Paul Graham&#x27;s argument is entirely tautological.<p>1. Startups are companies that try to grow quickly into billion dollar businesses.<p>2. Founders have substantial equity in their startups.<p>3. Therefore founders get really rich when their startup succeeds.<p>4. More successful startups means more really rich people.<p>5. More really rich people means more inequality.<p>6. Therefore more startups means more inequality.<p>PG defines startups as companies that become large and make their founders rich. So yes, you then trivially get &quot;more startups == more inequality&quot;. However, this loses sight of the fact that when the goal is to create a billion dollar company in a few years there is a huge incentive to game the system, and to produce all sorts of externalities.<p>Take AirBnB. They are effectively an unregulated hotel business. How can a bed and breakfast compete with an airbnb, when they have to face regulations and taxes? How do the neighbors like it when new people move in every couple of days and party all night long? Sacrifices have to made in the name of growth.<p>Another example is Uber or other sharing economy startups. Employees become independent contractors, who are always on the edge of being fired. Who have to pay for their own uniforms, cars and other equipment in order to do their jobs. It&#x27;s pretty ruthless exploitation, but Uber is valued at $70 billion and it&#x27;s super convenient for the customer, so we look the other way.<p>When it comes to software if you want to serve the most people you work with open protocols, you open source your software (so it can be inspected for quality and security), you make importing and exporting to competing products easy and fast and so on. If you want to make a billion dollar business you keep everything proprietary and you create a walled garden with tremendous lock in.<p>Just look at all the open source products that our startups are built on top of. Billions of dollars worth of free software. What do the contributors get? Nothing. (Not strictly true; they get angry bug reports, but you get my point). This is not the natural order of things, so we should question whether this is just.<p>There&#x27;s a big difference between companies that provide a huge amount of value, and companies that can CAPTURE a huge amount of value. Startups have to be in the second category, and that has huge social implications worth thinking about. The founders necessarily play only a small role in the success of their business -- we all stand on the shoulders of giants after all -- so why should the founders be the ones who capture all the rewards?