I've been thinking more about how to maximize my income. I'm trying to do as much good as possible, and I think the best way for me to do this is earning as much as I can and donating it as effectively as I can. I think I should be risk neutral in that earning. As a programmer, starting some sort of internet company looks to be loads better than any other option. Hall and Woodward (2009) calculate that the typical venture capital backed entrepreneur earns $5.8M from a startup. (Of course, I would most likely earn nowhere near that much, probably nothing. But the small chance of a large outcome balances this to the $5.8M figure.) They don't calculate in the paper the equivalent in terms of dollars per year, but eyeballing it from their graphs I think dividing by three is about right. So ~2M/year in expected value.

This doesn't mean I'm giving notice today. I need to start thinking seriously about ideas. I would probably do much better with a cofounder. I may want to start something in my spare time and only go to full time if it looks promising. But it does mean I should be much more cautious about commitments. I'm curently considering starting a weekly dance series or convincing bida to switch to a weekly format. (In fact, today's bida board meeting is planned to be heavily focused on the idea.) This would not be as much work as starting a company, but would be a lot of work, even with a committee. So maybe I should rethink this. If my free time becomes much more valuable, then I should probably not take on a more active role organizing dances. Which is sad, because I really want there to be a weekly dance close in to the city. [1] It also means that today's conversation with the bida board will be strange: "I want this to happen, I've been saying I would be active in running it, a bunch of people have talked to me about being on a committee, but I'm no longer sure I should be on the committee. When did I decide this? This morning. Why? Because I have a small chance of making a lot of money."

Update 2012-02-20:

Carl Schulman writes:

It would be a mistake to think of the returns to entrepreneurship as predictably stemming from just showing up and taking a spin at the wheel of startup roulette. Instead, entrepreneurship is more like poker: a game where even the best players cannot predictably win over a single night, but measurable differences predict that some will earn much more than others on average. By paying attention to predictors of entrepreneurial success (whether good news or bad), you can better tell whether you have a winning hand or should walk away for a different game.

The predictors he talks about are the Canadian government's "Innovator's Assistance Program", IQ, and incubators. Defintiely worth reading.

[1] The mit dance is currently weekly, as it is many falls and springs, and I'm playing the next dance with the free raisins.