The truth is that it was never on track in the first place

Tuesday, February 25th, 2020

Paul Graham suggests that importance + novelty + correctness + strength, is the recipe for a good essay:

But I should warn you that it’s also a recipe for making people mad.

The root of the problem is novelty. When you tell people something they didn’t know, they don’t always thank you for it. Sometimes the reason people don’t know something is because they don’t want to know it. Usually because it contradicts some cherished belief. And indeed, if you’re looking for novel ideas, popular but mistaken beliefs are a good place to find them. Every popular mistaken belief creates a dead zone of ideas around it that are relatively unexplored because they contradict it.

The strength component just makes things worse. If there’s anything that annoys people more than having their cherished assumptions contradicted, it’s having them flatly contradicted.

Plus if you’ve used the Morris technique, your writing will seem quite confident. Perhaps offensively confident, to people who disagree with you. The reason you’ll seem confident is that you are confident: you’ve cheated, by only publishing the things you’re sure of. It will seem to people who try to disagree with you that you never admit you’re wrong. In fact you constantly admit you’re wrong. You just do it before publishing instead of after.

And if your writing is as simple as possible, that just makes things worse. Brevity is the diction of command. If you watch someone delivering unwelcome news from a position of inferiority, you’ll notice they tend to use lots of words, to soften the blow. Whereas to be short with someone is more or less to be rude to them.

[...]

You might think that if you work sufficiently hard to ensure that an essay is correct, it will be invulnerable to attack. That’s sort of true. It will be invulnerable to valid attacks. But in practice that’s little consolation.

In fact, the strength component of useful writing will make you particularly vulnerable to misrepresentation. If you’ve stated an idea as strongly as you could without making it false, all anyone has to do is to exaggerate slightly what you said, and now it is false.

Much of the time they’re not even doing it deliberately. One of the most surprising things you’ll discover, if you start writing essays, is that people who disagree with you rarely disagree with what you’ve actually written. Instead they make up something you said and disagree with that.

For what it’s worth, the countermove is to ask someone who does this to quote a specific sentence or passage you wrote that they believe is false, and explain why. I say “for what it’s worth” because they never do. So although it might seem that this could get a broken discussion back on track, the truth is that it was never on track in the first place.

The last bit reminds me of Scott Adams’ Loserthink.

You’ll be accused of some form of heresy

Wednesday, December 4th, 2019

If you discover something new, Paul Graham says, there’s a significant chance you’ll be accused of some form of heresy:

To discover new things you have to work on ideas that are good but non-obvious. If an idea is obviously good, other people are probably already working on it.

One way for an idea to be non-obvious is for it to be hidden in the shadow of some mistaken assumption that people are very attached to. Anything you discover from working on such an idea will tend to contradict the mistaken assumption that was concealing it. And you will thus get a lot of heat from people attached to the mistaken assumption.

[...]

So it’s particularly dangerous for an organization or society to have a culture of pouncing on heresy. When you suppress heresies, you don’t just prevent people from contradicting the mistaken assumption you’re trying to protect. You also suppress any idea that implies indirectly that it’s false.

[...]

There is a positive side to this phenomenon though. If you’re looking for new ideas, one way to find them is by looking for heresies. When you look at the question this way, the depressingly large dead zones around mistaken assumptions become excitingly large mines of new ideas.

The paths that lead to new ideas tend to look unpromising

Tuesday, November 26th, 2019

Everyone knows that to do great work you need both natural ability and determination, Paul Graham notes, but there’s a third ingredient that’s not as well understood — an obsessive interest in a particular topic:

When you look at the lives of people who’ve done great work, you see a consistent pattern. They often begin with a bus ticket collector’s obsessive interest in something that would have seemed pointless to most of their contemporaries. One of the most striking features of Darwin’s book about his voyage on the Beagle is the sheer depth of his interest in natural history. His curiosity seems infinite. Ditto for Ramanujan, sitting by the hour working out on his slate what happens to series.

It’s a mistake to think they were “laying the groundwork” for the discoveries they made later. There’s too much intention in that metaphor. Like bus ticket collectors, they were doing it because they liked it.

