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Comment by brudgers | Hacker News Reader

The thing is, building a billion dollar business doesn't require 1000x the work or entail 1000x the stress of building a million dollar one...even if it is more than 1000x less likely. It's also the case that only getting 5% of the way to a billion dollar business after six years is probably going to feel better than 20% of a million dollar business after two years...one comes with a reasonable paycheck, the other doesn't. Finally, the investors in your million dollar idea aren't going to be any less assholes, and probably moreso; your credit card and local bank are less ok with failure than angels and VC.

To put it another way, building a lifestyle business already requires a huge amount of luck and time on top of the hard work and stress. There are only so many trips to the plate and swinging for the fence may be the rationale option.

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The thing is, building a billion dollar business doesn't require 1000x the work or entail 1000x the stress of building a million dollar one

The key thing is, a billion dollars is nothing like 1000x better than a million. In fact, I suspect it's barely 1.1x better (and there's even some weak evidence from subjective wellbeing studies that it could be worse).

The St Petersburg Paradox[1] is a fun application of this fact — the fact that when you already have a LOT of money, even a LOT more money is pretty well useless to you.

[1] https://en.wikipedia.org/wiki/St._Petersburg_paradox

Do you really mean 1 million or, say, 10 million? I think there's a huge difference between these two. I haven't done the math, but I figure with the latter you could retire without thinking (much) about what you spend money on. From that point, yes a billion isn't much different.

Hmm. I agree there could be a difference between 1 million and 10 million. To an approximation, 1 million is not having to worry about housing, while 10 million is not having to worry about work.

But I'm not sure not having to worry about work would be good for everybody — me included. It could be good ... but I worry it could also leave one purposeless and adrift (I have some anecdotal evidence on this point).

Apologies for not looking up the literature to corroborate this (or not), but I should get back to the day job.

>> "...1 million is not having to worry about housing, while 10 million is not having to worry about work."

These numbers are low by a factor of ~2 unless you want to live in flyover country/a cheap country other than America.

I live in Cambridge, MA and I can't see any way that $10MM isn't enough to never worry about work again. At a first approximation, that's $300-350K in income without much risk of principal drawdown. It's surely enough for $250K in income (plus an inflation "raise" each year) forever.

If that's not enough to not worry about work, you might have lifestyle issues.

$1MM won't buy you a "really nice house" here, though, so I agree with you on that point, but it is still enough to not worry about housing if you choose "sufficient, not luxurious" level of housing.

As a counterpoint from the "flyover country" viewpoint, I live in rural Minnesota about 40 miles outside Minneapolis.

$1MM will buy you a very nice new construction 6,000+ sq ft house on about 20 or more acres of land with an outdoor pool most likely. And you're within commuting distance of major job markets. $10MM and you're living quite comfortably (probably spending weekends at your cabin on the lake) and certainly not needing to work, so maybe you spend your free time tending to your horses or alpacas.

Pretty sure you could not work even in SF or NYC with $10M in the bank.

I live in London, and ~$1.5m would be possible for me to retire with my current living costs that includes taking care of my son and the mortgage. $2m would be comfortable.

To just not have to worry about housing, even if I were to buy a house again today, would only take about $600k for a pretty standard 3 bedroom house w/garden even in London...

I read frequently that what was considered a "millionaire" the last century, inflation and cost of living adjusted would mean "someone with 7 millions or more in net worth"

Edit: they're the famous HNWI ("High Net Worth Individuals")

https://en.wikipedia.org/wiki/Millionaire

https://en.wikipedia.org/wiki/High-net-worth_individual

The famous "one percenters" are people with 8.4 million in net worth or more:

"The 1 percent threshold for net worth in the Fed data was nearly $8.4 million"

Source: http://economix.blogs.nytimes.com/2012/01/17/measuring-the-t...

http://www.nytimes.com/2012/01/15/business/the-1-percent-pai...

From https://news.ycombinator.com/item?id=7257696

After buying a nice power boat for week long cruises, a nice turbo prop for quick private travel, and that summer cabin in Colorado, 10,000,000 doesn't go as far as you might think. Especially if you like to travel well.

Then don't buy things with such poor value propositions? 4% interest on $10,000,000 is $400k per year. If you can't live off that I feel sorry for you.

Guess you'll have to suck it up and fly first class.

There was a redditor who explained the difference between various levels of wealth, from his real life experience dealing with rich people:

https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_i...

There seems to be a pretty big difference between 10m and 1b.

You don't build a billion dollar business to cash out and retire. You would likely end up investing in new businesses and continue from there.

In that perspective, a billion is exactly a thousand times better than a million. Even more so, perhaps, because it enables you to never have to worry about losing your money and going broke, which you could easily do with a million or even ten.

The paradox shows that capping the pot at eight bucks and limiting the tosses to three won't make the payoff better for the player. The no limits game has more positive outcomes.

That's a problem for small businesses, the individual owner usually has to keep playing because the smallness makes them integral to operations. Cashing out and walking away is rare, maybe they can negotiate some reasonable buy out over a few years...but targets insure that's not really a walking away right away. On the other hand, business makes it likely that the owner is replaceable and makes the opportunity to step into their operational roles attractive.

"But why would I ever want to walk away from my business? It is my life's work."

Why then would you make it small?

Seems to me you missed the point.

If you try to make a billion dollar business, you're more likely to fail completely and end up with nothing. If you go in with more reasonable expectations and a more sustainable approach, you're more likely to be successful, whether the end result is a million dollar business or a billion dollar one.

Starting off with the attitude of "a billion or nothing" makes you more likely to fail to accomplish anything.

I didn't miss the point. I just happen not to agree with it 100%, by which I mean that building any sort of business that just survives tends to be incredibly hard work and high risk, and even then most don't build long term value or throw off six figure salaries year in and out. 37 Signals is still a unicorn, just not in the VC sense. That's why another 36 similar companies don't immediately leap to mind.

The quantum step in risk is from wage worker to self-employee, and two year's toil with no net income for a little thing makes less sense than for a big thing. The article pretends that little things are sure things. They aren't.

There are many, many, many businesses that do several millions or tens of millions in revenue and are happy doing that. The reason they're hard to name is because they aren't nearly as famous at the the billion dollar business.

You're also still ignoring the point the article makes about the chances of success. Going for a billion dollar business often forces you to make decisions that sacrifice your ability to succeed with a smaller business. Even if the work and stress were the same, I'd take a 1-in-10 chance at $10M over a 1-in-10000 chance at $1B any day.

The odds of a $10,000,000 business are also approximately zero, not 1:10 or even 1:1000. That's what the article ignores. The important choice is starting something or not. The bigger the business the more numerous the possible beneficial outcomes. A billion dollar business can 1.2% fail at $12,000,000.

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