Are You A Pirate?

http://techcrunch.com/2010/10/31/are-you-a-pirate/

by GVRV • 16 years ago

282 92 16 years ago

This might just be my favorite post on TechCrunch.

messel2• 16 years ago

Posts from the heart are a potent brew, and that one certainly came from somewhere deep inside of Mr. Arrington. Mike can say that it's not about winning or losing, it's about playing the game now that he's "won".

andre3k1• 16 years ago

> Most people have an aversion to risk, my college economics professor told me. Which means they have to be rewarded to take on that risk. The higher the risk, the higher the possible payout has to be for people to jump.

Here's a followup question your freshman econ professor would have asked:

> Should we create incentives to reward entrepreneurs for their risk aversion? Or should we leave it exclusively up to the free markets to offer the reward?

In other words, if an idea fails should society step in and help the entrepreneur out (thus creating an incentive for him to further innovate)?

lunaru• 16 years ago

Sorry, but society shouldn't have to bail out a failed social network for puppies.

For entrepreneurship there is already enough reward for the risk. It's not just monetary gains we're talking about. For one, you get to call the shots and that's worth more to some people than money. (http://www.paulgraham.com/boss.html)

edanm• 16 years ago

"For entrepreneurship there is already enough reward for the risk."

Maybe that's true now, but it isn't a tautology. For example, pg has mentioned that a few centuries ago, people didn't keep the wealth they made (it was handed over to royalty), which made it so there were no incentives, which severely lowered entrepreneurship.

Society has to work at making sure the balance of incentives is "correct" (correct in the sense that that's what that society wants.) So asking about one potential way society can help increase risk-taking is perfectly valid and reasonable.

messel2• 16 years ago

Ninja

patio11• 16 years ago

There is a lot to unpack in the idea that people get utility out of risk itself. Personally I think many of them get utility out of things which can be sensibly extricated from risk. A lot of folks relish the social aspect of working in a startup (us versus the world, shared triumph over aversely, counterculture as the norm, etc): I think you can replicate that without 90% of them failing. (I hold other heresies such as that you can replicate it without 90 hour work weeks, too - the ninety hour workweek is the talking parrot, which doesn't really do anything for us but we know that it isn't a proper pirate ship without a parrot, and we cling to this even when it bites our fingers and defecates on our pirate boots.)

tyng• 16 years ago

I remember my college economics professor always made the point that "risk-averse consumers" are the rational decision makers in our economy. I almost totally believed him, and thought hack who'd be that dumb kid taking the extra risk without being benefited from it.

Well, now I realise, that dumb kid is me!

jamesbritt• 16 years ago

"the ninety hour workweek is the talking parrot"

Sweet metaphor. Thanks.

zackattack• 16 years ago

I would love to see some counter-examples where 90 hour weeks actually do power superior performance: investment banking; Mahalo.com; etc.

wpeterson• 16 years ago

+1 People need to separate what they like about the work experience from a startup founder/employee experience.

You can build the experience you want out of a job by 1) finding the right place 2) building the role that rewards you.

For some people, that requires running your own company, for most I don't think it does.

webwright2• 16 years ago

Of course you CAN do it without logging lots of hours... And working smarter is better than working harder. There's truth to the statement: "If I do the right work efficiently, I can get done in 40 what most people get done in 90."

But surely hours worked correlates with output, doesn't it? There might be a point of diminishing returns and there might be burnout risk (though the latter can-- and often is-- solved with fresh bodies to throw onto the pyre).

jacquesm3• 16 years ago

You only have one body. When it is gone you don't get another one to throw on the pyre. Instead, we will throw the one you have now on the pyre, and we'll remember you as the guy that worked really hard.

andysinclair2• 16 years ago

Wow, excellent article from Arrington.

I like the analogy, and I can relate to the attraction of spending your life "at sea". The prospect of striking gold is not what attracted me to work for myself, it is the lifestyle.

The unknown nature of startup life is also attractive. At my previous job I knew I would be at my desk every day doing the same thing - now I have no idea where I will be or what exactly I will be doing from week to week, and that is very appealing to me.

And risk/reward? Who cares, just enjoy the adventure!

metamemetics7• 16 years ago

> They don’t need to be rewarded for risk, because they actually get utility out of risk itself. In other words, they like adventure.

