How to Fund a Startup
Want to start a startup?
Get funded by
Y Combinator
.
November 2005
Venture funding works like gears.  A typical startup goes through
several rounds of funding, and at each round you want to take just
enough money to reach the speed where you can shift into the next
gear.
Few startups get it quite right.  Many are underfunded.  A few are
overfunded, which is like trying to start driving in third gear.
I think it would help founders to understand funding better—not
just the mechanics of it, but what investors are thinking.  I was
surprised recently when I realized that all the worst problems we
faced in our startup were due not to competitors, but investors.
Dealing with competitors was easy by comparison.
I don't mean to suggest that our investors were nothing but a drag
on us.  They were helpful in negotiating deals, for example.  I
mean more that conflicts with investors are particularly nasty.
Competitors punch you in the jaw, but investors have you by the
balls.
Apparently our situation was not unusual.  And if trouble with
investors is one of the biggest threats to a startup, managing them
is one of the most important skills founders need to learn.
Let's start by talking about the five sources of startup funding.
Then we'll trace the life of a hypothetical (very fortunate) startup
as it shifts gears through successive rounds.
Friends and Family
A lot of startups get their first funding from friends and family.
Excite did, for example: after the founders graduated from college,
they borrowed $15,000 from their parents to start a company.  With
the help of some part-time jobs they made it last 18 months.
If your friends or family happen to be rich, the line blurs between
them and angel investors.  At Viaweb we got our first $10,000 of
seed money from our friend Julian, but he was sufficiently rich
that it's hard to say whether he should be classified as a friend
or angel.  He was also a lawyer, which was great, because it meant
we didn't have to pay legal bills out of that initial small sum.
The advantage of raising money from friends and family is that
they're easy to find.  You already know them.  There are three main
disadvantages: you mix together your business and personal life;
they will probably not be as well connected as angels or venture
firms; and they may not be accredited investors, which could
complicate your life later.
The SEC defines an "accredited investor" as someone with over a
million dollars in liquid assets or an income of over $200,000 a
year.  The regulatory burden is much lower if a company's shareholders
are all accredited investors.  Once you take money from the general
public you're more restricted in what you can do.
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A startup's life will be more complicated, legally, if any of the
investors aren't accredited.  In an IPO, it might not merely add
expense, but change the outcome. A lawyer I asked about it said:
When the company goes public, the SEC will carefully study all
  prior issuances of stock by the company and demand that it take
  immediate action to cure any past violations of securities laws.
  Those remedial actions can delay, stall or even kill the IPO.
Of course the odds of any given startup doing an IPO are small.
But not as small as they might seem. A lot of startups that end up
going public didn't seem likely to at first. (Who could have guessed
that the company Wozniak and Jobs started in their spare time selling
plans for microcomputers would yield one of the biggest IPOs of the
decade?) Much of the value of a startup consists of that tiny
probability multiplied by the huge outcome.
It wasn't because they weren't accredited investors that I didn't
ask my parents for seed money, though.  When we were starting Viaweb,
I didn't know about the concept of an accredited investor, and
didn't stop to think about the value of investors' connections.
The reason I didn't take money from my parents was that I didn't
want them to lose it.
Consulting
Another way to fund a startup is to get a job.  The best sort of
job is a consulting project in which you can build whatever software
you wanted to sell as a startup.  Then you can gradually transform
yourself from a consulting company into a product company, and have
your clients pay your development expenses.
This is a good plan for someone with kids, because it takes most
of the risk out of starting a startup.  There never has to be a
time when you have no revenues.  Risk and reward are usually
proportionate, however: you should expect a plan that cuts the risk
of starting a startup also to cut the average return.  In this case,
you trade decreased financial risk for increased risk that your
company won't succeed as a startup.
But isn't the consulting company itself a startup?  No, not generally.
A company has to be more than small and newly founded to be a
startup.  There are millions of small businesses in America, but
only a few thousand are startups.  To be a startup, a company has
to be a product business, not a service business.  By which I mean
not that it has to make something physical, but that it has to have
one thing it sells to many people, rather than doing custom work
for individual clients.  Custom work doesn't scale.  To be a startup
you need to be the band that sells a million copies of a song, not
the band that makes money by playing at individual weddings and bar
mitzvahs.
The trouble with consulting is that clients have an awkward habit
of calling you on the phone.  Most startups operate close to the
margin of failure, and the distraction of having to deal with clients
could be enough to put you over the edge.  Especially if you have
competitors who get to work full time on just being a startup.
So you have to be very disciplined if you take the consulting route.
You have to work actively to prevent your company growing into a
"weed tree," dependent on this source of easy but low-margin money.
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Indeed, the biggest danger of consulting may be that it gives you
an excuse for failure.  In a startup, as in grad school, a lot of
what ends up driving you are the expectations of your family and
friends.  Once you start a startup and tell everyone that's what
you're doing, you're now on a path labelled "get rich or bust." You
now have to get rich, or you've failed.
Fear of failure is an extraordinarily powerful force.  Usually it
prevents people from starting things, but once you publish some
definite ambition, it switches directions and starts working in
your favor.  I think it's a pretty clever piece of jiujitsu to set
this irresistible force against the slightly less immovable object
of becoming rich.  You won't have it driving you if your stated
ambition is merely to start a consulting company that you will one
day morph into a startup.
An advantage of consulting, as a way to develop a product, is that
you know you're making something at least one customer wants.  But
if you have what it takes to start a startup you should have
sufficient vision not to need this crutch.
Angel Investors
Angels
are individual rich people.  The word was first used
for backers of Broadway plays, but now applies to individual investors
generally.  Angels who've made money in technology are preferable,
for two reasons: they understand your situation, and they're a
source of contacts and advice.
The contacts and advice can be more important than the money.  When
del.icio.us took money from investors, they took money from, among
others, Tim O'Reilly.  The amount he put in was small compared to
the VCs who led the round, but Tim is a smart and influential guy
and it's good to have him on your side.
You can do whatever you want with money from consulting or friends
and family.  With angels we're now talking about venture funding
proper, so it's time to introduce the concept of
exit strategy
.
Younger would-be founders are often surprised that investors expect
them either to sell the company or go public.  The reason is that
investors need to get their capital back.  They'll only consider
companies that have an exit strategy—meaning companies that could
get bought or go public.
This is not as selfish as it sounds.  There are few large, private
technology companies.  Those that don't fail all seem to get bought
or go public.  The reason is that employees are investors too—of
their time—and they want just as much to be able to cash out.  If
your competitors offer employees stock options that might make them
rich, while you make it clear you plan to stay private, your
competitors will get the best people. So the principle of an "exit"
is not just something forced on startups by investors, but part of
what it means to be a startup.
Another concept we need to introduce now is valuation.  When someone
buys shares in a company, that implicitly establishes a value for
it.  If someone pays $20,000 for 10% of a company, the company is
in theory worth $200,000.  I say "in theory" because in early stage
investing, valuations are voodoo.  As a company gets more established,
its valuation gets closer to an actual market value.  But in a newly
founded startup, the valuation number is just an artifact of the
respective contributions of everyone involved.
Startups often "pay" investors who will help the company in some
way by letting them invest at low valuations.  If I had a startup
and Steve Jobs wanted to invest in it, I'd give him the stock for
$10, just to be able to brag that he was an investor.  Unfortunately,
it's impractical (if not illegal) to adjust the valuation of the
company up and down for each investor.  Startups' valuations are
supposed to rise over time.  So if you're going to sell cheap stock
to eminent angels, do it early, when it's natural for the company
to have a low valuation.
Some angel investors join together in syndicates.  Any city where
people start startups will have one or more of them.  In Boston the
biggest is the
Common
Angels
.  In the Bay Area it's the
Band
of Angels
.  You can find groups near you through the
Angel Capital Association
.
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However, most angel investors don't belong to these groups.  In
fact, the more prominent the angel, the less likely they are to
belong to a group.
Some angel groups charge you money to pitch your idea to them.
Needless to say, you should never do this.
One of the dangers of taking investment from individual angels,
rather than through an angel group or investment firm, is that they
have less reputation to protect.  A big-name VC firm will not screw
you too outrageously, because other founders would avoid them if
word got out.  With individual angels you don't have this protection,
as we found to our dismay in our own startup.  In many startups'
lives there comes a point when you're at the investors'
mercy—when you're out of money and the only place to get more is your
existing investors.  When we got into such a scrape, our investors
took advantage of it in a way that a name-brand VC probably wouldn't
have.
Angels have a corresponding advantage, however: they're also not
bound by all the rules that VC firms are.  And so they can, for
example, allow founders to cash out partially in a funding round,
by selling some of their stock directly to the investors.  I think
this will become more common; the average founder is eager to do
it, and selling, say, half a million dollars worth of stock will
not, as VCs fear, cause most founders to be any less committed to
the business.
The same angels who tried to screw us also let us do this, and so
on balance I'm grateful rather than angry.  (As in families, relations
between founders and investors can be complicated.)
The best way to find angel investors is through personal introductions.
You could try to cold-call angel groups near you, but angels, like
VCs, will pay more attention to deals recommended by someone they
respect.
Deal terms with angels vary a lot.  There are no generally accepted
standards.  Sometimes angels' deal terms are as fearsome as VCs'.
Other angels, particularly in the earliest stages, will invest based
on a two-page agreement.
Angels who only invest occasionally may not themselves know what
terms they want.  They just want to invest in this startup.  What
kind of anti-dilution protection do they want?  Hell if they know.
In these situations, the deal terms tend to be random: the angel
asks his lawyer to create a vanilla agreement, and the terms end
up being whatever the lawyer considers vanilla.  Which in practice
usually means, whatever existing agreement he finds lying around
his firm.  (Few legal documents are created from scratch.)
These heaps o' boilerplate are a problem for small startups, because
