The end of founder worship, and a reset of toxic startup values
theglobeandmail.com
theglobeandmail.com
Seems to have missed the lesson of its immediately previous paragraph:
> The 1980s were dominated by junk bond specialists, the nineties by investment bankers, the aughts by hedge fund mangers.
Nothing was learned about the 80s, or the 90s, or the 00s (or or or ad infinitum). The parasites merely adapted to the changing environment and found new host expressions.
See the book Devil take the hindmost: a history of financial speculation by Edward Chancellor:
* https://bookshop.org/p/books/devil-take-the-hindmost-a-histo...
* https://www.goodreads.com/en/book/show/91360
Starts with 1600s Tulip mania and 1700s South Sea Bubble.
And what about the people at various degrees of distance, but still riding the coattails of that.
"If it were wrong it would be illegal."
How much have, for example, social media companies ruined lives? It has certainly helped many people, but at this point in history, on a daily basis, how many people are hurt more than they’re helped?
“Evidence for the relationship between Instagram use and well-being, as indicated by ratings of life satisfaction and happiness, is limited and mixed.”
“Initial evidence suggests that Instagram membership does not seem to be linked to depressive symptoms.”
“Evidence for the association between Instagram use and anxiety is scarce. The majority of the studies suggests that Instagram membership does not seem to put one at-risk for experiencing elevated anxiety levels.”
My interpretation is that social media matters far less than we think. If it was truly so bad (or good!) we would have found stronger evidence in the data.
E.g. "I am not the system, I am fighting it", by fooling folks to buy penny stocks or what ever.
The people my age who became tech workers (like me) would have become IBs in the 2000s, lawyers in the 90s, or relationship bankers in the 80s.
Look at how many people my age with money completely gentrified NoMA in DC, Park Slopes in Brooklyn, large tracts of Mission in SF, priced out Gays from the Leather District in SF, CapHill in Seattle, made Austin uncool, etc.
Your gentrification comment is irrelevant
Society has changed, and software engineering is viewed as the goto high paying job for people in my age demographic. And to be honest it makes sense - you make six figures, almost never go into the office, have the ability to travel all over the world working remotely, low working hours, intellectually stimulating work, etc.
And it's my cohort that plays a role in buying property and making everything expensive.
The archetype of programmer you mention still exists (hell, I don't program for a living anymore but I still mess around with kernel programming and OS dev) but are very much the minority now. Majoring in CS and CE is a fast track way to become a member of the 10% in American society so EVERYONE is trying to major in it.
I liked code but at some point, I got pissed off at ego driven "10x" engineers who couldn't be bother to explain in a non-combative manner how they architected their code base even though I was directly impacted by it. I realized weilding the mallet of "Profit and Loss responsibility" could get the assholes to shut up and let the rest of the engineers get unblocked.
This explains the influx of grifters and “MBA” types into the software industry along with the focus of software onto marketing junk, psychological manipulation, invasive ai, scammy digital coins, and scraping up people’s private data.
A lot of them are actually ex-Bankers too
Edit with additional anecdote:
A friend of mine who works IB told me how most of SF's Goldman Sachs Analysts (new grad IBs) class in 2020 and 2021 left for tech (either PM or SWE) because you earn more as a new grad FAANG dev than as an IB Analyst ($90k base and variable bonus that ended up pushing TC to around $150-160k with 60-70 hours of work).
Just trying to view things from the perspective of the, sort of, non tech, non "HN user" person out in flyover country.
Also, us techies have 100% become the capital elite now. We all work jobs that can afford us a full 401k contribution yearly plus the ability until a couple months ago to pull massive FHA loans at near 0% to buy a house.
New grad SWE positions are paying around 100-110k a year for around 20-30hrs/week of work, while new grad accounting, nursing, IB, govt work (GS-7), teaching, and other "middle class jobs" are pulling in 60-90k a year for 40-60 hours a week of work. There is an EXTREME amount of resentment against Techies for that reason. We all love to bitch and moan about our gilded cage, but at the end of the day, our lives are fucking amazing compared to the rest of Americans.
Being in the top 5% doesn't necessarily make you adjacent to the rest of society.
This was true 20 years ago during dot com boom, so not much has improved. Select FAANG workers over the past decade living in San Fran are making the big salaries, but the cost and quality of living is a huge tradeoff.
I have worked for mega-companies via acqui-hire and I feel like my preference is based in solid experience. I’ve never hired into a company with more than 30 employees in my 30+ years as a developer and probably never will. My current gig is now grown well into the size range where I frequently am reminded why I don’t like bigger companies :(
In the end this is just a job, and we should focus on what's best for ourselves. This is possible and necessary with both large and small employers.
