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Paul Graham: Hiring is Obsolete

samzenpus posted more than 9 years ago | from the listen-up dept.

Businesses 638

jazznjava writes "Paul Graham has a new essay covering what the influences of declining operating costs will have on startup companies, and the undervaluation of undergraduates."

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frist? (1, Insightful)

BorgCopyeditor (590345) | more than 9 years ago | (#12504973)

What is this? PaulGrahamFilter?

Re:frist? (-1, Troll)

Anonymous Coward | more than 9 years ago | (#12505139)

How come every time Paul Graham writes an entry in what is effectively his blog it gets slashdotted? He's boring! I don't want to hear any more about LISP and what a clever gee-whiz businessman he is. Stop facilitating his self-congratulation.

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Outsourcing... (4, Interesting)

Virtual Karma (862416) | more than 9 years ago | (#12504993)

Outsourcing will definately bring down the average wages. The only way for local graduates to be hired will be to offer their services for lesser pay. This will also translate to lower standard of living. Think about it...

Re:Outsourcing... (4, Interesting)

wpiman (739077) | more than 9 years ago | (#12505005)

The dollar is likely to fall- and the Rupee gain-- so I think equalibrium will eventually come.

But your point is valid- he doesn't mention outsourcing at all.

Re:Outsourcing... (5, Insightful)

mrchaotica (681592) | more than 9 years ago | (#12505098)

Well, the point is that we don't want equilibrium. We're the ones with the advantage right now, and we want to keep it.

Re:Outsourcing... (3, Insightful)

GlassHeart (579618) | more than 9 years ago | (#12505304)

Well, the point is that we don't want equilibrium. We're the ones with the advantage right now, and we want to keep it.

So learn to do something that the Indians and Chinese and Filipinos can't. Or are you asking for exemption from competition?

Re:Outsourcing... (3, Insightful)

Atzanteol (99067) | more than 9 years ago | (#12505346)

Or are you asking for exemption from competition?

Yes. Especially if that competition is unfair competition. Why is asking the government to do one of the few things it *should* (protect its citizens) a bad thing? Or should we all live on the same pay as the least paid people in the world?

This "free trade" idea only works if all countries are created equal. They are not. Thus there must be some form of compromise, unless you *want* the United States to become like India*?


* Not that I think India is aweful, I just think the standard of living overall leaves something to be desired when compared to the US.

Re:Outsourcing... (0)

Anonymous Coward | more than 9 years ago | (#12505012)

With the exception of people at the top. Surely something will *TRICKLE* down, ala trickle down economy that Jr. is a big fan of.

Re:Outsourcing... (1, Interesting)

Anonymous Coward | more than 9 years ago | (#12505042)

Outsourcing seems to be a passing fad. As we all know, slashdot's owners make money off it, so they won't post any articles about this, so here's one.

http://www.theregister.co.uk/2005/04/19/offshoring _savings_sometimes/ [theregister.co.uk]

When you take into account timezones, language difficulties, bad PR, and the fact that things like software development have little room for error (and thus saving some money to get it done cheap is false economy), in many cases it really isn't worth the cost saving.

Re:Outsourcing... (2, Funny)

CrazyJim1 (809850) | more than 9 years ago | (#12505092)

Try offering your programming talents at minimum wage, you won't get hired. Post Carnegie Mellon Degree, I've found the best way to make money is selling MMOG items on ebay for 2-3$/hr.

Re:Outsourcing... (1)

ergo98 (9391) | more than 9 years ago | (#12505144)

We've been doing the large-scale outsourcing thing for years, yet the average salary here in North America is actually starting to track up.

Outsourcing is good. (-1, Troll)

elucido (870205) | more than 9 years ago | (#12505213)

We need to reduce the value of the American workforce as much as possible while at the same time reducing the value of any individual worker worldwide. The best way to do this is by increasing the size of the workforce, more competition for workers is good. Competition is essential to capitalism.

The best thing we can do right now is cut taxes, get rid of social security, and privatize medicare and the healthcare system. I think we also need to get rid of the drug laws and remove the requirement for labels on food products.

startups (0)

Anonymous Coward | more than 9 years ago | (#12505196)

I think the idea behind the article was that undergraduates should start their own companies instead of seeking a ground level job.

Re:startups (4, Insightful)

GlassHeart (579618) | more than 9 years ago | (#12505341)

I think the idea behind the article was that undergraduates should start their own companies instead of seeking a ground level job.

According to the US Small Business Administration, 50% of small businesses fail within the first year, and 95% fail within five years. To start and run a business without ever having held a job is a sure path to disaster for all but the most talented, hardworking, and lucky.

Wow (0)

Anonymous Coward | more than 9 years ago | (#12504998)

[sarcasm]According to the headline, once I get out of college, I can't get a job!?!? [/sarcasm]
hmm, maybe a little less over-blown headline...

Who thinks recent grads are undervalued? (5, Insightful)

Anonymous Coward | more than 9 years ago | (#12504999)

Besides recent grads, of course.

Hiring someone with no work experience is extremely risky. There's a very good chance you're going to get someone with no clue, or someone who finds out your job isn't really what he wants to do for the next 5 years or so.

Because of that risk, recent grads will not get paid top dollar. Period.