they tend to grow into the union of all preceding documents.  I
know of one startup that got from an angel investor what amounted
to a five hundred pound handshake: after deciding to invest, the
angel presented them with a 70-page agreement.  The startup didn't
have enough money to pay a lawyer even to read it, let alone negotiate
the terms, so the deal fell through.
One solution to this problem would be to have the startup's lawyer
produce the agreement, instead of the angel's.  Some angels might
balk at this, but others would probably welcome it.
Inexperienced angels often get cold feet when the time comes to
write that big check.  In our startup, one of the two angels in the
initial round took months to pay us, and only did after repeated
nagging from our lawyer, who was also, fortunately, his lawyer.
It's obvious why investors delay.  Investing in startups is risky!
When a company is only two months old, every
day
you wait
gives you 1.7% more data about their trajectory.  But the investor
is already being compensated for that risk in the low price of the
stock, so it is unfair to delay.
Fair or not, investors do it if you let them.  Even VCs do it.  And
funding delays are a big distraction for founders, who ought to be
working on their company, not worrying about investors.  What's a
startup to do?  With both investors and acquirers, the only leverage
you have is competition.  If an investor knows you have other
investors lined up, he'll be a lot more eager to close-- and not
just because he'll worry about losing the deal, but because if other
investors are interested, you must be worth investing in.  It's the
same with acquisitions.  No one wants to buy you till someone else
wants to buy you, and then everyone wants to buy you.
The key to closing deals is never to stop pursuing alternatives.
When an investor says he wants to invest in you, or an acquirer
says they want to buy you,
don't believe it till you get the
check.
Your natural tendency when an investor says yes will
be to relax and go back to writing code.  Alas, you can't; you have
to keep looking for more investors, if only to get this one to act.
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Seed Funding Firms
Seed firms are like angels in that they invest relatively small
amounts at early stages, but like VCs in that they're companies
that do it as a business, rather than individuals making occasional
investments on the side.
Till now, nearly all seed firms have been so-called "incubators,"
so
Y Combinator
gets called
one too, though the only thing we have in common is that we invest
in the earliest phase.
According to the National Association of Business Incubators, there
are about 800 incubators in the US.  This is an astounding number,
because I know the founders of a lot of startups, and I can't think
of one that began in an incubator.
What is an incubator?  I'm not sure myself.  The defining quality
seems to be that you work in their space.  That's where the name
"incubator" comes from.  They seem to vary a great deal in other
respects.  At one extreme is the sort of pork-barrel project where
a town gets money from the state government to renovate a vacant
building as a "high-tech incubator," as if it were merely lack of
the right sort of office space that had till now prevented the town
from becoming a
startup hub
.
At the other extreme are places like
Idealab, which generates ideas for new startups internally and hires
people to work for them.
The classic Bubble incubators, most of which now seem to be dead,
were like VC firms except that they took a much bigger role in the
startups they funded.  In addition to working in their space, you
were supposed to use their office staff, lawyers, accountants, and
so on.
Whereas incubators tend (or tended) to exert more control than VCs,
Y Combinator exerts less.
And we think it's better if startups operate out of their own
premises, however crappy, than the offices of their investors.  So
it's annoying that we keep getting called an "incubator," but perhaps
inevitable, because there's only one of us so far and no word yet
for what we are.  If we have to be called something, the obvious
name would be "excubator." (The name is more excusable if one
considers it as meaning that we enable people to escape cubicles.)
Because seed firms are companies rather than individual people,
reaching them is easier than reaching angels.  Just go to their web
site and send them an email.  The importance of personal introductions
varies, but is less than with angels or VCs.
The fact that seed firms are companies also means the investment
process is more standardized.  (This is generally true with angel
groups too.) Seed firms will probably have set deal terms they use
for every startup they fund.  The fact that the deal terms are
standard doesn't mean they're favorable to you, but if other startups
have signed the same agreements and things went well for them, it's
a sign the terms are reasonable.
Seed firms differ from angels and VCs in that they invest exclusively
in the earliest phases—often when the company is still just an
idea.  Angels and even VC firms occasionally do this, but they also
invest at later stages.
The problems are different in the early stages.  For example, in
the first couple months a startup may completely redefine their
idea
.  So seed investors usually care less
about the idea than the people. This is true of all venture funding,
but especially so in the seed stage.
Like VCs, one of the advantages of seed firms is the advice they
offer.  But because seed firms operate in an earlier phase, they
need to offer different kinds of advice.  For example, a seed firm
should be able to give advice about how to approach VCs, which VCs
obviously don't need to do; whereas VCs should be able to give
advice about how to hire an "executive team," which is not an issue
in the seed stage.
In the earliest phases, a lot of the problems are technical, so
seed firms should be able to help with technical as well as business
problems.
Seed firms and angel investors generally want to invest in the
initial phases of a startup, then hand them off to VC firms for the
next round.  Occasionally startups go from seed funding direct to
acquisition, however, and I expect this to become increasingly
common.
Google has been aggressively pursuing this route, and now
Yahoo
is too.  Both
now compete directly with VCs.  And this is a smart move.  Why wait
for further funding rounds to jack up a startup's price?  When a
startup reaches the point where VCs have enough information to
invest in it, the acquirer should have enough information to buy
it.  More information, in fact; with their technical depth, the
acquirers should be better at picking winners than VCs.
Venture Capital Funds
VC firms are like seed firms in that they're actual companies, but
they invest other people's money, and much larger amounts of it.
VC investments average several million dollars.  So they tend to
come later in the life of a startup, are harder to get, and come
with tougher terms.
The word "venture capitalist" is sometimes used loosely for any
venture investor, but there is a sharp difference between VCs and
other investors: VC firms are organized as
funds
, much like
hedge funds or mutual funds.  The fund managers, who are called
"general partners," get about 2% of the fund annually as a management
fee, plus about 20% of the fund's gains.
There is a very sharp dropoff in performance among VC firms, because
in the VC business both success and failure are self-perpetuating.
When an investment scores spectacularly, as Google did for Kleiner
and Sequoia, it generates a lot of good publicity for the VCs.  And
many founders prefer to take money from successful VC firms, because
of the legitimacy it confers.  Hence a vicious (for the losers)
cycle:  VC firms that have been doing badly will only get the deals
the bigger fish have rejected, causing them to continue to do badly.
As a result, of the thousand or so VC funds in the US now, only
about 50 are likely to make money, and it is very hard for a new
fund to break into this group.
In a sense, the lower-tier VC firms are a bargain for founders.
They may not be quite as smart or as well connected as the big-name
firms, but they are much hungrier for deals.  This means you should
be able to get better terms from them.
Better how?  The most obvious is valuation: they'll take less of
your company.  But as well as money, there's power.  I think founders
will increasingly be able to stay on as CEO, and on terms that will
make it fairly hard to fire them later.
The most dramatic change, I predict,
is that VCs will allow founders to
cash out partially by
selling
some of their stock direct to the VC firm.  VCs have traditionally
resisted letting founders get anything before the ultimate "liquidity
event."  But they're also desperate for deals.  And since I know
from my own experience that the rule against buying stock from
founders is a stupid one, this is a natural place for things to
give as venture funding becomes more and more a seller's market.
The disadvantage of taking money from less known firms is that
people will assume, correctly or not, that you were turned down by
the more exalted ones.  But, like where you went to college, the
name of your VC stops mattering once you have some performance to
measure.  So the more confident you are, the less you need a
brand-name VC.  We funded Viaweb entirely with angel money; it never
occurred to us that the backing of a well known VC firm would make
us seem more impressive.
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Another danger of less known firms is that, like angels, they have
less reputation to protect.   I suspect it's the lower-tier firms
that are responsible for most of the tricks that have given VCs
such a bad reputation among hackers.  They are doubly hosed: the
general partners themselves are less able, and yet they have harder
problems to solve, because the top VCs skim off all the best deals,
leaving the lower-tier firms exactly the startups that are likely
to blow up.
For example, lower-tier firms are much more likely to pretend to
want to do a deal with you just to lock you up while they decide
if they really want to.  One experienced CFO said:
The better ones usually will not give a term sheet unless they
 really want to do a deal. The second or third tier firms have a
 much higher break rate—it could be as high as 50%.
It's obvious why: the lower-tier firms' biggest fear, when chance
throws them a bone, is that one of the big dogs will notice and
take it away.  The big dogs don't have to worry about that.
Falling victim to this trick could really hurt you.  As one
VC told me:
If you were talking to four VCs, told three of them that you
  accepted a term sheet, and then have to call them back to tell
  them you were just kidding, you are absolutely damaged goods.
Here's a partial solution: when a VC offers you a term sheet, ask
how many of their last 10 term sheets turned into deals.  This will
at least force them to lie outright if they want to mislead you.
Not all the people who work at VC firms are partners.  Most firms
also have a handful of junior employees called something like
associates or analysts.  If you get a call from a VC
firm, go to their web site and check whether the person you talked
to is a partner.  Odds are it will be a junior person; they scour
the web looking for startups their bosses could invest in.  The
junior people will tend to seem very positive about your company.
They're not pretending; they
want
to believe you're a hot
prospect, because it would be a huge coup for them if their firm
invested in a company they discovered.  Don't be misled by this
optimism.  It's the partners who decide, and they view things with
a colder eye.
Because VCs invest large amounts, the money comes with more
restrictions.  Most only come into effect if the company gets into
trouble.  For example, VCs generally write it into the deal that
in any sale, they get their investment back first.  So if the company
gets sold at a low price, the founders could get nothing.  Some VCs
now require that in any sale they get 4x their investment back
before the common stock holders (that is, you) get anything, but
this is an abuse that should be resisted.
Another difference with large investments is that the founders are
usually required to accept "vesting"—to surrender their stock and
earn it back over the next 4-5 years.  VCs don't want to invest
millions in a company the founders could just walk away from.
Financially, vesting has little effect, but in some situations it
could mean founders will have less power.  If VCs got de facto
control of the company and fired one of the founders, he'd lose any
