A life cycle theory of status-seeking, and why do billionaires complain?

One strategy I sometimes recommend to people is that early in their career they live in the place where their industry is headquartered. Bay Area for tech, New York for finance and publishing, LA for movies, Michigan for furniture and cars, Nashville for country music, etc. Soak up everyone’s expertise. Study. Learn. Even if you don’t want to start the next Google, you’ll learn a lot by way of “network intelligence” from physically living in Silicon Valley. But feel free to leave and join a lower-cost-of-living secondary market if and when you begin to feel perpetually not-quite-good-enough. This doesn’t mean moving to the boonies, but to a place where there’s plenty of industry activity but less happiness-hurting status jostling.

Here is more from Ben Casnocha.  Here is an email I wrote to Ben about related themes:

Talk, though, I think is in this case deceiving.

Take non-billionaires.  They (like billionaires) gossip an enormous amount.  Yet it is still ultimately a self-centered activity.  It is a way of processing the self. I am not saying there is *no* concern for other people involved, but talking about other people is very often mainly a way of talking about the self.

Now, if one billionaire says “isn’t XXXX a bigger billionaire than I am?,” I think this is often somewhat similar.  It is still a way of consuming being a billionaire.

It’s a bit like how people enjoy complaining.  When people complain about events on their vacation, that is very often (not always!) their mode of enjoying.

It’s as if being a billionaire isn’t real until you complain about it, and compare yourself to the others.  Think of “manufacturing vividness” as what is going on here, in the ultimate anthropological sense, more than just mere status games.

Hi from Hunan!

I agree that status is addictive, but I do not in general think of it as zero-sum.

Comments

https://www.youtube.com/watch?v=0_md9StVE-U

I guess this boils down to "small fish in a big pond" vs "big fish in a small pond". And I think I agree with Casnocha, at the beginning of your career you will be a small fish either way, so go to the big pond and learn (at that stage the sharks will hardly take notice of you, either way). At some point it will most likely be more pleasant to become the big fish in a smaller pond (I knew it is for me).

If you have a honest shot at becoming the big fish in a big pond, by all means try. You should simply be aware that you still are playing the lottery.

Wise words. You just made my day. No irony.

I should add that this doesn't just apply for locales but also firms. And it isn't just about status (or even mainly so), big ponds have a way of being a lot more energy intensive because competition is stronger.

Tyler nailed it! I am in the investment management business, and my career didn't really take off until I moved to New York. Then it did. Now I don't have to work so hard and my contact list is amazing.

Isn't the problem these days that young people can't afford to move to New York or San Francisco because the rent is too damn high?

What advice would you give to those people? Stay in Greenville and live rent-free with their parents, but at the expense of their career? Or take a chance and move to the big metro area anyway, suffering crappy quality of life with a tiny shared apartment and/or a long commute?

(Presumably the answer depends on the individual's chance of succeeding in the big city.)

Who needs a career? Save money, retire early. Why work your ass to buy a bunch of useless shit?

+10,000

Unfortunately, I did not figured that out until very late in my life, already with with kids that need to go to college and have the same options , that my father gave me.

Get a medium sized shared apartment and rent it out one weekend a month on AirBnb.
Crash on a friends couch for that weekend.

Don't move there unless you have bonafide talent to be an engineer or designer. If you have people skills you can move up the product management career path, but start as an engineer.

Or maybe if you want to get an MBA from Stanford, but even then it's probably better if you studied engineering.

This reminds me of the joke about the only lawyer in a small town who didn't have enough work to keep busy until another lawyer moved to town and they couldn't handle all the work. Lawyers, bankers, candle stick makers, they are all the same. My view, often expressed in my comments, is that Silicon Valley is more hype than substance, advertising masquerading as technology, an illusion no less than Hollywood. The same can be said about New York, "investors" and their handlers shuffling papers along with the companies and pieces of companies they represent, contributing little of substance to anything or anybody other than themselves. Then there are the endless meetings of economists, where this or that expert presents his or her latest pronouncements to the awe and admiration of the attendees who can carry the good news to the hinterlands and blogs. If a tree falls in a forest and no one is around to hear it, does it make a sound?

I agree. Two examples: Facebook is not that innovative, there were other social networks at the time and what real added value does Apple have?

Phew. I am REALLY glad you are around to judge what is 'real value'.

The gaul, the audacity ...

Facebook is extremely innovative in terms of infrastructure. A less they learned from watching Google succeed and Friendster struggle.

Facebook is extremely innovative in terms of infrastructure. A lesson they learned from watching Google succeed and Friendster struggle.

