I think this depends on the industry (as PG speculated). It works in software and other industries with healthy margins. But in industries with slim margins, you see more cutthroat behavior.
I don't think it's a coincidence that Amazon (for ex) has poor working conditions. Retail has always been a slim-margin business, and most of the companies in it are accused of very similar poor behavior. (I don't mean to pick on Amazon, but it's a recent example. And I know some will say AWS is ok.. but AWS likely has much higher margins than the retail side.. so it does't really change my point.)
Take any industry.. and the chances are the profit margin is a good indicator of the working conditions.
This isn't to mean that those who start retail (or similar low margin) business are mean people.. but I think the lack of profits necessitates cost control and a focus on efficiency... which leads to poor working conditions (since good working conditions cost money) and decisions people will interpret as mean.
In fact if you look at the history of once hot new industries (automobiles, airlines) you tend to see early cutthroat but fun to work for beginnings, followed by periods of fewer competitors, glamour and even more (if different) fun (think airline pilot/stewardess in the 1960s) followed by more competition, decreasing margins and the jobs kind of sucking. I've done no research on this whatsoever so will likely be shown counterexamples shortly.
Airlines may be a bad example, because they were operating for decades under price control, and most of the airlines never recovered from that mindset. The Amtrak syndrome...
Not just price control, regulation protected them from competitors in multiple ways until the late 1970s. I still think its' a good example. The point is you go through a golden age when everything is easy, competition is minimal to gentlemanly, for whatever combination of reasons
I recently read Zero to One, the Blake Masters / Peter Thiel manifesto (of sorts).
One of the interesting points he makes there is to come down on the side of monopoly. I interpreted it as a one-sided position, but I think they were putting forward this one-sided position to stand in contrast to the typical one-sided view of monopoly you often hear -- namely the other side.
Most people are anti-monopoly. Competition s good! But low-margin businesses are like starved animals that will eat your face off to survive. A low-margin business chases out "nice" founders and executives -- they simply don't make it in that environment. You really do have to be an asshole to extract margin from nothing, because part of the way you do that is by squeezing people including your employees. In tight low-margin industries nice people finish last.
Monopolies -- or at least companies in industries with margins and pricing power like software -- can afford to be nice. They can afford to pay higher salaries, be more tolerant of mistakes, give better benefits, have looser schedules, etc. Obviously there are exceptions as people will be people, but on average these industries tend to be nicer places.
Nicer founders and executives can also make it in these industries, and in fact might have an advantage. People want to work with them.
Monopoly like most other things in economics and ecology is a paradox. You (economically speaking) want your employer or company to be a monopoly, but not others. That's because for others you are a customer, so you want them to be subject to brutal competition.
But there's a dark side to monopolies too, namely that they get lazy. The ideal is probably to have some monopoly and pricing power around, but not too much. Like most things in living systems the optimum is somewhere in between and the edges are both pathological.
I'm not sure I'd call "monopoly" in economy a paradox - after all, it's the very carrot you hang in front of every participant! Market economy basically works by telling everyone to play a zero-sum game and collecting the side effects.
But getting back to your main point, I really like how Yvain summarized it[0]. One quote from the essay:
"Imagine a capitalist in a cutthroat industry. He employs workers in a sweatshop to sew garments, which he sells at minimal profit. Maybe he would like to pay his workers more, or give them nicer working conditions. But he can’t, because that would raise the price of his products and he would be outcompeted by his cheaper rivals and go bankrupt. Maybe many of his rivals are nice people who would like to pay their workers more, but unless they have some kind of ironclad guarantee that none of them are going to defect by undercutting their prices they can’t do it.
Like the rats, who gradually lose all values except sheer competition, so companies in an economic environment of sufficiently intense competition are forced to abandon all values except optimizing-for-profit or else be outcompeted by companies that optimized for profit better and so can sell the same service at a lower price."
(There's more of that, CTRL+F for "under the bus")
Maybe this scenario would work better if it included a significant minority of the workers who took night school machine class, and then took jobs as machinist for a significant raise, leaving a shortage of workers willing to accept sweatshop salaries.
The Yvain example only works when there is an unlimited supply of untrained labor, who can't be replaced with more productive but higher trained workers, or automation.
"
The Yvain example only works when there is an unlimited supply of untrained labor, who can't be replaced with more productive but higher trained workers, or automation."
Isn't this the actual situation for manufacturing workers right now, until we run out of places with desperately poor people?
Even large cushy Silicon Valley tech companies would say that if you have the time and energy left for night school, you're not giving 100% at work, not a team player, not a culture fit, etc.
I can't imagine why sweatshop workers would be allowed a day so short that they had time for eduction, absent regulation or unions.
> The Yvain example only works when there is an unlimited supply of untrained labor, who can't be replaced with more productive but higher trained workers, or automation.
You'll find plenty of low skilled people most anywhere in the world, even in first world nations due to welcoming immigration policies.
Hm. A monopoly doesn't have to worry about losing business nor employees to the competition. They can squeeze both for the last drop of blood.
ATT was a monopoly for years. They underpaid, charged for pathetic service, and were inefficient to the nth power. Maybe there was cash to be milked by individuals somewhere in all that. Probably executives. But I'm not sure the rank and file had it cushy.
They created a ton. Transistors, solar cells, lasers, satellites, cell phones, LEDs, UNIX and C all came out of that monopoly. That's an unparalleled track record of technical innovation.
With a great deal of government subsidies and grants. Left to own devices, private companies don't do theoretical, long-tail R&D, and you can see this in the fate of Bell Labs under the tutelage of Alcatel-Lucent. Its staff was cut 90% and their projects were subordinated to narrow, short-term commercial objectives with a 3-5 year go-to-market horizon.
Such an environment does not churn out transistors, fibre optics and TCP/IP.
> Hm. A monopoly doesn't have to worry about losing business nor employees to the competition. They can squeeze both for the last drop of blood.
But then again, they also don't have to worry about competition undercutting them. So it's more likely that they'll stop exploiting their employees at some point, if only because the CEO has conscience. But add in some fierce competition, and silly things like conscience have to go out of the window.
>they'll stop exploiting their employees at some point
So far as I know there is absolutely no evidence that this has ever happened. The evidence is all on the opposite side - monopolies become monsters to their workers, to their communities, to their political systems, and to their customers.
The only people they don't become monsters to are their owners and shareholders.
The most beneficial monopolies are Fordist, because they realise that you need to pay workers enough to grease the wheels of consumption. But the motivation there is still exploitative - it's just pragmatically exploitative, rather than ideologically exploitative.
Except the stockholders never gain a conscience, and the CEO is beholden to them, so there's no incentive to stop behaving like a sociopath and stop exploiting employees. Time and again evidence has shown that rich companies are never satisfied with being rich; they always want more.
Private investors still want profit, but hopefully they'd be more interested (because of their larger stakes on average) in less rapacious approaches.
Although, now that I think about it, the key metric here is probably growth. As long as a company is growing, if growth >> margin to be reclaimed by being an ass, growth wins. But when growth =< that margin... there's always going to be pressure (aka Google).
