Skip To Content
No Mercy No Malice

Unremarkables

January 3, 2020

6-min read

There has never been a better time to be remarkable, nor a worse time to be unremarkable.

People who highlight that the average American is better off than the richest person 100 years ago are, similar to someone telling you to follow your passion, already rich. The poor in the US have not progressed much, and there is still an apartheid-like disparity in household wealth among the races. 

The wealthy have done well, in a supernova kind of way. A ton has been written on this, so just one data point: the top .1% capture more wealth than the bottom 80%. For purposes of self-preservation you’d think the uber-rich would be concerned with this level of income inequality. At some point, the bottom half of the globe by income realizes they can double their wealth by taking the wealth of the richest 8 families, who have more money than 3.6 billion people. 

An easy way to contrast the progress of the poor vs. the rich over the last decade is to compare the change in NASDAQ (the top 10% of income-earning households own 84% of stocks) and minimum wage:

I’m staying with friends at the Yellowstone Club in Montana, where the .1% congregate. It would be easy to be cynical about the crowd and experience. There is a cartoon that very wealthy people are generally assholes. They are not. My experience is most very successful people have a few things in common: grit, luck, talent, and a tolerance for risk. 

Yes, most people, including the .1%, will use their skills and resources to ensure their firm has an advantage over others, even if that means turning a blind eye to externalities (environmental standards, monopoly abuse, tax avoidance, teen depression). Affixing your own oxygen mask before helping others is a decent tagline for capitalism. 

Yet most successful capitalist systems acknowledge that without rule of law, empathy, and redistribution of income, we lose the script. The purpose of an economy is to build a robust middle class. We have, traditionally, elected leaders who cut the lower branches off trees to ensure other saplings get sunlight. There is less and less sunlight. It’s never been easier to become a billionaire, or harder to become a millionaire. 

The uber-wealthy paid a tax rate of 70% in the fifties, 47% in the eighties, and 23% at present — a lower tax rate than the middle class. Taxes on the poor and middle class have largely stayed the same. We’ve exploded the debt so rich people pay less tax. If money is the transfer of work and time, we’ve decided our kids will need to work more in the future, and spend less time with their families, so wealthy people can pay lower taxes today. If that sounds immoral, trust your instincts. 

It feels as if something has changed. Gerrymandering, money in politics, lack of a shared experience among Americans, social-media-fueled rage, and an idolatry of innovators have led to a faustian bargain: the innovators (lords) capture the majority of the gains, and the 99% (serfs) get an awesome phone, a $4,000 TV, great original scripted television, and Mandalorian action figures delivered within 24 hours. Everybody gets a taste of the innovators’ nose candy and can buy shares in Amazon. Everyone has heard about someone whose daughter works at Google and bought her parents a house.

The Biggest Losers

The biggest losers of the decade are the unremarkables. Our society used to give remarkable opportunities to unremarkable kids and young adults. Some of the crowding out of unremarkable white males, including myself, is a good thing. More women are going to college, and remarkable kids from low-income neighborhoods get opportunities. But a middle-class kid who doesn’t learn to code Python or speak Mandarin can soon find she is not “tracking” and can’t catch up. 

  • I have intimate experience with being unremarkable:
  • Graduated public high school with a 3.2 GPA and 1130 SAT (85%).
  • Admitted, on appeal, to UCLA, academic probation 4 times, subject to dismissal twice, 2.27 GPA.
  • Landed a job at Morgan Stanley in Fixed Income Group. (How? I interview well and lied about my grades.)
  • Admitted to UC Berkeley Haas (yes, with a 2.27 undergrad GPA).
  • Have started several businesses since graduation; most have gone sideways or failed.

