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Hard Startups

blog.samaltman.com

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Re: Hard Startups

#161

Post by scroot »

rossdavidh wrote: post #112
beat wrote: post #16

Earlier quoted context omitted.

Right. Which is why government research is probably a better model for these world-changing basic technologies than Silicon Valley. Ugh, can you imagine how bad TCP/IP would have sucked if it had been developed by venture capital funding?

There are a few examples of government agencies which can make many parallel bets, on the understanding that most will fail but a few may pay off big. But, by "a few examples", I actually just mean DARPA. I'm sure there are others, not many though. Politics does not work well with "most of these projects failed". It's too easy of a target. Anything that failed, is an easy target for a congressman to take aim at as be…

> But, the logic behind "many long-shot bets in parallel" is inherently more difficult to explain in the political arena, which is why I think VC may actually be better at some of these kinds of things

This does not mean the VC will actually be better at the task (producing better basic research results), but that it is more realistically going to get the funding in the current climate.

If you look at what's worked for computing in the past -- where the real qualitative changes came from, in terms of basic research -- you have ARPA, PARC, and Bell Labs. They all had the following in common:

- Long-term time horizons of 5-10 years minimum; - Lots of funding with few strings attached - Funded people, not projects - Operated in a given context, but goals were vague (enough freedom to play)

Any funding model that is sensitive to the pressures of quarterly earnings reports is not going to be able to do any of this. Which is precisely why most of the improvements in computing since the early 80s have come as side effects from quantitative improvements like speed, memory, cost, etc.

The current computing culture, and especially the funding model behind it, will not give us the big new inventions we hope for.

Re: Hard Startups

#162

Post by jiofih »

hef19898 wrote: post #59
jiofih wrote: post #50

Earlier quoted context omitted.

That’s not exactly what he is aiming for; the quote is most likely related to Instagram which reached a $1bn valuation with ~10 people. A lifestyle business is worthless to VC (and unsustainable if it decides to take VC money).

Slowly I having my doubts about that. At least for early stage and angle investment. Investors need a 10x exit. Now imagine an early stage investment of 250k in a small business that grows to 10 million revenue. Healthy, because it is a lifestyle business not geared towards hyper growth. Assuming the company is profitable and cash positive, buying back the investor for 2.5 million through a bank loan is a reasonable…

You got it right: VCs are not interested in that 250k investment, and you forgot the time component - they want that 10x over a relatively short period (You cannot have it both ways, and why would you even need a huge lump of cash for a business that is already sustainable? Traditional loans are a much safer source of funding for that.

Re: Hard Startups

#163

Post by killjoywashere »

fenwick67 wrote: post #159
killjoywashere wrote: post #126

Earlier quoted context omitted.

Detroit has deep, fundamental problems. the weather, the utilities, the failed neighborhoods. You can cut costs significantly just by moving to San Diego and not have to explain to prospective applicants why living in a windswept frozen wasteland half the year is appealing.

San Diego has deep, fundamental problems. the cost of living, the homelessness, the failed neighborhoods. You can cut costs significantly just by moving to Detroit and not have to explain to prospective applicants why living in a feces-riddled yet expensive nightmare is appealing.

I grew up in the Midwest. There's no version of reality where I want to move back there.

Re: Hard Startups

#164

Post by heartbeats »

mc32 wrote: post #31
beat wrote: post #16

Earlier quoted context omitted.

Right. Which is why government research is probably a better model for these world-changing basic technologies than Silicon Valley. Ugh, can you imagine how bad TCP/IP would have sucked if it had been developed by venture capital funding?

Or companies which can afford research fellows working on fundamental technologies with a very long view.

Snark aside, that is a good point. Erlang is a nice language and it was developed as a pretty short-term project to fill a specific need. In fact, you might even argue it is a nice language because it was developed as a pretty short-term project to fill a specific need.

Re: Hard Startups

#165

Post by throwaway8291 »

arkades wrote: post #55
ssivark wrote: post #32

“When all you have is a hammer, everything looks like a nail.” Seems like Sam Altman’s hammer is startup investing, so he tries to solve everythin... even the most challenging/ambitious problems through those means. Doesn’t necessarily mean it’s a bad approach, but that seems to be his bias. It’s worth having a more nuanced discussion. The current piece sounds more like cheerleading than advice.

