
A Data-Driven Guide to Becoming a Consistent Billionaire - dayve
https://theartandscienceofdata.wordpress.com/2017/06/01/the-billionaire-clusters/
======
eksemplar
I had a month long heated debate in a eco/alternative economy political party
I was a member of a few years back (I'm Danish so we're talking really
liberal), about the value of education. The majority didn't value it, and as
such didn't want our political program to support it. It eventually led me to
leaving the party because it was just too silly for my blood.

I specifically remember when I used a good friend of mine. A dyslexic CS
major, as an example of how you could still have a brilliant career through
education, disability training and really hard work - and it was put off by
arguments like "well if he had dropped out he might've been bill gates,
instead of just running an RND department at IBM". I pointed out that the
likelihood of severely dyslexic Danes with no education (his age), even having
a job was very low statistically, but they would hear none of it, because
"most billionaires were dropouts".

It would've been nice to have this data back then.

~~~
kayoone
In countries were top education is essentially free, i really see no reason
anyone should forego it, even if they don't value it as much as others. Sure,
there is the off chance you might do better without that degree because you
can start earlier, but statistically that chance is slim and the benefits of
good education will serve you all your life. I understand the anti movement in
the US, because of their state of top education in return for lots of money
which might never pay off, but this really should not inspire people in europe
to drop studies.

~~~
kidmenot
Then again, while I agree with the value of studying for a degree, young
people see the vast majority of their slightly older peers with a degree in
their hands who can't get a job, so I can see why the young can decide to
forego college.

This is Italy I'm talking about, I don't know enough about other European
countries. While the average youth unemployment rate for Europe is ~19%, ours
got as high as 37%. That is a lot, only better than Greece and Spain.

There are many more factors to keep into account, such as the undeniable fact
that a lot of current youngsters feel entitled just because they have a
degree, or flat-out refuse jobs because that's not what they studied for, as
if it was _beneath_ them. They don't seem to realize that it's no longer like
it was in the past decades, when very few people could access higher
education, and were of course preferred in job interviews to people who just
went to high school.

On the other hand, taxation is extremely high and heavy on entrepreneurs
(employees cost ~2x their salary), who then hire under shitty one-off
contracts because it costs less, so the whole job market is very hard to get
into and very easy to drop off of.

Another issue is that there are a bunch of useless degrees, such as this thing
called "Political sciences", which makes you pretty much unemployable, and
sadly a lot of people choose it, and wonder why they can't find a job.

There are also many other factors at play here. It's a shitshow, really.

Higher education does have a lot of value in terms of teaching how to solve
problems and hopefully teaching you how to network, but there _are_ reasons to
either drop out or don't even get into college in the first place.

~~~
tiggybear
Don't forget about the entitlements of the business owners. Many, many, many
believe they are entitled to highly skilled and highly educated workers
without paying them enough to afford the shittiest house/condo within an
unreasonable commute to the office.

So at some point it isn't the workers that are being unreasonable. And I'm
really curious what you think that point is? What defines who is being
unreasonable among the business owner or worker? Or is that just dictated by
which socioeconomic class you fall into?

~~~
marcosdumay
Before landing my first job out of college I had to refuse quite a few offers
because I would effectively have to pay to work on them. And that was in a
growing economy in a much more young-accepting climate, besides, rent was
cheaper by the time.

The way you phrased it, it sounds entitled. But I guess the people downvoting
your comment have no idea what it is to enter the workforce nowadays.

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erikb
I think the idea to evaluate yourself or other people as Millionaire or
Billionaire is crap.

Being middle class has value, being upper class has value, being rich has
value, having a degree has value, having provided a meaningful recognisable
addition to human development has value. It's so easy to have such a number
drop to 50% or to zero even, without changing anything about your value, your
opportunities etc. For instance if Elon Musk lost all his money tomorrow you
bet he would still be able to attempt another huge project next week. But if I
give you one billion dollar, you might still not be able to start a project of
the same size, because you miss the skill, connections, track record etc.

The most important thing to worry about is actually doing something valuable
for the people around you. The more people you can influence positively the
better your life will become as well.

Example: In my country there's a start-up that tries to revolutionize the
train system. All they achieved was to repair one second-hand train, rent the
railway slots to drive once up south to north and once down north to south, a
few days a week. Then they ran out of money.

But! It really influenced a lot of people positively, made great press, showed
strong customer engagement. So even after going broke they were able to
continue after a short break, because someone bought them. No money, no
profit, loads of way-too-hard-work nobody else wants to do. And still they are
able to get this working, because they provide something provably valuable.

~~~
corporateslave2
This is non sense, the life for the rich is far better than for the poor. If
you don't believe that is true, then you haven't been exposed to it enough.
Having high status in any society can have massive advantages. More leisure
time, better mates, ability to purchase expensive health care and therapy,
organic food, the freedom to go anywhere in the world, the list goes on and on

~~~
erikb
I totally agree. But the set of rich people and the set of billionaires are
only overlapping. They are not the same. And funnily it's not even true that
one would be a subset of the other. It's possible to be a billionaire on paper
and starve to death. But at least I personally would say if you are starving
you are certainly not rich. Rich means having the ability to get what you need
and a lot of things you want, including things that are unavailable to most.
Would you agree?

