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Comment by 6gvONxR4sf7o | Hacker News Reader

> If someone is truly building a company into something they believe to be very valuable, the salary shouldn’t matter very much beyond helping them not worry about bills while they grow the company.

I don’t get that. If someone is truly sitting on a lottery ticket they believe to be valuable, salary still matters very much, because there’s significant irreducible risk that it doesn’t pay out. From a strictly financial perspective, it’s the same reason people don’t go all in on one company in the stock market, but rather diversify their portfolios: People maximize risk adjusted values rather than just expected values.

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So this is not a 0-1 game. Most of the risk in a startup (if you dont take VC) is getting to 5K MRR - 10K MRR. Once there, the existential risk should be reduced to zero.

If you take VC, than there is always an existential risk, since you are relying on new money being available for the next round.

Also, you diversify in the stock market mainly due to information uncertainty. I.e. you do not have any control on different risks (economy, company corruption, etc.).

However, in a startup you have much more control on the company future (again, if you DONT take VC money).

If you take VC money, than the company is basically a privately traded company, and you assume all the risks of a public company.

People diversify portfolios out of ignorance, not prudence. If you don’t have any special knowledge that lets you favor one company over another, then you might as well pick a bunch of them. But if you know one company is a good bet for specific reasons, it makes sense to lean your portfolio heavily on it. That is how you get so rich.

Or homeless.

You can’t truly become rich without risking becoming homeless.

Do you think Bill Gates or Jeff Bezos were ever at risk of becoming homeless?

That is still doubling down on risk, so diversifying is indeed prudence. Even a good bet is not a sure bet, particularly if it has a chance of high payoff.

Truly good bets are rare. When you find one, you should double down. If you do this every time, you will come out ahead most of the time, if they are truly good bets.

You are right but people are downvoting you lol.

Do you have an email address or a contact method?

Why would you ever want to contact me

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