Hackers can be business guys, and other lessons from Paul Graham

http://sub.garrytan.com/hackers-can-be-business-guys-and-other-lessons-from-an-interview-with-paul-graham-during-the-first-yc-batch-in-2005

by DavidChouinard • 13 years ago

153 49 13 years ago

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Shenglong• 13 years ago

Right. Business things, like hacking is mostly experience.

But much like hacking, I would argue, there are rockstar/ninja/superstar/10x/<insert other (deprecated?) term here> business people as well. A lot of it has to do with natural aptitude; just as how coding doesn't simply click for everyone, business things (which is mostly just dealing with people) simply doesn't either.

NathanKP• 13 years ago

Personally I don't believe in natural aptitude. Most of what others tend to see as natural aptitude is in fact just attitude. If someone really enjoys something they put in the hours of practice and the effort to be awesome in that field, and they can become the "rock star".

elliottkember• 13 years ago

"Talent is willingness to practice" is how I've heard that described.

jiggy20115• 13 years ago

Well yes and no. Obviously for most things you will get better with practise but it's certainly also true that you are genetically predisposed to learn some things faster than others and be able to get to a higher level quicker and have a higher chance of becoming one of the best in that field. So it makes sense to specialise in those things.

For example I'm sure I could run pretty fast if I trained but I'm never going to beat the 100m record because I'm not usain bolt.

pud• 13 years ago

The flip side is, when you're naturally good at something, it becomes fun to do. So you do it a lot.

I tried for 2 years to get good at guitar. Never got good. But didn't practice very often either.

Then one I sat down at a drum set and was immediately better than the drummer in my band. I had a knack. It was so fun to play those beats that I practiced almost every day for many years, and still do. And have gotten pretty darn good.

Natural ability turns into learned skills.

pistacchioso• 13 years ago

Maybe both are just experience, but in the process of learning when I fail at coding, it's just "fuck that, I'll try starting with a simpler task". If you fail at business you may find yourself on the road and bring people with you.

Andrew_Quentin• 13 years ago

Right, what are these rules?

randomdrake• 13 years ago

I would say smart hackers can be nearly anything they want to be. The best of them are capable of looking at most any problem and breaking it down into solvable chunks. Whether it's figuring out the behaviors necessary to tone their bodies into beings capable of physical activity, or honing their skills with machinery to rebuild an old car. Hackers can be some of the best mechanics and are capable of knowing how to turn their bodies into incredible machines.

Those are just a couple of examples of what hackers are capable of outside of, well, hacking on things. If there are parts of problems or tasks hackers don't know, they can research them and understand how to fix them. This means that they're not afraid to jump into the deep end in other professions or tasks.

Capable of being a business person, and possessing the same drive as business people are where the disconnect occurs, in my opinion. Could a good hacker figure out the steps needed to create something that would be considered a successful business? Yes, probably so. But, are smart hackers driven to generate wealth or create large organizations of people? In my experience, the answer is often: "not really, but I'd love to help you build it."

viame• 13 years ago

Great answer, nothing to add, nothing to take away. =) I haven't met Paul Graham but when I was watching this video I couldn't stop thinking that he should be an actor. At least his voice should be used in a commercial, a cartoon or elsewhere.

lifeisstillgood2• 13 years ago

I am surprised that Shenglong is down voted - it strikes me that the idea of 10x "business-people" is just as valid as 10x developers. Certainly Branson for example seems better at it than, say, me.

@Andrew_quentin Want my take on the 5 or so business rules:

1. Budget. Don't spend more than you plan to, plan to make a profit.

2. Clarity. Be clear what you offer and why it benefits the target market

3. ABS - Always Be Selling. Build a pipeline of prospects and clients and audiences. Keep on telling them how your thing will make their lives better. Then and only then watch GlenGary GlenRoss

4. Service - the customer must think you love them because only people we love do we treat so well. This is easier with few customers. They then have to be charged more. This is a sub rule (6)

5. Consistency - say it, do it. Hire a PA to make sure you do.

6. Never drop your price or cut your rates

jiggy20115• 13 years ago

Number 6 seems like the odd one out , there are plenty of businesses that were successful because they kept figuring out how to get things done cheaper and passing those savings on to consumers and undercutting the competition. Or companies who ate their margins to lower prices and gain market share.

mkr-hn• 13 years ago

Not every businessperson aims to create the next Walmart-scale business. You can live comfortably with a few tens of thousands of repeat customers.

spitfire• 13 years ago

Perhaps that rule could be rewritten as 6. Never drop your margins.

