"Minecraft Creator Calls Electronic Arts a 'Bunch of Cynical Bastards'"[1]

My guess is that it was EA that made the offer.

[1] http://kotaku.com/5907576/minecraft-creator-calls-electronic...

Is it fair to say that once you achieve "FU money", numbers start to lose their value? I can't imagine being able to say "no" to something like that. Although likely for something like Minecraft, it'd be stock options/cash mix.

I don't have any "FU money", but it seems very likely to me that once you have that sort of money, there are only a couple of reasons to run it up any further:

1) You have "Big Plans" that need funding (eg. Elon Musk)

2) Running up the numbers as a life gamification to "beat" your peers, or just because you can't stop chasing yourself, like one of those freak beast weightlifters that looks like a space monster but is addicted to "the gainz" (eg. Larry Elison, et al)

There are only so many houses and planes and boats and experiences you can buy, practically speaking, and at a certain point all your grandkids' grandkids are easily taken care of (should you decide to reproduce, and assuming society stands and the dollar keeps its value, of course).

Interestingly I'm pretty sure Bill Gates started in bucket #2 but moved to #1 at some point later in life, but I think most people stick in one or the other.

Or maybe:

3) you don't want the project to lose its integrity/vision. The dollar amount matters less than finding a fitting buyer at a good enough price.

He said:

> once you have that sort of money, there are only a couple of reasons to run it up any further:

Your reply seems to indicate you didn't read what he said, but instead read your own meaning into it. Your #3 doesn't make sense as a reason to "run it up any further".

In that case you shouldn't sell. The buyer might promise you everything, but once the deal is done, he will make his own calls, implement his own vision.

Microsoft can sell Mojang to EA the very next day if they want to.

Now I'm imagining Larry Ellison as a "freak beast weightlifter". Thanks.

Post-steroid Vince McMahon with a beard. HTH.

I think I just threw up a little in my mouth

Except for Steve Jobs and a few very rare exceptions, nobody really has a second act. Once you get the FU money, you might as well ride the first act for all it's worth cause that's all you're going to get...

Maybe he wants to get into angel investing?

He briefly though about investing into Psychonauts 2, but dropped out when he realized how much money was involved ($18m). [1] With a couple of hundred million dollars on his bank account he could get interesting and novel AAA games that would never get funding from traditional publishers made.

He even mentions this in [1]: "Perhaps in some distant future when I’m no longer trying to make games, I could get into angel investing."

[1] http://venturebeat.com/2013/02/04/exclusive-minecrafts-notch...

He likely already has a couple hundred million dollars in the bank. He made $100M just in 2012...

How much would taxes take out of it though? An offer of 2 billion dollars is not equivalent to getting 2 billion in your bank account.

For US citizens/residents with billions, taxes are pretty much a constant 25%, since

1. almost everything is capital gains (which comes to 23.6%). Note that this was 15% under GWBush, so it was even better back then.

2. You can avoid state taxes by relocating to WA/TX (If I recall correctly, this was Bezos' motivation for starting Amazon in Washington). A lot of billionaires live in 0% state capital gains tax states, except the ones that need to live in CA/NY for the tech/financial sector respectively. If you live in one of those, then think of the total taxes as more like 33% total (federal + state)

Notch is Swedish isn't he?

IKEA is Swedish as you get, and it's technically a dutch charity.

Technically it's controlled by a Dutch not-for-profit organisation (not a charity)

Ingvar Kamprad is too, doesn't prevent him from not paying any taxes. It's not very hard to find exploits in the tax system. Even in the worst case, the corporate tax is 22%.

His tax rate is probably around 40-50%.

He's the 4th largest tax payer in Sweden apparently: https://twitter.com/notch/status/410757753737469952

This being essentially all capital gains, it would be taxed at 30%.

When you are dealing in billions, you don't pay taxes.

Oh come on. Not even gonna bother to ask you to back that up.

He probably won't, so I will (somewhat, he's definitely exaggerating, but probably not as much as you think):

http://www.irs.gov/pub/irs-soi/09in12ms.xls

Effective tax rate plateaus at around a half mil in annual income, then starts going down again after around five million.

