15 ms·

Be Good

182 points by vsingh 18y ago

aarondc 18y ago
I have a real concerns with "Don't be evil" - 1. subvocalising "Don't" 2. focusing on the action "be evil" As a cyclist, I often tell new cyclists: "if you see a rock in the middle of the road, focus on the clear road either side of the rock, focus where you want to go. If all you think is 'don't hit that rock' 'don't hit that rock' 'don't hit that rock' guess where your focus is? Guess what you will likely end up doing?" I see Google's mantra in the same light. It is far better to focus on DOING something than NOT DOING something. "Be good" is a far better mantra to have, and that's before all the good reasons you cited, Paul. Thanks for the essay, have been looking for some inspiration lately and had forgotten about YC and your essays.
hualibaobao 18y ago
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jimjim 18y ago
Thanks for a great read, I was recommended this essay by a good friend of mine, and it was time well spent!
todds 18y ago
You made me think of the power and success of the Obama campaign. Lots of people donating $5 or $10 to his website was a lot like a charitable fundraising campaign. A unqiue, personal approach that focused on conecting with his 'users' and giving them what they wanted.
webwright 18y ago
Regarding Microsoft... it really struck me when I watched Steve Ballmer talk with Guy Kawasaki ( http://visitmix.com/blogs/News/Watch-Steve-Ballmer-and-Guy-Kawasaki-Live/ http://visitmix.com/blogs/News/Watch-Steve-Ballmer-and-Guy-K... ) that Steve over and over again touted that it was important for them to get big into online advertising. Not once did he frame a single Microsoft goal in the form of how it was going to help a customer.
- wanorris 18y ago
  Certainly a valid point. And PG's criticisms were deserved as well. At the same time, I can't help but think some of this is an overreaction. Microsoft beat Apple as well as IBM in the market the first time by letting users pick their hardware vendor. And, even today, they still do that, and that's still Apple's achilles heel in gaining market share -- if someone wants more choice than a half a dozen or so models, they're going to have to buy a system running a different OS. Yes, Vista sucks. Microsoft has come out with a completely crappy version of it's most important product. But other companies have released crappy products before and have lived on past their mistakes. Intel has released some horrible products before -- i860, Itanium, and the P4 all come to mind -- and pretty much all of them happened because they thought it was more important to keep their profits skyrocketing by controlling the market than it was to give customers what they wanted. But Intel has recovered from all of those debacles and once again makes the best CPUs around -- Core 2 Duo is great. The fact that people are clinging to XP says that people at least perceive Microsoft operating systems to have value. The real test for Microsoft is whether they can learn from the Vista debacle and focus on making a better product the next time out with Windows 7. Having one failed product cycle isn't likely to sink them, but a second one could. I run Ubuntu and I don't regret it for a second. It's a great system, and I like it better than Windows (or OS X, for that matter). But I think it's silly to say that Microsoft should just pack up and surrender because they shipped something that sucked.
  - allenbrunson 18y ago
    i think microsoft beat apple because apple was busy beating itself. apple had about a ten-year lead in gui operating systems, but couldn't keep up. steve jobs was immature, and engineered things such that he was made irrelevant in his own company. the dude's firing on all cylinders now, and is virtually unstoppable. it's very painful to switch operating systems, due to network effects. all your friends use windows, you've spent a lot of money on windows software, people you know pass around windows-centric .xls and .doc files, you've been using windows long enough to have become familiar with it, etc. if it wasn't for all that, i think apple would have already eaten about half of microsoft's lunch.
alextp 18y ago
It's scary how good the prose of some lispers is. I wonder what made Peter Norvig and Paul Graham write this well. "I am not claiming to be good. At best I speak good as a second language." is just brilliant.
- DaniFong 18y ago
  Lisp speaks active voice.
zkinion 18y ago
This article is nice, and I agree with the part about momentum gained by holding to greater values than simply building a successful company. However, PG doesn't mention the incredibly successful startups that start out with evil/crime and then later go good: ones that start with spammy & unethical means to get initial users and pirated content startups. I think most people strive to do good, but the world itself is a very evil place that sometimes needs adapting to.
- eb 18y ago
  Can you provide some examples?
  - steveblgh 18y ago
    I think even YouTube/FaceBook/Flickr started along those lines. Hell, even Jimmy Wales was running a porn website ring before focusing on Wikipedia full time.
    - eb 18y ago
      I don't think that's true. Those sites grew mostly through word of mouth. I don't consider that to be devious. What's wrong with Jimmy Wales operating a porn site? I don't see how that's related to Wikipedia.
      - steveblgh 18y ago
        Nothing wrong at all. I think he used it to finance wikipedia/nupedia in the early stages though. I just tried to give examples of things that started not necessarily with the thought of making the world a better place.
      - deleted 18y ago
        [deleted]
    - andreyf 18y ago
      Since when is porn evil?
gruseom 18y ago
The business literature of previous generations often talked about "service to mankind" as an ingredient of success. This essay sheds some light on what they might have meant by that.
- ecommercematt 18y ago
  Do you have any links or even just names of source material? I'm curious.
  - mynameishere 18y ago
    http://en.wikipedia.org/wiki/The_Wealth_of_Nations http://en.wikipedia.org/wiki/The_Wealth_of_Nations :-\ Could you, for example, grow a successful startup out of curing an unfashionable but deadly disease like malaria? Is it just me, or are pg's many draft-readers (and presumably fact-checkers) sleeping on the job here? I mean, c'mon, http://biz.yahoo.com/ic/510.html http://biz.yahoo.com/ic/510.html or, specifically, the company that more-or-less cured malaria (indirectly), until the efforts were quashed by goody-two-shoeses, http://en.wikipedia.org/wiki/Geigy_Pharmaceutical http://en.wikipedia.org/wiki/Geigy_Pharmaceutical
    - aswanson 18y ago
      He did not argue that self-interest is always good; he merely argued against the view that self-interest is necessarily bad I think the essay covers different ground than Mr. Smith by explicity stating it is in your self-interest to be good.
  - gruseom 18y ago
    I wish I could answer this because I know I've run across it many times. Unfortunately, it's all blended into a vague impression. The "power of thought" authors of whom Napoleon Hill is the most famous certainly wrote about this, but so did more conventional writers. Anyway, the only specific thing that comes to mind is this useless, but hilarious example of an old IBM company song: OUR I. B. M. SALESMEN Tune: "Jingle Bells" I. B. M., Happy men, smiling all the way. Oh what fun it is to sell our products night and day. I. B. M., Watson men, partners of T. J. In his service to mankind-that’s why we are so gay. It happened to be fresh in my memory because I submitted a link about it the other day. Lots of jaw-dropping stuff from a bygone era: http://www.digibarn.com/collections/songs/ibm-songs/index.html http://www.digibarn.com/collections/songs/ibm-songs/index.ht...
andr 18y ago
The contrast between this and DHH's talk is worth mentioning.
- pius 18y ago
  So mention it. :D
ken 18y ago
I've heard something similar before: "Why did Greg and I do something so ludicrous as sneaking into an eight-billion-dollar corporation to do volunteer work? Apple was having financial troubles then, so we joked that we were volunteering for a nonprofit organization." -- http://www.pacifict.com/Story/ http://www.pacifict.com/Story/
- andreyf 18y ago
  Amazing story. Please post it?
  - sjh 18y ago
    The Google Tech Talk given by the author is, if you're interested, a good watch: http://video.google.com/videoplay?docid=-7497796873809571567 http://video.google.com/videoplay?docid=-7497796873809571567
  - ken 18y ago
    Sorry, can't; jwecker beat me to it: http://news.ycombinator.com/item?id=1741 http://news.ycombinator.com/item?id=1741
    - rms 18y ago
      This is something that really needed a ? resubmit
hollerith 18y ago
pg writes that "starting an organic farm, though it's at least straightforwardly benevolent, doesn't help people on the scale that Google does". Although I agree with pg's main point about scale and about trustafarians, an organic farmer seems to resemble a founder of a tech company more than he or she resembles a founder of an ineffectual or parasitic charity, foundation or NGO: a friend of mine knows countercultural types who dropped out of the rat race in the 1970s to start organic farms in Mendocino[1] for reasons other than financial, and she says they all seem to have become millionaires. (If there is interest I could ask this friend exactly how many people she knows who started organic farms.) [1]: Mendocino County is the closest place to San Francisco that in the 1970s had aesthetically pleasing terrain and cheap farm land.
breck 18y ago
I agree that being benevolent and not focusing on profits in the early days is a good strategy for Internet businesses. Success on the Internet is all about scale. Growing faster than your competitors is key because your product can iterate faster and achieve a dominant position. Giving it away for free and being benevolent helps spur growth and is thus a very important strategy. But I'm not sure that this holds outside the Internet realm. In other industries, you cannot be too benevolent and non-profit-like. I can't think of many examples that have succeeded via this route. I'm not sure I agree with your idea that Microsoft started out as benevolent. I think the profit motive was there from day one. To back this up, look at this letter written in 1976 by BillG: "As the majority of hobbyists must be aware, most of you steal your software...The fact is, no one besides us has invested a lot of money in hobby software...Most directly, the thing you do is theft...I would appreciate letters from any one who wants to pay up." (http://www.blinkenlights.com/classiccmp/gateswhine.html http://www.blinkenlights.com/classiccmp/gateswhine.html) So acting like a non-profit is important in the Internet world where scale is key, but I think in other industries the non-profit strategies should be left to the non-profits.