Right, sure, the competition part. But we have no real conclusion we can make about the monopoly part. They may be kind. They may not. And there's definitely still pressure on them to profit. So I'm thinking, not.
The term is monopolistic competition. If you can extract monopoly-like power by not being the only company, but simply the best one, or the one that most closely fits your customers' needs, then you can afford to treat your people well and do right by the community. It's only when you're doing the exact same thing as everyone else that you have to join the race to the bottom.
It gets complicated when competitors start trying to do the things that you do, and that's what prevents you from getting lazy. Monopolistic competitors can never just do the same thing they've always done because points of differentiation can disappear practically overnight. But what they do have is a head start, and if they continue to innovate, they can maintain their lead over other players. An important factor for innovation is attracting and keeping top talent, and you don't get that by treating your employees badly, or being viewed by the public as "evil."
"But in industries with slim margins, you see more cutthroat behavior."
Absolutely. Not to mention in business and industries which are being operated by typically older people who have families and are in fear of losing their job or their business or their house (which is often collateral for loans). It's easy to be a relaxed nice guy if you are a tenured University prof with an office of dusty books. Or a startup guy who has multiple plan b's. [1] A bit harder if you've got outstanding accounts receivable as well as aggravating customers and cutthroat competitors. And the type of run of the mill mediocre people that you typically get to work for you if you are not a "startup".
[1] And let's just put it right on the table here. Anyone who gets a large amount of funding and fails gets their ticket punched and gets another try either working for another startup or perhaps raising for another idea. And actually the larger the failure (and visibility) it's typically good for the next thing someone will do. Edit: Failure in traditional business is failure. It's a negative plain and simple. You end up working for someone in their lackluster business and since you may have lost some of your assets you can't even typically start a new business (and your friends and family are not going to give you an additional money, nor will you be able to get bank loans..)
>I don't think it's a coincidence that Amazon (for ex) has poor working conditions.
I just spent a year and a half working for Amazon, and the recent reports about working conditions were, as far as I could tell, either fabrications, or things that hadn't happened for years.
Working there was great. Yes, I was in the AWS tree, but I also had contact with people in the Retail tree, and didn't perceive any differences there.
Low-wage jobs like fulfillment...I don't know. I'm a developer.
Oh, and did I mention the pay was great? Hard to complain, really.
I personally know three people whose stories are much closer to the NYT pieces than your comments, and they've all only left within the past three years, with the most recent exit being about five months ago. I know two others (in Seattle, it's easy to know many people with an Amazon work history) who had a fine experience, one of whom that still works there. I've interviewed for two positions there myself, one that I declined and one that I did not receive an offer for; one was presented as exceptionally competitive, with the HR rep dancing around a few of the NYT-style topics, and one that seemed much more typical and collaborative.
No, I've not worked there, but all of the evidence at my disposal (your comment included), leads me to believe your Amazon experience is highly dependent on where your work group sits in the Amazon network. To shrug off the stories as potential fabrications seems as intellectually dishonest as assuming the stories of extreme treatment are commonplace.
People who are treated well by systems will generally defend those systems, even if it means rationalizing acts of injustice or cruelty happening just next door.
At the very least, how much a person is willing to question the hand that feeds them can reveal the strength of their character to others.
>how much a person
is willing to question the hand that
feeds them can reveal the strength of
their character to others.
Careful! You are straying into fundamental attribution error territory. Those who bite the hand that feeds them may be in a better position to do so or feel more encouraged by the people they know.
True. I did not mean to say there is a direct correlation (thus the "can reveal") more that criticizing what one perceives as unjust, despite whatever benefits they receive from it, is often noble (strong character). Or at least noble if that person is fully aware of the consequences of speaking out in what they view as the truth.
Note, I believe that Noble does not always equal smart, where smart equals maximizing good, corporeal outcomes for one's self.
The inverse can happen very much though where people that complain the loudest were the exception to an otherwise fine place. What does seem to matter is the percentage and degree of the complaints, and the only way to get the real numbers is with a compulsory, anonymized employee survey.
Agreed. My comment was a response to a supposedly cruel organization vis-a-vis a person's morality, so it did not take into account the inverse as you have supplied.
I believe that once the percentage and degree of complaints meet a certain threshold of systemic cruelty, then my strength of character argument might (might) apply.
Ouch. I deny that my comment has anything to do with strength of character.
I was treated well, and everyone who I had contact with over my 18 months was similarly treated well (with the exception of forcing client developers to go "on call" for server issues that our team knew NOTHING about...that was cruel and unusual, but even that didn't require 80 hour weeks, just the occasional 2am pager beep).
Our branch of the org chart was happier (according to internal surveys) than Amazon at large, but those internal surveys absolutely didn't paint a picture of tons of unhappy people.
That said, I'm sure there are bad managers at Amazon, just as I had an awesome manager. There are just too many people there for them all to be perfect. But the picture from where I stood was honestly as positive as I described.
So don't throw around aspersions of my character when you don't know my situation, or what I observed.
ASIDE from the fact that I DID leave Amazon and sold all of my stock, so it's more like "the hand that fed me for a while."
Hypothesis: People will lie on internal surveys more often if they feel either nothing will be done or an honest response could be used against them. I wouldn't put too much stock in the results of those surveys.
Anecdotal support for hypothesis: Have been told firsthand by several people that they lie on these types of surveys and don't think results are truly anonymous.
I'd love to see a broad study of this across companies, conducted by a third-party organization with no affiliation to any company studied.
In general, I'd estimate anything below 4 (on a 1-to-5 scale) on those surveys could indicate a problem. What if "3/neutral" really means, "This actually sucks but I'm not willing to tell you that because I don't trust you"?
I doubt there are many internal surveys showing "tons of unhappy people" unless employees a.) have no fear of company reprisal, for whatever reason; or b.) have entirely given up on the company and are in open rebellion.
It probably also depends on who your manager is - often the biggest determinant of the work environment. A great manager will defend you from corporate b.s., bureaucracy and politics without you even knowing they are doing it.
I know many highly-competent individual engineering contributors and managers who quit Amazon (Lab126, mobile app store, CreateSpace) and found the NYT story accurate to varying degrees. Several of them were absolutely miserable. One was reasonably content, but still underpaid.
> I just spent a year and a half working for Amazon, and the recent reports about working conditions were, as far as I could tell, either fabrications, or things that hadn't happened for years.
Amazon employs roughly 150,000 people. It's pretty arrogant of you to assume that everyone else must be lying just because the bad things didn't happen within sight of your department.
Pay was great? Really? Maybe it's true for Seattle. I've done an internship at AWS couple years back and I chose not to return for fulltime, while two of my colleagues did. We're all in california and they both left Amazon before this summer. Why? Maybe because they're paid 20% less than I do? And one of them told me most people in his office only got 3% raise in salary each year.
I was an SDE III, and I had some hard-to-find skills. I'm also a crazy awesome developer who they decided they REALLY wanted to come in full time after I'd done a few months of contract work. Total comp was comfortably past $250k/year, counting signing bonus and stock.
I was based in Seattle, though I worked from remote. I was told I could have made Principal within a year if I were willing to move to Seattle. Which I wasn't.
