The most expensive lottery ticket in the world

http://blogs.reuters.com/felix-salmon/2014/04/21/the-most-expensive-lottery-ticket-in-the-world/

by barretts • 12 years ago

202 94 12 years ago

blogs.reuters.com

lutusp2• 12 years ago

Punch line: "In the world of startups, the only winning move is not to play."

The reviewer says the book gives the required substance behind the punch line, of that I have no doubt, but this reminds me of the "War Games" (1983) punch line, almost word for word.

akavi• 12 years ago

Perhaps because it's intended to reference War Games?

lutusp2• 12 years ago

Yes, possibly, but (a) most young readers won't remember the original, and (2) no obvious thematic connection. But possibly -- besides, it's a great punch line. I regard this as a good example of recycling (if that's what it is). :)

gpcz• 12 years ago

I'd recommend that anyone interested in startups download a capitalization table (Google "cap table download" without the quotes for a variety of choices), and just play with different scenarios. Plug in rounds from companies on Crunchbase (not just super-successful ones) and see what kind of money the founders are slated to get. See what happens if you don't meet expectations and go through a down round. It's better to see these possibilities before you're financially and emotionally invested in a company going through one of them.

If you still believe your startup idea is a slam-dunk after seeing how horrible things can get if there's any hiccup in the process, then you're ready to take an investor's time to give a proposal.

_Adam2• 12 years ago

"No Exit makes it very clear that the life of a startup founder is a miserable one, and that engineers are invariably happier when they’re working for a big company."

Any book that tries to tell me how I'm supposed to be happy is automatically placed in the same category as religious texts.

webwright• 12 years ago

Really? Do you think people are good at selecting a path that makes them happy? I don't. Related: https://twitter.com/webwright/status/451934942357098496

I'm not supporting this particular book, but there is plenty of great research about what correlates to happiness. Here's a great post to read that links to tons of research on the topic: http://lesswrong.com/lw/4su/how_to_be_happy/

_Adam2• 12 years ago

That depends how you define happiness. For some people, simply pursuing their dream makes them the happiest. It may be painful, miserable, and ultimately end in failure, but for a certain set of people that's the only way they can live.

001sky2• 12 years ago

The interesting part of the analysis is the way this is mitigated; social status displays are often re-source irrational. The issue is whether or not the latter can be capitalized upon. All evidence points to "yes".

pyrrhotech4• 12 years ago

I wish some of these articles would acknowledge that you have to be a top 10-20% engineer to work for Google. A lot of us are doing ok, but don't have the talent or work-ethic or what have you to do quite that well. Regardless, great article. I personally wouldn't consider starting a company until after I was financially independent and could bootstrap it with extra money that I wouldn't care to lose. And I'd never spend more than a normal workweek at it.

For those who say that doesn't work, my Grandad started his first company at age 58 with an excess million dollars out of 5 million he had saved from working a normal job until that point. He's never worked more than 40 hours per week in his life, and 25 years later, his company is a great success, turning 1 million into 60MM and having a lot of fun doing it.

sbov• 12 years ago

Note that for $5 million, at 58, assuming he started working at 18, is an average of $125,000 in savings per year between 1949 and 1989. I'm not sure I would call that a normal job. It's far above the median even now, much less back in the 50's, 60's, 70's and 80's.

jarrett• 12 years ago

It does make me interested to hear what, if any, investments this person made. Inflation means $5M was worth more in 1949 than in 1989, but investments can (and often do) beat inflation. So, assuming one invests successfully, one could work in 1949 for the 1949 equivalent of today's $125,000, continue on until 1989 with inflation-adjusted pay but no raises, and end up with $5M in 1989. In any case, that would, as you say, be very different from a normal job.

barce3• 12 years ago

You're forgetting interest so it isn't a straight calculation like above. :)

te_platt• 12 years ago

Buying a modest amount of real estate in parts of California 40 - 50 years ago could very easily get you over $5 million today.

pyrrhotech4• 12 years ago

he was a lawyer in a small town. Growing up in the great depression, he was extremely frugal for most of his life. Even today he lives in the same modest house he bought 47 years ago and drives a 10 year old cadillac. He also bought a lot of real estate and is a buy and hold stock investor. He wasn't just saving in his piggy bank.

gibybo2• 12 years ago

While you are correct that it would require pretty above median savings, it wouldn't require anywhere near $125,000 back then. Interest is a very powerful force over 40 years.

