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praxis13y10

I wonder what the ratio of "people who plan to become millionaires through tech entrepreneurship" to "people who become millionaires through tech entrepreneurship" is. Really, I wonder what it is. I would assume it's rather low, but then, a million dollars isn't really that much. Can moderately successfully start-ups provide a million dollars (in short order), or is it win/lose?

jpulgarin13y10

It's more or less win/lose. Being the average venture-backed founder actually has negative expected utility.

2[anonymous]13y

As one with similar plans to jpulgarin (minus the dancing?), I too am quite interested in relevant research. I know Carl Shulman has investigated entrepreneurship success rates but I don't know exactly what he found - I think I'll email him to find out. I am particularly curious about that '9/10 startups fail' statistic, which is repeated everywhere but I haven't yet seen confirmed.

See in context

8 Which College Major?

by eggman

6th Feb 2012

1 min read

8

N.B.: This discussion isn't up for mainstream article status, as far as I'm concerned (unless someone else wants to take it and run with it). I just didn't know how else to direct an important question to the LW community in general.

I'm currently a first-year university student in Vancouver, Canada, attending UBC. I have a trust fund and otherwise I will not need to worry about paying for my undergraduate degree. I am open to the idea of going to grad school. So, I have the luxury to take my time in my studies and there are lots of options I can choose from. Majors I'm considering are Cognitive Systems, Economics (and philosophy or math or stats), English, Philosophy and History of Science, Mathematical Sciences/CompSci, or Psychology. I'm open to other options. So, have at it with your suggestions.

Specific Questions:

Should I care more about making money or doing something that I have a "passion" for?

How will this allow me to maximize my production of utilons?

What else should I keep in mind?

Personal Blog

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80Don't Be Afraid of Asking Personally Important Questions of Less Wrong

3Grad School?

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[-]christina13y220

The most important question you've asked here is:

"Should I care more about making money or doing something that I have a "passion" for?"

And my answer is: You should care about both, approximately equally.

I would advise that you don't ever choose something that makes you want to gouge your eyes out with a metal fork just because the average yearly salary is six or seven figures. Most likely the result will not be anything like what you are visualizing (eg. early retirement, actually having time to enjoy your money, reasonable mental and physical health...) . I suspect this kind of choice tends to lead either to dropping out of your major, and thus losing both time and money, or to far too much agony when you do enter the workforce. The more interest and enjoyment you get from your chosen field, the better. In a similar vein, be wary of fields that sound cool or tolerable if you have very little idea of what the work in them is actually like. If you have some familiarity with doing whatever is done in your chosen field, that helps a lot. I majored in Computer Science, but I had been programming as a hobby for many years before that, so I already kind of knew how I felt about it. I knew about the frustrating parts, but also knew that overall I enjoy it immensely. I would definitely recommend considering which hobbies you enjoy most when you think about what you want to major in.

On the other hand, I would not ignore the importance of money. Please consider: how much would you like to have the independence to make your own decisions, because your money is your own? For me, this was very important, so I was unwilling to go into a field where the average (the mode, not the mean or median) salary was small, or where money seemed to be very unreliably distributed. For example, some fields have a few very prominent successes who make crazy amounts of money and a large number of talented, hardworking individuals who make almost nothing. Do not assume you will be one of the few prominent successes, regardless of your talent or ability to work hard. Also consider how important financial security is to you. Even if you are well off now, circumstances can change. So try to choose something where you will be able to put some of your money aside into savings (I think the amounts most people advise for this always sound a bit low...). When I was younger, there were times that money was extremely tight for my family--I knew that wasn't how I wanted to live once I was an adult, because it always felt so financially insecure. On the other hand, some people thrive on very little money, so you will need to consider how much your temperament matches mine. This is not to say I didn't take great pride in spending as little money as possible--but this was largely because I wanted the number in my savings account to be as large as possible. Because I did take this into consideration, I don't currently have to worry about money or debt, which is rather nice.

So, that's my advice. Hope you found that helpful in some way. It did at least work for me. I have a career that I can actually enjoy doing, and I don't have to live in poverty.

