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This article is, for me, more proof of a general phenomenon that's happening recently - startups are no longer considered the best vehicle for hackers to become

by edanm 14y ago

This article is, for me, more proof of a general phenomenon that's happening recently - startups are no longer considered the best vehicle for hackers to become wealthy. Maybe it's just my own history and confirmation bias speaking here (recently switched from startups to a Consulting business). But lately, the whole "bootstrap" movement is getting much more popular around here. More and more, I'm seeing articles and comments from tptacek, patio11, and others talking about how programmers could make vastly more money, especially by doing freelancing. I think the message is starting to sink in - the kind of people who read this site can start very profitable businesses, make loads of cash, and do this without the high risk of startups. No chance of a working 5 years and then striking a goldmine of an exit, but much higher chance of working 5 years and putting aside large amounts of money. This pg article is a great one, and a very honest one too. To me it reflects the changing times, and the changing understanding of what a startup means. No longer, like in previous articles on wealth, is pg very clearly advocating that all hackers should be starting startups. This essay, to me, reads as a much more precise explanation of what someone can expect if they start a startup. And it makes it much clearer when people should not start a startup.

simonb 14y ago
It would be very interesting to see a breakdown of people (diss)agreeing with pg's thesis by hacker/maker vs. business person.
sayemm 14y ago
I agree, and it's also a direction that I'm personally headed (currently focused on freelancing/bootstrapping), but I also think it has more to do with the current recession more than anything. It's a really tough environment now and I think a lot of the innovation over the next few years is actually going to come from the big tech companies. Some of the best startup advice you'll ever get is by @yegg in "Paths to $5M for a startup founder": http://gabrielweinberg.com/blog/2010/06/paths-to-5m-for-a-startup-founder.html http://gabrielweinberg.com/blog/2010/06/paths-to-5m-for-a-st... No one ever becomes a great entrepreneur overnight and it's a fallacy to think that you could do a high-growth startup only when you're young and in your 20s (Jeff Bezos, Larry Ellison, Jim Clark, Mike Bloomberg all started their big companies in their 30s; Mark Cuban and Mark Pincus started their billion-dollar co's in their early 40s). I think it's wise to maintain a very long-term view of the startup game, and to take bigger risks gradually as you develop into a stronger entrepreneur. So, I think it's smart to prove yourself as a bootstrapped entrepreneur and make your first few million and be financially independent, and then be in a position to take big risks to work on a high-growth startup. Jim Clark, the greatest serial tech entrepreneur to date, started SGI when he was 37 and Netscape when he was 50. This is a long-term game.
nostrademons 14y ago
Interesting observation, but I'd extend it to posit that maybe there is no "best" vehicle for hackers to become wealthy. It depends on the particular options available to you, and your "best" strategy is simply to consider all the options and pick the ones that seem most promising. In an efficient market, eventually you'd expect that you'd be paid the same amount for equal amounts of value created. In today's low-capital, target-rich hacker environment, it seems like good hackers would eventually become indifferent to the particular corporate structure used, and would instead choose whatever corporate structure lets them work on the highest-impact problems. Sometimes that'll be a startup, sometimes it'll be a consulting firm, and sometimes it'll be employment at a large tech company. Personally, I'm a plain old employee of a large tech firm. I see some of the financials that patio11 posts, and I'm making significantly more than that (we're the same age). I'm not nearly as well-off as tptacek, thanks to Matasano's acquisition, but I have a few years to catch up. I see rumors posted to HN about engineers at large tech companies making outlandish amounts of money, and I'm making more than that, and yet the comments are all "Wow. This seems unbelievable, it can't be true." I also know coworkers that are rumored to have those multi-million-$ retention grants; I'm fairly certain they exist.
- edanm 14y ago
  (You work at Google if I remember correctly, right?) Your situation with your employer might be more uncommon throughout the rest of the world as you think. Silicon Valley has a huge shortage of good hackers, but the rest of the world isn't quite as programmer friendly as all that. It's still very good for programmers, but not as good as some posts would have you believe. In any case, you are of course correct that there is no single "best" vehicle for hackers to become wealthy. But 5 years ago, starting a startup was the only way I knew about or considered seriously. The same is true of some friends today. I'm just happy the word is out that: a) startups fail, a LOT, and b) there are other ways of making large sums of money, including just being a highly-compensated employee.
  - nostrademons 14y ago
    I suspect that that's because startups are the mostly highly-visible and well-publicized path to riches. The other ones are private, and usually if people don't have to reveal their wealth, they don't. I also think that this phenomena of people making a lot of money through non-startup means isn't new, it's that publicity of it is. I have a friend whose dad worked for Wells Fargo in the 70s and then struck off as an independent computer consultant for big enterprises in the 80s and 90s. I asked her how much she thought he made when she was growing up, and she was like "Somewhere between $300-500K/year." And now that all eyes are on Wall Street, people are realizing that fund managers have made multi-millions a year since at least the 1980s. In hindsight, I also think about some of my family friends who owned local businesses - muffler shops, auto-body repair - and they had nice houses and vacation cottages and boats and expensive cars too, so I wouldn't be surprised if they were making in the multi-hundred-K to few millions per year. It just takes The Millionaire Next Door for people to realize that. (Yes, I work at Google. My path is perhaps uncommon, but still very achievable for a lot of people, and I don't think that refutes my overall point.)