Completely flawed. Every sane person seeks to reduce risk. What entrepreneurs also seek is to maximize gains. Increased risk is merely often required to do so.

barrkel6• 16 years ago

I don't agree. "Sane" people introduces something which is frequently a false dichotomy; whether you are driven by your rationality, or by more visceral and deep-seated spirits. The problem is the difference between rationality and enlightened rationality: what is good for you personally in the short term, versus what is good for everybody in the longer term. These things can give contradictory advice, and both can be labeled as rational. But the second isn't intuitive to most people: it generally needs to be supplied from somewhere else, usually emotions.

Let's say you need to get drinking water from the river, but there are crocodiles down there too. If you minimize your risk, you'll get just enough water for yourself. On the other hand, if you get more than enough water, you'll be able to share your surplus, increase your social standing, find a more attractive mate, etc.

Ah! you say - but the "minimizing risk" here isn't actually minimizing risk, but increasing another risk, a risk that you'll never get anywhere in life, won't raise a family and pass on your genes, etc.

But that's an intellectual risk. It's not likely to dawn on you unless you're quite introspected, or perhaps until it's too late and you're in relative middle age.

What if there was a different mechanism? What if exploring the boundaries of your capability, your talents, was its own reward? You can't explore those boundaries without risk of failure, even where failure might include death. A simple mechanism for that could be risk homeostasis, whereby a certain manageable amount of risk becomes its own visceral reward, attracting you to those boundaries and encouraging you to expand them.

In other words, getting utility out of risk itself - "liking adventure".

metamemetics7• 16 years ago

> What if exploring the boundaries of your capability, your talents, was its own reward?

Then you're gaining something (discovery of new assets, freedom, happiness, sense of accomplishment, self-actualization, etc.) and seeking to maximize gains. Risk does not magically become utility. If gains are held constant, nearly everyone chooses the one with less risk because it has a higher expected value. Entrepreneurs are gain maximizers. Risk is only _ utility _ in the case of masochism.

cabalamat• 16 years ago

> Ah! you say - but the "minimizing risk" here isn't actually minimizing risk, but increasing another risk, a risk that you'll never get anywhere in life, won't raise a family and pass on your genes, etc.

This is a useful insight, that minimising risk at one level can mean maximising it at another.

nl2• 16 years ago

Every sane person seeks to reduce risk.

That's simply not true (or else your definition of sane is very limited)

Just as a random example, the death rate for climbing Mount Everest is 10% (!) If sane people always seek to reduce risk then only insane people would climb Everest.

metamemetics7• 16 years ago

>or else your definition of sane is very limited

or else your definition of gain is very limited.

You seem to be implying a mountain climber makes no gains by tackling Mt. Everest. The risk is not what is preferred, the sense of accomplishment and fulfillment is what is preferred. Without gains to be had, the mountain climber would cease to choose decreased lifespan unless they intrinsically enjoyed suffering.

jbert• 16 years ago

You could make it fit your worldview by:

- defining anyone who likes adventure as "not sane" in your book

- including "risk of regret over having had an unadventurous life" into your risk calculation

- just run an analogy with casinos, where the gamblers are purchasing 'fun'

Or you could explore the idea that rational choice theory isn't a set of fundamental axioms of human behavior but a (mostly successful) attempt at a descriptive theory.

raganwald• 16 years ago

Careful, the expression "every sane person..." treads awfully close to "No True Scotsman..." http://en.wikipedia.org/wiki/No_true_Scotsman

More importantly, distinguishing gains from risk is only meaningful if gains are entirely decoupled from risk. I claim that many entrepreneurs seek non-monetary gains like prestige or autonomy, and pursue strategies that maximize prestige or autonomy at the expense of their risk-adjusted financial gain.

A taste for risk and/or a taste for the pure satisfaction of managing risk is a non-monetary gain. If we accept my claim that some entrepreneurs seek some non-monetary gains, how can we be certain that no entrepreneur seeks risk as its own reward?

My unprofessional opinion is that some entrepreneurs seek risk and rationalize their risk-seeking behaviour as a quest for maximal financial gains. I'd extend that risk-seeking and rationalizing behavior to explain why many people join early-stage startups. When you look at the average risk-adjusted return of being a startup employee, a great deal of rationalization is necessary to claim that you're in it for the money.

metamemetics7• 16 years ago

> non-monetary gains like prestige or autonomy

"Gains" obviously did not refer to strictly cash. Gains refers to anything you value. Cash is just a tool. I would go further than you and say the vast majority of entrepreneurs seek autonomy. Use occam's razor when interpreting the statements of others.

jacquesm3• 16 years ago

Did I just hear you call me insane?

I don't seek to reduce risk all the time. Sometimes I actually enjoy taking a risk. For instance, when given the opportunity to leave this house to go shopping I take a risk that I don't need to take. After all, I could get mugged, driven over or any other one of a thousand things that could go wrong on a trip to the shopping mall. It would be much safer to mail order everything in.