Re:Who thinks recent grads are undervalued? (1)

MasterOfUniverse (812371) | more than 9 years ago | (#12505064)

Thats not the point. The point is that the recent grads are undervalued compare to the past.

Thats GOOD (0, Troll)

elucido (870205) | more than 9 years ago | (#12505305)

We need to reduce the value of workers. Look, the sky is falling, the environment simply cannot sustain 6 billion people living as we do in the USA. This means the population size is too big and as productivity increases the value of the worker will decrease, allowing us who have jobs to live like kings.

Re:Who thinks recent grads are undervalued? (0)

Anonymous Coward | more than 9 years ago | (#12505068)


"Hiring someone with no work experience is extremely risky."

So why do fresh college grads have a better chance of finding work than someone with a substantial amount of current experience?

Re:Who thinks recent grads are undervalued? (1)

ergo98 (9391) | more than 9 years ago | (#12505125)

Hiring someone with no work experience is extremely risky.

This is pretty much what the article takes on - it proclaims that those grads who have demonstrated capabilities, such as through a small startup, get hired at top dollar (sometimes with a headcount acquisition, meaning a big hiring bonus).

Whoopeee. This is the great insight?

This is master of the obvious material here. The math whiz that finds a new way to factor ultra-large semiprimes will probably get a pretty good job off the bat too. University (and even high school) students have been creating businesses, often ultra small businesses, long before we had the interdweeb. Many of them earned some credibility, and when on to join the corporate world at a position much more senior than they would have otherwise.

Re:Who thinks recent grads are undervalued? (1, Interesting)

Anonymous Coward | more than 9 years ago | (#12505150)

Recent grads don't expect to get paid top dollar, either. Speaking of my own recent post-undergrad job hunt experience, we're well aware of what a reasonable starting salary should be from salary surveys and such, and are also well aware of the training value provided by our first employer. This article, IMHO, is more about getting paid, period; undergrads in the various IT sectors were probably overpaid in the boom years, but the pendulum has probably shifted back far enough the other way. Two years ago, it was common for up to 90% of new graduates to be unemployed a year after graduation. Times have improved since then, but there could have been structural changes which will mean hiring won't pick up much.

Re:Who thinks recent grads are undervalued? (4, Insightful)

Austerity Empowers (669817) | more than 9 years ago | (#12505230)

I'm not a recent grad, I think they're undervalued. They're generally the workhorse of any professional establishment (esp. engineering, medicine and law). They're still deluded into thinking hard work alone will move them up, and they work hard. They usually have no families and their friends are all slaving away like they are. They have big college loans. They're pretty canonical "good" employees, they deserve to be paid well. Further, if you want new workhorse types, you need a steady supply from school so wages have to be there or people will major in something else. Sure, they don't know as half as much as they think they know but that's why they're slaving for the man.

Second, not many people want to do the same job for 5 years. Older people may be more inclined to find peace in a lower paying, lower responsibility job owing to having a family or just finding zen. Young people are less likely to do that. But expecting anyone to stay in the same job for 5+ years is not rational. In addition to just wanting to move up and be CEO, professionals MUST change jobs periodically or become obsolete. It may just be going from one project to a different kind of project. It may be a company change or even a career change. But it's dangerous to stay put too long. Finally, we all work for the man to make $$$. Most companies do not give raises sufficient for employees to keep up with market value. 5 years is a good time for employees to go rectify the situation. Some may just be comfortable and not do so, but in my experience about half will.

I don't expect a graduate to have much work experience. Most in field work experience opportunities are unpaid, most college kids don't have a trust fund and must make money. Most do just fine, they may leave you quicker (if opportunities are limited) but I would be concerned if they stayed doing that shit work.

Re:Who thinks recent grads are undervalued? (1)

rob_squared (821479) | more than 9 years ago | (#12505282)

This is completely true, I've had a professor who keeps in touch with co-op companies (I go to Northeastern University) and the companies are amazed that 3rd 4th and 5th year students are so clueless and under-educated in vital things in computer engineering, such as Cisco IOS, wiring standards, and programming languages. Thankfully this stuff gets straightened out *before* graduation. A lot of people get hosed otherwise.

In many ways he is right. (5, Insightful)

edtstu (877701) | more than 9 years ago | (#12505006)

The basic costs to start a business in today's market is very small. Web storefronts have replaced real storefronts and the cost of 'renting' space is close to nothing now a days. Along with the fact that a bachelor's degree doesn't set you apart by any means the same margin it did a decade ago. More and more people are finding graduate school a necessity for job security.

Re:In many ways he is right. (5, Insightful)

TheOriginalRevdoc (765542) | more than 9 years ago | (#12505225)

The basic costs to start a business in today's market is very small.

I think this is where Graham gets it very wrong.

Granted, the cost of IT gear is pretty low, and if you administer it yourself, running costs won't be high.

However, finding paying customers is time-consuming and expensive. I've worked for a startup, and they went under because they had a product, but no customers. Marketing ought to be 80% of your starting budget. A few businesses might escape this requirement, if they have a ready-made market, but most won't. Expect to bleed cash for a year or two before turning a profit. (It'll cost a lot more than $10k.)

Coupled to that, if you're out marketing, who's looking after your servers and fixing the bugs in your app?

