How People Get Rich Now

Paul Graham’s essay How People Get Rich Now examines how the sources of wealth have shifted dramatically.

The Shift

In 1982, 60% of the richest Americans inherited their fortunes. By 2020, this fell to just 27%—not because inheritance decreased but because “more people are making them” through new ventures.

Tech Companies Drive New Wealth

Approximately 30 of the 73 new fortunes in 2020 derived from technology companies—the dominant source of wealth creation. These companies win “by having better technology, rather than just a CEO who’s really driven” at dealmaking.

The Historical Anomaly

The essay argues 1960 was the anomaly, not 2020. During the early 20th century, J.P. Morgan consolidated thousands of smaller firms into oligopolies, making independent entrepreneurship nearly impossible.

This structure began breaking up in the 1970s with deregulation and microelectronics.

Decreasing Startup Costs

Technology has made launching companies cheaper and faster. Companies now reach billion-dollar revenue milestones in 7-8 years (versus 45 years for IBM), accelerating founder wealth accumulation through rapid growth.

The Pattern

Entrepreneurship as wealth-building is historically normal, not new. Society is simply returning to pre-monopoly conditions where starting companies was the standard path to prosperity.

My Takeaway

If you want to build wealth, building companies is increasingly the path—and it’s more accessible than ever before.

How has this shift affected your thinking? I’d love to hear at persdre@gmail.com.