Granted. It actually got me out of the evil mandatory "on-call" experience.
Someone on my team actually quit without notice three days after he was first forced to go through an on-call week. So I don't want to sugar-coat it: It was everyone's least favorite activity.
Cost of living is substantially higher in Silicon Valley/CA than in WA state (maybe not Seattle itself, but in general). So it's natural to have differences in pay. In reality, you and your friends probably made around the same amount after all living expenses were paid, etc...
Basically $60K (or whatever salary) isn't $60K everywhere, it's relative. It's a reason why some "put their time in" working in SV, then move to Nebraska or something for a comfortable living.
Are you carefully reading my comment? I said we are all in California, one of them is in Amazon Irvine while the other is in Amazon Palo Alto. And before you make any further guess, I'm in Redwood City not San Francisco. So there's no reason they should be paid 20% less. In addition, this is just one year after we all graduated, if we keep the same growth rate for 5 years they're going to make 40% less than me. It's just not competitive at all.
As someone who competes against them for talent, and having seen dozens of examples from different parts of their business, Amazon is an extremely competitive employer on the tech side for experienced employees. They typically pay nicely above market
Geography arguments for salary discrepancies aren't compelling. Equal pay for equal work. My work won't be any different if I do it from DC or Des Moines.
That's a nice thought, but this country's economic system is the market. The market price of various kinds of work is absolutely dependent on geography.
I don't think you want this, either. The gravy train in Silicon Valley would halt instantly if the jobs were all remote and engineers in low-cost-of-living countries had an equal shot at them.
I understand where you're coming from (and I counteracted an apparent downvote of your comment), but I don't think you're entirely right. Mostly, maybe, but not entirely.
There is a value in having good people work in the same room. I think it's overvalued, but it's not zero.
And if companies want to hire a top engineer in the Bay Area, they're simply going to have to pay more than if they want to hire an engineer in Des Moines: Competition for good local employees is much higher, and higher competition for fewer resources means that the rate for those resources will go up.
If you're a senior developer in the Bay Area right now making less than $115k, you're not trying hard to get a raise. If you're in Des Moines making $115k, you're in the long tail; the 90th percentile is $108k. [1] The MEDIAN in San Francisco is $115k. [2]
And that doesn't even fully capture the state of the industry, because there are a few employers who go well beyond the median. Most senior engineers I know who are working at one of: Facebook, Google, Amazon, Microsoft, or Twitter, earn over $200k (total compensation, counting stock grants), and many earn closer to $500k.
Des Moines doesn't have major campuses of any of the above employers (correct me if I'm wrong), so the increased salary pressure from the high rolling Internet companies isn't affecting the local market.
Would love it if more big companies would hire remote workers; it would "spread the money" around the country more evenly, they could probably find developers for less, and it would reduce the amount of greenhouse gasses wasted on commuting.
But until they do, a significant fraction of the best developers will congregate in the Bay Area, where they can potentially pull in $500k/year instead of a pathetic $95k. Because good developers are worth that much in value to the company, and any good developer making less than $120k is being exploited.
I agree with you on this part. But maybe not completely remote. Last year, my company open a dev center in midwest just beside a high rank university. The result is pretty positive. There's great supply of high quality college new grads and we can spend 20% less than bringing them to the bay area. And the living cost there is at least 50% lower so they're obviously happy with it. An even better part is that in the bay area every week (if not every day) there gonna be some recruiter contacting you for different positions while there's really not much competition beside the university in midwest. The only issue we're having now is that we have a hard time to hire "real" senior engineer who can lead the team. But if all you need is some application level work, I think it's a good bet.
Offtopic and anecdotal but two people I knew at Amazon quit shortly after joining. One developer, after being at Amazon Music for 3 months and expected to work 80 hour work weeks, was asked by his boss to come in on the weekend to finish something up, that was the final straw for him.
Margins are probably not the main factor. Even in spaces with large margins, if the market is winner-take-all, then bad behavior from founders can make the difference. Think Uber playing dirty tricks on Lyft. It's not about margins, it's about building a monopoly and eliminating the competition.
I've always said that if I was in another industry, I'd be out of business a long, long time back. The traditional brick and mortar business people I know have to be ruthless. They negotiate like they'll run out of money tomorrow and never leave cash on the table. And they can't understand why I won't haggle or force my employees to work longer hours.
The tech industry is heavily insulated from what passes for 'normal practice' in most businesses.
Although on the surface this sounds plausible and I definitely think it explains why some companies have poor working conditions or psychopathic bosses. I don't think it necessarily explains why some have good. At least not in the context that pg is talking about.
Many startups don't have any margins at all. They might have growth but they are fundamentally unprofitable.
Instead I believe it's more to do with the fact that they are funded and don't have to worry about margins to begin with. (They might have to worry about growth though)
Totally. For businesses that scale well (= tech startups) it's safe to be nice without jeopardizing much. It's a lot easier to give software away for free in hope of a future return than it is, lets say, a car.
The easier it is to give away your product, the nicer you can probably afford to be and possibly, the more scalable your business is?
More traditional businesses, who depend on production facilities, supply chains, etc. have higher overhead costs and will not be in the position as often to give stuff away for free.
Companies choose their profit margin. Amazon, at one point, had to decide to become like Nordstrom or like Walmart. They chose the Walmart route.. which is a focus on lowering prices (and therefore low margin).
Zappos may be in retail, but they are not low margin. Their gross margins (revenue - cogs) are roughly 35%. Compare that to Nordstrom - 37.5%. And coincidentally, Nordstrom also has a reputation for good working conditions.
Trader Joe's seems to as well, and that's with razor thin grocery store margins. Employees are always so happy and helpful there. It's like night and day compared to places like... Safeway.
I would rather work as a retail employee at Costco than as a warehouse employee at Amazon. But I'd probably rather work at the job I'm most qualified for at Amazon than at Costco, because it would be better for my resume and presumably have more interesting technical work.
It is, but it's still in Vegas and it looks like the original CEO has pretty good control over the company. My friend had interview there back in college and they seems kinda over-obsessed with "culture fit". I mean when most companies talking about culture fit that basically equals to "we wanna hire nice people", but Zappos seems has really restricting rules on that part.
Anecdotally, I don't agree with the hypothesis that culture fit means they want to hire nice people. I've worked in a few places where people needed to be, for example, tough, tricky, bitchy, to survive.
I think part of the reason I got my job is because I euphemistically referred to "successfully implementing technical solutions in a complex political environment", and everybody knew exactly what I was talking about.
Was Amazon in a low-margin industry when they were a startup? I don't even remember what their initial market was -- selling old books or something like that. Did they even foresee what they would become?
I like to read pg's essays (they are what drew me to HN), but this one needs more examination of whether the statement "Obviously one case where it would help to be rapacious is when growth depends on that. What makes startups different is that usually it doesn't" is really true or not. Some of what I have read in news articles linked to from HN suggests that, say, Groupon or Uber or Airbnb or a variety of other startup businesses may all have done things that look rather rapacious to me to raise their growth rate. Some of those companies are still doing well, and some less so, but the companies we hear about here are all doing better than the companies started the same year that we never hear about, so we need to test pg's proposition by looking at startups that fizzle out soon after they are founded. Perhaps the highest level of niceness is found among companies that never gain high growth rate at all.
