In December 2017, I was a recent college graduate working at an investment bank in New York. While I learned a lot from the demanding nature of the job, I was soon contemplating how I could redirect my career to get what I wanted faster, and have fun doing it.
“The tremendous price (of competition) is that you stop asking some bigger questions … don’t always go through the tiny little doors that everyone tries to rush through, maybe go around the corner, go through the vast gate no one is taking.” — Peter Thiel, co-founder of Paypal, Palantir, and Founders Fund
At the time, crypto was booming. Booming so much that there was a 30–50% spread between Korean and American crypto prices. The opportunity was so blatant that everybody was talking about it, yet nobody thought to actually trade it. Why? I don’t know. I asked a lot of people, and they didn’t think it was possible because of this regulation or that blocker.
With a little investigation, I sorted out the legal and trade mechanics and was making $15,000 every single day, with just a few clicks. This was possible because I identified the opportunities, stayed abreast of developments, moved fast, sold people on working together, managed risk, and pulled all-nighters to do the grunt work from talking to lawyers to setting up trades — all while working a 70–80 hour / week job.
Due to hazy regulations regarding cross-border cryptocurrency trades, my Korean colleagues convinced me to take caution and pause the trades. Looking back, I think that was a huge mistake. This massive arbitrage opportunity existed for several months, and we could have made enough to sip coconut juice on a Hawaiian beach for the rest of our lives. While we played it safe, somebody out there figured out how to do it in scale, and the gap has since closed.
After this interesting incident, a few friends and I decided to arbitrage the price differentials among exchanges. This was a more complicated operation with tighter spreads compared to the previous crypto-to-fiat arbitrage. I helped my friends set up access to some exchanges and earned a steady fee from their operations. The trading was run from our tiny NYC bedroom, with rotating sleeping schedules to keep an eye on the markets 24/7. At one point, our portfolios were worth a couple million dollars. Not bad for 23-years-olds. It was fun times.
Walking the Other Way
I embarked on my next challenge when a friend convinced me to do a startup. He had covered crypto at a venture capital firm known for being bullish on the space, and himself had made a small fortune with well-timed investments. We raised a small round of seed funding and left for Silicon Valley with nothing but an idea. Some people wonder if doing a startup is risky. I don’t think it is as risky as people think:
- I can be quite happy with a minimalist lifestyle. This makes it easier to do a startup.
- Working on your own business exposes you to things at a rate faster than you could ever get at a big company. Even if it doesn’t work out (most likely), many employers value this experience.
- Some of my favorite entrepreneur-turned-investors all launched or worked at startups very early on in their careers, and I imagine they understood that the risks weren’t as big as people make them out to be.
- Most people fail to properly assess the risks of not doing a startup. See points 2, 15 and 16 here.
I would also add that for some people, working for yourself can be a lot more motivating. It’s not uncommon to find myself working for days at a time without taking a step outside.
“Instead of getting an apartment, we just rented a small office and slept on the couch. We showered at the YMCA. We had just one computer, so the website was up during the day and I was coding at night. Seven days a week, all the time. I briefly had a girlfriend during that period and in order to be with me, she had to sleep in the office.” — Elon Musk, 2014 USC Commencement Speech
If this sounds extreme, it’s actually one of the best things that can happen to you. You’re in flow. Work and life are mixed. You can’t live like this if you aren’t passionate about what you do. Moreover, the ability to set your own schedule is incredibly liberating.
“[At a job] there are going to be times when you have absolutely no desire to work on anything, and you’re going to have to go to work anyway and sit in front of your screen and pretend to. To someone who likes work, as most good hackers do, this is torture.” — Paul Graham, co-founder of Y-Combinator
This is not to say that the journey is easy. You have to keep a vigilant eye on your finances, and deal with hundreds of “schleps,” with no one but you to bear the burden of success or failure.
Still, I think being an entrepreneur is one of the biggest arbitrages available today. There is more willing capital than ever before to fund startups. There is huge intellectual and opportunistic upside. If you’re young, you don’t have much to lose.
“I’m willing to take responsibility for telling 22 year-olds to start startups. So what if they fail? They’ll learn a lot, and that job at Microsoft will still be waiting for them if they need it.” — Paul Graham, co-founder of Y-Combinator
Coming from a finance-heavy business school, the only entrepreneur I met during my undergraduate years was a fellow alumnus who came to visit our investment club. Having been the club president during his undergrad years, I’m sure he could have taken any number of desirable jobs upon graduation. However, he went the “riskier” way to start a healthcare startup straight out of school.