Here's a review of several new books that explore "multi-sided platform businesses". http://www.nytimes.com/2016/05/21/business/dealbook/review-the-rise-of-the-matchmakers-of-the-digital-economy.html?rref=collection%2Fsectioncollection%2Fbooks&action=click&contentCollection=books&region=stream&module=stream_unit&version=latest&contentPlacement=10&pgtype=sectionfront That which has been is that which will be, And that which has been done is that which will be done. So there is nothing new under the sun. That's from Ecclesiastes 1:9.

Yes! G-d is always there to hear it.

A key lesson from The Big Short is that those who saw things most clearly were NOT "where the action is".

Thinking about it, however, these people weren't primarily interested in status or leveraging networks, just being right. Perhaps there is a lesson there.

Some people are more comfortable reading prospectuses in Omaha, but others became away of the short potential because they were "where the action is"

What's interesting about the status seeking dynamic is that an easy way to gain status is to not care about status. That self-confidence of give zero Fs, draws a lot of people to you, especially females.

Just to follow up, Rick Harbaugh has a nice paper on how focusing on skill signaling can lead to prospect theory like distortions: https://kelley.iu.edu/riharbau/Skill.pdf

Abstract:
Failure is embarrassing. In gambles involving both skill and chance, we show that a strategic
desire to avoid appearing unskilled generates behavioral anomalies consistent with prospect
theory's concepts of loss aversion, framing effects, and probability weighting. Based on models
from the career concerns literature that formalize early social psychology models of risk taking,
the results show that skill signaling and prospect theory behavior might be confounded in
economic, financial, and managerial decisions where both skill and chance are important. We
identify special situations where skill signaling makes opposite predictions than prospect theory,
allowing for tests between the strategic and behavioral approaches to understanding risk

Absolutely, when I got really fat and stopped showering because I "gave zero Fs", I had a hard time keeping the "females" away.

This is a mostly delusional belief that contains only a trace of truth. Mostly it is a misunderstanding of causation.

The only billionaire I knew worked at Oracle, topped out, but wanted to prove to the boys (Ellison?) that it wasn't a fluke. Some tens or hundreds of millions were not enough. He was fortunate enough to score his billions with a start-up in the dot-com boom. Nice guy, and he seemed to have a good life balance, but sure people can get caught up in billions measuring contests.

As it happens, I opted out with less than billions, and tried to find a more spiritual happiness. I would say most people can't relate to that. Either working into their 60s, to pay for a $200K backyard remodel, is their happiness, or they are on a treadmill they can't quite exit.

Probably fair to say that life cycle theories are not simple for anyone, in practice.

Status is a Declining sum game.

I remember Pinker citing someone in The Blank Slate, saying that status seeking was a universal in human cultures.

Monks eschew status, but the Abbot is held in high regard.

(People can be creative and find many paths to status though, best pie at the county fair.)

I should imagine that the value in being a billionaire is purely in the status and the ego-soothing effects thereof.
There is absolutely nothing that being a billionaire can get you that being a 100 millionaire can't. 100 million is more than enough money to buy a giant house in a location of your choosing, and spend the rest of your life living in utter and complete luxury.

People want to have impact, impact is quite easily measured in dollars. Is this hard to comprehend?

Also, at 100M a private jet is difficult to afford. 'Large' boats are hard to afford. Multiple houses in prime real estate are difficult to afford.

But really, it is the sense of accomplishment that is what drives.

+1

"There's no difference between X and 10X" is a belief that can only be held when your fortune in much less than X.

To the average guy in the Sudan, $25k and $250k income in the US both look like paradise. But the entire focus of our politics is on how we handle the differences between those people.

Obviously, what we need is an AirBnb for private jets. You can buy a private jet and rent it out to other non-billionaires when you aren't using it, thus making it easier to afford.

Same concept with time-share condos in prime real estate areas.

But it's not 'tres comas' now, is it?

https://www.youtube.com/watch?v=rIB5HEcZBs8

'Utter & complete luxury' is the most boring thing in the world.

Doubt me? Try it.

True. This is why we have extreme sports.
But a 100 millionaire can easily afford all the mountain climbing and sky diving adventures that he could ever dream of.

A lot of status competitions are really Freudian competitions between fathers and sons. Jobs, Trump, Turner had unusually difficult relationships with their fathers. Musk has written about being bullied and alone. I'm sure some billionaires simply happened on a good idea and got lucky, but most have a personality that allows (or requires) them to compete against their own inner demons instead of learning to play less lucrative status games against other rivals.