From 1949 to 1989, the stock market averaged 7.2% annually. Saving and investing only $20,000 per year for those years would net you about $5m at the end.

r00fus• 12 years ago

Good point, if you're not at a startup, you're not necessarily going to be working for Google as an alternative. What if your alternative is to work for a stodgy non-tech firm because you're invested in a given domain (i.e., automotive, legal, biotech)?

The whole article is full of trollish comments like "There might be a generous paycheck in getting stuck on the Google bus for the next decade, but there sure ain’t any glory in it." - not all, or even most, Googlers take the bus. There is excitement and potential success stories even in large organizations like Google.

HN is best to ignore this kind of flame bait posting.

pjkundert• 12 years ago

Not everyone is cut out for high risk R&D. News at 11:00.

...

Ok, sorry if that was subtle. If only a minority of the population values risky behavior such as software/hardware R&D highly, and someone in the vast majority who cannot understand how anyone with the requisite skill-set wouldn't be happier earning a high, stable salary at Google writes an article implying that the group in question must be delusional or maybe insane, don't you think a bit of sarcasm is in order?

-- someone who turned down a Google offer to do R&D

gms• 12 years ago

Good thing people don't take the advice in the last sentence, otherwise there would be no Google for said well-paid engineers.

beat2• 12 years ago

One problem with the article is that is blurs the line between "founder" and "startup employee". The majority of startup employees are getting a paycheck on top of options - paycheck at lower rates than mainstream corporate work, but with a potential payoff if it succeeds. And if it fails, it's not hard for an experienced programmer to find another job.

Founders are a breed apart from programmers. If someone has that drive to create their own business from scratch, telling them that it's economically foolish to do so is like telling Van Gogh that he'd be better off painting houses - technically true, but irrelevant to the motives of the artist.

codystebbins• 12 years ago

Very true. Most of the people I know working at startups, myself included, had no delusions of becoming Mark Zuckerberg or winning it big. Startups can provide a great quality of life with good benefits for employees and the big pay off can be a very small motivation for some.

beat2• 12 years ago

Given the Kafkaesque horror that is most mainstream big-business programming/ops work, startups represent a significant quality-of-life improvement for programmers - an improvement worth trading some salary for. Maximizing salary while minimizing risk isn't and shouldn't be the only motivation for us. I could go on about how stupid mainstream economics and journalism are about this, but why bother?

NhanH2• 12 years ago

It seems quite obvious that if you're aiming to optimize your happiness, putting yourself into a stressful situation is never a good idea, even when you disregard the financial aspect.

As one of those young kids who've seen a lot of articles (and even HN's comments) in similar vein of this one, I'd love to see a rebuttal for those types of articles.

I know that everyone is supposed to have their own reasons, but not all of us is eloquent enough to put it into words. And some great writing to set our mind straight (in one way or another) would be great :-)

ryanjshaw• 12 years ago

I don't know any great writing on this topic, but:

It seems quite obvious that if you're aiming to optimize your happiness, putting yourself into a stressful situation is never a good idea, even when you disregard the financial aspect.

I disagree. For many people, to find your global optimum you have to first traverse several local minima.

In this thread there are going to be stories about people who worked a Normal Job (TM) for years and started a successful business with the savings, stories about people who bootstrapped a startup before puberty and kept it small, stories about people countering the other people with their amazing story, and stories following all kinds of patterns. And unless you're extremely fortunate, all of these stories have one thing in common: they are most likely nothing like your life and ultimately you won't be able to completely integrate them into your life story. Otherwise you'd be the one writing the story and not asking the questions ;)

While you can, and should, learn from others, at the end of the day you really do have to find your own reason to do the more difficult thing each day. If you're waiting for some magic words that are going to unlock your full potential and turn you into Time's next Person of the Year, you'll wait forever. I find it better, as I plan my day, to just think of laying on my deathbed someday, and asking myself if I'll respect the decisions I make today. (And no, the answer is not always "yes". That's life.)