But there is a difference between Ramanujan and a bus ticket collector. Series matter, and bus tickets don’t.

If I had to put the recipe for genius into one sentence, that might be it: to have a disinterested obsession with something that matters.

[...]

The paths that lead to new ideas tend to look unpromising. If they looked promising, other people would already have explored them. How do the people who do great work discover these paths that others overlook? The popular story is that they simply have better vision: because they’re so talented, they see paths that others miss. But if you look at the way great discoveries are made, that’s not what happens. Darwin didn’t pay closer attention to individual species than other people because he saw that this would lead to great discoveries, and they didn’t. He was just really, really interested in such things.

[...]

But there are some heuristics you can use to guess whether an obsession might be one that matters. For example, it’s more promising if you’re creating something, rather than just consuming something someone else creates. It’s more promising if something you’re interested in is difficult, especially if it’s more difficult for other people than it is for you. And the obsessions of talented people are more likely to be promising. When talented people become interested in random things, they’re not truly random.

I enjoyed this footnote:

[2] I worried a little about using the word “disinterested,” since some people mistakenly believe it means not interested. But anyone who expects to be a genius will have to know the meaning of such a basic word, so I figure they may as well start now.

There’s a big difference between nothing and almost nothing

Monday, September 18th, 2017

The most valuable insights are both general and surprising, Paul Graham says:

F = ma for example. But general and surprising is a hard combination to achieve. That territory tends to be picked clean, precisely because those insights are so valuable.

Ordinarily, the best that people can do is one without the other: either surprising without being general (e.g. gossip), or general without being surprising (e.g. platitudes).

Where things get interesting is the moderately valuable insights. You get those from small additions of whichever quality was missing. The more common case is a small addition of generality: a piece of gossip that’s more than just gossip, because it teaches something interesting about the world. But another less common approach is to focus on the most general ideas and see if you can find something new to say about them. Because these start out so general, you only need a small delta of novelty to produce a useful insight.

A small delta of novelty is all you’ll be able to get most of the time. Which means if you take this route your ideas will seem a lot like ones that already exist. Sometimes you’ll find you’ve merely rediscovered an idea that did already exist. But don’t be discouraged. Remember the huge multiplier that kicks in when you do manage to think of something even a little new.

[...]

And of course, ideas beget ideas. (That sounds familiar.) An idea with a small amount of novelty could lead to one with more. But only if you keep going. So it’s doubly important not to let yourself be discouraged by people who say there’s not much new about something you’ve discovered. “Not much new” is a real achievement when you’re talking about the most general ideas. Maybe if you keep going, you’ll discover more.

It’s not true that there’s nothing new under the sun. There are some domains where there’s almost nothing new. But there’s a big difference between nothing and almost nothing, when it’s multiplied by the area under the sun.

Advice that surprises you

Tuesday, November 4th, 2014

Startups are so weird, Paul Graham contends, that if you trust your instincts, you’ll make a lot of mistakes:

When I was running Y Combinator I used to joke that our function was to tell founders things they would ignore. It’s really true. Batch after batch, the YC partners warn founders about mistakes they’re about to make, and the founders ignore them, and then come back a year later and say “I wish we’d listened.”

Why do the founders ignore the partners’ advice? Well, that’s the thing about counterintuitive ideas: they contradict your intuitions. They seem wrong. So of course your first impulse is to disregard them. And in fact my joking description is not merely the curse of Y Combinator but part of its raison d’etre. If founders’ instincts already gave them the right answers, they wouldn’t need us. You only need other people to give you advice that surprises you. That’s why there are a lot of ski instructors and not many running instructors.

Read the whole thing — and the footnotes.

How to Get Startup Ideas

Monday, November 19th, 2012

The very best startup ideas tend to have three things in common, Paul Graham says:

They’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way.

[...]

The verb you want to be using with respect to startup ideas is not “think up” but “notice.” At YC we call ideas that grow naturally out of the founders’ own experiences “organic” startup ideas. The most successful startups almost all begin this way.

