Value is created by doing
blog.samaltman.com
blog.samaltman.com
I'm interested to read at least one post on the opposite advice -- what happens when you're too heavy on the "doing" end of the spectrum? Are there examples of startups failing because of too much emphasis of execution? At the very least, the "ideas are nothing, execution is everything" meme is clearly logically flawed. You can execute as fast as possible while creating zero customer value.
That being said, it's very, very difficult to dismiss mistakes, as wastes of time, as everything is a learning opportunity in the end. Of course mistakes have consequences related to resources (time, money, etc.), so it depends on how long your game is (and therefore how large of a margin for error you have).
Plenty, and we see it every day, except they don't call it "failure by doing too much". They call it things like "not understanding the target market" or "focusing on features rather than experience" (more generally "not thinking enough")
Maybe it's because many of the ideas in the "ideas are nothing" category are twitbook/fourit/squaresnap/flickchat/... clones, rather than ideas like "let's build a product for market X using tech Y to reduce problem Z".
(Edit: In some ways we do have such a framework. For example, I am sure that venture capitalists have a lot of paradigms for doing just that. But this meme of "ideas do not matter" still persists and is oft repeated by venture capitalists themselves.)
In contrast, as you say, there are huge amounts of armchair ideas that are not worth very much even if they are correct. For example "software will eat everything" is something I believe is mostly right. It is also a business idea with direct implications for action. Despite this, it is only valuable to set the general direction (let's do software), but not any specific cases. It does not mean that every case of transforming a traditional business into a software one is going to be a grand success, or even profitable. In fact, these types of ideas have a tendency to cause one to forget the exceptions from the rule, and thereby being actively harmful.
technical debt
It's almost a Maserati problem when you think about it.
Had the technical debt been paid up front, the iteration rate might have been much faster (e.g., good encapsulation and abstraction allows you to switch out things quickly to test different mechanics in a game), leading to a better end product that people will pay for.
Technical Debt = When you coded without thinking AND your project is successful and growing. It's debt because now you have to go back and fix/change the code.
Technical Grant = When you coded without thinking BUT your project is NOT successful and fails. It's a grant because it saved you time.
Most projects / startups fail so for most people "Just Do It" works better. Plus the product you envision is almost never the product you end up with. So all that thinking you invested can be a waste of time.
http://www.codinghorror.com/blog/2009/02/paying-down-your-te...
But I would bet that if you let the market dictate too much too soon, it will be harder to truly innovate, which is usually what the original vision was about. I'm obviously making some pretty big assumptions here but people know only what they know, and sometimes it takes carefully timed and constructed execution to snap them out of it to create a new paradigm and take things to the next level.
Improving skills can take the form of learning a new tool (css -> sass), a new programming pattern (like currying and monoids in functional programming), and more along those lines.
Granted, a huge problem with technical debt comes when your playing with a team, and if X people are going to be using your code, but it takes Y time to explain how that code works, then if takes Z time to refactor that code, and only W time to explain after the refactoring. Then, if XY > Z + XW, refactor every time!
The ones that pivot endlessly and run out of cash?
But the bill came.
http://investor.groupon.com/financials.cfm
Groupon had (in q3 2013, the latest I could find) 595M in revenue and 14M in operating income, an EPS of 0.02 excluding "excluding stock-based compensation and acquisition-related benefit", and 1.1B in the bank.
Not a smashing success, but is it a failure? The jury is still out on this, imho.
Given that success and failure are both relative terms, I would say Groupon is only a "failure" if you're measuring it by the perceived success it would have. So I would say that if you expected Groupon to be a $10bil company, they are a failure...but if you expected Groupon to be a normal company of a few million in revenue, then they are an amazing success.
Although Groupon may not have had the most lucrative business model in the world, I still feel like they've done a great job at "sticking to their guns" and not trying to enter all kinds of other markets (and failing miserably).
In less than one year
I can't think of a startup, but I can think of people like that. The first people that come to mind are the Mythbuster people. Very handy, very good at cranking out their ideas into meat-space - but my impression is that there is very very little critical thinking. This is probably in large part due to the demands of TV (You need cool gadgets and experiments - who cares if the experiment is poorly conceived when it looks cool?)
But a lot of hobbyists also fall in to that category: doing projects that have already been done, or ones where the solution isn't particularly intellectually exciting/innovative/stimulating but just mostly takes a bunch of time (ex: spending your weekend programming a PLD to control a stop light).
It's kinda hard to accuse these people of "doing" too much.. b/c doing is better than just sitting watching TV. But say instead of programming a stoplight all weekend you for instance read some textbooks and learning some higher level math, or read some blogs to get some inspiration, or read some scifi to get in a more creative mood - It gets kinda harder to make an objective comparison of which is "better".
Of course non-wealthy people can build things in the evenings and weekends, but, then they begin dealing with issues of stress and burnout. I'm glad YC helps to give folks a chance. I do think one of the less talked about benefits of a strong middle class and even wealth distribution is people have time/ability to innovate on their own.