Sure, find ways to save costs and pass this on to your customers, but only when it improves your margins a bit.

jkuria2• 13 years ago

I don't think anyone should try to follow Branson's example. The man is gambler and an extreme case of return on luck. One early success and some antics that catapulted him into fame, then this notoriety allowed him to hire good managers (Ex-McKinsey types) to run and launch new businesses under his name. Read his book 'Losing My Virginity' and you'll understand why.

apythonista• 13 years ago

I've read that book of his and also another one - Screw it, lets do it.

> allowed him to hire good managers (Ex-McKinsey types) to run and launch new businesses under his name

That still makes him a good businessman, IMO. I thought of changing the words to "good manager or delegator", but prefer the former. Employing good people and monitoring them is still the work of a businessman, methinks.

lifeisstillgood2• 13 years ago

Let me out it another way - high school drop out commits to startup career, fights through years of slow growth, relentlessly resourceful in finding new ways to keep afloat, then has break through, willing to risk capitalising on break through, then manages cash flow from that to diversify and repeatedly identify and create new businesses, brining in talent and nurturing it to maximise return

So this is what the YC alumni should not do?

negamax• 13 years ago

Yes. And many top notch business guys can become great programmers if they want to. Hard working people can shine anywhere.

r0s• 13 years ago

As an aspiring business guy, my biggest problem seems to be accessing information about different models.

Say I want to build a web community around a particular kind of video game. Estimating the value of that market is pretty damn opaque to an outsider.

wordplay• 13 years ago

I've been thinking about the general business plan problem for years. Not only because it's a very real problem, but also because as I'm walking through a swap meet or a grocery store I'm perpetually curious about margins and return on capital for the many tiny to medium businesses for which almost no intelligence exists. If I could figure out a way to bootstrap a crowd sourced resource for these I'd be working on it right now...but alas.

In your case, if you haven't done so already, I'd suggest attempting to buy advertising from a site similar to the one you'd like the build. Maybe even invest some dollars advertising your own product (non-profits are interesting guinea pigs too) to get some idea of the volume of traffic they enjoy and the prevailing rate that advertisers are willing to pay for access to their audience. Once you have data you can start building some models and establishing ranges inside which the business makes sense to pursue. I've done this kind of research myself and for clients on multiple occasions, it's not bulletproof but it's a valuable start.

jusben13693• 13 years ago

I always thought this was PG's greatest gift to the tech world. To horribly generalize - prior to YC "business" people had a patronizing attitude toward developers. They were expensive assets - comparable to hw/sw and data-centers - that were required to successfully launch and grow a startup. But they weren't invited to the strategic table too often. They didn't get business.

I don't know this to be a fact but I always felt like PG responded with a "I'll show you!" after one too many patronizing comments from the old boys club of VC's or CEO's or SVP's of BD's. And show us he has. Certainly other factors (the lower entry cost to starting a startup) contributed to the rise of the wide spread geek business leader. But PG deserves a lot of credit.

Having said all that I almost feel like developers today are similar to women in the 80's (stick with me I know this is getting weird) Women in the 80's were supposed to have fulfilling careers and still be great mother's/spouses. They could have both! They just ended up with 2x the pressure to be great at what they did vs before. It seems today every developer is supposed to have a real side project that could blossom into it's own business at any point. Come to think of it; non technical startup folks are implored to "learn to code!" So maybe it applies to both devs and non devs in startups.

It's an interesting time. I think it's great developers can now lead companies with little or not stigma attached. In the long run though I believe in teams and specialization vs individuals and doing it all. I think we'll return to a more natural balance. And that tends to be that people who can build and nurture a forest tree by tree and row by row aren't the same people who can see the entire forest and what the seasons will bring. The forest does best when each person is in the right role.

jiggy20115• 13 years ago

I don't know, even before YC a lot (most?) of the prominent successful tech startups were started by pretty technical people Microsoft , Apple , Yahoo , Google etc.

jusben13693• 13 years ago

That's why I emphasized "wide spread". And Google and Yahoo bought in "mature businessy" CEO's. And Jobs to me was always a business guy wrapped in the cloak of dev but that's a whole other discussion!

lhnz• 13 years ago

>> That tends to be that people who can build and nurture a forest tree by tree and row by row aren't the same people who can see the entire forest and what the seasons will bring. The forest does best when each person is in the right role.

There are plenty of hackers who can see an entire forest. This is the meaning of abstraction.

It is correct to say that something is best when people are in their 'right' role, but I think it's absurd to say that people that are used to hacking and creating systems are unable to think about systems...

