Larry Ellison and Billionaire Spending

As someone in the financial industry personal finance is something that is always interesting. If you are really interested in how even the rich can go poor I suggested Robert Frank’s “High Beta Rich” which has great stories of how even the top .01% can become the bottom 99% or even in some cases bankrupt. When I saw this story about Larry Ellison increasing his line of credit to $4.5 billion I began to wonder why he even has a line of credit.  Basically Ellison was using Oracle stock (company he founded) as collateral in order to pay for things he shouldn’t be buying (an island for example). According to Bloomberg Billionaires Index Ellison is worth around $38 billion. Larry Ellison is one of the highest paid CEO’s. For the past fiscal year Ellison made $96 million ($90.7 was due to stock option awards which few people actually know take years to get since they are actually restricted stock where an executive may have to wait 3 to 7 years even before they can cash out the options). Essentially 95% of the stock price is tied not the short term performance of Oracle but the long-term (3-7 year period) after the shares are awarded that matter. People forget the options Oracle gave Ellison could be worth less than the $90.7 quoted in the future if Oracle were to tank or not create shareholder wealth. According to this WSJ article Ellison between 2001 and 2010 made roughly $1.84 billion being the CEO of Oracle. If I do a performance chart of ORCL (Oracle) over the same period of time the stock was down close to 16%. Is Mr. Ellison overpaid?

It seems though that even though Larry Ellison is raking in the dough he is also spending a lot of it as well.  Usually people never change (even if they say they have). I found this great article published in 2006 from the SF Gate detailing Ellison’s ridicioulous spending  (even by billionaire standards). Phillip Simon who was Ellison’s accountant in 2002 told Ellison “I’m worried, Larry…I think it’s imperative that we start to budget and plan”. Apparently Ellison was living the really good life. He was spending $20 million on his “lifestyle”, $75 million on interest, $25 million on a villa in Japan, $194 million on a new yacht, $80 million on the American Cup and a random $12 million on UAD (which no one seems to know what it is).  He did build an insane $200 million Japanese style house. He is also charitable and wanted to increase the funding from $35 million to $100 million per year. This is all of course excluding the money he spent on Gulfstream and Cessna jets, cars (McLaren F1 car), Armani suits, and financing all these purchases by borrowing against his Oracle stock. I just hope Larry doesn’t one day face a margin call. Keep in mind at the time Ellison was worth closer to $17 billion. Not only was Ellison spending a lot but breaking one of the first rules of personal finance which is diversification. No one should have their net worth tied to one stock no matter how high quality it is since you never know what can happen in the future. Larry’s financial advisor was trying to diversify him out of Oracle stock however Ellison was increasing his ownership interest. 

Ellison started his company with only a dozen employees and had software that was being used by credit card companies, hotels, and airlines to process transactions. Now Oracle’s s software is used by over 70,000 government and commercial customers and has 115,000 employees.  Ellison was no whiz kid in school either. He left the University of Illinois during finals and ended up not taking them. He in fact remembers one exam where he just sat for an hour because he knew he had to spend 3 hours answering the questions. Larry did end up taking some physics classes at the University of Chicago which seem to interest him and lead him to actually lead him to computer programming. More of Larry’s story is told in the book “Softwar”.

Ellison basically came from nothing to build a business that earns billions of dollars per year. I admire this since he wasn’t given a business or just an inheritance to build it. Although, Ellison has built a successful business there are still laws of financial planning he has to follow like diversifying his stock, trying not to use Oracle stock as collateral, and not spend so much. I just hope that Ellison doesn’t end like other CEOs who financed themselves so much that they lost everything. 

Charles and Liz Koch Wichita State Alumni Presentation

I found this clip on YouTube which is a presentation from Wichita State's appreciation for Charles and his wife Liz Koch. Charles Koch donated $6 million for the Charles Koch Arena where the basketball team plays. So many people make Charles Koch out to be some evil guy when really is a wealth creating charitable individual.