But why money and business? Why not politics or science or arts? Why dollars instead of literary awards or political followers? Most billionaires are not famous the way Leonardo DiCaprio is famous. They, like top scientists and Cabinet Secretaries, are known by their peers and people from their business line.

Agglomeration economies explain some of the clustering such as in Silicon Valley and Wall Street.

From our friends at Wikipedia: In urban economics, economies of agglomeration are the benefits that firms obtain by locating near each other ('agglomerating'). This concept relates to the idea of economies of scale and network effects. As more firms in related fields of business cluster together, their costs of production may decline significantly (firms have competing multiple suppliers; greater specialization and division of labor result). Even when competing firms in the same sector cluster, there may be advantages because the cluster attracts more suppliers and customers than a single firm could achieve alone. Cities form and grow to exploit economies of agglomeration.

There may be an analogous psychic benefit aspect to supplement the economic benefit of agglomeration. That could help explain the increase in status and virtue, or vice, signaling.

Status isn't nearly as addictive as the use of status-seeking to explain human behavior. I don't deny that it is a factor, but to use Cowen language, "It is highly overrated."

So you think morning grooming, by basically everybody, is not status seeking?

I don't claim to know why you bathe, but I know that I do not do so for reasons of status. My workplace has a dress code to which I adhere because I want the income - not the status - that comes with my employment. If I could have the income without the employment, I would happily trade. Beyond that I make myself as attractive as possible to my spouse. To the extent that this is a pursuit of "status" in her eyes, then... okay... but only to that extent. And I figure "love" is a more accurate word for that pursuit, anyway.

But I concede that many people dress to impress and not for any other reason.

It might be that for a few, status seeking is underrated.

By that I mean both that they underappreciate how much is going on around them, and that they miss the benefits, low hanging fruit.

I am probably in that group, and this post is more a recognition of it than an outside view.

And then there are those of us who understand the importance of status seeking and the benefits, but find it impossible to play the game, for all sorts of reasons, varying from personal repulsion to lack of social skills to having a personality unsuited to ass-kissing.

If billionaires were easily satisfied they never would have worked hard enough to become billionaires in the first place. They complain because they are pretty much impossible to satisfy.

Similarly, complaining about hipsters is largely a way of consuming one's own (real or imagined) "hipness".

Recommending to work at the 'center of activity' is on dot. Working in a 'center of activity' helps, I think, because of systemic effect, or what is also referred as network intelligence. Learning rate increases and that helps to hasten both the knowledge and domain buildup.

Some links for you. You can call it "data"
1-
Thiel's admission of what amounts to fascism. I think you've read it.
" I no longer believe that freedom and democracy are compatible.
...As a young lawyer and trader in Manhattan in the 1990s, I began to understand why so many become disillusioned after college. The world appears too big a place. Rather than fight the relentless indifference of the universe, many of my saner peers retreated to tending their small gardens. The higher one’s IQ, the more pessimistic one became about free-market politics — capitalism simply is not that popular with the crowd."
And of course really he regrets that women ever got the right to vote
"Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron."
http://www.cato-unbound.org/2009/04/13/peter-thiel/education-libertarian

2-
Johann Hari "The news that Jorg Haider - the Austrian fascist leader - spent his final few hours in a gay bar with a hot blond has shocked some people. It hasn’t shocked me...
With the exception of Jean-Marie Le Pen, all the most high-profile fascists in Europe in the past thirty years have been gay."
http://www.huffingtonpost.com/johann-hari/the-strange-strange-story_b_136697.html

The root of it more than anything, is a knotted boiling self-hatred.

3-
Confirmation of Thiel's self-loathing
---Keeping it brief: Thiel essentially got his public start by founding the Stanford Review. That publication quickly, if not at its inception, was devoted mainly to “anti-PC” arguments, defending in particular fellow reviewer Keith Rabois, another future PayPal zillionare who, as a Stanford Law student was involved in "screaming 'Faggot! Hope you die of AIDS!' and 'Can't wait until you die, faggot,' in the direction of the resident fellow cottage of lecturer Dennis Matthies.”
According to a Stanford news release at the time: "first-year law student Keith Rabois ... sent a letter to the Stanford Daily confirming the allegations."
"Admittedly, the comments made were not very articulate, not very intellectual nor profound," Rabois wrote, according to the news release. "The intention was for the speech to be outrageous enough to provoke a thought of 'Wow, if he can say that, I guess I can say a little more than I thought.' "
Both Thiel and Rabois were/are gay.---
http://talkingpointsmemo.com/edblog/peter-thiel-keith-rabois-stanford-review

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