Founders - #277 Paul Graham's Essays Part 3

Starting point is 00:00:00 How to make wealth. There are a lot of ways to get rich, and this essay is about only one of them. This essay is about how to make money by creating wealth and getting paid for it. The advantage of creating wealth as a way to get rich is that it's more straightforward. You just have to do something that people want. Money is not wealth. This paragraph is key to understanding this entire essay. Wealth is the stuff we want. Food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do anything else that you wanted, you wouldn't need money.

Starting point is 00:00:42 Whereas if you were in the middle of Antarctica where there's nothing to buy, it wouldn't matter how much money you had. Wealth is what you want, not money. But if wealth is the most important thing, why does everyone talk about making money? It is a kind of shorthand. Money is a way of moving wealth, and in practice, they are usually interchangeable, but they are not the same thing. The people most likely to grasp that wealth can be created are the ones who are good at making things, the craftsmen. Their handmade objects become store-bought ones, but with the rise of industrialization, there are fewer and fewer craftsmen. One of the biggest remaining groups is computer programmers. A programmer can sit down in front of a computer and create wealth.

Starting point is 00:01:25 A good piece of software is, in itself, a valuable thing. Programmers literally think the product one line at a time. It's also obvious to programmers that there are huge variations in the rate at which wealth is created. At ViaWeb, which was Paul's startup that he sold to Yahoo, at ViaWeb, we had one programmer who was a sort of monster of productivity. I remember watching what he did one long day and estimating that he had added several hundred thousand dollars to the market value of the company. A great programmer could create a million dollars worth of wealth in a couple weeks.

Starting point is 00:02:00 A mediocre programmer over the same period will generate zero or even negative wealth. Steve Jobs repeated a variation of this idea his entire career. You must find extraordinary people is what he would repeat over and over again. Wealth is whatever people want. That is a concise description of this essay. Wealth is whatever people want. Think about this Y Combinator's motto, which Paul is going to found, I think the year after, a few months after this essay is written. Y Combinator's exist to do something people want. A more direct way to put it would be you need to start doing something people want. You don't need to join a company to do that. All a company is is a group of people working together to do something people want, which is also why there's always limitless opportunities because people always want new

Starting point is 00:03:00 things. A way to think about this is my favorite quote on this is from Richard Branson. A business is just an idea that is going to make other people's lives better. Now he gets to the part of the essay on working harder, which is something that he references a lot in a bunch of his essays. It turns out that there are economies of scale on how much of your life you devote to your work. In the right kind of business, someone who really devoted himself to work could generate 10 or even 100 times as much wealth as an average employee. He started this essay that if you wanted to get rich, how would you do it? And he says, I think your best bet would be to start or join a startup. That's the very first sentence. This is a couple pages later, and we're seeing why.

Starting point is 00:03:37 Main theme, it's really hard to generate wealth inside of large companies. Companies are not set up to reward people who want to do this, meaning work 10 or even 100 times harder. Companies are not set up to reward people who want to do this. You can't go to your boss and say, I'd like to start working 10 times as hard. So will you please pay me 10 times as much? And one of the reasons Paul says that it's hard to do inside large companies is the lack of measurement and leverage. He says to get rich, you have to have leverage. He's not talking about financial leverage, by the way. To get rich, you have to have leverage in the sense that the decisions you make have a big effect. If you're in a job that feels safe, you're not going to get rich because if there's no danger, there's almost certainly no leverage. And then he goes into smallness equals

Starting point is 00:04:20 measurement. That's the second part of this. You can measure the value of the work done by small groups. The opposite of this is why it's hard to generate personal wealth inside of a large company. Starting or joining a startup is thus as close as most people can get to saying to one's boss, I want to work 10 times as hard, so please pay me 10 times as much. There are two differences. You're not saying it to your boss, but directly to the customers, for whom your boss is only a proxy after all, and you're not doing it individually, but along with a small group of other ambitious people. And this line is so fantastic. The people you work with had better be good because it's their work that yours is going to get averaged with.

Starting point is 00:04:59 That is why all of history's greatest founders, including Steve Jobs, say you must find extraordinary people to work with. In fact, you might remember this from episode 208, where this interview of Steve Jobs is being done in 1997. And he says that the founder's most important job, he said recruiting is the founder's most important job. Back to the essay. Extra motivation comes from being in a small group. By selecting that small of a group, you can get the best rowers. Each one will be in the top 1%. That is the real point of startups. You are getting together with a group of other people who also want to work a lot harder and get paid a lot more than they would in a big company. A startup is not merely 10 people,

Starting point is 00:05:37 but 10 people like you. Steve Jobs once said that the success or failure of a startup depends on the first 10 employees. I agree. I'm pretty sure Paul's referencing that same interview that I covered in the book In the Company of Giants back on episode 208. So let me just repeat that real quick. Steve Jobs once said the success or failure of a startup depends on the first 10 employees. I agree. A very able person who does care about money will ordinarily do better to go off and work with a small group of peers. That's a really important part on 275, which is the first episode I did on Paul Graham, when I shared what he would do if he was starting a company now. That part really resonated. I had