Citizen Koch Goes To Tampa: Why David Koch Is So Interesting

This Weekly Standard article nicely profiles David Koch. The article is actually dated for September 3, 2012 however I have reading it this past week to learn more about the ever interesting David Koch. The article points out that David is 6’5 which they probably got from my post about the Koch brothers here. David has many interests and in his mind politics is around 5^th. David is president and chairman of Koch Membrane Systems which is actually a pretty cool subsidy of Koch Chemical Technology Group which is a subsidiary of Koch Industries. Koch Membrane Systems has around 700 employees. Basically the way I understand it is this company can purify liquids to be able to make water drinkable (like taking salt out of water so it is drinkable). Koch came up with a way to build a system that used larger filter cartridges which ended up being more environmentally safe and would lead to lower maintenance costs. According to this article Koch spends 3 days per week overseeing Koch Membrane Systems. Semi permeable membrane technology was all the rage at the chemical engineering department when David was at MIT. David has also learned that it is not easy to enter the membrane business without having a technological advantage. From 1999-2009 he worked to try to get the right people and research team in order to make his company be a serious contender. David uses this analogy in building a team by saying “It is like building a house. It takes ages to build the foundations, but once they are done, the house goes up quite quickly after that.

The origins of the company were started at MIT in the 1960s when a company called ABCOR (created by MIT professors) and Koch Industries then bought ABCOR. Actually one of David Koch’s professor Ray Baddour helped start ABCOR. According to this Boston article in 2008 Koch Membrane according to literature had sales of $110 million. Although, David Koch in the Weekly Standard claims it is a $2 billion a year business.  

Back to the Weekly Standard article I also learned that David who has a master’s degree in chemical engineering enjoys reading technical engineering journals in order to find the next big idea that will create value. As a kid at the age of 10, David worked summers as a field hand in Durant, Oklahoma. In school was “unmercifully teased”. However once he grew in size he was playing on the MIT basketball team averaging 21 points per game, was in the Beta Theta Phi fraternity, and studying chemical engineering. After he finished all his degrees at MIT he designed petrochemical plants and made $8,000 in the early 1960s which would be around $56,000 in 2012. In 1970 he joined Koch Industries after his father passed away from heart problems however stayed in New York instead of the company headquarters in Kansas. Also although many people connect the Koch brothers to Americans for Prosperity the Koch brothers only contribute 10%. Americans for Prosperity also has over 90,000 contributors as well.

In his love life David Koch use to have 3 dates per day and this woman claimed she dated Koch in the 1980’s. David didn’t get married until he was 56 years old (his wife Julia was 32 years old when they were married in 1996). Apparently, according to Julia after the first date David shook her hand and Julia thought “I’m glad I met that man because now I know I never want to go out with him again”. Six months later they went out again which started a 5 year relationship. David was known to have extravagant parties which apparently would not attracted women that you could bring home to a mother.

David Koch also has many interests. For example he serves on numerous non-profit boards donating his time and money to them. In fact according to the Koch Industries website he is a member of 23 different non-profit organizations where he is either some type of board member or some executive position. I also had no idea that David Koch was into archaeology as mentioned in this 2009 article. Truly David Koch is an interesting individual. 

David Koch on Gay Marriage, Tax Increases, and Defense Spending

Apparently, David Koch has been in the news recently with the Republican National Convention. David Koch recently officially came out for gay marriage and higher taxes. Anyone who wanted to know this already could have gone to his Wikipedia page. The first one I am not surprised about the second one I question what he actually means. Koch is always associated with the Republican Party who mainly believes that marriage should be between a main and a woman. However, people forget the Koch is actually a libertarian meaning he is fiscally conservative and socially liberal. I myself use to be conservative and then became more liberal on social issues because if the conservative premise is let me make my own financial decisions the parallel liberal premise should be let me make my own decisions with my body.

Anyways, some people on the left are excited while other are skeptical David Koch actually believes in same sex marriage. The guy did run for the libertarian ticket in 1980. I did see on Koch’s Wikipedia entry that he was conservative after that but really think people just associated with the conservative party. What is really interesting is that even liberals don’t think he is serious about his views on same sex marriage and think he is just lying. What incentive does David Koch have to lie? I would also point out he doesn’t benefit is any way shape or form from endorsing same sex marriage he just believes like I do people should be allowed to marry whoever they want to as long as they don’t infringe on the rights of others.

The increase in taxes comment was also interesting. David Koch never said whose taxes should increase. My best guess would be Koch wants there to be more taxpayers which by definition would be an increase in taxes since nearly 50% of the people who live in the United States owe no federal tax liability. On the spending side Koch believes that a “balanced budget would require every federal department… to take cuts”. He also said that we should cut defense spending which is not typical with the conservative viewpoint.