For now, it looks like I'm going to be working for a while to pay off my student debt and save money before I can even dip my toes into working on something interesting.
The idea that people should be allowed to work on their own projects but is funded by "others" (say, via taxes) is made to look like leeching off the group. The benefits are, while still theoretical, never talked about.
The value i see in a BI scheme is that the natural geniuses of the world gets to do what they are a genius at doing (e.g., somebody might be a really genius teacher), instead of doing the thing that earns maximal amount of money. I know somebody who is a great teacher, and he, at a great financial sacrifice, quit his job to be a teacher instead. He raised so many good students, which go on to bring priceless value to society, and yet the money he recieves is a pittance. He would've made at least a 6 figure income easily, working less hours had he remained in industry.
some people might call me a communist, but i really do believe they had some good ideas about equality (just that i don't see a way of governing such that corruption and inequality doesn't proliferate...).
Imagine a world where necessities of life is produced enmass by the government, in such a way that the cost is so low as to allow it to be provided to each citizen for free. Then BI would become possible. But i don't see it comeing any time soon.
My corollary to that is that if you write software that does create value, it doesn't matter what editor or language you use. So if you're super duper productive in Perl (or whatever) don't worry too much about chasing after whatever language HN is fetishizing at the moment. It will change in a few months anyway.
I'm not trying to say learning new languages is not worth it. I'm just saying that if you stick with what you know well for your production code, you can probably generate value more efficiently than if you are switching to the new HN fad language every six months.
It's completely inadequate. See, for example http://www.ted.com/talks/rory_sutherland_life_lessons_from_a...
(As a side note, it's ironically hard to find out what this guy actually does!)
All of which is too bad, because Marx had a lot of interesting and valuable things to say about the problems of industrial economies (see http://www.youtube.com/watch?v=qOP2V_np2c0 for a good introduction), even if the solutions that were tried in his name didn't work out. It just wastes people's time and energy having them spin their wheels re-discovering things he discovered 150 years ago.
> the value of a commodity is only related to the labor
The problem is that "only" word. Saying that labor is essential to create value is different from saying that labor is the only component of value.
And to take it further, the article claims neither of those, it only says that if you want to turn labor into value, you must apply the labor in some activity that creates value. Yep, quite tautological once you remove all the interesting parts.
That said, I agree with the other comments in this thread that linking the blog post to the Labor Theory of Value doesn't really make sense. I don't see anywhere in the post that defines "work" in a way that excludes activities that generated perceived value.
I think an interesting follow up conversation is to consider what "doing" really means. The Rory Sutherland talk you link makes a compelling case that there is an entire class of activities that generate value for a product/service but that you cannot directly measure in terms of material result (at least not right away) e.g. Frederick the Great spending time convincing people that potatoes are good wouldn't have tangible results until much later when demand rose.
As hackers and engineers the idea of "creating value by doing" resonates with us. We're happy to hole up in a dark room and create. It feels great. Wish I could do that for the rest of my life.
The reality is if you're selling something then that's the only validation you should be looking at to know if you're creating value.
I say this from the perspective of starting up where the point is more easily defined as creating direct economical value.
You can't sell something that doesn't have value to the buyer. Therefore, if someone buys a thing from you, it already had value before you sold it.
But don't get me wrong here, effective sales is an essential part of the value-creation process. It's the other side of the coin. Like the old tree-in-a-forest adage, if someone made a valuable thing and no one bought it, did it really have value? It's hard to say.
Selling something may not create value, but it does realize it: it quantifies the value -- value that already existed -- and turns it into money.
Well put. What we have to be careful of is being fooled into thinking we're creating value if in the end that value can never be realized. Essentially, not having value.
I like PG's distinction of wealth (i.e. value) and money: http://www.paulgraham.com/wealth.html
So, while selling realizes a monetary gain, it does not necessarily create wealth also.
Here is why I still think it does create wealth:
* there is economic value in allocating resources efficiently
* (non-monetary) user acquisition increases the value of network effect driven products
* money goes to work when infused into a productive company (instead of being idle, money is invested in wealth creating assets)
Getting money is multiplying value by business.
As PG says entrepreneurs should "Live in the future, then build what’s missing."
Investors allocate capital to what will be more valuable in the future: whether it is something that is missing now or whether it is something that will simply continue to grow in value.
Venture Capital is an interesting middle ground because not only do you allocate capital but you also assist the companies in creating value and you have to compete to be able to invest in the most promising companies. By blogging well you are building your brand and this will help you meet great entrepreneurs and increase your ability to have access to invest in their companies. Of course your reputation will mainly be based on the track record of your investments and how much you help the founders you work with but writing well and having it consistently on top of hacker news helps.
Plus, your writing helps clarify your thoughts and provides you with useful feedback which can help you refine your investment thesis.
Warren Buffett has said he spends 80% of his days reading and 20% talking on the phone. He only has needed one good idea per year to be the best investor of all time. His schedule doesn't sound like work to most people but it clearly has worked well.