Starting point is 00:06:17 a ton of people share it publicly on social media, but also send me private messages about hearing that. And he says, I'm just going to read the second part of it real quick. He says, at every point in the company's growth, I'd keep the company as small as I could. I'd always want people to be surprised by how few employees we had. Fewer employees equal lower costs and less need to turn into a manager. This is the most important point, though. His punchline here, he says, when I say small, I mean small in employees, not revenue. That is very important. He's writing that tweet, I think 15 years, maybe even close to 20 years now, about 15 years after he's writing what he's writing in this essay. This is something you and I talk about over and over again, that the people building these companies, they don't have

Starting point is 00:06:59 20 things or a hundred things that they want you to remember. They have a handful of core principles that they repeat decade over decade. And we see that here. A very able person who does care about money will ordinarily do better to go off and work with a small group of peers. Then he gets into the point of what he means about leverage. For him, technology equals leverage. This is another very important line.

Starting point is 00:07:20 What is technology? It's technique. It's the way we do. We all do things. And when you discover a new way to do things, its value is multiplied by all the people who use it. And he goes into that this is the domain of small companies, right? Small companies are more at home in this world because they don't have layers of bureaucracy to slow them down. Also, technical advances tend to come from unorthodox approaches, and small

Starting point is 00:07:45 companies are less constrained by convention. And I love what he does here. He ties this into no one thinks of Walmart as a technology company, but he makes the point. Sam Walton got rich not by being a retailer, but by designing a new kind of store. Go back to the previous page. What is technology? It's a technique. It's the way we all do things. A few paragraphs later, he ties it in. Sam Walton, the founder of Walmart. No one thinks of Walmart as a technology company. Sam Walton got rich not by being a retailer, but by designing a new kind of store.

Starting point is 00:08:16 Episode 150 and episode 234. If you don't know what Paul Graham is talking about, you will see Sam Walton experiment decade after decade of trying to find a new kind of store and then stumbling on to this idea. It's like, oh, there's a ton of business out there in all these little small rural towns that all the other big retailers ignored. And if you can offer the lowest prices, these people will drive far distances just to save money. It is also a good idea to go and read about the opening of the first Walmart store, the idea that's going to generate, in the future, one of the largest fortunes that a family has ever made in the history of humanity. Starts off with donkey crap and exploding watermelons.

Starting point is 00:08:54 That is not hyperbole. That actually happened. Back to this essay. His idea, very next paragraph, he talks about one of my favorite ideas that I've learned from him. Again, taking a very complex idea and breaking it down to the aphorism level, run upstairs, which means the harder something is to do, the less competition you're going to have. So Paul writes, use difficulty as a guide, not just in selecting the overall aim of your company, but also at decision points along the way. At VIAweb, one of our rules of thumb was run upstairs.

Starting point is 00:09:23 Suppose you're a little nimble guy being chased by a big fat bully. You open a door and find yourself in a staircase. Do you go up or down? I say up. The bully can probably run downstairs as fast as you can. Going upstairs, his bulk will be even more of a disadvantage. Running upstairs is hard for you, but even harder for him. What this meant in practice was that we deliberately sought hard problems. If there were two features we could add to our software, both equally valuable in proportion to their difficulty, we would always take the harder one. Not just because it was more valuable, but because it was harder. We delighted in forcing bigger, slower competitors to follow us over difficult ground. Venture capitalists know about this and have a phrase for it, barriers to entry. If you

Starting point is 00:10:06 go to a VC with a new idea and ask him to invest in it, one of the first things he'll ask is how hard would this be for someone else to develop? Now he gets to the point of what's the catch. There is a large random multiplier in the success of any company. Most startups tank. It's common for a startup to be developing a genuinely good product, take slightly too long to do it, run out of money, and have to shut down. And I think this is a good line to end the essay part before I get to the footnotes. The ball you need to keep your eye on here is the underlying principle that wealth is what people want. So few businesses really pay attention to making customers happy. And just two things in the footnote, this last sentence I'll get to in one second is a really good point at the very end of this paragraph.

Starting point is 00:10:50 There are many senses of the word wealth, not all of them material. I'm not trying to make a deep philosophical point here about which is the true kind. I'm writing about one specific, rather technical sense of the word wealth, what people will give you money for. This is an interesting sort of wealth to study because it's a kind that prevents you from starving. This is a fantastic sentence that I double underlined at ends it. And what people will give you money for depends on them, not you. And then I'll end this essay on really just good life advice from Paul. This is more on his idea of running upstairs on doing something difficult intentionally. This is a good plan for life in general. If you have two choices, choose the harder. If you're trying to decide whether to go out running or sit home and watch

Starting point is 00:11:33 TV, go running. Probably the reason this trick works so well is that when you have two choices and one is harder, the only reason you're even considering the other is laziness. You know in the back of your mind what's the right thing to do, and this trick merely forces you to acknowledge it. So there's an excerpt from the book I'm going to talk to you about today, which is a collection of Paul Graham's essays. It's called Hackers and Painters, Big Ideas from the Computer Age. Okay, so I want to start with the essay that the book is named after, which is Hackers and Painters. And I think the point of reading this essay, from my perspective, is Paul's trying to describe and really teach, like, it's learning how to make good things. So he says, when I finished grad school in computer science, I went to art school to study painting. A lot of people seem surprised that someone interested in

Starting point is 00:12:19 computers would also be interested in painting. They seem to think that hacking and painting were very different kinds of work. Then he goes into his main theme here. Hacking and painting have a lot in common. In fact, of all the different types of people I've known, hackers and painters are among the most alike. What hackers and painters have in common is that they're both makers. What hackers and painters are trying to do is make good things.

