Is it fair to say that once you achieve "FU money", numbers start to lose their value? I can't imagine being able to say "no" to something like that. Although likely for something like Minecraft, it'd be stock options/cash mix.
1) You have "Big Plans" that need funding (eg. Elon Musk)
2) Running up the numbers as a life gamification to "beat" your peers, or just because you can't stop chasing yourself, like one of those freak beast weightlifters that looks like a space monster but is addicted to "the gainz" (eg. Larry Elison, et al)
There are only so many houses and planes and boats and experiences you can buy, practically speaking, and at a certain point all your grandkids' grandkids are easily taken care of (should you decide to reproduce, and assuming society stands and the dollar keeps its value, of course).
Interestingly I'm pretty sure Bill Gates started in bucket #2 but moved to #1 at some point later in life, but I think most people stick in one or the other.
For example, if he has someone in charge of spending money on medical research, don't you think there is a point (a few billion) where they just don't know what else to spend money on? I mean, there are only so many medical researchers in the whole world.
Of course you can always just throw money away/at people, but it won't do any good. "Give a man a fish" vs. "teach a man to fish."
Only about 16% of proposed NIH grants alone are funded each year- we can immediately see from that data that funding all NIH grants in just one year would probably take well over $100 billion.
The life scientists of the U.S. could find a use for Bill Gate's entire fortune in a few years. Not that dropping $80 billion on across the board medical research wouldn't be incredibly, enormously beneficial, but the infrastructure and manpower in the medical sciences are there to be able to absorb it and put it to use.
That is about twice as much as NASA [2].
[1] http://www.nih.gov/about/budget.htm
[2] http://en.wikipedia.org/wiki/Budget_of_NASA#Annual_budget.2C...
Edit: well, of course everyone's salaries would go up since there would be so much more demand and no extra supply, but I doubt they could go up that much all at once; most of the money would still go unspent.
I've done grant funding as well. People say they want money, but the minute you give them a deadline, they're gone, and they can't collect even the merest evidence required for due diligence.
That's hardly surprising. Managing money is investing, and wise investment requires a lot of skills, market information, and connections. There's only so many good investors out there.
Not investing as a whole is a zero sum game but specifically increased levels of investing sophistication and savvy.
Yes, throwing fish at the poorest is the right thing to do. Malnourished children grow with diminished intellectual capacity. Then it is too late to teach them to fish.
Look at the recent US drought - were people wrong to have had children ten years ago? How were they to know that some areas of the US were going to be in severe multi-year drought?
Why is it different if you change "the US" to some other part of the world?
Have a read of "Too Poor To Farm" which explains some of the problems very poor people face, and explains some of the reasons why very poor people have children.
http://www.irinnews.org/report/94947/lesotho-weather-extreme...
http://www.irs.gov/pub/irs-soi/09in12ms.xls
Effective tax rate plateaus at around a half mil in annual income, then starts going down again after around five million.
I couldn't find any hard data about brackets above that. Didn't Mitt Romney pay around 15%?
Then there's my all-time favorite quote, of Leona Helmsley:
>Only the little people pay taxes.
But, that's only anecdotal, heh :-)
It's also worth noting that the tax rate for the very rich is still 15%. As far as I can tell, certain very rich people "not paying taxes" is a myth.
Finally, it's worth noting that Notch is not American.
Rich people do have ways of reducing their tax burden, sometimes to surprisingly low amounts.
[1] planning is normal reduction of tax burden and is unlikely to be challenged by tax authorities.
[2] avoidance is legal, but sometimes exploits loopholes in tax laws in weird ways and you might risk the Inland Revenue changing the regulations - sometimes retroactively.
[3] evasion is just illegally not paying tax.
Exactly, there are good reasons for this. The problem is that it would be grossly unfair to tax a small business owner or small investor at say income tax levels because their risks are so much higher. On the other hand a big investor will millions or billions ends up paying the same tax rate as that small business owner or investor, but is able to spread their risk across many investments reducing the overall risk. Yes it would be unfair to tax them at a higher rate for doing fundamentally the same thing - how would we justify one tax rate for one investor in a company, but another rate for this other investor?
Taxation is a hard problem.
Because taxation has gone way beyond what it was initially meant to do. That's why it's a hard problem; we're trying to make value and fairness judgements and using that as a basis for applying tax.
To me, personally, people can't claim fairness if they're treating people differently based on their arbitrary value judgements. Until we start treating "fairness" as a universal, with no subjective component.
The big reason why the rich guys can lower their tax rates is because they can use investment losses to offset taxes. It's not a loophole, just a tax deduction you can optimize.
1. almost everything is capital gains (which comes to 23.6%). Note that this was 15% under GWBush, so it was even better back then.
2. You can avoid state taxes by relocating to WA/TX (If I recall correctly, this was Bezos' motivation for starting Amazon in Washington). A lot of billionaires live in 0% state capital gains tax states, except the ones that need to live in CA/NY for the tech/financial sector respectively. If you live in one of those, then think of the total taxes as more like 33% total (federal + state)
3) you don't want the project to lose its integrity/vision. The dollar amount matters less than finding a fitting buyer at a good enough price.
Microsoft can sell Mojang to EA the very next day if they want to.
> once you have that sort of money, there are only a couple of reasons to run it up any further:
Your reply seems to indicate you didn't read what he said, but instead read your own meaning into it. Your #3 doesn't make sense as a reason to "run it up any further".
