What Microsoft is this the Altair Basic of?
paulgraham.com
paulgraham.com
It's really just dumb luck. One thinks one can extract a lesson from this hindsight, but how was the situation that led to your decision any different than the 99 other startups that were just as lame but didn't make it?
> Do what excites you and put your energy into that.
Absolutely.
Sometimes I think people look at where a company is, rather than it's direction, it's velocity.
That is, an IBM PC running at 4.77 MHz; with 128 KB of ram (or 640 KB if you're lucky). The OS would have been dos at something like version 2.x Some people[1] used Wordstar as their text editor.
You had limited multitasking -- TSRs maybe.
I'm not sure what programming language they used but possibly Microsoft C and assembly.
I don't know how it's handled these days, but when I was first playing around with Win32, you'd receive events telling you a region of your window was invalidated. You were expected to figure out what controls and images belonged in that region and just repaint those items because of the CPU load.
MS was never primarily a tech company, it was a sales-and-marketing-and-M&A company that happened to sell tech products.
So the 'Does this company have a future based on this product?' question is misleading.
The important question is - how are they marketing the product? What relationships do they have? What relationships are they building? What's the sales and marketing culture like?
MS are poster children for this. Time and again they've marketed the crap out of technically mediocre products with - mostly - great success.
AirBnb weren't exactly light on the marketing either. (Etc.)
The Apple of the eighties.
The more expert you are at something the more likely you will dismiss things. PG recognises this bias and is trying to keep his mind open. You have fallen straight into your own trap which is narrow mindedness presenting itself to you as expertise.
They did have a product and they did go on to build many products. Many of them are far from crap and solved really difficult problems including running on all kinds of hardware, maintaining backward compatibility, rewriting their main OS from scratch. Microsoft is not Coca Cola. PG is trying to see that in other companies at a very early stage. (not giving him a free pass - I think he still has other blind spots that annoy me - I have many more no doubt)
edit: No doubt, it's probably that combination of being an expert at something but having a somewhat open mind that got PG started on his adventures in the first place.
But I wonder if an investor might have noted that Gates had an interest in aggressive market-building and income generation, as suggested in the scrappy and public fight with the tape sharers and the eventual battle between MITS and MS over royalties.
I wasn't paying attention at the time, but looking for similar patterns today - in, say, Uber - suggest that there's a clear interest in aggressive and cut-throat behaviour, which probably bodes well for future investment returns. (If that's your main interest in a tech company - it's not mine).
I certainly don't think MS were crap at everything. But there's also no denying that the user experience with many MS products was - and still is - shockingly bad.
Office and XP were good-enough, with a few nice tweaks. But you have to balance that against a long string of horrors (insecure VB macros, IE6, the ribbon, Win 8 tiles, Win 95 series bugs, and on and on.)
So historically, the focus has always been on sales and using legal and corporate lock-in to sell poor-to-good software.
It clearly hasn't been on creating state-of-the-art super-products and assuming that quality will sell itself.
So I think the point stands - look at business culture and management attitude to market building as a primary predictor. Product quality is not a predictor, as long as it's good enough.
Being slightly better than average doesn't hurt, but there's no commercial need to be a technical marvel.
http://jugad2.blogspot.in/2014/11/alley-in-park-bucharest-ro...
http://en.wikipedia.org/wiki/Wikipedia:Taking_the_road_less_...
http://en.wikipedia.org/wiki/The_Road_Not_Taken#Analysis
Also, reminds me of my favourite variant of this quote:
"Two roads diverged in the woods. I took the one less traveled, and had to eat bugs until Park rangers rescued me."
But the main takeaway is that Polonius is an idiot and his advice to Laertes should be considered platitudes at best and terrible counsel at worst.
Also, I reckon people are generally too harsh on Polonius. Sure, he's not the sharpest tool in the shed, but in this scene he just seems like an old man who's worried about his son leaving home and trying to give him good advice. That he can't come up with anything genuine to himself is, I think, a little sad.
