I love that this is the top story on HN. I only wish that PG got as much flack for his startup economics hype piece[1] and proposition to compress a lifetime's worth of work effort into four years.
I've not seen eye to eye with PG on everything he has written. But this particular essay is one of my favourites of his. PG laid out an upper bound, which he later clarifies:
"If $3 million a year seems high, remember that we're talking about the limit case: the case where you not only have zero leisure time but indeed work so hard that you endanger your health."
And his upper limit for hours worked was 2x that of a corporate employee. Taken literally, this could be 80 hours per week, or 16 hour days. PG is not advocating this lifestyle in his essay. He's saying that it's theoretically possible but at the cost of your good health. Arrington says to hell with your health: quit the whining and work through the pain. This is not an upper bound but in fact an average that he's trying to push.
That's why I despise the Arrington article but don't take issue with PG's.
Overall, I loved the "Wealth" essay. I do wonder though if Paul ever considers that the same thing he says about Bill Gates' success could also be said about his own.
"Bill Gates is a smart, determined, and hardworking man, but you need more than that to make as much money as he has. You also need to be very lucky."
Or perhaps PG thinks his personal success is based purely off his own brilliance with no helpful outside factors needed (i.e. competitor blunders, etc)? :)
Or perhaps PG thinks his personal success is based purely off his own brilliance with no helpful outside factors needed
He doesn't think that. Though he claims to have made good decisions and benefited from competitor blunders, he frequently refers to incidents that nearly sank the company, and acknowledges the good fortune that saved them and helped them to their very happy exit.
It's hard to come up with a good conditional probability, but just looking at the population ratios, the odds are close to the same: somewhere around 1 in 300 American households have net worth >$10m, and somewhere around 1 in 300 of those (close to 1 in 100,000 households) have net worth >$1b.
Just going by the fact that the wealth distribution is fat-tailed, the (stochastic) rate at which you obtain wealth must be roughly proportional to your current wealth. Otherwise, you'd expect an exponential decay in the wealth distribution.
Right. One has to factor into the assets that Microsoft had at the start the access to Bill Gates' dad, who was a highly successful lawyer active in technology.
Where would Microsoft's shrinkwrap sales strategy have been without legal advice?
His mother served on the same board of directors as the IBM CEO. Which is probably why the original licensing deal was even considered and why the they where not heavy handed in their contract negotiation.
Edit: In 1980, she discussed with John Opel, a fellow committee member who was the chairman of the International Business Machines Corporation," her son's company. "Mr. Opel, by some accounts, mentioned Mrs. Gates to other I.B.M. executives. A few weeks later, I.B.M. took a chance by hiring Microsoft, then a small software firm, to develop an operating system for its first personal computer."http://en.wikipedia.org/wiki/Mary_Maxwell_Gates
> His mother served on the same board of directors as the IBM CEO. Which is probably why the original licensing deal was even considered and why the they where not heavy handed in their contract negotiation
The first is probably true, I agree atleast. Your second point about them not being heavy handed because they knew Bill's mother I just can't see having any shred of truth.
IBM also made a sweetheart deal with Intel with no mother's involved.
The reason they made those deals has been stated many times over.
IBM was in a huge rush to ship and they needed an OS and CPU in a very bad way. They made those deals because that's what allowed them to ship.
Thanks for posting that. These little things are often not mentioned in the success stories we hear. Was Mrs. Gates' chat with Mr. Opel the sole cause of Microsoft's success? Of course not! But opening a few doors so early on is definitely a huge stroke of good fortune.
I see it as an experiment in thinking about leverage. If you minimized all the corporate office bullshit, leveraged your work to the max, AND worked hard on top of that, how much could you earn? The baseline becomes your work earnings WITH corp-bullshit, poor leverage, and lackluster effort, and then he extrapolates from that.
Leverage analogy: think schwerpunkt in blitzkrieg. If you amass all your tanks on one sector of the front and crush the opposing line there, then you will have more of an impact than if you spread the same force out over a wider area.
