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Comment by devoply | Hacker News Reader

Maybe. From an overall perspective of entrepreneurship and job creation no. The reason being that many companies are bootstrapped on the backs of cheap labor until they reach a point where they can sustain jobs. You are basically saying that bootstrapping should never happen and you should always have investors to create companies... unless maybe if the founder can make a company based around a very small team work somehow who are working for next to nothing for equity.

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But where is the line? Can I import hundreds of people to manually have them dig coal out of the ground with their bare hands because I can't afford the machinery yet and claim I'm bootstrapping a mining business. We would typically call this exploitation.

Many types of business can't be bootstrapped. That is not unusual. Bootstrapping is primarily a popular approach now due to easy computer automation that makes a small subset of companies viable with the very small staff and no expensive hardware. It certainly isn't a default across all industries.

The labour pool is a market. You are not entitled to cheap labour just because you want it. If you can't find someone willing to do your work at the rate you want to pay it's because someone else is paying more for the same work, so you need to pay more to attract the labour.

Importing people from abroad is something that only exists as a solution because of the imbalance of development levels around the world right now. I expect that this is an anomaly that we are going to see correct itself in time once all countries reach a similer level of development. Where will you import your cheap labour from then?

In the UK we used to employ children to work in the mines and the mills. This was eventually realised to be exploitative and made illegal. I'd bet that all the business owners at the time complained how would they ever be profitable without the cheap child labour. But they either adjust or die, and I'm happy with that tradeoff. If a business is only viable with child labour I would prefer it didn't exist at all.

> Importing people from abroad is something that only exists as a solution because of the imbalance of development levels around the world right now. I expect that this is an anomaly that we are going to see correct itself in time once all countries reach a similer level of development.

This has never been the case in the past; there is no reason to expect it in the future.

Disagree. In the past, “abroad” was physically closer and in what is now the same country. Londoners can pay the Welsh less, but they can’t go on literal slave-gathering raids c. 999 AD.

It’s all a matter of degree. Degree of progress, degree of wage difference, etc.

The definition of "abroad" is of no interest. The world has always been the same size. There has never been a time when all countries / regions / whatever-you-like were at a similar level of development, and there is no reason to expect that such a thing will or could happen.

Less developed countries tend to have higher growth rate, so there is a reason to expect convergence.

But there are large - sometimes huge - steps back, e.g. Venezuela. Any reason to think they'll stop happening?

The world has always been the same size

Not in terms of travel distance or the speed of human movement (remember when "around the world in 80 days" was an actual accomplishment, worthy of fantasizing about?)

There is every reason to expect it. Compare now with 20 years ago, 50 years ago, 100 years ago, 200 years ago. The graph is exponential.

If everywhere develops at the same exponential rate, you can easily see that the gaps in level of development constantly grow over time. Exponential growth is not meaningful for this question.

Having a few poor countries is not enough to balance things. The global economy is currently balanced on having billions of very low wage workers, but low wage workers push an economy forward so it’s not a stable equilibrium. Either workers send money home via remittances, or work in their own country kick starting the economy.

I think that rule of law and development of institutions (cf. Chinas progress vs Africa's progress) are the drivers of economic development.

Without the rule of law, you don't end up with large scale factories. Corruption is kind of a sliding scale, but factory workers take infrastructure in a way that oil does not.

That said some African countries are actually doing rather well. Botswana has seen real economic growth ranking in the top in terms of GDP PPP, just ahead of China, and that's without oil.

PS: Africa's population density is also much lower due to war and corruption. Overall, it's 1.216 billion over 11.73 million mi² vs say 1.339 billion in India in 1.269 million mi² so about 10x the population density. China at 1.386 billion over 3.705 million mi² is again 5x Africa

Well - the sharp and unexpected decline of fertility levels globally reported in the news last week : https://www.bbc.com/news/health-46118103

Also the improvement of economic conditions in some parts of the world will mean competition for labour globally.

Bootstrapped usually means cheap labour of the founders, as part of the risk they took founding the business. Not paying unreasonably low wages to all around.