- anewaccountname 18y ago
  "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
ctkrohn 18y ago
This isn't a new idea at all; in fact it's as old as capitalism itself. Adam Smith was one of the first to recognize that capitalism helps align the self-interest of the entrepreneur (selfishness) with the general interest of others (charity): "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages."
- pg 18y ago
  This isn't a new idea at all Which idea?
- tlb 18y ago
  Smith is is saying that customers can depend on businesses providing value out of their own self interest (in order to make money.) Graham is saying that as a business, you'll be most successful if you spend your energy trying to be good to your customers, rather than, say, trying to squeeze a little more money from them. Smith: greed => good service => profit & happy customers Graham: benevolence => wonderful service => happy customers & happy entrepreneurs & profit Very different ideas.
  - yters 18y ago
    It really depends on your definition of self interest too. Benevolent people either think their benevolence benefits them materially, or gain satisfaction from altruism. Both are forms of self interest.
    - kleevr 18y ago
      I personally think altruism is born the murkiest waters of self-interest. But discriptive psychalogical egoism skirts the the issue a bit and forks us into a long examination of the nature of the "soul". But, whether altruism is some measure "divine" (or symbolically derived), or born completely out of self-interest, there is a wide consensus on what it ought to look like. (egoism is an easy card play, we could pull the appartus down and have a look at it though, but we might not get much farther than those that have gone before us.)
logjam 18y ago
Excellent stuff. A manifesto for change.
mhb 18y ago
I have no idea how Digi-Key is interacting with Octopart, but I have been buying parts from them for a long time and have nothing but good things to say about them. I like the company so much that I called to see if they were public so that I could buy stock; they're not. Although Octopart and its investors may be frustrated, it does Digi-Key a disservice to characterize it as "evil", not "good" or a company that isn't concerned with its customers - it is extremely concerned with customer satisfaction and I have been very pleased with every interaction I have had with it. Sure it would be great if Digi-Key facilitated Octopart's objective, but that doesn't justify conflating it with the all-star "evil" hall-of-famers.
- allenbrunson 18y ago
  i modded you up, because you brought value to the conversation. i don't think i agree with you though, or at least you haven't presented enough information to convince me. being concerned with customer satisfaction does not preclude the company from trying to keep prices artificially high.
- menloparkbum 18y ago
  Some of the comments about Digi-Key were unfair. Their prices are usually comparable to Mouser. Some items are more expensive, some are cheaper. They don't significantly overcharge for anything. You can confirm this with Octopart. Also, the most interesting thing about Octopart is the line item that says how many parts are in stock, not the pricing.
  - andres 18y ago
    In addition to listing parts from Digi-Key and Mouser we've also started indexing more consumer oriented sites like Newegg. Where there is overlap between Digi-Key and Newegg, we've found that the distributors are 10%-100% more expensive. For example, here are some search results for power strips (http://octopart.com/category--Accessories--Surge+Protectors/search?q=digikey+newegg&c=5310 http://octopart.com/category--Accessories--Surge+Protectors/...). I agree with your point about prices. Most people using Octopart, Digi-Key and Mouser aren't too concerned with pricing. Life would actually be easier for us if we hid Digi-Key's prices but we don't because we want to display all the information we have and because some of our users do find it useful.
nostrademons 18y ago
Peter Drucker said much the same thing: profit is the cost of doing business, not the purpose. The true purpose of a business is to provide goods & services to its customers. The "profit motive" is essentially a check on the resources consumed by the business, to ensure that it's not spending resources inefficiently, much as PG mentions in the 2nd footnote. Up until the 1970s, it was common for corporations to be managed "to balance the interests of all stakeholders - employees, customers, shareholders, and the community." You can blame Milton Friedman for changing that: he popularized the notion of a corporation existing purely to maximize shareholder value, enshrining it so deeply in American culture that it's become law, and corporate directors can now be sued if they consider anything other than the interests of shareholders. It is important that companies pay attention to shareholder value, but it was a huge mistake to make that the only mission of a corporation. Score one for market fundamentalism...
- tungstenfurnace 18y ago
  Yes, and looking at purpose another way: if something is worth doing it's worth doing at a profit, because non-profit enterprises are always underfunded.
  - billswift 18y ago
    A better way of looking at it, is if it can't earn a profit it isn't worth doing - because it isn't useful enough for people to pay for.
- jimbokun 18y ago
  Recommendations for good Drucker books, particularly those with appeal for the Startup and/or Hacker mentality?
  - nostrademons 18y ago
    Start with "The Essential Drucker" - it's a collection of chapters from all his books, and then you can pick out what seems most interesting from that. I'm currently reading "The Post-capitalistic society", which is fascinating, and I recall really enjoying "Innovation and Entrepreneurship" as well. I don't remember where the bit about profits came from - I think it was in The Essential Drucker. (To be honest, all the business books I read kinda run together in my head, and I'm lucky if I can even remember who said what, let alone where they said it.)
abless 18y ago
While I am sure that there is a lot of truth in that post, I'd say that selling "sins" is much more profitable: sex, drugs, alcohol, tobacco - lots of money involved.
- gregwebs 18y ago
  These are your definitions of sin. Tobacco companies have been bad in the past for lying to their users. However, you could argue that many of these companies are being good to their users.
  - abless 18y ago
    Good point. However, if "being good to your users" is the meaning of "good" in the article, then using the word "good" (with all its connotations) might be misleading. "Good" basically reduces to "do what your users want".
    - jcl 18y ago
      "Good" basically reduces to "do what your users want". To be fair, PG makes the same connection in the essay, albeit in the opposite direction: "Make something people want. Don't worry too much about making money. What you've got is a description of a charity." And charity = good. Arguably, tobacco companies make something people really, really want, but they do not fit the definition of charity or good, probably because while people really want tobacco, it's not in their long-term interests. In other words, there's a gap between what people want and what they should want, and the tobacco companies exploit this gap. So PG's description fits more things than just charities -- and he really doesn't argue otherwise; he simply chooses not to consider it in the essay. There have been plenty of successful startups that similarly satisfy "Make something people want" but are of questionable benefit to their users' long-term interests: gambling, adult sites, online games, etc. Whether or not these endeavors constitute "evil" is, of course, a value judgment and depends on what you consider a long-term benefit. (The very idea that "good" and "evil" could be phrased in terms of short- and long-term benefits is interesting...)
- attack 18y ago
vesterr 18y ago
"And the very best hackers tend to be idealistic. They're not desperate for a job. They can work wherever they want." I've heard PG repeat this but I think it's fallacious. A lot of up-and-coming hackers can't pick and choose where to work except in the sense that any person can quit one job and apply for another one. They can't unilaterally get themselves into Google, for example. Established hackers also may have constraints, such as time and family commitments, that keep them working a stable job instead of a startup, or keep them where they are rather than uprooting to go work at e.g. Google for a lower standard of living (possibly less salary and almost certainly higher cost-of-living, if you work at the HQ) even if they'd prefer to work there. Or your company may fold and you may have trouble finding an awesome job right away and have to settle for a tolerable one instead. Considering that so many start-up founders live hand to mouth, they are quite likely to be "desperate for a job" at various points, or at least unable to work "wherever they want". They might also find that the startup they want to do is just not as profitable or likely to succeed as some other one, and end up working on the other one instead. Scratching your own itch does not necessarily coincide with "making something people want" on a commercial scale.
- modoc 18y ago
  I'd argue that "the very best hackers" can pick and choose. "Up-and-coming" != "the very best". Maybe they'll get to be the some of the very best with some experience (work or project) under their belt, and at that point, if it's great code/work, they can absolutely get a job (almost) anywhere. I'm not sure what the rest of your points have to do with the PG quote exactly. Yes there are many factors around what job works for you given your current situation. You still have options, they may just be options that don't make sense for you, or that carry more risk than you're personally happy to take on, etc...
  - vesterr 18y ago
    You said: "Up-and-coming" != "the very best". I'm not talking about up-and-coming skill-wise, I'm referring to level of fame or notoriety. What it really boils down to is whether you have enough money to just work on what interests you vs. what pays the bills. "they can absolutely get a job (almost) anywhere." Not really. There are far more jobs that require skills you don't have than skills you do.
bdr 18y ago
Paul's thesis here seems to be a confused grasp at what others have described, more simply, as the benefits of capitalism: "A good company is honest. In a world of complete information, two parties will transact iff they both benefit. This positive-sum interaction creates wealth." What am I missing?
- pg 18y ago
  What am I missing? http://www.paulgraham.com/good.html http://www.paulgraham.com/good.html
