> But frontier models have become really good, and running vending machines is too easy for them now.
Wasn't their previous attempt at running vending machines unprofitable? Not aware of any demonstration that it can actually run that business successfully.
> Wasn't their previous attempt at running vending machines unprofitable?
If we are talking about the one at that newspaper, it wasnt just unprofitable. The "customers" made it give away products for free. It was ordering them playstations.
As entertainment it was fun, but as a business or proof of intelligence or Turing test, it was an abject failure.
You could just look it up on their website leaderboard? The newest Claude model makes over $10k profit over a simulated year of operation, after starting with $500
They've never translated it to the real world though. So saying the problem is "too easy" when they have no public (as far as I know) demonstration that they've solved that problem is a stretch.
Yes, they did. You could also find this information easily.
A company like Andon creates value by exposing interesting AI failure modes, so it makes perfect sense for them to move on to harder problems when the previous ones get saturated.
I think you're just being overly cynical.
Can you point me to an example then? It's not linked in the article as far as I can tell and it's not easy to find on their website if it's there. I don't count simulations because I used to work with simulations regularly and they often fail to translate to the real world.
Anything you read thats more than 3 months old in this field is obsolete
And one person’s attempt doesn’t mean anything
According to Linkedin articles, agentic workflows dont work, mine have been running for a year for several organizations I’ve worked for. Prompting used to be much more particular and now its not the issue
I set an alarm to re-evaluate all of my workflows to avoid complacency, see you in July
3 months ago I was still building webapps, I’m definitely on the “paying to summarize info on a screen is obsolete” bandwagon now.
All my products just have an AI calling or messaging customers about what the AI did, event driven architectures triggered by something hitting an email inbox, or in the real world, or other API. You dont need an app for your fitness tracker, just have an AI person tell you what you’re doing right and wrong once a week, send you food and medicine and tell you why. Solve the underlying problem like all the old depictions of the 21st portrayed aligned robots doing, apps were a distraction.
> Wasn't their previous attempt at running vending machines unprofitable? Not aware of any demonstration that it can actually run that business successfully.
It doesn't look like this one will be any better. Did you look at the merchandise selection? It's only chance is pity purchases from AI bros.
The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.
Here in Sweden non-competes without a financial agreement is void. And those that offer some financial are probably OK, but haven't been tried extensively.
The non-competes I've signed have offered 60% of my base pay for six months (the length of the non-compete) if I cannot find a job because of the contract if the company exercise it.
Those sorts of agreements are generally still allowed with these anti non-compete laws. If there is a specific non-compete contract that is signed, with money being paid for it directly, that is fine. That is a normal contract where both sides trade something of value.
The types that are banned are ones that set the restriction as a part of a normal employment contract, where there is no specific compensation given for accepting the non-compete and where the employee can't decide to abandon the non-compete in return for not getting the extra money.
The problem is allowing companies to do contracts that their lawyers know are null and void (like the above) but the employee may not know.
Employees thinking they are subject to legal penalties/fight due to a non-enforceable non-compete gets the company 90% of what they want, anyway, and so to prevent that they should be strongly punished.
> So even if you sign that clause you are not bound by it.
Jimmy John's was making its low-level employees sign non-competes, for example. This was ridiculous on its face, and probably wouldn't hold up in court. However, the people affected by it were least able to take it to court.
Right, the way it would work is that you are getting some sort of payment every month for not competing. If you choose to start competing, those payments stop. You can choose to stop the non-compete at any time, you are just giving up that income stream.
I also see these as reasonable since they are part of the negotiation of selling the business. Non-competes as it relates to most ordinary employees in the US is typically a contract of adhesion: a surprise take it or leave it clause while signing an employment agreement, well after a job offer and salary negotiation.
Technically, restrictions on employees by their FORMER employer. In theory (if valid), they could retain power over you for a time AFTER you are no longer employed.
A similar thing is often done during dismissal: sign away your rights to sue for wrongful dismissal in return for severance. In my case, almost a year's worth of pay seemed like a reasonable severance, so I took it and didn't argue.
Not really. Individuals who can build a company are under no obligation to sell it to anyone placing unreasonable conditions on the sale. If I'm buying your company, I have a concern that you might pull of of the customers back (having started a new company) but the price I'm willing to offer you compensates you for the book of business you are selling to me. That's where non-solicitation clauses come in.