NhanH2• 12 years ago

Just to clarify my stance first: I don't think of "optimizing happiness" should be a life goal. I think happiness should be a byproduct that you got when achieving your life goal.

And I agree with everything you said. For the sentence that you quote, my point was, for certain people who try to always feel content (in other words, aiming for local maxima) in their life, without explicitly having any other life goal of unlocking their potential or making X million dollars or starting a big company, putting themselves through a local minima for a long stretch of time would be hard to pay off. That was just meant to be an observation of an extreme case (optimizing happiness/your feeling of happiness at expense of everything else, as opposed to striving for a goal at expense of your own feeling). Since most of us would be somewhere in between rather than either extremes, we would have to go through local minima at varying degrees.

I'm not waiting for some magic words to start my marathon - but I just thought that there would be some magic words that will help me justify the run to others, and to myself (also serve as enhancement to make you run faster!).

fishtoaster• 12 years ago

"engineers are invariably happier when they’re working for a big company"

I stopped reading right there* . I've worked for a few big companies, a small lifestyle company, and a few startups, and I'm invariably happiest at a small company.

Financially, the book may be right: I'm not going to get rich as a startup employee, and I'll probably fail if I start my own. However, the thing I do for more than half my waking hours for the duration of my working life is something I enjoy. I get up reasonably interested in going to work, and go home feeling like I'm building something.

You can phrase it cynically if you want. You can say I'm deluded; that I'm building someone else's dream; that I could be making more money doing something else.

But I enjoy what I do, and I make enough money to support myself, so don't tell me I'd invariably be happier at a big company. I've been down that road, and it's the only time since middle school I ever considered not being a programmer.

* Ok, so I actually continued reading, but you get the point.

ZenPro6• 12 years ago

You < *Engineers (plural)

dang• 12 years ago

Fishtoaster was reacting to the ludicrous use of "invariably", so his or her counterexample was quite sufficient, and beautifully written to boot.

JoshTriplett• 12 years ago

I agree, that's definitely not a reasonable generalization, and "invariably" is ridiculous. Some engineers enjoy a big company more, some prefer a startup or small company, some are happy anywhere, and some are never happy.

praxulus• 12 years ago

Would it be different if you were a founder rather than an employee? I believe the article was talking about your boss, not you.

bicknergseng• 12 years ago

The whole article was filled with absurd assumptions and claims:

"...engineers tend to do quite well in structured environments, where there are clear problems to solve, and relatively badly in the chaos of a startup, where the most important skills are non-engineering ones, like being able to attract talent and investors."

What does that have to do with engineers? People tend to do well in structured environments with clear problems to solve, regardless of their background or profession. It's a small subset of people who can survive in unstructured envs, and an even smaller one that is willing to submit themselves to that masochism. If anything I would surmise that engineers have a higher percentage of that subset, but I don't have any more data than the article's writer to prove that.

"A few big-name angels and VCs can do OK for themselves, but in aggregate the industry of investing in startups does not make money."

No data presented to back that up, either.

I know it's an editorial, but if the writer wants to make such broad sweeping generalizations, he should have at least a little evidence or data to back those claims up or it's just wasted text.

bradleyjg• 12 years ago

No data presented to back that up, either.

It's a book review, not wikipedia. If you want to see the argument made in full, buy the book.

logfromblammo• 12 years ago

Size of the company is irrelevant to me. I have found that I am happiest when I have but a single boss, and that person not only knows how to adapt people to the business and vice versa, but is also capable at least of accurately evaluating my work, even if he or she is unable to do what I do.

The worst places I have worked invariably involve a muddied chain of command, where the people with the authority to direct or redirect my work have no understanding of how or when they should do so. Often, those people are simultaneously in competition with you while you are expected to cooperate with them.

Small company size is not a guarantee of sane and rational management. Large size is not a guarantee that your bosses will be idiots. But a subunit of a larger company can fail for a much longer period of time before becoming unable to continue, so that may be what causes the perceived differential.