Re:In many ways he is right. (1)

edtstu (877701) | more than 9 years ago | (#12505306)

While I agree with on on the point if you are marketing a brand new product or repping some one else's newest invention.

However, if you are entering an already thriving market(i.e. The computer enthusiast market) You already have a client demographic of people looking for the latest and greatest.

Furthmore, companies like ebay have made marketing the cheapest and easiest thing to do by opening up a storefront on their site. You can pay I think $19.95 to ahve your item featured on the front page during the auction period. This brings many to the item and then they see you have a storefront and they brows your product.

Starting a business from scratch does take alot of work in many other markets except for the retail market. That is my point. The retail market is entirely too easy to enter. Today's technology also allows us to see what other customer's experiences with you were like and therefore(provided you are doing things right and your customers are happy) drives more business.

Word of mouth is your best friend in business. And what spreads opinion faster than the internet.

Exactly, we have an ownership society now. (1)

elucido (870205) | more than 9 years ago | (#12505247)

We can all own our own businesses. Nothing stops you from taking advantage of outsourcing. No one is forcing you to work for the man when you can be the man. Now of course only some of us can be the man, this is why we need population control, we should support abortion, we should abolish social security, we should privatize healthcare and we need to make government much much smaller. If you want to survive in the brave new world you have to do it on your own.

Re:Exactly, we have an ownership society now. (2, Insightful)

category_five (814174) | more than 9 years ago | (#12505313)

"Now of course only some of us can be the man, this is why we need population control"

What does a limited amount of society being in a position control production have to do with population control? You have supplied no logical connection between the two ideas.

Why? (1)

elucido (870205) | more than 9 years ago | (#12505322)

Do you want to pay for the people who don't have jobs? The majority of people wont have jobs.

So connect the dots, how much money would you gain if we had no taxes to pay?

Specialization. (4, Funny)

rice_burners_suck (243660) | more than 9 years ago | (#12505007)

In my opinion, companies shouldn't have to hire anymore. The hiring and firing process creates a lot of overhead costs that most companies should avoid.

We know from the study of basic economics that specialization creates synergies between global organizations and that by leveraging innovative technologies, content providers streamline compelling enterprise solutions. Therefore, there should be one big huge company that always employs everybody in the labor force, and those employees would be rented on an hourly basis to other companies for their use. This would have the following advantages: First, this big huge company would have its payroll system totally dialed in, so that it would happen with minimal overhead. Secondly, everybody would have benefits. Third, you could never get fired. Fourth, when a company decides not to "use" you anymore, the big huge company will automatically place you in a job by the next day. This would maximize the amount of employment throughout the country, reduce the amount corporations are spending on the hiring and firing process, reduce litigation, and give everyone a good, stable job.

I think that's what Graham means when he says that hiring is obsolete.

Pharoah Ramses III agrees with this post. (1)

mbkennel (97636) | more than 9 years ago | (#12505033)

Back to work, slave!

And fetch me a fresh Nubian virgin on your way out.

Re:Pharoah Ramses III agrees with this post. (1)

The Ultimate Fartkno (756456) | more than 9 years ago | (#12505103)

> And fetch me a fresh Nubian virgin

What's a Nubian?

Re:Pharoah Ramses III agrees with this post. (0)

Anonymous Coward | more than 9 years ago | (#12505270)

What's a Nubian?

It's a code word for "anal"..

Re:Pharoah Ramses III agrees with this post. (0)

Anonymous Coward | more than 9 years ago | (#12505122)

Pharoa Ramses III, you say?

I fucked him.

Re:Specialization. (3, Insightful)

Fulcrum of Evil (560260) | more than 9 years ago | (#12505040)

Therefore, there should be one big huge company that always employs everybody in the labor force

I thought we didn't like communism...

Re:Specialization. (1)

mrchaotica (681592) | more than 9 years ago | (#12505086)

Communism is when the government employs everybody. When it's a company that does it, it's called "fascism."

Re:Specialization. (1)

01000011011101000111 (868998) | more than 9 years ago | (#12505272)

Actually, the government employing everybody is Socialism... Albeit a bastardised version... Communism is where everyone works for themselves, dumps all their output in one big pot & then takes an equal share out (as opposed to anarchy where they trade what they have for what they want - similar thing)...

Re:Specialization. (3, Insightful)

MerlynEmrys67 (583469) | more than 9 years ago | (#12505107)

I thought we didn't like communism

This is slashdot - capitalism is bad... Everyone is equal here - and frankly if it really was that way Microsoft and Intel would have lost a long time ago to Apple and AMD

Re:Specialization. (0)

Anonymous Coward | more than 9 years ago | (#12505181)

Some people have excellent karma. Others are only good.

Capitalism is great (1, Interesting)

elucido (870205) | more than 9 years ago | (#12505267)

Everyone is not equal. Equality was the dumbest idea man invented next to capitalism! There can never be equality just like there can never be fair capitalism, It's simple, our population is totally out of control and needs to shrink. The world simply isnt sustainable without population control. This means we need to stop spending money to help people survive by getting rid of social programs and welfare programs like social security.

Re:Capitalism is great (1)

slpalmer (6337) | more than 9 years ago | (#12505347)

For the first time in (I don't even know how many, My /. ID is 6337, think about it.) years, I've got to say, someone, please, mod this up. The last 3 times I've had mod points I saw nothing worth spending them on, but this one is on point, insightful, and funny.