Good point. Airbnb, Uber, etc. certainly didn't go out of their way to be "nice" to taxi commissioners, hotel lobbyists, etc. The new guys felt they had a better way of doing business and rushed it into new markets as fast as they could, tolerating lawsuits and injunctions along the way.
My company budgets a small amount for customer appeasement each month. The funds can be used toward discounts, expedited shipping, upgrades, etc. We can usually start every support response with empathy as opposed to protecting ourselves from loss. The result is a focused work environment, happy customers, no burn-out, no venting, no therapy bills, and a reminder to keep things this way by continuously improving the product(s).
This doesn't apply completely, IMO, to startups with early enterprise deals. If you negotiate those in ways which are "too un-rapacious", you can be starved for capital, be ignored by the customer (because it's insignificant as an expense...), and turn into a consultancy by necessity.
It's not exactly being power-mad, but definitely putting the interests of your company (which, at the time, might just be you!) first in negotiations. Not being a dick, but being assertive, and having a decent BATNA in negotiations (i.e. being willing to walk away).
I'd totally agree with what pg said here for consumer or low-marginal-cost products. Absolutely disagree for professional services. Disagree moderately for the somewhat-marginal-cost world of enterprise deals (or hardware).
I think there's something more to this which has to do with marginal cost, not just growth curve.
Fwiw I was doing an enterprisish biz before and am now doing consumer. Maybe matching personality types with these is worth doing.
Also I was stressing about the enterprise side of the biz when I sent this email. The enterprise biz has no chance of growing hyperlinearly because the market is too small and the customers are very hard to reach. (TV stations)
My personal sweet spot is well-resourced people with hard problems (but not unique-to-them, or self-created problems), either individuals or large organizations. "Professionals" might be better than Enterprise, since they purchase products themselves rather than through purchasing departments, at least for initial buyers as a startup.
My dream business would be the software/service equivalent of Snap-On Tools. Not Craftsman (home/high-end value), shitty cheap shit from the dollar store, free stuff included with furniture, and also not NASA custom $30k screwdrivers.
Sounds like github/gitlab would be a close to what you are describing. Hosted quickbooks. Hosted turbotax for accountants. Payment processing like square for small businesses.
None of those are really hard tech problems, though. They can be hard at scale (like FB has hard infrastructure problems at scale), but they are more about domain expertise, initial sales, and having the right mvp and a path to small number of initial sales, IMO.
If only most venture capitalists were nice, or were looking for nice founders. In my experience, and I've met probably 250 VCs over 20 years, it's not the case. Especially if they've had a few drinks, when the truth is revealed.
There are exceptions, always. But too many are not really that nice. They'll put on an act to pretend they're nice, but they're not.
I would agree with this, people who's primary responsibility is shuffling money around, making deals, and dealing with people who actually produce something as if they are game pieces on a board tend to be a bit different. I wonder if this personality type is drawn to that role, or if it is learned.
It seems to be a fairly common pattern for a startup to offer a bunch of stuff for free, or to ask for very little in return. This startup then attracts a bunch of users, and for a while everything's good.
Then the growth starts to slow down. The company needs to continue growing financially, to appease investors and so on, so they start to ratchet up their monetization. User experience and product quality begin to suffer.
By this time the company is usually pretty entrenched, with some combination of having driven all their competitors out of business or by having a strong network effect. Users will want to leave, but they don't have any other viable options.
> It seems to be a fairly common pattern for a startup to offer a bunch of stuff for free, or to ask for very little in return. This startup then attracts a bunch of users, and for a while everything's good.
That's less about being nice and more about business development in a time where people are very hesitant to spend money.
If a startup offers something for completely free, it's never out of altruism.
The startup scene has it's own definition of startup.
Some, but not necessarily all of the following apply:
1) Younger people
2) Educated (can be self taught)
3) College grads or dropped out of college to do a startup
4) Have more to gain than to lose by participating in a startup. (Little assets, [1] not leaving a traditional job but perhaps going from another "startup")
5) Working primarily with other people's money
6) Has the interest and/or money of "angels" "Vc's" or "incubators".
7) Doing something that could get big and stands a high chance of failure. (In other words, not starting an Italian restaurant that's going to be a single location sauce and cheese place)
8) Located or able to travel and possibly relocate to a place that startups are typically. (Silicon Valley, NYC or the other hubs..)
What am I missing? (Please fill in the other things I am almost certainly forgetting).
[1] Unless they have family money or have done a previous startup where they hit the pay window.
Those are aspects of startups but not a definition. The best definition I think is Paul Graham's: "Startup = Growth" [http://www.paulgraham.com/growth.html]. There are many food delivery services that are just local businesses, not startups. The difference is growth, a startup looks to expand to multiple cities, states, and countries.
I don't disagree with what you are saying and I probably should have not used the word "definition" in that sentence.
However the reason I used "definition" was because what comes to mind with SCOTUS and porn,[1] that is "we know it when we see it" in a sense that it can't really be defined in the traditional sense and probably never will be.
Paul would strongly disagree with the idea that a startup is defined by a random list of traits and that you "know it when you see it". He very clearly defines a startup as a company aiming for (and potentially capable of achieving) a very high rate of growth.
I think it's quite reasonable to make that argument. The idea that high growth vs. low growth as an attribute matters more than the "industry" a startup operates in. So all high growth companies are more like each other, than high and low growth companies operating in the same industry. Therefore startups (i.e. high growth companies) are their own industry.
Nassim Taleb makes a similar argument about size. He says that small things and big things of the same type are more different than they are the same. They should be grouped by size rather than by their nature.
"As I've written before, one of the things that has surprised me most about startups is how few of the most successful founders are like that. Maybe successful people in other industries are; I don't know; but not startup founders."
I know that "old school" world quite well and have for a long long time. There is a big difference between being, in general, fresh out of school working with your peers of highly motivated and typically educated and skilled people (that you additionally socialize with) vs. being in an environment where you have your own money on the line, no margin for error, and people are constantly doing stupid shit that threatens your livelihood. [1] With all due respect to PG afaik he has never operated in this world. But it is a world that does exist and there is a reason for it as well.
[1] Note I am not talking about the corporate world and obviously goes without saying that there are many people running entrepreneurial companies that aren't like the caricature which PG describes.
Maybe founders are nice to Paul Graham but many of them are total douches to their employees. I don't recognize the industry I work in by his description.
So if you're a founder, here's a deal you can make
with yourself that will both make you happy and
make your company successful. Tell yourself you
can be as nice as you want, so long as you work
hard on your growth rate to compensate.
Doesn't this imply that if you have less than a "hyperlinear growth curve" you should be a raging sociopath[1]? Fuck that.
[1] Or, to be precise, "a rapacious, cigar-smoking, table-thumping guy in his fifties who wins by exercising power"
Paul's definition of a startup is centered on hyperlinear growth rate. Since his area of expertise is startups, he limited his hypothesis to this group. "Maybe" in other situations niceness doesn't work.