Starting point is 00:12:45 And so that ties together with his other essay, How to Make Wealth. If you can learn to make good things that people want, that is how you build wealth. And then what I found so interesting about the next section, he's talking about the fact that both hackers and painters learn by doing. And I wrote, this is similar to his perspective on how to build a company. I was taught in college that one ought to figure out a program completely on paper before even going near a computer. I found that I did not program this way. I found that I like to program sitting in front of a computer, not a piece of paper. Instead of patiently writing out a complete program and assuring myself it was correct, I tended to just spew out code that was hopelessly broken and then gradually beat it into shape.

Starting point is 00:13:24 For a long time, I felt bad about this. If I had only looked over, this is so, this is such a good point. If I had only looked over at the other makers, the painters or the architects, I would have realized that there was a name for what I was doing. Sketching. You should figure out programs as you're writing them, just as writers and painters and architects do. And then he goes back to a very interesting thought about the edge that small companies have. And that is the edge of being able to make a truly great product. Only a small percentage of hackers can actually design software.

Starting point is 00:13:55 And it's hard for people running a company to pick these out. So instead of entrusting the future of their software to one brilliant hacker, most companies set things up so that it's designed by committee. And the hackers merely implement the design. If you want to make money at some point, remember this, because this is one of the reasons startups win. Big companies want to decrease the standard deviation of design outcomes because you want to avoid disaster. So essentially saying, hey, startups and small groups of people, you're going to have more tens, but you're also going to have a lot more ones. As companies grow, they want to get rid of these, what he calls oscillations. And so they're more comfortable with a bunch of fours, maybe four, like the four to six range, something like that, because they're worried about a disaster, right? So big companies want to decrease the standard deviation of design

Starting point is 00:14:39 outcomes because they want to avoid disasters. But when you damp oscillations, you lose the high points as well as the low. This is not a problem for big companies because they don't win by making great products. Big companies win by sucking less than other big companies. That's a very interesting point. And just one random paragraph in here for you. This is he just mentioned briefly what he looked for when he was interviewing people at his startup at VIAweb. When we interviewed programmers, the main thing we cared about was what kind of software they wrote in their spare time. You can't do anything really well unless you love it. And if you love to hack, you'll inevitably be working on projects of your own. And then he goes back into the importance of learning by doing. And really the series of highlights I have here are on the magic

Starting point is 00:15:30 of gradual refinement. One thing we can learn from the example of painting is how to learn how to hack. You learn to paint mostly by doing it. Ditto for hacking. You learn to hack mostly by hacking. Because painters leave a trail of work behind them, you can watch them learn by doing. If you look at the work of a painter in chronological order, you'll find that each painting builds on things learned in previous ones. This is the same exact idea that you see when you read a biography of an entrepreneur. You'll find that each idea builds on things learned in previous ones. I just referenced Sam Walton is the clearest description of that. I think that's a really important idea because I think you and I also do this.

Starting point is 00:16:06 Let me read. I'm going to read this again. Because painters leave a trail of work behind them, you can watch them learn by doing. If you look at the work of a painter in chronological order, you'll find that each painting built on things learned in previous ones. I think most makers work this way. And so that's the learning by doing part. Then he's saying, hey, you learn from other examples. Really, that's what Founders Podcast is for us. That's what reading these books is, right? The other

Starting point is 00:16:27 way makers learn is from examples. To a painter, a museum is a reference library of techniques. That's exactly what a biography of an entrepreneur is. For hundreds of years, it has been part of the traditional education of painters to copy the works of the great masters because copying forces you to look closely at the way a painting is made. This is such a fantastic idea. Writers do this too. Benjamin Franklin learned to write by summarizing the points in the essays of Addison and Steele and then trying to reproduce them. Hackers likewise can learn to program by looking at good programs, not just at what they do, but at the source code. Another example we can take from painting is the way that painters are created, or excuse me, that paintings are created by gradual refinement.

Starting point is 00:17:12 I think companies are created by gradual refinement as well. Now we get to my absolute favorite idea in this entire book. And it can be summarized in two words, relentlessness wins. This sounds like a paradox, but a great painting has to be better than it has to be. So again, great painting for our purposes, we're talking about a product, right? This sounds like a paradox, but a great product has to be better than it has to be. What the hell does that mean? For example, when Leonardo da Vinci painted the portrait of Ginevra da Vinci, he put a juniper bush behind her head.