[-]Kaj_Sotala13y210

Paul Graham's What You'll Wish You'd Known has some good advice: I think the bit about keeping your options open is the most valuable.

In the graduation-speech approach, you decide where you want to be in twenty years, and then ask: what should I do now to get there? I propose instead that you don't commit to anything in the future, but just look at the options available now, and choose those that will give you the most promising range of options afterward.

It's not so important what you work on, so long as you're not wasting your time. Work on things that interest you and increase your options, and worry later about which you'll take.

Suppose you're a college freshman deciding whether to major in math or economics. Well, math will give you more options: you can go into almost any field from math. If you major in math it will be easy to get into grad school in economics, but if you major in economics it will be hard to get into grad school in math.

Flying a glider is a good metaphor here. Because a glider doesn't have an engine, you can't fly into the wind without losing a lot of altitude. If you let yourself get far downwind of good places to land, your options narrow uncomfortably. As a rule you want to stay upwind. So I propose that as a replacement for "don't give up on your dreams." Stay upwind.

[-]amcknight13y40

Thanks for pointing us to this. It's a great essay!

[-]mas13y190

A weblog called StudyHacks has articles about passion that I think you would find interesting.

Specifically The Passion Trap and The Danger of Dream Job Delusion.

EDIT: FORMATTING

[-]Curiouskid13y80

Don't try to predict the future. Read Taleb's "the Black Swan". Instead, try to prepare for an uncertain future by learning generally useful skills that will be helpful in many possible futures. Along these lines, I've decided that I'm going to get a double major in statistics and computer science (particularly something related data mining).

Advantages:

Generally useful. Statistics is used in a lot of fields.
Impact- So many studies are poorly designed and so the results are useless.
Comparative advantage to people with a LW mentality- I think that few people will know about Judea Pearl's "Causality" or Jaynes.
Cool Shit! Google's driverless car. Machines that write jokes. Siri. the movie "moneyball"
Make DINERO!!! See Moneyball. See wall street algorithms that make most of the trades these days. See the gambling industry.
Understand the world. Intellectual stimulation.

I'm also self-studying psychology. If you can understand statistics, psychology, and philosophy, you will have a very solid understanding of the world around you.

http://bits.blogs.nytimes.com/2012/01/26/what-are-the-odds-that-stats-would-get-this-popular/

[-]jswan13y80

I have a BA and MA in English from a top US university, and more than half my lifetime later I'd recommend against it unless you are really sure you want to teach it. As an undergrad I thought I wanted to teach English, but I disliked the graduate studies in the field and I didn't much like teaching at the junior college level when I tried it. Being able to write well has been an enormous help in my alternate career, but you can get that in any course of study that forces you to write frequently under direct criticism. If I had it to do over again I'd do some combination of HPS and CS with a smattering of economics; right up your alley. UBC has a good CS department for sure.

[-]Karmakaiser13y30

Forgive my ignorance, but what is HPS?

[-]jswan13y40

History and Philosophy of Science.

[-]Risto_Saarelma13y50

I majored in computer science and am quite happy with the choice, but I do wish I'd had CS as a minor so I could have just picked and chosen all the interesting courses and ignored the must-have-for-degree undergrad crud, and majored in something that would have made it easier for me to not call myself a programmer while still actually mostly doing programming. I suspect people are a lot happier hiring a person in their forties who calls themself an actuarian, a control engineer or a geophysicist than just a programmer.

Though we're still globally in a pretty big cultural flux about figuring out just how all the programming is supposed to fit in the job and career market space, so my intuitions might apply more to people already older than me and prove to be pretty much outdated for someone just starting university. So, just yay computer science as a minor, whatever you choose as a major, I guess.

[-]Karmakaiser13y00

I am currently fascinated with Data Science as it combines algorithms with robust statistical tools and I'm quite interested in both.

Do you think a Maths with Statistical focus degree with CS as a minor would be enough CS to be hired into such a career?

