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On Nerds and Measurement
37 points by apsec112 on Jan 25, 2010 | hide | past | favorite | 9 comments
Paul Graham has pointed out, numerous times, that the way you make a lot of money is to a). have very high performance, and then b). go into an industry where your performance can be measured. He is quite correct in this supposition; if the top performer does ten times better than the average performer, it doesn't matter unless someone can measure it. However, it is interesting that he ignores the fact that this particular class of the economy- making a lot of money by measuring very high performance- is utterly dominated, not by nerds, but by salespeople.

What are the highest paying jobs in the United States? Some might say "corporate lawyer". But what is the job of a top corporate lawyer, really? It's to sell stuff- the legal services of his firm- to corporate clients. All the lower-paid people, the associates, are the people doing the real work. The higher-paid people, the partners, mostly do sales and manage their corporate clients. If you want to make a lot of money as an attorney, selling ability is the key skill to have. Working hard is also important, but it's your sales skill that will really stand out.

Some other people might say "financier". But what, exactly, is the job of a financier? Wall Street is divided into two "sides", the "sell side" and the "buy side". What the "sell side" does should be obvious: you sell stock to people, or whole companies, like investment bankers do. But what the "buy side" does is also really about sales; in order to get money to make investments, a hedge fund or private equity firm needs to sell their company to institutional investors. The way you succeed in the business, with a very few exceptions (like Renaissance Technologies), is by being a good salesman, not by achieving good returns. (It's the same for venture capital, hence the cluelessness of most investors.) This is readily demonstrated by how these funds perform: Warren Buffett has bet that the S&P 500 will outperform hedge funds over the next ten years (http://money.cnn.com/2008/06/04/news/newsmakers/buffett_bet.fortune/index.htm), and it looks like he's going to be right. Yet, people (until the finance crash) continued to invest trillions in them, because they were such good salesmen.

What about startups, the main topic of this website? It appears that, even in startups, programming has become a much less important skill relative to sales. Bill Gates couldn't sell anything to save his life. Yet, when PG and many others talk about the most successful YC founder so far (out of more than a hundred), Sam Altman, the key thing that gets mentioned is his ability to talk to people and do deals. Sam is smart, driven, technically capable, and hard-working, to be sure, but then, there are dozens of founders that fit that description. What really sets Sam apart are his superior social and people skills, which allowed him to get Loopt off the ground, even though he had to partner with some of the largest companies in America.

So, if anyone here doesn't really have a passion for technology, but just wants to make a lot of money in the startup industry: my recommendation is to go quit your job as a programmer right now, and get an entry-level sales job to help hone your people skills, because nothing will help get you there faster.




The way you 'succeed in business' is by creating value. Being closer to large changes in value (e.g., in sales) helps you individually make more money on average perhaps. And if making money is your idea of success in business, then that makes sense.

But creating value also involves not paying attention to what everyone else is doing. Imho, the difference between buy side and sell side is very crucial. You can say there are 'very few exceptions' -- but those exceptions are the beginnings of all new businesses since the idea of business began. The 'buy' in buy side is about taking risk, acquiring risk. It's true that the markets can't afford for everyone to do this. Otherwise we'd be in a topsy-turvy merry-go-round of a place.

But if you have something new and important to say or do: why would you want to be anywhere else?

> So, if anyone here doesn't really have a passion for technology, but just wants to make a lot of money in the startup industry: my recommendation is to go quit your job as a programmer right now, and get an entry-level sales job to help hone your people skills, because nothing will help get you there faster.

Agreed. And also if you do have a real passion for technology, and not just making a lot of money in the startup industry, I take your recommendation as keep on programming.


I do agree with most of what you said, but re: buy side and sell side:

"1. The “math” involved in corporate finance is A JOKE. As in, it’s addition / subtraction and maybe multiplication sometimes if things get really fancy.

Finance is 99% about social skills, networking, and making people like you… and 1% about technical skills." - Ex-investment banker, http://www.mergersandinquisitions.com/getting-a-finance-job-...


Sales is and will always be important, but you forget that:

a) Entry level sales jobs can be soul destroying.

b) Selling something you have trouble believing in is really hard.

c) Sales isn't a monolithic field. For instance, compare, selling new cars and high-end legal services; they are fundamentally different tasks requiring different skillsets.

Hence, you could quit programming and go and get an entry level sales job, stuff it up and end up hating sales and being in a worse position to start a business and make reasonable money.

On the other hand, if you build something that you believe in and think is fantastic it will be much easier for you to sell it. This has two additional advantages:

a) Believing in what you're selling will make it easier for you to get over rejection, and

b) If what you've built isn't what the marketplace wants then you have the advantage of both direct contact with your market and the ability to directly alter your product so that it's something they'd like.

Finally it's easier to hire good sales people as a programmer than vice versa because sales performance is easily measured.


my recommendation is to go quit your job as a programmer right now

Programmers can do stuff which is measurable, too, particularly when they're building systems that scale at startups which are smart enough to measure the effects of them. See IMVU for this taken to a truly impressive degree.

I think the party is just getting started on this, too. Ten years ago you had to be a quant will a billion dollar bankroll advanced by your favorite hedge fund to demonstrate that your individual programming prowess was causing measurable financial results. Both the leverage and the measuring are now empirically within the capabilities of one-man firms with essentially no capital.

It is a great time to be alive. Salesmanship helps, too, but it doesn't hurt to be selling "My my, look at this graph which shows how I made a previous client tens of thousands of dollars in a week."


Uhhh... you know that ten years ago was the height of the tech bubble, when anyone could sell a completely worthless startup for $100M, right?


I find there are plenty of people with extraoridnary natural talent at this kind of thing, looking for equally talented programmers to team up with. You don't even really need to find them because part of their talent is finding you. The trick is choosing one grounded enough that you can work with them and who isn't swept up in their own schtick.


“There's one thing I don't understand. The thing I don't understand is: every motherfuckin' word you're saying.”

[http://www.youtube.com/watch?v=7BaXPg_2FJ4]


Ditto!

Or, if you like, start pushing value out yourself, which again puts you in the "sales" department. The difference being, you get to say who gets how much.


A difference that makes no difference isn't really a difference.




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