Founding a Company Is the Most Efficent Way to Create Wealth

As the founder of a start-up company, I had to laugh when I read this from The Start-up Guru: Y Combinator's Paul Graham, Inc., June 2009:

Of all the things that Paul Graham hates about running a start-up — and there's not a whole lot about it that he likes — the customers bug him the most. Everyone has a problem with your product, and people are constantly calling to complain about things you cannot possibly fix. Then there is the fact that you are doing everything for the first time, which creates a crippling sense of uncertainty, as well as a persistent fear that a single bad decision could doom the whole enterprise. There are squabbles with co-founders and combative negotiations with investors and that gut-wrenching period when you realize that success isn't going to come quickly or easily — Graham calls it the Trough of Sorrow. Graham's start-up days are more than a full decade behind him, but he can't help recalling them with a shudder. "It's like talking to someone who went to war," Graham says. "It s—s to run a start-up."

The "Trough of Sorrow," indeed.  Yep, sometimes.

Then there's this, which, of course, explains everything:

It's odd to hear Graham speak this way, because he now oversees what is perhaps the most ambitious campaign of start-up creation ever attempted. His company, Y Combinator, is a hybrid venture capital fund and business school that invests in, advises, and, literally, feeds 40 or so early-stage businesses a year. Investments are small — less than $25,000 per company…

Why is Graham, an avowed start-up hater, doing this? Because for all the pain, he believes that founding a company is the most efficient way to create wealth — for investors, for founders, for society at large — and because he thinks he can make starting a company a lot less painful. "There's this classic pattern that has happened over and over again throughout history in which something is made one at a time, very expensively and unreliably by hand, and then someone comes along and figures out how to make large numbers of them cheaply and reliably," Graham says. "We're pulling this kind of transformation with venture funding. We're mass-producing the start-up."

Very interesting, Paul Graham, I love hearing your idea that founding a company helps produce wealth for society at large.  And thanks for your generous advice for entrepreneurs.


Note:  Since posting, the first page of the article has become unavailable, but a related video has been added here.

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