I think it applies to you as well. You are taking a risk(settling down on a lower monthly salary and time) which you had no real need to. If the start up flops you end up loosing money and time.
If this happens with 2 or 3 start ups you would have lost a lot of money and time.
Its only 11.43 hours a day if you work on weekends.
I am not advocating this!
I think if you are passionate about your work and work 8 hours a day (5 days a week) at full capacity you are productive enough. I can work more for one or two weeks if necessary (with the adrenalin boost stemming from a near by deadline) but not for much longer.
This is a great point that is often overlooked in the startup work environment. In 8 years of working at Startups I have only ever been in one place where anyone actually worked a solid 8 hours (everyone happened to pair-program there, which was one of the biggest contributors to this IMO). In most places people spend somewhere between 25-50% of their time surfing the web, reading personal email, hanging out in IRC rooms, socializing, etc. At this particular startup we really did none of that during the day. We all just felt really strongly about what we were working on, as a team we worked with the business guys to set a strong direction for the near-short term, and for four hours in the morning and four in the afternoon we worked. That was it. At 6 pm we left basically feeling punch-drunk for the mental exhaustion, and we went and followed our respective personal pursuits. The result?
The first place I'd worked where we launched on schedule with no overtime worked, with all of the features that business wanted for the big 1.0 (well, web-app 1.0... Really just a euphemism here).
My point is that while Arrington goes on about working insane hours, everyone always seems to overlook how much time in the office isn't actually productive for the product. I've been at places where people "worked" 16 hour days, at least 6 of which were spent playing Starcraft LAN games.
There is a big difference between PG and Arrington: PG states that you should be working for yourself. YC is set up to allow entrepreneurs to make money if they work hard and a big part of that is allowing a company to grow before being required to take VC money - allowing for a better valuation.
Sleeping under your desk with .05% equity? Probably a bad investment.
Sleeping under your desk for 45% equity? Well, roll the dice. At least you will get paid if it works.
Yes, 5 basis points is complete and utter crap. If you're going to work crazy hours, you might as well benefit from it proportionally. Gone are the days in tech when early employees would be rewarded for taking pay cuts in exchange for a higher amount of equity only to be completely diluted by each round of funding and the greediness of the MBA holding business founders.
He may just be the worst, suggesting kids should forgo a university education and going so far as to actually debate the "issue" whether an education is "worth it".
For some of these VC to make money, they have no need to see university degrees.
But they have their own interests in mind. And, lo and behold, most of them have university degrees.
I think you guys are being unduly cynical. Thiel recently debated this on NPR (http://intelligencesquaredus.org/index.php/past-debates/too-...) and I found him very convincing. He repeatedly talked about the concern of young people leaving college with 200k+ in debt -- which I think is very fair.
Thiel's also discussed elsewhere his frustration with the liberal politics of academia, which he sees as an impediment to libertarian policies gaining wider buy-in, so I think he might have motivations for attempting to undermine it besides pure concern for students' debt. (Though it's quite possible he earnestly dislikes academia for multiple, independent reasons.)
>He repeatedly talked about the concern of young people leaving college with 200k+ in debt -- which I think is very fair.
But is that a real problem? The statistics I've seen show that the proportion of students with more than $100,000 in debt is tiny. Most students graduate with ~$25,000 in debt. At that debt level, a college education is still a no-brainer.
I'd be willing to argue that if you've managed to rack up $200,000 in debt financing a college education, you've either 1) had extraordinarily bad luck or 2) made extraordinarily poor choices. Neither case is an indictment of the system at large.
At that debt level, a college education is still a no-brainer.
I would argue that depends heavily on which degree you're coming out with. I know a lot of communications and psychology majors who are working in food service 3-4 years after graduating, still living at home, and getting assistance from their regretful parents who cosigned on their student loans.
In the recent Thiel debate he said in fact that he supported undergrad education inclusive of non-technical degrees and was personally glad he did what he did. The larger question related to increasing price tag vs. decreasing value.