Stephen L. Palmer
slpalmer (6337)

Re:Specialization. (1)

rice_burners_suck (243660) | more than 9 years ago | (#12505200)

I thought we didn't like communism...

We, paleface?










Heh heh heh. Just kidding, dude. But seriously, there are companies like that.

The reason (1)

elucido (870205) | more than 9 years ago | (#12505291)

The reason the world is so competitive is because we have too many people and not enough machines. The more robots, machines and productivity we have, the less people we need. This means the only way for us all to be rich is to have population control. The best way to improve the economy is to get rid of social security. By removing social security theres less burden on the economy, we can reduce taxes. We can also get rid of public schools which cost billions per year and privatize the school system. This would save billions more.

Re:The reason (1)

rice_burners_suck (243660) | more than 9 years ago | (#12505339)

The best way to improve the economy is to get rid of social security. By removing social security theres less burden on the economy, we can reduce taxes.

Why don't we just do like that episode from Star Trek, where as soon as you turn 60 you have to be put to death. (It was an episode about a 59 y/o scientist from that planet who was on the verge of a great discovery and there was an argument whether to invoke the prime directive or not to save this guy's life.)

Re:Specialization. (0)

Anonymous Coward | more than 9 years ago | (#12505203)

Ahh, but in Soviet Russia, Communism likes YOU!

It's already happening: Accenture, EDS, etc. (1)

G4from128k (686170) | more than 9 years ago | (#12505175)

Absolutely true (up to the no-firing part). Look at all the IT Consulting and Business Process Outsourcing firms. Accenture has 100,000 employees, EDS has 117,000, Cap Gemini has 49,000. They act like the "big firm" and shift employees from project to project.

Of course when they lose a big contract or don't book enough business, they still lay people off.

Re:Specialization. (1)

mr_zorg (259994) | more than 9 years ago | (#12505223)

Oh, you mean like a temp agency?

Re:Specialization. (1)

mthaddon (580045) | more than 9 years ago | (#12505242)

Okay, so you create a system where it doesn't matter if someone is fired (= no-one gives a damn about doing a good job) and no-one is tied to a specific orgainzation (= no-one gives a damn about doing a good job).

Remind me again how a system where no-one gives a damn about doing a good job is good again?

Senior wanting work. (4, Funny)

nitrocloud (706140) | more than 9 years ago | (#12505014)

I find there is much a problem in underestimation of high school education and reluctance to hire students.

Re:Senior wanting work. (1)

Trizor (797662) | more than 9 years ago | (#12505061)

No, there really is a pretty terrible high school education in America. Those good for startups in and right out of highschool learn a lot on their own. They are fewer, and much more powerful, when they chose to shift the world it does.

Please (0, Flamebait)

wobblie (191824) | more than 9 years ago | (#12505015)

come up with a "Paul Graham" filter, I'm really sick of his drivel.

Article says nothing new. (4, Insightful)

dotslashdot (694478) | more than 9 years ago | (#12505024)

The article says nothing new. Some people who are younger are smarter than some people who are older. Big deal. We all knew that. Investors don't necessarily want smart people; they want people with experience because they're the ones who have the judgment to make good decisions. Being smart is certainly important, because that determines whether you can learn from your experiences. The younger a person is, the less likely they will have had the same breadth/depth of experience as an older person, and may be less capable of making good business decisions.

Re:Article says nothing new. (1)

wpiman (739077) | more than 9 years ago | (#12505066)

This matches my experience- when I was 18- I knew everything.

That was the smartest I was in my whole life.

Re:Article says nothing new. (1)

thpr (786837) | more than 9 years ago | (#12505235)

On the surface, it says nothing new... but read in between the lines and follow the thoughts to their conclusion. He proposes there will be increased purchasing of companies who develop products after a short period of time and never have revenue. While this does happen today, increased occurrance would signal a change.

First, the more it happens, the faster ROI a venture capital organization can get out of the business. Shorter time horizons mean lower risk, because the discount rate used when analyzing startups is VERY high (high uncertainty of future value).

Second, the more it happens, the less capital a VC fund needs to hold back for 2nd and 3rd round funding... therefore freeing more money for 1st round investments... it feeds back to produce significantly more startup companies.

Third, the more it happens, the less business experience you need. If all you are is a risk-development shop for a large corporation, you don't need the business experience, you just need to be able to identify a problem and build a portion of a solution for it. The purchasing company injects the business experience before going to market.

VCs are actually desperate to find a way to produce superior returns. There is a tremendous amount of money floating around for them to invest, and part of the reason for the bubble (one of many) was that the VC funds had to put that money to work (thus some less than stellar ideas were chased).

So, this may signify a change of behavior - not in terms of what would actually make a successful corporation, but in what it takes for a new company to produce positive value for those who own/start it - and those are distinct concepts.

marketing doesn't matter anymore? (-1, Troll)

lee1026 (876806) | more than 9 years ago | (#12505027)

So why in the world is there still a company named MS? they haven't made anything good for years and years. but still they are alive and kicking.

Take chances - fail often - win big (1, Insightful)

Anonymous Coward | more than 9 years ago | (#12505037)

When you're young and full of energy and ideas, it's good to take chances, fail often, and then find the winning idea and make it big...

