7 ms·

I'm wondering if there is a research about which percentile of these two groups became rich: People who started a company vs People who worked for Tech compan

I'm wondering if there is a research about which percentile of these two groups became rich: People who started a company vs People who worked for Tech companies.

tomhoward 3y ago
Unless you're very early (and/or very lucky), you can't get "rich" (i.e., can choose never to work again and can invest in many other things) as an employee (though of course a highly-paid employee can become very well off and comfortable). Yes you need to be lucky to get super-rich as a founder too, but you have a lot more control, i.e., you make the primary decisions that determine whether the company will make good products that people will use/buy.
- sahila 3y ago
  While agreed the chances are still low, if you joined Tesla or Nvidia in the last 10 years and especially before 2020, you very well and likely are rich if you're still working at either and kept all your stock. Hell if you joined Facebook last year and got in when the stock was around 100, your initial equity grant just 5x.
  - tomhoward 3y ago
    I edited the parenthesised part of the first sentence from "and very lucky" to "and/or very lucky" to make allowances for your objection. And sure, you can always point out exceptions. The real point is that it's misguided to try and compare percentages of tech company employees with percentages of founders; they're very different things. Of course, out of all the founders of all the companies, a relatively tiny percentage will be vastly rich. And out of all the employees of all the tech companies, most will be quite wealthy and comfortable, and a small percentage will be vastly rich. But that doesn't tell you anything about what is the most reliable path for any given individual to get vastly rich; it entirely depends on whether you're the kind of person you are how well you can learn how to build successful products and companies.
  - deleted 3y ago
    [deleted]
  - screye 3y ago
    You could have been investing in Nvidia the whole time. Decision inertia means that employees often don't sell vested stock, and end up being lucky. Similarly, external investors aren't willing to put 30-50% of their networth into one bet and therefore miss out on the kind of luck that can set them up for life. There is nothing that a lowly engineer at Tesla or Nvidia knows, that can't be found out by an external investor. They are operating in the same information landscape, but different outcomes when they give into decision inertia. It's not about joining Tesla or Nvidia early. It's about betting on them.
    - logifail 3y ago
      > It's not about joining Tesla or Nvidia early. It's about betting on them. It's also possible to bet on Tesla/Nvidia and lose. Badly.
      - screye 3y ago
        Exactly. every Nvidia/Tesla employee who became a millionaire recently CHOSE to hold onto their stocks after the vesting period. That was a bet. If they hadn't made the bet and sold stocks as soon as they vested, then the returns wouldn't have been as incredible.
  - candiodari 3y ago
    Tesla has a VERY bad reputation on that front, as does SpaceX.
- munificent 3y ago
  I live in Seattle. There are plenty of early Microsoft hires around here who are "fuck you money" rich.
- naniwaduni 3y ago
  How rich do you insist on being? The bar to "can choose never to work again" is surprisingly low, it just requires a high savings rate which is quite achievable in this line of work.
  - tomhoward 3y ago
    In the context of this article we're talking about the difference between the kind of rich you become from founding a hugely successful ("unicorn?") tech company, vs working hard for a salary for years and saving hard. It's more a qualitative thing than a specific number of dollars saved from a salary. I'm well aware that the definition of rich can be very different in other contexts. I'm talking about the context of this article.
  - vundercind 3y ago
    “Never work again” money is crazy-high for younger folks (like, not already close to qualifying for Medicare) in the US, on account of the costs and financial risks of our healthcare system. Most of the FIRE bloggers who bother to account for this—like MMM—have a (perhaps implicit) fallback plan of returning to work somewhere with decent health insurance if they or a family member becomes very sick, but that’s quite a gamble. (Never mind that a bunch of those sorts have jobs and couldn’t remain comfortably “retired” without them—god I really hate that part of the blogosphere, “look it’s so easy you dumb idiot” but then you start reading between the lines and realize how much of it’s just a bit)
    - toast0 3y ago