I am not really sure how this is really “news” since David Koch has been a libertarian for some time. People often have this association fallacy and believe “well David Koch is contributes to the Republican therefore he must hold all their beliefs”. Voting for politicians is like voting for a basket of goods. You may not like everything but there are enough things you like that you will vote for them. I wish David Koch would do more interviews to educate people on how much good he has done through his philanthropy, talk about what a great company he has help build, and to explain what has made him so successful. 

The Koch Brothers: Inside Koch World (Bill Koch The Other and Misunderstood Koch Brother)

(Continued from Part 1 here). David and William Koch during the 1970’s also joined Koch Industries (William was later fired) and Frederick is the only one who never got into the family business. Frederick in recent years reportedly spends $20 million on his art collection and castles while living in Monte Carlo and London. David also went to work for Arthur Little after graduation and then worked at Amicon Corporation and Scientific Design Company. David joined Koch Industries in 1970 and founded the New York office. By 1979 he was managing Koch Engineering and became executive vice president. William also joined Koch Industries in 1968 and founded Koch Venture Capital. Apparently William lost $90,000 and Charles was not too happy about this. He then ran Koch International Company for a short period before founding Koch Carbon and then became vice president of corporate development for Koch Industries.  William was successful as a chemical trader however he struggled. Some of his ideas included purchasing Checker Cab and funding an onion pill to lower cholesterol. These ideas were both flops. William was then fired by the board after he tried to take over. William had always claimed the dividend payout was $5 million in 1983 which is around $11 million in today’s dollars. William complained that the dividend payout was so low that he had to borrow money for his house and he was one of the wealthiest men in America. Around this time the Koch brothers were sharing dividends between $20 to $30 million per year (according to an article the company only paid out a dividend of 7% of its annual earnings). This is actually a small amount considering 90% of Koch Industries earnings are plowed back into the company which has led to a substantial growth.  

In 1983 William started Oxbow Corporation and set up business in Florida to avoid state income taxes (I guess incentives do mater). According to this article, William is a very detailed oriented boss who hired smart people and compensated them well.  Although, his experience at Koch Industries didn’t work out William seemed to work pretty hard being the first one in at 7 a.m. and would make sure employees were prepared and sometimes could lose his temper. William does have a softer side. He enjoys collecting art and wine. In fact he has a wine collection of 40,000 bottles of wine that are worth more than $12 million. His art collection consists of over 400 pieces and according to this article he transports them to his 42,000 square foot home in Florida to Cape Cod. On a single afternoon he spent $240,000 for centerpieces for flower arrangements according to this article. William also likes to sail and in 1992 won the American Cup for sailing after paying $55 million in 1992 according to this Sports Illustrated article. His love for sailing began when he was 13 years old and continued at a summer school naval program in Lake Maxinkuckee, Indiana. Then in 1984 he bought his first bought a 75 foot Hood cruiser.

His house is worth close to $26 million according to this recent article. According to this article he has so much art in the house that he actually had to start hanging it from the ceiling. William has more than $100 million of art and furniture in his house (I hope he has an insurance on all that art). He has used his house in the past for charity purposes however decided to cut this back in the early 2000’s. Not only does William like to collect art and wine he also use to collect women similar to his brother David. David in his playboy days had 3 dates per day. 

While already married to Joan Cranlund in 1995 he tried to evict model Catherine de Castelbajac from a $2.5 million condo that he owned at the Four Seasons Hotel in Boston according to this article. William claims that from October 1994 to August 1995 de Castelbajac ran up a bill of $47,000 at the Four Seasons hotel. William was seeing three women at one time (his wife, de Castelbajac, and Marie Beard). Just one year after he married Joan Cranlund he married Angela who was almost two decades younger than him. According to a 2001 New York post article Angela Browder Gauntt was a stunning blond with green eyes, unpretentious who herself was already divorced when a mutual friend suggested her and William get together. For their first date they went to the Commander's Palace in New Orleans. He sent flowers the next day but they only saw each other once or twice in the next nine months. Part of the reason was because he was still trying to handle Catherine de Castelbajac and he also had a daughter with another another lover named Marie Beard. William had been with many woman and was ready to have a real family. 