Knowing everyone you work with is certainly nice. At big companies you usually work as part of a team of, say, 8-12. And depending on your role and level you might rarely interact with others. At a startup you might have to talk to customers or other partner companies. So I wouldn’t even say it’s universally better in that way.
I do think a big benefit of startups is it’s much easier to get a sense of ownership for what you are doing which generally leads to more job satisfaction. Feeling like a mere cog can be demoralizing.
This is true, but why the focus on building new things? Improving and utilizing existing code bases is where most of the value from a software developer can be gained.
For me, I take joy from my work. I get to build something new and cool, and I work with a bunch of fun people.
We have enough money, and sometimes enough is enough. I could earn much more at another company, but why? What would I do with the excess money? Buy more shit I won't use? I earn enough money to support my family and I get it from a job I find personally satisfying. More money won't make me any happier, and will just cause more problems. No thanks.
Trying to maximize my salary at all costs just so "number go up" seems incredibly unhealthy and shortsighted. I'd rather be happy and fulfilled.
Sounds like you have an exit plan already worked out? You sound like you have a good retirement saved up or something else working to keep you free of worry.
For the majority of ppl working in this world, they don't have any options which is also accompanied by debt, and the future is always uncertain unless progress is upwards, and most of the time there is a ceiling to potential... There's often no healthy choices for people who didn't have the ability to save up.
So I make around 3x what I actually need to but save the rest. I expect to have enough to “retire” in a few years and then I’ll be able to pick jobs purely based on interest and fun and not pay. For me that’s worthwhile.
If $200K/year at senior/principal isn't "sustainable"--well, move out of the SFBA, I guess.
There was much more of a delta when I started doing this ~10 years ago, but even then few people were in a hard spot (again, SFBA types maybe excluded, get another two roommates I guess).
This is in my opinion the biggest luxury of working in tech over a lot of other occupations, being able to fairly comfortably value other things over salary and not having to take whatever job that pays a little more.
My default position has been that equity is monopoly money, and it’s been that position since the Simpsons mocked the dot com crash. “Oh, Bart: it’s not about how much stock you have, it’s about how much copper wire you can rip out of the wall before they catch you!”
There's an easy fix to that, and the only way I'd accept equity. Having my equity tied to founder equity value.
Thus, I will accept dilution, as long as a founders do, and this of course includes clauses for enrichment in any other form.
So a big new salary, or cash on the side, or any other method to take alternative comp, while dilution happens, lets me get mine.
Which is, of course, fair for me.
No games, no tricks.
So what you're saying, is the next lawyer in the chain, can always fool the prior?
If that is the case, then is an employment contract not the same? Suddenly, your contract now has you working for minimum wage?
Because 'next lawyer in chain' can always destroy all prior contracts?
So it is all pointless? Or are these lawyers only able to negate all equity claims?
Thus, the founders always get nothing? Or is it the VCs which get their equity diluted to 0, all the time, because no one can make a solid equity contract?
Note: if this happened to you, more info may aid us all.
Right?
Because there is no way to protect equity.
Right?
Because VCs can do anything they want? Because all contracts, and lawyers are worthless, right?
And only VC lawyers know how to write proper contracts, right?
So you will always lose?
Next on HN: now that American capitalism is proven null and void, on to the next bad thing!
What a load of hogwash. Do as I said in my original post.
It occurred to me yesterday that Flyer (1903) to Viking (1976) was only ~7 decades, and we're currently at Eniac (1945) + 78.
That said, I think the aerospace people had a far, far better grasp of the underlying principles of their domains than we do of ours, so there's still hope for major advances in software.
(OTOH, judging by his published output, Luca Cardelli believes he had Von Neumann programming all figured out by the turn of the century — so that hope may be slim)
I believe we are now getting closer to finishing the exploration of a series of extraordinary discoveries that happened in the 1900s-1940s or so, and have so far been unlucky in making any completely new discovery, so our rate of progress as we get near to a state Y is slowing down.
Edit: typos
We had a computer the size of a room and then sent one to Mars in just 31 years
Space we’ve obviously done really well. But even in commercial aviation we have planes carrying more passengers that use less fuel, less crew, and have far better safety records than 1976. And tickets are much cheaper as well.
This is a weird thing to write, because keeping custom churn low is one of the key points of increasing revenue.
Startups don’t really choose one or the other. They need both. I think the author may have been in such a rush to sort startups into “good” and “bad” examples that they bought into one startup’s positive spin on their own constrained growth.