[-]Risto_Saarelma13y20

My experience is that academic CS credentials matter little for getting hired, compared to other fields. Many people with CS degrees can't actually program, so hiring looks at previous work experience, portfolios of open-source projects and the ability to write a trivial program that looks like it could work in an interview. The degree might still be needed to get to the interview, but if you want to be some kind of data analyst, the hirers should be quite happy with a math major degree.

Most of the useful stuff you probably have a hard time learning on your own a university degree can make you learn is math or the mathier side of CS. Software development remains something of a. craft, which you learn more by doing software development than by studying theory.

[-][anonymous]13y30

Vancouver, Canada

Are you already coming to our meetups?

[-]eggman13y00

I only come occasionally, but I'm attached to the group and I am in regular contact with other members.

[-]hwc13y20

I always advise in favor of a double major with one major being something sciencey and quantitative (math, natural science, engineering, computer science, et cetera) and the other being something you care about. If those categories overlap, then you have less work to do.

[-]jpulgarin13y20

Should I care more about making money or doing something that I have a "passion" for?

Depends on what your passion is. If it's something that allows you to make a lot of money, and doesn't otherwise obstruct you from taking part in other things that you enjoy, then your best bet would probably be to choose that - even if there is another, passionless option, which gives you more money.

If on the other hand the things that you are passionate about you do not make money (which will hamper your ability to produce utilons in a variety of ways), then your best bet will probably be to become wealthy by means of doing something you're not passionate about. With something like tech entrepreneurship you can become a millionaire in 5-8 years, and then focus on producing utilons at optimal exchange rates for your entire life.

Personally, I'm not passionate about any careers that make a ton of money, so my current plan is to become a millionaire through tech entrepreneurship, and then focus on studying/writing philosophy and dancing afterwards.

[-]jswan13y10

Just out of curiosity, what kind of lifestyle and investment strategy are you planning to support a long-term life of the mind on $1M USD? Or is millionaire more of a figure of speech representing "a whole lotta money"?

If you make 5% a year on that and live a very frugal lifestyle in a low-cost area, you could do OK, but medical expenses, children, inflation, etc could hurt your capital considerably. I think you'd need a good bit more than $1M to have a large safety margin.

[-]jpulgarin13y20

The exact figure I'm aiming for is $5 M USD or above. I'd quit trying to make money as soon as I hit $5 M basically.

[-]gjm13y20

If you're planning to take venture capital as part of your plan for making $5M, you'd better hope that the VCs never read that comment.

[-]praxis13y10

[-][anonymous]13y20

[-]jpulgarin13y40

I've spoken to Carl about the subject and he pointed me to this paper: http://www.nber.org/papers/w14219

This paper puts the success rate of venture-backed companies at ~18%.

[-]jefftk13y40

Not everyone gets VC backing, though, which lowers your odds.

[-]CarlShulman13y10

That's not the raw data, it's adjusted to match groups for a comparison. If you look elsewhere in the paper:

The overall success rate on first time ventures is 25.3%. Not surprisingly, serial entrepreneurs have an above-average success rate of 36.9% on their first ventures: venture capitalists are more likely to be more enthusiastic about financing a successful entrepreneur than one who has previously failed.

That's for IPOs only, adding in companies that were acquired, and companies that remained private but made their owners a good amount of money via compensation packages and future sale or IPO would further boost the stats. See my 80,000 hours posts on this.

[-]rjshade13y00

Carl wrote a blog post over at 80,000 Hours where he discusses success rates for startups, and how these data might affect your career choice if you're aiming to donate a lot of money to effective charities:

Salary or startup? How do-gooders can gain more from risky careers

[-]jpulgarin13y10

It's more or less win/lose. Being the average venture-backed founder actually has negative expected utility.

