Y Combinator's Graham Says Startups Must Improve Lives | Hacker News Reader

Y Combinator's Graham Says Startups Must Improve Lives

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272 pointsjusthw80 comments

I'm reminded every time I watch Bloomberg I'm reminded just how high quality they are, and how intelligent their anchors are relative to any other large media corp.

Additionally, Paul, thanks for being frank and great. It makes me so happy to see you as the face of not only YC, but increasingly of tech startups in general. When I get around to implementing a good idea, I've got you to look to not only for interesting me in programming through Lisp, startups through YC, but also for increasingly the visibility and viability of tech startups.

Definitely worth watching all 14 minutes.

EDIT: Also, still a little bitter over "the real money's in hotel search"… dzoblin's & my Summer '11 (I think) YC application was that. Though admittedly not far along, and the idea was still in development. still ;)

No kidding. I have to admit when I saw Emily Chang give her opening spiel, having never heard of her or Bloomberg, my mind immediately put her in the "vapid TV personality" bucket. But over the next minute or two I realized that was a complete mistake, and was extremely impressed with how sharp she was.

I don't even think I was aware of how low my expectations of TV anchors are.

I felt the EXACT same way. She really did a great job.

I've been driving 1-2h/day recently, and Bloomberg on satellite radio is one of the better parts of that. (BBC is nice too, and sometimes CNBC, but CNBC's quality varies greatly).

I listen to Bloomberg radio[1] most days at work. Lots of insightful interviews and analysis of business, economics, politics, and current events.

[1]http://tunein.com/tuner/?StationId=17075&;

The improve lives through startups meme is a valuable idea, but finding tunein.com has improved my life in a small but delightful way.

I like radio because it is random and unexpected - to me. I don't have to set a playlist of any sort or even own the rights to play the song.

I used to listen to Pandora mainly for that randomly played music. I rarely even vote on Pandora and hate when it asks me to. Now that Pandora has listening caps, I barely use it.

A guy at worked pointed me to tune-in, and it is now my site of choice for online music/radio/whatever.

We'll show pg & co. what they missed out on! :-)

At least one of the taglines was a huge mis-characterization of what was actually said, though.

"Paul Graham: Don't look at groupon's numbers"

That's not what he said at all. He said that HE wouldn't, and that he'd bet on Andrew Mason because he knows him to be a smart guy (using PG's definition of smart). It wasn't giving advice except perhaps in the general sense of "bet on good people."

Yeah but Groupon is not on the "bet" level and IPOs are different that seed or series-A funding.

Yeah that's the whole point. He's not giving advice at all, he's just talking about his general approach to investment. It was Bloomberg that took the comment turned it into implicit commentary about the IPO, which was clearly not his intent.

First time I've ever heard the word suck on Bloomberg.

I love Graham's demeanor. Emily Chang and Cory Johnson seemed lost on air, check out 7:02 in, when Graham responded with succinct and honest answers. He didn't over-hype Y Combinator and emphasized the human aspect of startups: startups must make peoples lives better and hiring good, intelligent people are the keys to success.

'Improving lives' is ambiguous, it centralizes around solving problems that people have. However if you scale these problems from 1st world to 3rd world problems it seems to me that improving lives in this context is aimed more at 1st rather than 3rd world problems. Which makes sense from a business standpoint, but the title somewhat implies that is about making the world a 'better' place.

I am not criticizing pg because I strongly believe that it is a winning strategy when talking about startups, just take improving lives with a grain of salt. I'd love to actually improve lives, but unless you can take the Bill Gates route (earn billions, do charity work), it's not easy to do so from behind a computer, writing code. Are there any startups taking the route of actually improving quality of life?

PG discusses this at about the 5m mark in this video, using the example of curing Malaria: http://www.youtube.com/watch?v=q7K0vRUKXKc

While making the world a better place may not be sufficient to build a successful business, I don't think it's fair to say only organizations focusing on the third world are improving quality of life. Companies usually don't make money unless they are helping someone, and that help often leads to an improved quality of life, first world or not.

I specifically chose to talk about a scale, because I do agree that it is not black and white.

There is however a difference between: earning money as a goal and improving lives as a means (improved quality of life being a byproduct) and wanting to improve lives (and as such quality of life) and earning money only being a requirement to sustain those activities.

But perhaps startups are not way to go for the latter, which is why I am curious if there are any startups taking this route (or perhaps have tried and failed).

This is the perennial theological question about charity: do you measure goodness based on charitable intent or on charitable results? Say getting money to poor folks in India is a charitable result with nearly-universal support here. It is doubtful Microsoft scores very high on the intent scale there, but they have probably done more for poor Indians this year than all active charities and all foreign government aid in history. I love Mother Teresa, but aside from the poor's spiritual needs, if moving them into the middle class is a goal worth pursuing than economic growth has been really freaking effective and charity not so much.

