On Nerds and Measurement

37 points

16 years ago

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.

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