My wins were businesses that sold for between $28 million (Prophet) and $160 million (L2). The firm that was sold for $160 million, my VCs didn’t want to sell, as they felt there was an opportunity to go “bigger.” This is emblematic of our lottery / Hunger Games economy, where the gestalt is to go big or die trying. This creates a small class of uber-winners and many more people who wake up at 40 with no economic security or prospects. It’s “go big or go home.” Deaths of despair are skyrocketing, and the innovation ecosystem feeds it. 

Some data on why unremarkables have become an endangered species. I’ll use my background as context:

  • The acceptance rate at UCLA has gone from 42% (1989) to 12% (2019). Put another way, it’s 3 times as difficult to be a Bruin. 
  • In 1992, the annual tuition at Haas was $1,500, and upon graduating I received an offer from a consulting firm at $90,000/year. A degree ROI of 60. Haas tuition in 2020 is $62,000, and the median starting salary of a Haas grad is $140,000, yielding a degree ROI of 2 (97% decline).
  • There were nearly twice as many new companies formed each day during the Carter administration vs. now. We are living in an era of non-innovation as a feckless DOJ/FTC and media enable monopoly abuse.
  • My first house in San Francisco (Potrero Hill) cost $285,000, two years post-grad school (1994). Our household income was $210,000. A house/income of 1.36. The average house in San Francisco now costs $1.6 million, and a married couple (both MBAs, two years post-Haas) could make around $320,000 combined, yielding a ratio of 5. So, housing is almost 4x the cost.
  • In 1997 we purchased a home in Noe Valley (next-door to where the Zuck lives now … no joke) for $760,000 and sold it 2 years later for $1.2 million. I used the gain to move to NYC, start an e-commerce incubator (Brand Farm), and purchase stock in Nike, Oracle, Apple, and disk drive firm Iomega.
  • My tax rate on the proceeds from the sale of L2 was approximately 20%. I’m a Florida resident (no state income tax), and Obama passed Section 1202, which exempts the first $10 million in proceeds.

In sum, unremarkable kids no longer have access to remarkable opportunities. Today, I would not be admitted to a good school, wouldn’t be able to start a business due to crushing student loan debt, wouldn’t be able to buy a house, invest in stocks, or start a business. My professional life, and economic fortune, would foot to who I was/am — unremarkable. 

“The true measure of any society can be found in how it treats its most vulnerable members.”    — Mahatma Gandhi

One way to reinvest in the unremarkable: a Marshall Plan to increase 4-year public colleges by 40%, and junior colleges and trade schools by 80% over the next 10 years. This would be funded by:

  • Tax endowments over $1 billion of universities not growing freshman seats at 1.5x population growth. Any institution with tens of billions on its balance sheet that isn’t growing admissions is not a public good, but a private enterprise drunk on luxury.
  • Abolish tenure. (This will take a dean who is a class traitor.) Faculty and administrators have starched the degree ROI with a culture best described as “expensive but mediocre.”
  • Tax K-12 private schools and reinvest the proceeds in public schools. We are barreling toward a caste system, sequestering kids by income, which cuts at a key ingredient to capitalism: empathy.
  • Eliminate capital gains and mortgage tax deductions. Both are transfers from the young and middle class to the old and rich.
  • Resist populist proposals such as free college, which again is a transfer of wealth from the poor to the rich, as only 32% of Americans go to college. 

I attended UCLA/Berkeley, vacation at the Yellowstone Club, and am unremarkable. Each year there are fewer of us at all three.

Life is so rich, 

53 comments

  1. BT says:

    0. No free lunch works remarkably well. An ROI of 60 cannot stay long. People rush in and bid up to bring it down to a reasonable level (risk adjusted). Every other person I come across at work has an MBA now. I had not even known such a degree existed when I was in high school in the late 80s, let alone met anyone with an MBA. Perhaps, a similar ROI opportunity is opening up with all the online courses. 2. The tax decline from 70% to 22% is perhaps a key driver for explosion in overall wealth creation and innovation. May be, inequality is a wrong metric to look at. What we are perhaps looking for is that the bottom percentile has access to opportunities and basic health care and safety net. “Flattening the curve” is a lazy theoretical construct and might not work well in practice (history?).