I'm guessing his work activities were far more conventional (though still well selected) and only after building wealth did his time allocation change.
It’s easier to sit around and talk about building a startup than it is to actually start a startup. And it’s fun to talk about. But over time, the difference between fun and fulfilling becomes clear. Doing things is really hard—it’s why, for example, you can generally tell people what you’re working on without NDAs, and most patents never matter. The value, and the difficulty, comes from execution.
A corollary of this seems to be that investors (such as YC) provide little value because they don't execute. This seems incorrect on its face; most YC founders find the experience to be very beneficial. Maybe I'm missing your point, Sam?
So Good They Can't Ignore You[1] calls this the Passion Hypothesis[2], and argues (very well) that this is the wrong way to think about finding a career.
Instead, create a craftsman-like mentality and work ethic, and then use deliberate practice to get very, very good skills. With great skills, you will enjoy your work much more.
I believe this advice aligns with the rest of the blog entry very well. Creating value (and doing it well) requires an advanced skill set.
[1] http://www.amazon.com/Good-They-Cant-Ignore-You/dp/145550912...
[2] This is an arguable point, since caring about something could be different than being passionate about it.
So, lets not go in either direction for any one person; and let everyone optimize towards their own mix of work and pseudo-work to come to their own original ideas about X.
Some people will not have any original ideas and will therefore advocate work as a method to "focus" on derivative outcomes that make money.
Other people will "find inspiration" while taking a bath and run out of the bathroom to write down the genuinely valuable result and advise everyone to do the same.
These two groups are very different and most of us are somewhere in between.
Seeing big companies with money to blow on a product that no one wants take it all the way to market is sort of incredible to me.
Guess I'm just grumpy right now, but I sometimes feel like these posts are jokes put out there by successful people to see if they can make non-successful people feel stupid.
I love Altman's stuff, but I'm not so sure I agree with "joining a great company is a much better plan than starting a mediocre one". Why? Because no matter how great a company is, if you're an employee, you're still just an employee. You have a "boss" (OK, maybe, just maybe Valve aside), somebody who has you "under their thumb" and who can boss you around and redirect your energy and time, and/or fire you at a whim. And it doesn't matter how great your boss is, or how much you like him/her, you still have "a boss". That sucks. It sucks major donkey balls.
Well, it does for certain kinds of people anyway. It's a mindset thing. I cannot stand having a "boss" in the traditional sense. I'd much rather be running my own show, no matter how mediocre it is (assuming it gets at least to the point of qualifying as a "lifestyle business" and I can pay myself enough to pay the rent).
And yeah, yeah, I know that "you always have a boss" in a sense. Pedants don't bother replying to this. I'm not talking in metaphorical senses or generalities here. A Board of Directors, or "the market" or "your customers" are your "boss" in a metaphorical sense, but that's not the same thing as having one discrete person who can come into the room and go "Sooooo, Peter, you DID get the memo about how we're putting the NEW cover sheets on the TPS reports now, riiiiight? Yeeaaaaaaaaah" and yank your chain.
For example, I find nothing more valuable than clean air and water.
Off topic, but I believe this should be the basis for funding society rather than appropriating a portion of people's productive labor.
Land is valuable. But you don't really "own" it because no one made it. Likewise the Aluminum in a can or the steel in your car. You just borrow them for a time. When we are all dead and gone these things will still be here and people will likely use them.
Society should charge for the use of what really belongs to everyone instead of this part time modern indentured servant hood called payroll taxes. It seems much more just.
As a side benefit... consumption is discouraged and production rewarded. What better for society than that?
how can this both be true? if consumption is discouraged, then what would be the reward for production? if it is something that is to be consumed, then by definition consumption is desirable. If the reward is not something that is consumed, the what is that reward?
Mine is that one should be taxed on the use of land and materials (which, from a larger perspective, belong to society and humankind as a whole) rather than on innovation and labor (which is, from a larger perspective, a form of theft and slavery).
By taxing like this, you reward innovation and production while discouraging wanton consumption of resources (leading to more efficient use of resources and more investment in innovation).
If you're not making money by doing it, its a hobby. There is nothing wrong with hobbies, but they aren't business. Want to know if you are heading in the right direction? Are you headed towards money positive? That's your answer.
Why does the Craiglist Flipper add value? The Flipper takes away the random luck factor and distributes goods to those who can best utilize them.
Consider an iPad 1 listed for $10 on Craigslist by someone who just wants it gone. Almost anyone would buy just for the heck of it and take it away from the market even if they already have iPad Air and 3 other Android tablets gathering dust at home.
However, if the Flipper buys it and puts it back on the market at say $100, the person buying from the Flipper will actually have to think before making such a purchase.
So a reasonable Flipper adds liquidity and stability to the market. Unreasonable Flipper (one either putting prices too high or too low) does not stay in business for too long.
"Writing software no one wants" can create value if the person writing it wants it. Just not monetary value.
Why? It seems to me like the further you are from the doing, the more likely your role is to be prestigious and highly paid.
except for Elon Musk and team at SpaceX