A dysfunctional small company fails fast. A dysfunctional unit of a large company could limp along for decades without changing. On the other side, a great small company could just never take off, and a great unit of a large company could be axed from the executive suite without any apparent reason.

vkjv• 12 years ago

Yep, the whole point is that it's different for different people. I've also worked for big and small companies. Personally, I'm happier at bigger companies--and not because of money. Small companies have few people and therefore more responsibilities. Some people like that kind of breadth, but I'd rather never have to write a line of deployment code. Being at a bigger company means that I can focus on my niche and the exact type of code that I enjoy.

mathattack• 12 years ago

I think the author made two mistakes:

- Assuming that engineers aren't creative, and want to work on well defined problems with well defined inputs.

- Confused our parents generation of engineers with ours.

The skills of building a good technology can also be applied to building a good company. This is one reason (intellectual signalling is another) that MBA programs like to admit engineers.

tunesmith• 12 years ago

That argument is a step away from arguing that incubator companies are taking advantage of the younger tech generation. Along the lines of... by selling the illusion of likely startup success, and offering support in startups and entrepreneurship, incubators basically decrease their own investment variance and increase their own odds of successful investment performance, while the younger founders will usually (outside of the rare big winners) lose out on a few years of earning potential in a temporarily hot economy.

clamprecht• 12 years ago

I think one factor at play is that even if your startup fails, you can almost always fall back on a developer job, which usually pays very well. So yeah it's like playing a lottery, but not spending your last dollar on the ticket.

Even more, having startup experience on your resume is usually a good thing, even if the startup failed.

danielweber• 12 years ago

having startup experience on your resume is usually a good thing, even if the startup failed.

Yes and no. I've got crap given to me for having "co-founder" on my resume because they thought I was just biding my time until I could restart my company.[1]

Meanwhile, having relocated since college, the network in my geographical area is small.

[1] If you want to say "well you dodged a bullet," great, thanks, but given all the stupid things so many employers do while hiring, I'd rather have a job than the satisfaction of knowing that they made a mistake by not hiring me. I can't eat satisfaction.

ZenPro6• 12 years ago

Is it? Possibly for a small sub-set of developers or those in SV/SF but for the majority of people having a startup on their CV is suspicious at worst and meh at best.

I would much rather have McKinsey or Deloitte on my CV.

UK-AL2• 12 years ago

The vast vast majority of developers work in small businesses or start ups.

Hiring managers who do that pretty much exclude the majority of developers.

josephschmoe• 12 years ago

Startups are a double-or-nothing game with 2-3 months between wins and 0 months between losses. Everybody either just won or just restarted.

srlake• 12 years ago

As a startup-founder (Thalmic, YC w13), I wholeheartedly disagree with the viewpoint of the author here.

Is the pressure high, and the chance of success low? Certainly.

Was the expected value of taking a Google salary rather than the risk-weighted value of starting a company higher? Again, yes.

But the missing piece here is that sometimes it's not about the money, the perks, the hours. I love doing what I'm doing today, regardless of all of the above. My two co-founders here would say the same. We get to choose exactly who we want to work with, what we want to work on, and get a real shot at having an impact on people's lives all over the world, through the products we create.

If we didn't have entrepreneurs taking this irrational leap, we wouldn't have the Google's of the world to employ those who choose the other path.

ZenPro6• 12 years ago

To be fair, the article is not wrong in a lot of what it says. In actual fact, a close reading of VC/Angel writing including Paul Graham pretty much correlate exactly with the author has posited especially regarding VC investment.

In the UK, angels can claim 50% tax relief on any investment followed by claiming back up to 100% of any losses (minus the tax relief). Investing is almost risk free.