  - bdr 18y ago
    Yeah, I actually had wanted to edit the grandparent, but it was too late. Your talk yesterday was too rich for me to follow -- I spent the second half thinking about the first half -- and I had trouble following anything today. Sorry.
- phr 18y ago
  Agreed. If you buy my house, that means I wanted your money more than I wanted to keep my house. So I've gained from the transaction. Likewise, you must have wanted the house more than the money. So you also gained. Barring fraud, we've each done the other a service. The problem is that people either never learn this, or they forget it somewhere along the line.
  - bdr 18y ago
    One way to summarize that is to say that a moral* and successful business is necessarily helping people. However, there are other benefits (to your business) of acting morally: see the "Morale", "Help", and "Compass" sections of the essay. ;) * "moral" may be too broad here, but "honest" is too narrow
aswanson 18y ago
I didn't want to start another company, so I didn't do it. But if someone had, they'd probably be quite rich now... You would be correct: http://www.news.com/Symantec-snaps-up-antispam-firm/2100-7355_3-5266548.html http://www.news.com/Symantec-snaps-up-antispam-firm/2100-735...
- epi0Bauqu 18y ago
  I just want to point out that TurnTide was a Philly area company. Now that I live here, I have to plug it!
  - aswanson 18y ago
    Hey, that's how I knew about it. I'm a PA area guy too.
    - epi0Bauqu 18y ago
      Well, then join our hackathon group (if you haven't already): http://startups.philadelphia.groupomatic.com/ http://startups.philadelphia.groupomatic.com/
      - aswanson 18y ago
        Thanks, just applied.
        epi0Bauqu 18y ago
        Approved! The next hackathon is Thursday at the Bear Rock Cafe in KOP from 10am to about 3pm.
        aswanson 18y ago
        Great! I plan on attending.
ph0rque 18y ago
I admit that I haven't really explored this vein of thought, but what are the reasons that "good" startups (in the sense of good used in this essay) don't usually make their apps open-source?
- eru 18y ago
  Nice argument. If we swallow Pauls line of reasoning that constitutes an oppurtunity: They could get even 'better' (i.e. profitable) by open-sourcing.
dood 18y ago
Video of the talk here: [http://www.justin.tv/hackertv/98110/Paul_Graham_Partner_Y_Combinator_Founde http://www.justin.tv/hackertv/98110/Paul_Graham_Partner_Y_Co...] I enjoyed the essay, but found the video communicated the idea much better somehow.
Kaizyn 18y ago
Paul Graham revisits Adam Smith on economics?
- tungstenfurnace 18y ago
  Adam Smith said something about trusting the selfish motives of the businesses he bought stuff from. Many bad deeds are done with good intentions (by charities and NGOs), and many profit-seeking deeds are done competently (by corporations), bringing wider benefits But start-ups can fall into the rare category of performing good deeds with good intentions. The founders genuinely want to make the world a better place, and they're prepared to take risks in order to bring it about.
zach 18y ago
Brings new meaning to "software as a service."
aaronsw 18y ago
When I was a kid I was firmly in the camp of bad. The way adults used the word good, it seemed to be synonymous with quiet, so I grew up very suspicious of it. You know how there are some people whose names come up in conversation and everyone says "He's such a great guy?" People never say that about me. The best I get is "he means well." I am not claiming to be good. At best I speak good as a second language. There are a lot of people out there who spend an enormous amount of time coming up with rationalizations to justify doing bad things. What I realized after spending a lot of time around Paul Graham is that he's actually the opposite: He spends an enormous amount of time coming up with rationalizations to justify doing good things. However bad he may want to be, his fundamental good nature always seems to win out in the end.
- andreyf 18y ago
  aaronsw. you're one person I'd have expected to be mentioned in this essay. :-P
bokonist 18y ago
A lot of people do startups to get rich, so that they can then use that money or free time to do good. I've wondered though, if doing the startup is actually the most benevolent thing they will ever do. In a startup your survival is dependent on helping other people. Without that focus, it's easy to do something that appears good, but isn't really helping that much. The only difference between a non-profit and a company is that a non-profit cannot have equity investors. If a non-profit figures out a model to help people, there is no way to scale it. Thus, non-profits are the last entities that a country wants to subsidize through the tax code.
jfrumar 18y ago
Here's the deep-link to the part of Paul's speech where he discussed Octopart's battle of good vs evil: http://omnisio.com/startupschool08/paul-graham-at-startup-school-08/14:50 http://omnisio.com/startupschool08/paul-graham-at-startup-sc...
ryan 18y ago
The talk on which the essay is based: http://omnisio.com/startupschool08/paul-graham-at-startup-school-08 http://omnisio.com/startupschool08/paul-graham-at-startup-sc...
flipbrad 18y ago
"Fifty years ago it would have seemed shocking for a public company not to pay dividends. Now many tech companies don't. The markets seem to have figured out how to value potential dividends. Maybe that isn't the last step in this evolution. Maybe markets will eventually get comfortable with potential earnings. (VCs already are, and at least some of them consistently make money.)" Does this not worry anyone? It's basically a statement justifying investment based on confidence, not that an investor is able to reliably guess whether a company will be able to generate PROFIT or not, but that it will be able to generate EARNINGS at all! this is not investing in two birds in a bush (likely to be profitable). It's investing on the basis of four in the nest (potentially earning money at all!). that's astoundingly risky. Now, either you believe investors are stupid and risk-insensitive (or risk-blind! not uncommon in a bubble) and will keep investing the same sums of money as they ever have, or you believe they are clever, credit strapped and most certainly not risk insensitive. Option A means a world of pain up ahead for investors and their backers, because we're in a mighty bubble. Option B means PG is wrong (though doubtless he'd like to be right, because it makes flipping seedstage companies from the YC stable a hell of a lot easier) Based on the total inability of even the biggest players on the scene - e.g.YouTube, Facebook and Bebo - to monetise, I really don't see how the confidence to move to an earning-optimistic (from profit-optimistic) investing mode is at all justified. If anything, earnings are less certain than they ever have been, the slide should be the other way.
- nostrademons 18y ago
  I'm a little uncomfortable with it, because it's the same reasoning that led to the subprime-related derivatives debacle. People felt that securities should be worth something, even though nobody was actually paying for them, and so they marked to model instead of marking to market. The result's been a disaster so far. But remember - there's more than just blind hope at work here. These companies are delivering real value to customers, they just don't know how to capture that value. The whole field of finance is based on providing capital to people who deliver real value but do not yet have the means to capture that value. If that weren't a necessary function, we'd have no need for loans - every business would be able to finance itself from retained earnings. People pay back loans all the time, even though they don't have the money on hand at the time the loan is written. They just have to watch out for what happened with the subprime market. Statistically, this was a really solid bet: a certain proportion of mortgages default in any given year, that proportion is relatively constant, and so by dividing these mortgage pools into tranches, you could get predictable risk & reward streams. The problem was that by securitizing the mortgages, they changed the market. Since banks no longer had to live with the consequences of bad loans, they started writing loans to riskier borrowers, which threw all the statistical models out the window. Graham risks a similar problem if, by letting more marginal startups get funded, he changes the assumptions that let him be reasonably confident that any startup that builds things people want will be able to make money off it. BTW, this doesn't always end badly. Fractional reserve banking is based on a similar principle - it's statistically very improbable that all of a bank's customers will want their money back at once, and so it's fine to loan out 90% of the money. Or the logic behind retained earnings vs. dividends: if a firm is reinvesting its capital wisely into the business, then it should create just as much shareholder value as if it's been paid out in dividends.
guyk 18y ago
Oh man does this ring some bells for me. I started bugmenot.com years ago to help people. And then I started retailmenot.com with much the same end in mind. Because people dug bugmenot I got the critical mass I needed for retailmenot to work. Then it turns out you can make money off online shopping stuff. Fast forward to now, we've got 5 staff still building cool stuff (that helps people), having fun and making money. And curiously enough the business is called StatelessSystems.com :)
- kleevr 18y ago
  Thanks for building bugmenot btw. I've used that site on and off for the last 2 years or so, I always look before I start a bullshit account. What kind of conversion do you get when a person looks up a site, doesn't find a working account, leading to a new user submission for the site in question?
  - guyk 18y ago
    Thanks for the props and a good question on conversion but one I don't think I have numbers to answer. Numbers I do know: * around 100k visitors per day * 1,021,791 logins * 187,047 sites A certain percentage of those logins will be invalid though.
r7000 18y ago
The last thing I ever thought to see in a PG essay was a P. O'Brian reference! That was a nice surprise.
kingkongrevenge 18y ago
> The markets seem to have figured out how to value potential dividends. Over the last eight years a dividend focused investor kicked the ass of an appreciation focused investor. Those who picked dividend paying stocks in non USD denominations are even farther ahead.
Readmore 18y ago
This sounds a lot like my startup Embought (www.embought.com). After making the decision to donate 50% of all profits to charity it gives me another reason to 'not die'. There are people out there other than myself that can benefit from me making this project work, and that's a powerful motivator.
towny777 18y ago
