6 ms·

The ROI on being an entrepreneur vs. an employee

155 points by jcabala 12y ago

aaronjg 12y ago
Google Cache Link http://webcache.googleusercontent.com/search?q=cache:kvX1Y037yzoJ:marcbarros.com/the-value-of-a-founders-time/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:kvX1Y03...
mayank 12y ago
Not sure an unbounded 6% annual salary increase is plausible, especially over a 35-year period. That makes the "get a job" numbers quite inflated. I think its clear that the potential payoff from being an entrepreneur is very significantly higher than being an employee; it's a question of when someone's willingness to accept a higher risk matches their circumstances (luck, market, idea, etc.)
- ryandrake 12y ago
  Definitely. Average wage growth [1] from 2010 to 2012 has been about 4.7%, varying heavily on region (and likely profession). And this is the average (across all levels of experience). If you're not senior management, you're hitting a wage ceiling after about 10 years, where your pay won't be going up year after year even if you job hop. A more realistic model would assume your wage growth starts at, say 8-10% your first year and then tapers off to 0-1% after 10 years or so. 1: http://www.comparebloomington.us/include/reportsmedia_157_1541923639.pdf http://www.comparebloomington.us/include/reportsmedia_157_15...
  - dvanduzer 12y ago
    At a glance, that suggests the optimal time to start a startup is when you have 10 years of career behind you.
deleted 12y ago
[deleted]
richardking 12y ago
There seems to be so much variance in starting a company that I'm not sure how valid it is to use the 'averages' to create an earnings graph.
- MattSayar 12y ago
  That's the entire purpose of averages, though.
  - richardking 12y ago
    Not in this case, because a lot of business fail in a year or two, and a lot businesses survive for 10, 20+ years. I'll bet there's a lot of '$ made' graphs for entrepreneurs that don't go up much, or even go down; and a few that are hockey-sticks. There's really no point of averaging the two out into a scenario that rarely/never happens.
eruditely 12y ago
Small probabilities trend towards incomputability in tail events. The rate of error for the measure becomes so explosive that in that arena individual parameters seem to be more relevant, among many other things. We'd be better off with PG's intuition than this.
Swizec 12y ago
Great article, two issues: 1. Instead of looking at averages for entrepreneurs (and stock-holding employees) it should look at expected values. Those take probabilities into account. So with a 0.1 chance of a $100MM payout[1] gives you an expected payout of just $10MM for ~7 years of very hard work. Not too shabby, but not spectacular either. 2. "Assuming you don’t have any exits and you work 65 hours a week while running a company (compared to 50 hours per week with a regular job)" ... while I agree that people work this much and more, the funny part is how a lot of cold hard research proves that working that much makes you less productive and lowers your chances of a serious payout. Now can someone make this for freelancers? I feel like we're somewhere between employees and entrepreneurs. Salary definitely grows quicker than 6% and risk is definitely smaller than "pure" entrepreneurs. [1] billion dollar exit, let's say $100MM actually gets into a founder's pocket
- taurath 12y ago
  Whats the actual probability of a $1bil exit? Something more like .00001 I'd imagine, nowhere near that $100MM payout. Granted, nobody becomes an entrepreneur looking at that math - they have some reason to believe they're better than the rest, and as long as it looks good rather than poor on a resume to have your own failed company there's little reason not to try for it.
shutupalready 12y ago
There's not a single mention of taxes in the article. I don't think that the average employee is aware that an entrepreneur/founder/self-employed person can save a lot of tax if they structure it right and are meticulous about it. A self-employed person earning $70K a year can be better off than an employee earning $100K.
- jdreaver 12y ago
  Can you expand upon that? I am always looking to reduce my taxes. I got killed with my 1099s this year.
  - adwf 12y ago
    I can't speak for American tax law, but in the UK there are some common methods of small business owners reducing taxes on income: Small payroll income so that you fall within a low income tax bracket. Top up salary with dividends as they have a much lower rate of tax. If you have a live at home wife, make sure she's employed by the company in some form, eg. you can pay her the minimum wage for secretarial duties. Ideally falling within the tax-free lower bracket. Unlike regular employment, you can start claiming a lot of everyday things such as food/transport/home office electricity/internet/etc. as business expenses, thus meaning you can claim 20% VAT (sales taxes) back depending. Ultimately, there's also the final payout if you manage to sell the company. If it were classed as regular bonus income, you'd be taxed at 45%. Instead you get charged as capital gains at 18-28%. You can also get entrepeneur relief on the first £10m which means you only get charged 10% instead of 28%. NOTE: Some of these are loopholes like dividends and employing family. They tend to get cracked down on every now and again (I'm not even sure if they're valid now) But when you get down to it, there are a heck of a lot of potential savings over standard income tax (currently 40% on anything over £32k, 45% over £150k)
