# Buying shares in... people



## Tyler Durden (25 November 2013)

> IMAGINE getting a $10,000 injection to your bank account, right now. Today.
> The only catch? You could be paying it off for the next decade as a portion of your monthly income.
> 
> If you're seriously tempted, you're not alone.
> ...




More at http://www.news.com.au/money/invest...eir-lives-online/story-e6frfmdr-1226767773096

Interested in people's thoughts on this.


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## tech/a (25 November 2013)

Tyler Durden said:


> More at http://www.news.com.au/money/invest...eir-lives-online/story-e6frfmdr-1226767773096
> 
> Interested in people's thoughts on this.




Hows he using the 10.6 million ?
What if he became a quad?
Future income for how long?
*Its brilliant!*
Whens Buffet/Gates etc listing?

If you just finished Law school or Medicine or Physics you could be worth a fortune!
How do you value the "stock".
I like the idea of trading it.


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## Tyler Durden (25 November 2013)

tech/a said:


> Hows he using the 10.6 million ?
> What if he became a quad?
> Future income for how long?
> *Its brilliant!*
> ...




The article said he actually got injured, hence the idea for him did not go ahead.

But it is interesting. How does the person make announce "market sensitive news"? What if their dog died? What if they broke up with their partner? Or broke their iphone?

My friend and I were actually bantering about this idea about a year ago, with no intentions to ever do something like this. We were just talking about how if you could buy shares in the kids we went to high school with, you'd get quite a number of surprises. The ones who scored at the top didn't necessarily have the best jobs after 10 years, while some guy who dropped out of the HSC won the lotto overseas and is now mega rich.


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## burglar (25 November 2013)

tech/a said:


> ... I like the idea of trading it.




When you leave home with nothing but know you could amount to something,
it would be brilliant!


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## So_Cynical (25 November 2013)

Same general concept, buying shares in people...talk about timing, i just discovered Upstart over the weekend and was going to make a thread.

https://www.upstart.com/

Have to be a US citizen to apply for funding, don't know about the investor side...interesting that some Google veterans are behind it...as a concept i like it.



tech/a said:


> I like the idea of trading it.



 Well that's the next step right there.


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## skc (25 November 2013)

Tyler Durden said:


> Interested in people's thoughts on this.




Interesting idea but if you give me $10m upfront I'd stop doing whatever it is that makes me successful in the first place. Success is not a destiny, it takes drive, effort and determination. A lot of money upfront can mean a lot of distractions.

Just look at the number of NBA players who sign big contracts and lose their work ethics straight away.



tech/a said:


> I like the idea of trading it.




I'd short every one of them.


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## So_Cynical (25 November 2013)

skc said:


> I'd short every one of them.




Have a look at some of the profiles, a few of them have YouTube videos and do little presentations of themselves..a couple of them convinced me..i don't take much convincing though, but then its only 100 bucks per share, and i have often thought to myself over the years that on meeting someone "special" that i wish i could buy shares in them.


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## Tyler Durden (25 November 2013)

I wonder about the enforceability of all this. I mean, it's kinda like everyone chipping in to buy a lotto ticket, and then disputes happen when it turns out to be the winning one. They'll happily take your money now, but it might be hard for them to part with it when it's time to pay up.


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## prawn_86 (26 November 2013)

There was a Wired article either last year or early this year about someone who sold stock in himself and all the decisions that came into play, as he had to do what his investors told him.

If something like this was to work I think it should be more like a loan, rather than a share. Whereby you give them money upfront and then get a % of their income until the loan is paid off, maybe a convertible note or something. Or if it is a share then it is only up to say 10% so that the person has a few 'silent partners' if you will who don't have any decision on how they go about their life.

