

Given the odds, is taking venture capital the best way to get rich? - hillel
http://www.jacksonfish.com/blog/2009/06/01/given-the-odds-is-taking-venture-capital-the-best-way-to-get-rich/

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pg
Another way to decide questions like this is to poll rich people and see what
percentage took investment to do it. I don't know what the numbers would look
like in other fields, but nearly all the people I know who got rich from
software took money from investors. In fact Steven Wolfram may be the only one
I know who didn't.

The danger of this method is that you're measuring how things were in the
past. Maybe things are different now than they were 10 years ago. But
considering how many people in how many different industries (from restaurants
to hedge funds) use investors' money, my default assumption would be that it's
a reasonable idea.

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spolsky
Paul, this says more about the people that you know than anything else. Nearly
all the people I know who got rich from software were at Microsoft during the
IPO. That doesn't prove much.

Tim Gill made close to $1b from Quark. Jim Goodnight probably made $5b from
SAS. John Sall made $2b from SAS. Bill Gates made $50b from Microsoft.
Technically, Microsoft took VC, but that was just a favor to give David
Marquardt bragging rights... it was a nominal investment right before the IPO.

I could go on all day if you count $100m as rich, but we're just counting
swans, here, not really proving anything

~~~
spolsky
Now that I think about it, there's a strong selection bias here. Private
companies are, well, private, and don't get very much news coverage. Many
super-profitable private software companies that never took investment are
undercovered by the media. 90% of the successful software companies that I
meet at conferences like Business of Software have never come within three
states of a venture capitalist.

Rather than looking at how many rich people took investments, it's more
meaningful, in deciding whether or not to take VC, to look at the outcomes of
founders who take VC.

Those outcomes are not disputed... about half fail outright, the rest mostly
continue as zombies, a tiny number make the founders a million or two, and a
very very very tiny number become big enough hits to make the founders truly
wealthy.

~~~
netsp
I think you have to look at this comparatively though. The number of rich
people is by definition small.

To make a comparison worth anything at all is a problem. While you might or
might not like thinking of VCs as a filter, they do perform this function to
an extent.

If your non-VC sample consists of mostly VC rejects, that's a problem.

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patrickg-zill
The Millionaire Next Door was somewhat interesting. However the follow-on
book, "The Millionaire Mind" was packed with statistics instead of anecdotes
and for me at least, had a number of ideas and changes to my perspective to
offer.

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webwright
The author is talking about a decision that I don't think is made very often.
Founders don't sit around thinking, "Gosh, should I do a VC backed business or
a lifestyle business? Which has a bigger chance at wealth?" They generally
chase the idea that they chase-- because they are passionate about it or
because it falls into their lap. Based on that idea they say, "I could pull
this off without someone else's money" or "I need to go find some money
somewhere if I'm going to pull this off."

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holaamigos
VC investment is great for founders, you can pay yourself a real wage (no more
ramen), you can hire, and really make the company a success. Giving up 30% of
the pie to have $5M in the bank is pretty good methinks. Sure, you may get
kicked out, and / or the company may fail, but with some cash in the bank you
are THE MAN for a couple of years.

~~~
gscott
For the longest time I wouldn't have agreed with you but I had a change of
heart while exhibiting at this one conference and this 21 year old guy came
driving up in an expensive car while my 2004 Chevy Cavalier was being parked.
There is a certain amount of hardship a person can take but it can go too far.
Even going from Ramen to Cup of Noodles would be good sometimes.

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vaksel
Its not the question of whether or not to take VC, its a question of when.
Timing is everything. For a lot of businesses, there is that brief moment
where the extra money can help get you in the mainstream

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access_denied
The best way to get rich is selling insurances. There is good money to be made
with what is basically shovelling papers and.. ... doing well in marketing /
sales. And that's the kicker. Because the good sales people have much better
jobs, which are interresting to the sales geek. But if you are the only smart
guy in your region, you can pull it off quite easily. Off course it is boring
work, that's the downside. And the real reason for taking up venture capital:
to get your world changing idea funded (realized).

~~~
blader
As a current entrepreneur and the son of a PhD physicist insurance salesman, I
don't agree that the best way to get rich is to sell insurance. As far as I
could tell, selling insurance seemed to be hard, slow, and not especially
lucrative, even for somebody relatively smart.

~~~
trapper
It's not about IQ. It's about selling IQ. I know a guy pulling 500k who is at
best a 100 on the IQ scale, but he creates instant rapport with a twinkle of
his eye.