A conversation I had with an institutional investor makes me think niceness works elsewhere too.
This seems like an over simplification. Growth is not just the product, but the people executing. A founder who is giving away too much equity and money early may not have the equity and capital to attract all the talent she needs. Maybe she is more understanding about work life balance and doesn't push the team hard enough. But somebody else does, and this is often winner takes all.
Generally, people will be nice where they can afford to. I have been to cultures and regions, the developed or more well to do, or having enough resources tend to be more "nicer" toward each other. Competition seems to be get better off peoples niceness. Then seems the meta hacking, when people figure niceness can be a advantage and use it for personal, professional gains.
Okay, so "being nice" equates to "offer good value at a fair price", eg don't suck your customers dry. That makes perfect sense.
I do think a little bit of ruthlessness is called for, especially when your most important metric (growth) is coming at the expense of your competitors. Examples abound of this -- and I think that it can be enormously beneficial to study companies that have operated in moral "gray areas", both in how it helped them establish their position in the market, and how it hurt them. (More often than not, the "damage" is a rather superficial PR dent...) Look at Microsoft crushing Netscape, Apple playing hardball with everybody (including their supply chain), AirBNB with Craigslist, then skirting hotel regs, Uber in everything they do. For all these companies, from a consumer perspective, it's hard to argue they don't provide "good value for a fair price," even though their business practices often lead to nerd outrage here on HN.
That being said, a singular strategy of "being nice" (eg, offering good value at a fair price) could be enough for winning customers. Often this seems to happen if your product is so far superior that customers (or users) naturally gravitate towards you. That is how Google got big, and seems to be the modus operandi for social businesses (Facebook, Twitter, etc).
In fact, I think the only place where you can get away with not "being nice" is in extremely bureaucratic customer environments where success is dictated by the skill of your sales team -- the realm of Oracle, government contractors, etc. Those are also very interesting to study, but for different reasons.
Being nice is difficult even when you try to remind yourself every day, like i do with a post-it that has been on my desk for a year now "Be smart, honest and thoughtful". As a "startup founder" I do honestly try to be nice through considering those three items as often as possible. Having said that, there are lots of examples I can think of where I have not been nice and need to do better.
Lets face it: Founders are often young, trying to move quickly, less experienced managing stress, and regularly making mistakes due to all of these things. Some of the biggest mistakes you make are under pressure, and its often as simple as saying the wrong thing.
Personally don't know startups are any nicer than the rest of the world, but they are certainly smaller groups of people, which means you tend to form a tighter relationship with your co-workers / employees (like it or not). In my experienced that is what creates the accountability to be nice, provides people with context and understanding when something doesn't go to plan and ultimately gives others the ability to say things like "Yeah they're nice guys/girls, but pretty stressed out most of the time", which if you took away the "nice guys/girls" part of that sentence when referencing the founders you would just be left with someone who you would probably not describe as all that nice.
Relationships can truly make up for a lot and there are benefits for everyone involved. Advice i often give to founder is: If you can, invest in becoming as real of friend to the people who you work with as you possibly can. It really does pay back, especially when things do not go as you had planned.
I think we need to look at this from economic theory point of view. Being nice and being asshole - both have its own cost and ultimately how you should behave depends on what gives you the most gain. The general theory that being nice always works and has zero cost is probably an emotional view.
Sometime back it was in believed that founders ruthless and openly asshole personality often won the business wars. Everyone wanted to be CEOs like Gates, Grove, Bozos, Ellison and Jobs. And it actually worked for them. Despite of them being assholes (as per various well documented anecdotes) they attracted great talents and they pushed people to do seemingly impossible. But surprisingly it didn't worked for vast majority of other founders. I have often thought about this and my theory is that successful "asshole" CEOs had accumulated lots of credit in fame and money. They would frequently be features on covers with giant headline praising them as super humans. This is the credit that shielded them from consequences of being an asshole. Being always nice has a price: You might end up creating environment where mediocre is perceived as being tolerated, transparency gets some hit, the cultural values you want to push doesn't get as much traction as you hoped and you must constantly find creative ways to wordsmith your statements as opposed to just be honest with plain language. As a CEO you want to reduce this price and shortest path to that is just say and do what you think is the right thing regardless of how other person will feel. Obviously doing this has its own cost. The bottom line is that you can pay the cost of being an asshole if you have accumulated tons of media credit by getting featured on cover stories and tons of PR behind you. But otherwise this can sink you.
My understanding is that it's considered absolutely fine to be an asshole as long as you keep the money coming in. PR helps, but not as much as profitability and net worth.
If you're an asshole and the wheels come off - see e.g. Ashley Madison, and arguably Jobs Mk 1 - you're shark meat.
There was an article back that furthher validated the asshole theory that being an asshole was okay for the greater good of the team. Be nice tobyour employees/team but mean to the enemies. The teams would rally behind the leader attacking the antagonist. Asshole managers brought on the loss of respect from the team and eventual demise.
Quoting from Hesse's Siddhartha about a merchant chiding Siddhartha for a rice-deal he did not complete.
"That's all very nice," exclaimed Kamaswami indignantly, "but in fact, you are a merchant after all, one ought to think! Or might you have only travelled for your amusement?"
"Surely," Siddhartha laughed, "surely I have travelled for my amusement. For what else? I have gotten to know people and places, I have received kindness and trust, I have found friendship. Look, my dear, if I had been Kamaswami, I would have travelled back, being annoyed and in a hurry, as soon as I had seen that my purchase had been rendered impossible, and time and money would indeed have been lost. But like this, I've had a few good days, I've learned, had joy, I've neither harmed myself nor others by annoyance and hastiness. And if I'll ever return there again, perhaps to buy an upcoming harvest, or for whatever purpose it might be, friendly people will receive me in a friendly and happy manner, and I will praise myself for not showing any hurry and displeasure at that time."
Nothing groundbreaking here, just reframing (yet again) how to think about success so that founders focus hard on growth rate. Good stuff.
Sometimes I wonder if PG is targeting/excluding audiences by speaking in a mathy way.
"If he was bad at extracting money from people, at worst this curve would be some constant multiple less than 1 of what it might have been. But a constant multiple of any curve is exactly the same shape."
This makes perfect sense to a native math speaker but takes some effort for others to digest. I wonder if that is deliberate or just the way he talks.
It's always been a pet peeve of mine that people depend on the medium of text so much. My impression is that much of this information could have been better communicated with graphs. Better yet - interactive graphs!
The only real reason why someone would stick to text that I would think of is that they don't have the time, skills or resources to use something else. Maybe pg doesn't _personally_ have these things, but I'm sure that there are tons of designers who would love to help him out.
I think this math also explains why equity disputes, often caused by someone wanting 10-50% more, are a waste of effort. Again, it's case of optimizing the weaker multiplier.
As much as I enjoy reading Paul Graham's work, this post is quite derivative. This is a specific case of "karma" or general rule "what goes around come around".
Not being a douchebag is a virtue in all aspects of life. As some might say, it is practically newtonian.