Starting point is 00:17:46 In it, he carefully painted each individual leaf. Many painters might have thought this is just something to put in the background to frame her head. No one will look that closely at it. Not Leonardo. How hard he worked on part of a painting didn't depend at all on how closely expected anyone to look at it. He was like Michael Jordan. Relentless. Relentlessness wins because in, oh my goodness gracious, this is just fantastic. Relentlessness wins because in the aggregate, unseen details become visible. When people walk by the portrait, their attention is often immediately arrested by it, even before they look at the label and notice that it says Leonardo da Vinci. All those unseen details combine to produce something that's just stunning, like a thousand

Starting point is 00:18:38 barely audible voices all singing in tune. Great software, likewise, requires a fanatic, again, great products, likewise, require a fanatical devotion to beauty. If you look inside good software, this is just like Steve Jobs talking about what he learned from his father, right? That you're not going to put, you know, when you're a carpenter, you're not going to put a piece of like crappy wood on the back of a dresser that you're making, even though no one is going to see it. He also uses example of the other side of a fence too. If you look inside good software, you'll find that parts no one is ever supposed to see are beautiful too. When it comes to code, I behave in a way that would make me eligible for prescription drugs if I approached everyday life

Starting point is 00:19:18 the same way. And I think that what he's describing there at the very end is common to anybody that's capable of making a truly great product. Think about it. When it comes to code, so in Paul's case, whatever you and I are building, right? I behave in a way that would make me eligible for prescription drugs if I approached everyday life the same way. Relentlessness wins because in the aggregate, unseen details become visible. This is first on how to work well with other people. The example of painting can teach us not only how to manage our own work, on how to work well with other people. The example of painting can

Starting point is 00:19:45 teach us not only how to manage our own work, but how to work together. A lot of the great art of the past is the work of multiple hands, though there may only be one name on the wall next to it in the museum. Leonardo was an apprentice in the workshop of some guy's name I don't know how to pronounce, and painted one of the angels in this painting called baptism of Christ. This sort of thing was the rule, not the exception. When painters work together on a painting, they never worked on the same part. So again, he's really telling us how to work well with other people. Okay. When painters work together on a painting, they never worked on the same parts. You never had one guy painting over the work of the other. I think this is the right model for collaboration and software

Starting point is 00:20:21 too. When a piece of code is being hacked by three or four different people, no one of whom really owns it, it will end up being like a common room. The right way to collaborate, I think, is to divide projects into sharply defined modules, each with a definitive owner and with interfaces between them that are as carefully designed and, if possible, as articulated as programming languages. That's really good. I'm going to read that again. The right way to collaborate, I think, is to divide projects into sharply defined modules, each with a definitive owner and with interfaces between them that are as carefully designed and, if possible, as articulated as programming languages. Now, this is the customer-obsessed part.

Starting point is 00:21:03 Like painting, most software is intended for a human audience. You have to be able to see things from the user's point of view, from the customer's point of view. It turns out that looking at things from other people's point of view is practically the secret of success. And finally, I'll just end this part on this essay with just one line. It's such a great line. I feel like I should put like print it out and hang it on the wall. You only get one life. You might as well spend it working on something great. So then I just want to pull out a few highlights from this other essay. He wrote it this back in September 2001. It's called The Other Road Ahead.

Starting point is 00:21:49 And I'm reading it to you because one, I think the ideas are good. And two, this is many years before he founded Y Combinator. And again, we see like the prehistory, this like what he just talked about is if you go and see a painter's, you can see like the chronological, if you look at a painter's work in chronological order, you can see like the gradual refinement, how one idea builds on another. You can see the same thing in writing, in Paul's writing. And so Paul writes, there are only two things you have to know about business. Build something users love and make more than you spend. That made me think of one of my favorite quotes. I've read this on, you know, I don't know, dozens of podcasts in the past, but it comes from Don Valentine, the founder of Sequoia.

Starting point is 00:22:23 And he says, there are two things in business that matter, and you can learn this in two minutes. High gross margins and cash flow. All companies that go out of business do so for the same reason. They run out of money. And so back to Paul. The less you spend, the easier it is to make more than you spend. I'm going to read something. If you have access to Founders Daily, this is episode 12 on Founders Daily, but it's from an essay that Paul wrote in 2008. And we're going to see the ideas very similar to what he's writing in the book that I'm holding in my hand. This essay was published in 2001. And so now this is from his essay, Why to Start a Startup in a Bad Economy. It says, I'm reading directly from the podcast

Starting point is 00:23:00 player, if you have learned one thing from funding, if we have learned one thing from funding so many startups is that they succeed or fail based on the qualities of the founders. The economy has some effects, certainly, but as a predictor of success, it's a rounding error compared to the founders, which means that what matters is who you are, not when you do it.

Starting point is 00:23:16 If you're the right sort of person, you will win even in a bad economy. If you're worried about threats to the survival of your company, this is one of my favorite parts. If you're worried about threats to the survival of your company, don't look my favorite parts if you're worried about threats to the survival of your company don't look at them in the news don't look for them in the news look in the mirror fortunately the way to make a startup recession proof is to do

Starting point is 00:23:31 exactly what you should do anyway run it as cheaply as possible for years i've been telling founders that the surest route to success is to be the cockroaches of the corporate world what writing that's such because that that again great writing just uh i always say like reading a great book is it's like a movie for the mind the words that are on the page are going to put an image really great words on the page you're going to put an image in your mind and as soon as i read read that like i see something in my mind right i've been telling founders for the surest route uh success is to be the cockroaches of the corporate world the immediate cause of death in a startup is to running out of money, which is exactly what Don Valentine just told us. So the cheaper your company, this is the punchline

Starting point is 00:24:09 here. So the cheaper your company is to operate, the harder it is to kill. So let's go back to this essay from the book that I'm holding in my hand. The less you spend, the easier it is to make more than you spend. As for building something users love, here's some general tips. Start by making something clean and simple that you would want to use yourself. The standard to compare your software to, and your product, right? The standard to compare your product to is what it could be, not what your current competitors happen to have. Use your software yourself all the time.

