The original discussion was about expected value, not maximum value. I continue to believe that the expected value of finance exceeds that of startups, but the answer to that is not in the Forbes 400, which shows those who are at the extreme.
To make an analogy, the guy that just won the Powerball lottery is far richer than all the doctors in his state, but that doesnt mean the expected value of playing the lottery is higher than being a doctor.
Salaries in finance tend to start at close to $100K for first year employees coming out of undergrad. A solid performer can get up to $300K/year in 5 years.
The difference between this kind of career path and startup is that the finance employee has much more control over his compensation - if you're smart and willing to work hard, the salary rises in a predictable fashion.
An entrepreneur can make a lot more if he is successful, but many of the factors that determine success are out his control.
The entrepreneurs win much bigger than financiers (so the entrepreneuers should be much better represented in the Forbes 400), but the expected value of being a financier is greater (no data available to prove that).
Forbes 400 Data Shows Paul Graham Is Wrong
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Re: Forbes 400 Data Shows Paul Graham Is Wrong
#62You said:
> 211 new people entered the Forbes 400 list during this ten-year period. > Of these, 59 were from finance. > 17 were from technology.
He said: 'that list (of deltas) would be dominated by Finance'
So how exactly was he wrong wrong?
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#63Earlier quoted context omitted.
But it pays cash and lots of it How much? Can you be more, uh, quantitative here?
You make around S$200k/yr within 4 years if you're in banking IT in Singapore. This is not even counting the bonuses they usually get. OTOH if you work work for a startup here, you get around S$80-90k/yr max. And if you're a non-IT person at a bank, the figures are just astronomical. Almost half of the people I met in university are now working for banks, and you'll find them either preparing for CFA exams over the w…
S $200k/yr == USD 144k/yr.
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#64I made that original comment. Thanks for doing the analysis I was too lazy to do! Your analysis jives with the broader point I was trying to make - in the past 15 years, finance has been the surest path to riches in America. It is not just at the level of the Forbes 400. During the real estate bubble, newly minted mortgage brokers (often coming from other fields such as car sales, they found selling debt far more luc…
Quibble, but wasn't it the SEC that allowed the investment banks to leverage up 30x?
Not to mention that all of them are now dead, bought out by bank banks or in the process of becoming so (well, that's just the big names, but as I understand it the smaller fish are very small).
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#65People can interpret a data set in so many ways. I don't know which people you put into the "technology" and "finance" categories. I just went with the people that Forbes put into the categories of "Finance" or "Investment" vs the people that they put into the categories of "Internet" or "Software". I ran some numbers on the data they provided and here's what I found: Finance/Investments: Total People: 81 Avg Net Wor…
Did you look at just the new rich (the people who have gotten rich over the past ten years), or all the rich? If the latter, you're including a lot of dot-com people who wouldn't have gotten nearly as rich if it weren't for the bubble.
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#66This is a false dichotomy. The financiers who made this list were all entrepreneurs. James Simons, John Paulson, Steve Schwarzman, David E. Shaw, etc all successfully founded companies. Their companies just happen to be investment firms. The fact that more founders of financial startups have made this list in past decade than founders of tech startups speaks to the dominance of the investment industry in recent years…
"Nobody, finance sector or otherwise, makes this list by being an employee. Not even top employees can reach this level."
That is indeed true, but "start-up" has specific technology connotations in the minds of most people here.
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#67Earlier quoted context omitted.
Sounds reasonable. But when you have time it would be useful to see the actual lists of the people you put in each category.
Since the ecosystem of non-bootstrapped startups combine founders and financiers, where do you draw the line? VC firms seem squarely in the financier camp, and founders who do not contribute capital are not, but angels and incubators are more difficult. An honest classification attempt would attribute some of their equity to capital and some to work contribution, but even when there is currently a stable valuation av…
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Re: Forbes 400 Data Shows Paul Graham Is Wrong
#68Earlier quoted context omitted.
Sounds reasonable. But when you have time it would be useful to see the actual lists of the people you put in each category.
Since the ecosystem of non-bootstrapped startups combine founders and financiers, where do you draw the line? VC firms seem squarely in the financier camp, and founders who do not contribute capital are not, but angels and incubators are more difficult. An honest classification attempt would attribute some of their equity to capital and some to work contribution, but even when there is currently a stable valuation av…
I actually counted VCs as having made their money from technology rather than finance.
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#69I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career. Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit. How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of…
They take their licks though. I was there when the LTCM fund collapsed and they lost $600M. Also when the Russian economy collapsed and they lost another $600M. Layoffs? Nah - business as usual.
The finance industry doesn't need as many layoffs as other industries because they solved the stick wage problem.
Re: Forbes 400 Data Shows Paul Graham Is Wrong
#70Earlier quoted context omitted.
I didn't write them all down because that would have taken another hour and it's 11 PM Bay time on a Friday, but here are a few: http://en.wikipedia.org/wiki/Ray_Dalio http://en.wikipedia.org/wiki/James_Simons http://en.wikipedia.org/wiki/Steve_Schwarzman http://en.wikipedia.org/wiki/John_Paulson http://en.wikipedia.org/wiki/Daniel_Och http://en.wikipedia.org/wiki/David_Shaw http://en.wikipedia.org/wiki/Steven_A._Coh…
Just fyi, every person you listed above founded the financial company that made them rich. So they are founders and did do a startup - just not a technology startup.
How are you defining "startup"? "Startup" for most people has technology connotations. To quote PG:
"Startups are a comparatively new phenomenon. Fairchild Semiconductor is considered the first VC-backed startup, and they were founded in 1959, less than fifty years ago."
Clearly, he's referring to tech startups specifically. If you consider any small company that becomes big a startup, then Rockefeller and Carnegie made their wealth in startups.