This is one of the reasons Twilio excites me so much, incidentally. (Disclaimer: commercial relationship.) Cheap mobile phones have been a huge, huge, huuuuuuuuuuuuuuge win for the global poor. Twilio (and companies like it) upgrade every phone in the world to being a smart phone. I think that's going to create wealth on the scale of the Green Revolution or the Internet eventually.

hmm, interesting, and I don't deny that 'commercial' companies can have good (unintentional) effects. But I am sure there is a space between charity and 'actual' companies, along the lines of what Fábio Barbosa[1] is doing. Which makes me wonder if it is viable for startups to take such an approach?

[1] http://www.youtube.com/watch?v=SrONJfa9lZU

Honest question: how are phones for the poor such a huge win?

It depends on the existing available methods of communication. If "the poor" have internet access, email, Twitter etc then adding phones doesn't help much. On the other hand if the poor don't have any internet access then just having a cell phone that lets you communicate with business partners across town could make a substantial difference. Imagine a simple business where one guy sells vegetables in a marketplace in an urban area and his business partner buys vegetables from farmers 10 miles away in a rural area. If the two can communicates via phone then they can coordinate buying, selling and transporting the vegetables (or any physical good) easily. They could even optimize purchases on a given day based on the "real-time" demand the one guy sees in the marketplace. In general the local economy could be optimized in ways that are a net win for everyone. Lack of phones and communication could hinder this.

We have ta taken our startup down the route of wanting to improve lives. We work with a number of others like us. It works.

I don't think improving lives only mean going out and saving lives.

Hipmunk is improving life by making us get rid of ad-ridden travel sites.

I think when he says 'improve life', he mean create something which is better than what we already have. It can be any market or niche and may target a small user audience too but as long as it's better than what we currently have, it's improving the overall standard of life.

Vittana and Kiva are both arguably startups (the former certainly-- they are young/small and enjoying epic growth).

It's so interesting how PG answered that GroupOn question.

He dodged giving GroupOn his stamp of approval, but hedged by approving Andrew Mason. That's definitely an interesting approach, especially for someone like him.

Edit: Also...that TechStars response...talk about awkward. Definitely good questions from both hosts though.

Actually, that's fairly consistent for pg. As he notes later in the interview, he believes that a startup's founders matter more than the idea as good founders will improve upon or drop a bad idea.

I think that was exactly the heuristic pg used in this case. He may not think GroupOn is best company in its current form, but he believes that Andrew Mason's smart and driven and is thus capable of evolving GroupOn into a solid and profitable business.

I think betting on the founder breaks down as a company grows to a certain point.

Steering a small startup is one thing. Steering a 10k person public company is entirely different.

I doubt Steve Jobs at age 26 could have saved Apple from impending doom in 1996. Even at age 41, with all his additional skill/experience, it was far from easy for him.

Yeah, the overlap of people who are good at doing something from nothing and the group of people who are good at managing a large organization is probably pretty small. Bill Gates and Steve Jobs come to mind.

That said, from PG's point of view as an investor, the important thing is to get to an exit, and hope that for the sake of the company, part of what makes the founders 'good' is the ability to recognize when it's time to step aside.

Maybe, maybe not. I honestly don't have enough info to feel I can make an assertion either way. My gut does say, however, that many of the same traits are required of both startup CEOs and 10k employee public company CEOs. The challenges are indisputably different, but a CEO who's tenacious, intelligent, creative and driven will find ways to surmount any challenge whether it's hiring the first employee or executing a billion dollar take-over.

Fair questions: would Apple be facing impending doom in 1996 if Jobs hadn't been ousted and instead been allowed to lead his company? Would that Apple be as successful today?

> Fair questions: would Apple be facing impending doom in 1996 if Jobs hadn't been ousted and instead been allowed to lead his company?

Jobs didn't want to run Apple - that's why he brought in Scully. Then he got confused.

It was arguably better for Apple and Jobs that they were separate while Jobs re-found his clue.

> Would that Apple be as successful today?

I'd argue that it would have crashed and burned if Jobs had ousted Scully and would have faded if he hadn't brought Scully in.

> I think betting on the founder breaks down as a company grows to a certain point.

And even if it doesn't, having a good intuition about people and particular acquaintance with the founder in question are prerequisites to using the technique. A lot of experience with startup founders in particular is also really important.

Upon hearing the GroupOn question, I was so waiting for pg to kick off his reply with, "I worry, I worry..."