I couldn't find any hard data about brackets above that. Didn't Mitt Romney pay around 15%?

Then there's my all-time favorite quote, of Leona Helmsley:

>Only the little people pay taxes.

But, that's only anecdotal, heh :-)

It's worth noting that annual income above five million is almost definitely coming from investment of both labor and capital (ie, working to manage/direct a business you own, and seeing gains from the value of that business -- or working to manage your stocks and seeing gains from their value) rather than just from labor. This comes with very different risks, including the ability to lose your capital, which is why it's taxed in a very different way.

It's also worth noting that the tax rate for the very rich is still 15%. As far as I can tell, certain very rich people "not paying taxes" is a myth.

Finally, it's worth noting that Notch is not American.

The UK has a variety of schemes of tax planning[1], tax avoidance[2], and tax evasion[3]. Using such schemes usually requires someone to be wealthy enough to afford accountants and access to the scheme.

Rich people do have ways of reducing their tax burden, sometimes to surprisingly low amounts.

[1] planning is normal reduction of tax burden and is unlikely to be challenged by tax authorities.

[2] avoidance is legal, but sometimes exploits loopholes in tax laws in weird ways and you might risk the Inland Revenue changing the regulations - sometimes retroactively.

[3] evasion is just illegally not paying tax.

Many of the recent tax avoidance schemes that celebrities have tried to use in the UK were outright fraudulent - for example, one involved them falsely claiming that they were used car dealers and reporting fictious losses which were large enough to offset their income for the year. Another involved reporting that they'd invested money in UK film production when they hadn't.

> This comes with very different risks, including the ability to lose your capital, which is why it's taxed in a very different way.

Exactly, there are good reasons for this. The problem is that it would be grossly unfair to tax a small business owner or small investor at say income tax levels because their risks are so much higher. On the other hand a big investor will millions or billions ends up paying the same tax rate as that small business owner or investor, but is able to spread their risk across many investments reducing the overall risk. Yes it would be unfair to tax them at a higher rate for doing fundamentally the same thing - how would we justify one tax rate for one investor in a company, but another rate for this other investor?

Taxation is a hard problem.

"Yes it would be unfair to tax them at a higher rate for doing fundamentally the same thing - how would we justify one tax rate for one investor in a company, but another rate for this other investor?"

Because taxation has gone way beyond what it was initially meant to do. That's why it's a hard problem; we're trying to make value and fairness judgements and using that as a basis for applying tax.

To me, personally, people can't claim fairness if they're treating people differently based on their arbitrary value judgements. Until we start treating "fairness" as a universal, with no subjective component.

What do you imagine fairness to mean without subjective components? I'd say that value is a subjective concept and I cant think of a definition of fairness that is not based on value.

Why can't a small investor spread their investments? Isn't that what index funds are for?

Mitt Romney also gave a huge amount of his annual compensation to charity, which reduced his tax rate substantially.

The big reason why the rich guys can lower their tax rates is because they can use investment losses to offset taxes. It's not a loophole, just a tax deduction you can optimize.

I'm not sure why he got downvoted so muh. Just read all the threads about Amazon, Starbucks, Google, Vodafone, etc etc who manage to make fucking loads of money while also operating at minimal profit this avoiding / evading large amounts of tax.

Wow, you are so brave for bringing forward such a revolutionary and controversial statement. I hope you will bless us with your intelligence at every opportunity you get.

Helping others. There is no limit to that.

I bet Bill Gates has a hard time finding enough qualified people to wisely manage the money he is giving away.

For example, if he has someone in charge of spending money on medical research, don't you think there is a point (a few billion) where they just don't know what else to spend money on? I mean, there are only so many medical researchers in the whole world.

Of course you can always just throw money away/at people, but it won't do any good. "Give a man a fish" vs. "teach a man to fish."