I do agree with the general point that a return to focus on sustainable business is good for the industry. The easy money of the past several years has produced some weird distortions in the industry. I’ve been involved with startups where shipping product seemed like it was the lowest priority. They were so busy hiring credentialed managers and building out elaborate org charts and planning unnecessarily complicated off-sites and events. It felt like the infinite funding created an environment where they felt financially successful despite barely having customers yet, and they turned themselves into big company excess because that was the cargo cult thing to do.
This has always bugged me. Yes I get it you don’t want to put it in some passive-voiced “mistakes were made” kind of thing. But what does it mean to “take responsibility” if there are no consequences?
It would be meaningful if the “take responsibility” statement was followed up with “and I’m submitting my resignation effective immediately.” But “I take full responsibility… and y’all are fired” is just a way to get the good feels of “owning it” without actually owning it.
This is a very old management trick to avoid further arguments and discussion. You wanna avoid telling someone they're incompetent? Just say "it was my mistake to have hired you, we weren't ready to have someone in your position". You wanna rescind a job offer because you got cold feet? Just say "our HR made a mistake, and this offer shouldn't have been made". It also means you're not willing to work together to solve the problem.
The reason for those mass-layoffs are not "mistakes" by founders, and they're happening at the same time for a specific reason: to put employees collectively at a disadvantage in terms of salary and negotiations. They successfully shifted the discussion from this to "Why are they taking responsibility without any consequence?".
> The reason for those mass-layoffs are not "mistakes" by founders, and they're happening at the same time for a specific reason: to put employees collectively at a disadvantage in terms of salary and negotiations.
See, I think they're all happening at the same time because these companies are publicly traded, so executives are primarily concerned about shoring up the stock price ahead of an expected recession.
In the general case, from the company perspective, the layoffs have to happen to keep the company healthy. Regardless why it has reached this point.
When it comes to the CEO, they are admitting fault to the board, but the board is choosing to retain them, perhaps feeling the incumbent CEO may be best situated to right the company.
My assumption is that the consequences come when it happens a second time and the board says “enough, you’re finished”
It might feel like vindication for a CEO to be fired due to the necessity of layoffs, but on the other hand a CEO who did not overhire to maximize growth in the boom times could just as likely be fired by the board for failure to capitalize on the bull market.
We may find it morally abhorrent, but it's important to understand what's going on. The business world does not start from the axiom that layoffs are always the result of management failure.
So a CEO "taking full responsibility" is what, a claim of success?
> My assumption is that the consequences come when it happens a second time and the board says “enough, you’re finished”
This is precisely why many boards are rigged with yes-people. It provides the illusion of accountability.
So on one hand yes it makes sense to splurge when money is cheap and then cut back when it isn’t, on the other you may cause long term damage to your business doing this too much. I think tech companies probably overdid it the past few years.
Perhaps that incentive is the problem?
The incentive isn't something artificial, it's just how certain markets work. E.g. a city might be able to support hundreds of pizzerias, but only 2-3 ride hailing companies.
The mythical man-month is about how adding individual new members to an existing software team doesn't necessarily make the team deliver faster (and can even slow them down). Nowhere does it claim that adding more parallel projects or growth initiatives to a company slows the company down.
>..the incentives of a managerial class are not the same as the incentives of the lone entrepreneur. They have different timelines, risk profiles, and diversification/skin in the game. The managerial class is often motivated by a huge salary, so they’re more likely to play it safe to preserve their job. Even if the companies fail, they’ll get extremely rich. They’re just trying to hang on for as long as they can. Owners however are often motivated by their equity, so they’re more likely to think in the long-term interests of the company.
https://eriktorenberg.substack.com/p/burnham-elon-and-the-re...
Disruption itself is a game of usurper; not one of business fundamentals.
The agents still act "rationally" (in their own best interests, supposedly), but those interests are defined differently than suggested.
The problem is that once the VC industry reached its peak, the capital itself became a competitive weapon. If startup 1 only really needs $10 million in capital to reach profitability, the VCs can't make that much money off of it. So they will fund startup 2 with $100 million over several rounds, and almost certainly knock startup 1 out of the market just by scaling faster. That means startup 1 essentially has to raise and burn massive amounts to grow as rapidly as possible, even if they would prefer to go with the $10 million to profitability plan that would be considered the only sane route in any other industry. And it leads to the almost unbelievable to anyone in finance outside of VC situation of investors being pissed that a company isn't burning cash fast enough.
I do because I was raised in a roman-catholic country rich people are not supposed to be worshipped - straightforward interpretation of the Bible.