by edanm 14y ago

simonb 14y ago

It would be very interesting to see a breakdown of people (diss)agreeing with pg's thesis by hacker/maker vs. business person.

sayemm 14y ago

I agree, and it's also a direction that I'm personally headed (currently focused on freelancing/bootstrapping), but I also think it has more to do with the current recession more than anything. It's a really tough environment now and I think a lot of the innovation over the next few years is actually going to come from the big tech companies. Some of the best startup advice you'll ever get is by @yegg in "Paths to $5M for a startup founder": http://gabrielweinberg.com/blog/2010/06/paths-to-5m-for-a-startup-founder.html http://gabrielweinberg.com/blog/2010/06/paths-to-5m-for-a-st... No one ever becomes a great entrepreneur overnight and it's a fallacy to think that you could do a high-growth startup only when you're young and in your 20s (Jeff Bezos, Larry Ellison, Jim Clark, Mike Bloomberg all started their big companies in their 30s; Mark Cuban and Mark Pincus started their billion-dollar co's in their early 40s). I think it's wise to maintain a very long-term view of the startup game, and to take bigger risks gradually as you develop into a stronger entrepreneur. So, I think it's smart to prove yourself as a bootstrapped entrepreneur and make your first few million and be financially independent, and then be in a position to take big risks to work on a high-growth startup. Jim Clark, the greatest serial tech entrepreneur to date, started SGI when he was 37 and Netscape when he was 50. This is a long-term game.

nostrademons 14y ago

Interesting observation, but I'd extend it to posit that maybe there is no "best" vehicle for hackers to become wealthy. It depends on the particular options available to you, and your "best" strategy is simply to consider all the options and pick the ones that seem most promising. In an efficient market, eventually you'd expect that you'd be paid the same amount for equal amounts of value created. In today's low-capital, target-rich hacker environment, it seems like good hackers would eventually become indifferent to the particular corporate structure used, and would instead choose whatever corporate structure lets them work on the highest-impact problems. Sometimes that'll be a startup, sometimes it'll be a consulting firm, and sometimes it'll be employment at a large tech company. Personally, I'm a plain old employee of a large tech firm. I see some of the financials that patio11 posts, and I'm making significantly more than that (we're the same age). I'm not nearly as well-off as tptacek, thanks to Matasano's acquisition, but I have a few years to catch up. I see rumors posted to HN about engineers at large tech companies making outlandish amounts of money, and I'm making more than that, and yet the comments are all "Wow. This seems unbelievable, it can't be true." I also know coworkers that are rumored to have those multi-million-$ retention grants; I'm fairly certain they exist.

edanm 14y ago
(You work at Google if I remember correctly, right?) Your situation with your employer might be more uncommon throughout the rest of the world as you think. Silicon Valley has a huge shortage of good hackers, but the rest of the world isn't quite as programmer friendly as all that. It's still very good for programmers, but not as good as some posts would have you believe. In any case, you are of course correct that there is no single "best" vehicle for hackers to become wealthy. But 5 years ago, starting a startup was the only way I knew about or considered seriously. The same is true of some friends today. I'm just happy the word is out that: a) startups fail, a LOT, and b) there are other ways of making large sums of money, including just being a highly-compensated employee.
- nostrademons 14y ago
  I suspect that that's because startups are the mostly highly-visible and well-publicized path to riches. The other ones are private, and usually if people don't have to reveal their wealth, they don't. I also think that this phenomena of people making a lot of money through non-startup means isn't new, it's that publicity of it is. I have a friend whose dad worked for Wells Fargo in the 70s and then struck off as an independent computer consultant for big enterprises in the 80s and 90s. I asked her how much she thought he made when she was growing up, and she was like "Somewhere between $300-500K/year." And now that all eyes are on Wall Street, people are realizing that fund managers have made multi-millions a year since at least the 1980s. In hindsight, I also think about some of my family friends who owned local businesses - muffler shops, auto-body repair - and they had nice houses and vacation cottages and boats and expensive cars too, so I wouldn't be surprised if they were making in the multi-hundred-K to few millions per year. It just takes The Millionaire Next Door for people to realize that. (Yes, I work at Google. My path is perhaps uncommon, but still very achievable for a lot of people, and I don't think that refutes my overall point.)