Personally however I have often wondered if I would be of more benefit to society if I had house paid off and comfortable passive cash-flow and could focus on helping society, rather than just trying to make my own lot in life first. If someone gave me 5m I would then be able to help others much more than I am now


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## VSntchr (26 November 2013)

prawn_86 said:


> Personally however I have often wondered if I would be of more benefit to society if I had house paid off and comfortable passive cash-flow and could focus on helping society, rather than just trying to make my own lot in life first. If someone gave me 5m I would then be able to help others much more than I am now




Yep I agree, but it's hard to see it this way. IMO just gotta do what you can along the way until you make it.. although I suspect you already know this anyway.

Congrats on the overseas gig btw!


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## McLovin (26 November 2013)

So once the person decides they no longer want to pay a slice of their life away doesn't this just become indentured servitude and so illegal?

I agree with SKC, I'd short all of them.

I can't imagine anyone with tuppence worth of brains actually agreeing to it.


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## tech/a (26 November 2013)

McLovin said:


> So once the person decides they no longer want to pay a slice of their life away doesn't this just become indentured servitude and so illegal?
> 
> I agree with SKC, I'd short all of them.
> 
> *I can't imagine anyone with tuppence worth of brains actually agreeing to it*.




Well you've only ruled out 2-3% of the population.


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## craft (26 November 2013)

The transaction in the majority of cases would be a disincentive to the person that is selling their productivity. 

After the probably negative reflexivity economic impact of the transaction – the outcome between the two parties is zero sum. Winning can only be proportional to loses. Somebody is either being underpaid or overpaid for their productivity.

Wait – there.... let’s add transaction costs and trade it on a secondary market  - that’s sure to improve the proposition. Hmmm


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## tech/a (26 November 2013)

craft said:


> The transaction in the majority of cases would be a disincentive to the person that is selling their productivity.
> 
> After the probably negative reflexivity economic impact of the transaction – the outcome between the two parties is zero sum. Winning can only be proportional to loses. Somebody is either being underpaid or overpaid for their productivity.
> 
> Wait – there.... let’s add transaction costs and trade it on a secondary market  - that’s sure to improve the proposition. Hmmm




Your a budding Bill Gates.
Your undercapitalized.
You do a presentation
You sell shares in you.
You are only selling off x%.
I guess this is paid as a dividend
and the share can be traded.
You could also buy back your shares.
Trade your own shares.

Id like to see how these are set up.
You could avoid the share allocation by setting up a company down the track for 
a new aspect of your life --- eg starting a new business.

A lot more to it that the simplicity indicated initially. I think.


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## craft (26 November 2013)

How does it improve over a corporation for combining human and financial capital?

How does it improve on agency conflicts?

Simplistic idea that can be spun as a potential get rich quick scheme to some. Sign of the times.


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## burglar (26 November 2013)

tech/a said:


> Your a budding Bill Gates.
> Your undercapitalized.
> You do a presentation
> You sell shares in you ...




Bill Gates had a chance to buy DOS for $45k.
He saw what it was and knew what it could become.
For him it was a no-brainer (even though he seems to have a brain)!
Though it was a lot of money at the time, he borrowed from a bank!!

What makes him so remarkable?


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## McLovin (26 November 2013)

craft said:


> The transaction in the majority of cases would be a disincentive to the person that is selling their productivity.




Exactly. I can't actually think of when it is to the benefit of the person offering shares. If I have a bright idea, I form a company and raise capital. If something happens and I no longer want to be there then I dust my hands of it and leave. I just don't see how this benefits anyone. Then again, with 24 hour news cycles they have to fill their pages with something and this is good filler.


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## skc (26 November 2013)

As a general rule of thumbs... you only sell shares when you think your shares are over-valued and you have no other choice of raising funds.

For those who wants funds to take on certain business ventures etc... it makes sense to sell shares in that business venture, and not in the person itself.

For those who wants funds to study - it makes much more sense to acquire studend loans. Loans are going to be heaps cheaper than selling your own equity, if you back yourself to succeed.

And trading your own shares.... seriously? I can't imgaine a greater case of insider trading.

