What the bubble got right (2004)

by sakunthala • 12 years ago

53 54 12 years ago

" I thought it would be useful if I explained what a nerd was. What I came up with was: someone who doesn't expend any effort on marketing himself."

Sadly the personalities who dominate academia are increasingly anti-nerds.

lhnz3• 12 years ago

Horribly out-of-date in parts. The 'substance' has evaporated.

  "I thought it would be useful if I explained what a nerd was.
   What I came up with was: someone who doesn't expend any
   effort on marketing himself."

I always considered Paul Graham a 'nerd' despite his excellent essays marketing his intellect to nerds. (A positive is that he seems very humble; he does not recurse very well, and so had to create a Y-Combinator for this purpose. For somebody that doesn't appear to believe in marketing this man sure knows how to signal to me.)

I also don't see dressing informally as a very positive signal anymore. Many nerds have lost their right to wear formal clothes and they've just not woken up to that reality yet. Companies want their executives to wear suits and ties but their engineers have a new uniform: "no uniform". You can tell you're wearing a uniform, because there is a reputational cost to rejecting it. My slightly rebellious slant is to just pick the opposite of what everybody else is doing and do that.

_delirium2• 12 years ago

I've definitely noticed that with the clothes. As a programmer, you have the right and obligation to wear an informal but fairly regimented and slightly embarrassing uniform (e.g., cargo shorts + thinkgeek tshirt), which cements your social position. You basically cannot dress "nicely" without people judging you, from both above and below.

ahomescu1• 12 years ago

You can dress business casual as a programmer, and I don't think anyone judges you (I know plenty of "nerds" who dress business casual). So I'm assuming that when you say "nicely", you mean suit&tie. As I was reading your comment, one question came to my mind: why? If you work in front of a computer for 8-10 hours a day, and the only people you interact (briefly) are others on your team, what's the point of dressing up? I can see the reason for it in jobs where there's a lot of contact with others (who you need to impress), but that's not the case for programmers.

onedev2• 12 years ago

Why can you just wear some of the freshest designer shit and put everyone you work with to shame causing them to step up their game?

marquis3• 12 years ago

I'm a rather fashionable young woman thanks. It doesn't bother me in the slightest when I meet someone whose clothes don't fit the stereotype, perhaps you are in a more cloistered environment?

krakensden3• 12 years ago

In my experience, cargo shorts are pretty rare, as are overtly geeky shirts. Not to mention the post-hipster dandy look, which is increasingly popular.

knieveltech3• 12 years ago

I decided to get a mohawk (and dye it purple) last year. I also decided to wear nothing but business suits with tie and french cuff shirts when out in public during this period. The company I work for slapped pictures of me all over their Facebook feed a week after I made the change. I went to a developer conference and got mugged by a dutch film crew. I caught people using me as a landmark when the main conference hall got crowded. I popped up on instagram more often than the keynote speaker for the event. On several ocassions I had total strangers approach my table while dining out with my wife to tender complements. I'm not sure what my point is here other than I don't feel any pressure to conform to a given uniform and my intermittent refusal to do so hasn't seemed to impact my career so far.

deerpig• 12 years ago

Conformity and non-conformity are just two sides of the same coin, they are both marketing statements.

Einstein was the opposite, he had 5 sets of the same suit so that he didn't have to waste time thinking about his wardrobe. He would rather spend his time thinking about important problems.

A dyed mohawk and a suit, to me, is a lot of work and thought that I personally would rather spend on the work.

There is nothing wrong with marketing oneself, it's part of being a a social animal. But when you market yourself you are making a statement to others that you want them to notice and to be noticed. It is spending time on marketing and not on ideas and the work.

I would agree with Graham's definition of nerd. The fact that many people who like to think of themselves as nerds today, who actually aren't, doesn't change the kind of person he was describing.

kelnos3• 12 years ago

I think it was because, for lack of a better word, you were "weird". It's not just the clothes, it's the entire look. Had you worn the same clothing, but had a "normal" haircut, you likely would have been perceived to be more like the business/non-tech type.

