Interesting that this quote was initially about stock options at tech companies. It turned out that stock options did become nearly universal in tech compensation, and companies that granted them outcompeted companies that did not. So the management that was ostensibly “doing a massive blag at the expense of shareholders” wasn’t really, time vindicated their practices and things like option backdating and not treating them as an expense weren’t even really necessary, but it took a few years. It wasn’t obvious in 2002 that this is how it would play out.
And relevant to the title quote: maybe it should be amended to “good ideas do not need a lot of lies to gain public acceptance eventually”. The dynamic here is that a significant part of public opinion is simply “well, this is how things work now, and it seems to be working”, and any new and innovative idea by definition is not going to be how things work now. The lies are needed to spur action and disturb the equilibrium of today. But if you’re still telling lies a few years in, you’ve failed and it’s a bad idea to begin with.
> stock options did become nearly universal in tech compensation
Although I've noticed that options have been replaced more and more these days with RSU's (plain old grants) because options have a tendency to go "underwater", suggesting that they weren't all that great to begin with.
> Interesting that this quote was initially about stock options at tech companies. It turned out that stock options did become nearly universal in tech compensation, and companies that granted them outcompeted companies that did not. So the management that was ostensibly “doing a massive blag at the expense of shareholders” wasn’t really, time vindicated their practices and things like option backdating and not treating them as an expense weren’t even really necessary, but it took a few years. It wasn’t obvious in 2002 that this is how it would play out.
I happen to have read probably everything that Warren Buffet wrote on this subject, and in my opinion your take is confused at best.
First, you say that “stock options did become nearly universal“. No, they were already nearly universal at the time that this conversation was happening. I remember that Warren Buffet was quoting, going by memory, something like all but 3 out of 500 S&P DONT companies do it, or nasdaq or whatever index he was talking about. The fact that almost all companies do it doesnt mean its the right thing to do and if almost no company did it, Buffet wouldnt be complaining about it.
Second, you say “companies that granted them outcompeted companies that did not“. I literally have no idea how you came to this conclusion since, like I said, at the time this conversation was going on almost all company did it. Not because the companies that didnt do it died out, but because companies that didnt do it switching into doing it.
Third, and most important, I believe you misunderstand what the conversation is about. Expensing stock options is not a competitive advantage. Granting stock options might be, the rationale that paying management and staff more attracts the best people is an argument worth having. But the conversation isnt about whether its a good idea to grant stock options, the conversation is about which entry you should put your stock options when preparing financial statements. The author says clearly that this is about accounting, but you missed that. Theres no competitive advantage in doing one way or the other. The reason why Buffet complains about them is that A) it makes harder to discern from financial statements how much staff is costing the shareholders, not that its a competitive advangage or disadvantage, and B) if theres a cost that you need to pay in order to run the business, thats called an expense, and by your own argument you need stock options to run the business, therefore those are expenses and thats how they should be labeled in the income statement. The argument of companies doing it is that “earnings“ is bigger if there are things which are expenses but you dont call them that. Its literally saying that pnl = P - L but you know what, its bigger if I just report the P and hide the L.
The flip side is that good ideas with honest framing often lose to bad ideas with better marketing. Being right isn't enough if you can't communicate it and most people don't have the patience to evaluate the honest version.
This is what scares me the most about AI. You have a handful of really big companies trying to outdo each other as they race to implement it and deploy it as quickly as possible.
To try and justify their outrageous capital spending on data centers; they are incentivised to exaggerate its current capabilities and also what it will be capable of 'soon'.
There is no time to evaluate each step to make sure it is accurate and going in the right direction, before setting it loose on the public.
Having worked in public advocacy advertising, I’d frame it like this:
“Good ideas don’t need lies” is a compelling ideal but in practice, public acceptance isn’t a reliable signal of truth or societal benefit. It depends on incentives, narratives, and how information is presented.
History shows that even harmful or suboptimal ideas (like coal power) can gain widespread support if presented persuasively, while genuinely beneficial ideas can struggle if they’re complex or unintuitive.
A useful heuristic is: if an idea relies on misleading claims to survive scrutiny, that’s a warning sign. But public acceptance itself is not proof of goodness or correctness.
In short: persuasion and truth are related—but far from identical.
Something interesting about my experience with the Iraq War was that, as a 9 year old living in DC at a wealthy, liberal private school, everyone knew from the beginning it was all a lie. I only learned fairly recently that a vast majority of the country thought invading Iraq was a good idea.
With the current moon mission I'm reminded of how whenever someone from NASA is interviewed they like talking about how the billions spent are justified because of the practical results of the research - Velcro, Tang, etc. It always seemed like a stretch, but I have the unpleasant feeling the US is going to lean the true value of being the research leader when it's gone.
I completely disagree with the title. Good ideas should be either self evident or at least become clearly apparent with strong evidence. Typically that is not the case.
People are social critters that typically fear originality, and not by just a little bit either. Most people find originality repulsive no matter how well qualified a good idea may be. Instead, most people look towards social validation. A socially validated bad idea has vastly superior acceptance for most people as compared to any good idea.
