Bubbles

Yesterday night I read Paul Graham’s new essay, entitled “What the Bubble Got Right”:http://www.paulgraham.com/bubble.html. It’s the first of Graham’s essays that I read from start to end. Why I didn’t before? Before they’re so very long. They’re around 10 printed pages. But the trouble is, they’re not printed pages, they’re text on your screen. And most people, including myself, don’t like reading from a computer screen. Why I don’t print it out? Because I don’t feel like going upstairs, switching the PC on where the printer is connected to, waiting until it’s booted, switch the printer on, go downstairs again, press the print button, wait for a while, go upstairs to get the prints and go back downstairs and start reading them. I’m lazy, I know. The other essay I know of him is “Great Hackers”:http://www.paulgraham.com/gh.html, but I listened to that in audio. Yes indeed, that one resulted in “Why Microsoft Can’t Hire Great Programmers”:http://www.zefhemel.com/archives/2004/09/22/hiring-great-programmers.

Anyway, for those who weren’t able to digest his latest essay (yet), and because I read it anyway, I might aswell quote some of the parts I found particulary interesting.

About Google and internet companies:

Google has over 82 million unique users a month and annual revenues of about three billion dollars. [2] And yet have you ever seen a Google ad? Something is going on here.

Admittedly, Google is an extreme case. It’s very easy for people to switch to a new search engine. It costs little effort and no money to try a new one, and it’s easy to see if the results are better. And so Google doesn’t have to advertise. In a business like theirs, being the best is enough.

The exciting thing about the Internet is that it’s shifting everything in that direction. The hard part, if you want to win by making the best stuff, is the beginning. Eventually everyone will learn by word of mouth that you’re the best, but how do you survive to that point? And it is in this crucial stage that the Internet has the most effect. First, the Internet lets anyone find you at almost zero cost. Second, it dramatically speeds up the rate at which reputation spreads by word of mouth. Together these mean that in many fields the rule will be: Build it, and they will come. Make something great and put it online. That is a big change from the recipe for winning in the past century.

That’s what I really like about the internet. If you’re doing something good, whatever it is, and put it online, eventually, people will find it. It doesn’t matter if you’re established or not, as long as what you’re doing is interesting and innovative.

About suits:

A company that made programmers wear suits would have something deeply wrong with it.
[…]
Dressing up is not so much bad in itself. The problem is the receptor it binds to: dressing up is inevitably a substitute for good ideas. It is no coincidence that technically inept business types are known as “suits.”

About “nerd culture”:

I have no illusions about why nerd culture is becoming more accepted. It’s not because people are realizing that substance is more important than marketing. It’s because the nerds are getting rich. But that is not going to change.

About startups:

In many businesses, it just makes more sense for companies to get technology by buying startups rather than developing it in house. You pay more, but there is less risk, and risk is what big companies don’t want. It makes the guys developing the technology more accountable, because they only get paid if they build the winner. And you end up with better technology, created faster, because things are made in the innovative atmosphere of startups instead of the bureaucratic atmosphere of big companies.

Our startup, Viaweb, was built to be sold. We were open with investors about that from the start. And we were careful to create something that could slot easily into a larger company. That is the pattern for the future.

About company size:

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. As Fred Brooks pointed out, small groups are intrinsically more productive, because the internal friction in a group grows as the square of its size.

Till quite recently, running a major company meant managing an army of workers. Our standards about how many employees a company should have are still influenced by old patterns. Startups are perforce small, because they can’t afford to hire a lot of people. But I think it’s a big mistake for companies to loosen their belts as revenues increase. The question is not whether you can afford the extra salaries. Can you afford the loss in productivity that comes from making the company bigger?

Yeah, I definately have to buy his book “Hackers and Painters”:http://www.paulgraham.com/hackpaint.html. But I have so many books to read already…

_Tomorrow I’ll be at a reunion all day, so no story then._