      > “Never work again” money is crazy-high for younger folks (like, not already close to qualifying for Medicare) in the US, on account of the costs and financial risks of our healthcare system. Exchange plans are fine enough, and like, they're not that cheap, but they're also not that expensive either. Depending on how much you make from investments on your never have to work again horde, you may be able to qualify for rate subsidies, and then it's even less expensive. In my county, if I were 64 years old, assigned male at birth, I'm looking at about $17,000/year for a Blue Cross Bronze plan (less costly options available), with $9,200 out of pocket max. Budgeting $26,000/year for healthcare means less than $1 M should cover you for life (assume 3% perpetual withdrawal rate). Rates are lower for younger people, but budgeting based on current costs for the oldest people should help the numbers work. Double the budget if you have a spouse; do some math if you have kids you need to cover until they become independent. Definitely make sure you work until you have earned Medicare eligibility, cause it'll be handy when you reach that age. Is $1-2 M crazy-high? Kind of, but depending on what your annual withdrawal rate target was, maybe you can just say if you've got enough to pull $100,000/year, you're good on healthcare too. Hopefully most years you won't hit the out of pocket max.
- cmrdporcupine 3y ago
  Even very early these days won't get you much. Just a bit of a lump sum you could apply to your 401k/RRSP or whatever and inch you ahead by 5-10 years on retirement. If you got it early enough in your life (20s, 30s) that it can gain interest. VCs and founders are writing stock option agreements these days with very low ownership stakes for even very early employees. Back in the early y2ks, and late 90s, yes, you could get rich and be up and out if you were lucky and played your cards right. Those days are done.
  - ojbyrne 3y ago
    That whole extended ZIRP thing wasn’t great for interest on savings.
- adrianN 3y ago
  A SF engineer pulling something like 300k can definitely retire before the age of 60.
  - ojbyrne 3y ago
    Many of them might be on their second or third layoff by 50.
- lupire 3y ago
  What is "rich"? There are tens of not hundreds of thousands of people who could retire comfortably after working at Google, Facebook, Apple, MSFT for a decade during their growth years. How many startup founders can do that? Sure, becoming a billionaire is a different story but who cares?
- deleted 3y ago
  [deleted]
takinola 3y ago
My guess is that it is much easier to get rich from working at a tech company and rising through the ranks. Being a FANG middle manager for a couple of years and managing your money well should put you in a very comfortable position. However, if you want to be private island rich, you need to do your own startup.
- ttul 3y ago
  Certainly in my own circle, people who were fortunate enough to work at FAANG during the right window of time became comfortably rich. Many of my own investors just worked as engineers at Microsoft for the right decade and are worth tens of millions. They worked really hard and sacrificed a lot, but they got paid every step of the way. Predicting which big tech company will do well enough in future to give you that big stock reward over time is a big gamble, but certainly a smaller gamble than doing a startup. I know plenty of people who have joined half a dozen startups, none of which yielded any gain. And many entrepreneurs who worked super hard many times and have nothing to show for it but scar tissue. Whatever you do, the best advice is to ensure you are enjoying the journey. Don’t waste your life just to be rich. That path nearly always yields a Pyrrhic victory.
rguzman 3y ago
it really depends on what you mean by rich: the surest path to end up with $2-5M over ~10 years is job at ~FAANG, do it well to get promoted, and manage your savings/investments well. that path is very unlikely to get you to $10-100M in the same 10 years, and starting a startup seems to be one of the best ways to do that.
- ilrwbwrkhv 3y ago
  You forget the higher up you go in these companies, the politics get nasty. Not many people have the appetite for that.
  - lupire 3y ago
    You don't need to be a higher up; you just need to be a good cog.
- Hydraulix989 3y ago
  Senior engineer (E5) is enough to get you $2-5M over 10 years. That's terminal cog level.
  - ojbyrne 3y ago
    According to levels.fyi, E5 at Google gets you $385k TC annually. If you save a third of that (which is not easy) for 10 years you get to approximately $1.3 million. Maybe your investments get you above $2 million, but it would really depend on what decade that was. If you had the Great Recession in the middle of that, not so great. If you think it is easy to save more than a third of your income, remember you’ll have a federal marginal tax rate of 35% or higher, will probably have to work onsite in a HCOL state, and unless you’re lucky enough to live in WA, a high state income tax. Yes you can shield some of your income via 401ks and Roths, but for the former you’re going to get taxed on withdrawal, and for the latter you get penalized if you touch it before you’re 59.5. Now if you’re dual cogs with no kids, maybe. If you do have kids, you’re not retiring until long after ten years.
    - 3y ago
alexchantavy 3y ago
Not research, but here's this popular Dan Luu essay https://danluu.com/startup-tradeoffs/ https://danluu.com/startup-tradeoffs/