And that's not counting my decision to maybe do it on a bicylce, which we all know is less safe than my car (but I enjoy being out there). And I might not even wear UV protection risking skin cancer. And not wear a breathing mask to enjoy the not-so-fresh air.

Life is risk. Sane people (or at least I hope they are the sane ones, if not I'll be off to the funny farm tomorrow) will balance the risks they take against the upsides and will not seek to reduce risk per se.

Entrepreneurs are not unique in this respect, everybody does it, all the time.

Increased risk and knowing how to balance risk is a requirement for a normal life.

And that's not getting in to things like skydiving and bungee-jumping yet.

loewenskind• 16 years ago

I think you're missing the parent's point. Your focus going to the mall isn't "oh man, I may get killed! That's so awesome!" but rather you're focusing on what ever you think you'll get by going to the mall. Likewise, skydiving and bugee-jumping provide an adrenaline dump. A "high".

fraserharris2• 16 years ago

We are living, breathing maximizing expected outcomes functions.

gaius• 16 years ago

That is obviously not true and it's easy to prove: betting on sports is wildly popular. And here the thing, people don't want to win per se; they want to share in the outcome for their team, positive or negative.

Never underestimate the tribal drive in humans.

artsrc• 16 years ago

I have read an analysis of the teaching profession where highly motivated people choose against become teachers not just because of a low salary, but because of low salary variability. Expected teacher salaries don't get much worse even if the teacher does not try, and is not good at teaching.

Most people will not choose an outcome distribution which is highly concentrated on one spot, even if that has the highest expected return. People who are highly motivated are even less likely to choose it.

Most people will choose less expected return (sacrifice gains), and more risk by buying a lottery ticket.

I think the notion of lower risk being good comes from the financial world where you can use leverage on a lower risk position to create a higher return one.

I think people choose outcome distributions that are quite different than a low risk one.

ericflo• 16 years ago

Great article, and definitely a feel-good for people who are starting their own businesses!

However, I wonder if all entrepreneurs are like he describes. In fact his description is almost at odds with what Zuckerberg said at Startup School, about simply building things because you like building things.

I think at the end of the day there's many motivations for doing something as bold as building a company, and everybody has a different mix of those motivations.

JofArnold2• 16 years ago

I feel it's absolutely in keeping with that.

"What if..." is a sign of curiosity, exploration, creativity, imagination and a modest disregard for the risk.

- "What if I climb down that cliff... will I find a beautiful and isolated beach?" (Versus: fall to death)

- "What if I sail this ship a bit further? Will the next island be more bountiful than the last?" (Versus: crash on rocks)

- "What if I replace this diode with an LED? Will the effects circuit sound better?" (Versus: break the effects pedal)

And so on.

bbhacker• 16 years ago

I can't help but think that that this statement of "building things because you like building things" was very scripted at Startup School. The reaction of the crowd was 100% predictable and it was a very smart move and completely re-framed the movie and all the other bad publicity around Facebook.

"Their argument/story/point of view is not valid because they don't understand that you can just build things because you like building things" - 100% crowdpleaser. He is not addressing the issues, he is completely reframing it.

If you look for more examples check out the movie "Thank you for smoking": The question is not whether smoking is good or bad for you or whether we knew about that. The argument is whether we should make decisions for the people of this country or if it is their freedom to make their own decisions.

fraserharris2• 16 years ago

Great insight bbhacker. Mr. Zuckerberg's quip did not sound off the cuff.

JofArnold2• 16 years ago

Might help to break down the concept of "risk" in this context:

- Part A: Seeing a distant island full of fruit and thinking "Wow, I'm totally going there - screw everyone else who's just eating potatoes around here."

- Part B: Choosing to make a boat rather than jumping straight in the sea and risking drowning or death by shark.

So the goal itself is risky and/or unknown, but it doesn't mean you have to do stupid or excessively risky things to get there.

There's a lot of overlap between scouting/explorer/pirate behaviour and entrepreneurship - certainly for me. The very same thing that keeps me going as an entrepreneur sees me exploring/climbing and hiking in dangerous but beautiful places. It's an odd personality trait, but one that's evolutionarily advantageous (now the islanders have all the fruit they need) :)

random422• 16 years ago

I don’t care if you’re a billionaire. If you haven’t started a company, really gambled your resume and your money and maybe even your marriage to just go crazy and try something on your own, you’re no pirate and you aren’t in the club.