unvested stock unless there was specific protection against this.
So vesting would in that situation force founders to toe the line.
The most noticeable change when a startup takes serious funding is
that the founders will no longer have complete control.  Ten years
ago VCs used to insist that founders step down as CEO and hand the
job over to a business guy they supplied.  This is less the rule
now, partly because the disasters of the Bubble showed that generic
business guys don't make such great CEOs.
But while founders will increasingly be able to stay on as CEO,
they'll have to cede some power, because the board of directors
will become more powerful.  In the seed stage, the board is generally
a formality; if you want to talk to the other board members, you
just yell into the next room.  This stops with VC-scale money.  In
a typical VC funding deal, the board of directors might be composed
of two VCs, two founders, and one outside person acceptable to both.
The board will have ultimate power, which means the founders now
have to convince instead of commanding.
This is not as bad as it sounds, however.  Bill Gates is in the
same position; he doesn't have majority control of Microsoft; in
principle he also has to convince instead of commanding.  And yet
he seems pretty commanding, doesn't he?  As long as things are going
smoothly, boards don't interfere much.  The danger comes when there's
a bump in the road, as happened to Steve Jobs at Apple.
Like angels, VCs prefer to invest in deals that come to them through
people they know.  So while nearly all VC funds have some address
you can send your business plan to, VCs privately admit the chance
of getting funding by this route is near zero.  One recently told
me that he did not know a single startup that got funded this way.
I suspect VCs accept business plans "over the transom" more as a
way to keep tabs on industry trends than as a source of deals.  In
fact, I would strongly advise against mailing your business plan
randomly to VCs, because they treat this as evidence of laziness.
Do the extra work of getting personal introductions.  As one VC put
it:
I'm not hard to find.  I know a lot of people.  If you can't find
  some way to reach me, how are you going to create a successful
  company?
One of the most difficult problems for startup founders is deciding
when to approach VCs. You really only get one chance, because they
rely heavily on first impressions.  And you can't approach some and
save others for later, because (a) they ask who else you've talked
to and when and (b) they talk among themselves.  If you're talking
to one VC and he finds out that you were rejected by another several
months ago, you'll definitely seem shopworn.
So when do you approach VCs?  When you can convince them.  If the
founders have impressive resumes and the idea isn't hard to understand,
you could approach VCs quite early.  Whereas if the founders are
unknown and the idea is very novel, you might have to launch the
thing and show that users loved it before VCs would be convinced.
If several VCs are interested in you, they will sometimes be willing
to split the deal between them.  They're more likely to do this if
they're close in the VC pecking order.  Such deals may be a net win
for founders, because you get multiple VCs interested in your
success, and you can ask each for advice about the other.  One
founder I know wrote:
Two-firm deals are great. It costs you a little more equity, but
  being able to play the two firms off each other (as well as ask
  one if the other is being out of line) is invaluable.
When you do negotiate with VCs, remember that they've done this a
lot more than you have.  They've invested in dozens of startups,
whereas this is probably the first you've founded.  But don't let
them or the situation intimidate you. The average founder is smarter
than the average VC.  So just do what you'd do in any complex,
unfamiliar situation: proceed deliberately, and question anything
that seems odd.
It is, unfortunately, common for VCs to put terms in an agreement
whose consequences surprise founders later, and also common for VCs
to defend things they do by saying that they're standard in the
industry.  Standard, schmandard; the whole industry is only a few
decades old, and rapidly evolving.  The concept of "standard" is a
useful one when you're operating on a small scale (Y Combinator
uses identical terms for every deal because for tiny seed-stage
investments it's not worth the overhead of negotiating individual
deals), but it doesn't apply at the VC level.  On that scale, every
negotiation is unique.
Most successful startups get money from more than one of the preceding
five sources.
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And, confusingly, the names of funding sources
also tend to be used as the names of different rounds.  The best
way to explain how it all works is to follow the case of a hypothetical
startup.
Stage 1: Seed Round
Our startup begins when a group of three friends have an idea--
either an idea for something they might build, or simply the idea
"let's start a company."  Presumably they already have some source
of food and shelter.  But if you have food and shelter, you probably
also have something you're supposed to be working on: either
classwork, or a job.  So if you want to work full-time on a startup,
your money situation will probably change too.
A lot of startup founders say they started the company without any
idea of what they planned to do.  This is actually less common than
it seems: many have to claim they thought of the idea after quitting
because otherwise their former employer would own it.
The three friends decide to take the leap.  Since most startups are
in competitive businesses, you not only want to work full-time on
them, but more than full-time.  So some or all of the friends quit
their jobs or leave school.  (Some of the founders in a startup can
stay in grad school, but at least one has to make the company his
full-time job.)
They're going to run the company out of one of their apartments at
first, and since they don't have any users they don't have to pay
much for infrastructure.  Their main expenses are setting up the
company, which costs a couple thousand dollars in legal work and
registration fees, and the living expenses of the founders.
The phrase "seed investment" covers a broad range.  To some VC firms
it means $500,000, but to most startups it means several months'
living expenses.  We'll suppose our group of friends start with
$15,000 from their friend's rich uncle, who they give 5% of the
company in return.  There's only common stock at this stage.  They
leave 20% as an options pool for later employees (but they set
things up so that they can issue this stock to themselves if they
get bought early and most is still unissued), and the three founders
each get 25%.
By living really cheaply they think they can make the remaining
money last five months.  When you have five months' runway left,
how soon do you need to start looking for your next round?  Answer:
immediately.  It takes time to find investors, and time (always
more than you expect) for the deal to close even after they say
yes.  So if our group of founders know what they're doing they'll
start sniffing around for angel investors right away.  But of course
their main job is to build version 1 of their software.
The friends might have liked to have more money in this first phase,
but being slightly underfunded teaches them an important lesson.
For a startup, cheapness is power.  The lower your costs, the more
options you have—not just at this stage, but at every point till
you're profitable.  When you have a high "burn rate," you're always
under time pressure, which means (a) you don't have time for your
ideas to evolve, and (b) you're often forced to take deals you don't
like.
Every startup's rule should be: spend little, and work fast.
After ten weeks' work the three friends have built a prototype that
gives one a taste of what their product will do.  It's not what
they originally set out to do—in the process of writing it, they
had some new ideas.  And it only does a fraction of what the finished
product will do, but that fraction includes stuff that no one else
has done before.
They've also written at least a skeleton business plan, addressing
the five fundamental questions: what they're going to do, why users
need it, how large the market is, how they'll make money, and who
the competitors are and why this company is going to beat them.
(That last has to be more specific than "they suck" or "we'll work
really hard.")
If you have to choose between spending time on the demo or the
business plan, spend most on the demo.   Software is not only more
convincing, but a better way to explore ideas.
Stage 2: Angel Round
While writing the prototype, the group has been traversing their
network of friends in search of angel investors.  They find some
just as the prototype is demoable.  When they demo it, one of the
angels is willing to invest.  Now the group is looking for more
money: they want enough to last for a year, and maybe to hire a
couple friends.  So they're going to raise $200,000.
The angel agrees to invest at a pre-money valuation of $1 million.
The company issues $200,000 worth of new shares to the angel; if
there were 1000 shares before the deal, this means 200 additional
shares.  The angel now owns 200/1200 shares, or a sixth of the
company, and all the previous shareholders' percentage ownership
is diluted by a sixth.  After the deal, the capitalization table
looks like this:
shareholder   shares    percent
-------------------------------
angel           200       16.7
uncle            50        4.2
each founder    250       20.8
option pool     200       16.7
               ----      -----
total          1200      100
To keep things simple, I had the angel do a straight cash for stock
deal.  In reality the angel might be more likely to make the
investment in the form of a convertible loan.  A convertible loan
is a loan that can be converted into stock later; it works out the
same as a stock purchase in the end, but gives the angel more
protection against being squashed by VCs in future rounds.
Who pays the legal bills for this deal?  The startup, remember,
only has a couple thousand left.  In practice this turns out to be
a sticky problem that usually gets solved in some improvised way.
Maybe the startup can find lawyers who will do it cheaply in the
hope of future work if the startup succeeds.  Maybe someone has a
lawyer friend.  Maybe the angel pays for his lawyer to represent
both sides.  (Make sure if you take the latter route that the lawyer
is
representing
you rather than merely advising you, or his
only duty is to the investor.)
An angel investing $200k would probably expect a seat on the board
of directors.  He might also want preferred stock, meaning a special
class of stock that has some additional rights over the common stock
everyone else has.  Typically these rights include vetoes over major
strategic decisions, protection against being diluted in future
rounds, and the right to get one's investment back first if the
company is sold.
Some investors might expect the founders to accept vesting for a
sum this size, and others wouldn't.  VCs are more likely to require
vesting than angels.  At Viaweb we managed to raise $2.5 million
from angels without ever accepting vesting, largely because we were
so inexperienced that we were appalled at the idea.  In practice
this turned out to be good, because it made us harder to push around.
Our experience was unusual; vesting is the norm for amounts that
size.  Y Combinator doesn't require vesting, because (a) we invest
such small amounts, and (b) we think it's unnecessary, and that the
hope of getting rich is enough motivation to keep founders at work.
But maybe if we were investing millions we would think differently.
I should add that vesting is also a way for founders to protect
themselves against one another.  It solves the problem of what to
do if one of the founders quits.  So some founders impose it on
themselves when they start the company.
The angel deal takes two weeks to close, so we are now three months
into the life of the company.
The point after you get the first big chunk of angel money will
usually be the happiest phase in a startup's life.  It's a lot like
being a postdoc: you have no immediate financial worries, and few
responsibilities.  You get to work on juicy kinds of work, like
designing software.  You don't have to spend time on bureaucratic
stuff, because you haven't hired any bureaucrats yet.  Enjoy it
while it lasts, and get as much done as you can, because you will
never again be so productive.
With an apparently inexhaustible sum of money sitting safely in the