  2. Peter Jones says:

    Scott sold two companies for a combined $188m. That is remarkable.

  3. Vijay says:

    The title of your post reminds me of the title of Andrew Yang’s book “The War on Normal People.”

  4. RBW says:

    I love Scott’s posts. All of them. I also like that he is very transparent, in this post indicating that he lied to get a job and his residence helps avoid taxes (works in NY, lives in FL). As Balzac said, “behind every great fortune lies a great crime.” Is it rare that the very rich do not lie or aggressively avoid taxes in their efforts to become/remain the very rich?

    • Simmons says:

      You look at taxes like it’s not the earner’s money though. You act like the government did the work to earn the money. Do you see how you have that backward? Without the earners, there are no taxes, not the other way around. The government is for the people, by the people. The are supposed to be our employees, we are not their serfs.

    • Peter says:

      @Simmons You are confusing “the government” with “the wealthy” of whom a great number use the government as their personal tool. Taxes are indeed generated by the work of citizens, but tax money is (in a perfect system that we don’t currently enjoy) used to better the lives of ALL citizens. It should be a downward flow, with the highest earners paying the most to help the lowest earners. Currently, the system we have set up is that the lowest earners are frequently the highest contributors to overall taxes by percentage of income, so in effect the people are already serfs working for the billionaire class. Fixing the tax system means putting a greater share of tax burden on the wealthy and lessening the burden of the non-wealthy. I think everyone (except maybe the wealthy) could agree on that, no?

    • Gus says:

      @Peter, the answer is in your own words, set equal tax percentage regardless of being poor or rich. Scott said this “My experience is most very successful people have a few things in common: grit, luck, talent, and a tolerance for risk”, so they should be rewarded for their efforts. You can’t just say that taxes are to better all citizens and get the persons who work harder to pay more tax. We need to incentivise people to do more and reward their hard work. And most of the time these people, unless they are rich through illegitimate activities, are already creating work for others. Isn’t this fair? UBI is also fair and everyone benefits.

  5. Aaron says:

    Is this all due to the trend of value of capital increasing vs value of labour decreasing? Or, is this mainly due to mercantilist US regulatory policies? or both??

  6. SJ says:

    Great post Scott. One point you touch upon tangentially is that the increasing costs associated with “success” and financial independence (i.e. undergraduate and graduate degrees, housing in urban markets, etc.) are also laying the groundwork for a new generation that is far more risk-averse than the generations before. This is anecdotal evidence, but the majority of my colleagues and friends who graduated from 4-year college programs and graduate degrees have by and large gone to work in consulting, private equity, biglaw, banking, or big tech companies — “safe” but high-salaried positions. As the effective costs to enter the labor market continue to rise, people become less willing to take a gamble by starting a business or entering into other unorthodox careers. As you point out, remarkable opportunities to make 1000x ROIs suddenly become only available to those with family resources to fall back on in the event of failure. Risk tolerance has become a luxury of the wealthy.

  7. Joe says:

    Thank you for your words Scott

  8. Mark Weiss says:

    I just read the last 12 NM/NM entries in a row. I love your ruthless, merciless voice, and your consistent theme of holding all of us, the unremarkables and Zucks alike, to a high level of accountability and responsibility for our actions. You are a mencsh. Which is why I’m disappointed by the very last point in this essay, “Resist populist proposals such as free college, which again is a transfer of wealth from the poor to the rich …” You use the word “populist” here as a slur, a half step up from how the right throws the word “socialist” around these days. Which is intellectually lazy. Also, confusing given that this essay is, literally, populist. You champion the “unremarkables” and argue for more opportunity for all. Which you also argue for (or rail against the privilege of the remarkables) in essentially all your blogs and Pivot appearances. It’s also politically lazy because this seems to be a backhanded slap at Bernie Sanders, who prominently features free college education in his platform. Why this passive-aggressive indirect criticism instead of calling him out directly? Finally, the argument itself is flawed. Consider that perhaps the reason only 32% of Americans go to college *currently* is *because* it’s unaffordable. Perhaps more would go if it was free? This seems like an obvious question to ask. One way to analyze this with data would be to look at the income distribution of college students and the percentage of the population that went to college when college education was free (just two generations ago). Without doing this, you cannot reasonably claim that making something free that currently costs thousands of dollars won’t make it accessible to more people.

