The thesis of Chris Hughes’s book Fair Shot: Rethinking Inequality and How We Earn is stated right up front: “Most Americans cannot find $400 in the case of an emergency like a car accident or a hospitalization, yet I was able to make half a billion dollars for three years of work. Something is profoundly wrong with our economy and in our country, and we have to fix it.” But is Hughes’s solution the answer?

Facebook

The critical event in Hughes’s short life (he is now 34) was that in 2003 at the age of 19 he chose to room in his sophomore year at Harvard with Mark Zuckerberg. During that sophomore year Zuckerberg, Hughes, and a third roommate Dustin Moskovitz developed Facebook, the now-legendary social media company. For his significant but relatively small role in Facebook’s creation Hughes was awarded a two percent share by Zuckerberg. It turned out to be worth $500 million when Facebook went public.

After working on the launch of Facebook Hughes went on to play a role in the social media apparatus of the Obama presidential campaign. Again he logged a major success in helping Obama win, as part of a successful venture. But he felt that his success was due much more to good fortune than to his own uniquely brilliant abilities.

Although he was no longer directly involved by that time, Hughes reveals a startling fact about Facebook. Facebook, he says, was “caught flat-footed when the surge in mobile users arrived in 2011. As late as that year, Facebook had only a handful of engineers focused on its mobile products, but it immediately pivoted to capture the emerging market, yielding enormous returns. Facebook went from zero mobile advertising revenue at the time of its initial public offering in 2012 to $22 billion a year by 2016.”

We need to be reminded how astonishingly recent this new mobile sharing economy is. The Apple iPhone appeared only 11 years ago and the now-ubiquitous mobile apps, such as Facebook, Uber, Twitter, Google, YouTube, etc. etc. caught hold only in the last few years.

Hughes also points out another interesting – and important – thing about Facebook:

In total, financial firms invested over $600 million in Facebook while it was still private. Because of outdated SEC regulations, most companies prefer to wait as long as possible to go public to avoid the regulations and public oversight that come with being traded on public markets. The effect of these policies is that no average American has any way to buy shares in the early days of the lives of valuable companies, but the networked ultra-wealthy are able to get a slice of them through these firms. In Facebook’s case, they were handsomely rewarded.

Startups have been waiting longer and longer to go public in recent years. Therefore, the early investments in the startups – the investments that they really need to become established and grow – can only be made by wealthy angel investors, venture capitalists, and private equity investors. That leaves the rest of investors, the smaller investors and most of institutional investment funds, to invest only in the secondary market where the flows of funds are not especially relevant to the companies themselves – and where a huge industry of investment advisors and managers compete with each other to lay claims to market-beating strategies that are of little importance to the overall economy. Perhaps Hughes could put his mind to how to remedy this situation.

Trying to do good

Many people who get rich feel that they have to “give back” in some socially-redeeming way. Hughes set out to use his new-found wealth, which he felt was largely due to unique circumstances and luck, to do something socially useful. He discovered that this isn’t so easy.