No, this isn't really true. The NIH's budget is 30 billion a year, and that funding is already incredibly competitive. Private universities, other government sources such as NSF, NASA, and DoE, and private institutions then in addition spend an amount that dwarfs that number. On top of all of that, the last 6 years have seen cuts, layoffs, and an enormous amount of work go unfunded in the life sciences.

Only about 16% of proposed NIH grants alone are funded each year- we can immediately see from that data that funding all NIH grants in just one year would probably take well over $100 billion.

The life scientists of the U.S. could find a use for Bill Gate's entire fortune in a few years. Not that dropping $80 billion on across the board medical research wouldn't be incredibly, enormously beneficial, but the infrastructure and manpower in the medical sciences are there to be able to absorb it and put it to use.

Have you talked to anyone who's been funded by the Gates Foundation? I have. It's rigorous, and very data-intensive. Whatever imaginary cache of research out there that might exist probably couldn't be qualified-up for a GF funding process.

I've done grant funding as well. People say they want money, but the minute you give them a deadline, they're gone, and they can't collect even the merest evidence required for due diligence.

Thank you for an informative comment. That is mind-blowing. At first I was skeptical, but I was able to confirm the $30 billion number [1].

That is about twice as much as NASA [2].

[1] http://www.nih.gov/about/budget.htm

[2] http://en.wikipedia.org/wiki/Budget_of_NASA#Annual_budget.2C...

If they magically funded all of the grants then there wouldn't be enough scientists to do all the work; there's nothing to say that you can't put in more than one proposal at a time.

Edit: well, of course everyone's salaries would go up since there would be so much more demand and no extra supply, but I doubt they could go up that much all at once; most of the money would still go unspent.

> Of course you can always just throw money away/at people, but it won't do any good. "Give a man a fish" vs. "teach a man to fish."

Yes, throwing fish at the poorest is the right thing to do. Malnourished children grow with diminished intellectual capacity. Then it is too late to teach them to fish.

Even in the modern world, starvation and low nutrition among schoolchildren is a major problem. https://www.ted.com/talks/ann_cooper_talks_school_lunches

Better teach the people not to produce children if they can't nourish them.

What a horrible, ignorant, comment.

Look at the recent US drought - were people wrong to have had children ten years ago? How were they to know that some areas of the US were going to be in severe multi-year drought?

Why is it different if you change "the US" to some other part of the world?

Have a read of "Too Poor To Farm" which explains some of the problems very poor people face, and explains some of the reasons why very poor people have children.

http://www.irinnews.org/report/94947/lesotho-weather-extreme...

The best way to do that is to educate young girls so they grow up into women who don't want to just pump out kids. It happened in the West, it can work elsewhere.

Unfortunately, in a lot of places there is a regression in this area.

> I bet Bill Gates has a hard time finding enough qualified people to wisely manage the money he is giving away.

That's hardly surprising. Managing money is investing, and wise investment requires a lot of skills, market information, and connections. There's only so many good investors out there.

I don't think managing a charity successfully and making savvy investment decisions are similar. Investing outside of angel investing/accelerators is fairly close to a zero sum game, and there are many more excellent opportunities from a societal investment perspective in charities than in investing.

Not investing as a whole is a zero sum game but specifically increased levels of investing sophistication and savvy.

In general due to fees investing is considered to be a negative sum game.

Diminishing returns does apply to some problems, but there are enough researchers in most areas to justify investing hundreds of millions or billions, and for that matter you can fund research grants for students to expand the number of people in that field.

The thing is money is the best drug known to man. One you get big numbers you never want it to stop. You just keep fighting for bigger and bigger numbers.

That's a bug. Consider fixing it.

Maybe Notch's perspective is that Minecraft as an IP is worth more than that. He can probably ride it out for the next couple decades with sequels or other monetization techniques.

Why take the big payment today when you can have the bigger payment on-going? Especially if you want to continue to make it your life's work. Look at some gaming stars from the past. John Romero didn't "make us his bitch" with his post iD offerings. Carmack's career seemed pretty down until his recent excitement with Oculus and even that happened while he was playing with space companies on the side. Even with all his brains and cred, he's now just a Facebook employee and his boss is a 20-something php coder.