Starting point is 00:24:40 Use your product yourself all the time. Okay, so I want to jump to Paul's essay, Mind the Gap. When people care enough about something to do it well, those who do it best tend to be far better than everyone else. There's a huge gap between Leonardo da Vinci and second-rate contemporaries. A top-ranked professional chess player could play 10,000 games against an ordinary club player without losing once. Like chess or painting or writing novels, making money is a very specialized skill. But for some reason, we treat this skill differently. You get paid by doing or making something people want.

Starting point is 00:25:21 And those who make more money are often simply better at doing what people want. And those who make more money are often simply better at doing what people want. Steve Jobs saved a company that was in terminal decline. The way I think about what Paul's about to get into right here is Apple buys next for what, $450 million, $500 million. I think it's $450 million. Let's just say $500 million. They paid half a billion dollars essentially to rehire Steve Jobs. And it was the bargain of the century. Steve Jobs saved a company that was in terminal decline, and not merely in the way a turnaround specialist does by cutting costs. He had to decide what Apple's next product should be. Few other people could have done it. It may seem unlikely in principle that one individual could really generate so much more

Starting point is 00:26:03 wealth than another? What would Apple's next product look like if you replace Steve Jobs with a committee of 100 random people? These things don't scale linearly, which is also probably why we don't understand them intuitively. Then he gets into the fact that people complain about, oh, this profession gets paid so much more than the other profession. And Paul's point is that in a free market, prices are determined by what buyers want. People like baseball more than poetry.

Starting point is 00:26:30 So baseball players make more than poets. To say that a certain kind of work is underpaid is thus identical with saying that people want the wrong thing. So that was an interesting point. My interpretation for myself, the note I left for myself on this page is, this means you should find the intersection of what you're good at and what people want. And then he spent some time writing about, you know, most people think, there's a lot of people that think, maybe not even most people, a lot of people think that the amount of wealth in the world, it's like a pie, it's like static. And as we know from Paul writing in his other essays, that's not true. You can actually

Starting point is 00:27:00 create wealth and you create wealth by making things that other people want, thus increasing the size of the pie. Steve Jobs and Steve Wozniak didn't have to make us poor to make themselves rich. Quite the opposite. They created things that made our lives materially richer. And I don't think he says it explicitly in this essay, but implicitly it's like, well, technology is just going to lead to a more ever increasing variance in the amount of productivity that one person can have and therefore an ever increasing variance in the amount of wealth that one person has and one person doesn't. And so if you have an entire society that thinks that people only get wealthy by stealing or taking from other people, like, for example, Steve Jobs is getting richer. So therefore, somebody else must be getting poor.

Starting point is 00:27:40 If society doesn't catch up to understanding that wealth is not finite and something that should be growing over time, it could lead to a lot of, you know, social unrest and cultural issues. And so he goes back to this main theme that technology is leverage. Remember, he's writing this essay in 2004. This is only, you know, increased even more so in our time, and it looks like, you know, we'll continue unabated. And so this section is called the lever of technology. Will technology increase the gap between the rich and the poor? It will certainly increase the gap between the productive and the unproductive. That is the whole point of technology. With a tractor, a farmer could plow six times as much land in a day as he could with a team of horses. But only if he mastered a new kind of farming. That is a very excellent point about the value of learning about and then using technology

Starting point is 00:28:27 and that most people won't actually. If you take two farmers that have both spent their entire lives plowing their field with a team of horses, the one that is reluctant to change, the one that is reluctant to learn about new technology is going to be left in the dust by the other one that isn't. So with a tractor, a farmer could plow six times as much land in a day as he could with a team of horses, but only if he mastered a new kind of farming. I've seen the lever of technology grow visibly in my own time. In high school, I made money by mowing lawns and scooping ice cream at Baskin Robbins. This was the only kind of work available at the time. Now, high school kids could write software or design websites,

Starting point is 00:29:01 but only some of them will. The rest will still be scooping ice cream. That's another great point. I remember very vividly when in 1985, when in 1985, improved technology made it possible for me to buy a computer of my own. Within months, I was using it to make money as a freelance programmer. A few years before, I couldn't have done this. A few years before, there was no such thing as a freelance programmer. That's a great illustration of his main idea that wealth can, more wealth can always be created. No one is getting poorer because Paul Graham is sitting there now making money as a freelance programmer in 1985, but he is getting wealthier.