    - jhome 12y ago
      I would appreciate if someone could correct me on this as this is mostly from memory. I believe the using dividends for tax avoidance is either no longer effective or has been cracked down upon. You can also give less to the government on your VAT if your profit (or revenues, I can't remember which!) is below 150,000 GBP. Rates vary between 9% and 15%.
adamzerner 12y ago
80,000 Hours did a write-up on this: http://80000hours.org/blog/12-salary-or-startup-how-do-gooders-can-gain-more-from-risky-careers http://80000hours.org/blog/12-salary-or-startup-how-do-goode...
Zelphyr 12y ago
Through Founder Institute I've spoken with several successful entrepreneurs (reasonably wealthy with at least one successful exit) about this issue and nearly all of them said if your goal is simply to make money you're better off getting a job. However, if you want to build something that you own, are passionate about, and are comfortable with the possibility of not having much money for many years then being an entrepreneur is definitely a worthwhile endeavor.
- ermintrude 12y ago
  I picked up "The Founder's Dilemmas" and the first chapter tries to talk you out of starting a business by telling you that your business will probably fail, and you'd probably end up wealthier working for other people. It's good to remember, after the hype surrounding large exits, that the chances of creating a similarly valuable company are incredibly small. So yeah, if you're in it for the money it's probably not worth it.
timedoctor 12y ago
This is very theoretical and I would say there are a lot of mistakes in the analysis I would look more simply at all the people I know that are entrepreneurs versus those that work in a job. At least 50 percent of the entrepreneurs have over $1 million In assets and in a few cases over $10 million Zero employees that I know have over $1 million in assets I think it is far more likely to be wealthy as an entrepreneur, it's possibly a bit safer as an employee.
- neilk 12y ago
  https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias
- nostrademons 12y ago
  I know quite a few employees with over $1M in assets. Unless you're a relatively close personal friend, there's basically zero reason for someone who earned over $1M in non-public transactions (notably salary) to tell you about it, though.
  - smm2000 12y ago
    There is zero reason to tell close personal friend that you have more than $1M in assets unless your friend have comparable assets. People are jealous and telling somebody that you have much higher salary (especially if are in the same industry) or you have a lot of assets is the sure way to destroy friendship.
    - nostrademons 12y ago
      Well, there are other ways to infer it if you hang out with someone on a regular basis, eg. if they say "I'll just work for another 5 years and retire", or if they own 3 homes in the Bay Area and aren't complaining about mortgage payments, or if you do an anonymous net-worth survey among many of your friends and see that some of the top rows are over $1M.
- greenyoda 12y ago
rdl 12y ago
A VC funded company, assuming you are capable of raising a seed round, can generally pay sfba founders 50-120k for full time work pretty soon after (founding, or people going full-time). Those same people are generally forgoing 100-200k jobs. The equity value of a founder's shares is an order of magnitude higher than an early hire, or two orders higher than a late A or B round hire, and 3-4 orders higher than a pre IPO employee. No one gets rich as a regular IC hire at series B or C, even at a Google -- it probably tops out at 10-15mm, vs 15b for the founders. Even more so at companies less successful than Google. On top of that, founders get supremely preferential tax treatment. Founders shares are generally bought near nil, and the entirety of gains are long term capital gains. If you do it right with QSBS and moving to WA before the sale, it can be taxed at zero. An employee often ends up paying hella AMT on almost all gain from ISOs since he didn't early exercise (or, early exercises at substantial out-of-pocket cost), and gets less freedom to sell in later financings, less return in a sub-optimal exit where the sale is covered with preference but "retention grants" are given to founders, etc. I think the optimal strategy is to work for the most prestigious and successful companies purely as a learning and reputation building exercise, and then either be a founder or consultant to make money. It might be possible to enter a slightly earlier (series b) company as a director or better and still get a reasonable amount of equity (1%+ in a 100-200mm company), but otherwise either going for the tax advantaged, high variance outcome as a founder, or the high cash, flexible, also tax optimized outcome as a consultant, is the best way to actually get paid.
- timr 12y ago