A lot of gaming luminaries are often one-trick ponies. Its difficult to get lightning to strike twice. Smart money is keeping a tight hold of the IP that made you successful. Notch has seen what happens when you lose your IP and maybe he doesn't like it.

It's probably very smart of Notch to retain what he can regarding the Minecraft IP. What a lot of people seem to miss is that Minecraft isn't only about the "official" game.

It's a platform for development. More importantly, it's a platform that lets many people create things in 3D without having to bother with OpenGL/etc.

If you think I'm talking about pixel art or other static things, or if you think I'm talking about mods, I suggest watching these, which are all stock minecraft only.

* SimCity reimplemented in vanilla redstone & in-game command blocks *

http://www.jigarbov.net/simburbia-map-release/

* FVDisco's Cake Defense, a wave-attack game with many features. (everything FVDisco has done is outstanding...) *

https://www.youtube.com/watch?v=OwxD3axvgt4

* Razul, an older scripted rpg adventure game with command-block based quest system *

http://www.planetminecraft.com/project/razul---skyrim-inspir...

* Hypixel, a many-thousand player custom server that works with the stock client *

https://www.youtube.com/watch?v=k1BdSq8fMtY

--

The larger ideas that Minecraft is effectively a prototype for is basically the VR environments we've wished for over the last several decades. We achieved a lot of the 3D graphics capability (and are ok with sound, the few cases where the developer bothers), but interactivity is just as important for immersion. Not being able to interact with things that are not part of the "intended" experience can rip you right out of your suspension of disbelief.

This interactivity is what Minecraft gets right, and we've barely scratched the surface.

Minecraft : interactive 3D voxel games :: NCSA Mosaic : hypertext documents

It seems to me that the one-trick pony nature of the gaming business is more reason to take a big payout upfront. $2bn is fuck you money for the rest of your life. Who knows if the Minecraft IP will even be worth anything a few years from now?

Not when you have a hit as big as Minecraft. Kids growing up with Minecraft today will still be playing it nostalgically 30-40 years from now.

Yes, but Minecraft is not a lego - you do not need to buy newer sets. You buy it once and you own infinity of it. The only reason to buy another Minecraft is when new incompatible hardware becomes the norm.

> Yes, but Minecraft is not a lego - you do not need to buy newer sets.

Minecraft the game does not generate a continuous income after the initial sales, but recently they started an official multiplayer server hosting service (called "Minecraft realms"). You can buy a private server for $10 per month.

Given that Minecraft is played by a lot of kids whose parents whose parents or themselves do not know how to set up a server, I think this is a very viable monetization strategy, albeit launched a bit late.

Of course, there have been 3rd party commercial hosting services for Minecraft for a long time, but again, it's not something kids and their parents go after.

Hell, I know how to set up a server but I am considering hiring a Minecraft realm for the winter months, just because it is less hassle than setting up a server and the price is reasonable.

And who knows if Minecraft will grow in complexity and interconnection to the point where instead of having websites, every company has a Minecraft world? Who knows if Minecraft won't become the online world from Snow Crash?

In my own personal case though, the second I had anything worth $2 million I would sell out and retire. I just want to be able to feed myself and shelter myself and I'll gladly do independent research the rest of my life.

MineCraft has sold over 50 million copies at $7 (pocket edition) to $27 (PC edition) each, plus merchandise. Even after expenses, I'm pretty sure Notch's personal cut is in the nine-figure range. Easily enough to be independent for the rest of his life.

(I'm with you on "sell out at $2 million" in general, though. For the area I want to live in, which I coincidentally already live in, that'll last a lifetime.)

41 year old you might regret 31 year old you taking you out of the game. A lot of the type-A people who dominate the coding and business worlds might not be happy with just one big paycheck while they watch their peers continue on.

I can't imagine Bill Gates selling MS in '86. He wanted to build an empire.

My familiarity with notch is only superficial: we met in person 3 times, once before MC got big, once when it was starting to get big, and once after it was already big. Before that we used to hang out in the same game dev irc/forum circles and chatted on occasion there.

