The most expensive lottery ticket in the world | Felix Salmon - 0 views
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No Exit, the new book from Gideon Lewis-Kraus, should be required reading for anybody who thinks it might be a good idea to found a startup in Silicon Valley. It shows just how miserable the startup founder’s life is
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Silicon Valley is gripped by a mass delusion, compounded by a deep “fake it til you make it” attitude toward success. Why do so many people in Silicon Valley want to be founders? Because every founder they meet is always killing it, crushing it, having massive success, just about to close a huge round, etc etc
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people tend to believe the evidence of their own eyes, and what they see is a combination of two things: the founders they know all seemingly doing great, and also a steady stream of headlines showing other founders cashing out for millions or even billions of dollars.
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No Exit makes it very clear that the life of a startup founder is a miserable one, and that engineers are invariably happier when they’re working for a big company.
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Financially, starting up a company in Silicon Valley makes very little sense. You have a very high chance (indeed, a certainty) of having to scrape by on a very low income in a very expensive city. At a time of your life when you should be out enjoying life and meeting friends and generally having lots of fun, you will instead be unhappily tethered to your laptop at all times. In return for sacrificing a six-figure salary elsewhere and general enjoyment of life, you’re given a lottery ticket: you get a minuscule chance of making untold millions of dollars.
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So where does it come from, this intense Silicon Valley desire to buy the most expensive lottery ticket in the world?
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The Silicon Valley trade is also pretty close to being zero-sum. Even on a purely financial basis, if you add up all the profits from successful investments, they barely cover the losses on all the unsuccessful ones. A few big-name angels and VCs can do OK for themselves, but in aggregate the industry of investing in startups does not make money.
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Essentially the way that the startup ecosystem works is by taking the valuable labor of thousands of hopeful founders, and converting it into large amounts of capital for a tiny number of successes
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On its face, the winners, here, are the people with the big successful exits. But after reading No Exit, a different conclusion presents itself. The real winners are the happy and well-paid engineers, enjoying their lives and their youth while working for great companies like Google. In the world of startups, the only winning move is not to play.
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Everything in American culture would lead one to think that it is easy to launch a new restaurant, hair salon, company, or fill in the blank. I wouldn’t go so far to say that those who do it have a false sense of entitlement – but there’s seemingly no sense of contentment in being a no. 2 or lower in a company.
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most of the website or mobile app start-ups that you guys in the general media (I will lazily generalize like you all do and lump you all together) lazily or ignorantly refer to as “tech” or “silicon valley” are not founded by computer engineers. They are started by coders, which are a couple notches below computer engineers on the knowledge and experience scale. They are willing to forego a big steady paycheck because they are short on knowledge and experience, and are not usually “incredibly qualified engineers – in fact, they are mostly just qualified to work on mobile apps and economically unsustainable web start-ups. Their value to established companies that need to develop products that generate revenue and profits is questionable, at best.
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I don’t know if you have ever worked for a very large multi-national company that compartmentalizes your job into little tasks so that your skills can be exploited for a few years, and then discarded when they are obsolete. Many big companies are poorly managed, and while they may offer stable employment in the short term, when the errors of their executives impose their costs on the company, the employees usually pay the price. And then what do they do? People who avoid working for large companies and seek the excitement of start-ups have a different value system than you and all those who would choose the illusion of job security.