But that requires knowing a lot of things, and recognizing that you aren't invincible and will need help from experienced people, too.

But it's heck of a lot better than going to school, toil away in classes just for the sake of being in the classes, and then working for a good salary...

sponng3 (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12505049)

one common goal - right now. I tried, If *BSD is to the project faces, all along. *BSD for aal practical fly They looked future. The hand Move forward, enjoy the loud

A plea to Paul Graham... (3, Insightful)

jay-be-em (664602) | more than 9 years ago | (#12505067)

Please stop pretending that you are anything more than a very good programmer and a good teacher (On Lisp was good).

You're beginning to sound like Eric Raymond with this non stop barrage of contentless gasbag articles.

Re:A plea to Paul Graham... (1)

swimmar132 (302744) | more than 9 years ago | (#12505080)

Why can't he write articles if he wants to?

Re:A plea to Paul Graham... (1)

jay-be-em (664602) | more than 9 years ago | (#12505091)

I'm not saying that he should be physically or legally unable to write them. I'm just asking him to stop.

Re:A plea to Paul Graham... (4, Insightful)

swimmar132 (302744) | more than 9 years ago | (#12505128)

Why? You don't have to read them.

Re:A plea to Paul Graham... (0)

Anonymous Coward | more than 9 years ago | (#12505174)

Yeah and you also don't gotta slashdot 'em.

-5 Stupid Editor (1)

WizardRahl (840191) | more than 9 years ago | (#12505074)

Hiring Obsolete??? Give me a fucking break, stop trying to overdramatify your articles and make a REAL descriptive topic.

Paul Graham Obsolete +5 Obvious (1)

tomhudson (43916) | more than 9 years ago | (#12505205)

At least from the comments so far (and Captain Obvious also missed out that this has always been the case, in every industry, all the time. Newbie == less experience || less pay)

Re:Paul Graham Obsolete +5 Obvious (1)

smitty_one_each (243267) | more than 9 years ago | (#12505317)

He's talking about trends across industry.
Barriers to entry => lower
More bright folks => starting companies
Big companies => consume startups, before Discredit Swedish Second Providence jacks their market cap into low-earth orbit
Companies now have selected bright talent 'on the cheap', ergo, Hiring is Obsolete.
While couched as a cheerleader pitch for a college, this was really a recruiting pitch, no?
Do I win, Bugbear? [slashdot.org]

Paul's recurring theme... (5, Interesting)

MarkEst1973 (769601) | more than 9 years ago | (#12505079)

Have you noticed the essays [paulgraham.com] he's written? They all trend in the direction of this most recent essay. I say he's rather encouraging.

His points over many essays are nearly always the same, but looked at from different angles:

  • do hard work (and work hard)
  • hang around with smart people
  • don't follow trends, blaze your own trail
  • start with good ideas
  • spend as little as possible
  • the internet leverages your investment
  • your biggest investment is time
  • Tech matters (as do languages and platforms)
  • He did it (started a successful company and sold out). All of his essays encourage you to as well.
I cannot understand why anyone on this site does not like what he has to say. He's saying the time has never been better to start a business, keep your costs low and make better technology your advantage, and he's entirely encouraging with his style of presentation.

I, for one, thank Paul Graham for his insight into something I want to do.

Oh, and if you didn't know this nugget of wisdom: Find and listen to someone who has done what you want to do. Don't listen to the masses. Listen to someone's who's done it.

Re:Paul's recurring theme... (0)

Anonymous Coward | more than 9 years ago | (#12505109)

Hm, you need to cut down on your post to make it more effective. The best posts only use words like "leverage", "synergy", and "blaze".

Re:Paul's recurring theme... (2, Funny)

pmazer (813537) | more than 9 years ago | (#12505118)

I cannot understand why anyone on this site does not like what he has to say.

I don't think many people on this site like to admit that others know more than them.

Re:Paul's recurring theme... (1)

blueZhift (652272) | more than 9 years ago | (#12505161)

Well I for one agree with Paul Graham and since reading Hackers and Painters really feel he is on to something. If nothing else, his encouragement of smart people to think in an entrepreneural fashion is something that many of us in tech need to hear.

Re:Paul's recurring theme... (2, Interesting)

mark-t (151149) | more than 9 years ago | (#12505206)

Why should I listen to him if I don't want to do what he did in the first place? Really, his line of reasoning, I shouldn't pay any attention to him whatsoever.

I don't want to run my own company. I don't want to be my own boss. I don't want the headaches, hassles, frustration, and migraines of getting a struggling business off the ground. I have, in my circle of friends in just the past 5 years, been witness to two different marriages that ended in divorce because of people spending so much time and energy on getting their business going, that their own marriage ended up falling apart.

There's more to life than money. Money is wonderful to have, but if you don't have the time to use it, and in particular, don't have the people you care for with you to enjoy its benefits as well, it's worth less than the paper it's printed on.

I know what I want to do with my life... and I'm quite content to work for someone else while I do so. At least I can go home at the end of the day to be with my family and forget work for the evening.

Oh... and starting a startup takes more than just time and associated costs... it also takes an original idea and enough social skills to be able to sell other people on the idea. For people with Asperger's, to give you just one example, for that to happen would be nothing shy of simple blind luck.