If what you're saying is true, however, that means a weakening of our socioeconomic position, so you better hope that you're wrong, and that we do in fact have the natural ability to learn, think about systems and be strategic.

arjunnarayan• 13 years ago

While I agree with you, I wouldn't attribute the entire effect to Paul Graham. There's a steady progression: Phase 1 was Larry and Sergey: they tried their hardest to stay in charge, but the powers that be (i.e. the money) forced a CEO on them. The best they could do was limit the damage by making sure the CEO had as much technical chops as possible. In retrospect, Eric Schmidt was great: a real hacker in background who had made the transition into a business guy at Novell/Sun. Pretty good progress to getting hackers more power: at least when they were forced to hire above themselves, they picked one of their own.

But the next one in the line went better - Call this Phase 2: Mark Zuckerberg (the next big company founder) was somehow able to hold his own against the money. I think we can credit this to Peter Thiel: since Thiel had first hand experience at PayPal, he probably has tremendous respect for hackers (I don't know what his personal hacking skills are, but I suspect they are good). Thiel (as the primary money behind FB) gave the Zuck free reign to stay CEO, which moved the needle further.

And now we're in phase 3: Zuck has shown the money guys enough contempt (remember the articles in Businessweek or whatever where bankers were angry that Zuck wore a hoodie and not a suit at the IPO roadshows?), as well as established a ~50B company with hackers firmly at the helm. Now it's common knowledge that you don't really need a "business guy". The next guys are free from this tyranny.

I do think that PG helped though. A lot of the education has come from PGs essays: I'd be surprised if there was anyone in the valley who hasn't read them, or at least organically come to very similar conclusions that he has: notice how they overlap well with Peter Thiel's class notes for CS183 (at least in some of the assumptions they both make about how the world works). And the part of SV that PG doesn't influence (the bigcos, I imagine. I don't know, I'm speculating at this point...) Thiel influences. So take the lead-by-example of Google, then Facebook. The intellectual underpinnings by Thiel and Graham. The evangelizing of Graham and Hacker news, and that's what I would credit for this outcome.

hkmurakami• 13 years ago

>I think we can credit this to Peter Thiel: since Thiel had first hand experience at PayPal, he probably has tremendous respect for hackers (I don't know what his personal hacking skills are, but I suspect they are good).

Peter Thiel's educational background is in philosophy and law [1]. There's been no public demonstration of hacking ability from him. I'd suspect that his respect for hackers was (if it didn't exist from earlier years through his personal relationships) grown from his partnership with Max Levichin in founding PayPal and keeping it afloat during those tumultuous years via multiple technical breakthroughs (including fraud detection, researched and developed by Levichin).

[1] https://en.wikipedia.org/wiki/Peter_Thiel#College_and_law_sc...

yuhong• 13 years ago

Nowadays there is even Marissa Mayer of Yahoo and David Marcus of PayPal. I hope that this kind of CEO becomes more common.

paulsutter• 13 years ago

Come on guys, Hewlett and Packard were engineers, and they _slightly_ predated pg, Larry, Sergei, and Mark Z. Even their mentor was a professor, not a "business guy". From Wikipedia[1]:

"Bill Hewlett and Dave Packard graduated with degrees in electrical engineering from Stanford University in 1935. The company originated in a garage in nearby Palo Alto during a fellowship they had with a past professor, Frederick Terman at Stanford during the Great Depression. Terman was considered a mentor to them in forming Hewlett-Packard. In 1939, Packard and Hewlett established Hewlett-Packard (HP) in Packard's garage with an initial capital investment of US$538."

Drones in khakis and blue shirts have been trying to infiltrate the valley ever since. It's true that their influence waxes and wanes, but they've never been the ones to drive things here.

[1] http://en.wikipedia.org/wiki/Hewlett-Packard

k__• 13 years ago

Many really successful people were and are engineers. Also many big companies are led by managers who started as engineers.

ysapir• 13 years ago

"We fire up that video the second we start reading an application, usually."

As a new applicant, it makes me curious. Does that mean that (usually) if I haven't seen views on the video yet, the application hasn't been read yet?

klrr• 13 years ago

Even though it's true that "web based" software will be the future I personally think it's a bit sad(unless if that term doesn't solely mean software on a server that you connect with a bloated browser to).

Besides that, interesting and good interview.

vy8vWJlco• 13 years ago

2005 was a long time ago, but I think that attitude (@ 17:23 "We would be reluctant to invest in someone making desktop software", "It's ridiculous to think that your data should be on a computer... Your data should be on the network.") is unfortunate. The web is the best and worst part of the modern Internet. It is easy to develop for and in the short-term can be quite liberating, but in the long term it can do very little except make us easier to control and less likely to revolt when the operators do anything "Evil (TM)." I also think the web is a very weak and overrated platform - standards have been slow, because native experimentation has stopped. To do anything interesting, you need a native plugin. The Internet itself is ideal for communication and message passing, but the web is just one facet that excels at typesetting a dynamic book, but I can only look at so many banners.

