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A startup is a small company that takes on a hard technical problem.
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.
There is a limited amount of money in the world but wealth is unlimited. Wealth can be created through work and new ideas.
Companies aim to create wealth and so do you when you join one. In a company your work is averaged with that of others so it obscures your actual contribution.
Joining a company is not the only way to create wealth. As long as you can create something that people want you can create wealth and for that you don’t need a company as an intermediary.
Working hard has a high individual cost but creates the opportunity to earn more wealth than one would have by working less hard. Companies are normally not set up to reward people who do this and they often lack a way of measuring individual contribution.
...you need to get yourself in a situation with 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, as in your decisions having a big effect in the final product you’re working on.
The smaller the group involved in a project the easier it is to measure the value of an individual’s contribution. That’s why startups are ideal for hard workers.
Technology is technique, the way we do things. New technology has its value multiplied by all those who use it. Solving a technical problem that affects many gives you leverage.
Technology changes fast, and small companies are better suited to this pace as they have less bureaucracy to slow them down and are less constrained by convention.
Big companies develop technology, but not quickly. Their size makes them slow and prevents them from rewarding employees appropriately.
They are better suited to develop technology in fields where large capital requirements prevent startups from competing. And even in those fields they depend heavily on startups for components and ideas.
Seek to solve the harder problems as they are more valuable and give your company an edge over the competition. It also increases the barrier to entry. That’s how hard it is for another company to duplicate what you’ve done.
If you can develop technology that's simply too hard for competitors to duplicate, you don't need to rely on less effective defenses, like patents.
Without the incentive of wealth, people would only work on projects that brought them personal satisfaction or social status, no one would want to develop mundane technologies like light bulbs or semiconductors.
The power to be re-compensated for working hard and keep wealth is what gave rise to startup culture and what powers our technological revolutions.
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