But I suspect most of us have endured our parents sending us off with good advice on our first time leaving home. And generally that advice seems to be similarly cliched ("Remember to eat properly...and make sure when you're going out, you know how to get home...and wrap up warm when it's cold out..."). I doubt I'll do much better when my time comes!
http://en.wikipedia.org/wiki/The_Road_Not_Taken
(linked to from your link) take it to mean something else, somewhat the reverse. I prefer my own (or rather, that background image's) more positive (IMO) interpretation, though :) And that's why I had it on my PC for long. Friends liked it too.
@AceJohnny2 started to touch on this, but them seemed to retreat(?), but:
I can't find "wisdom" anywhere in that scenario -- some seem to think that making a mistake is -- making a mistake -- which is hilarious because people cheer for articles or philosophies of plowing through the business landscape making mistakes and pivoting until something "sticks".
With the information you had, you made the best decision you could. The lesson is "sometimes people are wrong", or "I had a near-miss w/ success/failure", or "there's no way anybody could have predicted X, and I witnessed part of it." Your experience (I don't mean to diminish anything) is an anecdote.
If someone can proverbially sell ice to Eskimos, it's not because ice is great stuff.
I find those smart choices don't come to mind as easily as the missed big opportunity choices, so I have to work to keep them in mind too.
Is the success of an endeavor highly sensitive to small perturbations in the timeline? I'm guessing most of us don't buy into the mythology of the all-powerful Idea and Founders. Every employee and action matters. The details matter. If I could go back in time and swap in for employee #8 at MS, it would probably no longer be the MS we know. Or perhaps we wouldn't know of it at all.
Perhaps best not to sweat these missed opportunities, and instead keep making whatever we're doing right now the next MS, or whatever you define as outrageous success.
It may later seem like it was a loss, so some form of retrospective loss aversion might be more appropriate to apply to this phenomena: http://en.wikipedia.org/wiki/Loss_aversion
On a general note wrt. failure/success then we actually tend to slightly exaggerate our successes when remembering them, and similarly downplay our failures.
while it feels somewhat paradoxical, reinvention of the wheel has been an extremely efficient way to move the industry forward. Probably because it is an effective way to subterfuge the incumbents, and incumbents are the most significant obstacle on the way forward.
Let us remember that we are here chatting on HN because PG sold his company to the quintessential collection of half-assers in tech history: Yahoo.
> A 58 year old hacker. 5 failed start ups, now work for a really really big company. eh, oh well.
Looking back on that I cannot see any way in which I would have concluded differently, given the information I had available, but that experience has since given me insight to never dismiss an idea simply. I like to have solid reasoning behind my mistakes :-)
All I could think of after reading your post was: ouch!
Things are different if you're worried about putting food on the table a couple of months from now.
They didn't have to worry about staying fed and sheltered, because they generated revenue immediately. They built a real business.
Please don't make needlessly personal accusations in HN comments. This comment would be much better if it started from "Many people were given even better..."
(Thanks—added.)
Having met Bill since that time in other contexts, it is clear to me that he had a much bigger picture in mind than my high school self could conceive of at the time. I'm not sure he forsaw all of what Microsoft became, but he saw a whole lot more in the future of microcomputers than I did.
Your theory is also decimated by Paul Allen.
Those two never had to worry about starving to death, because they made sure to generate sales from the very beginning. Microsoft was started for peanuts, they lived on peanuts in New Mexico, they drove sales, and that was that. It would not have mattered if it was two Paul Allen's coming from a middle class background, or a Gates and Allen. One thing mattered: sales.
You know why Allen wasn't afraid, despite lacking the Gates family money? He knew he had the ability to go get a well paying job at dozens of companies, he had a valuable skill.
Anecdota: My Father used to subscribe to the Wall Street journal during this time, and him and I observed the whole thing play out. There no indication, none what so ever that Microsoft would win out the way they did. It was all really remarkable.
If there ever was a computer company that squandered a golden opportunity, it was DEC.
(of course, DOS was their big break)
I still have mine. Some day I'll get it running again (restoring the capacitive keyboard is pretty hairy, I understand).
Can you imagine what it was like to be the only kid in 11th grade (high school) who had a computer?
DG had a couple of pretty good BASIC implementations (MAXI-BASIC and Business-BASIC). They were not hurting there.
Just because many successful companies are built on ideas that at first seemed ridiculous doesn't mean that ideas that seem ridiculous will be smash hits. Actually, most ideas that seem ridiculous are ridiculous.
