I used to be a trader.
Traders make more money than I do now. I guess $0 a year is an easy bar to beat.
Traders like making money. But (broad generalization) while traders like the money, they're driven less by money itself than the status and the challenge of creating money. And this is where today's story goes -- Startups are hot.
Traders see Facebook, LinkedIn, Groupon, AngiesList, Yelp IPOs and can't help but think: "easy edge". And they have the excess capital to fund their pursuits.
Shameless Self Plug 
My little startup, Rocket Lease, provides online apartment applications and credit checks. It's decidedly unsexy. It's a tiny bit of the process that helps landlords take applicants and turn them into tenants. It's small. I don't really know how much money it is going to make, or what the right monetization strategy is, but I'll almost certainly charge a small amount on every credit check I run. So Rocket Lease is going to grind its way to profitability, a couple bucks at a time. Buy credit checks wholesale, sell them retail. Rocket Lease is 7-11 for credit scores. Yeah, girls swoon upon hearing that.
So my old colleagues often say "hey ezl, why don't you build something like Facebook/Twitter/LinkedIn? The payout is WAAAAY bigger". Other smart people have written along these lines too. Here's why. I'm not prepared to pay the buy in to play the big startup game.
Darts
I play darts (I'm lying, I don't really).
Big startups are a dartboard with a bullseye worth $300mm. Then sprinkled around the board there are a couple of smaller value sections, $50k, $100k, but the majority of the board is a wasteland of big fat $0 sections.
Small startups are a dartboard where the bullseye might be worth $2mm. and if you miss by a little, it's worth $1mm. The rest of the board is comprised of sections that range from $0 to $100k, and while there are $0 sections, the majority of the sections are values greater than $0. They might not be big numbers, but they're non-zero numbers.
The expected value of a random point on the big startup dartboard is $2m (small chance at a lot of money, big chance at nothing). The small startup expected value is $250k (small chance at 2mm, lots of small chances at other payouts).
Great. "small expected value, small variance" VS. "big expected value, big variance". Now here's the kicker. To play the game, you have to buy the dartboard. Price tag?
- Big startup dartboard: 2 years of life and $100k in cash.
- Small startup dartboard: 6 months of life and $25k in cash.
Where are you now?
There's no right answer to this. If you're 30 and broke and wondering how you're going to pay the rent in 6 months, its harder to swing for the fences. If you sold your last startup so you'll never have to worry about food and rent again, big startup board.
Rocket Lease is me saying that 40k a year would be life changing for me; and while 200k a year would be better than 40k a year, its not better enough to warrant the higher buy in and increased probability of getting nothing.