There must be something in the air right now. I published an article about this very issue on March 27th (you can view it at http://uberdigi.blogspot.com/2008/03/secret-of-life-in-participation-age.html http://uberdigi.blogspot.com/2008/03/secret-of-life-in-parti...). My main point is that being useful is the most important value in the participation age. If an individual or business makes usefulness their number one priority they increase their chance for success. In this case I think goodness and usefulness are synonymous. I got this idea from Buckminster Fuller. He failed miserably until he had an epiphany that he would not concentrate on success, but rather on making himself a servant to the universe. Ultimately this meant that he would just start working on good and useful things. As a result, he became a controversial figure but also pretty successful.
Emmjaykay 18y ago
Asking a corporation to be "good" or moral is like asking a car to be good or moral.
mikhailian 18y ago
>The trouble with lying is that you have to >remember everything you've said in the >past to make sure you don't contradict yourself. Il faut bonne mémoire après qu'on a menti (A good memory is needed after one has lied). [ Le Menteur, IV, 5, Cliton ] Pierre Corneille
stener 18y ago
When people see some things as good, other things become bad. Hold on to the center. -- Lao-tzu
kcmarshall 18y ago
Since Malaria was a specific example, this headline caught my eye yesterday: Web guru targets malaria with social network site http://news.yahoo.com/s/nm/20080420/tc_nm/britain_malaria_dc_1 http://news.yahoo.com/s/nm/20080420/tc_nm/britain_malaria_dc... I admit some skepticism but haven't read beyond the article. Maybe it is possible to "Facebook" malaria out of existence...
colortone 18y ago
Hey PG, I bought www.benevolentcorporation.com a few months ago while thinking about these memes. I'll sell it to you for $5M ;-)
- jcl 18y ago
  Looks like someone beat you to goodcompany.com -- a more clever name. :)
drernie 18y ago
Hi Paul, Great essay. The idea of a purpose to business transcending mere "stockholder value" is a powerful new meme, which I believe Forbes has labeled "Capitalism 2.0": http://www.forbes.com/columnists/forbes/2008/0310/030.html http://www.forbes.com/columnists/forbes/2008/0310/030.html Here's hoping the idea takes off -- and not just for startups! Sincerely, Dr. Ernie http://ihack.us/2005/10/07/capitalism-20/ http://ihack.us/2005/10/07/capitalism-20/
dusklight 18y ago
One thing I've realized personally about why good works: when you are evil, you can only fool those people who are less intelligent than you. You can bully only those people who are weaker than you. If you are very smart or very strong, that could be a lot of people, and you can benefit a lot, and you are necessarily setting a hard limit on the number of people who are willing to help you. When you are good, when you give more than you receive, the opposite is true. You gain the aid of those who are smarter and stronger than you, others who "get it" and who have chosen to commit to the "cooperate" branch of the Prisoner's Dilemma.
SwellJoe 18y ago
I find it somewhat amusing that pg suggests in the footnote that Microsoft ought to recommend their customers switch to Mac OS X. The problem with that is that there is one supplier of hardware for Mac OS X: Apple. And they charge a significant premium for that hardware. Kinda like IBM back before Microsoft pulled a fast one and licensed their OS to all comers and (benevolently) changed the face of personal computing. pg recognized the evil that was IBM, but fails to recognize the same evil in Apple, because the facade is so much nicer to look at.
- pg 18y ago
  Not all computers are bought new. There are very inexpensive Apple machines: used ones. A Powerbook G4 like the one I use for everything seems to cost around $500 on eBay, and I suspect that offers a net better experience than the average Vista user gets.
  - SwellJoe 18y ago
    There were used IBMs on the market, as well. Does that invalidate your argument about IBM? One of your premises is incorrect. Which one is it?
    - pg 18y ago
      What I said was that if Microsoft cared about users, they'd recommend they switch to OSX. You replied that Apple hardware comes at a premium. I replied that this premium is less than the difference between new and used hardware, and that using OSX only costs about $500. Could you find a laptop capable of running Vista for significantly less than that? If not, how am I mistaken?
      - plinkplonk 18y ago
        to be fair though, when someone says "you should switch from X to Y" there isn't an implicit "you'll have to use second hand / used versions of Y" attached to that message. e.g the statement "you should switch from [cheap car] to [expensive car] because expensive car is much more comfortable" does NOT carry the "I meant a used [expensive car]" implication. Most people would understand that the first statement implies you should pony up the price differential because the extra comfort is worth it. It is bad enough that Windows has a monopoly and uses it to gouge customers. Why would anyone want to replace a software monopoly with a software and hardware monopoly?
ricky 18y ago
It struck me that this essay shares many things in common with the last chapter of Guy Kawasaki's book, "The Art of the Start". That chapter is called "The Art of Being a Mensch", and argues that to build a lasting organization, you need to help lots of people, do what's right and pay back society. Sounds about right to me.
cowsandmilk 18y ago
related to malaria, maybe you want to look at Amyris Biotechnologies as a living example of similar ideas to what you describe. They started with Bill and Melinda Gates money to produce artemisinin, which the grant stipulated had to be produced without a profit, but have taken that technology and have used it to grow an amazing Biotech startup that most PhDs in the field would die to work for. The Bill and Melinda Gates Foundation isn't usually thought of as a startup incubator, but this is one example of a company that started from the idea of treating malaria, and continues with that idea as they apply the same technologies to solve the other needs they see in the world.
Kbaxter 18y ago
Mr. Graham, Thanks for this piece. It's something that's been kicking around in my head since Nov. '06 or so when I discovered Newsvine. I found a community and community genuinely interested in promoting quality news discussion and content, AND in making money. There's something powerful happening now, with the profit-motive acting in a socially-beneficial way. Your blurb about the malaria company inspired me to do a little thought exercise about whether it'd be possible for a for-profit company to successfully help pull people out of poverty, and what that company would look like. If you're interested in reading it, here is a link: http://www.tightwind.net/2008/04/mesh-networks-relationships-and-poverty-non-profit-becomes-for-profit/ http://www.tightwind.net/2008/04/mesh-networks-relationships... . Thanks again for your great piece.
cjwang 18y ago
I was unaware of Octopart but after checking it out, it seems like an excellent service. I posted it on my blog so that others can check it out too. I also agree with the concept of being good and idealistic programmers. My blog is basically a development journal to record my progress and thinking as I write an open source wireless (Zigbee) protocol stack. Many companies charge large amounts for these embedded stacks, but I figure that hobbyists should have access to the same things that large companies do. Only good ideas can come out of it. If anyone is interested, you can check out my dev journal and blog here: http://www.freaklabs.org http://www.freaklabs.org
jgrnwld 18y ago
Paul Graham for President!
atduskgreg 18y ago
Have you followed the rise of social entrepreneurship at all? Under its banner there are quite a lot of startups taking on problems exactly like the malaria dilemma you describe in the piece. They come at the issue from the opposite side of the spectrum: they're reacting to all of the waste and inefficiency in the old fashioned non-profit world, where something gets done because a millionaire's brother's wife is interested in it and done badly because she's not very good at solving the problem. So, they're trying to harness the power of market forces and the attendant efficiencies and motivations that go with them in order to solve these big intractable social problems. The social entrepreneurship movement encompasses everything from micro-finance -- which was pioneered by Mohammed Yunnus at Gramin Bank (for which Yunnus just won the nobel prize) -- to a revolution in funder logic and an increased focus on effectiveness metrics. I'd be curious to read your thoughts on social entrepreneurship from a startup point of view.
austinchu 18y ago
Great article. I work for a startup company and these are exactly the issues that we go through. We're in the second phase of funding and it's always a tough time. Will we have enough money? Is there money? How will be get it? Where will we get it? How much do we need? All these question about money. What I got from the post is that we are here for a purpose. I totally agree with nostrademons post. Provide a great service and product, let the people be the judge. Let's get to work. We're not going down quietly.
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goodsamaritan 18y ago
I understand the concept of being good and benevolent, but not thinking about making money is the hardest part. It is really tough to ditch your job, and keep doing good for people whose psychology (at least on the Web) has become to expect everything for free. You can survive your own goodness for 6 months, 1 year but after that you surely expect something in return. And then, if you do not have or want VC funding but just want to run your startup based on the good old way of 'revenues' how long can your goodness keep you going? Even Jesus 'sold' his woodwork to feed himself, isn't it? :) People throwing money at you for the good you do to them is living on a charity. Whatever happened to the good old way of selling something in return for money?
mcarlin 18y ago
Paul, I've been reading your stuff for six years, and that's the first one that made me cry. It's the last step on a good path, and I was worried you would never take it. I'd been quite enamored of YC for a while, but I had my doubts about its ability to do good things. It's also something I never thought of. I just always mentally separated "good, charitable" and "successful company" in much the same way as people generally separate "work" and "what you love".
anguriam 18y ago
thios document is promagnificient and we are al;so poor youth from uganda,looking for financial aid fior our project so help us get new donors. thaks anguriamichael 2562854991 mkanguria@yahoo.com

