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Exactly. There are other problems with the data as well, but the big problem is that he's talking about averages in an industry defined by outliers. You should

by paul 12y ago

Exactly. There are other problems with the data as well, but the big problem is that he's talking about averages in an industry defined by outliers. You should start a startup if you think you have it in you to revolutionize an industry, not because someone's spreadsheet says you will earn an average of $X/year doing it. The median founder should expect to earn a lot of valuable experience, and very few dollars.

BenjaminTodd 12y ago
Definitely true that the median can't expect to earn much. In fact, looking at the data, we can see that about 70% exit with only their salaries (typically under $100k). Like we say in the summary, since all the value is in the tail, an individual should be thinking in terms of 'what are my chances of creating a new DropBox or AirBnB' i.e. revolutionising an industry. The problem is, no-one knows who exactly that's going to be. This post shows that getting into YC provides some useful information. It shows you're now in a reference class of ppl who can be expected to earn millions of dollars per year (although the median is still zero). Beyond that, there's lots more to consider when judging whether to become a tech entrepreneur e.g. are you exceptionally technically able, gritty, able to accept risk, in possession of a potentially huge idea etc. If you got into YC but it's clear you'll never be Drew Houston, then your expected outcome is probably still pretty low.
RoboTeddy 12y ago
If you're attempting to earn money to donate to effective charities, and you're risk neutral, it might make sense to consider average rather than likely outcomes.
- BenjaminTodd 12y ago
  It's not just the donations. It seems likely startups produce lots of economic value by developing new products, and the extent to which you do that is somewhat correlated with how much money you earn. That's another reason to consider the non-risk-adjusted average outcome.
BenjaminTodd 12y ago
What are the other problems with the data? We're keen to hear.

by paul 12y ago

BenjaminTodd 12y ago

Definitely true that the median can't expect to earn much. In fact, looking at the data, we can see that about 70% exit with only their salaries (typically under $100k). Like we say in the summary, since all the value is in the tail, an individual should be thinking in terms of 'what are my chances of creating a new DropBox or AirBnB' i.e. revolutionising an industry. The problem is, no-one knows who exactly that's going to be. This post shows that getting into YC provides some useful information. It shows you're now in a reference class of ppl who can be expected to earn millions of dollars per year (although the median is still zero). Beyond that, there's lots more to consider when judging whether to become a tech entrepreneur e.g. are you exceptionally technically able, gritty, able to accept risk, in possession of a potentially huge idea etc. If you got into YC but it's clear you'll never be Drew Houston, then your expected outcome is probably still pretty low.

RoboTeddy 12y ago

If you're attempting to earn money to donate to effective charities, and you're risk neutral, it might make sense to consider average rather than likely outcomes.

BenjaminTodd 12y ago
It's not just the donations. It seems likely startups produce lots of economic value by developing new products, and the extent to which you do that is somewhat correlated with how much money you earn. That's another reason to consider the non-risk-adjusted average outcome.

BenjaminTodd 12y ago

What are the other problems with the data? We're keen to hear.