Further more, the network exists to connect computers, not the other way around. It is not a thing on its own. There's no such thing as data that "lives" on the network. Today's cloud is just someone else's PC, somewhere else on the globe, and much less under my control, so it's not a very compelling alternative to running native software for me when it's available.

chacham15• 13 years ago

> I'd be reluctant to invent in someone who made desktop software

I wonder if pg would revise that statement now seeing as how Dropbox is its largest winner so far.

reledi• 13 years ago

It's also a web app.

d0m• 13 years ago

What PG says resonate so much with me, it's hard to explain. People asking me questions about my startups or hacking stuff... I wish I could just redirect them to this video. Actually, I will!

On a side note, I didn't know PG sounded a bit british : )

jkuria2• 13 years ago

Since this was in 2005 I wonder what he'd say now? I believe he has since said that initially, they thought they were looking for smart people. Over time they found out they were looking for determined people.

[Business Writer] What do you look for in people?

[PG] Determination. When we started, we thought we were looking for smart people, but it turned out that intelligence was not as important as we expected. If you imagine someone with 100 percent determination and 100 percent intelligence, you can discard a lot of intelligence before they stop succeeding. But if you start discarding determination, you very quickly get an ineffectual and perpetual grad student."

larrys• 13 years ago

I'm going to watch this entire video but what I find interesting in the first few minutes are Paul's facial reactions to the initial questions indicating what appears to be no idea at all of what he is going to be asked.

In contrast to the facial reactions of people who are asked questions on formal TV interviews who appear as if they more or less know what is going to be asked because there isn't as much facial twitching, or thinking, it's as if they've had time to think things through by knowing in advance the questions. Not the case here.

DanielRibeiro• 13 years ago

This interview contains some pretty amazing gems. This part[1]:

So, really good sofware is software that embodies an idea, some fabulous idea for some new thing that is possible that maybe only the guy writting the software realizes is possible. And maybe people who hear about it while he's working at it think it is the stupidiest idea

... reminded me of Peter Thiel's famous quesetion[2]:

what important truth do very few people agree with you on?

[1] http://www.youtube.com/watch?feature=player_embedded&v=B...

[2] http://blakemasters.com/post/22866240816/peter-thiels-cs183-...

mceoin• 13 years ago

ob·strep·er·ous /əbˈstrepərəs/

Adjective Noisy and difficult to control: "the boy is cocky and obstreperous".

pshin45• 13 years ago

I don't know if anyone here is a fan of MMA aka Mixed Martial Arts (as I am), but I think the parallels between the startup/hacker world and MMA are fascinating.

Not unlike startups, success in MMA requires proficiency in several very different disciplines including wrestling, Brazilian jiu-jitsu, boxing, Thai boxing (Muay Thai), karate, etc.

In the early days of MMA, fighters were very one-dimensional and the dominant champions tended to be wrestlers, reason being that while a wrestler could reasonably defend against a (kick)boxer's strikes, (kick)boxers were generally powerless to do anything once a wrestler took them down, which they inevitably did in the course of a fight.

I believe this is the case with hackers vs. business guys as well. Hackers can generally become very proficient in business in 3~5 years on the job, but a business guy would need 10+ years of focused practice in order to become equally proficient in hacking, and until they learn will be absolutely clueless when working with hackers.

And in the early wrestler-dominated days of MMA, people envisioned a future where every MMA athlete would be equally well-rounded in all of the disciplines and such distinctions would become unnecessary. But as is often the case, the reality has turned out a bit differently.

A strong wrestling base is still a huge plus and a strong indicator of success - There are 8 weight classes in the UFC and 5 of them are wrestlers. But in general, what has happened is that in order to be a champion or championship contender, one needs to be minimally (i.e. above average) well-rounded in every discipline, but every champion is exceptional in at least one discipline. For example, non-wrestler champions like Anderson Silva (185 lbs) and Jose Aldo (145 lbs) are outstanding kickboxers who are competent enough in wrestling to be able to avoid being taken down. The days of only-specialists are gone and the days of only-generalists never came; the reality has turned out to be a combination of the two.

I expect to see the same dynamic in the startup world. Hackers are becoming more business-minded and business guys are (maybe less so) starting to realize the "power" and importance of hackers, but I don't expect the two worlds to ever completely converge. It will be important to be world-class in at least one discipline (hacking or marketing or whatever), but everyone will need to be at least above-average in all disciplines to expect to compete at all.

Hackers can be business guys, and other lessons from Paul Graham

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