Reading 06: Wealth Creation

The three essays by Paul Graham that we read this week certainly had some interesting takes on startups and wealth.

The way he describes startups appears incredibly frightening to someone who is considering all job prospects nearing graduation, like myself. While most of Graham's writings on startups focus on the people and innovations that make them successful, he does highlight how "there is a large random factor in the success of any company" (How to Make Wealth, Graham). When talking about the downsides of startups, Graham describes their approach to business as similar to a mosquito. These companies risk shutdown to make as many jumps and leaps as possible to strive for more success, cutting corners and making rash decisions all over. This seems like common knowledge, but Graham drives home just how luck-based it can be. Viaweb evidently came close to failure several times, even with a risk-adverse approach to business. In today's world, however, Graham claims that this approach just does not work. The risk is part of startups, and actual statistics do not make that risk seem small. According to the US Census Bureau, startups are failing more and being started less often in recent years.  It did not seem like a very promising world for startups a decade ago, and increasingly so now. As a result, I am rather hesitant to even approach the world of startups. I find it incredibly ironic how Paul Graham describes them as a "reliable way to get rich for hundreds of years" when they might be the least reliable method of income in tech on average. If I had to create a startup, however, AI makes an easy choice for the next five years. As a rapidly developing and relatively new field, AI has a lot of potential for new advancements that need to be made swiftly and with risk. The popularity of AI in recent years provides an easy way to get funding, too.

Graham's takes on income inequality really struck me as odd. He asserts that giving people the ability to earn exorbitant amounts allows for more innovation and progress, but this sounds like the rant of someone who did exactly that and really enjoys that fact. I would agree that things like government funding can be ineffective towards progress, yet attributing a majority of humanity's technological successes to wealth hoarding is absurd. You can make just as many advancements, if not more, by seeding several potential innovators rather than just one. My favorite example would have to be that of Srinivasa Ramanujan, a mathematician who grew up in poverty but became world-renowned in his work. To me, his story demonstrates how an increasing income inequality gap only stifles bright minds who just cannot take the risk that others can. Innovators should strive to innovate for the needs of others, not the (monetary) needs of themselves. What good are all of these innovations if nobody can afford to use them, anyways?

Overall, Graham's essays give off a sort of obsession with risk in present society. He places a lot of value in the progress that startups bring, yet clearly understands that most of them fail (even with a good product). Our society strives for these innovations but does not offer any form of safety net, instead offering ridiculous monetary gain. This approach dissuades more than it entices, as clear by trending startup statistics mentioned previously. I think our society should encourage these businesses with more seed funding and proper safety nets.