Only after five dates William purposed in May 1996 and then they were married in November 1996.  However, there was no honeymoon after the wedding. William was also traveling with his job so it made it hard to made time for his family. Things however got worse. In July of 2000 Angela successfully issued a restraining order according to this article against William for punching Angela in the stomach. The restraining order required Bill to live in the guest house or beach house while his wife Angela lived in the main house. Also Koch was not allowed to drink alcohol 24 hours before he visited his children. William openly talked about the fact that he went to rehab in 2000. 

Angela however did alright in the end as she was paid $16 million in addition to making monthly child support payments of $21,800 ($10,900 per kid) for the two kids that they had together as seen here. In addition to this William also agreed to pay for college for the children. This agreement overruled an initial prenuptial agreement where Angela would have only got 1% of William’s net worth. At the time in 2000, he was worth $650 million which would have been a little less than $7 million. After the divorce from Angela William had former lover Marie Beard moved into his $30 million 30,000 square foot mansion. At the same time William reportedly trying to romance Barbara Chevellard. William is now married to Bridget Rooney who was married to Kevin Costner. 

Speaking of family William also wants to build his own town in western Colorado that will just be for his friends, family, and historians. In 2007, William spent $51 million on four properties in Aspen, Colorado. One of the properties is 17,000 square feet. This of course was after Charles and David each purchased $2.5 million homes in 1992. This article talks about how beginning in 2007 William started to buy up land in Bear Ranch which is near the Ragged Mountains. The town has its own train station, saloon, and firehouse. William also uses his money for charity as well. In 1994, William gave $5 million to help fight crime in Kansas and founded the Koch Crime Commission according to this article.  According to this profile William donated $64.6 million in 2011. He created and funded Oxbridge Academy for $50 million. Speaking of education William also had three degrees from MIT including a doctorate in chemical engineering which was 372 pages and entitled "Flow of Light Gases, Through the Voids, On the Surface, And In The Solid of A Solid Microporous Media" where the citation can be found here from the MIT library. Truly William Koch is an interesting man. 

The Koch Brothers: Inside Koch World (A Family History)

The Koch family is probably one of the most interesting families. Stories of money, power, and lawsuits have affected the whole family. I have covered the historical net worth of the Kochs brothers here.

 I first learned about Charles Koch after watching a celebration dinner for Dr. Walter E. Williams and was curious about who he was and when I found out he was it lead me to explore not only who Charles Koch is I realized there were four Koch brothers (Charles, David, William, and Fredrick). The easiest way to remember them is Charles likes to collect money, David (use to) collect women, William collects everything, and Frederick collects castles.

To understand who the Koch brothers are today we first have to understand where they came from. The brothers were the son of Fred Koch who created a better way of turning crude oil into gasoline. Koch then went to the Soviet Union and installed cracking units through the country. In 1940, Fred Koch created Wood River Oil and Refining Company and then acquired Rock Island Oil and Refining Company in 1946 which then turned into Koch Industries.

Growing up the Koch boys were all taught about hard work. Fred Koch didn’t want his sons to become country club bums. When Charles was only five and Frederick was seven the boys showed up to work to a former marine who was a groundskeeper. When asking for money David Koch remembers “If I wanted to go to the movies, I’d have to ask him for the 25 cents”. Growing up Fred Koch took his sons on trips to Africa and the Arctic Circle where they would hunt and fish. All the boys went to different schools growing up. Charles and William both went to Culver Military Academy in Indiana, Frederick went to Hackley School in New York, David went to Deerfield Academy in Massachusetts. Charles got busted for drinking on a train and was expelled from school. Brother David in this article describes his own brother as “a bad boy who turned good”.

In 1958 Charles, David, and William were enrolled at MIT earning engineering degrees.  Charles and David both earned master’s degrees in engineering while William earned a PhD in chemical engineering. Although William earned a PhD it took him eight years and he finished it in 1971. His dissertation was entitled  "Flow of light gases through the voids, on the surface, and in the solid of a microporous media" which ended up being 372 pages and the citation can be found here. While at MIT David and William were both on the basketball team. Charles, David, and William are all above 6’0 tall (David is 6’6, William is 6’5, and Charles is 6’3). David held the record for the most points scored in one game until 2009. What is impressive however is that David averaged 21 points per game (how many modern day billionaires can say that?) William was second string on the team and sitting on the bench. At MIT both Charles and David were in fraternities.  Frederick went to study English and drama at Harvard and Yale.