182 points by vsingh 18y ago

I have a real concerns with "Don't be evil" - 1. subvocalising "Don't" 2. focusing on the action "be evil" As a cyclist, I often tell new cyclists: "if you see a rock in the middle of the road, focus on the clear road either side of the rock, focus where you want to go. If all you think is 'don't hit that rock' 'don't hit that rock' 'don't hit that rock' guess where your focus is? Guess what you will likely end up doing?" I see Google's mantra in the same light. It is far better to focus on DOING something than NOT DOING something. "Be good" is a far better mantra to have, and that's before all the good reasons you cited, Paul. Thanks for the essay, have been looking for some inspiration lately and had forgotten about YC and your essays.

hualibaobao 18y ago

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jimjim 18y ago

Thanks for a great read, I was recommended this essay by a good friend of mine, and it was time well spent!

todds 18y ago

You made me think of the power and success of the Obama campaign. Lots of people donating $5 or $10 to his website was a lot like a charitable fundraising campaign. A unqiue, personal approach that focused on conecting with his 'users' and giving them what they wanted.

webwright 18y ago

Regarding Microsoft... it really struck me when I watched Steve Ballmer talk with Guy Kawasaki ( http://visitmix.com/blogs/News/Watch-Steve-Ballmer-and-Guy-Kawasaki-Live/ http://visitmix.com/blogs/News/Watch-Steve-Ballmer-and-Guy-K... ) that Steve over and over again touted that it was important for them to get big into online advertising. Not once did he frame a single Microsoft goal in the form of how it was going to help a customer.

wanorris 18y ago
Certainly a valid point. And PG's criticisms were deserved as well. At the same time, I can't help but think some of this is an overreaction. Microsoft beat Apple as well as IBM in the market the first time by letting users pick their hardware vendor. And, even today, they still do that, and that's still Apple's achilles heel in gaining market share -- if someone wants more choice than a half a dozen or so models, they're going to have to buy a system running a different OS. Yes, Vista sucks. Microsoft has come out with a completely crappy version of it's most important product. But other companies have released crappy products before and have lived on past their mistakes. Intel has released some horrible products before -- i860, Itanium, and the P4 all come to mind -- and pretty much all of them happened because they thought it was more important to keep their profits skyrocketing by controlling the market than it was to give customers what they wanted. But Intel has recovered from all of those debacles and once again makes the best CPUs around -- Core 2 Duo is great. The fact that people are clinging to XP says that people at least perceive Microsoft operating systems to have value. The real test for Microsoft is whether they can learn from the Vista debacle and focus on making a better product the next time out with Windows 7. Having one failed product cycle isn't likely to sink them, but a second one could. I run Ubuntu and I don't regret it for a second. It's a great system, and I like it better than Windows (or OS X, for that matter). But I think it's silly to say that Microsoft should just pack up and surrender because they shipped something that sucked.
- allenbrunson 18y ago
  i think microsoft beat apple because apple was busy beating itself. apple had about a ten-year lead in gui operating systems, but couldn't keep up. steve jobs was immature, and engineered things such that he was made irrelevant in his own company. the dude's firing on all cylinders now, and is virtually unstoppable. it's very painful to switch operating systems, due to network effects. all your friends use windows, you've spent a lot of money on windows software, people you know pass around windows-centric .xls and .doc files, you've been using windows long enough to have become familiar with it, etc. if it wasn't for all that, i think apple would have already eaten about half of microsoft's lunch.

alextp 18y ago

It's scary how good the prose of some lispers is. I wonder what made Peter Norvig and Paul Graham write this well. "I am not claiming to be good. At best I speak good as a second language." is just brilliant.

DaniFong 18y ago
Lisp speaks active voice.

zkinion 18y ago

This article is nice, and I agree with the part about momentum gained by holding to greater values than simply building a successful company. However, PG doesn't mention the incredibly successful startups that start out with evil/crime and then later go good: ones that start with spammy & unethical means to get initial users and pirated content startups. I think most people strive to do good, but the world itself is a very evil place that sometimes needs adapting to.

eb 18y ago
Can you provide some examples?
- steveblgh 18y ago
  I think even YouTube/FaceBook/Flickr started along those lines. Hell, even Jimmy Wales was running a porn website ring before focusing on Wikipedia full time.
  - eb 18y ago
    I don't think that's true. Those sites grew mostly through word of mouth. I don't consider that to be devious. What's wrong with Jimmy Wales operating a porn site? I don't see how that's related to Wikipedia.
    - steveblgh 18y ago
      Nothing wrong at all. I think he used it to finance wikipedia/nupedia in the early stages though. I just tried to give examples of things that started not necessarily with the thought of making the world a better place.
    - deleted 18y ago
      [deleted]
  - andreyf 18y ago
    Since when is porn evil?

gruseom 18y ago

The business literature of previous generations often talked about "service to mankind" as an ingredient of success. This essay sheds some light on what they might have meant by that.

ecommercematt 18y ago
Do you have any links or even just names of source material? I'm curious.
- mynameishere 18y ago
  http://en.wikipedia.org/wiki/The_Wealth_of_Nations http://en.wikipedia.org/wiki/The_Wealth_of_Nations :-\ Could you, for example, grow a successful startup out of curing an unfashionable but deadly disease like malaria? Is it just me, or are pg's many draft-readers (and presumably fact-checkers) sleeping on the job here? I mean, c'mon, http://biz.yahoo.com/ic/510.html http://biz.yahoo.com/ic/510.html or, specifically, the company that more-or-less cured malaria (indirectly), until the efforts were quashed by goody-two-shoeses, http://en.wikipedia.org/wiki/Geigy_Pharmaceutical http://en.wikipedia.org/wiki/Geigy_Pharmaceutical
  - aswanson 18y ago
    He did not argue that self-interest is always good; he merely argued against the view that self-interest is necessarily bad I think the essay covers different ground than Mr. Smith by explicity stating it is in your self-interest to be good.
- gruseom 18y ago
  I wish I could answer this because I know I've run across it many times. Unfortunately, it's all blended into a vague impression. The "power of thought" authors of whom Napoleon Hill is the most famous certainly wrote about this, but so did more conventional writers. Anyway, the only specific thing that comes to mind is this useless, but hilarious example of an old IBM company song: OUR I. B. M. SALESMEN Tune: "Jingle Bells" I. B. M., Happy men, smiling all the way. Oh what fun it is to sell our products night and day. I. B. M., Watson men, partners of T. J. In his service to mankind-that’s why we are so gay. It happened to be fresh in my memory because I submitted a link about it the other day. Lots of jaw-dropping stuff from a bygone era: http://www.digibarn.com/collections/songs/ibm-songs/index.html http://www.digibarn.com/collections/songs/ibm-songs/index.ht...

andr 18y ago

The contrast between this and DHH's talk is worth mentioning.

pius 18y ago
So mention it. :D

ken 18y ago

I've heard something similar before: "Why did Greg and I do something so ludicrous as sneaking into an eight-billion-dollar corporation to do volunteer work? Apple was having financial troubles then, so we joked that we were volunteering for a nonprofit organization." -- http://www.pacifict.com/Story/ http://www.pacifict.com/Story/

andreyf 18y ago
Amazing story. Please post it?
- sjh 18y ago
  The Google Tech Talk given by the author is, if you're interested, a good watch: http://video.google.com/videoplay?docid=-7497796873809571567 http://video.google.com/videoplay?docid=-7497796873809571567
- ken 18y ago
  Sorry, can't; jwecker beat me to it: http://news.ycombinator.com/item?id=1741 http://news.ycombinator.com/item?id=1741
  - rms 18y ago
    This is something that really needed a ? resubmit

hollerith 18y ago

pg writes that "starting an organic farm, though it's at least straightforwardly benevolent, doesn't help people on the scale that Google does". Although I agree with pg's main point about scale and about trustafarians, an organic farmer seems to resemble a founder of a tech company more than he or she resembles a founder of an ineffectual or parasitic charity, foundation or NGO: a friend of mine knows countercultural types who dropped out of the rat race in the 1970s to start organic farms in Mendocino[1] for reasons other than financial, and she says they all seem to have become millionaires. (If there is interest I could ask this friend exactly how many people she knows who started organic farms.) [1]: Mendocino County is the closest place to San Francisco that in the 1970s had aesthetically pleasing terrain and cheap farm land.