It can be considered a subtle difference, but it's the point I'm trying to
make. Stop worrying about the number "one billion US dollars" and instead
start worrying about becoming rich.

~~~
ohquu
I honestly cannot understand the point you're trying to make.

Also,

> It's possible to be a billionaire on paper and starve to death.

Can you provide an example?

~~~
erikb
It's also hard for me to see where our experiences diverge so much that we
can't understand each other. Maybe you don't know that billionaires are not
having this billion dollars on their bank account, but instead it's a
calculation of assumed ownership of stock, houses, derivates etc?

If you have a billion dollar on a bank account with a bank that would cash
that amount of money, then I'd say yes you are rich. But the Forbes list is
mostly guessed values that are used in calculations, based on real but unknown
values that may change a lot between one day and another.

I hope that was the point. If not give me some hints or explain your point of
view more detailed. I wouldn't be surprised if we find out that we actually
share the same view but express it differently.

~~~
ohquu
Please tell me how many on the Forbes list are starving. Hell, give me an
example of _any_ billionaire ever that ended up starving. The point you’re
trying to make has no basis in reality.

~~~
erikb
You talk about correlation, statistics. I talk about logical conclusion.

~~~
ohquu
No you don’t!

------
paulsutter
More concise version here:

[http://longorshortcapital.com/four-simple-steps-to-
becoming-...](http://longorshortcapital.com/four-simple-steps-to-becoming-a-
billionaire.htm)

~~~
singularity2001
_) Take outrageous risks

_ ) Be the 1 out of 500 million for whom it pans out. This one is key so focus
on it.

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noddy1
Isn't "consistent billionaire" a surrogate for "way over a billion" whereas
the "non-consistent billoinaire" is someone who makes about a billion? And,
does any of this mean anything? who cares?

~~~
prostoalex
"Silicon Valley" S02E07, where Ross Hanneman finds out his net worth drops
slightly below $1,000,000,000.

~~~
davidkuhta
My personal favorite: Richard: (referring to the McLaren) You got this for me?

Russ: What? No, I It's for me. I bought this for myself to celebrate you guys
helping me get back to a billion. That's why I came here, to show it to you.
To say thank you. I'm not an * * * * * * *.

Dinesh: You drove here with a bow on it?

Russ: No, I put it on after I parked.

------
geocar
Erm. Bayes might have some trouble with this kind of analysis. There are
around 2,000 billionaires in the world, and over a billion people living in
Africa. Anyone moving to Africa with the hopes of becoming a billionaire is
going to be disappointed.

------
robterrin
Thanks Rosebud! This is a cool analysis, and I really appreciate you sharing
the code. There are a ton of ways to pick apart the interpretations, but I
feel that you were pretty up front about the difficulties of inferring much. I
can empathize with the level of data cleaning fatigue you must have felt.
Here's an analysis of VC backed enterprise startups that I did for a stats
class:
[http://robterrin.com/MissingData/index#1](http://robterrin.com/MissingData/index#1)

By the end, I was pretty much burnt out on this data set to draw many strong
conclusions. Still, you busted some myths and flagged some interesting
observations for further research. Thank you!

P.S. Oops, I realize the OP is not the author, but cool nonetheless.

~~~
softwarelimits
Interesting! Would you like to offer the slides as a pdf, the html version is
broken, most slides have their content cut off by a big black frame. Thanks!

~~~
robterrin
Thanks for your interest! Press w for widescreen mode and f to go full screen.
Sorry it was a presentation for class so it wasn't designed to be super user
friendly.

I also reknit and uploaded a pdf version, it just doesn't look as pretty.
[http://robterrin.com/MissingData/Final_Project.pdf](http://robterrin.com/MissingData/Final_Project.pdf)

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dzhiurgis
Is this supposed to be taken seriously?

This looks like a regular degree distribution:
[https://theartandscienceofdata.files.wordpress.com/2017/06/b...](https://theartandscienceofdata.files.wordpress.com/2017/06/billionaire-
degree.png)

~~~
dahart
I think it is. There is a persistent myth that rich people drop out of school
at larger rates than average. That "fact" is often used to suggest that
education might be the opportunity cost that prevents one from getting rich.

It looks to me like the distribution of degrees among the billionaires skews
higher than the general population, according to this:
[https://en.m.wikipedia.org/wiki/Educational_attainment_in_th...](https://en.m.wikipedia.org/wiki/Educational_attainment_in_the_United_States)

Your point is super important too, because it's extremely unlikely that level
of education has anything to do with being in the top 0.01% of the income
distribution.

The article's "AI data" that says a bachelor's degree is 6% important is sort
of meaningless. He's measured the relative correlation of variables, among
only billionaires. It's still true that only 0.01% of bachelor degree educated
people get there, just like only 0.01% of dropouts get there. We can't talk
about how important education is to getting there until this analysis is done
on the general population.

------
davidshalev
Most of the rich became that way by engaging in unethical/immoral acts.
Misrepresentation, fraud, financial elder abuse, serial bankruptcies, creating
environmental disasters in third world countries without a blink of an eye.
They just happen to not get caught or to not engage in activity that is
outright illegal. Yes, there are innovators and inventors. They deserve our
admiration. But most of the Wall Street and Real Estate billionaires are just
people who are less reluctant to engage in certain behavior that is deemed by
most as immoral. You can become very rich by selling financial alchemy to old
ladies with dementia. Society will deem you as "successful" and a "role model"
if it's not exposed.

