Dustin Moskovitz: Y Combinator’s “No Idea” Round Bad for Silicon Valley
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I think YC is making a statement here: talk is cheap and ideas are cheap, but people are really expensive. If you want a solid company, the people matter more than the idea, because the idea will change over time anyway.
I know a lot of people who think that they have to have a "stroke of genius" where they think of something innovative before they can be a successful entrepreneur, when a lot of the most successful companies really did reinvent the wheel (they just did it better!).
The idea for a company is an artificial barrier to becoming an entrepreneur, because the idea isn't nearly as relevant as the execution (It's simple: what makes Apple or Google special, or more specifically, what made them special when they were starting out?). It almost always boils down to their approach to a problem instead of just the problem they were trying to solve.
I largely agree with this sentiment in general. However, all ideas are not created equal. Most successful companies seem to make 2nd order corrections and refinements to their ideas, but not change them all that much. Case in point, facebook hasn't changed that much in terms of vision and what it provides for its users since it started. Same for google, apple, airbnb, heroku, dropbox, reddit, mint, basecamp, ...
[i don't mean to say that those are the same type of success, just illustrating that what i said applies to a lot of very different types of successes]
Google started as a search company (now an advertising company, which offers search, phones etc)
Apple started as a computer company (now a consumer electronics company)
Airnb started as air beds on occupied flat floors, not renting empty flats
Of course some companies have a great idea, execute, and stay true to it (perhaps like some of the others on your list like dropbox for example), and for those above you can trace their origins in the preoccupations of many of these companies today (Apple still tries to bring computing to the masses, Google still has search as its focus, and arguably makes advertising money because of good search), but often they have moved quite far from their original inspiration, and they have often made their money in unrelated areas (e.g. Apple is now making far far more from iPhones than it ever did from computers).
I do think ideas and plans matter less than execution, because ideas tend to change so much when they come into contact with the real world and real users, and you can come across plenty of great ideas (or even get them for free from your users) as you create solutions and learn about a particular area.
I smell a logical fallacy. The fact the ideas tend change shows that they actually matter, otherwise they would not change. If ideas didn't matter Nokia would still be selling rubber boots.
This is when I decided this must be a parody.
Why does the idea for my company have to be my own idea? We could potentially have really talented founders who simply haven't had enough exposure in the right ecosystem (let's face it: not every place in the world is like the Bay Area) to have an idea for a startup yet.
A couple guys had an idea for a cheap computer and a great search engine, respectively. And they executed it well. You're kidding yourself if you think the Steves sat around and said, "what is it we should do with our lives? We need an idea." They knew what they wanted to do, and did it, and continued to believe in it (in Steve Jobs's case, for his entire life).
It was their passion for the ideas that determined how successful their respective companies were, perhaps combined with traits about themselves. Do you think Apple will ever be as successful without Jobs's dedication? Maybe successful, but not innovative, and doomed to eventually run out of steam. Google is already failing because they are losing focus on the idea that made them great.
I don't think a company can be truly successful unless the people founding it truly believe that the idea will change the world (and how can you truly believe in an idea that you haven't discovered yet, and that you have to go to an incubator to work on?). Of course, this is meaningless in today's perceived-value bubble, which might be why Y Combinator is trying it.
In the end, and I hope I'm wrong, I suspect this will draw out people who are just looking for a cash-out vehicle. "I heard there was money to be made in Silicon Valley, but I don't know what company to start. Help me find an idea!"
From the way he tells it, there was no "Aha! I must sell books on the internet because books are my passion!" moment. Instead, he went methodologically looking for something to sell online, and books had widespread appeal, were easy to ship, and lent themselves to being searched on a website.
> One day that spring, Jeffrey Bezos observed that Internet usage was increasing by 2,300 percent a year. He saw an opportunity for a new sphere of business, and immediately began considering the possibilities.
> In typically methodical fashion, Bezos reviewed the top 20 mail order businesses, and asked himself which could be conducted more efficiently over the Internet than by traditional means.[1]
Idea: Build a better mail-order business using the Internet. He saw the potential for the efficiency of the Internet and automation to make mail-order businesses obsolete. He didn't look at the Internet and say, "gee, I want to be an entrepreneur, what company can I start here?"
