Ask HN: How do I practically create wealth?
I'm not talking about general advice like owning equity and stuff. I want to the actionables, like maybe joining a startup accelerator and work on my own thing (not the best example)
I was to reach FU money and get away from the salary addiction
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[ 3.8 ms ] story [ 115 ms ] threadSuccessful startups create something that people want (product-market fit).
How do you create something people want? Solve problems in your own life, or solve problems that you think about a lot, have some expertise in, etc.
First identify what people actually want, then create that.
> Solve problems in your own life
I have several problems, which people don't really care about.
> or solve problems that you think about a lot, have some expertise in, etc.
This is orthogonal to what people actually want.
In practice, identifying what people want is the least simplest thing. Building software is generally easy, but discovering product-market fit is the hard part.
You start with your own problems because it is likely other people face the same problems as you. Even obscure problems have may have profitable, sizable markets. But if you try imagining problems that other people have but that you don't have, then you may be too distant from the problem to adequately find a fit.
ie. building an instagram marketing SaaS tool when you've never done instagram marketing
Identifying what people want is a process, and the highest probability of success is starting with some problem you are close to.
There's no need for this on HN.
Generating wealth is also very different than saving. No amount of saving will ever make a minimum wage worker rich. No amount of simple saving will get a developer to 8 figures either.
salary addiction? first im hearing of this. People usually want money to cover their means + some for their interests. It actually sounds like you want more then that to me, since you want FU money and dont want to rely on a salary to get there..
you give an example of joining/building a startup.. is it because you want to strike it rich in 5 years and never work again or something? If so, good luck, the rest of the world wants the same thing.
For example, can you create a product that will reach 5K MRR ?
And in the USA, if you manage to luck into one that is lucrative, you are very likely to end up sharing the business with partners you didn’t want in the first place.
Er, and? How does the presence of homeless people negatively affect a prosperous laundromat business?
I have a good friend who was a firefighter who has built a great cashflow with a few laundromats and attached apartments as well as maintaining in-house laundromats for hotels and apartment complexes. He recently retired and is parlaying that into a motel franchise.
Partners and investors are key part of most businesses. Solo businesses limit you to things like real estate that are more about selling as an agent. I know one guy who found a niche where he is a sales agent for a few VoIP vendors and network integrators. But you need to have a unique personality, broad network (or marry into a deep network) to pull that off.
https://twitter.com/TradeCastOne
Is there another reason you avoid crypto?
A good counterpoint to my argument is gold, which has very little industrial use but a very high price, driven by people wanting to sell it for more to others. And it's been running for a while. I've heard all the explanations of why, they make zero sense to me.
Besides a lot of people want to own and use crypto for whatever reason. This thing isn't going away unless it is regulated out of existence, and that is very much country specific. I believe the countries that outlaw crypto will eventually be very few, as that is the trend I've seen.
As someone who was a founder/manager, it's often the managers who have to appease devs. We've seen people who just... don't work and they still don't get fired. Because there's too much work to do and finding a replacement might take 6 months.
If your goal is freedom, then starting a business ain't it. You no longer have to worry about your rent. Instead, you worry about salaries, office rents, unit economics. You stop sucking up to your boss, and start sucking up to investors and customers. Most startups have a runway of several months, at which you get fired by the market, and have to fire everyone in the office. In the early stages, you also can't afford anyone decent, so you're still doing everything yourself or dealing with the cheap side of the market. If you're burnt out as a salaried employee, you take breaks, unpaid or paid. As a founder, all breaks are unpaid and they always lead to more undealt problems when you come back.
But starting a business and getting rich within 10 years is practical and repeatable. Just follow the playbook: https://playbook.samaltman.com/
But the path for both is well documented. Some people decide to hit the books long enough. Some people decide to do lots of user interviews and build 1000 prototypes. The documented paths will land you in an entry level position, which is what shocks a lot of people. You still have to put in the work over a few years. It's a matter of picking which kind of work you prefer to do over the next 10 years, after you get your foot in the door.
I think there's a selection bias towards tech jobs here, but if you hang around people who have successfully built businesses, there's a lot of common patterns there as well.
But, I will admit, these conversations often strike me with what I see as two clearly different mental models. The first is what I might call the Bayesian (or perhaps "Rawlsian", or "anthropic") model, where the thinker assumes, "I am unlikely to be much different from anyone else", and thus takes overall success rates to be a sort of guidance: "Most startups fail; the expected value of a startup is negative; therefore I won't start a startup."
The alternative mentality I see here seems to be more of an egocentric one: "I'm special, I believe in my ideas, and I can make it."
It seems to me the egocentric view is certainly a necessary condition for wild success, but obviously an insufficient one: people who are special need to identify their specialness to avoid a fate of what might be called "elite mediocrity". But plenty of people who aren't special think they are, and achieve worse outcomes as a result of their unrealistic goals.
Unfortunately, the prescription here seems to be to simply "be clear-eyed", which is easier said than done.
“I didn’t want to work a 9 to 5 job, so I started my own business. Now I work 24x7… f***!”
Most of us try to do 4.) if you have lose morals, 2.) or 3.) might be worth the risks.
But if you are risk averse, buy companies, roll them up, take them public and go live on an island.
Your 4 is natural resources, which they already mentioned. Hedgefund managers are basically parasites that live on parasites.