He briefly though about investing into Psychonauts 2, but dropped out when he realized how much money was involved ($18m). [1] With a couple of hundred million dollars on his bank account he could get interesting and novel AAA games that would never get funding from traditional publishers made.
He even mentions this in [1]: "Perhaps in some distant future when I’m no longer trying to make games, I could get into angel investing."
[1] http://venturebeat.com/2013/02/04/exclusive-minecrafts-notch...
Why take the big payment today when you can have the bigger payment on-going? Especially if you want to continue to make it your life's work. Look at some gaming stars from the past. John Romero didn't "make us his bitch" with his post iD offerings. Carmack's career seemed pretty down until his recent excitement with Oculus and even that happened while he was playing with space companies on the side. Even with all his brains and cred, he's now just a Facebook employee and his boss is a 20-something php coder.
A lot of gaming luminaries are often one-trick ponies. Its difficult to get lightning to strike twice. Smart money is keeping a tight hold of the IP that made you successful. Notch has seen what happens when you lose your IP and maybe he doesn't like it.
I can't imagine Bill Gates selling MS in '86. He wanted to build an empire.
I won't pretend that makes me really know him as a person but I can say I've never got the impression he cares much about empire and/or massive ego building. I would venture a guess that by now he accepted the fact that MC was his one massive strike and that he likely won't have another one & would be content to live his life of luxury with that.
I don't think he wants to build an empire, but he wants the freedom to do his own thing, with people that he cares about (the mojangstas).
In my own personal case though, the second I had anything worth $2 million I would sell out and retire. I just want to be able to feed myself and shelter myself and I'll gladly do independent research the rest of my life.
(I'm with you on "sell out at $2 million" in general, though. For the area I want to live in, which I coincidentally already live in, that'll last a lifetime.)
Minecraft the game does not generate a continuous income after the initial sales, but recently they started an official multiplayer server hosting service (called "Minecraft realms"). You can buy a private server for $10 per month.
Given that Minecraft is played by a lot of kids whose parents whose parents or themselves do not know how to set up a server, I think this is a very viable monetization strategy, albeit launched a bit late.
Of course, there have been 3rd party commercial hosting services for Minecraft for a long time, but again, it's not something kids and their parents go after.
Hell, I know how to set up a server but I am considering hiring a Minecraft realm for the winter months, just because it is less hassle than setting up a server and the price is reasonable.
It's a platform for development. More importantly, it's a platform that lets many people create things in 3D without having to bother with OpenGL/etc.
If you think I'm talking about pixel art or other static things, or if you think I'm talking about mods, I suggest watching these, which are all stock minecraft only.
* SimCity reimplemented in vanilla redstone & in-game command blocks *
http://www.jigarbov.net/simburbia-map-release/
* FVDisco's Cake Defense, a wave-attack game with many features. (everything FVDisco has done is outstanding...) *
https://www.youtube.com/watch?v=OwxD3axvgt4
* Razul, an older scripted rpg adventure game with command-block based quest system *
http://www.planetminecraft.com/project/razul---skyrim-inspir...
* Hypixel, a many-thousand player custom server that works with the stock client *
https://www.youtube.com/watch?v=k1BdSq8fMtY
--
The larger ideas that Minecraft is effectively a prototype for is basically the VR environments we've wished for over the last several decades. We achieved a lot of the 3D graphics capability (and are ok with sound, the few cases where the developer bothers), but interactivity is just as important for immersion. Not being able to interact with things that are not part of the "intended" experience can rip you right out of your suspension of disbelief.
This interactivity is what Minecraft gets right, and we've barely scratched the surface.
Minecraft : interactive 3D voxel games :: NCSA Mosaic : hypertext documents
For instance if Minecraft sells 10,000 copies a day (as someone else said) that is $100m a year. Assuming other platforms add up to the same that is $200m a year. At an 8% interest rate that is worth $2.5 billion assuming it continues forever. It is worth $1.3 billion if it only happens for 10 years.
Anyhow, the easy rule of thumb for converting between income streams and present value is simply "multiply by 20". In rough numbers, it $1/year is worth $20.
You chose one, I chose the other.
The much much bigger problem is how many years?
But Mojang’s revenue and profit are public: http://www.polygon.com/2014/3/20/5531046/minecraft-mojang-pr...
$322M revenue, $128M profit. However, I’m not sure whether that profit number is the correct one to assess the value of the company and IP.
If I understand this potential acquisition correctly, Notch seems to want to sell everything (company and IP). I think the company is currently set up so that Mojang pays Notch licensing fees for the Minecraft IP. That could potentially be a large part of their revenue. If Microsoft acquires company and IP they obviously don’t have to pay those licensing fees anymore.
Mojang is only a 40 person company, labour has to be their by far biggest cost, and I really don’t think a 40 person software company (that doesn’t really do any marketing, by the way) costs nearly $200M to run per year.
Determining the value of IP is incredibly complex and something I would love to avoid having to do.
Then let's say they lose 10%-15% of revenue in licencing cost (apple, ms, google, xbox, and let's say some facebook/twitter campaigns and software).
So then you'd have $322m * 0.85 - 40 * $150k - 128m (notch's pay) = 139m profit.
That looks reasonably close on the money. So you'd expect net income to be about $265 million.