Of course for a company which has a monopoly in the market these laws don't apply - you don't to have carry about the users nor workers because they have no other place to go.
Paul seems to be missing one key factor: that profit can be reinvested into the company to increase growth. The converse is also true: the lack of profit might cause the founders to slow growth because they cant pay the bills. An example of the former was a talk at startup school IIRC where a founder of Stack Overflow stated how they used a lot of money to scale out their servers into different verticals (and conquer new markets before competitors).
It's all to easy for nice founders to turn into full blown sociopaths. Maintaining empathy, integrity, and balance takes alot of work once things grow (or fail).
Isn't that just "Be user centric first, be profit centric later"?
I often see companies that once felt "nice" become "un-nice" later on. For example, I recently tried to use AirBnB again after some years of absence. It was horrible. In the old days, it felt like a well spirited user centric place. Now they act like a power-drunk, arrogant and dismissive bully.
The reason startup founders can safely be nice is that making great things is compounded, and rapacity isn't.
So if you're a founder, here's a deal you can make with yourself that will both make you happy and make your company successful. Tell yourself you can be as nice as you want, so long as you work hard on your growth rate to compensate. Most successful startups make that tradeoff unconsciously. Maybe if you do it consciously you'll do it even better.
This captures why I prefer Silicon Valley to Wall Street. In Wall Street the assumption is zero sum - one dollar either goes to me or you, but not both. In Silicon Valley there is the illusion that you, your employees and your customer can all win. Whether this is true or not, it makes for a healthier work environment, and PG helps explain why it is true for startups. (Nobody at Wall Street grows 5% a week)
I don't know, this feels like confirmation bias. When PG talks about founders being "nice", nice to whom? Their VC and advisor? Sure. Customers? Sure, hopefully.
But as we go down the line I'd argue that startups demonstrably aren't "nice": what does Uber pay drivers again? In fact, what startup in the task economy is "nice" to their workers?
When your startup holds meetups at bars, you're not being nice to marginalized groups that don't do well in these settings. When you haven't examined your hiring practices you're not being nice to the people you've "culture-fitted" out of your organization.
I like this vision, and I like the math. I'd just hope founders cast a wider net of niceness.
It could be that the new people in charge are introducing the shift in policy. It may give the impression to earn more, but as PG shows, this is a false impression as long as growth is steady. Like PG I also think that it hurts gowth.
It only talks about customer pricing and there is a lot more to it than that. On overly nice founder might have trouble of disposing of a bad employee, which could destroy the culture or destroy the product. They might accept worse investment terms by being nice to investors which might allow themselves to be removed.
So, in terms of not overpricing the product, there is a valid discussion to have. But in terms of being a pushover, that's a bad thing. Often nice people get taken advantage of. So ther needs to be a clear differentiator between nice pricing/marketing and being firm and leading from the front. A founder needs respect from their team and nice might not make that happen.
Yes, if you define "nice" as being a pushover and conflict-avoider who would rather destroy the company culture than confront a problem employee, then yes, it's easy to be too nice. Try defining "nice" as a willingness to sacrifice your own interests for the interests of others and the essay will make a lot more sense.
When your startup holds meetups at bars, you're not being nice to marginalized groups that don't do well in these settings. When you haven't examined your hiring practices you're not being nice to the people you've "culture-fitted" out of your organization.
Freedom of association covers this case. If Company A irrationally discriminates systematically against any competent group, Company B can hire members of that group at a discount and beat Company A on labor costs. As companies C, D, E, etc., figure this out, their demand bids up wages, and everyone wins except Company A.
But no. Freedom of association is biased against "marginalized" groups—an ever-expanding set that seems to be converging on "anyone who isn't a normal white (or maybe Asian) male". In the land of the free, "freedom" means "your company can hire whom it pleases, as long as the demographic pattern of those hires pleases me."
It's not the job of companies to make "marginalized" groups feel welcome, or to be a good "culture fit" for anyone in particular, unless you (and the US Federal Government) make it their job. Which it seems you're only too happy to do. Destroying freedom of association? Apparently a small price to pay.
You seem to have a particular political axe to grind. Fair enough.
> It's not the job of companies to make "marginalized" groups feel welcome, or to be a good "culture fit" for anyone in particular, unless you (and the US Federal Government) make it their job.
That would be the Civil Rights Act of 1964 which makes it illegal to discriminate on the basis of race, color, religion, sex, or national origin. Yes, it is your company's job to ensure that you are hiring fairly across all marginalized groups.
You are free to "associate" with whomever you wish, at all times. But when through seeming coincidence some 96% of tech jobs are held by men I'd say there's something larger afoot.
My theory is sexism. It provides a testable hypothesis that has been proven multiple times. It makes predictions on other effects we'd see. Those have also been proven.
That would be the Civil Rights Act of 1964 which makes it illegal to discriminate on the basis of race, color, religion, sex, or national origin.
That's the one. It seems like an obviously good idea. Are all seemingly good ideas actually good ideas?
But when through seeming coincidence some 96% of tech jobs are held by men I'd say there's something larger afoot.
Through what seeming coincidence are 100% of NFL player jobs held by men? Or 80% of health-care jobs held by women?
My theory is sexism. It provides a testable hypothesis that has been proven multiple times. It makes predictions on other effects we'd see. Those have also been proven.
Sexism is (a) not mutually exclusive with group differences and (b) is, in many of its claimed forms, wildly inconsistent with many observable facts. As an exercise, I suggest you try making a list of such facts. You might start by listing job categories dominated by women. (I'll get you going: health care, day care, education, publishing.) As a follow-up, try listing areas where men are objectively worse-off than women. (Maybe start with: homelessness, intellectual disability, autism, workplace fatalities, imprisonment, lifespan.)
If you scratch most supposedly definitive examples of unfairness caused by sexism, you'll find some variant of the Blank Slate hypothesis underneath. Once you admit the possibility that men and women might not be blank slates, many of the patterns that appear to be "sexist" suddenly make sense. For example, many people assume that women and men have the same innate aptitude and inclination for "tech" (broadly defined). From this point of view, any deviations from "equality" (i.e., proportional representation) must derive either from overt sexism or from an endemic sexist culture. But when you accept the possibility that men and women may differ in more than stature and genitalia, suddenly it's not so clear.
What's yours?
Due to a combination of genetic and non-genetic differences, different groups are systematically different, and have different aptitudes and inclinations. Group differences lead to a first-order effect: all NFL players are male because all qualified players are male; some majority of those inclined to health care are female. The preponderance of a particular group also leads to a group culture reinforcing group identity. This leads to a second-order effect: female health-care workers create a feminine culture, attracting further female workers (while repelling male workers). This latter effect is sometimes called "sexism", but it's an inevitable consequence of human nature. Efforts to fight it will (a) cause massive collateral damage while (b) not working. (Has the Civil Rights Act of 1964 brought racial and gender harmony? It seems to me that in many ways things are worse than ever.)