bank, the founders happily set to work turning their prototype into
something they can release.  They hire one of their friends—at
first just as a consultant, so they can try him out—and then a
month later as employee #1. They pay him the smallest salary he can
live on, plus 3% of the company in restricted stock, vesting over
four years.  (So after this the option pool is down to 13.7%).
[
7
]
They also spend a little money on a freelance graphic designer.
How much stock do you give early employees?  That varies so much
that there's no conventional number.  If you get someone really
good, really early, it might be wise to give him as much stock as
the founders.  The one universal rule is that the amount of stock
an employee gets decreases polynomially with the age of the company.
In other words, you get rich as a power of how early you were.  So
if some friends want you to come work for their startup, don't wait
several months before deciding.
A month later, at the end of month four, our group of founders have
something they can launch.  Gradually through word of mouth they
start to get users.  Seeing the system in use by real users—people
they don't know—gives them lots of new ideas.  Also they find
they now worry obsessively about the status of their server.  (How
relaxing founders' lives must have been when startups wrote VisiCalc.)
By the end of month six, the system is starting to have a solid
core of features, and a small but devoted following.  People start
to write about it, and the founders are starting to feel like experts
in their field.
We'll assume that their startup is one that could put millions more
to use.  Perhaps they need to spend a lot on marketing, or build
some kind of expensive infrastructure, or hire highly paid salesmen.
So they decide to start talking to VCs.  They get introductions to
VCs from various sources: their angel investor connects them with
a couple; they meet a few at conferences; a couple VCs call them
after reading about them.
Step 3: Series A Round
Armed with their now somewhat fleshed-out business plan and able
to demo a real, working system, the founders visit the VCs they
have introductions to.  They find the VCs intimidating and inscrutable.
They all ask the same question: who else have you pitched to?  (VCs
are like high school girls: they're acutely aware of their position
in the VC pecking order, and their interest in a company is a
function of the interest other VCs show in it.)
One of the VC firms says they want to invest and offers the founders
a term sheet.  A term sheet is a summary of what the deal terms
will be when and if they do a deal; lawyers will fill in the details
later.  By accepting the term sheet, the startup agrees to turn
away other VCs for some set amount of time while this firm does the
"due diligence" required for the deal.  Due diligence is the corporate
equivalent of a background check: the purpose is to uncover any
hidden bombs that might sink the company later, like serious design
flaws in the product, pending lawsuits against the company,
intellectual property issues, and so on.  VCs' legal and financial
due diligence is pretty thorough, but the technical due diligence
is generally a joke.
[
8
]
The due diligence discloses no ticking bombs, and six weeks later
they go ahead with the deal.  Here are the terms: a $2 million
investment at a pre-money valuation of $4 million, meaning that
after the deal closes the VCs will own a third of the company (2 /
(4 + 2)).  The VCs also insist that prior to the deal the option
pool be enlarged by an additional hundred shares.  So the total
number of new shares issued is 750, and the cap table becomes:
shareholder   shares    percent
-------------------------------
VCs             650       33.3
angel           200       10.3
uncle            50        2.6
each founder    250       12.8
employee         36*       1.8     *unvested
option pool     264       13.5
               ----      -----
total          1950      100
This picture is unrealistic in several respects.  For example, while
the percentages might end up looking like this, it's unlikely that
the VCs would keep the existing numbers of shares.  In fact, every
bit of the startup's paperwork would probably be replaced, as if
the company were being founded anew.  Also, the money might come
in several tranches, the later ones subject to various
conditions—though this is apparently more common in deals with lower-tier VCs
(whose lot in life is to fund more dubious startups) than with the
top firms.
And of course any VCs reading this are probably rolling on the floor
laughing at how my hypothetical VCs let the angel keep his 10.3 of
the company.  I admit, this is the Bambi version; in simplifying
the picture, I've also made everyone nicer.  In the real world, VCs
regard angels the way a jealous husband feels about his wife's
previous boyfriends.  To them the company didn't exist before they
invested in it.
[
9
]
I don't want to give the impression you have to do an angel round
before going to VCs.  In this example I stretched things out to
show multiple sources of funding in action. Some startups could go
directly from seed funding to a VC round; several of the companies
we've funded have.
The founders are required to vest their shares over four years, and
the board is now reconstituted to consist of two VCs, two founders,
and a fifth person acceptable to both. The angel investor cheerfully
surrenders his board seat.
At this point there is nothing new our startup can teach us about
funding—or at least, nothing good.
[
10
]
The startup will almost
certainly hire more people at this point; those millions must be
put to work, after all.  The company may do additional funding
rounds, presumably at higher valuations.  They may if they are
extraordinarily fortunate do an IPO, which we should remember is
also in principle a round of funding, regardless of its de facto
purpose.  But that, if not beyond the bounds of possibility, is
beyond the scope of this article.
Deals Fall Through
Anyone who's been through a startup will find the preceding portrait
to be missing something: disasters.  If there's one thing all
startups have in common, it's that something is always going wrong.
And nowhere more than in matters of funding.
For example, our hypothetical startup never spent more than half
of one round before securing the next.  That's more ideal than
typical.  Many startups—even successful ones—come close to
running out of money at some point.  Terrible things happen to
startups when they run out of money, because they're designed for
growth, not adversity.
But the most unrealistic thing about the series of deals I've
described is that they all closed.  In the startup world, closing
is not what deals do.  What deals do is fall through.  If you're
starting a startup you would do well to remember that.  Birds fly;
fish swim; deals fall through.
Why?  Partly the reason deals seem to fall through so often is that
you lie to yourself.  You want the deal to close, so you start to
believe it will.  But even correcting for this, startup deals fall
through alarmingly often—far more often than, say, deals to buy
real estate.  The reason is that it's such a risky environment.
People about to fund or acquire a startup are prone to wicked cases
of buyer's remorse.  They don't really grasp the risk they're taking
till the deal's about to close.  And then they panic.  And not just
inexperienced angel investors, but big companies too.
So if you're a startup founder wondering why some angel investor
isn't returning your phone calls, you can at least take comfort in
the thought that the same thing is happening to other deals a hundred
times the size.
The example of a startup's history that I've presented is like a
skeleton—accurate so far as it goes, but needing to be fleshed
out to be a complete picture.  To get a complete picture, just add
in every possible disaster.
A frightening prospect?  In a way.  And yet also in a way encouraging.
The very uncertainty of startups frightens away almost everyone.
People overvalue stability—especially
young
people, who ironically need it least.  And so in starting a startup,
as in any really bold undertaking, merely deciding to do it gets
you halfway there.  On the day of the race, most of the other runners
won't show up.
Notes
[
1
]
The aim of such regulations is to protect widows and orphans
from crooked investment schemes; people with a million dollars in
liquid assets are assumed to be able to protect themselves.
The unintended consequence is that the investments that generate
the highest returns, like hedge funds, are available only to the
rich.
[
2
]
Consulting is where product companies go to die.  IBM is the
most famous example.  So starting as a consulting company is like
starting out in the grave and trying to work your way up into the
world of the living.
[
3
]
If "near you" doesn't mean the Bay Area, Boston, or Seattle,
consider moving.  It's not a coincidence you haven't heard of many
startups from Philadelphia.
[
4
]
Investors are often compared to sheep.  And they are like sheep,
but that's a rational response to their situation.  Sheep act the
way they do for a reason.  If all the other sheep head for a certain
field, it's probably good grazing.  And when a wolf appears, is he
going to eat a sheep in the middle of the flock, or one near the
edge?
[
5
]
This was partly confidence, and partly simple ignorance.  We
didn't know ourselves which VC firms were the impressive ones.  We
thought software was all that mattered.  But that turned out to be
the right direction to be naive in: it's much better to overestimate
than underestimate the importance of making a good product.
[
6
]
I've omitted one source: government grants.  I don't think
these are even worth thinking about for the average startup.
Governments may mean well when they set up grant programs to encourage
startups, but what they give with one hand they take away with the
other: the process of applying is inevitably so arduous, and the
restrictions on what you can do with the money so burdensome, that
it would be easier to take a job to get the money.
You should be especially suspicious of grants whose purpose is some
kind of social engineering-- e.g. to encourage more startups to be
started in Mississippi.  Free money to start a startup in a place
where few succeed is hardly free.
Some government agencies run venture funding groups, which make
investments rather than giving grants.  For example, the CIA runs
a venture fund called In-Q-Tel that is modelled on private sector
funds and apparently generates good returns.  They would probably
be worth approaching—if you don't mind taking money from the CIA.
[
7
]
Options have largely been replaced with restricted stock, which
amounts to the same thing.  Instead of earning the right to buy
stock, the employee gets the stock up front, and earns the right
not to have to give it back.  The shares set aside for this purpose
are still called the "option pool."
[
8
]
First-rate technical people do not generally hire themselves
out to do due diligence for VCs.  So the most difficult
part for startup founders is often responding politely to the inane
questions of the "expert" they send to look you over.
[
9
]
VCs regularly wipe out angels by issuing arbitrary amounts of
new stock.  They seem to have a standard piece of casuistry for
this situation: that the angels are no longer working to help the
company, and so don't deserve to keep their stock.  This of course
reflects a willful misunderstanding of what investment means; like
any investor, the angel is being compensated for risks he took
earlier.  By a similar logic, one could argue that the VCs should
be deprived of their shares when the company goes public.
[
10
]
One new thing the company might encounter is a
down
round
, or a funding round at valuation lower than the previous
round.  Down rounds are bad news; it is generally the common stock
holders who take the hit.  Some of the most fearsome provisions in
VC deal terms have to do with down rounds—like "full ratchet
anti-dilution," which is as frightening as it sounds.
Founders are tempted to ignore these clauses, because they think
the company will either be a big success or a complete bust.  VCs
know otherwise: it's not uncommon for startups to have moments of
adversity before they ultimately succeed.  So it's worth negotiating
anti-dilution provisions, even though you don't think you need to,
and VCs will try to make you feel that you're being gratuitously
troublesome.
Thanks
to Sam Altman, Hutch Fishman, Steve Huffman, Jessica
Livingston, Sesha Pratap, Stan Reiss, Andy Singleton, Zak Stone,
and Aaron Swartz for reading drafts of this.
Arabic Translation


