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.
âThe tremendous price (of competition) is that you stop asking some bigger questions ⌠donât 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.ââââPeter Thiel, co-founder of Paypal, Palantir, and Founders Fund
At the time, crypto was booming. Booming so much that there was a 30â50% 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 donât know. I asked a lot of people, and they didnât 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, constantly managed risk, and pulled all-nighters to do the grunt work from talking to lawyers to setting up tradesâââall while working a 70â80 hour / week job.
Snapshot of arbitrage record
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. At one point, they were millionaires. 23-years-old.
Trade automation with python and charting exchange spreads
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 top 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 ârisky.â Well, letâs evaluate it logically:
What is the downside of doing a startup?
- Startups take years. Which means Iâve foregone padding my resume with the âMcKinseysâ and âGoldmansâ. Walking that path was definitely a consideration, as itâs where I see many of my peers cut their teeth. Some of the entrepreneurs I respect even spent time at those firms. While itâs a fine path, I believe it optimal to find what you are passionate about quickly, and work extremely hard at it.
- I realized 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 doesnât work out, which most likely it wonât, many employers value this experience.
- It helps to consider the path that the people you admire took. 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 werenât 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. Itâs not uncommon to find myself working for days at a time without taking a single step outside.
âInstead 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.ââââElon Musk, 2014 USC Commencement Speech
If this sounds extreme, itâs actually one of the best things that can happen to you. Youâre in flow. Work and life are mixed. You canât live like this if you arenât passionate about what you do. Moreover, the ability to set your own schedule is incredibly liberating.
â[At a job] there are going to be times when you have absolutely no desire to work on anything, and youâre 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.ââââPaul Graham, co-founder of Y-Combinator
Worth It?
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 âschleps,â with no one but you to bear the burden of success or failure. For example, an unsustainable burn rate from using outsourced developers forced us to bring our code in-house, and weâve had to delay the startup as we brush up on our programming.
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 youâre young, you donât have much to lose.
âIâm willing to take responsibility for telling 22 year-olds to start startups. So what if they fail? Theyâll learn a lot, and that job at Microsoft will still be waiting for them if they need it.ââââPaul 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, Iâm sure he could have taken any number of desirable jobs upon graduation. However, he went the âriskierâ 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 (âNo suits! Weâre going with blazer and jeansâ). It was great to buck the tradition of wearing a full suit at these pitches.
(L-R) Dan Sangyoon Kim (me) and alumnus Tushar Jain, NYU Stern Stock Pitch, 2015
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. Laying on the upper bunk bed at a Draper University dorm room (my first home in the bay area), I scanned the news. An article caught my eye: âMulticoin Capital Raises $250 Million From Investors, Including Andreessen Horowitz.â
The founders? Tushar Jain and Kyle Samani, the alumni from several years prior. Theyâre now considered one of the most rigorous and analytical investors in the cryptocurrency space. Theyâve even profited during the 2018 crypto bear market with shorts. And Kyle continues to write investment analyses for the Multicoin blog. Keep in mind, this was a full five years into their entrepreneurship journey.
âWhen 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 âsafeâ route. They joined investment banks or consulting firms with big salariesâŚ
At the five-year reunion, those peopleâŚwere 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 companyâŚI was $6 million in debtâŚ
By the ten-year reunion, Jerry, Ron, Steve and I each still had our problems, but the safe bets werenât looking quite so safeâŚConsultants and investment bankers were finding their careers flattening out and were wondering if this was all there was to lifeâŚ
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. Steveâs 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.âââTim Draper, How to be The Startup Hero
Competition Is For Losers
Thatâs Peter Thielâs business and life philosophy in one sentence. It really resonates with me. He has a great lecture on it.
When itâs 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 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.
âThe battles were so ferocious because the stakes were so small.ââââHenry Kissinger
âFrom the outside everyone wanted to get into [corporate law firm]⌠but on the inside ⌠everybody wanted to leave⌠When I leftâââafter seven months and three daysâââone of the lawyers down the hall from me said, âYou know, I had no idea it was possible to escape from Alcatraz.â 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.âââPeter 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. Coincidence? Theyâre now worth $3 and $20 billion respectively. Clearly exceptions, but the general path they took and resulting success (however you measure it; happiness, wealth, health, etc.) is no anomaly. Some people find the work at such firms rewarding, and thatâs great. There are also many who donât. For the latter group, Iâd urge you to pause and think, because you can be stuck forever doing something you donât like. The mimetic nature of humans run deep in our genes and psychology.
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. Donât fall into this trap. Learn to distinguish irrational herd-mentality from wisdom of the crowds (the crowd is often right). Then work hard at honing what makes you different. One day, youâll get what you deserve.
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