[-]thejash13y10

I went and read that paper. I don't think it says that at all. Their exact conclusion is:

"An individual with a coefficient of relative risk aversion of 2 and assets of $0.7 million would choose employment at a market salary over becoming an entrepreneur. With lower risk aversion or higher initial assets, the entrepreneurial opportunity is worth more than alternative employment"

I didn't understand relative risk aversion, so I looked it up. Here is an example:

"[if you have constant relative risk aversion utility and] If you would give up 2% of your wealth to avoid a 50-50 risk of losing or gaining 10%, then you have a coefficient of relative risk aversion of 4." If you would give up only 0.5% of your wealth to avoid the same gamble, you have a coefficient of 1.
source: http://www.rasmusen.org/x/archives/cat_economics.html

Maybe I'm just not risk averse, but I would not be willing to give up much at all to prevent such a gamble. I'm WAY below a coefficient of 2, and I suspect that many people here on LW are as well.

[-]jpulgarin13y00

This is why I said "average" venture-backed founder. You may have tons of assets such that losing/gaining 10% is not a big deal, or you may be naturally less risk-averse than the average person.

Some level of risk-aversion is rational, and it's not obvious to me if people are naturally over or below that level. it's also not obvious to me at all that people on LW would have unnaturally low risk-aversion.

[-]thejash13y-10

Ok, I now think it's possible that you were right about the "average" founder, but for a different reason--it only depends on what assumptions we make about the distribution of rationality within the set of all founders. I'm not really interested in that right now.

However, I am assuming that the audience of LW is MORE rational than average. They should be LESS risk averse, because "A risk averse agent can not be rational" (source: http://lesswrong.com/lw/9oe/risk_aversion_vs_concave_utility_function/ )

Thus, I believe that it is somewhat disingenuous to use that paper to say that founding a startup has negative expected utility--actually, the EXPECTED utility is very high (because the average outcome is great), and it is very rational. We should definitely be encouraging people here to start startups.

[-]jefftk13y10

Risk aversion, as it applies to wages and startups, is measured in money not utility. If you spend money only on yourself it has diminishing returns: the first $50K has a huge effect on your happiness, while the $50K that takes you from $5M to $5.05M much less. So you'd be quite rational to be risk averse in terms of money, preferring a certainty of $1M to even odds of $3M.

(I give away 30% of my money, and if I suddenly earned a large amount I would probably give away more. Charity doesn't have diminishing returns until you're giving huge amounts of money, so I'm not very risk averse.)

[-][anonymous]13y00

I don't know the statistics but my impression is that the expected value is higher and the variance is lower in finance than in tech. My sample is biased because I don't personally know any rich tech people but I know a lot of rich traders.

In general I think it is pretty foolish to think you can walk into a competitive field and make $Millions without even any passion for what you are doing.

[-]jpulgarin13y00

Retracted.

[This comment is no longer endorsed by its author]Reply

[-]Daniel_Burfoot13y10

What else should I keep in mind?

Everyone is aware of the effect that choice of major has on labor market value, but most people neglect the effect that it has on dating market value; don't make that mistake.

[-]eggman13y20

Can you clarify on this? I would predict that labor market value equates to better pay and a better job, which would be more attractive, unless the job eats up all my time to the extent I cannot date. Do you mean anything specifically?

[-]Barry_Cotter13y10

I don't know about Daniel_Burfoot but my interpretation would be that some jobs are cool and some aren't. Artists don't make much money, accountants do. One suspects artists have more attractive, and more interesting to them partners than accountants making equivalent money. Some fields are negatively cool to the average person, almost everyone dealing with computers, for example. But... Google, Facebook and making apps are cool. People can understand what you do.

Being truly excellent in any field is cool to most people, but how much cool your impressive achievement buys you will depend on the field. There was that cow of a Gawker intern who thought the ex-Magic: The Gathering world champion should have publicised this fact so she could have avoided going on a date with him, for example.

But you can confine your active mate search to people of whatever subculture you belong to. These people will after all tend to be simpatico with you. OTOH, most subcultures are quite gender segregated.

The Great Firewall defeated my attempts to find the Roissy/Heartiste link that said this first and better. David D. Friedman had a post at some stage on the subcultures bit. Please link in daughter comments.