  These days, being an employee at at a profitable series B+ company may not make you rich, but it's a nice balance of risk and reward: you'll almost certainly walk away with the equivalent of a few hundred thousand per year, with a pretty cushy lifestyle on top of that. I know plenty of people who have jumped from one big valley name to another at mid-growth stage, and they're not hurting financially (plus, it makes you supremely marketable -- recruiters/investors/press go irrationally nuts over people who have big names on their resumes). Entrepreneurship has never been an economically rational decision. You do it because you have to do it, or because you can't force yourself to work for someone else anymore. If you just want to gamble, go to Vegas.
daemin 12y ago
Who manages to only save 6% of their salary? For $75,000/year that's a measly $4,500. For someone working in tech on a good salary this should be closer to 50%, easily. Even paying a high rent, and heading out every night one should be saving at least 25%.
- cpwright 12y ago
  People who have expenses like child care, mortgages, car payments, unexpected medical bills, don't contribute to a 401K through automatic payroll deductions, or who just don't budget as well as they might. The average savings rate from 1959 to 2014 was 6.82%. [1] [1] http://www.tradingeconomics.com/united-states/personal-savings http://www.tradingeconomics.com/united-states/personal-savin...
  - greenyoda 12y ago
    These days, student loans can also be a significant expense.
  - deleted 12y ago
    [deleted]
- adventured 12y ago
  I've never met a person that could save 50% of their income that wasn't making $250k+. If you're living in California and making $125,000 per year at a job, you're paying $33,000 in income taxes alone. Your 50% savings rate would be $62,500 - after taxes you have $92,000, so the person can live off of $30,000 per year. Rent alone can easily run $1,500 to $2,500 per month. This is an impossible scenario without even getting into the real costs of existing (ie bills, families, debts, vehicle & getting to work, accidents, problems, charity, social life, doing things). My ex, who lives in Los Angeles, and makes $70k per year in the medical field, can't save more than $400 to $500 per month max after all costs and taxes. That savings is inevitably slashed in half due to once-per-year events that cost a few thousand dollars to fix. Her only salvation is her 401k.
  - smm2000 12y ago
sopooneo 12y ago
A little over halfway through the author mentions a billion dollar sale netting each of three founders only $300,000. Am I misunderstanding, or is that a mistake?
- czbond 12y ago
  That line threw me off as well. I think he was switching thoughts between sentences. He mentions Billion dollar companies,and then I believe he's saying "for any company exit [not Billion exit] - your average gain is $300k"
- saalweachter 12y ago
  Expected value is the key phrase. So 0.00006% of the time you start a billion dollar company and take home $300MM. 67% of the time you fail and take home $0. The rest of the time you fall somewhere in between, and so your expected value is $300,000. Divide that into an average of 4 years and your expected value is $75,000. So if you're perfectly rational, you should be willing to work as an employee with no equity for an extra $80,000 over whatever you'd pay yourself as a startup founder, because your expected value is higher.
  - robryk 12y ago
    If you're optimizing for the expected value. One can also optimize for the greatest chance to have more than X$ for some X.
    - saalweachter 12y ago
      If your goal is to make at least $100MM, and your chance of founding a billion dollar company is 0.00006%, then you should go buy a thousand lottery tickets the next time the powerball is up in the hundred millions. Your odds will be higher and you'll find out the next day you lost.
  - sopooneo 12y ago
    Okay, thanks. I hadn't realized he was talking expected value at that point, but your figures clear it up.
romaster 12y ago
negative skew & fat tails vs. fixed income stream.
wallflower 12y ago
"This unexpected success is just unbelievable. When we video chat, we still want to pinch ourselves through the monitor. Peldi started Balsamiq on nights and weekends, and now it is supporting half a dozen families. We were lucky to able to learn so much in our former jobs at Macromedia and Adobe. If he hadn't had the courage to leave, if the stars hadn't aligned just right" If that is not a real, tangible definition of a successful startup, I do not know what one would be. Having been part of at least one failed side venture startup, I know how hard it is to build a product and how much harder it is to build the right team. https://blog.supportbee.com//2010/12/02/delivering-wow-customer-service-an-interview-with-valerie-liberty-from-balsamiq/ https://blog.supportbee.com//2010/12/02/delivering-wow-custo...
lacero 12y ago
This article is basically the conclusion of the book the millionaire next door. The authors comb through statistics of the rich and interviews with wealthy people. Building a business is probably the best way to make a large lump sum of money. Unfortunately the business is more likely than not to fail before bearing fruit and even after successfully running the business for large profits over time competition, laws, and factors out of your control usually kill the business. Due to the inherent risks and stress involved the book states that most successful people would not advise their children to start businesses but to get professional degrees, especially the kind that can work for themselves or consult such as law, medicine and accounting. Not so much the non-professional jobs such as business management.