There seems a bit of a contradiction between the first and last sentences here. If a screwup of this magnitude is not enough to make her resign, what would it take? https://t.co/E99SyQjos9

@synopsi There are some mistakes even second time founders continue to make though, like taking too long to fire people.

@GGCadoudal Charabia d'ivrogne is my new favorite phrase.

@SarmadZadjali All successful startup founders are, to start with.

@mmkalmmkal Obviously, but historically that has rarely if ever been the case.

@elonmusk You should add a way to ask for more posts with certain words too.

@Noahpinion "Germany, and by extension Europe, must now stand up for their freedom or fall under the Russian bootheel" could have been written by someone on the German General Staff in 1913.

Not saying I disagree, but plus ca change.

@annaarthoe The people whose job it is to decide this and have the most skin in the game — i.e. investors — disagree with you.

@henhaohank There are tests by which you can distinguish them. For example, the conformist test in "What You Can't Say."

https://t.co/qF7ab5MsJv

@optimaestro When it stopped swinging further to the left, which seems to have been either 2020 or 2021.


As a result Oxford and Cambridge have sunk to fourth place in the latest Times Good Universities Guide. I'm skeptical about this drop, but there's one thing I have definitely noticed. Middle class students, knowing they'll be discriminated against, are now applying to US schools.

A few years ago Oxford and Cambridge started discriminating against middle class applicants. They used to base admission offers solely on academic performance. Now they have lower standards for applicants from poor families or bad schools.

@ay426922 2 or 3 weeks, probably, but I might choose to take longer on this one.

@yenkel Hiring conventional-minded people.

Jessica: What happened to his company?

Me: Venture debt.

Jessica: Oh.

@LuisAndLearn Remain founder-led. Stay small.

In many domains it's an advantage to have a culture of doing things fast and cheaply. But organizations never shift toward this as they age; if they shift, it's always in the other direction. So the only way to have this culture is to start with it and not lose it.

@aidamars The traditional solution is to move.

Source: https://t.co/yEUPeAAvg1

"Reich now believes Europe, at least, is in a period of accelerated selection that began 5,000 years ago, focusing on immune and metabolic traits." https://t.co/WNVEWQ99Qn


@robinhanson Depends who paid for the ad.

@rohitdotmittal That point was around 2012.

@PalmerLuckey @ZDNET IANAL but deliberately refusing to update an article that they know contains lies seems to me libel in the spirit of US law. If a judge agrees it could be a valuable precedent.

@PalmerLuckey @ZDNET It seems like you can sue them if they deliberately (with "actual malice") publish lies. And one could argue that they are doing this if they don't correct an article that they know to be false, since the publication of an article on the web is ongoing.

Cases like this (and they are surprisingly common) are why very few people in tech trust journalists.

@PalmerLuckey @ZDNET Why don't you just sue them?

@MarginalContrib Investors also eat.

@rabois @ATabarrok Keith, we go way back and I believe you're a reasonable person at heart, but if you find yourself calling Alex Tabarrok an idiot, partisanship has taken you too far. He's not your enemy. He was one of the few who spoke out against wokeness during the dark days when few could.

The deadline for applying to YC's Spring 2025 batch is two days from now. If this batch is like most batches, some of the companies that end up doing the best will only decide to apply between now and the deadline... https://t.co/vNl8WWyedT

@nejatian I was spiriting away all the stuff that's technically expired but I believe is still good. Biscoffs for example. Surely they can't actually go bad.


@TheBestOfAdam If there are two ways of interpreting something you write, people will assume you meant the one that's less true.

Twitter in 1692: https://t.co/TXkwJNg2UT

@markdono @bobbyb58758961 These children were killed in their home, not in a school, hospital or mosque. So tell me again, who was hiding behind them?

@bobbyb58758961 Who was hiding behind these children, Bobby?

@da_green_hermit @WeTheCharlie He's right. We post under our own names. Why don't you? Are you ashamed to?

@tom_nuttall Strange, because I feel like most reasonably observant people have understood what they're doing for a long time.

@Austen If by lasts you mean takes, this is true for many other things. It's true for writing too for example.

@eastdakota What problems have you encountered?

@WeTheCharlie @frectangle All but one of a couple's children are killed, and this is your response, that they had too many?

@CcibChris TIL there was a P-47 variant faster than the P-51D.


@stuartbuck1 No, they're supposed to use quotation marks.

@timurkuran @stucchio Perhaps also a bullshit field in which the quality of one's work is impossible to measure?

@matthewgburgess I despise communism, but it's possible that the reason it caused so many deaths was simply that it was the flavor of the month for dictators during the 20th century, when states had large populations and were very effective at killing.

@bscholl I've rewatched the video about 20 times.

You should post some more videos. There would be demand.

@PlanMaestro @FT @axios This could be misleading. Restaurants are often booked at prime times and only release marginal slots to reservation apps.

Jessica is watching The Dropout as intently as an ornithologist watching a documentary about a newly discovered bird species.

@KieranO It was like Milo of Croton's training plan.

We evolved a bunch of unusual games when the boys were little. In Sloth Battering Ram, our younger son would hang on my arm like a sloth, and then become a battering ram attacking the older one. https://t.co/TGtpYh9ZF2

Jessica is editing the Ron Conway episode of The Social Radars on her laptop in the kitchen, and it's so pleasing to hear. It's like he's here visiting.

@Noahpinion The way I describe the wave of wokeness that peaked in 2020 is that it was similar in shape to the Cultural Revolution, but much smaller in magnitude.


@yongqianme Depends how far you make it through the application process.

@Mayanktweeted Nothing is too early. It's not too early if you thought of the idea as you were filling out the application.

@warrenbuffing Of course. Lots of people still had their old jobs when they were accepted.

@MovesInShadows Startups are supposed to make money. I don't know how you'd make money out of UBI, but if you've thought of a way, that would be all the more interesting.

@IndestGames No, only half the startups in recent batches have been doing AI.

At YC it's a long-standing tradition, and a point of pride among the partners, to be able to pick startups without having a revenue graph to look at. So if you think you're good, trust them to recognize it. If they fail it won't be for lack of trying.

As YC has become more established, the idea has spread that your startup has to be established in order to be accepted. But that's not true. Initial traction proves something, but not much. The YC partners care more about what you're like than how far along you are.

Today is the deadline for applying to the summer 2024 Y Combinator batch. Don't be deterred from applying if you're not very far along yet. In a typical batch, about 40% of the startups YC funds are just an idea.

@jdmccafferty Peak millstone collar.

@mattyglesias You don't really want to reproduce the circumstances that led to this happening though.


@jneeley78 Just the final product, so it's a lot more keystrokes.

Since 12 yo started dictating his current series of books in 2021, I've typed 330,882 characters.

@archi_tradition No they didn't. The Dark Ages were roughly 500 to 1000 AD. This was built in the 1240s.

@CburgesCliff It will be if we start calling it that. Names stick.

@Chris_arnade If you were less unsure about Bush vs Gore, you were mistaken, because it would be hard for an election to be closer than that.

@thomastupchurch This rate of adding power is equivalent to building 213 average-sized nuclear plants per year.

@SperrysandNikes You're lucky you never saw San Gimignano when it had all 72 of its towers. https://t.co/1HwsaRAjf4

I realize this is not the thing one is supposed to notice about this email, but I can't help noticing it's another instance of omitting the definite article to signal that something is special and/or that one is an insider. E.g. Concorde, DoD.

@OrwellNGoode Trick question: there's no such thing as $199 dollars.

When Matthew Green says something is probably the most important story of our lifetimes, I read it.


@JoshSchoen @cynthiazhang17 @ycombinator You're right. I'm going to delete my reply.

@whyvert @ModeledBehavior @lymanstoneky According to ChatGPT they did: https://t.co/FafoxMfD7v

@jdmccafferty Their habits are so clearly differentiated that they look like two football teams meeting for the coin toss before a match.

@fritzdev It not only would but has.

@whyvert @ModeledBehavior @lymanstoneky In particular it would be interesting to know whether they gave up for the same reason, or if there are two separate disqualifying features of the car business.

I never thought I'd retweet this woman, but you have to give her credit for courage. She's not afraid of anything.

@RpsAgainstTrump He's not wrong. But the US is heading down a darker one.

@jdmccafferty Possibly Kneller's best work.

@gaganghotra_ I have an account I use for little projects like the pattern editor I used to make these. https://t.co/buEBpTMskL

@mehrassa_a It's not enough just to generate code. You also have to deploy it. Replit spent years building the infrastructure to do this.