~~~
tomcam
> Most of the rich became that way by engaging in unethical/immoral acts.

Citation?

~~~
davidshalev
Admittedly, I don't have data to provide you. I can only tell you my
observations based on a rather large social circle I'm exposed to and just the
sheer frequency that the wealthy engage in white collar crime. Do you honestly
believe that corporate raiders such as Nelson Peltz, Carl Icahn, Henry Kravis
provided billions in value added, you are naive at best. Do you also believe
the Russian oligarchs made their money in a moral way? Insider trading, market
manipulation, Bribery (aka lobbying), fraud, etc..... That's how most people
become billionaires.

------
RosebudAnwuri
Hello Everyone,

Rosebud here!

I am overwhelmed by all the responses. I never expected the blog post to
garner this much engagement! Thank you so much for all your comments and all
the reads.

Let's keep talking.

------
dahart
> "founding_year” is intriguing. It could mean that it may be getting easier
> or harder to build a sustainable business.

It could mean that. It could also mean inflation. The threshold of 1B is worth
less and less every year, so the number of billionaires is expected to go up
every year, skewing all data toward today.

------
the_watcher
> when no one wants to be a Hajime?

I understand the author is using hyperbole here, but it's a little ridiculous
to write that no one wants to have vacillated between billionaire and near-
billionaire.

~~~
ukulele
If you're not in the three comma club, what's the point?

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baxtr
I would love to see the same analysis for millionaires. A lot bigger sample
size to draw conclusions on and more relevant for many people who’s goal is to
become rich one day.

------
poorman
Since founding year seems to be of some importance, I would really like to see
a plot over time of the number of founders per year and possibly extrapolate
founding year + sector to predict what a good time to enter a sector would be.
Could yield some interesting results.

------
fiftyacorn
Its a small point - but its a shame JK Rowling is used as an example of "the
ghost" since the main reason she has dropped off is she is giving away her
money

------
brosky117
All I could think about was Russ Hanneman.

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santoshalper
Well, I'll be sure to keep this in mind.

------
tudorconstantin
TL;DR be an african 30 something male with a PhD and start a business in
telecom

------
katastic
>. It’s not shocking that Country and Sector are important variables but
“founding_year” is intriguing. It could mean that it may be getting easier or
harder to build a sustainable business.

It should be pretty obvious that LUCK is a huge factor.

It's that age old saying... how does it go? "Success is when preparation meets
opportunity." Bill Gates got rich because he was the right guy, at the right
time, with the right (completely unfinished vaporware) product when IBM needed
an OS.

Most of the new billionaires are techies. Techies that happened simply because
the world became tech oriented. Surprising... nobody. There are entire
billionaire families from previous "Rushes". The gold rush, oil rushes, wall
street, RAIL ROAD TYCOONS, etc.

There is no scientific way to guarantee billion-dollar wealth, only
correlations. And the only data I see from the article is: 1) There's more
than one way to skin a cat. Some dropped out, some got Ph'ds, many stayed in
the middle. That doesn't matter. Wherever you are now, you can start working.
2) Luck matters. You can be successful but the chances of you exploding is
fractions of a fraction.

------
jondubois
There is no such thing as a self-made billionaire. Luck is such a huge factor
that it makes the other characteristics irrelevant.

I think that there is more to learn about life from a bum on the streets than
from a billionaire.

~~~
Jdam
"luck favours the prepared mind"

~~~
jondubois
Yeah but just because you have two legs, it doesn't mean that you're going to
win the 400m relay in the Olympics if you keep trying... Having two legs
barely scratches the surface; even in the extremely unlikely case that you
actually make it to the Olympics, you have to account for the fact that your
personal success depends more on your team's performance than on your own
performance.

Everybody and everybody's mum has a 'prepared mind'. The kind of basic level
of intelligence that's required for earning a billion dollars is extremely
common among the general population. Billionaires are not geniuses; they have
slightly above average intelligence and/or skill.

The pool of people who have 'slightly above average intelligence and/or skill'
is massive. Hundreds of millions of people. On the other hand, the pool of
people who are billionaires is tiny in the thousands. It's easy to see why
it's a lottery.

~~~
Jdam
I'm glad that I don't have this limiting mindset.

~~~
jondubois
I don't know who you are or what you do but I know for sure that you're not a
USD billionaire and I can also predict that you will never become a
billionaire. The fact that I can make this prediction has nothing to do with
who you are as a person and everything to do with probability.