PG says the first iteration doesn't matter much as long as the founders are good and iterate quickly. Empirically, is this the case? Airbnb and Dropbox certainly didn't iterate on their concepts that much. Google's first shot was excellent. Facebook captured 90%+ from Harvard students before moving on to conquer the world. Are there real counterexamples, or even better, hard data?

(If only YC recorded and aggregated key metrics from their startups, it would be so much easier to answer such questions)

Data would be helpful, I agree.

But sometimes in iterations, you end up totally changing the product. So you might be thinking this is the first iteration of Groupon but it wasn't, the first iteration was The Point which really didn't work out and no one knows about it.

Airbnb's first iteration was presented as being much more about actually renting air mattresses and couches in people's home. They iterated into ebay for spaces.

Dropbox's first iteration was a one-guy team working on the problem. The founder iterated into a two-founder team based on feedback. I'd say that's a significant iteration.

If you read The Facebook Effect, Facebook was simply the latest in a line of "fun hacks" Zuckerberg unleashed on his fellow students at Harvard, each one building on the next.

Sounds like every one of these projects involved iteration. It's fun to think awesomeness springs fully-formed from one's forehead, Zeus-like, but I don't that happens to often in practice.

Replace "iterate" with "kept working on and improving" and your comment makes just as much sense: any company, old or new, evolves and tries out new things and abandons other things that don't work — in that sense, saying iteration is crucial to startups is pretty much just a tautology.

I think PG was hinting at the fact that for startups, iterating often means pivoting, so your first iteration doesn't necessarily lock you into path dependency. Which is a lesson that doesn't really apply to Facebook or Dropbox or Google, because they got the general direction right the first time.

Airbnb was iterating prior to being part of YC, they've given several interviews where they talked about how they'd gone through several launches and failed to take off and had to iterate on their model. For example they started out by only being an introduction service, but they found handling the payment in person was actually a major issue (socially awkward, no record of transaction, etc.) so the end up incorporating payment handling into their service. That was likely a critical iteration.

Google's primary business is Ads which wasn't what they started with.

Handling all payments is absolutely critical because it leads to a review/rating system that is credible (which is critical for a service like Airbnb where strangers are offering and renting space to/from each other). As soon as the payment processing is gone you end with a review/rating system like Yelp. Namely one this is easy to game (for example business owners offering free things to people who give them a good Yelp review) and therefore carries little to no weight. I've used Airbnb three times now. The credible rating system was crucial for me to feel comfortable staying with a total stranger.

Prior to September 2006, Facebook bore little resemblance to today's newsfeed-centric iteration.

PG had a line recently like -- "we're looking for teams building BASIC for the Altair" -- an obvious reference to Microsoft. And Gates and Allen had a business before that analyzing traffic data or something.

I loved this quote (I'm paraphrasing)

Reporter: What kills young startups?

PG: The back button

Brilliant

I'd really like to hear about pg's gripes with TechStars.

Backstory as I understand it:

David Cohen asked PG's permission to start a YC franchise of some sort in Boulder. He said no. David Cohen cloned YC in virtually every respect (down to copying the application form).

Basically what Wimdu is doing to AirBnb.

Still, it has been 5 years and YC has certainly not suffered. I'm surprised PG isn't a bit more magnanimous towards them.

Imitation is the greatest form of flattery. I don't think PG cares too much.

He didn't give that impression in the video.

It's too bad, because Techstars seems like a pretty cool thing in its own right. To me, Boulder also sounds way more attractive than the Bay Area at this stage in my life.

We need more YC. YC is rejecting every applications. So, TS is good, IMHO. But, his remark "they find people" is more arrogant.

I believe he said "they're fine people."

Apologies then

Not really. TechStars is a franchise model, Cohen built a replicable model for seed accelerators while YC is largely driven by Paul Graham personally. You could remove Cohen from TechStars and TechStars would be the same, you couldn't remove PG from YC without changing it's nature substantially.

TechStars was obviously derived from YC, but it's no more a clone than McDonalds was a clone of existing Burger bars.

They copied everything about YC as it originally existed down to the application form. If that doesn't count as a clone nothing does.

TechStars has only recently started trying to replicate their model on a wide scale. They're very far from proving that they can.

The fact that TS would be just as good without the founder isn't necessarily a positive sign.

> The fact that TS would be just as good without the founder isn't necessarily a positive sign.

If they have 'productized' the process so that they get, rather than one charismatic, super smart guy like PG, a series of founder types who go in and talk and mentor their startups, perhaps it can be made to "scale" to some degree, rather than be a program based exclusively on the brilliance of one individual.

Although, to be fair, YC seems to be taking on new people as well.