155 points by jcabala 12y ago

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mayank 12y ago

Not sure an unbounded 6% annual salary increase is plausible, especially over a 35-year period. That makes the "get a job" numbers quite inflated. I think its clear that the potential payoff from being an entrepreneur is very significantly higher than being an employee; it's a question of when someone's willingness to accept a higher risk matches their circumstances (luck, market, idea, etc.)

ryandrake 12y ago
Definitely. Average wage growth [1] from 2010 to 2012 has been about 4.7%, varying heavily on region (and likely profession). And this is the average (across all levels of experience). If you're not senior management, you're hitting a wage ceiling after about 10 years, where your pay won't be going up year after year even if you job hop. A more realistic model would assume your wage growth starts at, say 8-10% your first year and then tapers off to 0-1% after 10 years or so. 1: http://www.comparebloomington.us/include/reportsmedia_157_1541923639.pdf http://www.comparebloomington.us/include/reportsmedia_157_15...
- dvanduzer 12y ago
  At a glance, that suggests the optimal time to start a startup is when you have 10 years of career behind you.

deleted 12y ago

[deleted]

richardking 12y ago

There seems to be so much variance in starting a company that I'm not sure how valid it is to use the 'averages' to create an earnings graph.

MattSayar 12y ago
That's the entire purpose of averages, though.
- richardking 12y ago
  Not in this case, because a lot of business fail in a year or two, and a lot businesses survive for 10, 20+ years. I'll bet there's a lot of '$ made' graphs for entrepreneurs that don't go up much, or even go down; and a few that are hockey-sticks. There's really no point of averaging the two out into a scenario that rarely/never happens.

eruditely 12y ago

Small probabilities trend towards incomputability in tail events. The rate of error for the measure becomes so explosive that in that arena individual parameters seem to be more relevant, among many other things. We'd be better off with PG's intuition than this.

Swizec 12y ago

Great article, two issues: 1. Instead of looking at averages for entrepreneurs (and stock-holding employees) it should look at expected values. Those take probabilities into account. So with a 0.1 chance of a $100MM payout[1] gives you an expected payout of just $10MM for ~7 years of very hard work. Not too shabby, but not spectacular either. 2. "Assuming you don’t have any exits and you work 65 hours a week while running a company (compared to 50 hours per week with a regular job)" ... while I agree that people work this much and more, the funny part is how a lot of cold hard research proves that working that much makes you less productive and lowers your chances of a serious payout. Now can someone make this for freelancers? I feel like we're somewhere between employees and entrepreneurs. Salary definitely grows quicker than 6% and risk is definitely smaller than "pure" entrepreneurs. [1] billion dollar exit, let's say $100MM actually gets into a founder's pocket

taurath 12y ago
Whats the actual probability of a $1bil exit? Something more like .00001 I'd imagine, nowhere near that $100MM payout. Granted, nobody becomes an entrepreneur looking at that math - they have some reason to believe they're better than the rest, and as long as it looks good rather than poor on a resume to have your own failed company there's little reason not to try for it.

shutupalready 12y ago

There's not a single mention of taxes in the article. I don't think that the average employee is aware that an entrepreneur/founder/self-employed person can save a lot of tax if they structure it right and are meticulous about it. A self-employed person earning $70K a year can be better off than an employee earning $100K.

jdreaver 12y ago
Can you expand upon that? I am always looking to reduce my taxes. I got killed with my 1099s this year.
- adwf 12y ago
  I can't speak for American tax law, but in the UK there are some common methods of small business owners reducing taxes on income: Small payroll income so that you fall within a low income tax bracket. Top up salary with dividends as they have a much lower rate of tax. If you have a live at home wife, make sure she's employed by the company in some form, eg. you can pay her the minimum wage for secretarial duties. Ideally falling within the tax-free lower bracket. Unlike regular employment, you can start claiming a lot of everyday things such as food/transport/home office electricity/internet/etc. as business expenses, thus meaning you can claim 20% VAT (sales taxes) back depending. Ultimately, there's also the final payout if you manage to sell the company. If it were classed as regular bonus income, you'd be taxed at 45%. Instead you get charged as capital gains at 18-28%. You can also get entrepeneur relief on the first £10m which means you only get charged 10% instead of 28%. NOTE: Some of these are loopholes like dividends and employing family. They tend to get cracked down on every now and again (I'm not even sure if they're valid now) But when you get down to it, there are a heck of a lot of potential savings over standard income tax (currently 40% on anything over £32k, 45% over £150k)
  - jhome 12y ago
    I would appreciate if someone could correct me on this as this is mostly from memory. I believe the using dividends for tax avoidance is either no longer effective or has been cracked down upon. You can also give less to the government on your VAT if your profit (or revenues, I can't remember which!) is below 150,000 GBP. Rates vary between 9% and 15%.

