How to Make Wealth

[Tony I]

This essay is written by Paul Graham, founder of the start up accelerator Y Combinator.

He has turned tons of start ups into multi million dollar companies.

"The average valuation of Y Combinator-backed companies, according to co-founder Paul Graham, is $45.2 million."


Here is an essay he wrote on how to make wealth. Tons of golden info in here.

Some highlights:

"There is a conservation law at work here: if you want to make a million dollars, you have to endure a million dollars' worth of pain."

Someone graduating from college thinks, and is told, that he needs to get a job, as if the important thing were becoming a member of an institution. A more direct way to put it would be: you need to start doing something people want. You don't need to join a company to do that. All a company is is a group of people working together to do something people want. It's doing something people want that matters, not joining the group."

"For most people the best plan probably is to go to work for some existing company. But it is a good idea to understand what's happening when you do this. A job means doing something people want, averaged together with everyone else in that company."


http://www.paulgraham.com/wealth.html

 

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[Mrs. BRKb]

http://www.paulgraham.com/wealth.html

Thanks!

THAT is one extraordinary article for anyone with the patience to wade through it.

Here are just a few of the ideas mentioned:




Wealth

If you want to create wealth, it will help to understand what it is. Wealth is not the same thing as money... Wealth is as old as human history. Far older, in fact; ants have wealth. Money is a comparatively recent invention...

..if you were in the middle of Antarctica, where there is nothing to buy, it wouldn't matter how much money you had.

Wealth is what you want, not money. But if wealth is the important thing, why does everyone talk about making money? It is a kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable. But they are not the same thing,..


Specialization

Money is a side effect of specialization.

...Instead of trading violins directly for potatoes, you trade violins for, say, silver, which you can then trade again for anything else you need. The intermediate stuff-- the medium of exchange-- can be anything that's rare and portable.

...The advantage of a medium of exchange is that it makes trade work. The disadvantage is that it tends to obscure what trade really means. People think that what a business does is make money. But money is just the intermediate stage-- just a shorthand-- for whatever people want. What most businesses really do is make wealth. They do something people want.


The Pie Fallacy

A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world.

...You can make more wealth. Wealth has been getting created and destroyed (but on balance, created) for all of human history.

Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is-- and you specifically are-- one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you'll get more for it.

In restoring your old car you have made yourself richer. You haven't made anyone else poorer. So there is obviously not a fixed pie. And in fact, when you look at it this way, you wonder why anyone would think there was.

Kids know, without knowing they know, that they can create wealth. If you need to give someone a present and don't have any money, you make one. But kids are so bad at making things that they consider home-made presents to be a distinct, inferior, sort of thing to store-bought ones-- a mere expression of the proverbial thought that counts. And indeed, the lumpy ashtrays we made for our parents did not have much of a resale market.


Craftsmen

The people most likely to grasp that wealth can be created are the ones who are good at making things, the craftsmen. Their hand-made objects become store-bought ones. But with the rise of industrialization there are fewer and fewer craftsmen. One of the biggest remaining groups is computer programmers...

 

[davedev]

THAT is one extraordinary article for anyone with the patience to wade through it.
Here are just a few of the ideas mentioned:

Thanks, that put me in the mood to read the entire thing. Here goes. (it's a whopper of an article, geez)

 

[Tony I]

this article was relayed to me from someone who has built a successful fastlane biz in his 20's. He owns a software company.

its worth the long read.

 

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