The question I wanted them to ask is "How do you identify great founders?". Every question they asked led to "YC picks founders, not the business". If it's all about the people, I want to hear more about how he evaluates them.

http://www.paulgraham.com/founders.html

Fortunately, he wrote a whole essay on that very subject: http://paulgraham.com/founders.html . It's the fourth from the top on his "Essays" page: http://paulgraham.com/articles.html .

I felt he deliberately did not go into this topic. He was asked "How do you pick ~60 out of ~2000 applications?", and his entire response could be paraphrased as "We have practice". It made me wonder if it was because he thought it was too complex a topic for a quick TV show.

I wrote about how I read applications here:

http://ycombinator.com/howtoapply.html

http://news.ycombinator.com/item?id=801739

I wasn't suggesting that you were unwilling to divulge this information. I meant that I felt you did not wish to discuss it in that forum.

Semi-related: The YC application for Dropbox from the link above seems to have been taken down.

Does anyone have a mirror?

http://bit.ly/dropbox-yc-app

Thanks Paul.

PG: ballsy enough to wear two popped collars?

i hope he won some money on that bet.

Loved the questions Emily Chang asked, she seems sharp.

Iteration (aka trial-and-error) occurs on three levels, with feedback from users; to pivoting; and he's elsewhere said YC was initially a way to learn about angel investing, by having many investments, turning over quickly. Like geneticists studying fruit-flies - or Christensen studying the disk-drive market.

One of the disappointing things he's elsewhere said they've learnt through this is that smartness is less important than they'd thought. I wonder why he's fallen back to "smart people" in this interview - maybe it's code for "good people". #5: http://www.paulgraham.com/really.html http://www.paulgraham.com/founders.html

PG, your enthusiasm is crazy infectious. Loved the clip.

I liked this interview, but I found myself siding with the dude at the computer more than anybody.

I mean I fully agree that startups must and should improve lives to be viable. But then how are you in the same interview going to plug a website called "Hipmunk" that basically just displays flight info in a different way that to me doesn't really seem any more intuitive than Kayak?

Flight search has been done. A billion times. Unless you are coming with some interesting new business model, you are just shuffling around existing information and wasting a lot of time and money. You aren't really improving anybody's lives or solving a real problem. Why not try to build something that really helps people do something they can't do now?

You've deftly avoided commenting on our mascot. This is just one year into hipmunk - there's more to come. But even a year in, think of all the hours we've liberated for flight/hotel searchers to do other more productive things (like read Hacker News -- OK, bad example).

This interview defines me. Paul Graham exemplifies software entrepreneurship: "Make something people want." Cory Johnson, herald of the old guard: "Make users wade through bullshit; make ad revenue." You are dead, bullshit business man. Welcome to my century.

I am pretty sure Cory was not advocating click-throughs to generate ad revenue, in fact he seemed to be specifically trying to frame that particular approach as being vulnerable to competition.

The key question of course being, how can hipmunk actually make money doing this?

I did not get the same impression other HN'ers did, I noticed. To me Cory sounded smug and know-better, but maybe that's what I expected out of him. I'll watch it again.

Oh he definitely he sounded smug and know-better, he's a professional TV personality and his audience is not typically hackers. But I think that's more a reflection of him not actually caring deeply about topic more than true conviction. That comment was just a set-up for the truly interesting question.

What I like best about what Graham says is the idea that good people will persevere and do good things to make peoples lives better and that he's willing to bet on these good people. That's something universal, not just in the startup world that I wish more people believed in.

I like how PG surprises the male interviewer with his non-traditional filters for good investments.

I agree with PG. We need to do http://www.netmba.com/strategy/swot/ and http://www.netmba.com/strategy/pest/ analysis before doing a startup.

ironically, we ran into PG & JL downtown right after he did the interview. while we were lugging cinema displays...

tag

If you want to bookmark an article on HN, you don't have to leave a comment for the purpose of tagging it. Just upvote the story. Then goto your profile and click on "Saved Stories." Every article that you've upvoted on HN will be there.

Or you can bookmark the page using your browser/bookmarking service of your choice.

Either way it's better than leaving a "tag" comment.

Thank you. That's not quite an intuitive association, but my era of tagging is over.

Never seen PG talk before, figured he'd be another west-coast asshole, but he seems super down to earth!! Think I might apply to YC now..

PG is an east-coast transplant.

FYI: If you think everyone on the west coast is an asshole you'll probably not be very productive living here and doing YC.

Totally valid point, and everybody should be given a fair shake, it's just that a lot of the people I've met from the west coast startup scene seem very pretentious (and I'm quite sure I'm not the only person out east who feels that way.)

Paul doesn't seem that way at all in this video, however, in fact he seems incredibly down to earth. I found this surprising and refreshing, and it makes me think that I have a misconception about the scene out there, and that I would like to experience it now to decide for myself.

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