Buying startups: Pro and Con (4, Insightful)

G4from128k (686170) | more than 9 years ago | (#12505087)

Cisco pursued this strategy of buying small companies with promising technology but in the dotcom days. Effectively, Cisco let others finance the R&D and initial market testing that all start-ups perform. If the start-up failed, it was no skin off Cisco's nose. If the start-up worked and had a product (and company vision) that matched Cisco, then they bought you.

Its a great way to get innovative and market-proven technologies, but it can be a little piece-meal. Not all the great start-up techs are going to fit into your architecture or segment the market in a clean way. Also, due diligence can't uncover every problem when you take the start-up's tech and try to scale it to big-company volumes and service expectations. Finally, buying start-ups is a very public affair compared to a tightly secured internal R&D function -- the minute you buy a startup (with a product on the market), all your competitors know where you are going.

Buying start-ups is a nice tool, but it can't totally replace (only augment) an internal, integrated approach to R&D, product development and architecture development.

Re:Buying startups: Pro and Con (1)

wpiman (739077) | more than 9 years ago | (#12505142)

I heard somewhere that Cisco pursued this trend mostly because of bookkeeping. Somehow internal R&D was bad for the books- but seed money came from a different pile. Being a tech jockey- I didn't inquire further. I hope someone can comment further.

I heard this from the good people formerly at Hammerhead- whom Cisco acquired.

Seeing as how this was the days of Enron, Worldcom, and the like-- it seems very plausable. Everyone was cooking the books as best they could.

The problem with R&D (2, Informative)

G4from128k (686170) | more than 9 years ago | (#12505237)

Somehow internal R&D was bad for the books- but seed money came from a different pile.

R&D is bad for the books because so much of the money is wasted on ideas that fail. Letting start-ups do the R&D, initial product roll-out and marketing lets you do R&D totally off the books because someone else foots the bill. Rather than fund 100 R&D projects and see one create a successful project, you can let 100 start-ups do it and buy the one start-up that has a good idea.

Cisco also had the advantage that buying startups cost that "nothing." Rather than buy the startup in cash, the used stock to purchase the company (it dilutes the stock a bit, but Cisco almost never bought large companies). You are right about the issue of R&D on the books, because internal R&D cost real dollars, acquired R&D (buying startups) only cost shares.

You get what you pay for (0)

Anonymous Coward | more than 9 years ago | (#12505099)

My company hires computer science interns as a way to save money on development costs. I just heard someone wonder the other day why their output is disorganized crap. I had to laugh. Amy said it best. Guh!

Buyers required (2, Insightful)

aggles (775392) | more than 9 years ago | (#12505108)

Anyone can create a business - but to be successful, someone has to buy the product. History is littered with great products that failed to survive, because nobody plunked down money to keep the company alive. Buyers are increasingly less willing to acquire products from start-ups, because long term support is a real question. The start up may be bought - they may choose to do something else - they may just go away. If the product doesn't provide a return on the investment required within a very short time, its just not worth the risk. Building a better mouse trap doesn't guarantee that people will beat a path to your door.

What Paul Really Does... (5, Interesting)

quark101 (865412) | more than 9 years ago | (#12505172)

It seems to me that while, as several users have pointed out, Paul doesn't really present anything new; what he does do is to point out things that most people don't see. While some people already know in detail what he is talking about, many do not, and he is opening the eyes of these people.

Having read about 2/3 of his articles, I have realized that most of what he talks about, I already, at some level, know. The article helps to see a topic in a new light though. Yes, some of his articles aren't all that great, and are stuff that is generally know, but very few writers are always successful.

It is the same reason that we have books on science or programming or how to use Windows, or any other number of topics. A subset of the population already intimately understands these ideas. However, to the rest of us, it lets us understand and explore the ideas in ways that never would have occurred to us/been possible.

If you really don't like Paul's articles, then don't read them. They only come up every few weeks. It's not like he posts a new one every other day.

This is why we need to reduce the population. (3, Insightful)

elucido (870205) | more than 9 years ago | (#12505198)

Hiring is obsolete. This is why we need enough wars, famines, diseases, and poverty to reduce the population sizes. We simply don't need new labor or new consumers.

Choice quote (4, Funny)

timeOday (582209) | more than 9 years ago | (#12505207)

"In fact, if Bill [Gates] had finished college and gone to work for another company as we're suggesting, he might well have gone to work for Apple. And while that would probably have been better for all of us, it wouldn't have been better for him."

Overgeneralization (5, Insightful)

Locke2005 (849178) | more than 9 years ago | (#12505214)

1) He says barriers to entry of startups is low. Wrong. Barriers to entry of web services is low; most other startups still require huge infusions of capital, e.g. anybody that wants to do actual manufacturing or sell actual hardware. Are web based startups different from hardware manufacturing startups? Absolutely.

2) Low barriers to entry also means there is going to be hundreds of other "undergrads" trying to sell the same idea. This means your chances of eventual payback are much smaller!

3) Why should bigger companies buy startups when they can just partner with them or outsource company services to them?