I think the operative principal here is that employees are at a disadvantage w/r to employers. Buyers and sellers are not presumed to be at any disadvantage w/r to each other.
That's how it works in California. I had a 3 year non-compete with VMware after we sold a business to them. It was restricted to the specific market and technology our business covered but didn't limit activities in other areas. It seemed completely fair to me.
Besides, competing would have meant doing exactly the same thing over again. What's the fun in that?
It is not unheard of that employees leave a company to start their own precisely because the company is not addressing something specific leaving a gap in services. The startup begins to gain traction to the point the company the employees left buys the startup. It's like this is the only way for the company to "do it right", yet it would have been cheaper if they'd just let the employees do the thing as employees in the first place
But also a lot of people go off and try to create competitive businesses and fail, a lot of people also try to completely rework the business they're in and also fail (it's a disease in early stage startups)
Is it reasonable? You clearly have the advantage since you bought a running business where as the other person has to build a new company from scratch. I fail to see how it is reasonable to tell a person what they can or can't do after the transaction is over. Also from a consumer standpoint competition is good.
Often an acquisition of a company is for the set of customers. If I sell my lawn care business and then turn around and email all my former clients offering them lawn care via my new company, I’ve just undercut what I just sold.
Noncompete shouldn’t be so broad that I couldn’t move to another city and start a lawn care business there, but I shouldn’t be able to compete directly with the business I just sold using my insider information of that business.
There's also a big difference between starting a competing business like your example, and being barred from say working on "cloud infrastructure" because your previous employer also worked on "cloud infrastructure". It can be blurry for executives, but in general noncompetes seem to be used to push pay down more than for any legitimate business purpose.
> Often an acquisition of a company is for the set of customers.
That's a merger. You can, not having any business currently, buy yourself into one. In which case the acquisition is purely for the profits.
> I’ve just undercut what I just sold.
No you've just competed with them. If your prices are lower then you've undercut them. If their prices are artificially high then the market, a.k.a. those customers, are the ones to benefit.
> but I shouldn’t be able to compete directly with the business I just sold
Competition is _competition_. You didn't buy a market you bought an opportunity. You still have to compete against everyone else.
> I just sold using my insider information of that business.
Insider information? On a lawn care business that has no issued securities?
Purchases that wouldn't go through if they didn't reduce competition shouldn't happen anyway. Banning those kinds of restrictions would help with that.
He's a pretty successful angel/early stage VC investor so he's not some random guy. His point doesn't seem to be that there's nothing to be learned building a successful business but that the existing methods are so formulaic they drive profits down since everyone copies the same ideas. Looking at the recent batch of AI companies that are being funded this does seem to be what's happening.
You can't reclassify profit as reinvestment to show zero net profit. (If you could every business would have an internal hedge fund or private equity business and would show zero net profit).
Pretty good overview of how/why these deductions reduce your taxable income. Couple of things to note.
Depreciation is recaptured if you sell an asset for more than its depreciated basis. People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.
You also aren't going to be able to pay no taxes since you do need to realize some income to pay for mortgage/rent, food, transportation, etc. I guess if you had assets you could borrow against it would be possible to pay for these using the loan proceeds (which are not taxable).
>People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.
But in the U.S. you can't rapidly depreciate real estate, it is generally straight-line over 27.5 or 39 years (residential vs. non-residential). The gain on real estate due to depreciation is technically referred to as Section 1250 gain, and if there is no gain (which is calculated against your adjusted basis, not purchase price), then it follows that there is no Sec. 1250 gain (often mistakenly called "depreciation recapture").
No, you can do cost segregation to classify some of the real property as Section 1245 (which is accelerated vs Section 1250). People doing this and then selling is how they get unexpected tax bills.
The “unexpected tax bill” usually comes from people not realizing they pulled those deductions forward earlier.
Also worth noting, if you don’t sell (or you 1031), that recapture can be deferred, which is why a lot of investors still use cost segregation aggressively.
This is a pretty clear breakdown of how 1245 vs 1250 recapture actually works on sale if anyone wants the full picture:
The thing I don't understand with these loan arguments is: don't you eventually need to pay taxes in the income you use to repay the loan? It seems to me that folks who take out such loans are just kicking the can down the road.
There are a bunch of strategies here, but one people oft repeat is the "buy, borrow, die" approach. Where, they are kicking the can down the road, but the magic happens at the die step. When the borrower dies:
Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the shares, to pay the loans, and not owe capital gains, because there are no gains. Additionally, at this step cash can be extracted for no gains as well if desired.