I won't pretend that makes me really know him as a person but I can say I've never got the impression he cares much about empire and/or massive ego building. I would venture a guess that by now he accepted the fact that MC was his one massive strike and that he likely won't have another one & would be content to live his life of luxury with that.

I think Notch just want to have fun, and build fun stuff.

I don't think he wants to build an empire, but he wants the freedom to do his own thing, with people that he cares about (the mojangstas).

He's made public comments to that effect as well, just not quite as bluntly.. But close.

It is important to remember that PV calculations are pretty easy to do, and help bring the FU money back to reality.

For instance if Minecraft sells 10,000 copies a day (as someone else said) that is $100m a year. Assuming other platforms add up to the same that is $200m a year. At an 8% interest rate that is worth $2.5 billion assuming it continues forever. It is worth $1.3 billion if it only happens for 10 years.

Hey, I said that with the 10,000 (PC) copies. (With the 10,000 number that hasn’t changed for years I mostly wanted to make clear that, while not exactly growing, Mojang doesn’t seem to shrink, either.)

But Mojang’s revenue and profit are public: http://www.polygon.com/2014/3/20/5531046/minecraft-mojang-pr...

$322M revenue, $128M profit. However, I’m not sure whether that profit number is the correct one to assess the value of the company and IP.

If I understand this potential acquisition correctly, Notch seems to want to sell everything (company and IP). I think the company is currently set up so that Mojang pays Notch licensing fees for the Minecraft IP. That could potentially be a large part of their revenue. If Microsoft acquires company and IP they obviously don’t have to pay those licensing fees anymore.

Mojang is only a 40 person company, labour has to be their by far biggest cost, and I really don’t think a 40 person software company (that doesn’t really do any marketing, by the way) costs nearly $200M to run per year.

I didn't mean to say "this is how you value Mojang". I just meant to say "here is how you get numbers that make $2 billion not just FU money".

Determining the value of IP is incredibly complex and something I would love to avoid having to do.

Let's say their employees are paid $100k each per year (average). And let's say they cost $50k work workplace/perks/... each.

Then let's say they lose 10%-15% of revenue in licencing cost (apple, ms, google, xbox, and let's say some facebook/twitter campaigns and software).

So then you'd have $322m * 0.85 - 40 * $150k - 128m (notch's pay) = 139m profit.

That looks reasonably close on the money. So you'd expect net income to be about $265 million.

8% interest on present cash is high.

Anyhow, the easy rule of thumb for converting between income streams and present value is simply "multiply by 20". In rough numbers, it $1/year is worth $20.

How do you come up with the factor of 20? On a smaller scape, if you try to buy a website or an online-business (say, on Flippa), oftentimes the sales price is around 2-3x yearly income. For my own business, I'd love to see a factor of 20, but I can't see how anyone would offer that much money.

Consider the difference between income and profit. For the present value calculation, you would need to use the profit, not the revenue. (After all, once you take the payout, you don't have any expenses.)

Both 8% and 5% are fairly standard.

You chose one, I chose the other.

The much much bigger problem is how many years?

... and in a month a new game comes out and minecrafters realise this is what minecraft should have been all along ...

A few dozen "this is what minecraft" should have been games have come out in the last few years. Nothing has the staying power of Minecraft.

Eh, can you name one? There are several "Minecraft could have done this as well" games, I guess, but nothing really stands out as anything like a spiritual successor, or whatever. There's Terraria, but that's not quite the same either is it.

Well, that certainly goes in the "potential risks" section, but it hasn't happened yet, and it's been five years.

my mom bought me a stuffed animal from Walmart, and I know more people who play it on the xbox in real life... and I know at least 150 pc gamers personally through heading up VTC's gaming club. I'm pretty sure the business angle here is marketing leverage to sell more xboxes.

Adding a zero (or two) to your personal net worth may still change minds about many things.

If I remember correctly Notch is a partial owner of Mojang, so he might have some say in this.

Please correct me if I'm wrong.