How to make Wealth

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1. If you wanted to get rich, how would you do it? I think your best bet would be to start or join a startup. That's been a reliable way to get rich for hundreds of years.
2. 由于草根阶层在创业知识、能力和资源上的不足，草根创业通常是非常困难的事情，会伴随着大量的新生意的失败。As 草根, we lack 创业知识, Money富二代 and Resources(官二代)
3. Startups usually involve technology, so much so that the phrase "high-tech startup" is almost redundant. A startup is a small company that takes on a hard technical problem.
4. Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four. This pays especially well in technology, where you earn a premium for working fast.
5. If a fairly good hacker is worth $80,000 a year at a big company, then a smart hacker working very hard without any corporate bullshit to slow him down should be able to do work worth about $3 million a year.
6. There is a conservation law at work here: if you want to make a million dollars, you have to endure a million dollars' worth of pain.
7. It's not a good idea to use famous rich people as examples, because the press only write about the very richest, and these tend to be outliers. Bill Gates is a smart, determined, and hardworking man, but you need more than that to make as much money as he has. You also need to be very lucky.
8. This essay is about how to make money by creating wealth and getting paid for it. There are plenty of other ways to get money, including chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting. Most of the greatest fortunes have probably involved several of these.
9. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn't need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn't matter how much money you had.
10. Wealth is what you want, not money. But if wealth is the important thing, why does everyone talk about making money?
11. How do you get the person who grows the potatoes to give you some? By giving him something he wants in return. But you can't get very far by trading things directly with the people who need them. If you make violins, and none of the local farmers wants one, how will you eat?
12. The solution societies find, as they get more specialized, is to make the trade into a two-step process. Instead of trading violins directly for potatoes, you trade violins for, say, silver, which you can then trade again for anything else you need. The intermediate stuff-- the medium of exchange-- can be anything that's rare and portable.
13. The advantage of a medium of exchange is that it makes trade work. The disadvantage is that it tends to obscure what trade really means. People think that what a business does is make money. But money is just the intermediate stage-- just a shorthand-- for whatever people want. What most businesses really do is make wealth. They do something people want.
14. If you plan to start a startup, then whether you realize it or not, you're planning to disprove the Pie Fallacy.
15. But with the rise of industrialization there are fewer and fewer craftsmen. One of the biggest remaining groups is computer programmers.
16. A programmer can sit down in front of a computer and create wealth. A good piece of software is, in itself, a valuable thing. There is no manufacturing to confuse the issue. Those characters you type are a complete, finished product. If someone sat down and wrote a web browser that didn't suck (a fine idea, by the way), the world would be that much richer
17. A great programmer, on a roll, could create a million dollars worth of wealth in a couple weeks. A mediocre programmer over the same period will generate zero or even negative wealth (e.g. by introducing bugs).
18. hear that the richest 5% of the people have half the total wealth, they tend to think injustice! An experienced programmer would be more likely to think is that all? The top 5% of programmers probably write 99% of the good software.
19. If wealth means what people want, companies that move things also create wealth.  Ditto for many other kinds of companies that don't make anything physical. Nearly all companies exist to do something people want.
20. A more direct way to put it would be: you need to start doing something people want. You don't need to join a company to do that. All a company is is a group of people working together to do something people want. It's doing something people want that matters, not joining the group.
21. You're expected not to be obviously incompetent or lazy, but you're not expected to devote your whole life to your work.
22. Salesmen are an exception. It's easy to measure how much revenue they generate, and they're usually paid a percentage of it. If a salesman wants to work harder, he can just start doing it, and he will automatically get paid proportionally more.
23. The CEO of a company that tanks cannot plead that he put in a solid effort. If the company does badly, he's done badly.
24. In a large group, your performance is not separately measurable-- and the rest of the group slows you down.
25. To get rich you need to get yourself in a situation with two things, measurement and leverage. You need to be in a position where your performance can be measured, or there is no way to get paid more by doing more. And you have to have leverage, in the sense that the decisions you make have a big effect.
26. The only decision you get to make is how fast you work, and that can probably only increase your earnings by a factor of two or three.
27. An example of a job with both measurement and leverage would be lead actor in a movie. Your performance can be measured in the gross of the movie. And you have leverage in the sense that your performance can make or break it.
28. CEOs also have both measurement and leverage. They're measured, in that the performance of the company is their performance. And they have leverage in that their decisions set the whole company moving in one direction or another.
29. I  think everyone who gets rich by their own efforts will be found to be in a situation with measurement and leverage. Everyone I can think of does: CEOs, movie stars, hedge fund managers, professional athletes. A good hint to the presence of leverage is the possibility of failure. Upside must be balanced by downside, so if there is big potential for gain there must also be a terrifying possibility of loss. CEOs, stars, fund managers, and athletes all live with the sword hanging over their heads; the moment they start to suck, they're out. If you're in a job that feels safe, you are not going to get rich, because if there is no danger there is almost certainly no leverage.
30. But you don't have to become a CEO or a movie star to be in a situation with measurement and leverage. All you need to do is be part of a small group working on a hard problem.
31. Starting or joining a startup is thus as close as most people can get to saying to one's boss, I want to work ten times as hard, so please pay me ten times as much. There are two differences: you're not saying it to your boss, but directly to the customers (for whom your boss is only a proxy after all), and you're not doing it individually, but along with a small group of other ambitious people.