By your own quoting, he did exactly that. Maybe rephrased slightly, so as to frame "I wanna be an entrepreneur" as "I saw an opportunity", et c.
The point is, Bezos wasn't suddenly awestruck with the epiphany that the Internet was going to change selling books, which incidentally was one of his great passions.
And one product that was not well represented on the Internet. This made books & publishing ripe for disruption.
Oh really? How many successful entrepreneurs have you heard of without ideas, just totally empty heads and whole bunch of hustle? Do they just hack away at nothing? Do they hustle without any purpose at all? And how many companies have you heard of without any ideas behind them? Don't be silly.. of course ideas matter. YC recognizes that individuals that work hard can come up with great ideas. Of course an entrepreneur must have an idea before they start working on something. Can that idea fail miserably? Sure, but great entrepreneurs will keep going. The failed idea/company will be ripped into bits, and the good parts will be funneled into a new idea. Over and over and over again. YC is banking on their ability to identify people who can come up with ideas and execute them.
> It's simple: what makes Apple or Google special, or more specifically, what made them special when they were starting out? It almost always boils down to their approach to a problem instead of just the problem they were trying to solve.
An "approach to a problem"? Oh, you mean an... idea for a solution to a problem? Yeah. Ideas matter.
We'll find out after this next YC round. Besides, I think the point is that pg is looking for people that are the antithesis of empty heads. Startup ideas mutate, and if you can find driven people with fertile minds and place them in a setting where product ideas can be brainstormed and hashed out with the guidance of the YC team, then they stand a much better chance of success then the typical entrepreneur who might try this on their own.
Coming up with a decent product idea is hard for most people. But I have to wonder, is it hard because they expect the ideas to come easily and have never spent the time to really focus in on it?
The lessons learned will be meaningless that quickly. It will take more time than that to discern the real impact.
Some examples:
Id, shipped 3 games before Wolfenstein Flickr started as an MMO company Rovio shipped 60+ games before Angry Birds Twitter's first project was a podcast directory
I'm sure there's hundreds of other examples.
> Obviously you need some idea before you start making a product
That's not the discussion though.
>> The idea for a company is an artificial barrier to becoming an entrepreneur > Oh really? How many successful entrepreneurs have you heard of without ideas, just totally empty heads and whole bunch of hustle?
Can you be an entrepreneur without an idea? Obviously not.
And even Microsoft had an idea for a product (starting with the BASIC interpreter for the Altair). That was, after all, where it all started.
This is because we are going about it backwards. A successful entrepreneur obviously became successful by executing on some idea. That says little about what came first: the desire to strike out on their own or the flash of an idea. My guess is that there is a fair percentage of both these cases plus the third case where someone was forced into being an entrepreneur (I put Google in that category).
So yes, ideas matter but when used as a criteria to decide whether to startup or not, they are an artificial barrier.
I know more than a few people where we could sit in a room and brainstorm some decent business ideas. Maybe not even ones we want to work on, but a building full of these people, with ideas coming out of one room, being refined in another, maybe being executed in yet another? I think that could lead to something.
Other than the empty heads part, it's pretty common. That's why we will probably see millions of smartphone apps within a few years.
IMO, YC focuses on a particular type of entrepreneur. One of their features is that they don't place a high value on bootstrapping and place more value on working within a collaborative ecosystem. Those traits indicate flexibility.
Most of the ideas that YC companies pursue are not visionary in a way that correlates to the type of passion underlying an Apple or Oracle. They're usually more practical, limited and don't require a Jobs or Ellison.
*A former bakery owner and professional bicyclist, he was choking down PowerBars
for energy in the middle of a daylong 175-mile ride. "I couldn't make the last
one go down, and that's when I had an epiphany -- make a product that actually
tasted good."*
-- Gary Erickson, founder and CEO of Clif Bar.
Quoted in Fortune Small Business, October 2003.The part about making a product that tastes good?