If, however, a new market, technology or cultural bend turns up, an idea that exploits it might seem ridiculous because it breaks with social norm or accepted technological limitations but actually be viable. When Tesla started building electric cars they were ridiculed because few people understood that both the technology and the social acceptance was now at a point that made it possible. Had they started ten years prior the idea would probably have been ridiculous.
The trick is to be able to see the difference between the snakeoil salesmen, mad hatters and crazy inventors and the true visionaries. What makes this really difficult is that noone, including the founders, knows whether they're one or the other. There's a lot of luck and timing involved.
I'd also wager that the reason that mindblowingly successful companies often start out as seemingly ridiculous ideas is that if they don't have any competition in a niche that they can exploit. Microsoft, for example, were the first to sell software. IBM laughed them out of the room because software was just something that came with the hardware. The idea that you could sell software seemed as crazy as selling sand in Sahara. But because of a technological and cultural shift it was a good idea, and because it seemed ridiculous to "real" companies they had the market to themselves for the first vital years. Had they not been so lucky (or smart) with their timing noone would know who Bill Gates is.
I think you might be able to conclude the following:
"If you want merely to be well-off start a company that isn't based on a ridiculous idea. If you want a small chance of changing the world start a company based on a ridiculous idea"
Good VCs worry about being pitched on the next Apple/Microsoft/Facebook/Google and passing on it because of their own prejudices or lack of vision. I see the article as an effort to consciously counter those prejudices.
But VCs have the luxury of being able to invest in a lot of companies. When you have that luxury, you can afford to say "let's let a few lame ideas in because they could grow huge".
You're right that potential founders don't have that luxury. Sinking 5-10 years of your life into a lame idea is overwhelmingly likely to have little payoff for the founder.
Which seems to be the strategy used by most VCs anyway. The primary difference is that may not (at the time) see some of those companies/ideas as 'lame' themselves. But "invest in a large number because X will fail and we need one homerun" seems to be the prevailing MO.
If anything, I would say the takeaway is that many ideas that seem lame are dismissed without truly understanding their potential, and that PG has made it a point to spend more time exploring their potential before deciding they are indeed lame.
Without BASIC, You do have to first of all learn assembly programming, learn to assemble it by hand and translate to hex/binary then flip it in. BASIC was amazing for the time, anyone could and can program in BASIC.
Google was not lame for the time, search engines sucked, no one saw/used google and said why? The first time we all used google we were hooked, we didn't have to AND OR NOT our results, it found meaningful results from the get go.
Now Facebook we could argue that about if it would take off, you might say, why? There's already myspace. But I don't know that the Microsoft BASIC or google search was lame in any way shape or form. If we all folks did was hear about the idea, then yes, they would easily be brushed off, but after implementation, it was a no brainer. Kinda like Tesla, all electric cars have really sucked until Tesla showed you could make electric cars stylish, fun to drive and with range.
Search was lame for its time. You couldn't actually find anything, that's why we all had to use portals and directories instead.
Social networking online was lame for its time. What are you, some kind of nerd who doesn't have any friends?
I think the meta-lesson here is that you don't want your product to be lame. You want your product to be exceptional, given what's already out there. You want your market to be lame, but very fast-growing, such that in a couple years people won't think it's so lame anymore.
Google search was awesome. Even Altavista was awesome back at the beginning before they let their search results become polluted by spam.
Ditto Google - I don't recall search being all that useful. I went to Yahoo to find websites until I was introduced to Google in 2000.
I wish it were still the case.
I was working in a company at the time. Happened to be one of the early people there to know about Google. Tried it out. A few days later told a friend, who was sitting at the desk next to me, about it. He tried it with a search; results came back in 0.x seconds (even in those days, 1997 or so), then muttered: "That's fast."
Yeah, Google had a better way to search. But it was obvious that Google, without any viable revenue model (they planned to lease their tech to other search engines) could never compete with the might Yahoo! or Excite.
Likewise the Altair. Sure it was a great personal computer, but who wanted a personal computer? What would you do with it? (Remember that some of the first Apple Computer commercials showed the Apple ][ being used to store recipes...What do you do at home? You cook. What would you do with a PC? Um, use it to help cook?)