32. It will, ordinarily, be a group. Except in a few unusual kinds of work, like acting or writing books, you can't be a company of one person. And the people you work with had better be good, because it's their work that yours is going to be averaged with.
33. A startup is not merely ten people, but ten people like you.
34. You don't want small in the sense of a village, but small in the sense of an all-star team.
35. But a very able person who does care about money will ordinarily do better to go off and work with a small group of peers.
36. Smallness = Measurement
37. Technology = Leverage
38. Startups offer anyone a way to be in a situation with measurement and leverage. They allow measurement because they're small, and they offer leverage because they make money by inventing new technology.
39. What is technology? It's technique. It's the way we all do things. And when you discover a new way to do things, its value is multiplied by all the people who use it. It is the proverbial fishing rod, rather than the fish. That's the difference between a startup and a restaurant or a barber shop. You fry eggs or cut hair one customer at a time. Whereas if you solve a technical problem that a lot of people care about, you help everyone who uses your solution. That's leverage.
40. If you look at history, it seems that most people who got rich by creating wealth did it by developing new technology.
41. What made the Florentines rich in 1200 was the discovery of new techniques for making the high-tech product of the time, fine woven cloth. What made the Dutch rich in 1600 was the discovery of shipbuilding and navigation techniques that enabled them to dominate the seas of the Far East.
42. Fortunately there is a natural fit between smallness and solving hard problems. The leading edge of technology moves fast. Technology that's valuable today could be worthless in a couple years. Small companies are more at home in this world, because they don't have layers of bureaucracy to slow them down. Also, technical advances tend to come from unorthodox approaches, and small companies are less constrained by convention.
43. Big companies can develop technology. They just can't do it quickly. Their size makes them slow and prevents them from rewarding employees for the extraordinary effort required. So in practice big companies only get to develop technology in fields where large capital requirements prevent startups from competing with them, like microprocessors, power plants, or passenger aircraft. And even in those fields they depend heavily on startups for components and ideas.
44. A McDonald's franchise is controlled by rules so precise that it is practically a piece of software. Write once, run everywhere. Ditto for Wal-Mart. Sam Walton got rich not by being a retailer, but by designing a new kind of store.
45. Use difficulty as a guide not just in selecting the overall aim of your company, but also at decision points along the way.
46. And I'd be delighted, because something that was hard for us would be impossible for our competitors.
47. Venture capitalists know about this and have a phrase for it: barriers to entry.
48. That is, how much difficult ground have you put between yourself and potential pursuers? [7] And you had better have a convincing explanation of why your technology would be hard to duplicate. Otherwise as soon as some big company becomes aware of it, they'll make their own, and with their brand name, capital, and distribution clout, they'll take away your market overnight. You'd be like guerillas caught in the open field by regular army forces.
49. A big company is not afraid to be sued; it's an everyday thing for them. They'll make sure that suing them is expensive and takes a long time.
50. the best defense is a good offense. If you can develop technology that's simply too hard for competitors to duplicate, you don't need to rely on other defenses. Start by picking a hard problem, and then at every decision point, take the harder choice.
51. When you're running a startup, your competitors decide how hard you work. And they pretty much all make the same decision: as hard as you possibly can.
52. A startup is like a mosquito.
53. We would have much preferred a 100% chance of $1 million to a 20% chance of $10 million,
54. The closest you can get is by selling your startup in the early stages, giving up upside (and risk) for a smaller but guaranteed payoff.
55. So it is easier to sell an established startup, even at a large premium, than an early-stage one.
56. t is just as well to let a big company take over once you reach cruising altitude. It's also financially wiser, because selling allows you to diversify.
57. The hard part about getting bought is getting them to act. For most people, the most powerful motivator is not the hope of gain, but the fear of loss. For potential acquirers, the most powerful motivator is the prospect that one of their competitors will buy you. This, as we found, causes CEOs to take red-eyes. The second biggest is the worry that, if they don't buy you now, you'll continue to grow rapidly and will cost more to acquire later, or even become a competitor.
58. What they go by is the number of users you have.
59. Users are the only real proof that you've created wealth. Wealth is what people want, and if people aren't using your software, maybe it's not just because you're bad at marketing. Maybe it's because you haven't made what they want.
60. In a startup, you're not just trying to solve problems. You're trying to solve problems that users care about.
61. So I think you should make users the test, just as acquirers do. Treat a startup as an optimization problem in which performance is measured by number of users.
62. Among other things, treating a startup as an optimization problem will help you avoid another pitfall that VCs worry about, and rightly-- taking a long time to develop a product
63. Get a version 1.0 out there as soon as you can. Until you have some users to measure, you're optimizing based on guesses.
64. The ball you need to keep your eye on here is the underlying principle that wealth is what people want. If you plan to get rich by creating wealth, you have to know what people want. So few businesses really pay attention to making customers happy.
65. You please or annoy customers wholesale. The closer you can get to what they want, the more wealth you generate.
66. Making wealth is not the only way to get rich. For most of human history it has not even been the most common. Until a few centuries ago, the main sources of wealth were mines, slaves and serfs, land, and cattle, and the only ways to acquire these rapidly were by inheritance, marriage, conquest, or confiscation. Naturally wealth had a bad reputation.
67. Two things changed. The first was the rule of law.
68. The answer (or at least the proximate cause) may be that the Europeans rode on the crest of a powerful new idea: allowing those who made a lot of money to keep it.

References:

http://www.paulgraham.com/wealth.html