I did it by raising angel capital for a business that sputtered out after five years, taking time off to write a Web server that went nowhere but which taught me a lot, going to work for a FAANG company in a frothy stock era similar to this one, leaving with $1 million after 4 years, and finally buying a company whose services I used but which couldn’t monetize. I then monetized it successfully. I chose not to patent anything and ended up with several competitors who copied the idea and were able to create similar lifestyle startups.
Starting from an early age I read a whole lot about entrepreneurs and money management even though I had no money. I understood I would have to take risks. About 70% of my businesses succeeded, and 30% failed. None of the risks would have bankrupted me, but I also knew I was batting doubles instead of going for home runs. My research showed me that becoming a billionaire almost always seems to cost entrepreneurs their first and maybe even second marriages/ brood of kids. I chose to tune down the risk, which also tuned down the potential rewards. My wife would much rather be worth $10 million than $1 billion for the same reason.
Why my trajectory sounds fairly straightforward, you need to understand that at every step of the way I was zigging while other people were zagging. That means I was always going against the conventional wisdom. That can be really hard because most people think what you’re doing is wrong. Which is obvious, but it also means that you have few or no peers to discuss things with.
I believe I won’t be able to help you because no one I’ve talked to with the kind of thinking you’re exhibiting here has reached critical mass. All of the companies I started, including the failures, addressed holes in the market. I had a deep faith that I had what it took to fix those problems. I wasn’t always right, which meant that I could spend months or years worrying about whether I’ve made the right decisions.
I didn’t think about things like “salary addiction“. I thought about solving existing problems that I understood personally, and bet my own time+money to do so.
I suspect that for someone like you the best way to reach your goals would be in investment banking or working on high speed trading. The reason I didn’t take that approach is because these jobs appear to be soul crushing. People only seem to last five or so years in those jobs and they seem to hate those jobs with a passion. So I made less money than most investment bankers but I still have the same wife and kids.
It’s not really clear to me why you think general advice like owning equity is not actionable, by the way. I did that too.
2) get into crypto (building projects not speculation)
Are there crypto projects that actually justify using crypto and not fiat + database, and aren't total scams/Ponzis?
1. Work hard, save money, and purchase your first rental unit in city with solid real-estate growth market. Find a bank / lender that accepts least amount of down payment. Get tenants ASAP.
2. Leverage that rental unit to buy your second unit. Banks are MUCH more forgiving on down payment, if they have collateral, and know you're generating income.
3. Repeat these steps until you have a nice portfolio of 5-10 units.
The real money here is not the income generated from rent, but rather the increase in property value. The more value you have = the more risk banks are willing to take, and lend you more money.
Depending on what country you live in, you might have to create a LLC (or equivalent) for each property. This shields you personally from losses, and gaps the properties from each other. Also, depending on country, the lending rules/laws can be more lenient on companies, versus people. Of course, there are more costs involved, there are trade-offs.
This is a strategy I've seen pretty much in every city with positive RE growth. People are making money hand over fist, starting from scratch - mainly due to very low lending rates, combined with explosive markets.
I know one guy that did just this, while mainly working as a developer. If he sold his portfolio today, he could retire - even though his debt ratio is completely out of whack.
But oh well, life aint fair.
It lays out 10 ways folks became rich throughout history, from being a loyal lieutenant like Ballmer to building a business to stealing.
https://en.wikipedia.org/wiki/Enclosure
https://en.wikipedia.org/wiki/May_68
I know a lot of people might be haters, and I DEFINITELY know his methods might not be repeatable everytime by everyone, but the tenets are sound:
1. Find a problem you want to solve that others have, 2. Build a tool to solve the problem, 3. tell people about the tool, 4a. Monetize the tool if it gains traction, OR 4b. No traction? Go back to #1. 5. Invest the profits from your product(s) in an S&P500 index mirroring ETF
Keep building until you find something that gives #4a.
End of the day, you need to work hard at something long enough to earn more money than you spend and save then invest that money over a long period of time. Selling products you build allows you to earn more money than some salaries.
DISCLAIMER this is NOT financial advice. You need to work for what you want in a way that works for you and your situation. Good luck.
If all of those are off the table, this is a guaranteed way to get rich over the medium term: 1) earn a degree from a prestigious university or college in something very hard, typically math, computer science, or math economics (you will typically need at least some masters work on your CV), 2) have or develop a personality that can get you into a trading operation or ancillary field, 3) go work there, 4) don't spend money in anything but rent, groceries, gym, family, healthcare, etc., and 5) if you are good at your job you will have earned enough money in 10 years to never have to work again if you maintain a "quietly affluent" lifestyle. Unfortunately, there is a certain aspect of natural talent in this career (how your brain is already wired). My friend's son followed this path at a "Public Ivy" institution and in his mid-20s he was turning down $300-450,000 per year offers (salary plus base case bonus) to work at hedge funds in order to finish his masters and be selective about his employer next year. When he goes there, in good years he could get bonuses of $1-2mm or more.
This will probably offend you, but the fact that you asked this question at all and the attitude expressed in your post indicates that you are much more likely to waste investment capital on seminars and training materials sold by "get rich quick" scamsters. Perhaps you think there is some secret move or opportunity, and if it exists then the person who knows about it is willing to spill the tea on a public forum.
Do you want a few more actionable pieces of advice? Be a humble person, kind, and show gratitude. No one ever did this alone, so take that attitude and connect with mentors who are successful in your field and in life. Help other people. More often or not, one of those seeds you plant today turns out to be the thing that helps you much later.