adamzerner 12y ago

80,000 Hours did a write-up on this: http://80000hours.org/blog/12-salary-or-startup-how-do-gooders-can-gain-more-from-risky-careers http://80000hours.org/blog/12-salary-or-startup-how-do-goode...

Zelphyr 12y ago

Through Founder Institute I've spoken with several successful entrepreneurs (reasonably wealthy with at least one successful exit) about this issue and nearly all of them said if your goal is simply to make money you're better off getting a job. However, if you want to build something that you own, are passionate about, and are comfortable with the possibility of not having much money for many years then being an entrepreneur is definitely a worthwhile endeavor.

ermintrude 12y ago
I picked up "The Founder's Dilemmas" and the first chapter tries to talk you out of starting a business by telling you that your business will probably fail, and you'd probably end up wealthier working for other people. It's good to remember, after the hype surrounding large exits, that the chances of creating a similarly valuable company are incredibly small. So yeah, if you're in it for the money it's probably not worth it.

timedoctor 12y ago

This is very theoretical and I would say there are a lot of mistakes in the analysis I would look more simply at all the people I know that are entrepreneurs versus those that work in a job. At least 50 percent of the entrepreneurs have over $1 million In assets and in a few cases over $10 million Zero employees that I know have over $1 million in assets I think it is far more likely to be wealthy as an entrepreneur, it's possibly a bit safer as an employee.

neilk 12y ago
https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias
nostrademons 12y ago
I know quite a few employees with over $1M in assets. Unless you're a relatively close personal friend, there's basically zero reason for someone who earned over $1M in non-public transactions (notably salary) to tell you about it, though.
- smm2000 12y ago
  There is zero reason to tell close personal friend that you have more than $1M in assets unless your friend have comparable assets. People are jealous and telling somebody that you have much higher salary (especially if are in the same industry) or you have a lot of assets is the sure way to destroy friendship.
  - nostrademons 12y ago
    Well, there are other ways to infer it if you hang out with someone on a regular basis, eg. if they say "I'll just work for another 5 years and retire", or if they own 3 homes in the Bay Area and aren't complaining about mortgage payments, or if you do an anonymous net-worth survey among many of your friends and see that some of the top rows are over $1M.
greenyoda 12y ago

rdl 12y ago

A VC funded company, assuming you are capable of raising a seed round, can generally pay sfba founders 50-120k for full time work pretty soon after (founding, or people going full-time). Those same people are generally forgoing 100-200k jobs. The equity value of a founder's shares is an order of magnitude higher than an early hire, or two orders higher than a late A or B round hire, and 3-4 orders higher than a pre IPO employee. No one gets rich as a regular IC hire at series B or C, even at a Google -- it probably tops out at 10-15mm, vs 15b for the founders. Even more so at companies less successful than Google. On top of that, founders get supremely preferential tax treatment. Founders shares are generally bought near nil, and the entirety of gains are long term capital gains. If you do it right with QSBS and moving to WA before the sale, it can be taxed at zero. An employee often ends up paying hella AMT on almost all gain from ISOs since he didn't early exercise (or, early exercises at substantial out-of-pocket cost), and gets less freedom to sell in later financings, less return in a sub-optimal exit where the sale is covered with preference but "retention grants" are given to founders, etc. I think the optimal strategy is to work for the most prestigious and successful companies purely as a learning and reputation building exercise, and then either be a founder or consultant to make money. It might be possible to enter a slightly earlier (series b) company as a director or better and still get a reasonable amount of equity (1%+ in a 100-200mm company), but otherwise either going for the tax advantaged, high variance outcome as a founder, or the high cash, flexible, also tax optimized outcome as a consultant, is the best way to actually get paid.

timr 12y ago
These days, being an employee at at a profitable series B+ company may not make you rich, but it's a nice balance of risk and reward: you'll almost certainly walk away with the equivalent of a few hundred thousand per year, with a pretty cushy lifestyle on top of that. I know plenty of people who have jumped from one big valley name to another at mid-growth stage, and they're not hurting financially (plus, it makes you supremely marketable -- recruiters/investors/press go irrationally nuts over people who have big names on their resumes). Entrepreneurship has never been an economically rational decision. You do it because you have to do it, or because you can't force yourself to work for someone else anymore. If you just want to gamble, go to Vegas.

