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Forbes 400 Data Shows Paul Graham Is Wrong

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Re: Forbes 400 Data Shows Paul Graham Is Wrong

#31

Post by leelin »

madair wrote: post #27
JacobAldridge wrote: post #16

There's a fundamental difference between 'there are more financiers than start-up founders in the Fortune 400' and 'a greater percentage of financiers in America make the Fortune 400 than start-up founders in America'. Using extreme example to make my point, if 0.001% of all 'financiers' made the Fortune 400 and 5.000% of all start-up founders did, no-one would claim that 211 v 59 means much because of the asymmetric…

Which leads to another big point about financiers...too many preppies heading to college for a quick buck on Wall St.

I don't blame the college kids. At least right now, our capitalist society deems their brains are better spent finding the next good $10M trade as opposed to helping ship Office 2010 or becoming grad students in math / physics / CS.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#33

Post by leelin »

nostrademons wrote: post #30
leelin wrote: post #21

Can we explain this by saying many hedge funds are negatively correlated, along with survivor bias? This is a huge simplification, but consider for every four hedge fund managers, one goes long the market, another short the market, another long volatility and another short volatility. No matter what it's very likely one or two out of those four perform very well over one year. Start with enough hedge funds and throw…

Startups have the same phenomenom: for every product that people are not buying, there's a substitute that they're buying instead. Either that or consumers are stuffing their money under the mattress, but we know (from the savings rate data) that this isn't happening. In some ways, there ought to be more variation with startups, because consumers will tend to pile onto the market leader because they're seen as reliab…

That accounts from some ways startups can be negatively correlated, but for the purposes of billionaire founders making the Forbes 400, I still say they are all hugely correlated to market conditions that enable crucial funding rounds, M&A events, and IPO events.

Also, if I think startup X sucks, it's not that obvious how I can bet against them and get rich on their dismal failure. But if I think hedge fund Y is doing stupid things, I can take the other side of their trades, and one of us will wind up rich.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#35

Post by diedsj »

I think the bigger point that sparked this discussion is: if you want to get rich should you go in finances or should you start a startups ? fact is, you should probably get in a finance startup, but a startup nonetheless. A startup offers you the unique ability to become a seth-godin-linchpin more so then taking a job in finance for say JPmorgan... then again comes the question: should money be the driving factor for your career choice? maybe, but most likely it should be whatever you are most passionate about. maybe thats money?

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#36

Post by Towle_ »

I don't understand why the two categories are being contrasted against each other as though one cannot be both. Wouldn't many highly successful founders later become financiers as well? If the root of this discussion is indeed which paths any given individual might take to achieve much greater wealth-- and not some sort of "financing vs. founding" contest-- then the founder role should nonetheless receive greater attention in all/most aspects. For most, the financier role will only ever be open if they are founders first.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#37

Post by nostrademons »

leelin wrote: post #33
nostrademons wrote: post #30

Earlier quoted context omitted.

Startups have the same phenomenom: for every product that people are not buying, there's a substitute that they're buying instead. Either that or consumers are stuffing their money under the mattress, but we know (from the savings rate data) that this isn't happening. In some ways, there ought to be more variation with startups, because consumers will tend to pile onto the market leader because they're seen as reliab…

That accounts from some ways startups can be negatively correlated, but for the purposes of billionaire founders making the Forbes 400, I still say they are all hugely correlated to market conditions that enable crucial funding rounds, M&A events, and IPO events. Also, if I think startup X sucks, it's not that obvious how I can bet against them and get rich on their dismal failure. But if I think hedge fund Y is doin…

"Also, if I think startup X sucks, it's not that obvious how I can bet against them and get rich on their dismal failure."

Compete with them. If you think startup X sucks, then enter the same market, gunning for the same customers, but serve them better.

It's harder to do this than for a financier to short a stock, but that's because everything in finance is higher leverage than in business. The goal of an entrepreneur is to do things better than established businesses; the goal of a financier is to predict which firms will do things better, and then divert capital to them. The actual effort involved in finance is simply a decision, but that decision needs a lot of information to be correct more often than it's wrong. (None of which changes the relative likelihood of wealth concentrating at the top of one of these fields.)

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#38

Post by leelin »

nostrademons wrote: post #37
leelin wrote: post #33

Earlier quoted context omitted.

That accounts from some ways startups can be negatively correlated, but for the purposes of billionaire founders making the Forbes 400, I still say they are all hugely correlated to market conditions that enable crucial funding rounds, M&A events, and IPO events. Also, if I think startup X sucks, it's not that obvious how I can bet against them and get rich on their dismal failure. But if I think hedge fund Y is doin…

"Also, if I think startup X sucks, it's not that obvious how I can bet against them and get rich on their dismal failure." Compete with them. If you think startup X sucks, then enter the same market, gunning for the same customers, but serve them better. It's harder to do this than for a financier to short a stock, but that's because everything in finance is higher leverage than in business. The goal of an entreprene…

I don't follow. Say a startup comes along and I think the entire idea, space, and sector is doomed to failure. The whole market is a no-go. I can't get rich off the ones I decide will be failures, and it's possible for an entire sector to fail together in a correlated way. Say, Gmail crushes all web-based email startups, or iPhone crushes all startups based on the available 2007-era mobile platforms.

At least in financial derivatives trading, there is a somewhat zero-sum aspect to who is winning and losing money. Every dismal derivatives trade should have some winners on the other side.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#39

Post by rameshnid »

A man of finance measures his success on a single metric - wealth accumulated. A techie founder on the other hand has many takeaways - social respect, geek goodness, making the future instead of guessing it, money in some cases.

I think if economic wealth is used as a measure instead of monetary wealth, pg would be spot on. What say?

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#40

Post by ricaurte »

apsec112 wrote: post #3
pg wrote: post #2

Interesting. Who were the 59 from finance?

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.
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