Paul Graham - How to Make Wealth - Summary

Click to see the full article. This is my summary, quoting and paraphrasing the content.

If you wanted to get rich, your best bet would be to start or join a startup.

Economically, you can think of a startup as a way to compress your whole working life into a few years.

You could be more than 30 times more productive than you’re expected to be in a random corporate job.

If you want to make a million dollars, you have to endure a million dollars’ worth of pain.

Businesses do something people want.

There is not a fixed amount of wealth in the world. You can make more wealth.

A programmer can sit down in front of a computer and create wealth. A good piece of software is, in itself, a valuable thing.

It’s also obvious to programmers that there are huge variations in the rate at which wealth is created.

Wealth can be created without being sold. Scientists, till recently at least, effectively donated the wealth they created.

You need to start doing something people want. You don’t need to join a company to do that.

A job means doing something people want, averaged together with everyone else in the company.

If you want to go faster, it’s a problem to have your work tangled together with a large number of other people’s. In a large group, your performance is not separately measurable – and the rest of the group slows you down.

To get rich you need to get yourself in a situation with two things, measurement and leverage. Examples: CEOs, movie stars, hedge fund managers, professional athletes.

A viable startup might only have ten employees, which puts you within a factor of ten of measuring individual effort.

Ideally, you are getting together with a group of other people who also want to work a lot harder, and get paid a lot more, than they would in a big company.

A very able person in a big company is probably getting a bad deal, because his performance is dragged down by the overall lower performance of the others.

If you solve a technical problem that a lot of people care about, you help everyone who uses your solution. That’s leverage.

You better have a convincing explanation of why your technology would be hard to duplicate

If you can develop technology that’s simply too hard for competitors to duplicate, you don’t need to rely on other defenses. Start by picking a hard problem, and then at every decision point, take the harder choice. This is a good plan for life in general. If you have two choices, choose the harder.

When you’re running a startup, your competitors decide how hard you work: as hard as you possibly can.

The deal is that you’re 30 times as productive, and get paid between zero and a thousand times as much.

Acquirers assume the customers of your startup know who has the best technology. Users are the only real proof that you’ve created wealth.

Treat a startup as an optimization problem in which performance is measured by number of users.

If you plan to get rich by creating wealth, you have to know what people want. The closer you can get to what they want, the more wealth you generate.

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Updated on 2019 Oct 15.
DISCLAIMER: This is not professional advice. The ideas and opinions presented here are my own, not necessarily those of my employer.