An NFT That Saves Lives
May 2021
Noora Health
, a nonprofit I've
supported for years, just launched
a new NFT. It has a dramatic name,
Save Thousands of Lives
,
because that's what the proceeds will do.
Noora has been saving lives for 7 years. They run programs in
hospitals in South Asia to teach new mothers how to take care of
their babies once they get home. They're in 165 hospitals now. And
because they know the numbers before and after they start at a new
hospital, they can measure the impact they have. It is massive.
For every 1000 live births, they save 9 babies.
This number comes from a
study
of 133,733 families at 28 different
hospitals that Noora conducted in collaboration with the Better
Birth team at Ariadne Labs, a joint center for health systems
innovation at Brigham and Womens Hospital and Harvard T.H. Chan
School of Public Health.
Noora is so effective that even if you measure their costs in the
most conservative way, by dividing their entire budget by the number
of lives saved, the cost of saving a life is the lowest I've seen.
$1,235.
For this NFT, they're going to issue a public report tracking how
this specific tranche of money is spent, and estimating the number
of lives saved as a result.
NFTs are a new territory, and this way of using them is especially
new, but I'm excited about its potential. And I'm excited to see
what happens with this particular auction, because unlike an NFT
representing something that has already happened,
this NFT gets better as the price gets higher.
The reserve price was about $2.5 million, because that's what it
takes for the name to be accurate: that's what it costs to save
2000 lives. But the higher the price of this NFT goes, the more
lives will be saved. What a sentence to be able to write.


@emre3 Many already seem to. According to a recent Gallup poll, only 36% of Americans support Israel's actions in Gaza, and only 18% of Democrats do.

@surjir__ The quote literally speaks of bombing "a family's home."

Remember when we were told children were being killed in Gaza because Hamas was using them as human shields? Now we know the real reason. When Israel wanted to kill someone, they waited till he went home, then dropped a bomb on the building, killing the whole family. https://t.co/GGCE9Bl8eE

@Noahpinion @garrytan Are you sure? In our school district, the real point of it was to create jobs for members of the teacher's union.

@jburnmurdoch FWIW I never once saw this happen in decades of living in America.

@auren Isn't this true of all boys?

@shadihamid I just block 'em. This is what blocking is for.

@aknox92 @kendrictonn I agree, except you need to make that 1800. By 1900 all the portraits were done by hacks based on photographs.

@kendrictonn He meant it sarcastically.

@Chris_arnade There's not as much fighting on Twitter now, but I think the reason is that woke mobs, as a phenomenon, have practically disappeared. That seems a good thing. They definitely added edge, of a sort, but nothing more.


The fact that YC partners will give startups new ideas for free doesn't mean startup ideas are worthless. The things that YC gives the startups are valuable. But it does imply they're not worth tens of millions or anything like that.

I've done this several times, and the only reason I don't do it more is that I'd rather draw a new idea out of the founders if I can. They're more likely to succeed if they're working on something related to their lives. But I'll give startups new ideas if I have to.

A data point about the market price of startup ideas: YC partners will give a startup whose initial idea doesn't work out a new one at no extra charge.

When writing, don't mention people who've criticized you. It doesn't age well. If you're right, no one will have heard of them in the future, and the reference to them will be a distraction. And if you're wrong no one will read your writing in the future, so it won't matter.

@auren The top four YC companies by value are Airbnb, Stripe, Coinbase, and DoorDash, and they account for about a third of total returns.

@OGTaylorB It's protected from censorship, but not protected from criticism.

There turn out to be very few genuine free speech advocates. Nearly everyone who talked about "free speech" during the woke era is completely silent about it now. @TheFIREorg is a rare exception, but otherwise it's crickets.

If you didn't speak out against *both* woke censorship and Trump's attempts to suppress criticism of Israel at universities, you're not a genuine free speech advocate. You're just a partisan hack who pretends to care about free speech when it suits you.

@pitdesi @auren Less than $13m.

@auren Whoever wrote that has no idea what they're talking about. Reddit accounts for practically none of YC's returns. The company that went public was spun back out of Conde Nast after being acquired for a few million.


@V_arrell Where we live you get those whether you like it or not.

@deepaksgt Maybe 30 or 40?

@TahaRDar @boomsupersonic A MiG-15 and some contemporary French equivalent.

@7ghj566 It's one of the desks we used at Viaweb. They were kitchen tables I bought in Cambridge, MA, in the 1990s.

@XChinaSorrows You're hoping I'm seven feet tall.

@denismars That's a concealed radiator, alas.

@sebastianvalin The white rectangle? That's just the angle of the roof.

@theAsteve My Family and Other Animals

@NationalParksX In the next room.

@axelerationist It's not; the room is just very symmetric.


Write Like You Talk
October 2015
Here's a simple trick for getting more people to read what you
write: write in spoken language.
Something comes over most people when they start writing. They write
in a different language than they'd use if they were talking to a
friend. The sentence structure and even the words are different.
No one uses "pen" as a verb in spoken English. You'd feel like an
idiot using "pen" instead of "write" in a conversation with a friend.
The last straw for me was a sentence I read a couple days ago:
The mercurial Spaniard himself declared: "After Altamira, all is
  decadence."
It's from Neil Oliver's
A History of Ancient Britain
. I feel bad
making an example of this book, because it's no worse than lots of
others.  But just imagine calling Picasso "the mercurial Spaniard" when
talking to a friend.  Even one
sentence of this would raise eyebrows in conversation.  And yet
people write whole books of it.
Ok, so written and spoken language are different. Does that make
written language worse?
If you want people to read and understand what you write, yes.
Written language is more complex, which makes it more work to read.
It's also more formal and distant, which gives the reader's attention
permission to drift.  But perhaps worst of all, the complex sentences
and fancy words give you, the writer, the false impression that
you're saying more than you actually are.
You don't need complex sentences to express complex ideas.  When
specialists in some abstruse topic talk to one another about ideas
in their field, they don't use sentences any more complex than they
do when talking about what to have for lunch.  They use different
words, certainly.  But even those they use no more than necessary.
And in my experience, the harder the subject, the more informally
experts speak. Partly, I think, because they have less to prove,
and partly because the harder the ideas you're talking about, the
less you can afford to let language get in the way.
Informal language is the athletic clothing of ideas.
I'm not saying spoken language always works best. Poetry is as much
music as text, so you can say things you wouldn't say in conversation.
And there are a handful of writers who can get away with using fancy
language in prose. And then of course there are cases where writers
don't want to make it easy to understand what they're saying—in
corporate announcements of bad news, for example, or at the more
bogus
end of the humanities.  But for nearly everyone else, spoken
language is better.
It seems to be hard for most people to write in spoken language.
So perhaps the best solution is to write your first draft the way
you usually would, then afterward look at each sentence and ask "Is
this the way I'd say this if I were talking to a friend?" If it
isn't, imagine what you would say, and use that instead.  After a
while this filter will start to operate as you write. When you write
something you wouldn't say, you'll hear the clank as it hits the
page.
Before I publish a new essay, I read it out loud and fix everything
that doesn't sound like conversation. I even fix bits that are
phonetically awkward; I don't know if that's necessary, but it
doesn't cost much.
This trick may not always be enough.  I've seen writing so far
removed from spoken language that it couldn't be fixed sentence by
sentence.  For cases like that there's a more drastic solution.
After writing the first draft, try explaining to a friend what you
just wrote. Then replace the draft with what you said to your friend.
People often tell me how much my essays sound like me talking.
The fact that this seems worthy of comment shows how rarely people
manage to write in spoken language.  Otherwise everyone's writing
would sound like them talking.
If you simply manage to write in spoken language, you'll be ahead
of 95% of writers.  And it's so easy to do: just don't let a sentence
through unless it's the way you'd say it to a friend.
Thanks
to Patrick Collison and Jessica Livingston for reading drafts of this.
Japanese Translation
Arabic Translation


@a_apanasik I mean fundraising after Demo Day.

@TheBestOfAdam I can actually estimate that based on graphs I've seen of past cohorts. I'd guess it happens about 5x faster than it used to. And that's for YC startups, who've always had a much easier time fundraising.

@yacineMTB Ok, I'll ask him.

Yuri's right. Fundraising is a uniquely distracting time sink. One of the many things YC does for founders is to make it happen much faster.

@hirschibar Definitely by the time you're raising money from sovereign wealth funds.

@garrytan Presumably the article was written by AI, and this is a hallucination.

@caitoz Not even people pretending. I'd be very surprised if they hadn't figured out how to run all those fake accounts with AI.

"She says 'We'll bake bread tomorrow,' even when there is no flour. She says 'The windows are broken because we wanted more air,' even though that is not why the windows are broken. She says 'The baby is sleeping,' even though the baby is gone." https://t.co/ZlfIWJi9Q6

@hthieblot Grad school, and a party at my house.

@shomatsuoj A table top in one of the mini kitchens. Not sure what floor it was on, but it was an amazing piece of stone.


In the process of giving advice to a startup whose domain I know very little about, I came up with a useful form of qualification: only listen to this advice if you can imagine scenarios where this email comes back to haunt you.

Or in Lisp terms, evaluate this expression containing free variables in your lexical environment, and see if it causes an error.

People often tell me they sent their kids some essay of mine, but if I tried that with my sons, I'd get the royal raspberry. Are you kidding? You expect me to read an essay you wrote?

Neither of them have ever read one, as far as I know, though my older son did once have to listen to one I gave as a talk. (He said it was good, but showed no interest in reading any more.)

I wrote a talk tonight. It's basically an essay, but I can't publish it as one because it's about how to blow up a cartel of corrupt incumbents, and I don't want to provoke an immune response.

It's interesting how much less work it is to write a talk than an essay though. I wrote this thing in about an hour and a half. Admittedly because I had to; I have to give it tomorrow. But if it were an actual essay that would be followed by days of rewriting.

Initially I was surprised at people's ability to ignore evidence leading to conclusions they don't like, even with multiple videos of the scene. But then I remembered that 34% of Americans don't believe in evolution.

Which in turn implies that this controversy will never be settled. There's big segment of the population who can't be convinced by any amount of evidence. So unless Trump and Noem stop lying, which they won't, there will always be people who believe them.

Supermarket kefir is basically a milkshake. This is the real thing. It takes a while to get used to the taste, but Jessica thinks it's the reason she hasn't gotten sick in a year.

https://t.co/DOQIufyFye

ICE just shot and killed a woman Minneapolis. A US citizen. How long before we say "Enough is enough?"