The dyed mohawk gave you enough of a counter-culture look that, when paired with the suit, gave you an overall look completely unique from the informally-dressed nerds and the formally-dressed suits, and that's generally viewed positively by the nerd crowd.

And it's also about the people around you. You'd presumably already established your personality and technical competence at your company before that, so while the change in look was of course a change, they already had context in which to appreciate the change. In that context, even if you hadn't changed your hairstyle, while you may have gotten some surprised looks and questions when you suddenly show up in a suit, your colleagues would still assume "the best" before believing you'd turned into a "suit" they don't trust anymore.

kelnos3• 12 years ago

Companies want their executives to wear suits and ties but their engineers have a new uniform: "no uniform".

Strongly disagree. I look at it the other way: if I weren't at work, what would I be wearing? Well... the same thing I just happen to be wearing at work. I own a couple suits (one of them actually well-tailored and fitted), a few blazers, a bunch of buttoned shirts. They're great when I'm going for that look, but they're never going to be as comfortable to me (both physically and psychologically) as a tshirt, jeans, and hoodie. When I get home from work, I don't change into something more comfortable like my dad always did when I was growing up. I'm already comfortable.

I think that's the definition of dressing informally to me: not changing my look based on the current situation.

Many nerds have lost their right to wear formal clothes and they've just not woken up to that reality yet.

I do agree with that, unfortunately. At the worst end of it, some people are rejected for positions because of "culture fit", and often the signal for that lack of fit is that they showed up to the interview dressed too formally.

On the other hand, a employee at my company (before my time, sadly) just showed up one day wearing a suit. When asked about it, he simply said, "I just decided I want to dress like this from now on". And that was that.

_aeron• 12 years ago

I find that considering any part of one's appearance to be acquiescing or reacting to company policy is ultimately still acknowledging it, and PG touches on the reason why that alone should be distressing: "dressing up is inevitably a substitute for good ideas".

Focus on building a wardrobe that can modulate and interplay. A nice (and here I mean non-stuffy, my personal preference is a rich blue slim-cut) suit can lose the trousers in favour of jeans for the weekend, or lose the jacket in favour of a sweater for the workplace of a programmer. You won't look especially trendy, or 'like a programmer', but nor will you look tasteless or in any way aberrated; you will look competent. Expecting anything else is probably quite vain.

vorg2• 12 years ago

PG touches on the reason why that alone should be distressing: "dressing up is inevitably a substitute for good ideas"

Maybe in America. Americans who visit Asia better remember that just because they're wearing a suit doesn't mean they're stupid.

specialist2• 12 years ago

Every day is Halloween.

You have to look, talk, and act like the people you want to interact with. Dress the part. Homophily.

Last week I put on my politician costume, headed to the legislature, talked policy, asked for votes, and played the role.

The following day I put on my bike commuter costume, laptop camped with my fellow programmers, and wrote code.

Whenever we have planning meetings, I dress up, so that I'm taken more seriously.

You absolutely judge others by their appearances. Why would it be any different for you?

lhnz3• 12 years ago

I completely agree with you. In fact I smiled when you said "homophily."

You're clearly not somebody that will fight against reality.

Are you on twitter by any chance?

michaelochurch4• 12 years ago

PG got so much wrong here.

(From #4, Youth) A 26 year old may not be very good at managing people or dealing with the SEC. Those require experience. But those are also commodities, which can be handed off to some lieutenant. The most important quality in a CEO is his vision for the company's future. What will they build next? And in that department, there are 26 year olds who can compete with anyone.

Some 26-year-olds are immensely talented, sure. Anyone who would argue against that point is an idiot. Some people learn how to lead very early on. But the ability to lead a team or motivate people and the ability to keep one's company legal are not commodities. Not even close. If your CEO is an idiot or a naif then he can't evaluate his lieutenants, he will pick idiots to manage the day-to-day, they will do shoddy work (or screw him over behind his back) and he won't know, and disaster will ensue.

This has nothing to do with age, really, because there are many 26-year-olds who can do those stereotypically "older" jobs.