I'd guess we actually agree on many things, and in particular we want many of the same outcomes—or, at least, I want a subset of the outcomes you want. Let's say I want O and you want O + O'. Included in O is people of all races, colors, religions, genders, and national origins living prosperous, fulfilled lives free (as much as possible) of conflict and strife. Included in O' is the Civil Rights Act of 1964.
Often (as with the Civil Rights Act) the intent of policies in O' is to achieve outcomes in O, but I believe that not only does O' not achieve O, it frequently achieves not-O. Believers in O' would rather wreck college athletics with Title IX, or wreck the black community with welfare, than admit that O' doesn't achieve its stated goals. That would lead to their being accused of "sexism" or "racism", and O'-believers are as eager to avoid such accusations as they are quick to deploy them against their enemies. (Whereas I don't care, because I see them for the Orwellian terms of abuse they are. Just call me a "crimethinker" and be done with it.)
>Once you admit the possibility that men and women might not be blank slates, many of the patterns that appear to be "sexist" suddenly make sense.
I don't know of many people who assert that people are blank slates, they just take equality as the null-hypothesis until they see evidence to the contrary.
And I'm not sure what you mean by "suddenly make sense". Differences caused by discrimination also "make sense", the question is which is the better assumption. I think it's unhelpful to assume innate differences, because that assumption encourages discriminatory differences, and so confounds observation.
>Let's say I want O and you want O + O'.
People don't necessarily want the Civil Rights Act, they just think it's necessary to kick us out of the local maxima of self-reinforcing bias. Ideally, all the protected classes get their chance, and over time people come to realise they're actually equally good at most things, and then the act is no longer necessary.
>Has the Civil Rights Act of 1964 brought racial and gender harmony? It seems to me that in many ways things are worse than ever.
Cultural change is a slow process, but everything I've seen suggests that things are definitely far better now than they were in 1964. Do you have any evidence to the contrary?
>Believers in O' would rather wreck college athletics with Title IX,
Personally I don't think women's leagues are an ideal solution, and I'd prefer a tiered unisex system that encourages competition at every skill level.
>or wreck the black community with welfare, than admit that O' doesn't achieve its stated goals.
Poverty traps are caused by economic policy, not anti-discrimination policy.
>Efforts to fight it will (a) cause massive collateral damage while (b) not working.
Do you have any other examples of this "massive collateral damage", because I'm not finding your examples particularly compelling.
> I don't know of many people who assert that people are blank slates, they just take equality as the null-hypothesis until they see evidence to the contrary.
You've not been paying attention to the media then. But even a "null hypothesis" of equality is indefensible given the facts. Everything heritable is correlated to a lesser or greater extent, that's just how genetics works. Pretty much anything you can think of a measure for - height, weight, IQ, myers-briggs personality traits, religiosity... - will have different averages for different sexes. It would take an extraordinary coincidence for job performance at some particular job to be uncorrelated with sex.
> And I'm not sure what you mean by "suddenly make sense". Differences caused by discrimination also "make sense", the question is which is the better assumption.
> I think it's unhelpful to assume innate differences, because that assumption encourages discriminatory differences, and so confounds observation.
Assuming that any difference is evidence of discrimination is equally unhelpful. If you want the truth you can't assume one way or the other; you need to consider all the possibilities.
> Poverty traps are caused by economic policy, not anti-discrimination policy.
It can be both. Some anti-discrimination policies (e.g. having black students taught by black teachers) have made things worse for those they were trying to help. And I think those mistakes largely happened because the people involved were unwilling to even consider the possibility of innate differences.
> Do you have any other examples of this "massive collateral damage", because I'm not finding your examples particularly compelling.
Compelling (at least to me), relevant-to-here example: it's illegal in the US, and possibly elsewhere, to use an IQ or similar test in hiring (without doing an expensive study that large organizations may be able to afford but startups generally aren't). This is foolish; it damages the ability of companies to hire the best person for the job, dragging down the whole economy.
The Uber example is a balance between benefiting customers and drivers. If the prices are too high, there won't be enough riders and if the prices are too low, there won't be enough drivers. There is a balanced price where the supply of drivers and riders is equal and fluctuations in this balance are seen in the surge prices. If Uber's share of the ride price went up, then the accusations of underpaying drivers would be more justified.
I think it can actually mean something. Often times you'll get folks who aren't used to the pace of startups. They think they're coming into a nice cushy gig. Startups are cut throat. Some folks just aren't cut out for that. They'd be better off going to work for Google or Apple.
Isn't Uber a bad example? Their drivers have zero leverage because they require very little training and there is a high probability they'll be replaced in 5 years with self driving cars.
But take the IT industry. I just saw a startup offering unlimited Amazon books, unlimited Starbucks coffee, half day Fridays, zero cost health care, and remote work, all in an attempt to attract employees.
I'm not saying the Uber drivers should all go into IT, but there is a shortage of business administrators, educators, and health care workers in this country (and I'm sure lots of other fields).
It's a bad example because they are in the customer service business. Happy workers == happy customers.
Uber's technology isn't novel and will be replicated. Robot cars will probably make them a commodity. Alienating the frontline is selling the future.
Before Wal-Mart adopted a business model dependent on government subsidy of the workforce, they paid well and gave even part time workers significant discounts on stock purchases. When that stopped, and they took the asshole route, the shopping experience turned into the current state -- a few steps away from DMV.
Why is that a bad example? I think it's the perfect example of where you'd have to be nice to pay well.
There's no competitive advantage to paying your drivers well, there's no legal compulsion to pay drivers well, the only reason to pay your drivers well is to be nice.
Your example is bad because the reason all those incentives are offered is because IT workers are in demand and so market forces are forcing employers to offer lots of benefits. Not because they're nice.
Under isn't doing it for niceness, but to entice drivers into system ensuring the customers quick service, and driver's a minimum lucrative compensation during the time they are building customer base. It is same as first ride free, to attract people into system. Once you have critical mass of driver's and customers, they'll optimize for profit.
I've long thought of being nicer as coming in two flavors: increasing how nice you are to those you don't like (love your enemy" and increasing, as you put, the net of niceness (classifying less people as your enemy).
That of course has a very simple view of niceness: you view people in only two categories. But I think it generalizes nicely to the nuanced groups people interact with: make the core group bigger or just be nicer to everyone. Of the two, I think the second is the hardest.
I'm glad the math works... but to me, the reasons to be a "nice" founder are not financial. Instead, I believe it to be good because it will guide your decisions in ways that build a positive work environment in which creative, intelligent people want to work. That, in turn, will support the growth that is desired for the business.
Not-nice founders will likely build less friendly work environments, which will build poor performing teams, and slow down growth.
Although I cannot prove this, I have to believe that the added growth from a good working environment will at least balance, if not surpass, growth forced out of non-optimal work environments.
Is Linus Torvalds a founder who was too nice by pg's critera?
He created something that people want, made it grow, etc, but he let other people capture the value and did not focus on securing a superlinear financial return for himself.
Just musing that "growth" we are talking about is really the growth of the slice of the pie owned by the equity holders in the startup. Being so nice that you let your users or employees capture the value created by the product and don't get your superlinear return would seem to be too nice as a startup founder.