Job creation comes after the business has become self-sustaining.

Recently got told by some founders doing a farming technology startup that nobody gets paid because "We don't even pay ourselves!", but if I would like to volunteer my time doing automation and robotics R&D, then that would be great.

I always think that you should account a startup as though you are going to be paying everyone properly even when you cannot, and then start to pay out based on a combination of need and who has the oldest outstanding credit, when money starts to appear.

If you do this, then your company accounts are actually useful documents that you can project costs off going forward and actually attract investment, rather than living in some optimistic dreamland where the numbers you have do not represent anything like the actual costs of running the business properly.

> Recently got told by some founders doing a farming technology startup that nobody gets paid because "We don't even pay ourselves!", but if I would like to volunteer my time doing automation and robotics R&D, then that would be great.

So they are saying you should do slave-labor? I hope they expected to give you plenty of equity (which is cheap as the company is worthless as there is no money being made yet), otherwise it would be idiotic to expect people to work without compensation.

Those founders are getting paid by having 100% ownership in the business. If in 5 years the business becomes profitable then the original unpaid employees won't see any of that money.

The only way this payment structure can be morally sound is by treating every unpaid employee as a founder and giving them an equal share of the company.

This is called "working for venture". I have seen it (once) explicitly stated as the terms of employment.

Businesses are bootstrapped on the backs of the founders who exchange high personal risk for potential reward. I have had a bootstrapped company and my employees always got paid first and correctly. I don’t hire people unless I can pay them what they fairly cost. Any shortfalls came from my pocket and savings and never on the backs of my team. Maybe I am an outlier. It seems to me that the Amazons and Ubers of the world are built upon “cheap” labor more so than bootstrapped companies. Those types of companies have a competitive advantage from their access to cheap labor that is magnified at scale. Your typical bootstrapped company isn’t at the scale where exploitive labor makes much sense.

You’re welcome to set up a company and pay yourself as little as you want - that doesn’t mean you can compel others to accept mediocre wages too.

Not a native speaker, but doesn't mediocre mean average? Surely most people are working for a mediocre salary or less?

Normally yes, but it is also used as a degenerate term, though in this case other words might have been a better choice.

In modern American usage, mediocre is a pejorative word. To Horace, aurea mediocritas was a good thing, but we translate that as "golden mean" because mediocrity is, by definition, bad. The sense of "middle" has been lost.

It goes deeper than that. Average is viewed as negative in American culture. When people say mediocre they are thinking "eww average" in the back of their mind.

Didn't you get the memo? Our goal is to pay everyone above-average wages! Anything else is a terrible injustice!

Businesses aren't bootstrapped on the back of cheap labor. They're bootstrapped on the back of high cost variance labor. They're paid in equity that may be worth nothing or may be worth a lot. You convince people based on the merit of your idea. They evaluate whether or not your idea has a sufficiently high probability of success to be worth their time. The labor isn't cheap, it's just not paid for with cash.

I think historically a lot of businesses were bootstrapped on cheap labor.

Not meaning to be facaetious, but this sounds like something an 18th Century sugar plantation owner might say.

Historically, there were slaves.

That's exactly my point. A lot of the big companies today have at some point in their past exploited workers. Basically every manufacturing company started before WW2 or so.

Sorry, do you mean your comment could be a candidate for the `/s` tag?

Early factory workers where not exploited in terms of pay, they made more money than the average worker of their time period. Safty is a different story.

If someone starting a business works many hours themselves for $2/hour, and asks their spouse/children to chip in, and calls in favors from family and friends to get things going - then that's bootstrapping on cheap labor, but nobody in their right mind would call that 'slavery'. When starting a business when you have nothing, you have to be frugal, yet you can't do everything alone - that doesn't mean all ways you can get work done at below-market rates are sleazy or immoral.

Usually you get that cheap labor with lower experienced and younger employees. You do get what you pay for in many ways, but you do find those talented young people who can be really good for the first 1 or 2 years, or do things that many big companies refuse to do, like hire remote or give things like flexible work arrangements in exchange for cheaper pay.

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