5 ms·

> If someone is truly building a company into something they believe to be very valuable, the salary shouldn’t matter very much beyond helping them not worry ab

> If someone is truly building a company into something they believe to be very valuable, the salary shouldn’t matter very much beyond helping them not worry about bills while they grow the company. I don’t get that. If someone is truly sitting on a lottery ticket they believe to be valuable, salary still matters very much, because there’s significant irreducible risk that it doesn’t pay out. From a strictly financial perspective, it’s the same reason people don’t go all in on one company in the stock market, but rather diversify their portfolios: People maximize risk adjusted values rather than just expected values.

xwdv 5y ago
People diversify portfolios out of ignorance, not prudence. If you don’t have any special knowledge that lets you favor one company over another, then you might as well pick a bunch of them. But if you know one company is a good bet for specific reasons, it makes sense to lean your portfolio heavily on it. That is how you get so rich.
- isbvhodnvemrwvn 5y ago
  Or homeless.
  - xwdv 5y ago
    You can’t truly become rich without risking becoming homeless.
    - rfrey 5y ago
      Do you think Bill Gates or Jeff Bezos were ever at risk of becoming homeless?
- Thrymr 5y ago
  That is still doubling down on risk, so diversifying is indeed prudence. Even a good bet is not a sure bet, particularly if it has a chance of high payoff.
  - xwdv 5y ago
    Truly good bets are rare. When you find one, you should double down. If you do this every time, you will come out ahead most of the time, if they are truly good bets.
- winterplace 5y ago
  You are right but people are downvoting you lol. Do you have an email address or a contact method?
  - xwdv 5y ago
    Why would you ever want to contact me
streetcat1 5y ago
So this is not a 0-1 game. Most of the risk in a startup (if you dont take VC) is getting to 5K MRR - 10K MRR. Once there, the existential risk should be reduced to zero. If you take VC, than there is always an existential risk, since you are relying on new money being available for the next round. Also, you diversify in the stock market mainly due to information uncertainty. I.e. you do not have any control on different risks (economy, company corruption, etc.). However, in a startup you have much more control on the company future (again, if you DONT take VC money). If you take VC money, than the company is basically a privately traded company, and you assume all the risks of a public company.

xwdv 5y ago

People diversify portfolios out of ignorance, not prudence. If you don’t have any special knowledge that lets you favor one company over another, then you might as well pick a bunch of them. But if you know one company is a good bet for specific reasons, it makes sense to lean your portfolio heavily on it. That is how you get so rich.

isbvhodnvemrwvn 5y ago
Or homeless.
- xwdv 5y ago
  You can’t truly become rich without risking becoming homeless.
  - rfrey 5y ago
    Do you think Bill Gates or Jeff Bezos were ever at risk of becoming homeless?
Thrymr 5y ago
That is still doubling down on risk, so diversifying is indeed prudence. Even a good bet is not a sure bet, particularly if it has a chance of high payoff.
- xwdv 5y ago
  Truly good bets are rare. When you find one, you should double down. If you do this every time, you will come out ahead most of the time, if they are truly good bets.
winterplace 5y ago
You are right but people are downvoting you lol. Do you have an email address or a contact method?
- xwdv 5y ago
  Why would you ever want to contact me

streetcat1 5y ago

So this is not a 0-1 game. Most of the risk in a startup (if you dont take VC) is getting to 5K MRR - 10K MRR. Once there, the existential risk should be reduced to zero. If you take VC, than there is always an existential risk, since you are relying on new money being available for the next round. Also, you diversify in the stock market mainly due to information uncertainty. I.e. you do not have any control on different risks (economy, company corruption, etc.). However, in a startup you have much more control on the company future (again, if you DONT take VC money). If you take VC money, than the company is basically a privately traded company, and you assume all the risks of a public company.