> Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is-- and you specifically are-- one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you'll get more for it.<p>Wow. I know it sounds obvious, but for some reason this was an epiphany for me. If I just... do something, I can create value where there was none before. Suddenly it seems like there's infinite opportunities.
Good essay. Though I'd err new developers to not be so easily persuaded by 'the multiplier' effect. In a company your $80K job is a specialist role. One where you focus and get good at one thing. All the million other things are taken care for you, because you weren't recruited for those roles. Just your one.<p>Working on your own product or in a startup is a comparatively generalist role. Or should I say multiple specialist role as you need to be good at a lot of different things that are outside of, and dare i say sometimes more important than, technology.<p>Believing that your 'working harder' is making more progress isn't necessarily true. Does that feature you're building excite your customers as it does you? Working for a month at 3x capacity on something that no one wants equates to zero value.
This is one of those articles I keep referring to my friends although it is almost 10 years old. It opened my eyes on how the world works, I think I learned more from it about wealth than from my entire college education (and I majored in economics).
Cool essay, but :<p>> Many employees would work harder if they could get paid for it.<p>is just wrong. See <a href="http://www.ted.com/talks/dan_pink_on_motivation.html" rel="nofollow">http://www.ted.com/talks/dan_pink_on_motivation.html</a>
I conceive of the value of a company to be the amount of added efficiency it brings to processes undertaken by its customers. If the company and product can either save or give entities time or money, it can theoretically extract some of those efficiency gains in the form of money. I think the "what people want" objective misses the mark a bit, since it implies an a priori desire for the wanted thing in advance of that thing existing. In practice, people just want efficiency and certain products are better at producing that at scale than others.
I enjoyed this essay immensely when it came out, and it's still worth discussion.<p>One thing that isn't discussed much [1] in this essay is the difference between <i>rent collection</i> and <i>wealth creation</i> (I wouldn't go quite so far as to say it's <i>missing</i>, which would imply that it should be there and isn't).<p>PG does conclude in this essay that on critical ingredient to encouraging wealth creation is allowing people who create wealth to keep (a lot of) it. I do agree. But looking back at the massive banking bailout (for instance), it's hard to avoid the conclusion that at least some of the massive fortunes were obtained through rent collection or even wealth destruction. Even in Silicon Valley, there are issues as well. The massive wealth of Microsoft was based heavily on leveraging a pretty aggressive monopoly - I've also read arguments that Facebook also occupies an incredibly profitable spot as a natural monopoly - earned fair and square, perhaps, but a monopoly nonetheless.<p>My guess is that everyone agrees that there is a mix of rent collecting and wealth creation - the real differences probably come in the extent to which people believe these two different activities occur. If you believe that most of the fortunes in the US are based on highly creative wealth generation, you're probably at ease with inequality and low taxes. If you believe that it is mainly rent collection, cartel and monopoly building, and an incestuous relationship with government, you probably aren't at ease with these things.<p>[1] It is mentioned, particularly in the first paragraph under wealth in power. I'd be interested in reading a PG specifically devoted to the difference between rent collection and wealth generation, the extent to which this is a problem, and what we might do about it.
Thinking about this and defining "value" as "what people want" (i.e. "wealth" in the essay), it seems to me that every freely-entered-into transaction must increase overall value. [Since the two exchanged items must be valued more by their final owners than their initial owners, otherwise the transaction would not occur.] This seems intuitively sensible to me and suggests that trade is a good thing :-)<p>However, this then leads to some, to me, unintuitive conclusions:<p>1 - "value" can disappear very rapidly. (I valued an ice cream more than £1, bought it (total value in the world goes up), then ate it (total value in the world goes down)). Also, simply becoming disillusioned with something destroys value (I value it less).<p>2 - the advertising and marketing industries create a lot of "value", by making people want more. (Yesterday I would only valued a new pair of shoes by brand X at £20. Today I saw an ad which made me covet them. I now value them at £100. If I find them for sale at £40 I will buy them and be very pleased.)<p>I've not studied economics, is this definition of fairly ephemeral and manipulatable "value" meaningful?
Very good essay with lots of wisdom. A couple of nitpicks, only because they keep popping up when I discuss this with people<p>1. The beginning has an overly technical explanation of wealth in relation to hours worked. Sort of PG's law of conservation of effort. I don't think the relationship is that precise. In all likelihood, what you work on (market opportunity) matters more than the quanta of hours. You can work 16 hours/day every week for two years and have a failed startup while you can have a pretty good success with putting in 10-12 hour days (putting aside efficiency considerations).<p>2. 'Make something people want' is perhaps not the most helpful way to frame what you should be doing in a startup. I mean it is true at a top level way (surely, nobody would want to work on something nobody wants). However, it seems like an end result of 'x' things that should be done so you get to making what people want.