Starting point is 00:29:38 And then to wrap this section up with a fantastic line, and I'm betting everything I have on this idea being accurate. So we should expect to see ever increasing variation in individual productivity as time goes on. This is an idea that I've just been absolutely obsessed with for a long, for many, many years. It's how big a difference can a single person or a small team make? In fact, there's a video saved on my phone. I recorded the video on September 29th, 2018. And I cannot find the video that I was making a recording of a screen, which is really funny, like filming my computer

Starting point is 00:30:10 with my phone. But it's actually Paul Graham on stage. He's at this thing. I zoomed in on his badge. It's something called the Cloudant Con. So the Cloudant Conference. He's wearing a navy blue sweater, if anybody can find this video for me. And I think he's being interviewed by the founder of Cloudant. And the founder asked him this question, how big a difference can a single developer or small team make? And he says, the answer is increasingly much, increasingly much. Remember, he's saying this in 2018. It's really what he's writing, a variation of the idea that he's writing all the way back in 2004, that, hey, we should expect to see ever increasing variation in individual productivity as time goes on, because the lever of technology

Starting point is 00:30:48 is going to keep increasing, right? So it says, the answer is increasingly much, increasingly much. Archimedes said, if he had a lever long enough, he could move the world. Well, nowadays, from your bedroom, thanks to all the infrastructure that exists, a combination of open source and services like AWS and the like, the lever is enormously long. You could be sitting in your bedroom programming, a single person, and if you make something that people like and is novel, it can have a really huge effect. That is very exciting.

Starting point is 00:31:12 You guys may take this for granted, but anybody who is old as me realizes that was not the case 20 years ago. It will be interesting to see how far it goes because it is certainly not over yet. And then he's asked a follow-up question. How far can it go? And his answer gives me goosebumps. Always further than people expect. And then before I leave this essay, I just got to point, bring something to your attention. Paul's constantly putting what he's talking about in a historical context. He's like the key for societies, for countries is founders, the people that have founder mentality,

Starting point is 00:31:49 they're going to go build wealth. They will make our societies richer, but the only way they'll make our societies richer if you let them keep a percentage of the wealth that they create. And then he says a lot of countries in history make the mistake where they turn this off. They don't let people with like founder mentality, people trying to build new companies, new forms of wealth, keep the fruits of their labor. And when they try to decrease the variance in economic outlook, this person has too much wealth compared to the average person. The end result is making everybody poor. So he says at various times and places in history, whether you could accumulate a fortune by creating wealth had been turned on and off. This is fantastic. Northern Italy in 800, off. Northern Italy in

Starting point is 00:32:32 1100, on. Central France in 1100, off. England in 1800, on. England in 1974, off. I didn't know what he was talking about here. And then he puts it into parentheses, which is fantastic. So in England, 1800, you get to keep your wealth, It's on. England in 1974, it's off because they give a 98% tax on investment income. That's crazy. United States in 1974, on. We've even had a twin study. West Germany, on. East Germany, off. In every case, their creation of wealth seems to appear and disappear that's a really important point like the noise of a fan as you switch on and off the prospect of keeping it and he's got a fantastic way to distill the ideas talking about if you let henry ford get rich he'll make you a tractor to replace your horse so before i jump into his next essay, which is called Beating the Averages, I want to read,

Starting point is 00:33:25 I have notes on this podcast Paul was on back in 2009. It's an episode of this podcast called Econ Talk. The title of the episode is Paul Graham on Startups, Innovation, and Creativity. But there's a quote he mentions on hackers and painters that I think is going to relate to this essay and the next essay I'm going to share with you. And this is what Paul said. He says, I found that the interesting parts of programming you can't make scientific. Startups are the same. What makes a programmer good at programming is more like what makes a painter good at painting. It is something a little less organized. It is taste, a sense of design, a certain knack. And so I just want to pull out a few random ideas from this essay called Beating the Averages. So the first idea is thinking of ideas as tools. If a painter were

Starting point is 00:34:11 offered a brush that would make him a better painter, it seems to me that he would want to use it in all of his paintings, wouldn't he? The second idea is aiming for monopoly, or really the way you think about it, what he was referencing earlier, you should have a barrier to entry in what you're doing. If what you're doing is easy to copy, a lot of people are going to copy it. And then the best businesses are very hard to copy. In later essays, he uses an example of like Stripe and Airbnb to illustrate this point. And so he writes, software is a very competitive business prone to natural monopolies. A company that gets software written faster and better will, all other things being equal, put its competitors out of business. Paul writes a lot about the

Starting point is 00:34:45 advantages that small teams and small companies have over larger ones, but there's also disadvantages. And one thing that startups cannot or small companies cannot afford to do is not focus. And so he has this idea that you should ignore what other people are doing and consider only what will work best. In a big company, you can do what all the other big companies are doing, but a startup can't do what all other startups do. I don't think a lot of people realize this, even in startups. Then it goes into the fact that a small company can actually succeed by only, they actually only need to be good at one thing. When we started ViaWeb, we had no experience in business. We didn't know anything about marketing or hiring people or raising money or getting customers. Neither of us even ever even had what

Starting point is 00:35:24 you'd call a real job. The only thing we were good at was writing software, and we hoped that would save us. And then he talked about some other good ideas they did when he was building a startup. One, they focused on speed. Our development cycle was so fast that we could sometimes duplicate a new feature within a day or two of a competitor announcing it in a press release. And he said a key to that was they had a technical advantage. He talks a lot about this book, in this book about programming languages. I've omitted this. He felt that the fact that they use this, I guess, unknown, but really advanced programming language called Lisp was a massive advantage to ViaWeb. He says, in business, there is nothing more valuable than a technical advantage your competitors don't understand. Let me read