I don't think PG is saying anything especially novel in this post. It's the obvious next step from the now-cliche "The best companies start out looking like toys" to "how do I distinguish between the companies that really are toys and the ones that can get big?" The answer is to imagine a way in which they could become big. Sometimes they do and sometimes they don't, but at least you can weed out the ones that can't.
Once you throw in the success stories like Steve Jobs, Larry Ellison, and James Cameron, it seems that the benefits really accrue to those people that were lucky enough to be near "a lump of the future", and fearless enough to capitalize on it.
Of course, you can make your own luck to a degree: One of the big advantages to attending a top research university is that you get exposed to stuff that the rest of the world won’t see for another decade or so. This was especially the case with Bill Gates since he not only had access to a powerful computer while in college, but he also attended a high school that had rare access to a computer. Since smarts correlates with getting into a good university, it makes sense that smart people would be overrepresented in technology success stories.
But, then you have Larry Ellison who read research papers and happened to find the one that laid out the theory for relational databases. Like Bill Gates, he got lucky that IBM didn’t fully appreciate the value of that idea. Similarly, James Cameron would go read grad students’ theses while working as a truck driver, after he had dropped out of community college.
Steve Jobs was pretty lucky in that he grew up near Silicon Valley when and where a lot of future technology was being invented. But, he was fearless enough to reach out to Bill Hewlett (co-founder of HP) and ended up getting a summer job there. So he got a lump of the future at 12 years old, kind of like Gates did.
But here’s the thing about getting access to lumps of the future: thanks to Moore’s Law, any of us can live in the future by spending enough money. But, it does not seem to occur to most programmers that they should be playing with $50K[1] computers instead of the $1-$5K computers that are already yesterday’s machines before they even hit the store shelves.
[1] To say nothing of playing with a $192,000 machine, which is equivalent to the one that BG used, adjusted for inflation.
I think the problem we all suffer from is that we all have a very limited perspective. Things that we think are bad ideas - because we don't have an immediate need for them, or because we don't understand them - may be an obvious good idea for someone sitting somewhere else. And the trick to picking good startups is to get out of that personal bubble, and understand what is it about the users of that startup that differs from us, and whether that characteristic is going to be shared by more people in the future.
Google was also great: before them the best search engine was AltaVista where I often had to load a a few tens of pages in order to find the link relevant for me, the one that Google returned typically at the first page. Other engines were even worse, as in not even indexing most of the sites on the internet.
Mainly centering around high potential technology, overlooked ideas and opportunities that these startups can take advantage of.
My question becomes, and it seems PGs, how can you do this without the value of hindsight. One one hand, you could sit and reason why startup x or your startup idea is the Microsoft in this scenario. But you can also easily delude yourself.
Pebble, IMO, is shaping up alot like early Apple did. They are entering a competitive industry with a new product, facing a goliath and have a huge emphasis on their design & focus on developer. Which makes me believe history will repeat itself. That if we have the Apple for wearables, there should be, or soon, a Microsoft for wearables.
Just a thought, would love any point for/against.
For reference:
http://paulgraham.com/ambitious.html https://www.youtube.com/watch?v=R9ITLdmfdLI
That was a great talk. Everybody should re-watch it. Even if just for the one off question "why does HN violate the HTTP spec by sending invalid line endings?" (Answer: "because it works for me!")
Edit: I get the point that companies might have a larger scope and to look out for it but deliberately trying to come up with a lame tagline seems... Off? Did AirBNB really set out just to offer a single place with air mattresses? Like no plans?
By decades of media coverage, "Microsoft" evokes images of a behemoth. But try to imagine what the name "Microsoft" must have sounded like -- it doesn't sound very ambitious. It sounds a little lame. If you planned to be the biggest company in the world, would you name your company "Microsoft"?
Microsoft was started when Gates was 20 or something. I think a lot of 20 year olds are just trying to make something interesting. Some are dreaming of taking over the world, but those are the types that probably don't actually do it.
I think you can see a similar thing with Linux. If you look at Linus's original mail announcing Linux, it doesn't sound like he has any goals to run on the majority of servers, mobile phones, many desktops, and tons of embedded devices.
He even insisted it would never be portable past i386!!!