So you avoid taxes while alive by taking loans (not income), avoiding capital gains (never selling), and then gains evaporate through a stepped up basis. There are some exceptions here - estate taxes, etc with ways around them like trusts, but this is the general mechanism.
Its worth noting though, that its not ironclad. In a significant downturn you can be forced to liquidate and it will hurt (see the news on Musk right after X purchase). Additionally, while people talk about this as being super popular, realize that in practice people who take advantage of these strategies also still have millions in cash flow, so its not a true borrow only $0 tax lifestyle, they will use already taxed money to manage them as well.
Minor nitpick. The step up in basis actually happens when you die (not when your heirs receive the assets), and your estate has to pay off creditors before distributing assets. So the debt is paid off first, then your heirs get whatever is left over. Net result is the same though.
I'm familiar with this strategy but there's one thing about it that I don't understand: After death, the loans are an estate liability, right? Doesn't the estate need to be settled before heirs get their inheritance? If i had an outstanding $1MM loan, wouldn't the estate need to liquidate some of that $RIVN at the $67 basis in order to pay the loan? and then whatever $RIVN was left over would go to the heirs at a stepped-up basis?
The step up in basis happens when you die, so the estate has no capital gain. Then the debts are paid, then the heirs get whatever they're supposed to get.
I conflated the two, since it all happens pretty quickly, but the estate is actually the recipient of the updated basis. So the estate sells @ current price, pays the negligible difference on gains from appreciation while the estate settles, if any happened, and then passes out the rest.
When the cash flow from the assets exceeds interest expense, you've cashed out the assets without incurring tax on your appreciated position and you can afford to pay the interest. As for principal, debt is largely not paid back these days, especially large bespoke debt secured by liquid and well-defined assets. The debt holders (lenders) get paid back after death of the borrower or they continue rolling the position and collecting their return (interest income). The only question in the lender's mind is how much leverage to grant on the underlying assets, e.g. blue chip stocks, and what to do in a liquidity crunch when rolling.
Lenders have an amount of capital that they need to invest and earn returns -- they're generally not in the business temporarily so they don't want their capital back. And when the loans are secured by hard assets, e.g. publicly traded stocks, there's little risk of default so long as the price stays up. In times of rising stock prices, there's little to no reason for a debt holder (lender) to exit their positions at maturity. Rather roll and continue taking the return (interest).
I don't know how these specific loans are structured but in real estate it's relatively common for a loan to be interest only with a balloon payment (the principal) due some number of years in the future. So in theory you could just pay off the balloon payment with a new loan and repeat the process.
Lines of credit against assets are typically interest only, interest rate pegged to however many basis points above the current fed fund rate.
There is no balloon payment ever due if you simply pay off the interest indefinitely.
Of course there is always the possibility of a margin call against the loan where if you lose X% of value on the securing asset you may be liquidated of it and the proceeds used to pay off said line of credit.
There are a million caveats and different loan structures so I’m sure some finance bro will be along to correct me shortly. But overall for normalish folks this is more or less the correct mental model.
You do. I think these loans are generally used for short term liquidity. For example if you want to buy a new house before selling your old one. You'd get a loan against your assets, buy the home with the loan proceeds, sell your old home and pay off the loan.
If your assets are growing faster than the interest it would also be possible to payoff the loan with a new (larger) loan, so you are still kicking the can down the road but eventually you would die and never need to pay the taxes while you were alive. I doubt this is done that often in practice, but who knows.
A margin loan typically does not require any payments at all other than interest. Many loans are like this. Amortization for principal repayment is usually something you only find in personal or real estate loans
As mentioned in the article, death (and subsequent inheritance), solves this problem. Once you're dead, your tax situation changes significantly, and selling your assets to settle your debts is subject to estate taxes, not capital gains.
I.e. what kinds of loans can be tax deductible? To be clear theres decent effort into this, you can't just do a cash-out refi on a home, but loopholes exist for those who find it worth the effort.
This is exactly why many people became landlords, but changed their mind and found that there is no way out. You might decide one day to buy some investment property, but after a few years when you lost interest in the pursuit, quitting would actually give you a huge tax headache in the form of unrecaptured section 1250 gain. This is unfair. You can quit a W-2 job or a hobby without tax consequences.