    • Accountable says:

      College was not free two generations ago. It was less expensive. My hypothesis is that the responsibility for this lies at the feet of colleges and the federal government. The federal government opened the Pandora’s Box of student loans. With the proliferation of student loans, colleges have raised tuition at will and pocketed the money.

  9. Scott says:

    The problems detailed, out of control tuition + associated debt, cost of housing, middle class generally being crushed [Obamacare has been a disaster more such families] are the result of government interventions in the markets: mortgages, higher education, health insurance, income taxes. As to the latter, unremarkable families once could live on one income. All these attempts to redistribute income in some fashion to some group or another have essentially backfired, . Calling for more such interventions is not the answer, we need to return to limited, Constitutional government. That said, plenty of unremarkable people get accepted at better unis and earn 4 year degrees. Grade inflation anyone. One unremarkable person just became a billionaire, as Galloway has detailed extensively of late. The ability to fail upward has never been better, whether in the VC backed swamp or the DC swamp. Both have become heavily insulated from market forces.

    • JC says:

      You mean a return to traditional American values like free trade, a balanced budget, open immigration and a small military (ie army)?

  10. Dave says:

    Affixing your own oxygen mask before helping others is a horrible tagline. If you try to help your own kid before affixing your own oxygen mask, you will 100% pass out and might kill yourself and your kid. You NEED to put on the oxygen mask first so you have a chance of still being conscious enough to help others.

  11. Noah says:

    Thank you for not letting up on this.

  12. Oswald says:

    A big reason why only 32% of Americans go to college is because it’s expensive. Isn’t the point of free college for all to make that number much higher?

    • Mike says:

      Yeah was confused by this as well.

    • john says:

      my thoughts exactly.

    • Peter says:

      It ignores the bigger issue though. What value is a college education if the graduate has no job prospects that pay a decent wage? We need to strengthen the income of people who have jobs that don’t require a college education, rather than continue to promote the lie that going to college is a magical “get out of poverty” ticket.

  13. Mark Snyder says:

    Great read! Congrats on your achievements. It sucks to see what’s happening to our economy and society. We need another FDR to make the changes necessary to give the unremarkables another chance.

  14. Pierre-Luc says:

    Happy Remarkable new year, Mr 2.0ism.

  15. Michael says:

    Adds a bit of context to the whole “OK boomer” situation.

  16. Asaf says:

    Prof Galloway for President!

  17. Connie Connors says:

    Yellowstone Club? And that renders you unremarkable? What am I missing? xo

    • Jeff says:

      The point.

    • Mike says:

      @Jeff LOL!

    • Dianna says:

      @Mike @Jeff. Must be fun to have a laugh at the only female commentator on this story.

    • Greg says:

      @Dianna I’m sure if she was male they’d laugh just as hard

    • Jeff says:

      @Dianna to be clear, I was absolutely not paying attention to the names of posters, let alone the demographic breakdown of the responders. To be more clear, a person’s gender identification in no way indicates their intelligence, and we need more women involved in more conversations across the board. @Connie apologies for the joke at your expense.

  18. James Somers says:

    Back in the 60s, Michigan State University had a tuition plan that charged on a sliding scale that was dependent upon the parents’ income. The lower the household income, the lower the tuition. If you were no longer your parents’ dependent, you paid the lowest rate. Today I donate money to my alma mater. But when I visit the campus, the only thing I see are new buildings. I don’t see rising admissions, a higher graduation rate, or cheaper student housing.