daemin 12y ago

Who manages to only save 6% of their salary? For $75,000/year that's a measly $4,500. For someone working in tech on a good salary this should be closer to 50%, easily. Even paying a high rent, and heading out every night one should be saving at least 25%.

cpwright 12y ago
People who have expenses like child care, mortgages, car payments, unexpected medical bills, don't contribute to a 401K through automatic payroll deductions, or who just don't budget as well as they might. The average savings rate from 1959 to 2014 was 6.82%. [1] [1] http://www.tradingeconomics.com/united-states/personal-savings http://www.tradingeconomics.com/united-states/personal-savin...
- greenyoda 12y ago
  These days, student loans can also be a significant expense.
- deleted 12y ago
  [deleted]
adventured 12y ago
I've never met a person that could save 50% of their income that wasn't making $250k+. If you're living in California and making $125,000 per year at a job, you're paying $33,000 in income taxes alone. Your 50% savings rate would be $62,500 - after taxes you have $92,000, so the person can live off of $30,000 per year. Rent alone can easily run $1,500 to $2,500 per month. This is an impossible scenario without even getting into the real costs of existing (ie bills, families, debts, vehicle & getting to work, accidents, problems, charity, social life, doing things). My ex, who lives in Los Angeles, and makes $70k per year in the medical field, can't save more than $400 to $500 per month max after all costs and taxes. That savings is inevitably slashed in half due to once-per-year events that cost a few thousand dollars to fix. Her only salvation is her 401k.
- smm2000 12y ago

sopooneo 12y ago

A little over halfway through the author mentions a billion dollar sale netting each of three founders only $300,000. Am I misunderstanding, or is that a mistake?

czbond 12y ago
That line threw me off as well. I think he was switching thoughts between sentences. He mentions Billion dollar companies,and then I believe he's saying "for any company exit [not Billion exit] - your average gain is $300k"
saalweachter 12y ago
Expected value is the key phrase. So 0.00006% of the time you start a billion dollar company and take home $300MM. 67% of the time you fail and take home $0. The rest of the time you fall somewhere in between, and so your expected value is $300,000. Divide that into an average of 4 years and your expected value is $75,000. So if you're perfectly rational, you should be willing to work as an employee with no equity for an extra $80,000 over whatever you'd pay yourself as a startup founder, because your expected value is higher.
- robryk 12y ago
  If you're optimizing for the expected value. One can also optimize for the greatest chance to have more than X$ for some X.
  - saalweachter 12y ago
    If your goal is to make at least $100MM, and your chance of founding a billion dollar company is 0.00006%, then you should go buy a thousand lottery tickets the next time the powerball is up in the hundred millions. Your odds will be higher and you'll find out the next day you lost.
- sopooneo 12y ago
  Okay, thanks. I hadn't realized he was talking expected value at that point, but your figures clear it up.

romaster 12y ago

negative skew & fat tails vs. fixed income stream.

wallflower 12y ago

"This unexpected success is just unbelievable. When we video chat, we still want to pinch ourselves through the monitor. Peldi started Balsamiq on nights and weekends, and now it is supporting half a dozen families. We were lucky to able to learn so much in our former jobs at Macromedia and Adobe. If he hadn't had the courage to leave, if the stars hadn't aligned just right" If that is not a real, tangible definition of a successful startup, I do not know what one would be. Having been part of at least one failed side venture startup, I know how hard it is to build a product and how much harder it is to build the right team. https://blog.supportbee.com//2010/12/02/delivering-wow-customer-service-an-interview-with-valerie-liberty-from-balsamiq/ https://blog.supportbee.com//2010/12/02/delivering-wow-custo...

lacero 12y ago

This article is basically the conclusion of the book the millionaire next door. The authors comb through statistics of the rich and interviews with wealthy people. Building a business is probably the best way to make a large lump sum of money. Unfortunately the business is more likely than not to fail before bearing fruit and even after successfully running the business for large profits over time competition, laws, and factors out of your control usually kill the business. Due to the inherent risks and stress involved the book states that most successful people would not advise their children to start businesses but to get professional degrees, especially the kind that can work for themselves or consult such as law, medicine and accounting. Not so much the non-professional jobs such as business management.