Before the Startup

What about universities and government funded projects?

Are you also under the impression that most interesting R&D need significant funding?

Around the turn of the millennium, the brashness born of 1990's success transformed his writing from youthfully exuberant technical expertise [2] toward experienced practical advice [3]. In Before the Startup we meet up with PG again just as he walks back into the ring of the public light. His load has shifted, advice must be sage: consistent with the gestures of hands that have firmly held the tiger's tail twice. Yet, despite the years, PG's youthful earnestness remains intact.

Recently, because I've seen ViaWeb and HN trotted out as contemporary examples of successful uses of Lisp in business, I've wondered how much of Beating the Averages describes what really happened and how the older PG would ascribe the success of his first startup.

Was Lisp really the secret sauce? Would it have mattered if PG and Morris ground out updates in Perl? Will there be an immodest greybearded admission that, in hindsight, it really was the people?

Autobiography is not so much an author's way of gaming history, but rather gaming the business of history. And that, the gaming of "the business of x" is the central theme of Before the Startup. What Graham is arguing is that a person can't game their way into running a successful startup. He doesn't deny that a person can successfully game the business of startups...there are people who can sell Yelp for Dogs to investors sufficiently to purchase barker.com.

No longer YC's designated spokesmodel, PG is in the agora pitching eudaemonia, the not-as-seen-on-TV good life, to the youths of the valley. His life's example is not the celebrity brought about by business success. His advice is "stay earnest."

[1] yes.

[2] On Lisp

[3] Beating the Averages

So this is the third counterintuitive thing to remember about startups: starting a startup is where gaming the system stops working. Gaming the system may continue to work if you go to work for a big company. Depending on how broken the company is, you can succeed by sucking up to the right people, giving the impression of productivity, and so on. [2] But that doesn't work with startups. There is no boss to trick, only users, and all users care about is whether your product does what they want.

Then, to his credit, he admits...

The dangerous thing is, faking does work to some degree on investors. If you're super good at sounding like you know what you're talking about, you can fool investors for at least one and perhaps even two rounds of funding. But it's not in your interest to. The company is ultimately doomed. All you're doing is wasting your own time riding it down.

Okay, so we have something to chew on.

First of all, investors are gameable if you're good at social proof arbitrage (that is, lying about competing interest in order to set off a "herd mentality" and become a VC darling). I don't have an ethical problem with social proof arbitrage. It's what you have to do if you want to raise VC and you're not from a very wealthy family.

Is the system gameable? It depends on what your objectives are. You can't build a successful company if you make something no one wants. That's clear. However, let's be cynical and realistic here. Do you care about the success of "the company" or of your own career?

If your investors don't like you but you build a great company, they'll give it (and most of the rewards) to someone they do like. If your investors like you and your company fails, they'll arrange a favorable acqui-hire. This means that you collected $120k for each year that the business was alive, and got a 3x salary bump (plus a 7-figure hiring bonus) in your next job. Or, they might make you a VC.

The part that determines whether your product is Google or Clinkle is difficult, if not impossible, to fake. We don't even understand how many of those random variables work. There's some part that's performance- and skill-related and a large part that's luck, and no one knows where to draw the lines. However, the startup career is immensely gameable, and that's true the whole way to the top (partner-level ranks in VC firms).