After college Charles went to work for Arthur D. Little after he graduated and then went to work with his father in 1961. Fred Koch told his son that if he did not join the company he would sell it. When Charles Koch took over the company had $250 million in revenue and today the company has around $100 billion in revenue. Charles at first was not interested in the family business but thought managing a company was more interesting then working for someone else. The first job Charles had was to create an engineering division in Italy. According to a Wichita Eagle article from 1998 Charles worked seven days a week in the beginning. In the early 1980’s according to this article he was putting in 10 hour days. Charles not only worked long hours at home but according to this 1997 Fortune article he worked 12 hours per day and expected executives to work on Saturday mornings and would call meetings that ran into Saturday night. Charles even proposed to his wife Elizabeth over the phone and flipping through his calendar to plan a wedding date. Charles is what I would call a busy man trying to create value. 

 David was no slacker either as in this article talks about how he left for work around 9 A.M. has a driver pick him up around 9 P.M. for dinner. In 1966, Fred Koch died at the age of 67 of a heart attack while hunting ducks. Interestingly enough every day for breakfast Fred has a tall glass of buttermilk which made have lead to heart problems in his later years. 

Day in Life of CEO

H/T-Inc.

Billionaire hedge fund manager at 38 retires

Recently, John Arnold announced that he would close his hedge fund Centauras Energy and return money to investors. Arnold is pretty young being only 38 and has been an energy trader for 17 years. Apparently, the fund only made a 4% return for advisors which is not the typical double digits return that John Arnold would return. Last year he returned 9% and made $360 in the process. In 2006 Centauras Advisors earned 300% which was much better than in 2005 when they earned 150% (mostly due to the blow up of Amaranth Advisors).

Arnold got his start at the now defunct Enron. He went to Vanderbilt University where he earned an economics degree and even his professors weren’t surprised when they heard he was earning billions. When he worked at Enron Arnold was a natural gas trader and did very well. In 2011 alone he earned $750 million. Many people and politicians complain that traders create little to no value. However, this is not true. Traders don’t increase prices because they are responding to the fundamental market conditions. In order for a trade to be made there has to be both a buyer and seller. People get enraged when prices of oil increases however don’t even talk when the prices go down which is due to traders like John Arnold.

Arnold is setting off into the sunset quite early. He mainly wants to depend his time and resources with the Laura and John Arnold Foundation which has around $700 million. In 2011 alone John and his wife Laura donated $100 million to various different causes. Really John Arnold is saying is that he does believe he can’t earn the great returns he has been making. Usually financial planning professionals say that you can withdraw up to 4% of your income and still be able to retire. So essentially John Arnold could withdraw $120 million per year which is a substantial amount of money (this would vary depending on how much he gave to charity). Clearly, though there an opportunity cost for Arnold not running a hedge fund. He could be helping other people get rich but has decided that philanthropic pursuits are worth then what he can make in the future. I have a feeling that after a while John Arnold will want to get back in the investing game in some way in the future.

Whitney Houston: Death, Drugs, and Money

A couple hours ago it was reported that Whitney Houston died. Houston was known as a great singer and had a great voice. It is reported she sold 170 million albums (yes we use to have albums in the old days). It is reported she signed a record deal in 2001 for $100 million in which she would have to produce six albums. There will be no doubt there will be surge in the albums she sells. Whitney Houston knew how to earn money. Below is a list of tours and how much they grossed.

Greatest Love Tour (1986) $4.8 million
Moment of Truth Tour (1987-1988) $24 million
Bodyguard World Tour (1993-1994) $33 million
Nothing But Love Tour (2009-2010) $36 million

This is of course is what the tours earned not what Whitney personally earned. Plus, this is a gross amount which doesn’t take into account costs as well. Whitney herself in 1988 earned $30 million according to Forbes. It is rumored that she was broke and was asking for money within the past couple of months. It is also known that she had a problem with drugs and alcohol. She admits that during the 1990’s she was doing drugs every day. Drugs and musicians seem to go together although they really shouldn’t. One reason why I think musicians and performers look to drugs is because if you think about their schedule of giving it there all and going night in and out dancing and singing they probably won’t get by without some time of stimulant. If you include the traveling, interviewing, and promotional things musicians have to endure they have crazy schedules. I am in no way defending their behavior although I understand why they do it because of the incentives they are faced with. This makes me think of a similar analogy to baseball and the use of steroids.