This formula does not take into consideration game theory. How fast you grow also depends on how fast your competitors are growing. Being #1 in an industry, ends up being a massive difference from being #2.
But the foundation of convincing investors is to seem formidable, and since this isn't a word most people use in conversation much, I should explain what it means. A formidable person is one who seems like they'll get what they want, regardless of whatever obstacles are in the way. Formidable is close to confident, except that someone could be confident and mistaken. Formidable is roughly justifiably confident.
Even if PG is wrong about the effects of behavior, every startup is still likely to fail. So being mean just means odds are a mean person is likey to wind up failing and an asshole.
It seems to be JavaScript only so the text is all there ready and downloaded, and hidden with JavaScript.
Is it a page load time thing? Has testing shown that a button like this causes people to be more likely to read the article om mobile? Or something else?
Yup, we have to motivated to change the world if it is. Otherwise when we all think about the money, the driver of excellence will become less and less. Same thing happened on me when I am driven to make something to get money. I don't want money so I quit. Now I am creating something that people want, not just creating money
If someone could answer, when a startup starts to exponentially gain traffic (and the server costs start going up), how does the startup maintain their servers and purchase new instances (say the startup is running EC2 ones)? Will the startup start taking on debt or will it look for funding or both?
If you want to get it right, before a startup gets successful, predetermine a fixed % of free equity pool to be shared amongst all employees,and include that as a condition when fund raising.
I suppose the leadership team at Uber would be the outlier (at least the media would have us believe)? But then again, perhaps most of them aren't "founders" but hired guns.
It's a fascinating essay, but being "nice" isn't exactly the same as under-pricing your product early on to gain traction. In the enterprise space, being cheap may not win you much love at all. Being faster/better/easier is the key.
Even early customers will pay more if you've got a genuinely better solution to their problem. Nice may translate into A+ customer service or features. But saying "I'm cheaper" is often seen as the hallmark of the weaker product, masking later costs and inefficiencies down the road.
> because so long as he built something good enough to spread by word of mouth, he'd have a hyperlinear growth curve.
Startups are not a meritocracy. The marketplace is too crowded, so any startup founder who has an edge will take it. How do you get word of mouth? By "growth hacking" and leveraging privileged personal connections, both of which I've seen happen time and time again from even YC companies.
> By "growth hacking" and leveraging privileged personal connections, both of which I've seen happen time and time again from even YC companies.
This isn't always that beneficial with the tech scene being largely an echo chamber. Compare Meerkat and Secret to Facebook and Snapchat. Meerkat and Secret got a lot of hype from the tech crowed and investors but neither achieved any real word of mouth growth. Facebook and Snapchat on the other hand both had significant traction before they were noticed by investors (Lightspeed, one of the first investors in Snapchat learned of the company through one of its partners' daughters).
> Compare Meerkat and Secret to Facebook and Snapchat.
Fair counterpoint, although it raises the question on what is considered "word of mouth." Both Meerkat and Secret had an absurd (and unwarranted) amount of coverage on Twitter and tech blogs.
In Silicon Valley, that's considered "success" for a startup.
> Fair counterpoint, although it raises the question on what is considered "word of mouth."
The question is whose mouth are the words coming out of and what are they actually saying. So much of the talk about Meerkat and Secret was "this is interesting" and not "I'm using this and you should too."
> The marketplace is too crowded, so any startup founder who has an edge will take it.
That also seems like a good reason to be nice. If you are nice to someone, it puts both you and that person ahead; in a crowded market, that adds up to being the leader of the pack. If you are nasty to someone, it puts both you and your target behind (there is an opportunity cost to being nasty; you're not spending that time being nice). You'll take your target down, but you'll also end up at a disadvantage relative to someone who just stayed out of it.
If you've ever played multiplayer strategy games like FFA Starcraft or Civ 5, you'll notice that the optimal strategy is usually to sit back, turtle up, and work on your infrastructure while everybody else kills each other off. Then when you have an overwhelming force, crush everyone who's left. Players who come out of the gate aggressive usually get taken out or weakened enough that one of the turtles can finish them off, even if they are very skilled.
> Players who come out of the gate aggressive usually get taken out or weakened enough that one of the turtles can finish them off, even if they are very skilled.
Unless they win against other aggressive players and manage to secure additional resources. Late game often turns into logistics game, and if while turtling up you didn't pay enough attention to expand, you'll get starved out of resources and killed.
But I agree with the other part of your post. Moreover, by being consistently nice to people you signal your willingness to cooperate (as in Prisoner's dilemma), which makes other more likely to cooperate with you, leading to better outcome for all parties involved (as long as you're good at avoiding defectors).
The iterated prisoner's dilemma's optimal solution is tit-for-tat, which is a "nice" strategy in that it never defects first. In game-theory tournaments where bots play off an iterated prisoner's dilemma against multiple opponents, the "naughty" strategies get crushed because they eventually encounter a provocable strategy and get caught in a defect loop, running themselves into the ground while the "nice" strategies dominated. This is the situation closest to the startup ecosystem. See eg. The Evolution of Cooperation:
"Privileged personal connections," perhaps minus some of the negative connotations, seems to be among the chief selling points of going into an incubator like YC. I remember seeing Sam Altman tweeting something a few weeks ago about the latest batch raising $220+ MILLION dollars. Those are some hefty connections.
Its ludicrous to say anything good enough to spread by word of mouth will have hyperlinear growth.
Take any group of startups with a product. Now objectively evaluate whether they have a 'good' product. Most people can't objectively evaluate anything, they have a status quo bias. But most people will be able to think of some products that they thought were good and mentioned to their friends and then amazingly didn't get 'hyper-growth'. Sometimes the most innovative products and services are ignored or even hated just because they go against existing belief systems.
As an venture investor, I would prefer my startup CEO's to be nice. Easier to manipulate nice.
As an entrepreneur, I've seen many situations where investors dump the founder, all nice and reasonable while they stick the knife.
There's room at the top they're telling you still
But first you must learn how to smile as you kill
If you want to be like the folks on the hill
- Working Class Hero, John Lennon
In my experience, most people are nice. But be on guard, and remember that execution and results trump everything.
Nice people give up more equity than they should and trust the people with the money.
If you really want personal success, you need to show strength, not be 'nice'. Otherwise, the only person you will be making successful are the venture capitalists.
I've seen this time and time again: many venture capitalists feel that new founders haven't paid their 'dues' and don't deserve to have a share larger than essentially an employee.
There should be statistics on YC companies: What percentage of founders actually end up making a significant amount of any buyout.
I don't think it's a coincidence that Amazon (for ex) has poor working conditions. Retail has always been a slim-margin business, and most of the companies in it are accused of very similar poor behavior. (I don't mean to pick on Amazon, but it's a recent example. And I know some will say AWS is ok.. but AWS likely has much higher margins than the retail side.. so it does't really change my point.)
Take any industry.. and the chances are the profit margin is a good indicator of the working conditions.
This isn't to mean that those who start retail (or similar low margin) business are mean people.. but I think the lack of profits necessitates cost control and a focus on efficiency... which leads to poor working conditions (since good working conditions cost money) and decisions people will interpret as mean.