I agree with pg that a lot of these people are living in the future and don't necessarily realize that they're going to be riding this hockey stick growth. Even if you're doing it, I'm sure it's hard to predict. There's hundreds of decisions and improvements you have to make along the way. There's no one idea or feature to implement to get that big.
They certainly were no match for the ambitions of Intergalactic Digital Research.
Early on their idea was to be a "Bed and Breakfast", to the point where they required the hosts to cook breakfast for the guests.
My main question is, how could Bill Gates afford the $40,000 of computer time? That's quite a lot of capital at the time.
Becoming very financially successful is very much more about what family you were born into and fortune than it is about skill or talent, although the latter certainly still matter.
Even though lots of folks were using the -10 for commercial projects on the side, Harvard made him give all the Altair money back to avoid disciplinary action. Wasn't really fair.
So, yeah, some of us were blind at the time. In my defense, I did help Carl Helmers get Byte Magazine off the ground a year later or so, along with my high school buddy Dan Fylstra who went on to create VisiCorp to commercialize the original VisiCalc.
Yes, in 1975. The DOS deal with IBM didn't come around until 1980, Excel showed up in 1982, Word in 1983, and Windows in 1984.
... then figure out, 'Which IBM will let itself be duped?'. If MS hadn't made the DOS deal with IBM PC, would the Microsoft we know now, have happened? This is of course counter-factual, because MS was a raging success.
It's a great question to ask though.
While he didn't know Facebook would pioneer it, Mark Zuckerberg says he knew that all software would be social.
While he didn't know Google would pioneer it, Larry Page said he knew that the fast growing web would eventually need a good way to search.
While he didn't know Viaweb would pioneer it, Paul Graham said he knew that ecommerce sites would eventually be created by software.
And so on....
I respect the fuzziness and path dependence of startup growth but boy do I respect people who can see the future now, make it happen and end up being correct. Even more props to people who make it happen multiple times [e.g. Joel Spolsky, Elon Musk]
...that doesn't quite have the same ring, does it? There is a lot of survivorship bias at play here. Thousands of individuals had convictions that their instincts were right as as well - but it turned out poorly for them. Luck and timing plays a big part in success, but more often than not, hn ignores this.
The broader point is Peter Thiel's --> You are not a lottery ticket.
The best example might be Jeff Bezos and his business plan. Elon Musk has been consistent for ~ 20 yrs about the areas he set out to work on since college and he's followed that through. It's not dumb luck. It's skill + luck. The skill part of the equation is oft dumbed down in favor of the randomized success algorithm. People who are able to repeat their successes multiple times e.g. Joel Spolsky, Elon Musk, David Duffield, Rich Barton are especially skilled and it would be disingenuous to attribute their successes to some luck/timing that they were not ultimately mostly responsible for creating or noticing.
The real measure of a theory is how successful it is at predicting whatever it predicts. So out of all of the companies that you predicted could become the next "Microsoft of X", how many did? If your method doesn't perform better than randomized selection, then it's worthless. I suspect that's the case here.
Of course, the law of large numbers combined with the high returns offered by tech companies means that even if investors aren't performing better than a randomized process, they feel like their theories about what makes a successful companies/entrepreneur are valid.
Here's an experiment that will never happen, but that I'd love to see YC perform: for a given batch, select who makes it to the batch randomly from the pool of preselected applicants (you want preselected applicants and not all applicants because it's fairly likely that the 90% of people who are applying with their "Facebook for cats" idea that they came up with after beers 2 hours before the submission deadline won't make it. Or will they?). Then, look how that batch performs. It wouldn't be surprising if the batch performed no worse or no better.
Examples first, details later.
The Altair->Microsoft example also emphasizes the minimum condition necessary. What seems small but could be big (given the proper market growth and a mother who's also an IBM executive to get you free connections+business)?
Also see this great example: https://news.ycombinator.com/item?id=9082844
The good thing though is that it keeps us totally focused on building our MVP.
I think part of the issue is that the most successful startups aren't successful because of new hardware or software, but because of the new social practices they enable. And while Apple releasing a new iPhone every year has gotten people really good at evaluating new hardware and software, most people don't have the same level of proficiency at evaluating novel forms of social interaction. (Even though it's totally learnable.)
