Is Selling Shares in Yourself the Way of the Future?

Adella Miesner

The Libermans insist that they have only ever done white-hat hacking (that is, probing to find vulnerabilities that should be fixed), but they define that standard broadly. The supercomputing abilities that enabled them to run complex geological algorithms, they confessed to me, came from tapping into the processing power of […]

The Libermans insist that they have only ever done white-hat hacking (that is, probing to find vulnerabilities that should be fixed), but they define that standard broadly. The supercomputing abilities that enabled them to run complex geological algorithms, they confessed to me, came from tapping into the processing power of idle computers on their network. The F.S.B.’s scrutiny spooked them, so they started a company around something that, in the early two-thousands, they were sure no serious people would scrutinize: video games.

The going was rough. “We’d never worked with a two-hundred-person team before,” Daniil said. “We raised more and more money without releasing the game—and then the financial crisis came.

“We kind of felt like idiots,” he went on. “How could we have missed the world financial crisis?”

Looking at the data, they landed on the same culprit as many people had: the deregulation, in the late nineties, of derivatives and related credit-default swaps. “But then we were, like, O.K., why were they deregulated?” Daniil said. “And who was the beneficiary?” The brothers coded algorithms to trawl data from the Federal Reserve. By far, it seemed to them, the biggest holders of wealth in the United States were pension funds, which collect, invest, and deliver money for people’s pensions. They concluded that the country’s pension funds together held roughly forty trillion dollars, or a sum twice the size of the entire U.S. economy.

That insight wasn’t new. In “The Unseen Revolution” (1976), the corporate theorist Peter Drucker had noted that pension funds control “practically every single one of the 1,000 largest industrial corporations in America” through their share ownership. The Libermans observed that the funds had continued to grow into the twenty-first century, which in their view explained a lot. The rising cost of education? One factor was that many educational institutions have fixed-return pension funds, so, whenever the markets underperform, the institutions go to their own pockets. The declining wealth of younger generations? Pension funds were good and necessary, the Libermans believed, but they had become ominously oversized, as had the corporations that they controlled. Wealth was draining toward major shareholders and the old.

“You came here from a distant planet to ‘study humanity,’ but God forbid you help around the house.”

Cartoon by Ellis Rosen

To the brothers, this circumstance—what some people would call capitalist gerontocracy—was an example of the longitudinal-inequality problem writ large, and, as they bounced ideas back and forth, they shared an epiphany. The core of the imbalance, they thought, was an asymmetry in how we measure wealth.

When we measure the wealth of people, we tote up their cash, assets, and debts on a given day and take that as their worth—even if we know they’ll earn more going forward. When, on the other hand, investors value corporations, such as Costco, they take into account the company’s likely growth, and figure out a price for a share with that future in mind. (Costco is priced at forty times its current earnings.) Corporations are allowed to worm their wealth forward and backward in time by selling shares. In theory, people can do this through debt, but debt is psychologically onerous and rarely encourages personal risk-taking. The Libermans convinced themselves that, if you let people move their future wealth value around the way corporations do, people and businesses would be more evenly matched.

The brothers shopped the idea around for years, but it wasn’t until recently that reception to it warmed. Sam Lessin, a venture capitalist at Slow Ventures, was the first investor to buy shares of the Libermans’ future. He grew up in a prosperous family and, as a teen-ager, was struck by the fact that he could go to whatever college he wanted, while smart kids without the same financial security might be compelled to select schools on the basis of tuition and aid options. For years, he proposed to investors the idea of “venture capital for people,” to no avail. Then, as the debt crisis deepened, he noticed the wind beginning to turn. Lessin’s firm recently opened a whole department devoted to investing in human lives. To the extent that many investors remain skeptical, it is often for market reasons. “That idea might be ten years too early—or more,” Jerry Murdock told me. “We’re not in a deep enough crisis of talent.”

One Saturday morning, the brothers got in their white Tesla Model Y bearing the license plate “LIBERMN,” and drove to Westwood to meet their friend Oleg Itskhoki, another Muscovite, who is a professor of economics at U.C.L.A. On the way, they stopped to pick up Mehreen Malik, a partner in their project, whom I already knew. When the Libermans drive, Daniil is at the wheel, and David stares out the window. Later, they say, their experiences blend, as if in stereoscope, into one memory. (The brothers also read books two by two; they each carry a bank card from a joint account.) If they ever get in a serious quarrel, they observe a brief period of silence, bracket the dispute, and get on with their shared life. What else could they do? “We understand that what we get from each other is so much more than we could get alone,” Daniil said.

Malik clambered into the car at a crowded Beverly Hills corner. “You’ve both had a haircut! I think I preferred both of your hair longer,” she said. “You could either pass for mad scientists or go to a Beck concert.”