On the other hand when I read stories of Elon Musk the real-life Tony Spark whose by the sheer force of its genius brain is going to save Humanity by making it multi-galactic, that does remind me of the hagiographies I had to read when I was young - those unbelievable but nonetheless believed biographies of the saints of the catholic pantheon.
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https://en.wikipedia.org/wiki/The_Protestant_Ethic_and_the_S...
When he discussed it in the Protestant Ethic, he used Lutheranism as the chief example of the unio mystica that contrasted sharply with the ascetic posture. Later he would associate "Luther, the symbolic exponent of bureaucratic despotism, with the ascetic hostility to Eros — an example of Weber's sporadic tendency to link together bureaucratic and ascetic modes of life and to oppose both from mystical and aristocratic perspectives."
However, Weber saw the fulfillment of the Protestant ethic not in Lutheranism, which was too concerned with the reception of divine spirit in the soul, but in Calvinistic forms of Christianity.[6]: 32–33 The trend was carried further still in Pietism.
http://targuman.org/2016/07/21/seeking-comfort-in-crisis-cre...
Which does beg the question though: given that Germany isn't Calvinist, and we still have founder worship, is Calvinism really the reason founders are worshiped in the US?
Conversely complaints about founder worship typically drip with ressentiment. It's funny how all of this anchors back to Nietzsche's expansive take on the influence of Christianity in Western culture.
People look to the survivors and see that it paid off in the end. They don’t need to bow down to no one and they’re able to exit the hamster wheel.
Case in point I know of someone who sold their small company for like 20 million dollars. Peanuts compared to billion dollar exits but gargantuan for most regular people. This dude was apparently some regular dude who sold the company in his 40s and he basically quit and focuses full time on his family. No longer needs to work 40 plus hours a week nor play office politics. He’s set and so is his family.
By contrast, can you even name the heirs of the Rockefeller fortune?
Except this still defines 'success' as "making a lot of money". If making money is a result of being successful, then if someone doesn't make a lot of money, can they be considered successful, and how? I challenge you to name three contemporary people worshipped as successful but aren't considered successful in terms of their net worth.
Side note: A $20 million payoff is still rich and absolutely out of reach for most. A person working full-time at $15/hr could work for 600 years and still be $2 million short of $20 million.
The discussion was about worshipping startup founders and success was in that context. My point is that people like us (tech workers, assuming u might be one too) look up more to escaping the hamster wheel of promotion driven development and other bullshit in favor of just living life. Startups are a capitalist game. You don’t need to play it, you’re free to do something else.
I specifically said "worshipped as successful" to require not just personal opinion. I mean worshipped in the same way as Jobs, Gates, Musk, Bezos, or even entertainers like Oprah Winfrey, Steven Spielberg, Lady Gaga, Michael Jordan, Tiger Woods, and so on, are worshipped.
I mean Steven Hawking, Neil Degrasse Tyson, Higgs, Tim Berners Lee, etc are all “worshipped as successful” by many people since they’re popular and well known. In my circle of casual science fans (we aren't scientists) we worship these people because we like science.
Success leads to money. Unless you’re in a commie country where it might lead to gulag lol.
Thank you for your analysis. It is both penetrating and diffuse.
I’m a software engineer and I’d say I’m pretty good considering I always rank in the top 10%, so it makes sense to me that I’m paid a lot of money.
I’m starting a company and I plan on doing my best to succeed on it. If I do, my success will lead to money.
What I’m trying to say (esl so it’s hard for me maybe to convey) is that money is a side effect of being successful aka being good at something.
That's an issue too, because "success" increasingly looks dependent on timing more than anything else. Your company could be a money-burning endeavour and you could still come out rich if you impress the right VCs and time your IPO.
Jack Dorsey and Evan Spiegel are billionaires, yet their companies lose hundreds of millions pretty much every single year. Same for Shopify, Uber and many other "unicorns".
Good for him, but he’s still no god. I’m not worshiping any man.
What that means is unique to each of us b
What? The historically protestant countries are where social democracy have been the strongest, compared to catholic countries.
And while I understand the point that the author of this article is trying to make, I don't think that there will be any significant value reset (of any kind) in the industry that will be remembered in a few years. Moreover, the industry will likely always have sycophants, as they are the objects that drive this optimism and hype for those aspiring to achieve greatness.
We have been pointing this out for more than a decade : antitrust has been asleep at the wheel !
"World domination" is not something to be encouraged in a company !
If the worst offenders like Facebook and Uber had been made an example of and shut down then (including by pressure from other countries), we would have had a much less insane funding environment.