Evolution in accomplishment value happens a lot outside the tech world. Take sports, as an example. People keep on getting faster and stronger. But this consistency makes it hard to arbitrage the accomplishment. If a swimmer who swam in the 2008 Summer Olympics told their 100m freestyle time to someone who swam in the 1932 Summer Olympics, the old timer would look the youngin’ up and down and quickly say, “so what? It’s easier now!”
The problem with accomplishments in the tech world is that they’re not consistently changing in one direction, and it’s not as obvious that you’re talking to the equivalent of the 2008 Olympian. Take the statements, “I sold my company for $500m” or “I invested in a company that was acquired for $500m.” I wasn’t in high school yet so I don’t have a good sense, but I would guess that a negative arbitrage occurs if the acquisition happened before 1995. But a big positive arbitrage occurs if the acquisition was in cash and took place in the late 90’s / early 00’s. An even bigger positive arbitrage takes place if the acquisition took place in the late 90’s / early 00’s in an all-stock transaction with a public company (that probably no longer exists). Of course, the speaker best takes advantage of this value arbitrage by providing none of this context. The same phenomena is true for when it comes to taking a company public. Sometimes it’s been easy, sometimes it’s been hard. But we interpret the value of the accomplishment based on how easy or hard it is to accomplish now.
The dot.com bubble is a great source of accomplishment arbitrage value. I think we’re currently creating a new breed of accomplishment arbitrage. As an example, take what it means to “be an investor” in a particular company. The vibrant secondary markets for companies like Facebook, Zynga, Twitter, LinkedIn and others, not to mention large seed syndicates, has altered the value of what it means to “be an investor”. Nonetheless, we’re still holding on to the traditional definition of what it means to “be investor” because for the most part, the traditional definition of being an investor is still the dominant type of investment. Unfortunately, this makes this type of accomplishment arbitrage even harder to spot — it’s still the exception to the rule. Still, while I see a lot of positive arbitrage going on now, in five years, my guess is the spread on this claim will be even larger.