* Bill Gates's memoir/vision book, The Road Ahead (1995)
* Paul Allen's memoir book, Idea Man: A Memoir by the Cofounder of Microsoft (2011)
Watch this:
* Pirates of Silicon Valley TV movie (funny but accurate, based on Triumph of the Nerds interviews)
* Triumph of the Nerds (TV docu, 1996, by R. Cringely)
* Nerds 2.0.1 (TV docu, 1998, by R. Cringely)
Okay:
I grew up not far from a nice public golf course. It had some par 3 holes. Sure, on such a hole, it's possible to make a hole in one.
Okay, for a year track all the hole in one successes and see how many were by expert golfers and how many were by people lucky to have a round at 10 over par.
So, conclude from this that for a hole in one it doesn't help to be good at golf? Nope! Instead, on that course there were so many more poor players than expert ones that, likely, net, just from luck, there were more successful hole in one shots from the poor players than from the expert ones.
Or, case #9,284,387,437 of how to lie with statistics!
But, let's consider some other examples:
Ike wanted some pictures of the USSR and sent some U-2 airplanes. Too soon one got shot down, and then someone called Kelly Johnson at Lockheed, and he noticed a new engine developed by Pratt and Whitney in their Florida operation: The engine was a turbojet until about Mach 2.5 at which time it became a ram jet and, thus, could go on to Mach 3+ without overheating the engine.
So, get some titanium, design some aerodynamics especially good for supersonic flight, and get an airplane that could fly at Mach 3+, at 80,000+ feet, for 2000+ miles without refueling. Then the US got a lot of good pictures, and the Lockheed plane, the SR-71, never got shot down.
There are many more examples from GPS, the F-117, the first Xerox copier, etc.
These examples are cases of hole in one with high payoff and low risk from just routine work after the initial planning and review of the plans.
Commercial version?
Okay: Xerox, the IBM System 360, the Intel 386, Cisco IP routers, the Bell Labs work in optical fibers and Ga-Al-As heterojunction lasers, the Sony work on Blu-ray optical disks, etc.
Lesson: It really is possible to pick a good target, plan carefully, execute with low risk, and be successful. For just one team, poor work and luck are not better.
The 3 I mentioned I think much of their success comes from implementing their first ideas very well and attracting the excellent talent which allowed them to pivot or broaden when other things came along.
Of course that then lands you back on another familiar YC idea of investing in teams rather than ideas.
Microsoft grew into a behemoth by making crucial decisions at several key turning points, and avoiding making disastrous mistakes.
Are these good ideas that are just too boring to have attracted a good team yet? I've heard these ideas going back and forth for 10 years now. After 10 years, nobody has gotten it right? Or are they lazy ideas that appeal to get-rich-quickers who think they can play the startup game? What is it?
I understand the value of "don't make fun", and it's something I really struggle with in my own life. I've (unfortunately) been on both sides of that exchange, and frequently feel bad about my involvement in it. It's a weird world we live in where you can't just keep your mouth shut sometimes. It's probably a sign of internet addiction. I digress.
But I also have to consider things from the standpoint of someone who is being pitched by non-technical founders on these ideas. "It might be a good idea" isn't enough.
Want a huge fight? Assign the dreaded smart watch to one of those reasons for past failure and likely near future. Or "the smart house". Or "voice control" or alternative UIs in general.
If you can convince a couple people the only reason the cuecat failed was their capitalization structure, then the world is doomed to a flood of plastic cat barcode readers and barcodes all over legacy media. Not all the different from QR codes (aren't they officially dead now?)
In fact Gates directed IBM to approach Gary Kildall of Digital Research for the OS. But Kildall skipped the first meeting with IBM and his team at DR dilly-dallied on signing a standard NDA with IBM and could not reach an agreement. IBM went back to Gates for an answer for the OS. [1]
Had DR not dropped the ball on the IBM deal, the future would have been very different for Microsoft, and for DR and for the world. It is all of course counterfactual - but who knows - the world may have been running on CPM/2015, and Gates and Allen would have been running a successful PC software company - selling compilers and languages for it.