breck 18y ago

I agree that being benevolent and not focusing on profits in the early days is a good strategy for Internet businesses. Success on the Internet is all about scale. Growing faster than your competitors is key because your product can iterate faster and achieve a dominant position. Giving it away for free and being benevolent helps spur growth and is thus a very important strategy. But I'm not sure that this holds outside the Internet realm. In other industries, you cannot be too benevolent and non-profit-like. I can't think of many examples that have succeeded via this route. I'm not sure I agree with your idea that Microsoft started out as benevolent. I think the profit motive was there from day one. To back this up, look at this letter written in 1976 by BillG: "As the majority of hobbyists must be aware, most of you steal your software...The fact is, no one besides us has invested a lot of money in hobby software...Most directly, the thing you do is theft...I would appreciate letters from any one who wants to pay up." (http://www.blinkenlights.com/classiccmp/gateswhine.html http://www.blinkenlights.com/classiccmp/gateswhine.html) So acting like a non-profit is important in the Internet world where scale is key, but I think in other industries the non-profit strategies should be left to the non-profits.

anewaccountname 18y ago
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."

ctkrohn 18y ago

This isn't a new idea at all; in fact it's as old as capitalism itself. Adam Smith was one of the first to recognize that capitalism helps align the self-interest of the entrepreneur (selfishness) with the general interest of others (charity): "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages."

pg 18y ago
This isn't a new idea at all Which idea?
tlb 18y ago
Smith is is saying that customers can depend on businesses providing value out of their own self interest (in order to make money.) Graham is saying that as a business, you'll be most successful if you spend your energy trying to be good to your customers, rather than, say, trying to squeeze a little more money from them. Smith: greed => good service => profit & happy customers Graham: benevolence => wonderful service => happy customers & happy entrepreneurs & profit Very different ideas.
- yters 18y ago
  It really depends on your definition of self interest too. Benevolent people either think their benevolence benefits them materially, or gain satisfaction from altruism. Both are forms of self interest.
  - kleevr 18y ago
    I personally think altruism is born the murkiest waters of self-interest. But discriptive psychalogical egoism skirts the the issue a bit and forks us into a long examination of the nature of the "soul". But, whether altruism is some measure "divine" (or symbolically derived), or born completely out of self-interest, there is a wide consensus on what it ought to look like. (egoism is an easy card play, we could pull the appartus down and have a look at it though, but we might not get much farther than those that have gone before us.)

logjam 18y ago

Excellent stuff. A manifesto for change.

mhb 18y ago

I have no idea how Digi-Key is interacting with Octopart, but I have been buying parts from them for a long time and have nothing but good things to say about them. I like the company so much that I called to see if they were public so that I could buy stock; they're not. Although Octopart and its investors may be frustrated, it does Digi-Key a disservice to characterize it as "evil", not "good" or a company that isn't concerned with its customers - it is extremely concerned with customer satisfaction and I have been very pleased with every interaction I have had with it. Sure it would be great if Digi-Key facilitated Octopart's objective, but that doesn't justify conflating it with the all-star "evil" hall-of-famers.

allenbrunson 18y ago
i modded you up, because you brought value to the conversation. i don't think i agree with you though, or at least you haven't presented enough information to convince me. being concerned with customer satisfaction does not preclude the company from trying to keep prices artificially high.
menloparkbum 18y ago
Some of the comments about Digi-Key were unfair. Their prices are usually comparable to Mouser. Some items are more expensive, some are cheaper. They don't significantly overcharge for anything. You can confirm this with Octopart. Also, the most interesting thing about Octopart is the line item that says how many parts are in stock, not the pricing.
- andres 18y ago
  In addition to listing parts from Digi-Key and Mouser we've also started indexing more consumer oriented sites like Newegg. Where there is overlap between Digi-Key and Newegg, we've found that the distributors are 10%-100% more expensive. For example, here are some search results for power strips (http://octopart.com/category--Accessories--Surge+Protectors/search?q=digikey+newegg&c=5310 http://octopart.com/category--Accessories--Surge+Protectors/...). I agree with your point about prices. Most people using Octopart, Digi-Key and Mouser aren't too concerned with pricing. Life would actually be easier for us if we hid Digi-Key's prices but we don't because we want to display all the information we have and because some of our users do find it useful.

nostrademons 18y ago

Peter Drucker said much the same thing: profit is the cost of doing business, not the purpose. The true purpose of a business is to provide goods & services to its customers. The "profit motive" is essentially a check on the resources consumed by the business, to ensure that it's not spending resources inefficiently, much as PG mentions in the 2nd footnote. Up until the 1970s, it was common for corporations to be managed "to balance the interests of all stakeholders - employees, customers, shareholders, and the community." You can blame Milton Friedman for changing that: he popularized the notion of a corporation existing purely to maximize shareholder value, enshrining it so deeply in American culture that it's become law, and corporate directors can now be sued if they consider anything other than the interests of shareholders. It is important that companies pay attention to shareholder value, but it was a huge mistake to make that the only mission of a corporation. Score one for market fundamentalism...

tungstenfurnace 18y ago
Yes, and looking at purpose another way: if something is worth doing it's worth doing at a profit, because non-profit enterprises are always underfunded.
- billswift 18y ago
  A better way of looking at it, is if it can't earn a profit it isn't worth doing - because it isn't useful enough for people to pay for.
jimbokun 18y ago
Recommendations for good Drucker books, particularly those with appeal for the Startup and/or Hacker mentality?
- nostrademons 18y ago
  Start with "The Essential Drucker" - it's a collection of chapters from all his books, and then you can pick out what seems most interesting from that. I'm currently reading "The Post-capitalistic society", which is fascinating, and I recall really enjoying "Innovation and Entrepreneurship" as well. I don't remember where the bit about profits came from - I think it was in The Essential Drucker. (To be honest, all the business books I read kinda run together in my head, and I'm lucky if I can even remember who said what, let alone where they said it.)

abless 18y ago

While I am sure that there is a lot of truth in that post, I'd say that selling "sins" is much more profitable: sex, drugs, alcohol, tobacco - lots of money involved.

gregwebs 18y ago
These are your definitions of sin. Tobacco companies have been bad in the past for lying to their users. However, you could argue that many of these companies are being good to their users.
- abless 18y ago
  Good point. However, if "being good to your users" is the meaning of "good" in the article, then using the word "good" (with all its connotations) might be misleading. "Good" basically reduces to "do what your users want".
  - jcl 18y ago
    "Good" basically reduces to "do what your users want". To be fair, PG makes the same connection in the essay, albeit in the opposite direction: "Make something people want. Don't worry too much about making money. What you've got is a description of a charity." And charity = good. Arguably, tobacco companies make something people really, really want, but they do not fit the definition of charity or good, probably because while people really want tobacco, it's not in their long-term interests. In other words, there's a gap between what people want and what they should want, and the tobacco companies exploit this gap. So PG's description fits more things than just charities -- and he really doesn't argue otherwise; he simply chooses not to consider it in the essay. There have been plenty of successful startups that similarly satisfy "Make something people want" but are of questionable benefit to their users' long-term interests: gambling, adult sites, online games, etc. Whether or not these endeavors constitute "evil" is, of course, a value judgment and depends on what you consider a long-term benefit. (The very idea that "good" and "evil" could be phrased in terms of short- and long-term benefits is interesting...)
attack 18y ago

vesterr 18y ago

"And the very best hackers tend to be idealistic. They're not desperate for a job. They can work wherever they want." I've heard PG repeat this but I think it's fallacious. A lot of up-and-coming hackers can't pick and choose where to work except in the sense that any person can quit one job and apply for another one. They can't unilaterally get themselves into Google, for example. Established hackers also may have constraints, such as time and family commitments, that keep them working a stable job instead of a startup, or keep them where they are rather than uprooting to go work at e.g. Google for a lower standard of living (possibly less salary and almost certainly higher cost-of-living, if you work at the HQ) even if they'd prefer to work there. Or your company may fold and you may have trouble finding an awesome job right away and have to settle for a tolerable one instead. Considering that so many start-up founders live hand to mouth, they are quite likely to be "desperate for a job" at various points, or at least unable to work "wherever they want". They might also find that the startup they want to do is just not as profitable or likely to succeed as some other one, and end up working on the other one instead. Scratching your own itch does not necessarily coincide with "making something people want" on a commercial scale.

modoc 18y ago
I'd argue that "the very best hackers" can pick and choose. "Up-and-coming" != "the very best". Maybe they'll get to be the some of the very best with some experience (work or project) under their belt, and at that point, if it's great code/work, they can absolutely get a job (almost) anywhere. I'm not sure what the rest of your points have to do with the PG quote exactly. Yes there are many factors around what job works for you given your current situation. You still have options, they may just be options that don't make sense for you, or that carry more risk than you're personally happy to take on, etc...
- vesterr 18y ago
  You said: "Up-and-coming" != "the very best". I'm not talking about up-and-coming skill-wise, I'm referring to level of fame or notoriety. What it really boils down to is whether you have enough money to just work on what interests you vs. what pays the bills. "they can absolutely get a job (almost) anywhere." Not really. There are far more jobs that require skills you don't have than skills you do.

bdr 18y ago

Paul's thesis here seems to be a confused grasp at what others have described, more simply, as the benefits of capitalism: "A good company is honest. In a world of complete information, two parties will transact iff they both benefit. This positive-sum interaction creates wealth." What am I missing?

