How to Make Wealth

I revisited my old friend StumbleUpon yesterday. As always, that old friend had a serendipitous article for me stroking my entrepreneurial ambition, striking so many chords I felt like an old guitar.

The article was by Paul Graham, one of the founders of Y Combinator (a Yahoo! company focusing on helping startups), called How to Make Wealth. When I felt read that title I was a little put off. To me, the chances that anyone would write an article “How to Make Wealth” in an attempt to make anyone else but him or herself wealthy was pretty low; and my b-sh*t meter went up a notch.

But I’m not one to think everyone from China’s uncouth and everyone from India’s out to make a quick buck, so I gave the article a chance and skimmed down a couple of paragraphs. Before I knew it, I was hooked.

The article’s about entrepreneurship, but not just that. Graham takes plenty of pokes at why typical jobs don’t work for people who tend to contribute above the mean.

Here’s his article, trimmed down to the bare essentials for your skimming pleasure:

On Startups

  • A startup has the potential to make you lots of money within a short number of years — it condenses your earning potential from say 30 years to three — but along with the earnings, the pains, too, are condensed.
  • You can get rich reasonably straight-forwardly with some talent and hard work. But thinking about getting billionaire-rich takes more than just hard work and talent; luck plays a part too.

On Money and Wealth

  • Money is not wealth, it’s just a method of allowing people to easily exchange their labour for something they want or need. You want wealth (i.e. what money can buy), not money.
  • Making wealth is the creation of value. When you create something (a piece of art or software; refurbishing an old home or car; repairing a broken down widget, etc.) you create wealth. You make something somebody else wants or needs.
  • Money may be zero-sum: if one person gets more, chances are good another person gets less.
  • Wealth on the other hand, is infinite. You create something, and there’s suddenly more wealth in the world. Even if nobody buys anything from you, that thing you created can improve the lives of others in other ways, even if just through aesthetics (if it makes life look better, life’s better).

On job performance and measurement

  • Companies create wealth.
  • Companies pay you for the value you create. When a company employs you, it assumes you’re going to be making the company more than you’re costing it (e.g. salary and bonuses).
  • But the problem is you can’t compensate what you can’t measure. Sales and top-management are easily measured; sales by their individual sales, and top-management by the profit of the company.
  • When you’re far removed from the actual sales of the product, there’s no easy way to measure you. Engineering designs the product; marketing markets the product; and customer service reps augment the after-sales perception of the product — who gets credit with how much of the actual sales of the product?
  • When you can’t be measured, your efforts will be merged with others. You can work your ass off for your company, but chances are good your effort’s subsidising the loafer smoking at the stairwell.
  • The solution? Get a job that can measure your performance more directly. If individual performance cannot be done, you can still get close: small groups will work. Work for a smaller company where’s everyone’s performance is much closer tied to how the company’s doing.
  • Or start a business.

And he wrote on about startups, of which I’ll just list some points below. Check out the article. It’s good.

On Startups

  • It’s small, so it’s much more measurable.
  • You pick your own people, and that’s key. A corporation may employ hundreds or thousands of people. By definition many will be just average. When you’re creating a startup, you get to select the best people you know, not the average.

The Catch on Startups

  • You don’t decide how hard you want to work. Your competitors do. And how hard do they work? As hard as they can.
  • Your product may or may not work. Luck plays a great part.
  • Startups are “like mosquitoes”, and exist only for one thing: to score. One slap, though, and you’re dead. Graham writes beautifully, “the defense of mosquitos, as a species, is that there are a lot of them, but this is little consolation to the individual mosquito.”

On Immigration (In Europe)

I’m currently reading a book called Reflections on the Revolution in Europe, by Christopher Caldwell, which talks about how immigration (and Islam) has affected Europe.

Early on in the book Caldwell writes that though Britain has generally been against mass immigration, it has been without much conviction, which could be due to a sense of moral shame. In particular, he cites their being chased away from India had left them “feeling embarrassed and diffident.”

On this feeling, though, Caldwell writes,

If one abandons the idea that Western Europeans are rapacious and exploitative by nature, and that Africans, Asians, and other would-be immigrants are inevitably their victims, then the fundamental difference between colonization and labor migration ceases to be obvious.

Whether you agree or disagree with what he says, I think you’ll probably agree that it’s an interesting perspective to have nonetheless.

What other wedding expenses do we need to consider?

Just the other day the Lix started worriedly asking me if we had enough money to get married. I told her we mightn’t, and that if it came down to it we’d just borrow what we needed.

But Lix has a strong aversion to borrowing. “If we can’t afford it,” she said, “we shouldn’t be doing it.”

Yeah, that’s why I said HDB void deck but “Noooooooooo,” she said.

So I came up with a list of our expenses, trying my best to make sure I caught everything (in my six months as a scout, if I learned nothing except one thing, it was this: “be prepared”. Hey, you know what they say: once a scout, always a scout.)

Still, I can’t quite shake off that feeling that I could be missing something somewhere.

  • Bridal Package (mostly paid for already, so probably no worries here)
    • Pre-wedding photography (over and, well, done)
    • Actual day photography (under and medium rare — haha, food joke. get it?)
    • Bridal gowns / tea dresses (to serve tea in I suppose)
    • Groom’s suit (with a body like mine, who needs one? heh.)
    • Father-in-laws suits (with spandex preferably)
    • Make-up artist on actual day(?)
  • Videography on actual day (deposit paid. Hope they’re still in business then.)
  • Band (live music) for actual day (deposit not paid. Hope they’re still available then.)
  • Professional emcee(?) (professional. hopefully.)
  • Bridal car (anyone wants to loan me their car?)
  • Hotel room(s) for guests from overseas (anyone running a bed and breakfast?)
  • Extra wine (I suppose two bottles per table would be enough? Maybe less… shouldn’t encourage excessive drinking, ya?)
  • Hong bao’s, for both the Malaysia (in ringgit, thank God) and Singapore banquets
  • Rest of banquet $$$ less deposit that’s been paid (all I can say is, “ouch.”)
  • Wedding bands (where should we get it?? and gold prices are going up… argh. Acrylic diamonds look so real… *cough cough hint hint*)
  • Invitation cards (printing of — actually, I’ve got a laser printer at home. Colour laser. *blink blink hint hint*)
  • Furniture for our new room (Only the best European furniture. IKEA.)

Is there anything else I’m missing? Any Where’s Waldo expenses?

(I suppose painkillers and a list of SOS hotlines would be good (just for me), but I’ll leave that on my unofficial list.)