Friday, December 23, 2005

Wealth vs. Money

Wealth vs. Money

Paul Graham has posted one of the essays from his book, "Hackers and Painters" to

I'm a bit torn on this one, because I think it has some great points, but I also think it could be much shorter. Therefore, allow me to offer you my bullet-point summary of the essay:

1. Money is not wealth. Money is just a shorthand. Making wealth consists of doing what people want.

2. Thinking of money as wealth leads people to believe that wealth is a zero-sum game of dividing a fixed pie of money. In fact, the best way to make money is to expand the pie by creating wealth (which can then be converted into money).

3. Great programmers (and other top performers) can be orders of magnitude more productive than average. Big companies and regular jobs tend to average everyone out. Therein lies the problem with big companies.

4. Startups offer a better deal for top people. You can be measured on your output (because the company is small enough to act as a proxy for your own productivity), and technology provides tremendous leverage.

5. In fact, because startups are so productive, a good strategy is to "run upstairs" by seeking out the hard problems (that offer commensurate rewards). The harder the problem, the less likely a big company can tackle it as quickly as a startup.

6. Of course, keep in mind that startups offer a better deal on average. Startups are mosquitoes that either succeed or get squashed, unlike a lumbering corporate bear, which can take a lot of hits without going down (just look at General Motors).

7. Because wealth consists of doing what people want, the best measure of success is the number of users you have. Get out there as quickly as possible, because without users, you're optimizing based on guesses.

8. Capitalism works because it lets the people who create the wealth keep most of it. When government doesn't let you keep what you create, the incentive to create goes away.

Ultimately, I agree with every one of Paul's points; I just think he could have said it in fewer words. What do you think? Did I do a good job of summarizing the gist?

1 comment:

Ben Casnocha said...

why would i go read Paul Graham's verbosity when you just summarized it so well for me!?!