pg 18y ago
What am I missing? http://www.paulgraham.com/good.html http://www.paulgraham.com/good.html
- bdr 18y ago
  Yeah, I actually had wanted to edit the grandparent, but it was too late. Your talk yesterday was too rich for me to follow -- I spent the second half thinking about the first half -- and I had trouble following anything today. Sorry.
phr 18y ago
Agreed. If you buy my house, that means I wanted your money more than I wanted to keep my house. So I've gained from the transaction. Likewise, you must have wanted the house more than the money. So you also gained. Barring fraud, we've each done the other a service. The problem is that people either never learn this, or they forget it somewhere along the line.
- bdr 18y ago
  One way to summarize that is to say that a moral* and successful business is necessarily helping people. However, there are other benefits (to your business) of acting morally: see the "Morale", "Help", and "Compass" sections of the essay. ;) * "moral" may be too broad here, but "honest" is too narrow

aswanson 18y ago

I didn't want to start another company, so I didn't do it. But if someone had, they'd probably be quite rich now... You would be correct: http://www.news.com/Symantec-snaps-up-antispam-firm/2100-7355_3-5266548.html http://www.news.com/Symantec-snaps-up-antispam-firm/2100-735...

epi0Bauqu 18y ago
I just want to point out that TurnTide was a Philly area company. Now that I live here, I have to plug it!
- aswanson 18y ago
  Hey, that's how I knew about it. I'm a PA area guy too.
  - epi0Bauqu 18y ago
    Well, then join our hackathon group (if you haven't already): http://startups.philadelphia.groupomatic.com/ http://startups.philadelphia.groupomatic.com/
    - aswanson 18y ago
      Thanks, just applied.
      - epi0Bauqu 18y ago
        Approved! The next hackathon is Thursday at the Bear Rock Cafe in KOP from 10am to about 3pm.
        aswanson 18y ago
        Great! I plan on attending.

ph0rque 18y ago

I admit that I haven't really explored this vein of thought, but what are the reasons that "good" startups (in the sense of good used in this essay) don't usually make their apps open-source?

eru 18y ago
Nice argument. If we swallow Pauls line of reasoning that constitutes an oppurtunity: They could get even 'better' (i.e. profitable) by open-sourcing.

dood 18y ago

Video of the talk here: [http://www.justin.tv/hackertv/98110/Paul_Graham_Partner_Y_Combinator_Founde http://www.justin.tv/hackertv/98110/Paul_Graham_Partner_Y_Co...] I enjoyed the essay, but found the video communicated the idea much better somehow.

Kaizyn 18y ago

Paul Graham revisits Adam Smith on economics?

tungstenfurnace 18y ago
Adam Smith said something about trusting the selfish motives of the businesses he bought stuff from. Many bad deeds are done with good intentions (by charities and NGOs), and many profit-seeking deeds are done competently (by corporations), bringing wider benefits But start-ups can fall into the rare category of performing good deeds with good intentions. The founders genuinely want to make the world a better place, and they're prepared to take risks in order to bring it about.

zach 18y ago

Brings new meaning to "software as a service."

aaronsw 18y ago

When I was a kid I was firmly in the camp of bad. The way adults used the word good, it seemed to be synonymous with quiet, so I grew up very suspicious of it. You know how there are some people whose names come up in conversation and everyone says "He's such a great guy?" People never say that about me. The best I get is "he means well." I am not claiming to be good. At best I speak good as a second language. There are a lot of people out there who spend an enormous amount of time coming up with rationalizations to justify doing bad things. What I realized after spending a lot of time around Paul Graham is that he's actually the opposite: He spends an enormous amount of time coming up with rationalizations to justify doing good things. However bad he may want to be, his fundamental good nature always seems to win out in the end.

andreyf 18y ago
aaronsw. you're one person I'd have expected to be mentioned in this essay. :-P

bokonist 18y ago

A lot of people do startups to get rich, so that they can then use that money or free time to do good. I've wondered though, if doing the startup is actually the most benevolent thing they will ever do. In a startup your survival is dependent on helping other people. Without that focus, it's easy to do something that appears good, but isn't really helping that much. The only difference between a non-profit and a company is that a non-profit cannot have equity investors. If a non-profit figures out a model to help people, there is no way to scale it. Thus, non-profits are the last entities that a country wants to subsidize through the tax code.

jfrumar 18y ago

Here's the deep-link to the part of Paul's speech where he discussed Octopart's battle of good vs evil: http://omnisio.com/startupschool08/paul-graham-at-startup-school-08/14:50 http://omnisio.com/startupschool08/paul-graham-at-startup-sc...

ryan 18y ago

The talk on which the essay is based: http://omnisio.com/startupschool08/paul-graham-at-startup-school-08 http://omnisio.com/startupschool08/paul-graham-at-startup-sc...

flipbrad 18y ago

"Fifty years ago it would have seemed shocking for a public company not to pay dividends. Now many tech companies don't. The markets seem to have figured out how to value potential dividends. Maybe that isn't the last step in this evolution. Maybe markets will eventually get comfortable with potential earnings. (VCs already are, and at least some of them consistently make money.)" Does this not worry anyone? It's basically a statement justifying investment based on confidence, not that an investor is able to reliably guess whether a company will be able to generate PROFIT or not, but that it will be able to generate EARNINGS at all! this is not investing in two birds in a bush (likely to be profitable). It's investing on the basis of four in the nest (potentially earning money at all!). that's astoundingly risky. Now, either you believe investors are stupid and risk-insensitive (or risk-blind! not uncommon in a bubble) and will keep investing the same sums of money as they ever have, or you believe they are clever, credit strapped and most certainly not risk insensitive. Option A means a world of pain up ahead for investors and their backers, because we're in a mighty bubble. Option B means PG is wrong (though doubtless he'd like to be right, because it makes flipping seedstage companies from the YC stable a hell of a lot easier) Based on the total inability of even the biggest players on the scene - e.g.YouTube, Facebook and Bebo - to monetise, I really don't see how the confidence to move to an earning-optimistic (from profit-optimistic) investing mode is at all justified. If anything, earnings are less certain than they ever have been, the slide should be the other way.

nostrademons 18y ago
I'm a little uncomfortable with it, because it's the same reasoning that led to the subprime-related derivatives debacle. People felt that securities should be worth something, even though nobody was actually paying for them, and so they marked to model instead of marking to market. The result's been a disaster so far. But remember - there's more than just blind hope at work here. These companies are delivering real value to customers, they just don't know how to capture that value. The whole field of finance is based on providing capital to people who deliver real value but do not yet have the means to capture that value. If that weren't a necessary function, we'd have no need for loans - every business would be able to finance itself from retained earnings. People pay back loans all the time, even though they don't have the money on hand at the time the loan is written. They just have to watch out for what happened with the subprime market. Statistically, this was a really solid bet: a certain proportion of mortgages default in any given year, that proportion is relatively constant, and so by dividing these mortgage pools into tranches, you could get predictable risk & reward streams. The problem was that by securitizing the mortgages, they changed the market. Since banks no longer had to live with the consequences of bad loans, they started writing loans to riskier borrowers, which threw all the statistical models out the window. Graham risks a similar problem if, by letting more marginal startups get funded, he changes the assumptions that let him be reasonably confident that any startup that builds things people want will be able to make money off it. BTW, this doesn't always end badly. Fractional reserve banking is based on a similar principle - it's statistically very improbable that all of a bank's customers will want their money back at once, and so it's fine to loan out 90% of the money. Or the logic behind retained earnings vs. dividends: if a firm is reinvesting its capital wisely into the business, then it should create just as much shareholder value as if it's been paid out in dividends.

guyk 18y ago

Oh man does this ring some bells for me. I started bugmenot.com years ago to help people. And then I started retailmenot.com with much the same end in mind. Because people dug bugmenot I got the critical mass I needed for retailmenot to work. Then it turns out you can make money off online shopping stuff. Fast forward to now, we've got 5 staff still building cool stuff (that helps people), having fun and making money. And curiously enough the business is called StatelessSystems.com :)

kleevr 18y ago
Thanks for building bugmenot btw. I've used that site on and off for the last 2 years or so, I always look before I start a bullshit account. What kind of conversion do you get when a person looks up a site, doesn't find a working account, leading to a new user submission for the site in question?
- guyk 18y ago
  Thanks for the props and a good question on conversion but one I don't think I have numbers to answer. Numbers I do know: * around 100k visitors per day * 1,021,791 logins * 187,047 sites A certain percentage of those logins will be invalid though.

r7000 18y ago

The last thing I ever thought to see in a PG essay was a P. O'Brian reference! That was a nice surprise.

kingkongrevenge 18y ago

> The markets seem to have figured out how to value potential dividends. Over the last eight years a dividend focused investor kicked the ass of an appreciation focused investor. Those who picked dividend paying stocks in non USD denominations are even farther ahead.