[-]eggman13y00

After perusing advice from the comments and checking the details of the majors I listed above, the ones that seem to promise the most utility would be CompSci, Math/Mathematical Sciences, or "Economics and Mathematics/Statistics" (a single joined major, not a double major). I'm not particularly drawn to software design, so CS is an option I'd put on the backburner at this point. MathSci is a combination of CS, stats, and math; either that, or econ/stats or econ/math I think could open doors to good salaried employment (i.e., actuary, accountant, finance, various businesses(?), etc.). It would be easy to double major in one of those with HPS, or a minor in philosophy, which are flexible, and I can take cool courses like this. Studying neuroeconomics would be interesting grad work; this is motivating me to consider taking more psych/neuroscience.

On VC entrepeunership: to quote christina,

some fields have a few very prominent successes who make crazy amounts of money and a large number of talented, hardworking individuals who make almost nothing. Do not assume you will be one of the few prominent successes, regardless of your talent or ability to work hard.

Not to begrudge those of you aiming for VC success, but I don't personally see myself as the ambitious kind who takes risks with my brilliant idea and succeeds in such a field. At least, not without some collaborators, which would hardly make it my business anyways. I consider questions posed on 80000 hours about career choice and utility too, but those are separate questions I'm not prepared to answer quite yet.

Thanks for the links from Study Hacks and other sites. I'm confident enough in my skills to have a life outside of a career so that my career won't define my life, unless I happen to fall into a really fun career anyways.

[-]FiftyTwo13y00

We can say with reasonable confidence that internet access to information and training will stay as good as it is now or more likely vastly improve in the future. As such there is very little value to learning large amounts of information or specific skills, instead you should look for courses that give you good transferable skills, and learn other things as needed.

Personally, [with standard disclaimer against generalising from one example] I've found studying philosophy extremely good in those respects. It contains a lot of the general rationality and thinking skills we discuss on Less wrong, and a chance to practice them beyond understanding in theory. And once you have the ability to rationally assess arguments and draw out the best parts it becomes exponentially easier to learn and do well in other subjects. A good department will also emphasise clear writing and presenting your arguments persuasively. Given your stated interest in mathematics and compsci Formal Logic might be particularly god for you.

[-]Bruno_Coelho13y00

"Smart people tend to clump together, and if you can find such a clump, it's probably worthwhile to join it. But it's not straightforward to find these, because there is a lot of faking going on." P. Graham

In every field exist crackpots, but in hard science they are more difficult to find.

LW community is full of CS guys, then is natural to suggest the area. So do i. You will be a programmer sooner or later. Choose something that do math part of the time, because you need math thinking on pratically every serious subject.

In addition, everything is digital, the future is emulation. It's vague, but resume the aspirations of technological market. If you don't like the private sector, go to academia. Try to be precise, do research, and if you are not so good at math, go to business again. Avoid idealism.

Maybe you like frogs, but don't forget existential risks. A little help in a crucial question is more important than a great effort in something lateral.

Find your predispositions.

[-]beoShaffer13y00

I'd suggest double majoring if at all possible, this will help keep you options open. Of course at most schools this will reduce the amount of elective classes you can take, but the end result is probably worth it. If you can find two subjects that add value to each other, but have different core markets(eg. CS & PSCY with a intent of going into HCI) thats a nice plus.

[-]orthonormal13y00

The first thing you should do is take a high-level (rigorous) math course if you can, or else the fastest prerequisites to it. It will teach you a lot that you couldn't learn in other classes, and will be phenomenally useful if you decide to take any of those majors aside from English. Plus, math and CS take the heaviest preparation, so you should find out ASAP if that's what you'd enjoy.

[-]Cog13y-10

I have been told that math would also help in English and other humanities as well. Statistical analyses of literature, as well as things like procedurally generated narratives, are beginning to take root. Literary/artistic criticism through the lens of neuroscience/cognitive psychology is also ready to take off, so many of the scientific fields listed above would be useful.

This is not to say that I think that a focus in humanities will lead to the greatest personal utility, but if you feel that you must do something in that vein for a career, then a background in hard science/math would be a good thing. It will make you quite unique and valuable, something that you will need if you enter that horribly over saturated market.

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