What to Do
March 2025
What should one do? That may seem a strange question, but it's not
meaningless or unanswerable. It's the sort of question kids ask
before they learn not to ask big questions. I only came across it
myself in the process of investigating something else. But once I
did, I thought I should at least try to answer it.
So what
should
one do? One should help people, and take care of
the world. Those two are obvious. But is there anything else? When
I ask that, the answer that pops up is
Make good new things
.
I can't prove that one should do this, any more than I can prove
that one should help people or take care of the world. We're talking
about first principles here. But I can explain why this principle
makes sense. The most impressive thing humans can do is to think.
It may be the most impressive thing that can be done. And the best
kind of thinking, or more precisely the best proof that one has
thought well, is to make good new things.
I mean new things in a very general sense. Newton's physics was a
good new thing. Indeed, the first version of this principle was to
have good new ideas. But that didn't seem general enough: it didn't
include making art or music, for example, except insofar as they
embody new ideas. And while they may embody new ideas, that's not
all they embody, unless you stretch the word "idea" so uselessly
thin that it includes everything that goes through your nervous
system.
Even for ideas that one has consciously, though, I prefer the
phrasing "make good new things." There are other ways to describe
the best kind of thinking. To make discoveries, for example, or to
understand something more deeply than others have. But how well do
you understand something if you can't make a model of it, or write
about it? Indeed, trying to express what you understand is not just
a way to prove that you understand it, but a way to understand it
better.
Another reason I like this phrasing is that it biases us toward
creation. It causes us to prefer the kind of ideas that are naturally
seen as making things rather than, say, making critical observations
about things other people have made. Those are ideas too, and
sometimes valuable ones, but it's easy to trick oneself into believing
they're more valuable than they are. Criticism seems sophisticated,
and making new things often seems awkward, especially at first; and
yet it's precisely those first steps that are most rare and valuable.
Is newness essential? I think so. Obviously it's essential in
science. If you copied a paper of someone else's and published it
as your own, it would seem not merely unimpressive but dishonest.
And it's similar in the arts. A copy of a good painting can be a
pleasing thing, but it's not impressive in the way the original
was. Which in turn implies it's not impressive to make the same
thing over and over, however well; you're just copying yourself.
Note though that we're talking about a different kind of should
with this principle. Taking care of people and the world are shoulds
in the sense that they're one's duty, but making good new things
is a should in the sense that this is how to live to one's full
potential. Historically most rules about how to live have been a
mix of both kinds of should, though usually with more of the former
than the latter.
[
1
]
For most of history the question "What should one do?" got much the
same answer everywhere, whether you asked Cicero or Confucius. You
should be wise, brave, honest, temperate, and just, uphold tradition,
and serve the public interest. There was a long stretch where in
some parts of the world the answer became "Serve God," but in
practice it was still considered good to be wise, brave, honest,
temperate, and just, uphold tradition, and serve the public interest.
And indeed this recipe would have seemed right to most Victorians.
But there's nothing in it about taking care of the world or making
new things, and that's a bit worrying, because it seems like this
question should be a timeless one. The answer shouldn't change much.
I'm not too worried that the traditional answers don't mention
taking care of the world. Obviously people only started to care
about that once it became clear we could ruin it. But how can making
good new things be important if the traditional answers don't mention
it?
The traditional answers were answers to a slightly different question.
They were answers to the question of how to be, rather than what
to do. The audience didn't have a lot of choice about what to do.
The audience up till recent centuries was the landowning class,
which was also the political class. They weren't choosing between
doing physics and writing novels. Their work was foreordained:
manage their estates, participate in politics, fight when necessary.
It was ok to do certain other kinds of work in one's spare time,
but ideally one didn't have any. Cicero's
De Officiis
is one of the
great classical answers to the question of how to live, and in it
he explicitly says that he wouldn't even be writing it if he hadn't
been excluded from public life by recent political upheavals.
[
2
]
There were of course people doing what we would now call "original
work," and they were often admired for it, but they weren't seen
as models. Archimedes knew that he was the first to prove that a
sphere has 2/3 the volume of the smallest enclosing cylinder and
was very pleased about it. But you don't find ancient writers urging
their readers to emulate him. They regarded him more as a prodigy
than a model.
Now many more of us can follow Archimedes's example and devote most
of our attention to one kind of work. He turned out to be a model
after all, along with a collection of other people that his
contemporaries would have found it strange to treat as a distinct
group, because the vein of people making new things ran at right
angles to the social hierarchy.
What kinds of new things count? I'd rather leave that question to
the makers of them. It would be a risky business to try to define
any kind of threshold, because new kinds of work are often despised
at first. Raymond Chandler was writing literal pulp fiction, and
he's now recognized as one of the best writers of the twentieth
century. Indeed this pattern is so common that you can use it as a
recipe: if you're excited about some kind of work that's not
considered prestigious and you can explain what everyone else is
overlooking about it, then this is not merely a kind of work that's
ok to do, but one to seek out.
The other reason I wouldn't want to define any thresholds is that
we don't need them. The kind of people who make good new things
don't need rules to keep them honest.
So there's my guess at a set of principles to live by: take care
of people and the world, and make good new things. Different people
will do these to varying degrees. There will presumably be lots who
focus entirely on taking care of people. There will be a few who
focus mostly on making new things. But even if you're one of those,
you should at least make sure that the new things you make don't
net
harm
people or the world. And if you go a step further and
try to make things that help them, you may find you're ahead on the
trade. You'll be more constrained in what you can make, but you'll
make it with more energy.
On the other hand, if you make something amazing, you'll often be
helping people or the world even if you didn't mean to. Newton was
driven by curiosity and ambition, not by any practical effect his
work might have, and yet the practical effect of his work has been
enormous. And this seems the rule rather than the exception. So
if you think you can make something amazing, you should probably
just go ahead and do it.
Notes
[
1
]
We could treat all three as the same kind of should by saying
that it's one's duty to live well — for example by saying, as some
Christians have, that it's one's duty to make the most of one's
God-given gifts. But this seems one of those casuistries people
invented to evade the stern requirements of religion: it was permissible to
spend time studying math instead of praying or performing acts of
charity because otherwise you were rejecting a gift God had given
you. A useful casuistry no doubt, but we don't need it.
We could also combine the first two principles, since people are
part of the world. Why should our species get special treatment?
I won't try to justify this choice, but I'm skeptical that anyone
who claims to think differently actually lives according to their
principles.
[
2
]
Confucius was also excluded from public life after ending up
on the losing end of a power struggle, and presumably he too would
not be so famous now if it hadn't been for this long stretch of
enforced leisure.
Thanks
to Trevor Blackwell, Jessica
Livingston, and Robert Morris for reading drafts of this.


When startups are doing well it's common for them either not to disclose their numbers, or under-report them. Half the time when I get an email with great numbers, it's followed by "but don't tell anyone."

@tarabmatrix @eulerfx Ideally very late, but if they discover problems it may not be as late as I'd hoped.

@talhof8 I'm sometimes worried that I'll get in trouble for things I've said in it, but I'm rarely if ever worried that it has big mistakes in it. I don't have deadlines. I don't need to publish something till I'm sure I got it right.

@sarmadgulzar Ugh, no. I use AI for research, but I'm not letting it near the writing.

@eulerfx That's what I do. It's easy to endure writing crap the first time through if you know you're going to come back and fix it.

Imagine if you somehow got shit on your hand. You'd probably still be washing your hand long after it looked clean. And it wouldn't feel like an effort to do this; it would take an effort to stop.

It doesn't feel laborious to go over every sentence in an essay 50 times. The mistakes in early drafts irritate me so much that it would be hard to stop trying to eliminate them.

Chris Arnade just made his account public, so you have a rare opportunity to follow him before he makes it private again. I recommend it. He walks all over the world and has lots of interesting things to say.

In the new essay I'm writing I get to mention Moon Unit Zappa, and I'm very pleased about that.

Sherman was 45 in this picture. https://t.co/LaOjqFugpP


@ArmandDoma I don't know if "darling" was ever quite the word.

Focusing on users will get you investors, but focusing on investors won't get you users.

@tomlbutler At this stage it won't be a down round. It will be no round.

If you design your startup to appeal to investors instead of users, you may well succeed in raising your first round. But when you try to raise your second, without good growth numbers, you'll suddenly find you're not appealing to investors after all.

@Marwood_PostLib @GaryLineker You're right that many people share his opinions, but most who do are afraid to express them publicly.

And when I'm out walking and I try to remember a problem I'm in the middle of fixing, it's usually the shape I remember first. I remember there was a paragraph with a particular bad shape, and only then do I remember the actual words in it.

They don't have precise shapes. It's more like I'm perceiving the writing with the part of my brain that perceives shapes. When I think about a paragraph that's missing something, or twisted around, or repetitive, it's like thinking of a physical thing with those qualities.

I know some people associate numbers with colors. This doesn't happen to me, but when I think about an essay I'm writing, the paragraphs often seem to have shapes. Especially the ones that need fixing.

@richard_landes How can you joke about the deaths of three children, Richard?

Thank you @GaryLineker for having a conscience, and the strength to listen to it.


It is even more difficult to get a man to understand something when his identity depends on his not understanding it.

@wispem_wantex They would do unbelievably badly.

@WytPilledCurze Every country is a GDP factory in the sense that GDP per capita is the best predictor of other measures of well-being. So frankly you're lucky that they and not you are deciding how to allocate investment capital.

@thales4c And their model of tech talent is the opposite of the one you describe. VCs focus on growth, not lowering costs.

@BowTiedCrocodil False. If anything VCs are notorious for encouraging founders to spend to much.

@hanselang They have to invest their own money in their funds too.

@yacineMTB They don't have to judge people's potential as founders.

