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Paul, this says more about the people that you know than anything else. Nearly all the people I know who got rich from software were at Microsoft during the IPO

by spolsky 17y ago

Paul, this says more about the people that you know than anything else. Nearly all the people I know who got rich from software were at Microsoft during the IPO. That doesn't prove much. Tim Gill made close to $1b from Quark. Jim Goodnight probably made $5b from SAS. John Sall made $2b from SAS. Bill Gates made $50b from Microsoft. Technically, Microsoft took VC, but that was just a favor to give David Marquardt bragging rights... it was a nominal investment right before the IPO. I could go on all day if you count $100m as rich, but we're just counting swans, here, not really proving anything

spolsky 17y ago
Now that I think about it, there's a strong selection bias here. Private companies are, well, private, and don't get very much news coverage. Many super-profitable private software companies that never took investment are undercovered by the media. 90% of the successful software companies that I meet at conferences like Business of Software have never come within three states of a venture capitalist. Rather than looking at how many rich people took investments, it's more meaningful, in deciding whether or not to take VC, to look at the outcomes of founders who take VC. Those outcomes are not disputed... about half fail outright, the rest mostly continue as zombies, a tiny number make the founders a million or two, and a very very very tiny number become big enough hits to make the founders truly wealthy.
- netsp 17y ago
  I think you have to look at this comparatively though. The number of rich people is by definition small. To make a comparison worth anything at all is a problem. While you might or might not like thinking of VCs as a filter, they do perform this function to an extent. If your non-VC sample consists of mostly VC rejects, that's a problem.
brc 17y ago
It really depends on your definition of rich. Most salaried employees would consider themselves rich with a couple of million in the bank. Many private company owners have this level of wealth, and many wouldn't desire a higher level of success. I guess if you want 'have my own jet' levels of wealth, sooner or later you'll need someone else's money to help, even if it is just to secure their contacts/expertise. It's probably neither complete causation, neither unlinked correlation, but rather a more symbiotic relationship. People on the way to great wealth pick up investors. Sometimes they are cause, sometimes they are effect.
pg 17y ago
I wouldn't have written this if the rich people I knew were mostly from one company I'd worked at. Because of YC I've met a wide cross section of people who got rich from software. From literally hundreds of different sources. (I'm sorry I forgot about you; between you and Wolfram I know 2 who didn't take investment.)
- johnnybgoode 17y ago
  Like Joel said, isn't there still some selection bias there? I would think that even the people you've met because of YC are the ones who are connected to the outside funding "world" in some way.
  - pg 17y ago
    I don't see where. I've met them (a) because they come as investors to Demo Day, (b) because they're famous founders we've invited to speak at YC or Startup School, or (c) at events like conferences, Foo Camp, etc. Where would there be selection bias in any of those things?
    - menloparkbum 17y ago
      Perhaps it's more of a negative selection bias. I know 9 people who have made $5-$10M from software companies they have founded without taking outside investment. Most of the money was made by selling out to a bigger company, although one guy still is doing his thing. They don't go to conferences, aren't famous and don't invest in startups. Maybe that amount doesn't count as being rich, though.

by spolsky 17y ago

spolsky 17y ago

Now that I think about it, there's a strong selection bias here. Private companies are, well, private, and don't get very much news coverage. Many super-profitable private software companies that never took investment are undercovered by the media. 90% of the successful software companies that I meet at conferences like Business of Software have never come within three states of a venture capitalist. Rather than looking at how many rich people took investments, it's more meaningful, in deciding whether or not to take VC, to look at the outcomes of founders who take VC. Those outcomes are not disputed... about half fail outright, the rest mostly continue as zombies, a tiny number make the founders a million or two, and a very very very tiny number become big enough hits to make the founders truly wealthy.

netsp 17y ago
I think you have to look at this comparatively though. The number of rich people is by definition small. To make a comparison worth anything at all is a problem. While you might or might not like thinking of VCs as a filter, they do perform this function to an extent. If your non-VC sample consists of mostly VC rejects, that's a problem.

brc 17y ago

It really depends on your definition of rich. Most salaried employees would consider themselves rich with a couple of million in the bank. Many private company owners have this level of wealth, and many wouldn't desire a higher level of success. I guess if you want 'have my own jet' levels of wealth, sooner or later you'll need someone else's money to help, even if it is just to secure their contacts/expertise. It's probably neither complete causation, neither unlinked correlation, but rather a more symbiotic relationship. People on the way to great wealth pick up investors. Sometimes they are cause, sometimes they are effect.

pg 17y ago

I wouldn't have written this if the rich people I knew were mostly from one company I'd worked at. Because of YC I've met a wide cross section of people who got rich from software. From literally hundreds of different sources. (I'm sorry I forgot about you; between you and Wolfram I know 2 who didn't take investment.)

johnnybgoode 17y ago
Like Joel said, isn't there still some selection bias there? I would think that even the people you've met because of YC are the ones who are connected to the outside funding "world" in some way.
- pg 17y ago
  I don't see where. I've met them (a) because they come as investors to Demo Day, (b) because they're famous founders we've invited to speak at YC or Startup School, or (c) at events like conferences, Foo Camp, etc. Where would there be selection bias in any of those things?
  - menloparkbum 17y ago
    Perhaps it's more of a negative selection bias. I know 9 people who have made $5-$10M from software companies they have founded without taking outside investment. Most of the money was made by selling out to a bigger company, although one guy still is doing his thing. They don't go to conferences, aren't famous and don't invest in startups. Maybe that amount doesn't count as being rich, though.