How to Make Wealth

Paul Graham’s essay How to Make Wealth explains why startups work as wealth-creation vehicles and why the alternative—a conventional career—is often less efficient.

Wealth vs. Money

These are different concepts:

• Wealth: Stuff we want—food, clothes, houses, cars, gadgets, experiences
• Money: A medium for exchanging wealth

Focusing only on money obscures how actual value is created.

The Pie Fallacy

Many people wrongly believe wealth is fixed—that if someone gets richer, someone else must get poorer. This is false. Restoring a car increases total wealth without impoverishing anyone. Startups fundamentally disprove zero-sum thinking.

Measurement and Leverage

The path to wealth requires two conditions:

Measurement: Working in small groups where individual contributions are visible. In large companies, your output is averaged with everyone else’s.

Leverage: Technology is “the way we all do things.” Creating solutions that benefit many multiplies impact beyond individual effort.

Startups provide both naturally.

Why Startups Work

A talented individual might generate 36x more value than expected through:

• Working longer hours
• Greater focus and output per hour
• Eliminating corporate bureaucracy
• Exceeding job description expectations

Small, elite teams can move quickly on hard problems that larger competitors cannot pursue due to bureaucratic constraints.

Difficulty as Advantage

Hard problems create competitive advantage and barriers to entry. If something is easy, everyone can do it—no leverage.

My Takeaway

Wealth creation, not money-chasing, builds genuine fortunes. The startup path trades a stable, slower accumulation for a compressed, intense, all-or-nothing gamble. It’s not for everyone, but for capable individuals seeking significant outcomes, it’s the most direct path.

How do you think about wealth creation? I’d love to hear at persdre@gmail.com.