Reading Paul Graham’s How to Make Wealth is probably worth more than an entire two semesters of learning economics. He concisely expresses why startups ‘work’ as wealth generators, and along the way explains how money is not wealth, why letting wealth creators keep it is vital, and how a programmer can be 20 times more productive in a startup than in a large company.
If you want a simple rule for how to make it in the world, it would be: Create Wealth. Wealth, as he points out, is another name for stuff people want. The best businesses focus on delivering a great experience for their customers, enough so that they get paid and earn money for it. How to get rich? “measurement and leverage”. Small teams gives measurement, technology that can scale gives leverage.
He mentions how it may be better to sell a startup early, as it reduces risk (and probably maximizes the log-utility function of risk-adjusted wealth – what I mean by that is almost everyone is better off taking 100% chance at $10 million than 20% chance at $100 million and 80% chance of $0). But corporations are so risk-averse themselves they wait to buy ‘proven’ companies for a lot more. Since wealth is ‘what people want’ the simplest metric for startup success is how many users and customers you have.
I was struck by his parallel between institutional schooling and institutional work. Paul Graham has elsewhere expressed how a ‘job’ is overrated. As we move to a world where work is less based on large-company culture, does that change the credentialing process for people who want a job? Probably so. So just as startup culture displalaces the culture of IBM and lifelong careerism, what will displace the institutions of higher learning? There will be a new model of learning, and let me label it – Agile Learning – to express the JIT, individualized, more fluid, smaller pieces-loosely-joined model of learning that will be both possible and more beneficial.