As a rule the people who know the most about something are the pros whose incomes depend on doing it well. The pros at judging tech talent are venture capitalists. If venture capitalists' opinions differ from white nationalists', it's clear who's more likely to be right.

Strange to think that just a few years ago people on the far left got mad when I said this (because they dislike the idea that aptitude could be inborn) and now people on the far right are mad (because they dislike the idea that foreigners could be better at anything).

@sergitosergito When thinking about skilled immigration, you'd want to look at Math Olympiad results. And it's true that those suggest the US would have less than 5% of the best people. But I thought I'd give the US the benefit of the doubt.


Made in USA
November 2004
(This is a new essay for the Japanese edition of
Hackers
& Painters
.
It tries to explain why Americans make some things well
and others badly.)
A few years ago an Italian friend of mine travelled by train from
Boston to Providence.  She had only been in America for a
couple weeks and hadn't seen much of the country yet.  She arrived
looking astonished.  "It's so
ugly!"
People from other rich countries can scarcely imagine
the squalor of the man-made bits of America.  In travel books
they show you mostly natural environments: the Grand Canyon,
whitewater rafting, horses in a field.  If you see
pictures with man-made things in them, it will be either a
view of the New York skyline shot from a discreet distance,
or a carefully cropped image of a seacoast town in Maine.
How can it be, visitors must wonder.  How can the richest country
in the world look like this?
Oddly enough, it may not be a coincidence.  Americans are good
at some things and bad at others.  We're good at making
movies and software, and bad at making cars and cities.
And I think we may be good at what we're good at for the same
reason we're bad at what we're bad at.  We're impatient.
In America, if you want to do something, you don't worry that
it might come out badly, or upset delicate social balances, or
that people might think you're getting above yourself.  If you
want to do something, as Nike says,
just do it.
This works well in some fields and badly in others.  I suspect
it works in movies and software because they're both messy
processes.  "Systematic"
is the last word I'd use to describe the way
good programmers
write software.
Code is not something they assemble painstakingly after
careful planning, like the pyramids.  It's something they
plunge into, working fast and constantly changing their minds,
like a charcoal sketch.
In software, paradoxical
as it sounds, good craftsmanship means working fast.
If you work slowly and meticulously,
you merely end up with a very fine implementation of your initial,
mistaken idea.
Working slowly and meticulously is
premature optimization.  Better to get a
prototype done fast, and see what new ideas
it gives you.
It sounds like making movies works a lot like making software.
Every movie is a Frankenstein, full of imperfections
and usually quite different from what was originally envisioned.
But interesting, and finished fairly quickly.
I think we get away with this in movies and software
because they're both malleable mediums.  Boldness pays.
And if at the last minute two parts don't quite
fit, you can figure out some hack that will at least conceal
the problem.
Not so with cars, or cities.  They are all too physical.
If the car business worked like software or movies, you'd
surpass your competitors by making a car that weighed only
fifty pounds, or folded up to the size of a motorcycle when
you wanted to park it.  But with physical products there are
more constraints.  You don't win by dramatic innovations
so much as by good taste and attention to detail.
The trouble is, the very word "taste"
sounds slightly ridiculous to American ears.
It seems pretentious, or frivolous, or even effeminate.
Blue staters think it's "subjective," and red staters
think it's for sissies.  So anyone in America
who really cares about design will be sailing upwind.
Twenty years ago we used to hear that the problem with
the US car industry was the workers.
We don't hear that any more now that Japanese companies
are building cars in the US.   The problem with
American cars is bad design.  You can see that just by
looking at them.
All that extra sheet metal on the
AMC Matador
wasn't
added by the workers.  The problem
with this car, as with American cars today, is that it was
designed by marketing people instead of designers.
Why do the Japanese make better cars than us?  Some say it's
because their culture encourages cooperation.  That may come
into it.   But in this case it seems more to the point that
their culture prizes design and craftsmanship.
For centuries the Japanese have made finer things than we
have in the West.  When you look at swords they
made in 1200, you just can't believe the date on the label
is right.
Presumably their cars fit together more
precisely than ours for the same reason their joinery always has.
They're obsessed with making things well.
Not us.
When we make something in America, our aim is just to get the
job done.  Once we reach that point, we take one of two routes.
We can stop there, and have something crude but
serviceable, like a Vise-grip.  Or we can improve it,
which usually means encrusting it with gratuitous ornament.
When we want to make a car "better,"
we stick
tail fins
on it, or make it
longer
, or make the
windows smaller
, depending on the current fashion.
Ditto for houses.  In America you can have either a flimsy box banged
together out of two by fours and drywall, or a McMansion-- a
flimsy box banged together out of two by fours and drywall,
but larger, more dramatic-looking, and full of expensive fittings.
Rich people don't get better design or craftsmanship;
they just get a larger, more conspicuous version of the
standard house.
We don't especially prize design or craftsmanship here.  What
we like is speed, and we're willing to do something in an ugly
way to get it done fast.  In some
fields, like software or movies, this is a net win.
But it's not just that software and movies are malleable mediums.
In those businesses, the designers (though they're
not generally called that) have more power.
Software companies, at least successful ones, tend to be run
by programmers.  And in the film industry, though producers
may second-guess directors, the director controls most of
what appears on the screen.
And so American software and movies, and Japanese cars, all
have this in common: the people in charge care about
design-- the former because the designers are in charge, and the latter
because the whole culture cares about design.
I think most Japanese executives would be horrified at
the idea of making a bad car.  Whereas American executives,
in their hearts, still believe the most important thing about
a car is the image it projects.
Make a good car?  What's "good?"  It's so
subjective.
If you want to know how to design a car, ask a focus group.
Instead of relying on their own internal design compass
(like Henry Ford did),
American car companies try to make what marketing people
think consumers want.  But it isn't working.  American cars continue
to lose market share.  And the reason is that the customer
doesn't want what he thinks he wants.
Letting focus groups design your cars for you
only wins in the short term.  In the long term, it pays
to bet on good design.  The focus group may say they want the
meretricious feature du jour, but what they want even more is
to imitate sophisticated buyers, and they, though a
small minority, really do care about good design.
Eventually the
pimps and drug dealers notice that the doctors and lawyers
have switched from Cadillac to Lexus, and do the same.
Apple is an interesting counterexample to the general
American trend.  If you want to buy a nice CD player, you'll
probably buy a Japanese one.  But if you want to buy an
MP3 player, you'll probably buy an iPod.  What happened?
Why doesn't Sony dominate MP3 players?  Because Apple is
in the consumer electronics business now, and unlike
other American companies, they're obsessed with good design.
Or more precisely, their CEO is.
I just got an iPod, and it's not just nice.  It's
surprisingly
nice.  For it to surprise me, it must be
satisfying expectations I didn't know I had.  No focus
group is going to discover those.  Only a great
designer can.
Cars aren't the worst thing we make in America.
Where the just-do-it model fails most dramatically is in our cities-- or
rather,
exurbs
.
If real estate developers operated on a large enough scale, if
they built whole towns, market forces would compel
them to build towns that didn't suck.  But they only build a
couple office buildings or suburban streets at a time, and the
result is so depressing that the inhabitants consider it a great
treat to fly to Europe and spend a couple weeks living what
is, for people there, just everyday life. [1]
But the just-do-it model does have advantages.  It seems the clear
winner for generating wealth and technical innovations
(which are practically the same thing).  I think speed is the reason.
It's hard to create wealth by making a commodity.  The
real value is in things that are new, and if you want to
be the first to make something, it helps to work fast.
For better or worse, the just-do-it model is fast,
whether you're Dan Bricklin writing the prototype of VisiCalc in
a weekend, or a real estate developer
building a block of shoddy condos in a month.
If I had to choose between the just-do-it model and the
careful model, I'd probably choose just-do-it.
But do we have to choose?  Could we have it both ways?
Could Americans have nice
places to live without undermining the impatient, individualistic spirit
that makes us good at software?  Could other countries
introduce more individualism into their technology companies
and research labs without having it metastasize as strip malls?
I'm optimistic.  It's harder to
say about other countries, but in the US, at least, I think
we can have both.
Apple is an encouraging example.  They've managed to preserve
enough of the impatient, hackerly spirit you need to write
software.  And yet when
you pick up a new Apple laptop, well, it doesn't
seem American.  It's too perfect.  It seems as if it
must have been made by a Swedish or a Japanese company.
In many technologies, version 2 has higher resolution.  Why
not in design generally?  I think we'll gradually see
national characters superseded
by occupational characters: hackers in Japan will be allowed
to behave with a
willfulness
that would now seem unJapanese,
and products in America will be designed with an
insistence on
taste
that would now seem unAmerican.
Perhaps the most successful countries, in the future, will be
those most willing to ignore what are now considered
national characters, and do each kind of work in the way
that works best.  Race you.
Notes
[1] Japanese cities are ugly too, but for different reasons.
Japan is prone to earthquakes, so buildings are traditionally
seen as temporary; there is no grand tradition of  city planning
like the one Europeans inherited from Rome.  The other cause is
the notoriously corrupt relationship between the government
and construction companies.
Thanks
to Trevor Blackwell, Barry Eisler, Sarah Harlin,
Shiro Kawai, Jessica Livingston, Jackie McDonough, Robert Morris,
and Eric Raymond
for reading drafts of this.
American Gothic
The John Rain Books


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@todo_trev Weird how that works.

@steeve @SpencerHakimian The Biden administration attacked crypto.

@Jmizzle212 They mean after that.

@pauljendrasiak Things are always pretty high tech.

16 yo asked me when SUVs became a thing. I told him they became a thing three times: they were invented after World War II, became fashionable to drive in urban areas around 1990, and became ubiquitous after Obama's ill-conceived fuel economy regulations in 2009.

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@murchiston @pitdesi We're safe; too intellectual.

@SpencerHakimian They're eating the cats. They're eating the dogs. They're eating the tariffs.

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