We all like to think we are rational actors, but most of us aren’t and never will be.
This is also a good reminder that Paul Krugman opposed the Iraq War from the start. The Iraq War is still the most important part of populist narratives about elite untrustworthiness, but populists never ask about exceptions, and if we judge people and institutions by their stand on the Iraq war today, it has to go both ways.
my opinion is that lies have no relevance to if the idea is good or bad. liars lie and honest people are honest. ideas are not people and do not care who it is that thought them up.
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I’m kind of conflicted and confused faced with this message on this site, especially with the content of the post. Can someone explain why I’m feeling annoyed?
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And relevant to the title quote: maybe it should be amended to “good ideas do not need a lot of lies to gain public acceptance eventually”. The dynamic here is that a significant part of public opinion is simply “well, this is how things work now, and it seems to be working”, and any new and innovative idea by definition is not going to be how things work now. The lies are needed to spur action and disturb the equilibrium of today. But if you’re still telling lies a few years in, you’ve failed and it’s a bad idea to begin with.
(Google tells me this is a relevant summary of US GAAP https://carta.com/uk/en/learn/startups/equity-management/asc... )
> stock options did become nearly universal in tech compensation
Although I've noticed that options have been replaced more and more these days with RSU's (plain old grants) because options have a tendency to go "underwater", suggesting that they weren't all that great to begin with.
> Interesting that this quote was initially about stock options at tech companies. It turned out that stock options did become nearly universal in tech compensation, and companies that granted them outcompeted companies that did not. So the management that was ostensibly “doing a massive blag at the expense of shareholders” wasn’t really, time vindicated their practices and things like option backdating and not treating them as an expense weren’t even really necessary, but it took a few years. It wasn’t obvious in 2002 that this is how it would play out.
I happen to have read probably everything that Warren Buffet wrote on this subject, and in my opinion your take is confused at best.
First, you say that “stock options did become nearly universal“. No, they were already nearly universal at the time that this conversation was happening. I remember that Warren Buffet was quoting, going by memory, something like all but 3 out of 500 S&P DONT companies do it, or nasdaq or whatever index he was talking about. The fact that almost all companies do it doesnt mean its the right thing to do and if almost no company did it, Buffet wouldnt be complaining about it.
Second, you say “companies that granted them outcompeted companies that did not“. I literally have no idea how you came to this conclusion since, like I said, at the time this conversation was going on almost all company did it. Not because the companies that didnt do it died out, but because companies that didnt do it switching into doing it.
Third, and most important, I believe you misunderstand what the conversation is about. Expensing stock options is not a competitive advantage. Granting stock options might be, the rationale that paying management and staff more attracts the best people is an argument worth having. But the conversation isnt about whether its a good idea to grant stock options, the conversation is about which entry you should put your stock options when preparing financial statements. The author says clearly that this is about accounting, but you missed that. Theres no competitive advantage in doing one way or the other. The reason why Buffet complains about them is that A) it makes harder to discern from financial statements how much staff is costing the shareholders, not that its a competitive advangage or disadvantage, and B) if theres a cost that you need to pay in order to run the business, thats called an expense, and by your own argument you need stock options to run the business, therefore those are expenses and thats how they should be labeled in the income statement. The argument of companies doing it is that “earnings“ is bigger if there are things which are expenses but you dont call them that. Its literally saying that pnl = P - L but you know what, its bigger if I just report the P and hide the L.
> and companies that granted them outcompeted companies that did not
What are you basing this claim on?
To try and justify their outrageous capital spending on data centers; they are incentivised to exaggerate its current capabilities and also what it will be capable of 'soon'.
There is no time to evaluate each step to make sure it is accurate and going in the right direction, before setting it loose on the public.
I bought an EV last year and it's definitely been a "good idea" for me. Luxurious ride, fuel costs a tenth, doesn't stink.
Seems such an obvious upgrade it slightly confuses me take-up hasn't been quicker among people who like me can charge at home.
History shows that even harmful or suboptimal ideas (like coal power) can gain widespread support if presented persuasively, while genuinely beneficial ideas can struggle if they’re complex or unintuitive.
A useful heuristic is: if an idea relies on misleading claims to survive scrutiny, that’s a warning sign. But public acceptance itself is not proof of goodness or correctness.
In short: persuasion and truth are related—but far from identical.
"Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats." -- Howard Aiken
...to mean that, usually, the good ideas are the crazy sounding ones...
People are social critters that typically fear originality, and not by just a little bit either. Most people find originality repulsive no matter how well qualified a good idea may be. Instead, most people look towards social validation. A socially validated bad idea has vastly superior acceptance for most people as compared to any good idea.
We all like to think we are rational actors, but most of us aren’t and never will be.
“The truth doesn’t require your participation, only bullshit does.”
> This site uses cookies from Google to deliver its services and to analyse traffic. Your IP address and user agent are shared with Google, together with performance and security metrics, to ensure quality of service, generate usage statistics and to detect and address abuse.
I’m kind of conflicted and confused faced with this message on this site, especially with the content of the post. Can someone explain why I’m feeling annoyed?