I'm wondering if there is a research about which percentile of these two groups became rich: People who started a company vs People who worked for Tech companies.

tomhoward 3y ago

Unless you're very early (and/or very lucky), you can't get "rich" (i.e., can choose never to work again and can invest in many other things) as an employee (though of course a highly-paid employee can become very well off and comfortable). Yes you need to be lucky to get super-rich as a founder too, but you have a lot more control, i.e., you make the primary decisions that determine whether the company will make good products that people will use/buy.

sahila 3y ago
While agreed the chances are still low, if you joined Tesla or Nvidia in the last 10 years and especially before 2020, you very well and likely are rich if you're still working at either and kept all your stock. Hell if you joined Facebook last year and got in when the stock was around 100, your initial equity grant just 5x.
- tomhoward 3y ago
  I edited the parenthesised part of the first sentence from "and very lucky" to "and/or very lucky" to make allowances for your objection. And sure, you can always point out exceptions. The real point is that it's misguided to try and compare percentages of tech company employees with percentages of founders; they're very different things. Of course, out of all the founders of all the companies, a relatively tiny percentage will be vastly rich. And out of all the employees of all the tech companies, most will be quite wealthy and comfortable, and a small percentage will be vastly rich. But that doesn't tell you anything about what is the most reliable path for any given individual to get vastly rich; it entirely depends on whether you're the kind of person you are how well you can learn how to build successful products and companies.
- deleted 3y ago
  [deleted]
- screye 3y ago
  You could have been investing in Nvidia the whole time. Decision inertia means that employees often don't sell vested stock, and end up being lucky. Similarly, external investors aren't willing to put 30-50% of their networth into one bet and therefore miss out on the kind of luck that can set them up for life. There is nothing that a lowly engineer at Tesla or Nvidia knows, that can't be found out by an external investor. They are operating in the same information landscape, but different outcomes when they give into decision inertia. It's not about joining Tesla or Nvidia early. It's about betting on them.
  - logifail 3y ago
    > It's not about joining Tesla or Nvidia early. It's about betting on them. It's also possible to bet on Tesla/Nvidia and lose. Badly.
    - screye 3y ago
      Exactly. every Nvidia/Tesla employee who became a millionaire recently CHOSE to hold onto their stocks after the vesting period. That was a bet. If they hadn't made the bet and sold stocks as soon as they vested, then the returns wouldn't have been as incredible.
- candiodari 3y ago
  Tesla has a VERY bad reputation on that front, as does SpaceX.
munificent 3y ago
I live in Seattle. There are plenty of early Microsoft hires around here who are "fuck you money" rich.
naniwaduni 3y ago
How rich do you insist on being? The bar to "can choose never to work again" is surprisingly low, it just requires a high savings rate which is quite achievable in this line of work.
- tomhoward 3y ago
  In the context of this article we're talking about the difference between the kind of rich you become from founding a hugely successful ("unicorn?") tech company, vs working hard for a salary for years and saving hard. It's more a qualitative thing than a specific number of dollars saved from a salary. I'm well aware that the definition of rich can be very different in other contexts. I'm talking about the context of this article.
- vundercind 3y ago
  “Never work again” money is crazy-high for younger folks (like, not already close to qualifying for Medicare) in the US, on account of the costs and financial risks of our healthcare system. Most of the FIRE bloggers who bother to account for this—like MMM—have a (perhaps implicit) fallback plan of returning to work somewhere with decent health insurance if they or a family member becomes very sick, but that’s quite a gamble. (Never mind that a bunch of those sorts have jobs and couldn’t remain comfortably “retired” without them—god I really hate that part of the blogosphere, “look it’s so easy you dumb idiot” but then you start reading between the lines and realize how much of it’s just a bit)
  - toast0 3y ago
    > “Never work again” money is crazy-high for younger folks (like, not already close to qualifying for Medicare) in the US, on account of the costs and financial risks of our healthcare system. Exchange plans are fine enough, and like, they're not that cheap, but they're also not that expensive either. Depending on how much you make from investments on your never have to work again horde, you may be able to qualify for rate subsidies, and then it's even less expensive. In my county, if I were 64 years old, assigned male at birth, I'm looking at about $17,000/year for a Blue Cross Bronze plan (less costly options available), with $9,200 out of pocket max. Budgeting $26,000/year for healthcare means less than $1 M should cover you for life (assume 3% perpetual withdrawal rate). Rates are lower for younger people, but budgeting based on current costs for the oldest people should help the numbers work. Double the budget if you have a spouse; do some math if you have kids you need to cover until they become independent. Definitely make sure you work until you have earned Medicare eligibility, cause it'll be handy when you reach that age. Is $1-2 M crazy-high? Kind of, but depending on what your annual withdrawal rate target was, maybe you can just say if you've got enough to pull $100,000/year, you're good on healthcare too. Hopefully most years you won't hit the out of pocket max.
cmrdporcupine 3y ago
Even very early these days won't get you much. Just a bit of a lump sum you could apply to your 401k/RRSP or whatever and inch you ahead by 5-10 years on retirement. If you got it early enough in your life (20s, 30s) that it can gain interest. VCs and founders are writing stock option agreements these days with very low ownership stakes for even very early employees. Back in the early y2ks, and late 90s, yes, you could get rich and be up and out if you were lucky and played your cards right. Those days are done.
- ojbyrne 3y ago
  That whole extended ZIRP thing wasn’t great for interest on savings.
adrianN 3y ago
A SF engineer pulling something like 300k can definitely retire before the age of 60.
- ojbyrne 3y ago
  Many of them might be on their second or third layoff by 50.
lupire 3y ago
What is "rich"? There are tens of not hundreds of thousands of people who could retire comfortably after working at Google, Facebook, Apple, MSFT for a decade during their growth years. How many startup founders can do that? Sure, becoming a billionaire is a different story but who cares?
deleted 3y ago
[deleted]