Starting point is 00:36:05 that again. In business, there's nothing more valuable than a technical advantage your competitors don't understand. He thought LIS was that for them. And we see an idea that you and I have talked about over and over again, bad boys move in silence. For hundreds of years of the history of entrepreneurship, we see people, they have an edge and they shut up about it. I never said anything publicly about LIS while we were working on Via via web. This was no accident. A startup should give its competitors as little information as possible. Okay, so now I want to jump to Paul's essay called Taste for Makers. He says, I was talking recently to a friend who teaches at MIT. His field is hot now. He's writing this back in 2002. His field is hot now, and every year he is inundated by applications from would-be graduate students.

Starting point is 00:36:50 A lot of them seem smart, he said. What I can't tell is whether they have any kind of taste. Taste. You don't hear that word much now. And yet we still need the underlying concept, whatever we call it. What my friend meant was that he wanted students who were not just good technicians, but who could also use their technical knowledge to design beautiful things. For those of us who design things, these are not just theoretical questions. We need good taste to make good things. Let's try considering it as a practical question. How do you make good stuff? So again, I think all this ties together, right? He says, how do you know what to work on? Once you know what to work on, how do you make something great?

Starting point is 00:37:31 Why is that important? Because if when you make great things or good things that other people find valuable, that is how you build wealth. All of these ideas connect across multiple decades and I don't know, a hundred different essays. It's really remarkable. And I don't know if that would have clicked if I haven't spent the last few weeks, not only reading through his entire website, but also picking up this book and reading this as well. So back to

Starting point is 00:37:53 this idea of taste. Remember, this is taste for makers. If you mention taste nowadays, a lot of people will tell you that, quote, taste is subjective. They believe this because it really feels that way to them. Saying that taste is just personal preference is a good way to prevent disputes. The trouble is, it's not true. You feel this when you start to design things. Whatever job people do, they naturally want to do it better. Football players like to win games. CEOs like to increase earnings. It's a matter of pride and a real pleasure to get better at your job, which is why I think people read essays like this, read biographies of people that have achieved great things, whatever job

Starting point is 00:38:30 people have, they naturally want to do better. As in any job, as you continue to design things, you'll get better at it. Your tastes will change. And like anyone who gets better at their job, you'll know you're getting better. If so, your old tastes were not merely different but worse poof goes the axiom that taste can't be wrong and so he talks about examining what other people learned about designing things in different domains like the idea that a hacker can learn from a painter just like a writer can learn from a hacker or a founder can learn from a baseball player or a poet and this is part part of Paul's own personal curriculum, as he's gone and spent his entire life trying to learn and answer this question for himself.

Starting point is 00:39:10 And his conclusion is exactly what I noticed by reading hundreds of biographies, which you and I talk about all the time. Once you start to examine the question, it's surprising how much different fields ideas of beauty have in common. The same principles of good design crop up again and again. And so the rest of the essay is, what is good design? He has these headings like good design is simple, good design is timeless. And so I'm just going to read a couple of highlights from that. Good design is simple. You hear this from math to painting.

Starting point is 00:39:37 Less is more. It means much the same thing in programming. In writing, it means say what you mean and say it briefly. It seems strange to have to emphasize simplicity. You think simple would be the default, but something seems to come over people when they try to be creative. When you're forced to be simple, you're forced to face the real problem. When you can't deliver ornament, you have to deliver substance. Next one is good design is timeless. If something, this is such a great

Starting point is 00:40:05 line I've never heard before, if something is ugly, it can't be the best solution. There must be a better one, and eventually someone else will discover it. Aiming at timelessness is a way to make yourself find the best answer. So one of my favorite sayings and something I don't even think I have any other good filter besides this is that time is the best filter. Paul gets into that now. Strangely enough, if you want to make something that will appeal to future generations, one way to do it is to try to appeal to past generations. If you can make something that appeals to people today and would also have appealed to people in the year 1500, there's a good chance that it will appeal to people in the year 2500. Next one is good design is suggestive. Jane Austen's

Starting point is 00:40:46 novels contain almost no description. Instead of telling you how everything looks, she tells you her she tells her story so well that you envision the scene for yourself. Likewise, a painting that suggests is usually more engaging than one that tells. Everyone makes up their own story about the Mona Lisa. In software, it means that you should give users a few basic elements that they can combine as they wish, like Lego. Then he brings up a main theme that he repeats over and over again in different essays, different time periods, like the value in hard work. Good design is hard.