“This is a long process,” David said. “I cut the hairs now. Then I don’t cut them—”

“They won’t be cut for another year!” Daniil declared, with American brevity. Most of their social circle in town consists of other entrepreneurial Slavic expats. (The brothers spent much of the spring trying to evacuate friends from Russia and Ukraine.) Lilian Caldeira, Ken Caldeira’s wife, who knew the extended Liberman family, describes them as being in a swirl of intellectual life in Russia—Efim, their father, was an inspiration for a character in Ludmila Ulitskaya’s novel of seventies Moscow, “Jacob’s Ladder”—but the brothers built their own swirl over a recurring match of Mafia, the millennial parlor game. Frequent players called themselves the Libermafia, and the term stuck to describe their ever-growing network. “You need to be three months ahead to make a reservation for their spare bedroom,” Lilian Caldeira told me.

Itskhoki, whom they met that day, recently won the Clark Medal, the nation’s top honor for young economists, for his work on exchange rates and the influence of globalization on income inequality. He was the youngest tenured economist at Princeton before moving with his wife to the West Coast when she got a job there. “I went surfing the other day. My transition to Californian is complete,” he announced as they stopped at a shaggy Westwood café. He wore a terry-cloth Hawaiian shirt and a baseball cap that said “CAMP KNOW WHERE.” After a walking tour of the U.C.L.A. campus, Itskhoki led the group to a lush quadrangle near David Smith’s sculpture “Cubi XX,” where they sat in a big circle on the grass. David, warmed by the sun, gushed about Itskhoki’s research knowledge. “It’s always really interesting to, uh—”

“Find,” Daniil said, not looking up from a tiny fort he was building out of pine needles and eucalyptus buttons.

“—find what are the current ideas in academia about, for example, generational gaps in wealth and the role debt plays in this,” he said.

“There are surprisingly few,” Itskhoki said. “We think of ‘families’ and inequality between ‘households.’ We talk in terms of top ten, top one, top 0.1 per cent. We think a lot less of the unit being people older than fifty.” And yet age is crucial, he added. “Most wage growth happens in your twenties and thirties, so, if your twenties and thirties miss a time of high economic growth, you’re—statistically speaking—stuck with low wages for the rest of your life.”

That realization, he said, was part of the reason for economists’ recent academic interest in “a broad wealth tax,” to push wealth created in periods of high economic growth into the valleys.

The brothers were quiet for a long moment. A wealth tax, in fact, could disrupt their scheme: young people, valued by shares in their own futures, would be taxed as wealthy before they’d ever been rich. Finally, David said, “We’re on the side of, yes, maybe something will change in regulation and taxation, but how can you rebalance it from the market perspective? Adding a new type of security to help young people get wealth is another approach to the same problem.”

Redistribution—the idea that grossly imbalanced wealth should be spread to help the needy become less so—has traditionally been the province of the political center and the left, which believe in taxes and a safety net administered through the state. The Libermans say that their market-based approach can potentially move more wealth (the big money has been known to resist taxes, but is all in for investment) and weave its own networks of support. In one conceivable scenario, an aspiring folksinger of twenty-two decides, like the Libermans, to offer shares in her life. The shares are cheap—the monetary value of her future is uncertain—yet they attract some investors, because maybe she’s the next Taylor Swift: she’s high-risk, high-reward. Thanks to the investments, she can now afford a new head shot and the time of a well-connected producer. She has a bit of cash left over, so she buys a share (also cheap) in the future of her best folksinging friend. Ten years pass, and her work pays the rent. She sells a few more shares, at a higher valuation: her future value is now a vector based on measurable success.

A decade later, she releases her fifth album, full of candid songs about middle age. The album speaks to a generation and goes platinum. The price of a share in her future has now gone through the roof.

Or maybe it’s her friend who made it big. Our folksinger is envious all the way to the bank. She sells the share in her friend she bought long ago at a profit of a few hundred thousand dollars, and makes a down payment on her first home. Now it’s her friend’s success that’s keeping her creative life afloat.

Or—the likeliest of all—nothing happens, and so she finds a job in another line. Investors, as they would do with the stock of any pivoting company, might decide to hold or to sell at a loss; she owes them nothing, though she got some extra funding on the way.

The Libermans’ theory is that, in terms of stuff that America’s big wealth can invest in, people are more appealing than the current catalogue of middling venture-capital funds, shipping firms, and companies selling toothbrushes by mail. Instead of putting money into a fund for startups, investors would be free to find an ingenious entrepreneur and invest in her entire career. Rather than buying shares of Spotify, a fund could buy into a portfolio of the futures of emerging hip-hop artists, all of whom would get that cash. Most of us are more excited about our brilliant friends than about the companies they work for. And while the average age of an S. & P. 500 company is approximately twenty years—most die young—people do better. The stronger their boost off the blocks, the longer they can keep trying, increasing their odds of success.

Some new egalitarians speak of “basic capital” models (as opposed to basic income), the idea being that it’s more equalizing to grant people an early chunk of capital that they can grow than a steady drip. But the idea is old. In 1750, Dr. Johnson described a supposed tavern friend of his who observed that “it was not worse to have ten thousand pounds at the age of two and twenty years, than a much larger fortune at thirty; for many opportunities, says he, occur of improving money, which if a man misses, he may not afterwards recover.” People generally give up their dreams not because they’re sure they’ll never realize them but because money pressures close in. That those pressures are uneven—a scion with a trust fund gets more tries at making it in a risky but rewarding venture than an orphan with monthly rent to cover—is one way inequalities compound.

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