So how exactly does that idea change? In itself? Like magically? Or is it perhaps so that somebody needs to come up with that idea? So if there's nobody in your company who can come up with an idea then what? Because in the beginning Uncle Paul gave to you an idea. Because you where so dumb brick that you couldn't come up with anything while applying to the YC. So now you are implementing it at it does not work out, ideas change, you know. So you pick up the phone and call Uncle Paul in need of a new idea? To pivot in the billion dollar business. Really? But hey, first, to come up with and idea to call Uncle Paul for a new bllion dollar idea you need an idea that the current idea does not work and you need an idea to call Uncle Paul. Now what?
Meanwhile, cancer is uncured, the moon is lonely, etc.
By the bye, there are thousands of researchers & doctors around the world trying to cure cancer. As for the moon, it's not exactly the most compelling place to live.
We don't have enough entrepreneurs?
People talk about the "tech bubble" all the time, and that's a debate you can have, but that's always related to social web sites.
We really don't have enough entrepreneurs, because entire industries (healthcare and education are two good examples) are lagging and not taking full advantage of today's technology. So yes, perhaps Instagram could have been overvalued (or any other big acquisition for that matter), but that only emphasizes how much progress we need to make in other industries.
In each case, I sat down and said "I wonder what kind of company I should start", and followed a methodical process.
I didnt really have a choice. I would have been miserable if I'd stayed as an engineer at Apple.
For example, Quantcast. Konrad had done an applied stats company and I had a big data background. So we think about insurance fraud (sales cycle too long, concentrated customers), starting a quant fund (which is more fickle, the market or investors?), etc, or ad targeting.
Ad targeting. Big, fast growing market, and it's all script kiddies except for google (this was 2006). But where do you get the data? I knew that publishers hated comscore and Nielsen with a passion. So, free measurement service and provide targeting along with. Then, how to promote it? Using SEO. Create a web page for every site so that it shows up when a webmaster searches for his site name. Once you have have petabytes of data, hire PhDs and give them powerful tools. And voila, powerful as targeting with a unique data advantage and publisher relationships.
You want big market, fast sales cycles (aka easy customer decisions), fast growth, slow witted competitors, and most of all don't even start unless you know how you will promote and sell it. I'm partial to b2b because consumer is so random, it's a tipping point thing and there's almost never any technology involved.
Cool problems are cool problems. Find them, choose the one you can solve.
> I'm just not suited to general employment
Defines me incredibly well. I either rise to a critical position within an organization within ~18 months or I wind up leaving ~24 months because I feel like I've added all the value I can.
If it doesn't work out, then no harm, no foul.
I wonder what Dustin would have to say in an alternate universe where he was just another Harvard CS grad.
What YC is doing is opening up entrepreneurship to a whole new group of people - who might be just as competent as you - but don't want to work for you.
Also, I think what type of 'impact' I make is something I'll decide for myself. Working for your companies is not what I think is the best thing to do with my 1 and only life.
If this was all they said it wouldn't take much clarification to show another (more likely) meaning... you [your team] does in fact have ideas, but none of them are the one. You have a demonstrated ability to see problems and invent creative solutions, but in this case you're looking to find the problem that can best use your talents– YC being one of the best places to do that.
If a bunch of people submitted apps, thought about entrepreneurship, and 5-10 groups or individuals got interviews, thought more about entrepreneurship, and some (or none) got into YC, I don't see how this really changes things.
In fact, I think we'd all win from 10-18 year olds learning more about entrepreneurship (at least as an option), so they could steer their careers toward it -- by working on independent projects, by working for great companies (like facebook) where they can learn and meet cofounders, etc.
I agree that working for a company like Facebook is probably a better purely-financial decision than starting a startup, for a lot of of people, but I'd rather do a startup anyway.
Ironically enough, this meta-idea might be so revolutionary that the ideas that come out of it from the entrepreneurs (since they will be forming in a different environment) could turn out to be dramatically more impactful than if left to come up with their idea on their own.
At it's best there's a brilliance to it. What's your idea?