Now that Whitney Houston has passed it will be interesting to see whether or not she died with a will (dying intestate). If she did die without a will then the public will become aware about her finances. Personally I am curious to see how much she had left over after earning many millions of dollars.

Income Inequality: Top 1% Myths

Time magazine recently named “The Protestor” the person of the year. No doubt this year we saw complaints between the bottom 99% and the top 1%. However, although many people in the bottom 99% may be complaining I would question whether they have all their facts. According to Federal Reserve data 33% of the people in the top 1% in 2007 were no longer in the top 1% in 2009. Note that this is only over a two year time horizon. Less than 15% of people on the Forbes 400 stay on the list for over a 21 year period. Also it is important to note that inherited wealth is in fact the minority of people on the Forbes 400 list. What is even more interesting is that according to the Edward Wolff of NYU is that the percent of inherited wealth has been decreasing. In 1989, 23% of the top 1% inherited their wealth. By 2011, this percentage decreased to 9%. Also it is interesting that income inequality is lower now than where it was in 1995. Also the concentration of wealth in the top 1% is lower now than where it was in 1998.

People will always want more. This desire is part of human nature. What seems puzzling is why people are envious of other people who work harder, longer, and smarter than themselves. To me if someone wants to work 80-100 hours per week earn all that money and contribute to society more power to them. As long as they are not asking for government money everyone should be fine with this arrangement. We could of course cure income inequality by having recessions. Everyone would feel more equal yet it would come at the price of growth and expansion. One point people forget is that the top 1% often take the most risks. This is known what Robert Frank describes as the “high-beta rich”. Frank makes an interesting argument that the top 1% has more because they took more on more risk. This is common sense. Often people who have large amounts of wealth have most of their net worth tied up in their stock options or their business. The majority of Americans don’t have stock options and live off their paychecks. Since a large percentage of people in the top 1% have their net worth in one asset they have to constantly worry about what happens if that asset implodes. This means that the super rich have much more volatility in their net worth than say the average person. One year you might have $200 million and then the next $50 million if the stock market drops.

Income inequality should make people want to work harder (if they decide they want more money). Complaining about why other people are successful does nothing for any individual. Everyone wants more money yet very few people want to do what is required or necessary to get there. We can’t forget that people are paid on value creation and productivity.

Special thanks to Robert Frank for giving me the idea for this post.

Bottom 99% Are Already Top 1%

I think it is interesting when people show graphs of income inequality over time between the top 1% and everyone else. One thing I think people fail to understand is that the top 1% of today is not the same top 1% of yesteryear. Recent data from the Tax Foundation drives home this point. The Tax Foundation looked at tax returns between 1992-2008 and looked at the top 400 taxpayers. The results are somewhat interesting.

Close to 73% of individuals were only in the top 400 taxpayers for one single year over the 17 year period. Only 3% stayed on the list for 5 years. Only .4% of people stayed on for 15 years and .1% stayed in the top 400 taxpayers for 17 years. This would say only 4 taxpayers were in the top 400 taxpayers for 17 straight years. People might complain that even 4 is too high. The evidence shows that an overwhelming majority of people only stay in the top for a short period of time. One explanation is that people do sell their businesses or they retire and have options that get exercised. So what is actually happening is that people are high income earners and then drop out of the top 1%. In fact, according to

a report entitled “Income Mobility in the U.S. from 1996-2005” 57% of the people in the top 1% had dropped into the bottom 99%. For the top 5% around 46% moved into lower income groups. The major point is that the top 1% or even top 5% are not some elite group that stays constant.

An even better point is that even the bottom 99% have a higher standard of living than many of the people in 10% in other countries. Real per capita GDP over a longer period of time has been increasing. When people complain how things are today the question should be would you rather live today or in the 19th century? The things people had to worry about in the 19th century are much different than things we worry about today. Infant mortality was much higher during this time period. People had to worry more about sanitation and also worry if there would be enough food. People during this time didn’t even shower daily. Today, these are things even the homeless don’t really have to worry about (if they seek a homeless shelter) I have seen people at stores purchasing their groceries with food stamps yet they have IPhones. No one a decade ago had an IPhone. The amazing thing about markets is that it brings creative destruction. Entrepreneurs and inventors figure out what people want and bring it to the masses. Competition keeps out bad products and services while ensuring high quality and low prices. The bottom 99% should be embracing markets and income inequality should be an incentive to want to work hard to get in that top 1% (even if it is only for one year).