I do appreciate the risks pirates take, this however, does not devalue the role of a peasant or a cobbler or a prime minister or a soldier to the society. Its narrow minded to establish one work to be better than the other.

Be pirate, if you think, you are best suited for it. There is NO shame in doing something else, for which you are better suited either.

robryan• 16 years ago

He isn't saying one is better than the other. He is merely stating that there will be certain things you won't be able to identify with that entrepreneurs can.

random422• 16 years ago

I do realize that he is not say this article, however I just feel that there is a lot of false sense of grandeur associated with being a entrepreneur.

erikstarck• 16 years ago

While I like the entrepreneur-as-a-pirate-rebel sentiment it's not the risk that attracts me but the desire to change the world and build stuff that other people find value in.

To build something that other people use is an ego boost.

To build something that other people _pay for_ is even better.

jeffmiller3• 16 years ago

A fun read, but basically another "entrepreneurs are superheroes" article.

It seems unlikely that anyone would get utility out of risk itself, independently of the reward. But many people, given the choice of two scenarios with equal risk/reward ratios, tend to choose the scenario with the higher risk numerator. "Bet big or go home".

andysinclair2• 16 years ago

Totally disagree, lots of people get utility out of the risk itself, and this is the main theme of the article.

jeffmiller3• 16 years ago

Example?

nikcub• 16 years ago

This is what differentiates Arrington (and a rare few others) from a lot of other experts/bloggers - he is writing from the trenches, from the bottom of his heart/gut and from experience.

There are a lot of bloggers and self-proclaimed experts who are posers.

(Disclaimer: former tc employee)

mcritz• 16 years ago

One less lawyer.

elvirs• 16 years ago

looks like cash from AOL has really inspired Mike to advocate being pirate:) just kidding :)

credo• 16 years ago

I see it a bit differently.

For me, the risk-taking comes partly from a confidence (that could sometimes be characterized as over-optimism) and partly from the feeling that my gains from the risk are worth it.

I like adventure, but I don't fall into the category of "They don’t need to be rewarded for risk, because they actually get utility out of risk itself." people.

Taking a risk (e.g. quitting my (Principal Dev manager) job at Microsoft and creating a startup) is rewarding in itself (regardless of how well the company does financially). However, for me, the primary reward is not the risk. The reward is what I get from taking the risk (e.g. work on more interesting stuff)

nanijoe• 16 years ago

Let's just be clear here, pirates were thieves, not the swashbuckling heroes we see in movies today.

araneae• 16 years ago

Right, and there's a lot of good research into why people become criminals, and most do not do it because they're thrill seekers.

Instead, it mostly has to do with their expected costs and benefits, just like any other choice. If one comes from a poor background and lives in a society with poor upward mobility, your quality of life as well as life expectancy is low anyway, so the risk of crime is less severe compared to the expected gains.

No wealthy people became pirates. If risk aversion/attraction was all there was to it, they would.

Nick_C• 16 years ago

That's true, many were. That was mostly in the Caribbean.

There were also (I would say the majority) private ships operating under a government licence, the letter of marque, where they could do anything to the enemy's shipping to "take, burn or destroy". That was mostly in the Channel and the south americas.

And there was a big grey area where a ship might be thieving on one occasion and operating under a letter of marque on another. As with most history, it all depends on who was telling the story afterwards.

nickpinkston• 16 years ago

Though let's also be clear that piracy was often a legal activity by the pirates' home country, and that the offcial navy was engaging in the same activity - but they needed more help from mercenaries: the pirates.

Is Iraq with our Army and Blackwater mercs really any different?

jacobolus• 16 years ago

I recommend Kevin Phillips’s book Wealth and Democracy. One of the more interesting things I learned was that many of the pirates in the Caribbean in the late 18th century were sailing out of Boston and Salem, tasked by the US government with capturing British ships, and that many of America’s great early fortunes were earned from piracy.

http://books.google.com/books?id=sPHP4uUFQgEC&lpg=PP1...

* * *

Anyway, how do you decide who is the thief when we’re talking about stealing from boats trading in plunder, slaves, or products produced by slave labor, as was the case for an awful lot of what got shipped around the Atlantic for many centuries?

rue• 16 years ago

Pirates were robbers, not thieves. Thieves steal by subterfuge, robbers by force.

This message brought to you by the Thief Anti-Defamation League.

chrisaycock2• 16 years ago

Pirates: they're not ninjas.

metageek2• 16 years ago

So what's the common superclass?

(Personally, I'd say that robbers are a subclass of thieves.)