"Does it really matter? Throw me something horrible and I'll still execute flawlessly"
At it's worst: I can't think of anything... tell me what to do. Obviously these people get filtered out
I disagree. These kinds of "hey, let's start a business" conversations happen all the time among would-be entrepreneurs long before they've come up with an idea. YC's "no idea" round is simply taking what would have been a discussion over drinks with friends, or in a dorm room full of CS majors before applying and moving it later, so it happens under supervision.
Looking back, it was so naive to have written a few business plans, waiting for that 'unique' idea to come up.
I would say, talk to 50 folks (potential customers) about a problem. See if they acknowledge the pain and if they would pay for it to be solved. Try to put a number to solve that problem - how much would it cost (direct or indirect) them without that solution and just build it.
Does not matter whether competitors out there are already building it. Every business would take its own course based on customer feedback and no two businesses' vision will be the same over the years.
Zuckerberg said that he created Facebook because he felt like it needed to exist, but that he had immense respect for Jeff Bezos, even though Bezos' motivation for being in business was of a different nature than his own.
I think that this will be quoted in the future to indicate when bubble became obvious. I mean, come on, how much money must be flying around there for free, if they are willing to fund a band of 18 year olds who don't even know what they want.
Most successful founders have an initial idea, talk to potential customers, and find a related and sometimes completely unrelated thing that people want more and/or that excites them more.
It may yet turn out that having an idea is an indicator of something that is currently unknown but important, and that cannot be filtered for otherwise. If this happens, it will be apparent to YC soon. Meanwhile they are innovating, taking risks, and trying new things - which is exactly what I would expect from a group of people teaching others how to build better startups.
One believes that an entrepreneur needs to serve a cause and do something to better the world and success will come proportionally to how much they have enriched others' lives.
The other believes that an entrepreneur just needs to make a boatload of cash.
There are countless examples of successful entrepreneurs that pursued both routes, but I do believe that those in one camp probably wouldn't do well if they tried the other. Some people are just very smart, and sometimes smarts, hard work, and some luck is all you need.
There are more paths than your path Mr. Moskovitz.
Their argument is not that smart people can just make anything work, but that smart people who have the desire to change things in the world for the better almost always have an idea lingering in their head.
They just need help finding out what that idea is and YC finds they are good at helping people do that.
Think about how many people left good companies for bad ideas and pivoted to something else.
With Dustin's point of view they would have been stupid for leaving said big company in the first place, but alot of times the struggles after leaving the security blanket are what make the greatest ideas come to life.
I hope YC continues to be transparent with the results of this experiment, I think it could prove to be even better for the valley as it gives people who are truly qualified the confidence to do something without feeling like they are going at it alone.
In my experience some of the most risk-averse people who think the least of themselves are some of the smartest people I know.
I'd be willing to bet I'm not the only one who sees that pattern.
Facebook has to be the creepiest company in the history of business. It really shouldn't even be a company.
It's just a website that an enormous number of people have decided to simultaneous use, thereby creating connections. (Which is a great thing, but I would not give Mark Zuckerberg or this guy any more credit than any other web developer. They were lucky, not brilliant.) People could choose any website to make such connections. And there are hundreds of thousands of kids who could create such a site. Zuckerberg himself had to take the FB idea from someone else- his HotOrNOt clone (FaceMash) or filesharing application (WireHog) would never have made it- he did not even have a solid idea. If this kid had his way, he'd ensure they were all his under his employ. And all their ideas would be property of FB. Nice try.
However, the interesting thing here may not be one of whether an idea is necessary to initially catalyze a great company... or not. That seems like a chicken or the egg kind of question. (Do great companies breed great ideas or do great ideas breed great companies?)
Instead, I think the focus on the individual may be the most pertinent from this article. For some, those who are great at building within a company, being engineer #100 at Facebook is perhaps the greatest place of impact that person could have. Of course the converse can be true as well, which is the story we're all too used to. The underlying assumption is that a person's greatest placement is proportional to her natural inclination and disposition, and I'm inclined to agree.
I don't imagine the interviews to be along the lines of "Do you really want this? Do you reckon you can make something awesome? Great, you're in", rather that this is more for successful teams 'in between ideas' or great combinations of proven individuals. Otherwise I find it hard to see what the selection criteria could be.
