The most expensive lottery ticket in the world
blogs.reuters.com
blogs.reuters.com
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.
The author posited that engineers in general are happier. Fishtoaster attempted to refute the claim by citing anecdotal personal evidence.
Admittedly invariably was a little strong but it was just figurative, not literal.
It's not as if everyone in tech works for a startup, though I'm sure it often seems that way from the valley. Most likely the vast majority of engineers do in fact work for large companies, so the hysterical tone of the article only makes sense if you think even that small fraction of the industry that works at startups is fooling themselves about what makes them happy.
Of course, the article also seems to believe that most startup founders are engineers, and I'm not sure that's at all true either.
it is a piece of prose that took some license with it's language. Also, the total number of words in the English language != the amount of synonyms for invariably.
By your own standard you are just as incorrect as the author the article. You have posted a bad, misleading or imprecise sentence to suggest the author has hundreds of thousands of words to choose from. He does not.
"...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.
It's a book review, not wikipedia. If you want to see the argument made in full, buy the book.
> The Silicon Valley trade is also pretty close to being zero-sum.
On it's face, that statement is inaccurate. The rest of the paragraph looks to argue that returns are estimated value zero, not that the system itself is "zero-sum." So now I don't know if it's the review that's bad or the book.
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.
- 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.
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:
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.
Anyways, him being a lawyer pretty much answers the issue. You don't usually call any professional job a 'normal job', and that clears it up. It's pretty likely that even then it took some high risk/high reward investments or some lucky real estate buys in the meantime to drive it up that much.
Which is not to disparage the achievement of saving $5mil pre-retirement (or even at retirement) age. It takes above average fiscal discipline and money management to do that even with above average income.
My original point was just that a compound interest savings account isn't that amazing. You have to do more than just sock some money into an account to pull it off.
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.
The BLS CPI calculator puts $20k in 1949 at $198,565.55 today.
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.
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.
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.
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 :-)
> 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.)
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!).
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.
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.
[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.
Any book that tries to tell me how I'm supposed to be happy is automatically placed in the same category as religious texts.
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/
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.
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.
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...
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.
Anyway I think the 90% failure rate might be based on this: http://www.wamda.com/2013/02/90-percent-of-tech-startups-fai...
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.
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.
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.
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
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.
If the failure rate for all start-ups is 90%, I'm betting its lower for start-ups founded by ex-google engineers.
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.
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.
I feel that entrepreneurship is fundamentally about controlling one's own future.
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.
Even more, 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.
I would much rather have McKinsey or Deloitte on my CV.
Hiring managers who do that pretty much exclude the majority of developers.
[citation needed]
By small business I assume you mean self employed within Ltd Companies (LLC) which are small businesses in name only for tax efficiency. So much so the Government is trying to ban the practice with the use of disguised employee declarations.
In my area, these are the biggest employers.
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.
Wow. That language is a bit uncalled for.
...
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