Startup Thoughts

Thursday, December 29, 2005

How to create wealth

This is an awesome article by the genius writer and entrepreneur Paul Graham.
Some points important to remember are:

1. Difference between wealth and money. Anyone can create new wealth: something which people need. Especially programmers , where they can still compete with the big industrial organizations, unlike other individuals. Invidual programmers still have a big edge
2. You can be much more productive in a startup and get rewarded accordingly. In a big company, your effort gets averaged out and is difficult to measure.
3. Productive programmers are worth a LOT . They can create new and great wealth in couple of weeks.
4. Startup is like compressing the whole working life into a few years. Working individually you could be upto 30x times more productive than in a standard corporation environment !!

A programmer can sit down in front of a computer and create wealth.

5. A job is nothing but working towards something which people want. Think of the end-to-end connection.

6. Really important for creating wealth is Measurement and Leverage....Leverage means your decisions have big impact including the possibility of big failure. You are in a vital role for the organization.

7. A small group affords both good measurement and leverage. Startup means some really hard working people getting together. Its a super star group rather than a small village.

8. What's the leverage: Technology. A small leap in technology affects a large number of people. Wealth gets multiplied by the number of people who use it.

Big companies have a hard time developing new technologies: they are slow and less efficient. Startups are at an advantage to climb fast in technological.

Also understand what is your barrier to entry ? What will prevent a big corporation from just copying over your stuff ?? Explore the hard terrains where your competitors will have a hard time.

9. Startups can be all or nothing proposition.

10. Acquisitions : The biggest selling point is number of users.
Think of a startup as an optimization problem to get more number of users.... . That is the most important measure of any startup. Number of customers.

11. A big reasons nations advanced is that they allowed people to keep their wealth. There was stong incentive to innovate.


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