Just find yourself some entrepreneurs, sell them the dream, supply ramen noodles and repeat x 10 until one of them hits.

barretts• 12 years ago

Felix conveniently assumes a startup has a binary outcome: Immense riches or ignominious failure. In reality, there's a spectrum. I know a lot of people who sold their company for $1 million to $10 million. Depending on how the cap tables work, this is usually not life-changing money but enough to average out to a really decent salary for 1-5 years of work, plus a job at a good company at the end of the ride.

diego• 12 years ago

What the author does not seem to understand is that some people actually enjoy doing hard things. 35,755 people signed up for the Boston Marathon yesterday, and paid for it. Why pay to run 26 miles when you could be having a lazy Sunday breakfast instead?

I practice a form of rock climbing called bouldering. It's about walking up to a big boulder and climbing it along the hardest possible line you can. Hikers sometimes point out that "you could have just walked up on the other side."

Yes, doing a startup is hard. It can also be fun (probably type II or type III fun if you ask me). A climber named Kevin Jorgeson explained it quite well during a talk he gave at Google:

https://www.youtube.com/watch?v=Vsl4evw0a7Q

scrabble• 12 years ago

Why pay to run 26 miles when you can run 26 miles for free? I think it's generally for the prestige of being able to say, "I ran the Boston Marathon."

baddox• 12 years ago

I would guess that's it's not primarily about prestige, except perhaps for the top level competitors. A well-known marathon gives a concrete deadline for people to train toward. The fact that thousands of people are running at the same time gives a feeling of solidarity.

pyrrhotech4• 12 years ago

Why go to the bar and pay $6 for a beer that costs 75 cents at the grocery store? Same concept I think

barce3• 12 years ago

I still think a lottery ticket is still has far worse ROI, than the YCombinator application and startup process.

Let's say you pony up rent for your YCombinator startup and are paying about $2400 / month + utilities for 3 months. Let's say you get your food & other necessities costs to $80 / week.

That's an $8160 investment.

What you get back are the weekly dinners with great speakers. The connections you make should be worth at least $150k if your startup fails and you have to use that connection to get a job. I'm assuming a markup in your value as an employee for just getting into YCombinator.

$8160 and you can make 20% - 35% more than your peers if it fails.

$8160 in lottery tickets will pretty much get you zero if you fail.

thatthatis• 12 years ago

If you remove tail returns and just at the financial outcomes, the roi of YC and the roi of a lottery ticket start looking very similar.

The labor market signal (plus network) is another thing entirely, YC alum is probably more valuable than Harvard or MIT in certain circles so if you just look at it as an $8k credentialing, it is an easy thing to justify.

For a first time YC founder, you get both. For a second time YC founder you would only have the financial return traits.

bcbrown• 12 years ago

You're forgetting the opportunity cost of forgoing the salary of working for an existing company. Call that 10k/month for three months, and now your costs are closer to 40k.

barce3• 12 years ago

You still end up ahead since you can day trade yourself into a higher income bracket.

thesteamboat• 12 years ago

It is my impression[0] that a YCombinator startup is a cut above other startups along a variety of criteria (they receive more support in general, they are pre-vetted). It may be perfectly reasonable[1] that forming a startup has lower expected value than a lottery ticket, but conditioned on acceptance to YCombinator, a startup has positive expectation.

[0] For reference I am not currently in SF/Silicon Valley, but my brother is, as are many of my friends.

[1] I present this as a hypothetical, I have not thought about this enough to have an estimation of the value of a `generic' startup.

conradev• 12 years ago

Having only read the article and not the entire book, I am curious to see if the author explores the motivations behind starting a company. The article makes it sound like money and fame are assumed to be the only motivations.

I feel that entrepreneurship is fundamentally about controlling one's own future.

smacktoward2• 12 years ago

I'd sympathize with this point more for startups that aren't on the "take money from VCs, sell company to BigCo" model, which puts your future pretty squarely in the hands of the VCs and BigCo execs.

JonoBB• 12 years ago

There is a massive gulf between "winning the lottery ticket" and failing.

There are many many many startups (or whatever term you want to give them) that create a good living for the founder, and perhaps a few employees as well. Not all startups have to (read: the vat majority don't) get VP funding et-al in order to be enjoyable and provide an viable level of income.

iddav2• 12 years ago

Well, I'm an engineer who quit my cushy job at Google to go it alone. So, I suppose this makes me an idiot.