  19. Jeff says:

    I’m not overstating it when I say that: As a millennial (graduated college in 2009), reading Scott’s work salves en enormous amount of mental pain that I’ve felt since graduation, but couldn’t quite find the right balance of attribution between myself and/or society. This isn’t to say “woe is me”, there’s always more I could be doing to further myself, but it’s certainly validating to have this insight and feel a little less crazy about how hard it’s been to “make it”. Especially when I’m getting lectures from my parent’s generation on what I’m doing wrong. (not working hard enough, taking a vacation, etc.)

  20. Dave says:

    Gerrymandering and money in politics are the root-cause issues to our problems. Success is not defined by the absence of problems but the ability to deal with them. Our country has dealt with serious problems before, but now we are fundamentally stuck as we have become more and more tribal, viewing everything as a zero-sum game. Moderates in Congress, whose power and influence are rapidly on the wane because of gerrymandering and money, are getting primaried out, or they themselves are turning into extremists. Consequently, our ability to develop and implement practical, bi-partisan solutions that require short-term pain for long-term gain is impossible. Your Marshall plan is pure fantasy in this political climate.

    • Marc Lipton says:

      your diagnosis is correct (gerrymandering is a root cause, as is money in politics), but your “bothsiderism” is pedantic. it is not “bi-partisan” solutions that are necessary. One party (you can guess which one) has become an extremist version of itself. the other looks at Prof. Galloway’s recommendations and says, “hmm, there is stuff here we can work with.” The ability to put the blame where it belongs is a critical first step in designing a viable solution

    • Dave says:

      Pedantic or not, to drive any meaningful change, especially to overcome a presidential veto, requires cooperation between members on both sides of the aisle. Our founders designed our government with its system of checks and balances to specifically encourage cooperation. Unfortunately, the divide between the two sides is only getting worse, and the root issues are clear.

    • Alexander Zwissler says:

      @Dave With you here

  21. Bill says:

    Abolishing capital gains would discourage a investment. We need tiered capital gains. 0% on the first $100k of capital gains, 20% from $100k-$500k and then 40% or 50% on everything above that. The wealthy get more wealthy from capital gains not ordinary income. The Dems should all be talking about that, not the ridiculous wealth tax that hasn’t worked in any other country that’s tried it.

    • Josh says:

      It’s too late for as soft an action as you’re calling for.

    • Colin says:

      I disagree. Investing is how wealth is created today. Investing doesn’t need preferential tax treatment. Capital gains tax exemption is an outdated idea. Why should gains from labour and time risk continue to be taxed at twice what gains from money risk is taxed at ? If anything, money risk should be taxed more than labour/time risk.

    • Colin says:

      @Josh agreed.

  22. Bob says:

    I need a drink after reading this

  23. Jim says:

    What about the idea of dedicating 20% of all shares of public companies to the workers? Also, free tuition to state “public universities” would still seem a good investment in the future of our youth and nation. The wealthy will still send their kids to expensive private schools.

    • Craig K says:

      It’s way easier. Just break the cartel of elite, super endowed universities, by taxing endowments over one billion, unless they grow class sizes by 1.5x population growth. It’s ludicrous that a school as mediocre as UCLA has an acceptance rate of 12%. That says it all.

  24. Bob Sollish says:

    Best yet – immoral is the only way to describe a lot of what’s happening.

    • TRND says:

      Immoral is right. Take Instacart, Grubhub, Uber and Lyft. Who steals tip money from their employees (I’m sorry, contractors) to subsidize their business model?! These are people who often don’t have a lot of employment options. If your business model relies on this to make it, just shut the business down and move on to something better.

  25. Ed says:

    Powerful and sobering commentary.

  26. hogan says:

    Lol at the opening paragraphs and then you sign it ‘life is so rich.’ no mercy!