Starting point is 00:41:19 If you look at the people who've done great work, one thing they all seem to have in common is that they worked very hard. If you're not working hard, you're probably wasting your time. Hard problems call for great efforts. Good design looks easy. Like great athletes, great, and I think these good design is hard and good design looks easy. I think the ideas in both of these sections really relate to each other. Like great athletes, great designers make it look easy. Mostly, this is an illusion. The easy conversational tone of good writing comes only on the eighth rewrite. What I jotted down to myself when I got to that part, something that I learned from Arnold Schwarzenegger that's really

Starting point is 00:41:55 important. Everything is reps, reps, reps, reps. You're not going to pick up any of these books and see a founder, an entrepreneur, an athlete, an explorer, an artist do their best work in year one or two or three. It is year after year after year of practice, practice, practice. Everything is reps, reps, reps. In most fields, the appearance of ease, this is exactly what I was saying here. In most fields, the appearance of ease seems to come with practice. Perhaps what, I love that word, perhaps what practice does is train your unconscious mind to handle tasks that used to require conscious thought. This one was very interesting. Good design resembles nature. This is going to be, this is something that the founder of Visa,

Starting point is 00:42:36 D. Hawk, I covered him back on episode 260, talked about over and over again. He spent a lot of time in nature. He had a lot of ideas on how to build his business by observing how things work in nature. Paul Graham writes, good design resembles nature. Nature, and this is why, nature has had a long time to work on the problem. So it's a good sign when your answer resembles nature's. Next one, good design is redesign. It's rare to get things right the first time. Experts expect to throw away some early work. They plan for plans to change. It takes confidence to throw work away. You have to be able to think there's more where this came from.

Starting point is 00:43:12 Mistakes are natural. Instead of treating them as disasters, make them easy to acknowledge and easy to fix. Leonardo da Vinci more or less invented the sketch as a way to make drawing bear a greater weight of exploration. And then good design can copy. Attitudes to copying often make a round trip. A novice imitates without knowing it. Next, he tries consciously to be original. Finally, this is excellent. Finally, he decides it's more important to be right than original. The ambitious are not content to imitate. The second phase in the growth of taste is a conscious attempt at originality. I think the greatest masters go on to achieve a kind of selflessness. They just want to get the right answer, and if part of the right

Starting point is 00:43:57 answer has already been discovered by someone else, that's no reason not to use it. They're confident enough to take from anyone without feeling that their own vision will be lost in the process. And then good design happens in chunks. So he's going to talk about actual physical places. I'm going to read from this book, Go Like Hell. I think I covered it back on Founders number 97. Enzo Ferrari came to the exact same conclusion that Paul Graham is in this section of the essay. Enzo said,

Starting point is 00:44:27 It is my opinion that there are innate gifts that are a peculiarity of certain regions and that transferred into industry, these propensities may at times acquire an exceptional importance. In Modena, where I was born and set up my own works, meaning his own company. There is a species of psychosis for racing cars. Back to Paul Graham. Good design happens in chunks. Something was happening in Florence in the 15th century, and it can't have been genetic because it isn't happening now. Nothing is more powerful. This is, again, I feel another main theme about the importance of having ambitious people

Starting point is 00:45:02 know each other, to be around each other. I think I talked about this in both the last two episodes of Paul Graham. He's saying it again here. Nothing is more powerful than a community of talented people working on related problems. Great work still comes disproportionately from a few hot spots. And then I absolutely love how he ends this. He talks about that great work, good design usually comes, starts with somebody saying, hey, I could do better than that. In practice, it is easier to see ugliness than to imagine beauty. Most of the people who've made beautiful things seem to have done it by fixing something that they thought ugly.

Starting point is 00:45:36 Remember, that's not just an appearance. What did Steve Jobs say? Design is how it works. People think it's how it looks. It's like, no, it's how it works. So you could apply it to a product you're building, an industry. You just see something. It's like, this isn't quite right. In practice, I think it's easier to see ugliness than to imagine beauty. Most of the people who've made beautiful things seem to have done it by fixing something they thought ugly. Great work

Starting point is 00:45:55 usually seems to happen because someone sees something and thinks, I could do better than that. Intolerance for ugliness is not in and in, in of itself enough. You have to understand a field well before you develop a good nose for what needs fixing. Another important point, you have to do your homework. And this is the absolute perfect sentence to end on. I love this. The recipe for great work is very exacting taste plus the ability to gratify it. And that is where I'll leave it for the full story. Highly recommend buying the book. You can read the essays for free online, but it's so nice having some of them in book form. And I hope some publishing helps one day. Prince, all of his, all of Paul's essays, you know, probably have to be a multi, you know, multi-book series, but I would love to own them in, you know, physical book form. So if you are

Starting point is 00:46:51 going to pick up the book, it'd be helpful if you use the link that's in the show notes available on your podcast player and also available at founderspodcast.com. You'll be supporting the podcast at the same time. I have already been inputting a bunch of the highlights, not only from Paul's essays, but also from this book into my ReadWise. The past few weeks, ReadWise has already started reminding me a lot of the highlights that I previously read. I think it's a super valuable tool. It's my favorite app that I pay for, and I could not make the podcast without it. If you read a lot and you want to remember what you read and you want to use the same app that I do, you go to readwise.io for slash founders, and you can try it for 60 days for free and see if you like it as much that I do. You can go to readwise.io forward slash founders and you can try it for 60

Starting point is 00:47:25 days for free and see if you like it as much as I do. That is 277 books down, 1,000 to go, and I'll talk to you again soon.

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Founders - #277 Paul Graham's Essays Part 3

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