I'm sure some people might find Arrington very convincing as well (especially when he's recycling old jwz material). That may be why jwz has chosen to speak out.
Whether or not someone is convincing is moot if they're correct. That's what should be considered, not whether or not they're convincing. And every self-thinking analytical individual should be free to draw their own conclusions, after gathering as much data as possible.
I did find it ironic that one of Thiel's major complaints about education was the exclusivity of universities like Harvard given that his solution was a program that admitted a mere 20 would-be entrepreneurs.
jwz is right: be alert to the agendas of those who would influence you.
jwz is saying "follow the money". Thiel's drop-out scholarships are offered by his non-profit foundation.
There is no relation between the discord between the self interest of a VC and a startup employee on the one hand, and the possibility that Thiel is giving bad advice to people who he has no financial interest in.
I helped vet applications for 20 Under 20 and I'm serving as a mentor for the program, and based on my observations there's nothing cynical about it. As currently structured, the program isn't scalable, but they're just getting started. Let's see what they can do given a few years to get the ball rolling.
Sorry, I don't understand the link to 20 under 20. My understanding is that it is purely philanthropic. And I'm not sure I've ever heard of Thiel advocating what Arrington is advocating.
And honestly, is a university education not being worth it such an evil idea? Many of the best and brightest are autodidacts. From Ben Franklin to Thomas Edison to Bill Gates. Is it so horrible for Thiel to subsidize self-teachers?
In fact, my guess is that some people actually learn better on their own or outside of a university environment. Thiel is providing an innovative alternative to elite universities. He's very experimental in his philanthropy, so let's just see where this goes before giving him "flack."
I haven't heard his whole pitch, but the summary version I've heard doesn't seem crazy to me.
There are some fields where what really matters is talent and practical experience, not book learning. A lot of the best techies I know either have no degree or have it in something unrelated. The same is true of entrepreneurs and musicians, and probably other fields.
Consider also the absurdly rising cost of education:
"Median household income has grown by a factor of 6.5 in the past 40 years, but the cost of attending a state college has increased by a factor of 15 for in-state students and 24 for out-of-state students. The cost of attending a private college has increased by a factor of more than 13." -- http://www.economist.com/node/16960438
It's simple economics that if the cost of a good keeps increasing, it eventually won't be worth it for some purposes. It's not crazy to ask whether for certain people it's really worth it now. If your aim is entrepreneurship, you might be better off spending $150k and 4 years on starting businesses and learning on your own rather than giving that to Harvard.
Except those numbers simply are not true. Sticker price is nowhere close to actual price for college. No one leaves Harvard (or any Ivy League college) with $150K in debt. Either their families can easily afford to pay the price, or Harvard picks up almost all of the tab.
Also, um, not everyone is due to be an entrepreneur. Outside of the Twitter Bootstrap startup world, the entrepreneurs need well-educated professionals to do the work, and will pay for talent.
Mike (disclaimer: I know him) has done more startups than PG, and he did pretty much sleep under his desk for the first couple of years of Techcrunch (well, his desk was in his bedroom, and the Techcrunch "office" was the rest of his house) and has worked equally hard in the other startups he's done while I've known him. Including as a regular employee (that's how I met him - he worked at a startup I co-founded years ago).
So he's not a programmer. There are non-programmers that also work hard, you know.
One of us what? Hes just some dude that manged to strike it big and is now a VC.
The most common linking factor I can see between the HN poster and PG is entrepreneurial- and tech-focus. Whats so "one of us" about that? Nothing. Or is it the "hacker" group, that weird banner created when pg massaged a term with a loose meaning and appealing connotation into the something divorced from its original meaning that people now want to identify as?
We're on this website playing in his playground, one built to serve the needs of YC with advertizing, finding talent, and indoctrination. That's it; everything else is ancillary.
[1] http://www.paulgraham.com/wealth.html