Tablets and Etherealization

Wednesday, December 1st, 2010

Paul Graham suspects that we’ll end up calling iPhones, iPads, and their Android equivalents tablets:

The only reason we even consider calling them “mobile devices” is that the iPhone preceded the iPad. If the iPad had come first, we wouldn’t think of the iPhone as a phone; we’d think of it as a tablet small enough to hold up to your ear.

The iPhone isn’t so much a phone as a replacement for a phone. That’s an important distinction, because it’s an early instance of what will become a common pattern. Many if not most of the special-purpose objects around us are going to be replaced by apps running on tablets.

This is already clear in cases like GPSes, music players, and cameras. But I think it will surprise people how many things are going to get replaced. We funded one startup that’s replacing keys. The fact that you can change font sizes easily means the iPad effectively replaces reading glasses. I wouldn’t be surprised if by playing some clever tricks with the accelerometer you could even replace the bathroom scale.

The advantages of doing things in software on a single device are so great that everything that can get turned into software will. So for the next couple years, a good recipe for startups will be to look around you for things that people haven’t realized yet can be made unnecessary by a tablet app.

In 1938 Buckminster Fuller coined the term etherealization to describe the increasing tendency of physical machinery to be replaced by what we would now call software. The reason tablets are going to take over the world is not (just) that Steve Jobs and Co are industrial design wizards, but because they have this force behind them. The iPhone and the iPad have effectively drilled a hole that will allow etherealization to flow into a lot of new areas. No one who has studied the history of technology would want to underestimate the power of that force.

When Quality Doesn’t Matter

Friday, September 3rd, 2010

Back when the Web was young, Paul Graham demonstrated a new algorithm to Yahoo’s Jerry Yang, one that ranked search results by user behavior and differentiated between clicks and clicks leading to purchases.  Yang didn’t seem to care, and this confused Graham:

I was showing him technology that extracted the maximum value from search traffic, and he didn’t care? I couldn’t tell whether I was explaining it badly, or he was just very poker faced.

I didn’t realize the answer till later, after I went to work at Yahoo. It was neither of my guesses. The reason Yahoo didn’t care about a technique that extracted the full value of traffic was that advertisers were already overpaying for it. If they merely extracted the actual value, they’d have made less.

This, Eric Falkenstain notes, is just one example of when quality doesn’t matter:

There are many stories about real-estate brokers setting up shop in the early aughts, not caring about whether homebuyers would actually pay their mortgage because it did not matter. This was a signal that rot was rampant. Basically, if quality doesn’t matter, and there’s free entry, there’s a bubble.

When people have positions that don’t do what they say they do, and make a lot of money, there are myriad bad effects. Once when I was a risk manager, I remember showing a swaps book trader a more efficient way for him to hedge his portfolio. As I had to calculate his value-at-risk I had all the data to demonstrate conclusively my superior algorithm. He found this annoying. As a market maker, his Sharpe was already well above 10, so decreasing his value-at-risk by 20% did not really matter. Like Graham’s encounter, I discovered it was all marketing.

The problem with this situation is that when you really understand the game, you have to never talk about it, which is easiest to do if you really don’t understand it. So, the best brokers or brokers-who-call-themselves-traders are blithely ignorant, because they don’t generate ‘tells’ that make everyone engaging in the game uncomfortable. When they talk about trade ideas that are totally unfounded, they can’t be convincing if aware of its lack of statistical evidence, or how their qualifications make everything said meaningless (this could lead to a retracement). Once you swallow the red pill, you can’t go back to enjoying the Matrix.

Similarly in the corporate borg, especially in places like the new Office of Minority and Women Inclusion that is now mandated to be part of each of our 30(!) financial regulatory bodies. As true discrimination is about as rare as a Klan rally, this is all just a sop to the Indian-like ethnic group spoils system the US is becoming (are there really any bankers who hate minorities enough to forgo extra profits?). So, the Chief Diversity officer’s real role is not to rid financial discrimination, but rather to spout cliches about diversity, and put a pretext on the patronage daisy-chain that led to the 2008 housing crisis. However, if you really understood this, you would go crazy, so earnest dolts plague the aristocracy because the dupes actually believe their job is about what it says it’s about.

