as negative. One of the most significant gains for women in tech this week came from Google, where Ruth Porath, current CFO at Morgan Stanley, accepted an offer to join the search giant as CFO.

It’s also the clearest sign yet that Wall Street is no longer a place for top talent, and that its role is changing with the rise of technology. Porat chose Google not only because the company has a more interesting statement than Morgan Stanley, but because it also pays better. Much better. Google will reportedly pay Porat more than $70 million in salary and stock options over the first two years (although the vesting period for the options is much longer), a significant increase over his current compensation.

The Most Powerful Force In The Universe Is Compound Interest

The Most Powerful Force In The Universe Is Compound Interest

Silicon Valley is the dream of big and small about the future and science fiction, the most profitable businesses in the world, the intelligence of the smartest talent concentrated on the frontiers and some of the most sophisticated PR in the world. It is powerful in almost every aspect. When we consider that relatively few people work in this industry, it is finally the case that technology has replaced banking as the highest energy industry per capita on the planet.

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We already knew that Silicon Valley is a great place to work. While compensation for young executives in finance remains better, hordes of MBA graduates continue to flock to the Bay Area to work in the tech industry, or to start their own company or business. The same dynamic can be seen among college graduates across the country.

The Most Powerful Force In The Universe Is Compound Interest

But if you want to understand the dynamics of American power, you have to look at where the top talent is headed. And it’s clear that power in Silicon Valley is as concentrated as ever.

Here are just a few notable examples. David Plouffe, Obama’s 2008 presidential campaign manager, now heads policy at Uber. Larry Summers, former Treasury secretary and adviser to the president, is an adviser to Andreessen Horowitz and a board member at Square. Tech talent is also going the other way, with DJ Patil, a data scientist at Greylock, Jason Goldman, chief product officer at Twitter, and Megan Smith, vice president of Google X, all joining the Obama administration in recent months. .

The Most Powerful Force In The Universe Is Compound Interest

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The revolving door between Goldman Sachs and the White House has now been replaced by a more technologically advanced revolving door with Silicon Valley.

All these relationships and connections are certainly fully utilized. Just look at the Wall Street Journal’s analysis of Secret Service reports, which show that Google had one meeting a week with the Obama administration, undercutting a number of other companies like Comcast that tried to stay out of the network. neutrality in the FCC. All these efforts have certainly paid off: Google has avoided a negative ruling by the Federal Trade Commission over its search practices, despite calls from its own employees.

The Most Powerful Force In The Universe Is Compound Interest

Power follows money, and tech companies certainly have resources to throw at them. The technology market continues to grow steadily, with dozens of unicorn startups, a handful of super unicorns, and numerous public companies among the world’s most valuable. Of course, all these savings mean higher wages, but they also mean record payments to K Street lobbyists from the tech community.

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Of course – and you knew this point was coming – with all this power comes extraordinary danger, not only is power itself incredibly destructive, but our work is almost universally defined as anti-power in all its forms.

The Most Powerful Force In The Universe Is Compound Interest

Just look at the net neutrality debate, which is perhaps the strongest example of Silicon Valley’s new power. The FCC’s final decision was a major victory for our technology industry because it prevented Internet service providers (ISPs) from signing special deals with advanced Internet services that could stifle innovation. Few people thought that the biggest beneficiaries of such deals would be incumbents like Google and Netflix, groups that strongly oppose the rules.

So what was their motivation? It is, of course, about money. By reducing their influence in the market, these rules essentially ensure that Internet revenues are always generated by Internet services and not by ISPs. And of course, with the rollout of Google Fiber, even that little bit will benefit locally.

The Most Powerful Force In The Universe Is Compound Interest

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Even if we are sold on aspects of freedom – and indeed there is at least a grain of truth – these rules ensure that the incumbents are never threatened to pay for their bandwidth. This means they always have revenue and resources to spend elsewhere, such as fighting off competition from startups.

This brings us to another danger of all this accumulation of power. Indeed, part of the promise of Silicon Valley is its disruptive quality, a quality that becomes significantly more difficult to sustain in the market when the incumbents are so rich and powerful. A recent example of this is live broadcasting. Meerkat was spun off from Twitter, only to be replaced by the Twitter-acquired startup Periscope. Meerkat must now beat a competitor backed by the full resources of a $30 billion public company. This is no longer a startup utopia.

The Most Powerful Force In The Universe Is Compound Interest

There is talk of a taxi startup becoming worth more than the world’s most famous investment bank.

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To use a programming metaphor, we used to be a very modular industry, with startups offering “parts” that other companies put together, from 1950s defense contractors to 1990s software. We now have closed parks and API access agreements designed to preserve the limited experience of our devices and software.

The Most Powerful Force In The Universe Is Compound Interest

Worse, these parts now interact in ways that pose huge systemic risks to the rest of the economy. Today, the entire business world operates in the cloud, which means that a failure in the data center can have a catastrophic effect on the economy. A single flaw in a single encryption software library can open almost the entire world’s business to theft. We have replaced weapons of economic destruction like CDO with weapons of cloud destruction like AWS.

Unfortunately, many in the industry are as ignorant of this change as possible, and some are even vocal in their support of this power move. Silicon Valley is not so different from Wall Street, except that we think we help the world even more than capitalists and investment bankers.

The Most Powerful Force In The Universe Is Compound Interest

The Most Powerful Force In The Universe Is Compound Interest

The problem is that the scale we are talking about is almost beyond human comprehension. Apple is the richest company in the world, with a market value north of $700 billion. By comparison, JPMorgan is worth $220 billion and Goldman Sachs is around $85 billion. Given that Uber’s next round could double its current $40 billion valuation, we’re talking about the taxi startup becoming more valuable than the world’s most famous investment bank. There is a reason why Plouffe joined as a politician.

About which companies will be allowed to use the word start-up. We care about this in our report because startups are still a different beast than these mega-corporations and often don’t have the power or resources to fight back. But we must extend our critical eye to all aspects of what we report and analyse.

The Most Powerful Force In The Universe Is Compound Interest

For all of us in this industry, we also have to take a closer look at ourselves. We must analyze carefully which “sides” we are on, because the interests of the largest companies are not necessarily the interests of new startups. Just because we’re familiar with these companies and their engineers doesn’t mean they necessarily have our best interests at heart.

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Today, Silicon Valley faces serious risks of overachievement, and we must become much more adept at navigating a world where we are truly winners in politics and society. The region’s success has come from a boiling pot of creativity and entrepreneurship, and with so many technological marvels to discover, we must ensure that these qualities are preserved for generations to come. Why compound interest isn’t as powerful as you think Everyone likes to tout the power of compound interest, but it actually has significant limitations that you don’t often hear about.

The Most Powerful Force In The Universe Is Compound Interest

If you had to choose just one personal finance offer that everyone could relate to, what would it be?

After all, who doesn’t agree that we should save money, invest in the markets early and put compound interest to work?

The Most Powerful Force In The Universe Is Compound Interest

The Most Powerful Force In The Universe Is Compound Interest.

But as the title of this article suggests, I don’t really think compound interest is that powerful

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