4) Yeah, starting a web based startup doesn't cost significantly more than just being a slacker. But if you haven't noticed, 99% of us can't afford to just set around and be a slacker either! SOMEBODY has got to be paying your food and rent. Apparently Mr. Graham thinks most students graduate with tens of thousands of dollars in the bank and can afford to not have any income for several years. I've got about $130,000 in student loans that say otherwise...

not true. . . (1)

jafac (1449) | more than 9 years ago | (#12505228)

...All users care about is whether your site or software gives them what they want. They don't care if the person behind it is a high school kid...

BS. Users care if the company will be around tomorrow. Users care if there are some hidden security vulnerabilities in the software. Users care if the software has any stolen IP in the code. Users care if the software will integrate with their existing stuff.

A lot of this hinges on experience.

This is why the dotcom era saw thousands of startups come and go. And companies like IBM continues chugging along. True: the conventional wisdom left out folks who put their dotcom trust into old standby's like DEC or HP. But chances are, when you purchase the product of a high-schooler's startup, you may end up with something like Napster on your system. That won't do you any good 5 years down the road - so it only temporarily satisifes the requirements of the Home User market. Not something to build empires upon.

As an undergraduate (1, Funny)

Anonymous Coward | more than 9 years ago | (#12505232)

who works as a systems administrator for a research project and is therefore on call 24/7, I get paid $0/hour. I get no benefits, I even had to pay the parking ticket when I had to work 30 hours over a 3 day weekend and the closest place I could park was an empty lot. An associate of mine calculated that it is much cheaper as a research institution to hire undergraduates than it is to hire graduates/post-doc. It's roughly a third for undergrads, if you even have to pay them at all. It's really quite a sad state of affairs. While I'm not in a particularly huge financial problem, there are a lot of talented people who flip burgers when they should be doing "great" things.

Dear Paul (-1, Troll)

Locke2005 (849178) | more than 9 years ago | (#12505240)

Why don't you get back to us after you've successfully launched and sold a successful startup? Until then, I'm simply going to disregard all your assurances of how easy it is as just so much bullshit. Or, to quote the old adage, if you're so smart, how come you're not rich already?

Re:Dear Paul (5, Informative)

Blackeagle_Falcon (784253) | more than 9 years ago | (#12505328)

Why don't you get back to us after you've successfully launched and sold a successful startup? Until then, I'm simply going to disregard all your assurances of how easy it is as just so much bullshit. Or, to quote the old adage, if you're so smart, how come you're not rich already?

Ever heard of Viaweb? It's the startup founded by Robert Tappan Morris and Paul Graham. It was sold to Yahoo! for (according to Wikipedia [wikipedia.org] ) $49,000,000. I don't know how much of that actually went Graham, but he got enough of it to form his own VC company (Y Combinator [ycombinator.com] ).

He's got the experience to back up what he says.

mp3 of the talk (1)

iomanip (775663) | more than 9 years ago | (#12505249)

here [berkeley.edu] is a link to a mp3 of the talk if anyone cares.

oh and go CSUA!

Re:mp3 of the talk (1)

iomanip (775663) | more than 9 years ago | (#12505266)

forgot the obligatory plug for the Berkeley CSUA [berkeley.edu]

Bill Gates at Apple (1)

deanoaz (843940) | more than 9 years ago | (#12505254)

From the article:

"if Bill had finished college and gone to work for another company as we're suggesting, he might well have gone to work for Apple. And while that would probably have been better for all of us, it wouldn't have been better for him."

I doubt it would have been better for us either. If Gates had never created Microsoft, and never cloned the PC's underpinnings away from IBM, we would probably never have seen the day of ubiquitous, commodity PCs. Not to mention all the hardware and software innovation and job creation that has led to.

Utter bullcrap! (3, Interesting)

Anonymous Coward | more than 9 years ago | (#12505336)

The IBM-PC design was open architecture from day one, which had absolutely nothing to do with MS. Zilch. Nada.

IBM was briefly considering the new MC68000 as a CPU, but Motorola couldn't promise the volume. In an alternate universe, they might have been able to do that, in which case the obvious choice for OS would have been Microware's OS9/68k.

That would have given as an IBM-PC with a clean CPU design, coupled with a clean and modular OS with true multiuser and multitasking from the word go.

I sometimes wonder what the world would have been like today if that had been the first IBM-PC...

If Paul Graham says it, it must be true (4, Funny)

ftzdomino (555670) | more than 9 years ago | (#12505255)

This is just as likely as his previous essay stating that bayesian filtering [paulgraham.com] would end all of our spam problems.

Money? (1)

The boojum (70419) | more than 9 years ago | (#12505268)

I noticed that nowhere in TFA did he mention anything about where the money comes from (other than that its cheaper now). I'd have loved to try starting a company after college. But in the real world, I had students lots of expensive loans to pay off, rent on an apartment, various bills. Where would he expect me to have paid that from? How does he expect me to eat? He sort of seems to be overlooking the chicken and the egg problem. Yes, a newly graduated student can live cheaply -- but not for free.

This is so 1998 (4, Insightful)

Animats (122034) | more than 9 years ago | (#12505289)

That sounds like the stuff I was hearing in San Francisco in 1998. Mindshare! Viral marketing! Big companies are too inflexible! Profit doesn't matter! It's the New Economy!

And where are we today? Microsoft is #1 in Internet browsers. IBM is #1 in open source applications. WalMart is #1 in retail. The number of programmers in the US is down 25% since 2000. Almost all the dot-coms are dead.