On age more directly, the age discrimination culture is disgusting and perverse in its half-assed homoeroticism (I have no problem with actual gay people; my issue is with the chickenhawks who rule VC-istan, who identify as heterosexual and are often married men, yet have creepy "I'll support your career in order to look at you" relationships with 24-year-old, hipsterish manboys with minimal talent. Hmmm. Nothing weird about that. Of the VCs who backed Duplan and Spiegel, what do their wives think?) The '90s bubble may have corrected for a previous (and surely pernicious) anti-young bias, but this 2014-era, VC-istan age discrimination culture is just as disgusting and stupid. Let's stop being crass fuckheads and just make age a total nonfactor either way, ok?

On "vision", I would likewise say that the age correlation is probably 0.0 over the relevant range (20 to 65). However, many businesses don't require a vision-- they require taking a known problem and executing well, and for those, I'd argue that age is an advantage (but a very slight one) in those.

(From #6, Nerds) A nerd, in other words, is someone who concentrates on substance.

Really? Because the current tech bubble is driven by fart (no typo) boys like Lucas Duplan and Evan Spiegel, who aren't nerds. This round is actually disgustingly conformist. It has the mechanisms of startups, but no soul. Sure, you don't have to dress up if you work for one of these post-2008 VC darlings, but you face closed allocation and corporate politics and cultish conformity and boring problems, so what's the fucking point?

True nerds (by that definition) have no home in the VC-funded world these days. It is now owned by the fratty shitscum.

(From #7, Options) Options are a good idea because (a) they're fair, and (b) they work.

I disagree. In a typical VC-funded tech company, an engineer makes $100k while the VP/NTWTFK (Non-Technical Who-The-Fuck-Knows) working 11-to-3 and bikeshedding makes $150k. That's 1.5x more. In equity, the engineer is getting 0.05% while the VP gets 1%. That's 20 times more. The inequities in equity are absurd and would never be tolerated in salary numbers. Gender and race inequities are also much more extreme in the options/equity front.

9. California

You mean that dysfunctional broke state with extreme economic inequality?

Real estate is still more expensive than just about anywhere else in the country.

That's a bad thing, and if you don't realize that, you're a dumbass with little insight into how the economy works (101 lesson: elasticity). Expensive real estate is what you get when regulatory corruption (NIMBYism) meets the extreme inelasticity of housing costs: a 2% gap between how much housing there should be and what there is can cause prices to go up 50% or even double. The price/income ratio of housing is constant absent regulatory dysfunction. Bay Area incomes are higher than the national average, but not by enough to match the housing prices.

What makes the Bay Area superior is the attitude of the people. I notice that when I come home to Boston. The first thing I see when I walk out of the airline terminal is the fat, grumpy guy in charge of the taxi line.

Wait, so you can't launch a startup if there are too many fat people? Weird. I know plenty of fat people I'd found with if they were so inclined, but what do I know?

That 26 year olds with good ideas will increasingly have an edge over 50 year olds with powerful connections.

Now, the 26-year-old and 50-year-old with great ideas both get screwed over because the VC and support and resources all go to the 26-year-old with powerful (inherited) connections. (Or the 26-year-old with the creepy chickenhawk relationship with the powerful 50-year-old.) Ageism begets classism, because any 22-year-old who can get VC (in 2014, with the social distance between VCs and peons at record high) had parental lift. What's happening now is not an improvement.

onedev2• 12 years ago

I read about half way through before realizing that I was reading your writing...you've switched up your spiel a bit recently I see. Usually it takes no more than 1 to 2 sentences to figure out it's you.

This isn't meant to be negative btw. I just think it's funny how I can spot your writing and ideas from a mile away.

sakunthala2• 12 years ago

Yeah, you start to think, wow, some criticism I hadn't considered before, then you see the word "VC-istan" and move on.

pfarrell• 12 years ago

Michaelochurch, always enjoy your take on things.

Maybe I'm being too simplistic. I think the VCs want to mentor young founders because the younger they are, the more chances they get to found/fail before life starts calling to them in mid-thirties. A founder I had talked with said that young founders are judged on their potential while older founders get judged on business fundamentals of their idea.