Readmore 18y ago

This sounds a lot like my startup Embought (www.embought.com). After making the decision to donate 50% of all profits to charity it gives me another reason to 'not die'. There are people out there other than myself that can benefit from me making this project work, and that's a powerful motivator.

towny777 18y ago

There must be something in the air right now. I published an article about this very issue on March 27th (you can view it at http://uberdigi.blogspot.com/2008/03/secret-of-life-in-participation-age.html http://uberdigi.blogspot.com/2008/03/secret-of-life-in-parti...). My main point is that being useful is the most important value in the participation age. If an individual or business makes usefulness their number one priority they increase their chance for success. In this case I think goodness and usefulness are synonymous. I got this idea from Buckminster Fuller. He failed miserably until he had an epiphany that he would not concentrate on success, but rather on making himself a servant to the universe. Ultimately this meant that he would just start working on good and useful things. As a result, he became a controversial figure but also pretty successful.

Emmjaykay 18y ago

Asking a corporation to be "good" or moral is like asking a car to be good or moral.

mikhailian 18y ago

>The trouble with lying is that you have to >remember everything you've said in the >past to make sure you don't contradict yourself. Il faut bonne mémoire après qu'on a menti (A good memory is needed after one has lied). [ Le Menteur, IV, 5, Cliton ] Pierre Corneille

stener 18y ago

When people see some things as good, other things become bad. Hold on to the center. -- Lao-tzu

kcmarshall 18y ago

Since Malaria was a specific example, this headline caught my eye yesterday: Web guru targets malaria with social network site http://news.yahoo.com/s/nm/20080420/tc_nm/britain_malaria_dc_1 http://news.yahoo.com/s/nm/20080420/tc_nm/britain_malaria_dc... I admit some skepticism but haven't read beyond the article. Maybe it is possible to "Facebook" malaria out of existence...

colortone 18y ago

Hey PG, I bought www.benevolentcorporation.com a few months ago while thinking about these memes. I'll sell it to you for $5M ;-)

jcl 18y ago
Looks like someone beat you to goodcompany.com -- a more clever name. :)

drernie 18y ago

Hi Paul, Great essay. The idea of a purpose to business transcending mere "stockholder value" is a powerful new meme, which I believe Forbes has labeled "Capitalism 2.0": http://www.forbes.com/columnists/forbes/2008/0310/030.html http://www.forbes.com/columnists/forbes/2008/0310/030.html Here's hoping the idea takes off -- and not just for startups! Sincerely, Dr. Ernie http://ihack.us/2005/10/07/capitalism-20/ http://ihack.us/2005/10/07/capitalism-20/

dusklight 18y ago

One thing I've realized personally about why good works: when you are evil, you can only fool those people who are less intelligent than you. You can bully only those people who are weaker than you. If you are very smart or very strong, that could be a lot of people, and you can benefit a lot, and you are necessarily setting a hard limit on the number of people who are willing to help you. When you are good, when you give more than you receive, the opposite is true. You gain the aid of those who are smarter and stronger than you, others who "get it" and who have chosen to commit to the "cooperate" branch of the Prisoner's Dilemma.

SwellJoe 18y ago

I find it somewhat amusing that pg suggests in the footnote that Microsoft ought to recommend their customers switch to Mac OS X. The problem with that is that there is one supplier of hardware for Mac OS X: Apple. And they charge a significant premium for that hardware. Kinda like IBM back before Microsoft pulled a fast one and licensed their OS to all comers and (benevolently) changed the face of personal computing. pg recognized the evil that was IBM, but fails to recognize the same evil in Apple, because the facade is so much nicer to look at.

pg 18y ago
Not all computers are bought new. There are very inexpensive Apple machines: used ones. A Powerbook G4 like the one I use for everything seems to cost around $500 on eBay, and I suspect that offers a net better experience than the average Vista user gets.
- SwellJoe 18y ago
  There were used IBMs on the market, as well. Does that invalidate your argument about IBM? One of your premises is incorrect. Which one is it?
  - pg 18y ago
    What I said was that if Microsoft cared about users, they'd recommend they switch to OSX. You replied that Apple hardware comes at a premium. I replied that this premium is less than the difference between new and used hardware, and that using OSX only costs about $500. Could you find a laptop capable of running Vista for significantly less than that? If not, how am I mistaken?
    - plinkplonk 18y ago
      to be fair though, when someone says "you should switch from X to Y" there isn't an implicit "you'll have to use second hand / used versions of Y" attached to that message. e.g the statement "you should switch from [cheap car] to [expensive car] because expensive car is much more comfortable" does NOT carry the "I meant a used [expensive car]" implication. Most people would understand that the first statement implies you should pony up the price differential because the extra comfort is worth it. It is bad enough that Windows has a monopoly and uses it to gouge customers. Why would anyone want to replace a software monopoly with a software and hardware monopoly?

ricky 18y ago

It struck me that this essay shares many things in common with the last chapter of Guy Kawasaki's book, "The Art of the Start". That chapter is called "The Art of Being a Mensch", and argues that to build a lasting organization, you need to help lots of people, do what's right and pay back society. Sounds about right to me.

cowsandmilk 18y ago

related to malaria, maybe you want to look at Amyris Biotechnologies as a living example of similar ideas to what you describe. They started with Bill and Melinda Gates money to produce artemisinin, which the grant stipulated had to be produced without a profit, but have taken that technology and have used it to grow an amazing Biotech startup that most PhDs in the field would die to work for. The Bill and Melinda Gates Foundation isn't usually thought of as a startup incubator, but this is one example of a company that started from the idea of treating malaria, and continues with that idea as they apply the same technologies to solve the other needs they see in the world.

Kbaxter 18y ago

Mr. Graham, Thanks for this piece. It's something that's been kicking around in my head since Nov. '06 or so when I discovered Newsvine. I found a community and community genuinely interested in promoting quality news discussion and content, AND in making money. There's something powerful happening now, with the profit-motive acting in a socially-beneficial way. Your blurb about the malaria company inspired me to do a little thought exercise about whether it'd be possible for a for-profit company to successfully help pull people out of poverty, and what that company would look like. If you're interested in reading it, here is a link: http://www.tightwind.net/2008/04/mesh-networks-relationships-and-poverty-non-profit-becomes-for-profit/ http://www.tightwind.net/2008/04/mesh-networks-relationships... . Thanks again for your great piece.

cjwang 18y ago

I was unaware of Octopart but after checking it out, it seems like an excellent service. I posted it on my blog so that others can check it out too. I also agree with the concept of being good and idealistic programmers. My blog is basically a development journal to record my progress and thinking as I write an open source wireless (Zigbee) protocol stack. Many companies charge large amounts for these embedded stacks, but I figure that hobbyists should have access to the same things that large companies do. Only good ideas can come out of it. If anyone is interested, you can check out my dev journal and blog here: http://www.freaklabs.org http://www.freaklabs.org

jgrnwld 18y ago

Paul Graham for President!

atduskgreg 18y ago

Have you followed the rise of social entrepreneurship at all? Under its banner there are quite a lot of startups taking on problems exactly like the malaria dilemma you describe in the piece. They come at the issue from the opposite side of the spectrum: they're reacting to all of the waste and inefficiency in the old fashioned non-profit world, where something gets done because a millionaire's brother's wife is interested in it and done badly because she's not very good at solving the problem. So, they're trying to harness the power of market forces and the attendant efficiencies and motivations that go with them in order to solve these big intractable social problems. The social entrepreneurship movement encompasses everything from micro-finance -- which was pioneered by Mohammed Yunnus at Gramin Bank (for which Yunnus just won the nobel prize) -- to a revolution in funder logic and an increased focus on effectiveness metrics. I'd be curious to read your thoughts on social entrepreneurship from a startup point of view.

austinchu 18y ago

Great article. I work for a startup company and these are exactly the issues that we go through. We're in the second phase of funding and it's always a tough time. Will we have enough money? Is there money? How will be get it? Where will we get it? How much do we need? All these question about money. What I got from the post is that we are here for a purpose. I totally agree with nostrademons post. Provide a great service and product, let the people be the judge. Let's get to work. We're not going down quietly.

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goodsamaritan 18y ago

I understand the concept of being good and benevolent, but not thinking about making money is the hardest part. It is really tough to ditch your job, and keep doing good for people whose psychology (at least on the Web) has become to expect everything for free. You can survive your own goodness for 6 months, 1 year but after that you surely expect something in return. And then, if you do not have or want VC funding but just want to run your startup based on the good old way of 'revenues' how long can your goodness keep you going? Even Jesus 'sold' his woodwork to feed himself, isn't it? :) People throwing money at you for the good you do to them is living on a charity. Whatever happened to the good old way of selling something in return for money?

mcarlin 18y ago

Paul, I've been reading your stuff for six years, and that's the first one that made me cry. It's the last step on a good path, and I was worried you would never take it. I'd been quite enamored of YC for a while, but I had my doubts about its ability to do good things. It's also something I never thought of. I just always mentally separated "good, charitable" and "successful company" in much the same way as people generally separate "work" and "what you love".

anguriam 18y ago

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