1. Sell shares in myself @ $1.
2. Claim that I got sick and need to defer studies for 2 semesters - share crashes to 20c.
3. Buy the shares back.
4. Got better, back to study (and pocketed 80% return from short selling myself).

Or

1. Sell shares in myself @ $1.
2. About to discover the cure for cancer - no body knows that yet.
3. Buy all the shares back @ $1.
4. Announce the discovery for cure for cancer.
5. Tweet "Backers are suckers" with a picture of myself lighting cigars with $1m notes.


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## Smurf1976 (26 November 2013)

One issue I see is that it reduces the incentive for the person to actually perform well in future.

That is, if the effective benefit to the person from working harder (or smarter) is reduced by 10 or 20% then presumably this will alter their decisions away from earning money and toward recreational pursuits at least in some cases.

I also wonder about how enforceable any of this would be? Something that many people (myself included) learned the hard way is that "loans" to individuals often end up as "gifts" which are not repaid.


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## So_Cynical (26 November 2013)

Fellow ASFers i encourage you to visit https://www.upstart.com/ be prepared to spend a half hour looking around and actually look at a few of the profiles, many with prestigious US university degrees, many that have jobs, many wanting to or are already involved with start ups...on the whole these people are not idiots lining up for hand outs.


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## McLovin (26 November 2013)

So_Cynical said:


> Fellow ASFers i encourage you to visit https://www.upstart.com/ be prepared to spend a half hour looking around and actually look at a few of the profiles, many with prestigious US university degrees, many that have jobs, many wanting to or are already involved with start ups...on the whole these people are not idiots lining up for hand outs.




I stand corrected, the whole thing seems completely tilted toward the "upstarts".



> “It’s total freedom to change your mind,” says Nathan Sharp, 26, a pilot round student who worked in public health before attending business school. “One of the risks on [the investors’] part is if I choose to go back to public health and earn less than $30,000 a year, then they lose everything.”
> 
> ...
> 
> Upstart estimates that typical students will raise around $30,000 in exchange for 2 to 6% of their 10-year income, designed to give investors a 6% annual return. If they make less than $30,000 in any year, they’ll owe nothing, but the agreement will extend up to another five years, and the return for investors maxes out at 15%. Girouard describes it as risk capital. “It’s a little like a loan, but it also has elements of equity,” he says.




http://www.forbes.com/sites/alisong...unding-your-education-and-career-really-work/


So you basically are taking on highly speculative equity risk with returns that range from losing all your money to making a maximum of 15%. I agree with you, the Upstarts are indeed not idiots. What a great way to get someone else to pay for your education. What's the upside here?


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## Valued (1 December 2013)

McLovin said:


> I stand corrected, the whole thing seems completely tilted toward the "upstarts".
> 
> 
> 
> ...




If someone wants to give me 30k right now for 2% of my income for the next 10 years then be my guest How about we do this 50 times over so I get 1.5m and you all get 100% of my income and then I quit my job and make 150k pa for the next 10 years doing nothing.


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## cynic (2 December 2013)

Valued said:


> If someone wants to give me 30k right now for 2% of my income for the next 10 years then be my guest How about we do this 50 times over so I get 1.5m and you all get 100% of my income and then I quit my job and make 150k pa for the next 10 years doing nothing.




Surely your interest earnings would also count as income to be distributed amongst your 100% shareholders!


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## skyQuake (2 December 2013)

I guess its similar with equities.

The company knows whether equity or debt is cheaper and act accordingly!

Also I wonder if there is a franking issue if that person has already paid tax? What if 2 people buy shares in each other? Perhaps some kind of tax avoidance scheme can be hammered out?


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## Valued (6 December 2013)

cynic said:


> Surely your interest earnings would also count as income to be distributed amongst your 100% shareholders!




Haha that's true. Maybe I will put it in a no interest account to spite them


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