The Acceleration of Addictiveness

Wednesday, July 28th, 2010

Paul Graham discusses the acceleration of addictiveness:

What hard liquor, cigarettes, heroin, and crack have in common is that they’re all more concentrated forms of less addictive predecessors. Most if not all the things we describe as addictive are. And the scary thing is, the process that created them is accelerating.

We wouldn’t want to stop it. It’s the same process that cures diseases: technological progress. Technological progress means making things do more of what we want. When the thing we want is something we want to want, we consider technological progress good. If some new technique makes solar cells x% more efficient, that seems strictly better. When progress concentrates something we don’t want to want—when it transforms opium into heroin—it seems bad. But it’s the same process at work. [1]

No one doubts this process is accelerating, which means increasing numbers of things we like will be transformed into things we like too much. [2]

As far as I know there’s no word for something we like too much. The closest is the colloquial sense of “addictive.” That usage has become increasingly common during my lifetime. And it’s clear why: there are an increasing number of things we need it for. At the extreme end of the spectrum are crack and meth. Food has been transformed by a combination of factory farming and innovations in food processing into something with way more immediate bang for the buck, and you can see the results in any town in America. Checkers and solitaire have been replaced by World of Warcraft and FarmVille. TV has become much more engaging, and even so it can’t compete with Facebook.

The world is more addictive than it was 40 years ago. And unless the forms of technological progress that produced these things are subject to different laws than technological progress in general, the world will get more addictive in the next 40 years than it did in the last 40.

The next 40 years will bring us some wonderful things. I don’t mean to imply they’re all to be avoided. Alcohol is a dangerous drug, but I’d rather live in a world with wine than one without. Most people can coexist with alcohol; but you have to be careful. More things we like will mean more things we have to be careful about.

Most people won’t, unfortunately.

The one that caught him off guard was “procrastination” on the Internet:

People commonly use the word “procrastination” to describe what they do on the Internet. It seems to me too mild to describe what’s happening as merely not-doing-work. We don’t call it procrastination when someone gets drunk instead of working.

His take on the iPad:

Several people have told me they like the iPad because it lets them bring the Internet into situations where a laptop would be too conspicuous. In other words, it’s a hip flask.

Start In The Middle

Friday, May 21st, 2010

When it comes time to start a new project, you should start in the middle, not at the beginning:

Has this ever happened to you? You wake up one day with a great new idea for applying bayesian filtering to twitter streams to filter out the pictures of Joel’s new puppy spam. You’re totally convinced it’s what the world needs. It’s the startup that’s finally going to help you to break out of your day job maintaining PHP payroll software stock supermarket shelf stockers. So what do you do? You do this:

  1. Fire up your IDE and start a new website project
  2. Whip up a login page and get the user account basics set up
  3. Decide OpenID’s really where it’s at these days and hit stackoverflow for a good OpenID provider plugin
  4. Run into problems getting it to accept Google accounts and spend half the night debugging it

Wait, what? How did this happen? Getting OpenID working isn’t fun. It’s almost the definition of not fun.

I didn’t want to do all this, I just wanted to make an awesome bayesian twitter filter, but somehow there’s all this stuff I have to get through first.

— Me (swear words redacted)

My hard disk is littered with projects that I started, got half way through setting up without ever really getting to the good bit, then abandoned. I suspect yours is, too.

The right way to start a bayesian twitter filter is to apply a bayesian filter to content from a twitter stream. I know. It looks like this:

  1. Google for some bayesian filter code
  2. Dump whatever’s in your twitter client logs to a file and write three lines of python to parse it into a form the bayesian filter can work with
  3. Train the filter and see what happens

Compared to the original approach it looks awesome, right? So what stops us approaching all projects like this? Well, there’s something beguiling about wanting to get the framework right from the start this time. It’s more comfortable starting with something we already know how to solve. Sometimes we have a clear vision of how it should end up in our heads and simply start to create that vision from the beginning through to the end.

Start in the middle.

— Paul Graham (lightly paraphrased)

Lean startups and the Minimum Viable Product are all about starting in the middle. Paul Graham’s advice for startups can be summed up as ‘first solve the interesting part of the problem, then build the business around it’, but the process is also fractal — starting in the middle applies right down to the level of writing a new class, or a single function. First write some code that solves the problem even if it’s imperfect or partial, then expand it out with your favourite blend of accessors, inheritance and polymorphism (Note: don’t even bother with that bit unless you hate yourself).