Hard to sympathize with the landlord class too much on this one. Everyone knows how depreciation schedule works and gets in to it in no small part because of that deduction benefit + the hopes that via 1031 exchanges etc they can delay it until death.
Everyone is way too strong a word. Unlike a regular job, there is no course or qualification needed to become a landlord. In the Bay Area I know lots of people in tech who bought a house, couldn’t afford mortgage payments (perhaps after a layoff) and decided to rent out parts of their house. Or perhaps just a particularly smooth talking real estate convinced someone to sell their stocks and buy investment property.
You might say that not knowing about all housing related costs upfront is evidence of financial illiteracy. You might also say not knowing about depreciation before buying a house is also evidence of financial illiteracy. You might even say committing to a mortgage payment while your own job prospects disappear is evidence of bad risk management. But in real life many people make bad financial decisions, landlords included. Landlords do not inherently have more financial aptitude.
I'll agree that "everyone" is probably an unfair characterization. But the tax benefits of depreciation are wildly touted among real estate investors.
If they didn't claim depreciation in prior years they can still get it via Form 3115. Yes this is complicated/annoying to do (almost certainly need a CPA), which you can argue is unfair, but I'm still going to have limited sympathy for anyone DIYing in this space without talking to a professional.
If I understand this correctly, the pain is because you depreciated the assets in the first few years, offsetting other tax liabilities, and now you must pay those back even if exiting the properties at a wash?
If so, it seems like the unfairness is in the other direction: landlording allowed you to essentially pull forward a tax credit, which a W-2 job doesn't allow.
Buying an investment property isn't a job. It's an asset, that possibly generates income. That is not a job. That's an investment.
A W-2 job isn't an investment. It's a job.
A hobby isn't a job or investment, it's a hobby.
You absolutely do have tax consequences if quitting the hobby involves selling equipment, particularly if that equipment was something that has to be registered, like a boat, car, ATV, etc.
It is a job. You need to manage and select tenants and handle repairs and maintenance. Managing one rental property is like a part-time job. But W-2 jobs may be part time too. It’s not like an REIT.
There are no tax consequences for quitting a hobby because you can’t deduct any expenses for hobbies in the first place, let alone any depreciation for these equipment.
I don't think Musk and Andreesseen are who most people would associate with the concept of pronatalism. The headline was surprising to me because most of the people I know who could be described as "pronatalist" are strongly for WFH policies.
You can't be as deeply involved in your kids' lives if you've got 8 of them. There is a reason why every large family has sibling-parents.
Visible elements of pronatalism are largely focused on assigning a particular family role to women and trying to increase the supply of a particular kind of desirable baby (often white, but sometimes focused on IQ selection and other eugenic elements).
I only know one family with >=8 kids (they have 10) and not that well so I can't really comment on them. I know many with 4-6 kids though. It's true that in most cases the women have a traditional family role (not always though, I know one couple where the wife is a very successful cardiologist and the husband is an athletic trainer). Parental involvement is usually higher in these families than among the 2-3 children, 2 professional parent families I know, mostly because one parent is either not working or working in a reduced capacity.
The eugenics part doesn't match my experience at all. I've never seen any evidence that people who are having large families are motivated by that.
>I associate the concept of pronatalism with also wanting to be involved in your kids' lives
Then don't because it's just wrong. Very few, if any, of the "more babies, bigger families" types have any interest in or concern for the children after they're born. In fact they're usually the ones fighting tooth and nail to prevent any kinds of programs or services that might help the resulting children and families.
For them it's just a pure numbers game/bizarre sexual fetish disguised as a philosophy.
> The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD.
Ethnic Japanese in the US live have about the same life expectancy as Japanese living in Japan do (within 1 year). US GDP per capita is about 2.4x Japan's. So the numbers don't look nearly as bad when you adjust for that. The higher drug prices in the US are definitely part of it, part of it is our population is less healthy in general (fatter, worse diet, more drug and alcohol abuse), but part of it is Baumol's cost disease[0]. Biggest barrier to lowering healthcare costs in the US is it probably requires paying doctors, nurses, etc. significantly less and most of them work hard and feel like they deserve to be paid as well as they do.
Edit: to some extent high US drug prices are a public good that subsidizes healthcare for the rest of the world. I don't know the data but I would guess the US is responsible for a disproportionate share of new drugs.
Wasn't their previous attempt at running vending machines unprofitable? Not aware of any demonstration that it can actually run that business successfully.
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