In the absence of work on groundbreaking tech, maybe you do want young founders to build "iFart 2014"

selmnoo• 12 years ago

[...] because the VC and support and resources all go to the 26-year-old with powerful (inherited) connections.

Really? Do you really think this is so? Is y combinator, in that case, rigged? Because as you know pretty much all graduates of YC are practically promised some sweet funding money from investors all around -- and it seems (so far to me) that getting into YC is less about connections and more about having a thing that can actually make money.

I think the reason more 26 year olds are succeeding in this game is that they've grown up in a world filled with computers, and their intuition (in a broad spectrum of tech-related things) is simply better and greater than the 50 year olds'. They know better than 50 year olds' what model of mobile payments is more likely to be popular with their peer-aged 26 year olds, what kind of ad strategy is more likely to be effective for the key markets (which are generally younger, speaking in terms of the big money), and so on. They're just better positioned in the tech world to succeed because of these natural coincidences. That's really all there is to it. Where do you disgaree?

apsec112• 12 years ago

http://en.wikipedia.org/wiki/Patrick_Collison

Patrick's parents ran a small employee training business in Limerick, Ireland, a city of 60,000 (http://en.wikipedia.org/wiki/Limerick, https://www.sqt.ie/).

I don't know him, so I won't say if he is "fratty shitscum", but, well, judge for yourself: http://www.youtube.com/watch?v=qQpHfvEaF3I

krakensden3• 12 years ago

True nerds (by that definition) have no home in the VC-funded world these days. It is now owned by the fratty shitscum.

As opposed to the 'masters of the universe & big swinging dicks' era?

michaelochurch4• 12 years ago

That was Wall Street, not the Valley.

yuhong• 12 years ago

Not even close. If your CEO is an idiot or a naif then he can't evaluate his lieutenants, he will pick idiots to manage the day-to-day, they will do shoddy work (or screw him over behind his back) and he won't know, and disaster will ensue.

Reminds me of Groupon, which is one of the worst cases. And on Google, I submitted this to HN for a reason: http://slashdot.org/comments.pl?sid=3106555&cid=41288357

josephlord2• 12 years ago

> Real estate is still more expensive than just about anywhere else in the country.
That's a bad thing, and if you don't realize that, you're a dumbass with little insight into how the economy works (101 lesson: elasticity). Expensive real estate is what you get when regulatory corruption (NIMBYism) meets the extreme inelasticity of housing costs: a 2% gap between how much housing there should be and what there is can cause prices to go up 50% or even double. The price/income ratio of housing is constant absent regulatory dysfunction. Bay Area incomes are higher than the national average, but not by enough to match the housing prices.

Yes high housing costs are a bad thing but I don't think pg was saying they are/were a good thing. What he was saying was that the impression that Silicon Valley was dead was wrong. The fact that house prices remained high was an indicator that there was demand and that Silicon Valley was not dead. I think that the last decade suggests he was right on this issue.

As an outsider to the VC/SV world I generally enjoy your different perspective on it but this post felt like it was crossing the line from sceptic to slightly crazed conspiracy theorist with some good points hidden in the middle. It does name names but they are unfamiliar to me. I do remember in other posts you have mentioned not wanting to name names about the bad experiences you had in VC startups as good people still worked in the bad companies, has enough time passed that you can tell your story as I think you need to get it off your chest (apologies if you have and I missed it).

brc3• 12 years ago

I much prefer early pg to current-day pg writing. Hopefully handing over the reigns will bring back some clarity of thought.

This is a good article which highlights several things I agree with:

The prospect of technological leverage will of course raise the specter of unemployment. I'm surprised people still worry about this. After centuries of supposedly job-killing innovations, the number of jobs is within ten percent of the number of people who want them. This can't be a coincidence. There must be some kind of balancing mechanism.

precisely. The whole 'technology gone done taken our jerbs' thing seems to be popping up again lately - anyone taking this line needs to justify why this time it's different.

One upshot of which is that the companies of the future may be surprisingly small. I sometimes daydream about how big you could grow a company (in revenues) without ever having more than ten people. What would happen if you outsourced everything except product development? If you tried this experiment, I think you'd be surprised at how far you could get.