All Meaning Would Vanish

Thursday, April 29th, 2010

Po Bronson suggests a Twilight Zone-type premise:

What if surgeons never got to work on humans, they were instead just endlessly in training, cutting up cadavers? What if the same went for all adults – we only got to practice at simulated versions of our jobs? Lawyers only got to argue mock cases, for years and years. Plumbers only got to fix fake leaks in classrooms. Teachers only got to teach to videocameras, endlessly rehearsing for some far off future. Book writers like me never saw our work put out to the public – our novels sat in drawers. Scientists never got to do original experiments; they only got to recreate scientific experiments of yesteryear. And so on.

Rather quickly, all meaning would vanish from our work. Even if we enjoyed the activity of our job, intrinsically, it would rapidly lose depth and relevance. It’d lose purpose. We’d become bored, lethargic, and disengaged.

In other words, we’d turn into teenagers.

In Escaping the Endless Adolescence, Joe Allen argues that our urge to protect teenagers from real life – because they’re not ready yet – has tragically backfired:

By insulating them from adult-like work, adult social relationships, and adult consequences, we have only delayed their development. We have made it harder for them to grow up. Maybe even made it impossible to grow up on time.

Basically, we long ago decided that teens ought to be in school, not in the labor force. Education was their future. But the structure of schools is endlessly repetitive. “From a Martian’s perspective, high schools look virtually the same as sixth grade,” said Allen. “There’s no recognition, in the structure of school, that these are very different people with different capabilities.” Strapped to desks for 13+ years, school becomes both incredibly montonous, artificial, and cookie-cutter.

As Allen writes, “We place kids in schools together with hundreds, sometimes thousands, of other kids typically from similar economic and cultural backgrounds. We group them all within a year or so of one another in age. We equip them with similar gadgets, expose them to the same TV shows, lessons, and sports. We ask them all to take almost the exact same courses and do the exact same work and be graded relative to one another. We give them only a handful of ways in which they can meaningfully demonstrate their competencies. And then we’re surprised they have some difficulty establishing a sense of their own individuality.”

And we wonder why it’s taking so long for them to mature.

Paul Graham made a similar point in explaining why nerds are unpopular in high school — but not so much before or after:

I think the important thing about the real world is not that it’s populated by adults, but that it’s very large, and the things you do have real effects. That’s what school, prison, and ladies-who-lunch all lack. The inhabitants of all those worlds are trapped in little bubbles where nothing they do can have more than a local effect. Naturally these societies degenerate into savagery. They have no function for their form to follow.

In fact, all the evidence that teenagers have “raging hormones” or other intrinsic problems is modern:

I’m suspicious of this theory that thirteen-year-old kids are intrinsically messed up. If it’s physiological, it should be universal. Are Mongol nomads all nihilists at thirteen? I’ve read a lot of history, and I have not seen a single reference to this supposedly universal fact before the twentieth century. Teenage apprentices in the Renaissance seem to have been cheerful and eager. They got in fights and played tricks on one another of course (Michelangelo had his nose broken by a bully), but they weren’t crazy.

As far as I can tell, the concept of the hormone-crazed teenager is coeval with suburbia. I don’t think this is a coincidence. I think teenagers are driven crazy by the life they’re made to lead. Teenage apprentices in the Renaissance were working dogs. Teenagers now are neurotic lapdogs. Their craziness is the craziness of the idle everywhere.

Apple’s Mistake

Thursday, November 19th, 2009

Paul Graham examines Apple’s mistake:

Their fundamental problem is that they don’t understand software.

They treat iPhone apps the way they treat the music they sell through iTunes. Apple is the channel; they own the user; if you want to reach users, you do it on their terms. The record labels agreed, reluctantly. But this model doesn’t work for software. It doesn’t work for an intermediary to own the user. The software business learned that in the early 1980s, when companies like VisiCorp showed that although the words “software” and “publisher” fit together, the underlying concepts don’t. Software isn’t like music or books. It’s too complicated for a third party to act as an intermediary between developer and user. And yet that’s what Apple is trying to be with the App Store: a software publisher. And a particularly overreaching one at that, with fussy tastes and a rigidly enforced house style.