ChRoss• 16 years ago

So Robin Hood (if he really exist) is hero or thieves?

defen• 16 years ago

That's not entirely true. Some were, sure, but it also depends on your perspective. Piracy was a way to wage war against foreign powers without openly declaring it. For example here is a Letter of Marque granted to Henry Morgan (the Captain Morgan) by the governor of Jamaica: http://www.piratedocuments.com/Letters%20of%20Marque/henry_m.... To the Spanish he was a pirate, but to the English he was a hero fighting against the Black Legend. Sir Francis Drake is another example of this. A really fun book if you're interested is Empire of Blue Water - http://www.amazon.com/Empire-Blue-Water-Americas-Catastrophe.... If you read it you'll see that pirates were actually a lot closer to modern entrepreneurs than you might think, except they operated in a much less regulated system.

voodootikigod• 16 years ago

This article is a flaming piece of crap, like most of techcrunch, designed to do little more than inflate egos and rouse people to come back to the profiteering gluttons that, by the way, make up most of his "circle of friends". You want to see a better rallying call for change, try this: http://goo.gl/hMH8

ditojim• 16 years ago

yarr

brisance• 16 years ago

"It's better to be a pirate than join the navy"

http://www.folklore.org/StoryView.py?story=Pirate_Flag.txt

siglesias• 16 years ago

Ok all, we're going to settle this once and for all. I'll work with my prof (behavioral economics) tomorrow to set up a risk profile questionnaire (like an advanced Ask HN) and we'll know by Tuesday how well this claim holds up, empirically. (edit: unless we're comfortable making claims about risk preference WITHOUT data...)

edit 2: these are specialized, refined tests that construct risk preference from a number of decisions from hypothetical situations. Assessing risk preference is not a simple manner of direct question (ex: "Hi, are you risk tolerant or risk averse?") or introspection.

deltasquare4• 16 years ago

That would be awesome. Looking forward to it.

bali• 16 years ago

Just because something is complicated doesn't mean necessarily that it's more accurate or true (a funny illustration: http://www.southparkstudios.com/clips/360419/a-dream-within-...)

I have constructed preference profiles with conjoint and other "complicated" methods many times for big companies and believe me: they only scratch the surface of human behavior, most of it is not valid.

Everybody may have his/her own reason for being an entrepreneur. I see this discussion and Arrington's article as well (besides maybe preparing the ground to quit:) more as an emotional discourse to justify why we do what we do. I have these discussions with my friend and bus. partner all the time and I really enjoy feeling superior to employees, but I know in the back of my brain that it's somewhat unfair.

Anyhow, as for myself, I love to do it because of the lifestyle, because I love to create something, because I can wake up late and work during the night, because I am in control of my professional life and decisions and perhaps most importantly because I hate to know what's gonna happen the next day, next month which is inevitable with a normal job.

My life is over as soon as I am locked in a job + family + everyday routines + stop being curious and open. I would die. I would know how it is going to end, just wouldn't know when.

Just to avoid the latter and achieve the former I am risking right now nearly everything stable I have had in life (friends, family, nice job ($1M in 5-6 years), house, perspective of a relaxed long life)

(don't misunderstand the family part, i believe that is the most important element of a happy life, but it decreases your "degrees of freedom", if you see what i mean)

Ah, that was the word I was looking for, freedom :)

jaxn• 16 years ago

I completed a survey on entrepreneurship the other day for a local college kid's project. There was a multiple-choice question asking why I became an entrepreneur. The options were things like "being my own boss", "working from a preferred location", and "making more money".

I had to choose "other" and write in "I can't not do this."

It is an almost uncontrollable urge. I think it could be safe to say that kind of compulsion limits my ability to do a really good risk assessment. So far it works for me though :)

gregpilling• 16 years ago

I feel exactly the same way. Should I find myself with an extra million in the bank, it would not change the feeling. There is a particular rush from making your ideas into reality.

adhipg• 16 years ago

Is this a resignation letter? Are AOL listening?

swah• 16 years ago

Anyone else avoided these post thinking it was about Torrent or something?

davidst• 16 years ago

For fools rush in where angels fear to tread. -- Alexander Pope

I've come to believe that people who create startups must be, by definition, entirely unqualified for the job. If they were truly qualified they would have some idea of what they were getting themselves into and they would avoid it. Hence, only unqualified people embark on the adventure.

There is, however, an up-side to being unqualified:

The young do not know enough to be prudent, and therefore they attempt the impossible, and achieve it, generation after generation. -- Pearl S. Buck

The young and foolish change the world.

mkramlich• 16 years ago

When Arrington's on as a writer, he's on.

Are You A Pirate?

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