WhatsApp

pyoung3• 12 years ago

'technology gone done taken our jerbs'

followed by:

I sometimes daydream about how big you could grow a company (in revenues) without ever having more than ten people.

Do you not see the contradiction there?

Moto7451• 12 years ago

Why is there a contradiction? Sounds more like a formula for a lot of small to medium sized businesses being started. If there were no Big-COs that provide thousands of jobs, people wouldn't roll over and decide not to work. On the contrary, it's likely more people would form their own business out of necessity.

Now, would this be better for the US economy in general? Maybe. Maybe not. When I was in college I spent a stint as a Political Science major (focusing in IR). When learning about Asia I remember a lot of discussion about Taiwan's economy being successful in part because of their strong small to medium sized businesses.

Taiwan's government seems to be a fan of this idea as well: http://www.taiwantoday.tw/ct.asp?xItem=127151&CtNode=429

kelnos3• 12 years ago

Not necessarily. 100 companies each with 10 people may net more money per company than 1 company with 1000 people.

brc3• 12 years ago

No, definitely not.

A company with big revenues and a small staff means a very productive company - someone delivering lots of value for very little work.

Whenever you have a productivity multiplier working away, jobs are being created. The jobs might not necessarily be for the company, but the productivity benefits show up somewhere.

It's easy to employ people - just pay lots of people to do low productivity or negative productivity jobs. But to make a better society with better jobs, you need productivity to go up. This requires people to lose their current (less productive) jobs, but the forces created when this happens always create more jobs somewhere.

Case in point....before Henry Ford automates his production line, cars are built by hand slowly. It is a low productivity industry. He automates, and builds many more cars, for much higher revenue per person, than before. The price of the car drops as a result. More people can now afford cars, which means lots more people can use this new tool to do their job more productively. Eventually all this increase in productivity increases employment. There are specific cases of unemployment (coachbuilders, manure collectors) but there is a rise in general employment.

josephlord2• 12 years ago

In addition to what others have said you can subcontract significant amounts of work (e.g. using SAAS systems rather than in house) supporting other companies. Of course managing significant contract will become much of the work for the ten employed people.

grey-area• 12 years ago

Yahoo was a special case. It was not just our price to earnings ratio that was bogus. Half our earnings were too...What made our earnings bogus was that Yahoo was, in effect, the center of a Ponzi scheme. Investors looked at Yahoo's earnings and said to themselves, here is proof that Internet companies can make money. So they invested in new startups that promised to be the next Yahoo.

This section seems eerily prescient in foreseeing the current bubble - replace Yahoo with FB or Google, and it could have been written in 2013. Values are supported by confidence in larger companies which subsist on the advertising bought by smaller companies, which are funded in the hope of acquisition by larger companies. When that confidence evaporates, things will collapse, even the companies which provide true value, if they sell advertising and depend on the entire ecosystem continuing to grow.

This bubble gets some things right too - there are of course many many profitable and valuable communications and social networking companies (as there were in the first boom, probably even more now), and Twitter, FB and Google are not going to disappear any time soon, but if your income is based on advertising or VC funding, this sort of bubble can be really damaging, and when a crash comes, many worthy projects will be thrown out with the unworthy.

Perhaps bubbles repeat themselves too - the first time as tragedy, the second as farce.

dredmorbius• 12 years ago

The largest sources of advertising are the FIRE industries: finance, insurance, and real estate. After that: retail, travel, jobs & ed, home & garden, consumer electronics, vehicles, business, and gifts.

The problem I see here is that both FIRE and the consumer Web are largely catabolic industries -- they're liberating some stuck capital, but I don't see them as actually creating a whole lot in the way of new productive capacity. Which means you've got two bubbles feeding on one another.

The good news is that it's not the incestuous Internet bubble of the late 1990s. The bad news is that it's a much larger piece of the economy. Perhaps the only parts which have been growing appreciably.

http://www.wordstream.com/blog/ws/2012/01/23/google-revenues

What the bubble got right (2004)

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