If software publishing didn’t work in 1980, it works even less now that software development has evolved from a small number of big releases to a constant stream of small ones. But Apple doesn’t understand that either. Their model of product development derives from hardware. They work on something till they think it’s finished, then they release it. You have to do that with hardware, but because software is so easy to change, its design can benefit from evolution. The standard way to develop applications now is to launch fast and iterate. Which means it’s a disaster to have long, random delays each time you release a new version.

Apparently Apple’s attitude is that developers should be more careful when they submit a new version to the App Store. They would say that. But powerful as they are, they’re not powerful enough to turn back the evolution of technology. Programmers don’t use launch-fast-and-iterate out of laziness. They use it because it yields the best results. By obstructing that process, Apple is making them do bad work, and programmers hate that as much as Apple would.

How would Apple like it if when they discovered a serious bug in OS X, instead of releasing a software update immediately, they had to submit their code to an intermediary who sat on it for a month and then rejected it because it contained an icon they didn’t like?

What Startups Are Really Like

Thursday, October 29th, 2009

Paul Graham asked a number of founders what surprised them about starting a startup and came away with this advice to potential founders:

  1. Be Careful with Cofounders
  2. Startups Take Over Your Life
  3. It’s an Emotional Roller-coaster
  4. It Can Be Fun
  5. Persistence Is the Key
  6. Think Long-Term
  7. Lots of Little Things
  8. Start with Something Minimal
  9. Engage Users
  10. Change Your Idea
  11. Don’t Worry about Competitors
  12. It’s Hard to Get Users
  13. Expect the Worst with Deals
  14. Investors Are Clueless
  15. You May Have to Play Games
  16. Luck Is a Big Factor
  17. The Value of Community
  18. You Get No Respect
  19. Things Change as You Grow

The key insight is the super-pattern, the pattern of patterns:

These are supposed to be the surprises, the things I didn’t tell people. What do they all have in common? They’re all things I tell people. If I wrote a new essay with the same outline as this that wasn’t summarizing the founders’ responses, everyone would say I’d run out of ideas and was just repeating myself.

What is going on here?

When I look at the responses, the common theme is that starting a startup was like I said, but way more so. People just don’t seem to get how different it is till they do it.

The Start-up Guru

Monday, June 8th, 2009

Max Chafkin, Inc.‘s senior writer, has written a piece on Paul Graham, The Start-up Guru. I enjoyed Graham’s take on getting acquired by Yahoo, back in the day:

“Running a start-up is like being punched in the face repeatedly,” he says. “But working for a large company is like being waterboarded.”

If you’re not familiar with Paul Graham and Y Combinator, here’s the story:

After leaving Yahoo, Graham spent most of his time writing essays about technology and business and developing a new programming language. His best work was collected in a book, published in 2004, called Hackers and Painters: Big Ideas From the Computer Age. “Everything around us is turning into computers,” he writes in the preface. “So if you want to understand where we are, and where we’re going, it will help if you understand what’s going on inside the heads of hackers.”

In March 2005, Graham was invited by the Harvard Computer Society, an undergraduate group, to talk about starting a company. “I told them to raise money from angel investors, preferably people who have started start-ups themselves,” he says. After delivering that line, he glanced at the audience and noticed that everyone was looking at him expectantly. Fearing a deluge of bad business plans from bright-eyed Harvard students, he quickly added, “Not me.” Later that day, while having coffee with some of the students, he remembered that if he hadn’t been able to find his own angel investors, Viaweb never would have gotten off the ground. He decided it might be worth seeing what these kids could come up with.

Y Combinator began as an experiment in angel investing, conducted during the summer of 2005. Graham recruited Morris, Livingston, and a Viaweb employee named Trevor Blackwell to join him. The pitch was straightforward: $6,000 for a company with one founder, $12,000 if the company had two founders, and $18,000 if the company had three. In exchange, Y Combinator would get roughly 6 percent in common stock. (Exact ownership stakes vary. The most Y Combinator has taken is 10 percent; the least is 1.4 percent.)