I think the big question the author fails to address is: Do these deluded engineers end up regretting their decisions in the long-term?

I think most people in the startup community understand that failure-- and the misery that comes with it-- comes with the territory, and the key is whether you can learn with each failure. And I would argue that there's no better to place to learn than an environment where your income depends directly on whether you're genuinely solving a problem for people (the people who "run the lottery" are your target customers, not the VCs, by the way). In my case, I've failed at over a dozen projects (some prior to my time at Google) while finding a few moderately successful ones along the way, and I'm continuing to fail, learn, and grow.

And I like to think that this better understanding of harsh realities of how the world actually works gained from doing a startup-- whether you succeed or fail, whether you end up at a small company or a large company-- is a return on your investment that continues to serve you for the rest of your career.

smattiso• 12 years ago

I work at Google now. What made you decide to leave?

iddav2• 12 years ago

It's been my plan since high school to figure out a way to work for myself eventually, though I was very grateful for my job at Google. After the initial 2 years, my work at Google began feeling more routine (I chose to stay in the same team, and I was getting better at my job at the cost of learning fewer new things). I left after 4 years after deciding that I had learned enough and saved enough to move on to what I've viewed as the next stage.

riggins2• 12 years ago

I made this comment above, but I would love to see the success stats for ex-google engineers.

If the failure rate for all start-ups is 90%, I'm betting its lower for start-ups founded by ex-google engineers.

cousin_it2• 12 years ago

Is this true?

The Silicon Valley trade is also pretty close to being zero-sum. Even on a purely financial basis, if you add up all the profits from successful investments, they barely cover the losses on all the unsuccessful ones. A few big-name angels and VCs can do OK for themselves, but in aggregate the industry of investing in startups does not make money.

If it's true, that will strongly influence my opinion of the startup scene.

mhartl• 12 years ago

According to Fred Wilson of Union Square Ventures, ten-year venture capital returns lag major stock indices:

http://avc.com/2013/02/venture-capital-returns/

That's pretty bad, and it's even worse when you consider that VC is a lot riskier than buying an index fund.

cousin_it2• 12 years ago

That's very informative, thanks!

rwmj• 12 years ago

I'll tell you from experience there is a fate worse than your startup failing. That is that your startup bumps along neither making it big nor having the good grace to go out of business. You just have the monthly stress of making payroll with no end in sight. (Thankfully I'm out of that and working for The Man, and never happier)

edj• 12 years ago

I'm always deeply suspicious of "statistics" that claim startups only have a 1 in 10 chance of success. From the article: "if 90% of startups fail, it simply can’t be the case that all of the startups they know are succeeding."

But it looks like that may not be so far from the truth: "About three-quarters of venture-backed firms in the U.S. don't return investors' capital, according to recent research by Shikhar Ghosh, a senior lecturer at Harvard Business School."[1]

1: http://blogs.reuters.com/felix-salmon/2014/04/21/the-most-ex...

riggins2• 12 years ago

The thing these aggregate statistic ignore are the quality of the founders.

Let me put it concretely.

When Sebastian Thrun decided to launch Udacity I suspect the chance of failure was less then 90%. OTOH, I have 2 non-technical friends who managed to raise money to develop 2 more social networking app. I think the chance of failure there is easily 90%.

So maybe another way to put it is 'don't fool yourself'.

If you have Thrun-esque talent, start a company. If you don't, think twice, then think a third time for good measure before starting a company.

Twirrim• 12 years ago

Fred Wilson of Union Square Ventures has blogged that even with their impressive track record, it loosely correlates to a 1/3rd rule for them. Of their investments: 1/3rd lose money, 1/3rd (mostly) break even, 1/3rd make profit.

dalai• 12 years ago

And how many fail before they get any backing but after sucking a lot of money? The 1 in 10 chance of success could actually be optimistic.