Different people have different aspirations, and not all them involve Sr. Moskovitz' opinions of 'success' or 'impact'.
This question assumes only one of these is a viable path to a successful business, when it's clear that the path into entrepreneurship, like the path into a good idea itself, is anything but linear. It's easy to insist on a priori grounds that someone is doing it wrong, but the only proof that matters is whether a viable business emerges from the end of the process.
One cofounder of a big company believes that if the good workers try to compete with his company instead of working for the big company is outright bad.
“The only reason you should be an entrepreneur is because that’s the only way the idea will come into the world,”
Vs
"A lot of great people are wasting their time and talent by pursuing 'something that doesn’t exist yet,' instead of joining bigger projects that already have proven ideas."
So, isn't YC trying to achieve precisely the latter: getting talented people into a proven entrepreneur's business?
To anyone having even a fleeting interest in "entrepreneurship": you don't need any special reason to do it. You don't need to justify it to anyone.
Leave the Grand Unified Theory of Startups to VCs and tech pundits. Do it just because you want to.
You don't ask permission to write code, do you?
...building on an existing idea. This reads like a pitch to hire talent in a tight technical market from a platform company. All those little startups wasting their time again.
Without this information it is difficult to check if Dustin's critic make any sense.
Anyway having more engineers with that kind of experience, creating a business from scratch, is great for the ecosystem.
"We're not sure this will work, but if it does we'll do it from now on"
What he's really saying is he knows others can do what FB does and do it better. But he'd like them to just concede the social networking space to FB. "Don't bother trying to compete. You won't have an impact."
Edit: They fixed it. It lives on in the URL, and a comment below.
"Dustin Moskovitz Doesn’t Plan to Leave His Wealth to the Next Generation"
"Dustin Moskovitz: Asana Could “Certainly” Be a $100 Billion Business"
"Dustin Moskvitz: Y Combinator’s “No Idea” Round Bad for Silicon Valley"
"Dustin Moskvitz: Leaving Facebook One of the Hardest Things I’ve Ever Done"
"Key To Facebook’s Early Success? Slow Growth, Moskovitz Says"
"Dustin Moskovitz’s Worst Grade at Harvard Was a B+ in Intro to Computer Science"
"Live From PandoMonthly: Sarah Lacy’s Fireside Chat"
[1] Who chose red / green? I'm not colour blind, but I think these are not a good choice. Especially since the squiggles are the same - at least make the shapes different.
I want to say Microsoft, in Word, and green did not originally exist until later versions (if my memory serves). Not sure that they put spell check in a word processor for the first time (Wordstar?), but I think red underlining was originally a Word thing. I could be wrong.
Anybody know for sure? Now I'm curious, and it's tough to Google.
The danger's not that the ideas will be mediocre, because ideas change so frequently at the seed stage as to be dispensable. I think the real problem is more subtle, and it's the fact that this kind of presentation will attract the wrong sorts of people: narcissists who are attracted to the "we don't invest in ideas, we invest in people" rhetoric that VCs often use. That line is practically designed to appeal to narcissists, because a pathological, arrogant narcissist is going to hear those words and think, "well, I'm already a shoe-in then, because I'm better than all those other idiots who are applying". People will apply just for the personal validation of getting in, and in a "no idea" round, there's no way to filter them out.
There's a flip side of this as well: if you're rejecting or accepting a business strategy or technology concept, people who get rejected will be able to walk away with their dignity intact, because you're turning down a strategy or a plan rather than that individual as a person. So it's entirely impersonal, and they'll apply again in a year or two with a better idea. The "no idea" round is going to leave a sour taste in the mouth of everyone who gets rejected, even though simple mathematics tells us that the vast majority of applicants will be.
By the way, although I don't think PG's motives are such, here's what most venture capitalists actually mean when they say, "oh, we invest in people, not ideas". It means that they invest in stories, and that their decisions are going to be swung by unusual personal stories and heroic narratives, so you can expect a lot of Aleksey Vayner types to get in.