It Gates and Allen's ability to turn this fateful second chance into what we now know to be the deal of the century. In fact, Microsoft used this chance to sell QDOS (Quick and Dirty OS) - from a lone programmer (Dave Patterson) working across the lake in Seattle on a port of CP/M to 8086 - to IBM. IBM was not aware of this small company (Seattle Computer Products). Later it was found that QDOS literally "stole" CP/M code and function calls. DR sued but IBM settled the suit with DR by bundling CPM/86 with the PC - but selling it for $240 as opposed to $40 for PC DOS. CP/M never had a chance. And the rest as they say is history...
[1] http://en.wikipedia.org/wiki/Gary_Kildall
EDITS: typos
> Often the founders themselves didn't know why their ideas
> were promising. They were attracted to these ideas by
> instinct, because they were living in the future and they
> sensed that something was missing.
Anyway I am sad to report that PDP8s and Decmates were widely available (if you had friends in the right places, surplus, repaired scrap, etc) but DEC insanely wanted to charge $3000 or whatever for the OS8 license. I think even Fortran and basic were separately licensed and billed products. It was nuts. You could get an old -8 for free, more or less, (back then, now they sell for thousands on ebay) but legal software was insanely priced. Microsoft disrupted the market at a mere $300. That's what made them interesting right from the start, the dinosaurs of the industry didn't understand the imploding ratios of hardware cost to software cost. Sure the hardware is dropping in price so something that cost a corporate buyer $10K in '63 might only cost $1K in '73 but its not like software was getting even on dollar cheaper so if legacy corp buyers will pay $3K per seat for OS-8 I guess we'll keep right on charging $3K till they go away or we go away. Well guess how that turned out?
The above is based on my Dad's experiences although I was a kid watching watching it all unfold at that time.
That question lead us to be able to define the product we're currently working on, when we had spent months coming up with a good description and totally missed it. It actually helped me sell myself (and a few of the team members) on how big our idea could be.
My guess is that each example PG gives, the founders would have an answer to that question where they would say "we're [re-]defining an industry because..."
But seriously, who is really able to tell which extravagant nice-to-have (or even too-ridiculous-to-be-wanted) will be next week's must-have? If there was a way to find that out, we finally would have understood humanity.
So cheers to all with above-average stats at guessing who will be the next big Dollar Sign.
If you're a time traveler from the future, sure you bet on Bill and Paul, because you know how that turns out. But let's say you're a time traveler from an alternate timeline, or an alien from a more advanced planet, can you still tell who to bet on? Even if you had the knowledge to know how people would use computers in the future and what sorts of things would be most in demand, Microsoft wasn't necessarily the best bet way back in the Altair Basic era. Back then the obvious choice would have been Gary Kildall and Digital Research who had CP/M, a serious operating system that was light years ahead of the competition in the late '70s. It took several bizarre twists and turns for Microsoft to end up on top, but it was far from foreordained that they would. Other obvious competitors included Lotus and VisiCalc, folks who seemed poised to have strong offerings nestled in the bosom of a growing computer industry.
What Microsoft had that the others lacked was sticktoitiveness, adaptability, and business savvy. They were willing to do what ever it took to ride to the top, whereas other companies were satisfied with "merely" massive runaway success. And that showed up in surprising and non-intuitive ways. DR built CP/M from the ground up and invested heavily in making it the best they could. Microsoft bought a clone of CP/M that was written in 6 weeks for $75k because they needed an OS to deliver to IBM for the IBM PC, and they thought that was a reasonable business arrangement to be in. In no way does that sound like sound engineering or sound business strategy, but it turned out to be one of the most pivotal events in computing history. It was Microsoft's tenacity and their desire to make billions where others were content to make only billions that brought them to the top of the industry, things that weren't really obvious until after they happened.
For venture capitalists this problem isn't a big deal, because they can just play the lottery and invest in Digital Research as well as Microsoft and Lotus and all the reasonable bets. For people looking for "the next microsoft" to work at, the problem is much more difficult, if not fundamentally impossible.
Their big break was DOS. Getting offered to do an OS for the PC was luck, but they scrappily exploited it to the hilt: they didn't even have an OS; their license terms allowed them to sell to (future) clones; they sold it far cheaper than the competition.
The bottom line is that most of the startups based on a lame idea are, indeed, lame. It's all too easy to focus on the ones that succeeded.