Graham promoted the program with an essay that he posted on his website and that quickly found its way to many college students’ e-mail inboxes. “We give you enough money to live on for a summer, as with a regular summer job,” he wrote. “But instead of working for an existing company, you’ll be working for your own; instead of showing up at some office building at 9 a.m., you can work when and where you like; and instead of salary, the money you get will be seed funding.”

Graham received 227 applications, mostly from computer science students, and he invested in eight start-ups. Half went on to raise additional funding, and two turned down acquisition offers. Graham knew that most of the companies would probably die, but he also believed he was onto something. For example, Loopt, which develops software for cell phones that allows users to see where their friends are, managed to raise $13 million from two Sand Hill Road firms. Another company in the first batch, Reddit, operates a social news website similar to Digg. It was acquired by Condé Nast just a year and a half after its founding and before it had hired any full-time employees. Though the price was not disclosed, reports have pegged it at anywhere from $10 million to $13 million, which means that Y Combinator generated a sizable return, as much as 25 times its initial investment.

Reddit is a good example of what happens to a Y Combinator company when most things go right. But few Y Combinator start-ups enjoy such a straight line to success. That, in part, explains why Graham encourages companies to release products quickly. Doing so, he says, is the best way to turn a bad idea into a good one. “As long as you pay attention to your users, you can change a bad idea,” he says.

Case in point: Justin.tv. The wildly popular online video site now attracts 41 million viewers a month. But it has its roots in a failed start-up called Kiko. The company, a part of Y Combinator’s first class, began with a plan to do for online calendars what Google’s Gmail had done for e-mail. Things went well at first, but then Google decided to do for calendars what it had done for e-mail, making Kiko suddenly irrelevant. Co-founders Justin Kan and Emmett Shear bailed out and sold the company on eBay for $258,000.

Graham lost money on the idea but nonetheless decided to back Kan and Shear’s next venture, a bizarre take on reality television. Kan attached a video camera to his head, wore a backpack stuffed with cell-phone modems, and broadcast his life 24 hours a day. The idea was that Justin.tv would produce similar programs and sell equipment to aspiring reality stars. “I thought it was insanely weird,” Graham recalls.

Kan’s life attracted a few thousand fans and reams of press. But Kan soon noticed that instead of broadcasting from hat-cams, some users were interested in more traditional types of broadcasting. “People were e-mailing us saying, ‘I want to broadcast a bike race or a talk show or a concert,’ ” Kan says. “We were like, ‘OK.’ ” Kan stopped wearing the camera and focused on building a live video platform.

This kind of meandering path, Graham says, is encouraged at Y Combinator. “A lot of great companies started with different ideas,” Graham says, noting that Steve Jobs’s first plan for Apple was to sell do-it-yourself plans for building computers. “You need to listen to your users, figure out what they want, and do that.” When founders are accepted into Y Combinator, they are given a gray T-shirt that says, “Make something people want.” When a company sells, the founders get a black shirt that says, “I made something people want.”

Graham finds unusual parallels between hacking and painting:

But one thing painting taught him was the value of living frugally. “It taught me how to do cheap in a cool way,” Graham says. Artists, Graham discovered, don’t pretend to be rich; they live in sparsely decorated lofts and wear cool vintage clothes. “A start-up is that philosophy applied to business,” he says.

Two Ideas That Would Explode If Combined

Tuesday, April 14th, 2009

Paul Graham has been holding in his head two ideas that would explode if combined — metaphorically:

The first is that startups may represent a new economic phase, on the scale of the Industrial Revolution. I’m not sure of this, but there seems a decent chance it’s true. People are dramatically more productive as founders or early employees of startups — imagine how much less Larry and Sergey would have achieved if they’d gone to work for a big company — and that scale of improvement can change social customs.

The second idea is that startups are a type of business that flourishes in certain places that specialize in it — that Silicon Valley specializes in startups in the same way Los Angeles specializes in movies, or New York in finance.

What if both are true? What if startups are both a new economic phase and also a type of business that only flourishes in certain centers?