takinola 3y ago

My guess is that it is much easier to get rich from working at a tech company and rising through the ranks. Being a FANG middle manager for a couple of years and managing your money well should put you in a very comfortable position. However, if you want to be private island rich, you need to do your own startup.

ttul 3y ago
Certainly in my own circle, people who were fortunate enough to work at FAANG during the right window of time became comfortably rich. Many of my own investors just worked as engineers at Microsoft for the right decade and are worth tens of millions. They worked really hard and sacrificed a lot, but they got paid every step of the way. Predicting which big tech company will do well enough in future to give you that big stock reward over time is a big gamble, but certainly a smaller gamble than doing a startup. I know plenty of people who have joined half a dozen startups, none of which yielded any gain. And many entrepreneurs who worked super hard many times and have nothing to show for it but scar tissue. Whatever you do, the best advice is to ensure you are enjoying the journey. Don’t waste your life just to be rich. That path nearly always yields a Pyrrhic victory.

rguzman 3y ago

it really depends on what you mean by rich: the surest path to end up with $2-5M over ~10 years is job at ~FAANG, do it well to get promoted, and manage your savings/investments well. that path is very unlikely to get you to $10-100M in the same 10 years, and starting a startup seems to be one of the best ways to do that.

ilrwbwrkhv 3y ago
You forget the higher up you go in these companies, the politics get nasty. Not many people have the appetite for that.
- lupire 3y ago
  You don't need to be a higher up; you just need to be a good cog.
Hydraulix989 3y ago
Senior engineer (E5) is enough to get you $2-5M over 10 years. That's terminal cog level.
- ojbyrne 3y ago
  According to levels.fyi, E5 at Google gets you $385k TC annually. If you save a third of that (which is not easy) for 10 years you get to approximately $1.3 million. Maybe your investments get you above $2 million, but it would really depend on what decade that was. If you had the Great Recession in the middle of that, not so great. If you think it is easy to save more than a third of your income, remember you’ll have a federal marginal tax rate of 35% or higher, will probably have to work onsite in a HCOL state, and unless you’re lucky enough to live in WA, a high state income tax. Yes you can shield some of your income via 401ks and Roths, but for the former you’re going to get taxed on withdrawal, and for the latter you get penalized if you touch it before you’re 59.5. Now if you’re dual cogs with no kids, maybe. If you do have kids, you’re not retiring until long after ten years.
  - 3y ago

alexchantavy 3y ago

Not research, but here's this popular Dan Luu essay https://danluu.com/startup-tradeoffs/ https://danluu.com/startup-tradeoffs/