How to parse it?
"How does this Altair BASIC become a Microsoft?"
(The problem of silent evidence.)
"The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown."
1. Find a specialty or niche that you care about.
2. Excel in it.
3. ????
4. Profit!
These ideas seemed "lame" for businesses because they were hobbyist projects, but done to excellence because of the passion that was behind them. Still, hobby + excellence doesn't always make a business. You need a lot of help, and that help can be hard to summon.
Of course, there are also counterexamples. If Evan Spiegel excels at anything, it's writing creepy emails to his frat brethren. He's clearly not a technologist, and that applies to most of the VC darlings in this round, which is why it's going to be horrible for a lot of people when the chickens come home to roost and these P&D fake-tech companies have no buyers. But enough about that...
Where there's confusion, I'd say, is at step #3. To what extent is excellence (even in something that seems "lame", insofar as being impossible to build a business on, like fixing web search) going to get noticed and draw enough backing to overcome the extreme "pointiness" (as opposed to well-roundedness) that comes with narrowly-focused excellence (which seems, to most, to be a hobby project at best and obsessive at worst). And what are the odds? I don't know what the answers are.
I did #1 and #2 when I optimized hand-luck out of a trick-taking game, Ambition. ( https://docs.google.com/document/d/1S7lsZKzHuuhoTb2Wj_L3zrhH... ) It's been published in a few gaming magazines (mostly abroad, as in Hungary and Japan) but generally hasn't caught on, and I doubt it'll ever make me rich. I guess you can say that step #3 isn't automatic. But I'm not sure that that's a bad thing. Excellence doesn't need to produce wealth to be valuable, and doing something to make money makes excellence almost impossible in practice, anyhow. (Excellent products can make money, but products that are optimized for money-making are rarely excellent, because value-creation and value-capture are separate disciplines and antagonistic toward one another at the highest levels of performance.)
One thing I admire about Paul Graham (despite differences) is that he does place a value on excellence, as you can see in his work on Lisp. He understands excellence as a virtue (which is admirable) and believes that the market will reward it (which is debatable; we agree that there is correlation but would disagree on its strength). For his part, he tried to make an excellent Lisp (Arc) and showed a strong aesthetic sense. It didn't catch on. Rich Hickey made a Lisp that was, at the time, uglier but because it ran on the butt-ugly JVM, and you had a lot of S-expressions that looked more like (.addEventListener thingy other-thingy) than (map (comp f g) list).
Eight years later, most of Clojure is beautiful (unless you peer into the innards) because of the work it has attracted. All I'm saying is that it's hard to predict who'll win. If it was 2006 and someone told you that in half a decade, the best Lisp would be on the JVM, you'd laugh in that person's face. And yet... that's what happened.
I think we can agree that excellence, because of the narrowness of focus it often (and not always, but often) requires, will lead a person to be thought "lame". (There is also the extremely slow process through which true excellence is recognized.) In 2006, many would've written Rich Hickey off as a barely-employed ex-musician trying to do the impossible (write a beautiful Lisp on top of the JVM) and unsellable (who'd buy it)? And yet Cognitect has shown that Clojure's excellence is sellable. From the statically typed world we seem similar slow uptake: Haskell's over 25 years old and just starting to be recognized as a practical language for "real programming". Full agreement exists on #1 and #2.
What about #3: the "????" term that leads from focused, diligent excellence to freely flowing money? Before Silicon Valley, I feel like Americans were more honest about the lack of a strong relationship between excellence and financial success. People understood the "starving artist" concept, and that writers of trash novels (e.g. Fifty Shades of Gray) would economically outperform people writing genuine literature. (That said, don't write off Tolkien, King, or Rowling just 'cause they do "genre lit"; they're fantastically skilled.) The problem with Silicon Valley exceptionalism is that these people believe that they've transcended the nonexistence of a causal arrow between excellence and financial success. That leads to a naive optimism at first, and later to a self-serving sense of "meritocracy" that's divorced from reality. The truth about item #3 in the above is that it's very random and we have almost no insight into how it actually works, and that's upsetting but I don't know what to do about it.
for information on why it's problematic try this: http://www.disabilityandrepresentation.com/2013/09/14/ableis...