Anyway I think the 90% failure rate might be based on this: http://www.wamda.com/2013/02/90-percent-of-tech-startups-fai...

funkyy• 12 years ago

Some people prefer to aim at the moon rather than look at the ground. The issue with this article is that even if 5% startups will succeed - thats OK. Lets create 20 startups over next 20-30 years then. Because once you succeed - you are way ahead of anything that could happen in your life when just simply working for big company. Yeah, its hard work. Yeah, you will fail few times. So what? At least you learn invaluable things. Author seems to be missing the point... Not everyone is afraid of failure and not everyone wants good pay every month. Some people wants to fulfill their ego, needs, dreams and the price tag over this is well above living on the edge of poverty. If author is happy to live in safety of his job and security - great. But dont judge, or try to teach people that dont want to. Its very close minded by him to do so.

zmitri2• 12 years ago

Great response. Unfortunately as I get older, I see more and more people falling into the way of thinking he's outlined which is brutal.

chrisbennet• 12 years ago

Let me see, going to college and coming out with an insane amount of debt - to work as a writer. That sounds like pretty big gamble. Very, very few writers "make it big".

soup10• 12 years ago

Start a business, not a startup. You will have much more control and independence if you aren't desperate for funding and growth, not to mention you are much more likely to succeed. Startups(defined as extremely risky, high reward, growth oriented businesses) are not a very rational option for most people unless you have circumstances that mitigate the risk/stress. Also don't start yet another social/cloud/education/trendy thing here business, start something allows you to leverage your unique set of skills/knowledge/interests and experience.

Also, give up early! When you don't think something isn't worth pursuing anymore, figure out why, and don't be afraid to give up and try something else. Not every project is going to be successful and there is no shame in failing unless you have badly/unrealistically set expectations to the people you work with, in which case they are going to be rightly pissed.

Futurebot• 12 years ago

The book and article might be 100% right, but it still doesn't always matter. There are other reasons people start their own companies:

1) If you're after personal autonomy, no amount of working at a great company can give you that.

2) Not everyone has the skills to work at the Googles of the world. A mediocre engineer can still make a great business owner, though.

3) Not everyone has the right demeanor to work for other people.

4) Some people have worked for other companies, and decided it simply wasn't for them. Maybe they realized they were not paid anywhere close to enough for the value they created, or they simply couldn't take the politics.

5) The chance to make your bones (largely) on your own is a powerful thing.

It is often irrational from a short-to-medium-term financial perspective, and the Lottery Effect is sometimes at play, no question. The reasons above won't just go away, though.

marshray• 12 years ago

A 10% chance of succeeding at a startup is far better than that of the average Journalism school graduate's chance of making a career writing Opinion columns for a major press outlet like Reuters.

tomblomfield• 12 years ago

The Silicon Valley trade is also pretty close to being zero-sum... if you add up all the profits from successful investments, they barely cover the losses on all the unsuccessful ones

That's a very strange definition of "zero sum". The fact that VC investment is barely profitable does not mean the industry is zero-sum. There is the potential for huge value creation - the very opposite of zero-sum

http://en.wikipedia.org/wiki/Zero_sum

zmitri2• 12 years ago

As someone who started a company articles like this make no sense to me.

There's money-driven people everywhere, but if you want to get rich, your best bet isn't to start a company. Work at a hedge fund and work your way up. People makes millions a year. Way easier than starting something. That being said it's also soul sucking and absolutely mindless. Provides little value.

Perhaps there's more to starting company than ecosystem?

Starting company allows you to address a problem directly. Whether that addresses a real problem, or is a cash grab, depends on founders.

Most "good founders" do it because they want to make it real. That articles propagates some kind of wannabe culture as being the real value of starting a company. Which is so lame.

Life is short and starting your own company is way better than being an employee at a big company in my opinion. If you are young you are undervalued.

Obviously it's more nuanced then this comment and not everyone is in a position to start a company or work at a small company, and hell no is it a meritocracy, lots of problems, but damn, do your own thing.

lexcorvus• 12 years ago

The article exaggerates slightly, but based on my experience it's basically right. Alas.

cpks• 12 years ago

The most important thing in life is for life to have meaning. Trying to change the world -- even if you don't succeed -- does that. Trying to make adsense profits go up by 0.1% -- perhaps a bit less so.

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