There are interesting things to be done in software, but the "make money fast by selling stuff on the Internet" ideas have been done.

What a load of crap. (1)

Dink Paisy (823325) | more than 9 years ago | (#12505294)

What strikes me most when I talk to undergrads is how ignorant and unmotivated many of them are. Most of them are better off being put in an entry level job, because they really need more training and experience before they are suitable for anything else.

And the start-up-and-get-bought-out idea just doesn't work as well as Graham claims. I've seen it. Some few people get millions of dollars for their start-up companies, but most single person or very small operations that get bought out only take in a few hundred thousand. It works like this: smart and motivated guy has good idea and forms company, works hard for a few years making pennies and growing debts, gets bought out and ends with a plum job and a few hundred thousand in his pocket. It's only slightly ahead of plan B: smart and motivated guy gets entry level job and advances. It's behind plan C: smart and motivated guy gets entry level job, then gets poached by someone else and ends up with a plum job.

I've nothing against start-ups, and for smart and motivated undergrads who have a good idea that is actually marketable, a start-up may be a better option than a job or graduate studies. But my experience tells me that lots of companies will pay market value for smart and motivated people regardless of whether they come from a purchased start-up, or from the ranks of entry level people they hire. I'm sure there are lots of companies that won't do that, but good people can always choose to leave bad employers and take a different job.

Brilliant (2, Insightful)

psetzer (714543) | more than 9 years ago | (#12505297)

This seems to be part of a long line of great ideas where we push the risks towards the bottom while keeping the reward distribution the same. Frankly recent college graduates can move back into their parents' houses, but it doesn't take much for that to happen. Paul Graham said that it's possible to start a company for $10,000, and get rich off of it. If the recent grad fails to do so, or even to recoup the costs, then they're likely completely out of money, and if their parents won't let them move back in, they're on the street. On the other hand, an established programmer can just keep his old car an extra 5 years and be able to take time off on a project and if it doesn't work out, they've at least got experience from an old job helping them get a new one. A major company would be best capable of handling the risk, with a one-person project setting them back aa miniscule amount a year with a possibility for much greater returns.

Hence, it would seem logical to encourage the largest players to take risks, since they can not only manage the risk, but can best press the advantage. But we've got the current system where Microsoft is just sitting on piles of cash, and recent undergrads and grad students are risking their life savings to innovate. Frankly something is screwed up here.

I liked it (4, Insightful)

stoolpigeon (454276) | more than 9 years ago | (#12505308)

At first I thought it was all rosy and unrealistic and then he balanced out with the fact that yes, you will probably fail. But taking that chance at that point in your life is an interesting proposition.

As a father of 3 I know I can't afford to do anything too risky. But what if I had done it 14 years ago when I was 22 and had no responsibilities to anyone else. As he points out, there is a lot to gain but not nearly as much to lose.

It seems to me a lot of the criticism in the thread revolves around small points of the article but don't take the entire essay into account. And we know why this is the case.

He's correct, and therefore incorrect (2, Insightful)

levl289 (72277) | more than 9 years ago | (#12505334)

To put it simply, for every increase in widespead accessibility to something like starting a business, making music, or making art, one single person isn't the only one to capitalize on the benefits. A larger audience is brought into the arena with these advances, and effectively you're back to square one, because you're at the same proportion of talent/no talent given that the numbers of both increase.

In previous generations, it might have been things like better farming equipment, cheaper building supplies, or the printing press - in all cases though, while the population was lifted as a whole, there were individuals in each case which outshined their less talented counterparts.

Going back to the main point, in all of history, I can't think of anything that's repeatedly eclipsed education as the best means to your end - this time in history is no different, anyone who thinks so must not remember the Dot Com bust and the promised revolution therein.

Why free software makes sense. (2, Insightful)

Erris (531066) | more than 9 years ago | (#12505344)

The article in a nutshell:

Buying startups also solves another problem afflicting big companies: they can't do product development. ... The more general version of this problem is that there are too many new ideas for companies to explore them all. There might be 500 startups right now who think they're making something Microsoft might buy. Even Microsoft probably couldn't manage 500 development projects in-house... It's common for startup founders of all ages to build things no one wants. ...[go get to work so you can build something M$ can buy]

A few things have changed since Bill Gates, who is mentioned frequently, was 19 years old. One of them is Paladium and other market dominance from one obnoxious early entrant. The other is that people have wised up about working in the Microsoft world, hoping to be the ONE that gets bought.

Microsoft's publicly stated policy is to buy "loss leaders" in mature markets. It's no real change from the man who bought the Quick and Dirty Operating System (QDOS) and sold it to IBM or dumpster dived Basic when he was 19 and then sold it to others. Why the hell would I want to be one of those loss leaders? Competition is hard enough in a free world. It's impossible in a world that's owned by one or two dominant players. They are going to come to you an offer you some pathetic sum which they will gladly take to your striving and starving competitors and break you later if you don't play.

M$ is 20 years ago, free software is where things are now. A few people made money on M$ but there are far more corpses than there are companies today. Since then, the real success like Yahoo, Google, Hotmail and others have taken free software and done the end run the author says but does not drive home: they pleased the end user. That's way better than being bought by some big dumb company so your ideas and talent can rot in it's even bigger belly.

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