Strong agree. I found Sam Altman's writing on quora and followed it off-and-on long, long before I found out "who he is." And his advice is so overly-positive and one-note that, honestly, I thought he was a snake oil salesman or self-help guru. I would never have guessed he was actually a VC / successful entrepreneur. Frankly, his arguments and writing continue to sound like Self-Help Guru shined through the lens of…

Agreed.

I remain amazed until today about his progression. He founded a startup to solve a white upper middle class "problem", raised millions for that, was lucky to get a little bit more when he sold out his startup's users' data to the greater fool and now runs around and tries to get rich off other peoples creativity and sweat through the VC vehicle. When I learned that he actually founded OpenAI that org lost almost all appeal to me.

So yes, it might not be too much of a stretch to picture him as the embodiment of the current silicon valley mindset and all its tech-hybris and duplicity.

Re: Hard Startups

#166

Post by Animats »

cbhl wrote: post #75
marcosdumay wrote: post #37

Earlier quoted context omitted.

> Ugh, can you imagine how bad TCP/IP would have sucked if it had been developed by venture capital funding? It was. Several times. It was developed by a lot of large companies too. Nobody remember those, for obvious reasons, but people used to use them.

Novell had NetWare and IPX. Apple had AppleTalk. There was also Token ring...

Even the Stanford/Cisco people were thinking "multiprotocol gateway" back then. Much of the push for TCP/IP came from the buy side. I did my networking work when I was at a big aerospace company, and we wanted everything to talk to everything else. Not have DECNETSNAXNSX.25TP4 gateways trying to interconvert. The vendors all pushed their proprietary systems.

Even Berkeley didn't get it at first. Early Berkeley TCP/IP only talked to other Berkeley TCP/IP systems. They had to be beaten on to get interoperability to work. 4.3BSD shipped with broken sequence number arithmetic that only talked to itself until we fixed that.

This was back when big buyers had more clout than software vendors. It's hard to do that today.

Re: Hard Startups

#167

Post by buzzkillington »

rossdavidh wrote: post #112
beat wrote: post #16

Earlier quoted context omitted.

Right. Which is why government research is probably a better model for these world-changing basic technologies than Silicon Valley. Ugh, can you imagine how bad TCP/IP would have sucked if it had been developed by venture capital funding?

There are a few examples of government agencies which can make many parallel bets, on the understanding that most will fail but a few may pay off big. But, by "a few examples", I actually just mean DARPA. I'm sure there are others, not many though. Politics does not work well with "most of these projects failed". It's too easy of a target. Anything that failed, is an easy target for a congressman to take aim at as be…

>But, the logic behind "many long-shot bets in parallel" is inherently more difficult to explain in the political arena, which is why I think VC may actually be better at some of these kinds of things.

VC backed rockets have already taken longer to take a human to orbit than government money took to take a human to the moon. This is on top of the fact that they have had 60 years of technological improvement.

Simply put VC and capitalism in general is great for giving you turds rolled in glitter, less for building the sewage system to flush the turds out.

Re: Hard Startups

#169

Post by spectramax »

qchris wrote: post #54
spectramax wrote: post #45

What bothers me about Sam Altman's writing is the following: 1) He talks about X, X being an observation with survivorship bias painted all over it, but Sam Altman asserts as if it is true. Stop writing with authority over unsubstantiated claims - you can only be humble and say "Perhaps X is true because of my observations, take it with a grain salt". 2) Statements like "Easy startups are easy to start but hard to ma…

The first point on your list is something that I come back fairly frequently when reading through blog posts like this, or (for example) listening to things like TED talks. I understand that there's a need to stand behind any given thesis, but it seems to me that there is often a lack of distinction between "I'm claiming this to be true primarily based on my experience" and "I'm claiming this to be true based on wide…

I think you summarized it better than I could. When stating facts, be assertive and provide source. When stating opinions, state them as opinions, not facts.

As a reader, I wanna chuck the whole thing out of the window.

This is pretty common place - Harari's Sapiens suffers from this behavior excessively - I cannot read it and I don't understand why people like this book so much. Full of unsubstantiated claims.

Re: Hard Startups

#170

Post by arbitrarylimit »

whack wrote: post #130

> If you want to start a company working on a better way to build homes, gene editing, artificial general intelligence, a new education system, or carbon sequestration, you may actually be able to get it funded, even if you don’t have a degree or much experience. Is this actually true? I have plenty of "hard startups" that I would love to work on. But these hard startups require far more investments and manpower, eve…

You're skipping over the previous sentence, which is that you convince people you're serious about it.
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