We worked on a stock pitch together, and he struck me as extremely smart, well-spoken, and fun (“No suits! We’re going with blazer and jeans”). It was great to buck the tradition of wearing a full suit at these pitches.
I also got to meet his friend, who at the time was writing a blog and contemplating his next steps.
A few years later in March 2018, I had arrived in Silicon Valley with nothing but a suitcase after quitting my job in New York. Laying on the upper bunk bed at a Draper University dorm room (Tim Draper’s entrepreneurship school where I crashed for a month), I scanned the news. “Crypto hedge fund Multicoin Capital Raises Funding From Union Square Ventures, Andreessen Horowitz, and Craft Ventures.”
The founders? Tushar Jain and Kyle Samani, the alumni from before. They’re now considered one of the most rigorous and analytical investors in the cryptocurrency space. Kyle continues to write investment analyses for the Multicoin blog. Keep in mind, this was a full five years into their entrepreneurship journey.
“When I graduated from Harvard Business School in 1984, the people who seemed to know exactly where they were going were the ones who took the “safe” route. They joined investment banks or consulting firms with big salaries…
At the five-year reunion, those people…were puffing their chests out with pride. Meanwhile, my classmate Jerry Shafir decided to start a healthy organic soup company, and at the five-year reunion, he was broke. Another friend, Ron Johnson, took a job in retail, where no self-respecting MBA would tread, and at the five-year mark, he was scraping gum off the floors of Target stores. A third classmate, Steve Wiggins, was struggling to start one of the first health maintenance organizations (HMOs). He was also broke. I started the venture capital company…I was $6 million in debt…
By the ten-year reunion, Jerry, Ron, Steve and I each still had our problems, but the safe bets weren’t looking quite so safe…Consultants and investment bankers were finding their careers flattening out and were wondering if this was all there was to life…
By the fifteen-year reunion, Jerry was selling a lot of soup. Ron would go on to create the first Apple Store and run retail for Apple Computer. Steve’s company, Oxford Medical, was worth hundreds of millions of dollars, and my venture capital business was hitting the knee in the curve of what became the technology boom.
At the twenty-year reunion, many of the people who took the safe routes were asking the four of us for jobs. — Tim Draper, How to be The Startup Hero
Competition Is For Losers
as said by Peter Thiel. I don’t agree with everything he says, but this one resonates with me. He has a great lecture on it.
When it’s hard to differentiate yourself from other people because the objective differences are so small, you have to compete ferociously. It reminds me of college. So many uniquely talented young men and women, all driven to take the exact same job irrespective of their passions or talent. The competition is brutal precisely because everybody is qualified for those same jobs.
“The battles were so ferocious because the stakes were so small.” — Henry Kissinger
“From the outside everyone wanted to get into [corporate law firm]… but on the inside … everybody wanted to leave… When I left — after seven months and three days — one of the lawyers down the hall from me said, ‘You know, I had no idea it was possible to escape from Alcatraz.’ Of course that was not literally true, since all you had to do was go out the front door and not come back. But psychologically this was not what people were capable of, because when their identity was defined by competing so intensely with other people, they could not imagine leaving. — Peter Thiel
It so happens that two of my favorite entrepreneurs, Peter Thiel and Jorge Lemann, both quit their Manhattan law and banking jobs exactly seven months in (better than me since I stayed for nine). They’re now worth $3 and $20 billion respectively. Clearly exceptions, but I hope this shows it’s ok to take the road less travelled. Some people find the work at such firms rewarding, and that’s great. There are also many who don’t. For the latter group, I’d urge you to pause and think. The mimetic nature of humans run deep in our genes and psychology, and you can be stuck forever doing something you don’t like because of it.
Throughout my life, I was constantly bombarded by people telling me what to do. I despised this pressure to conform, but felt psychologically pressured. The gnawing inner conflict resulted in mediocrity and wasted opportunities. Don’t fall into this trap. Learn to distinguish herd-mentality from wisdom of the crowds (because the crowd can often be right). Then work hard at honing what makes you different. One day, you’ll get what you deserve.