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Companies are not apartments or houses, companies are people. You don't have to worry about motivation, energy levels when you are dealing with houses. You can

Companies are not apartments or houses, companies are people. You don't have to worry about motivation, energy levels when you are dealing with houses. You cannot "optimize" people - even talking about what is optimal is meaningless when you deal in collections of people. This is the fundamental libertarian assumption, which is why libertarians are for free market capitalism. Not because it maximizes wealth, but because it let's people simply be. I am afraid this essay is a perfect distillation of the flip-it model, just as the model is going out of fashion.

pg 18y ago
It sounds like you're disagreeing with something you think I said, but I can't figure out what. Can you give me an example of a specific sentence or paragraph I wrote that you disagree with?
- anewaccountname 18y ago
  Preferably as a block quote? =P
- prospero 18y ago
  I think what he was trying to say was that selling your startup to a large company is only a no-brainer if you have significant equity in the company. If you don't, selling to another company isn't an exit strategy, it's just a transition to a different, and quite possibly worse, work environment. I don't know if this is really a valid criticism, since most YC startups don't seem to expand that far past the founding team, but I'm pretty sure that was his point.
- startingup 18y ago
  Sorry I was out all day, so couldn't respond. I was reacting to the comparison of property management company to your putative "company management company" (which eventually gets revealed as a typical public company in your essay). That was the context in which I said companies have people, and people are not housing, and your objective of an "optimal" strategy doesn't hold water. My broader point is that companies/people (including founders) have goals, dreams, aspirations ... maximizing return on investment may not even be the biggest goal. It is a late 20th century Milton Friedmanite doctrine (which classical libertarians actually disagree with) that the only purpose of a company ought to be to maximize shareholder wealth. I mention this because you refer to "optimal" strategy, but in this case, there is no such optimal strategy, because the goals are so extremely diverse and often mutually contradictory. Interestingly, shareholder wealth maximization (which academics are so fond of) is a proposition most real world capitalists don't actually subscribe to - witness the resistance of Jerry Yang to being absorbed. It has little do with long term shareholder wealth maximization (though he has to pretend that it is, in order to keep the lawyers at bay), and everything to do with preserving what he perceives as a unique Yahoo culture from being decimated (somewhat justified, in my opinion), even at the cost of losing substantial value as a shareholder himself. There is no right or wrong in this (I think his cause is hopeless myself), just that this is how Jerry Yang, the capitalist part owner of Yahoo, operates. What is the goal of a company? It ultimately boils down to a religious question of "Who am I? What do I want?" which each founder (and each employee) has to ask himself/herself. DHH laid out his answer, and I bet an awful lot of founders identify with it. You have your school of thought on this, which I bet a lot of founders identify with too. But yours is not any kind of optimal extreme of DHH.
  - pg 18y ago
    It seems to me that you're refuting things you imagine I said, but that I didn't actually say. I certainly wouldn't claim that my "school of thought" was an optimal extreme of DHH's. (In fact, I can't even imagine what it would mean for that to be true.) I mean what I said, and no more. So please, if you think you disagree with me, find the actual sentence or sentences in the essay that you believe are false.
    - staticshock 18y ago
      I'm going to venture a guess that the statement under attack is most probably this one: The best case, for most people, would be if you could hire someone to manage the company for you once you'd grown it to a certain size. startingup is making the assumption that the goal of hiring this manager is to maximize the startup's ROI with minimum attention from the founders. However, I believe pg's original point was not that anything can be maximized, but that things can more or less stay in check without the founder looking, which is a far weaker claim. This isn't about profit, but about giving the founders the opportunity to do something more interesting, if such a thing were to exist. The essay is cautions enough not to make any grandiose claims. Imho, you've got a straw man on your hands, startingup.
    - startingup 18y ago
      Here is the quote from your article: David isn't mistaken in saying you should start a company to live off its revenues. The mistake is thinking this is somehow opposed to starting a company and selling it. <i>In fact, for most people the latter is merely the optimal case of the former.</i>

pg 18y ago

It sounds like you're disagreeing with something you think I said, but I can't figure out what. Can you give me an example of a specific sentence or paragraph I wrote that you disagree with?

anewaccountname 18y ago
Preferably as a block quote? =P
prospero 18y ago
I think what he was trying to say was that selling your startup to a large company is only a no-brainer if you have significant equity in the company. If you don't, selling to another company isn't an exit strategy, it's just a transition to a different, and quite possibly worse, work environment. I don't know if this is really a valid criticism, since most YC startups don't seem to expand that far past the founding team, but I'm pretty sure that was his point.
startingup 18y ago
Sorry I was out all day, so couldn't respond. I was reacting to the comparison of property management company to your putative "company management company" (which eventually gets revealed as a typical public company in your essay). That was the context in which I said companies have people, and people are not housing, and your objective of an "optimal" strategy doesn't hold water. My broader point is that companies/people (including founders) have goals, dreams, aspirations ... maximizing return on investment may not even be the biggest goal. It is a late 20th century Milton Friedmanite doctrine (which classical libertarians actually disagree with) that the only purpose of a company ought to be to maximize shareholder wealth. I mention this because you refer to "optimal" strategy, but in this case, there is no such optimal strategy, because the goals are so extremely diverse and often mutually contradictory. Interestingly, shareholder wealth maximization (which academics are so fond of) is a proposition most real world capitalists don't actually subscribe to - witness the resistance of Jerry Yang to being absorbed. It has little do with long term shareholder wealth maximization (though he has to pretend that it is, in order to keep the lawyers at bay), and everything to do with preserving what he perceives as a unique Yahoo culture from being decimated (somewhat justified, in my opinion), even at the cost of losing substantial value as a shareholder himself. There is no right or wrong in this (I think his cause is hopeless myself), just that this is how Jerry Yang, the capitalist part owner of Yahoo, operates. What is the goal of a company? It ultimately boils down to a religious question of "Who am I? What do I want?" which each founder (and each employee) has to ask himself/herself. DHH laid out his answer, and I bet an awful lot of founders identify with it. You have your school of thought on this, which I bet a lot of founders identify with too. But yours is not any kind of optimal extreme of DHH.
- pg 18y ago
  It seems to me that you're refuting things you imagine I said, but that I didn't actually say. I certainly wouldn't claim that my "school of thought" was an optimal extreme of DHH's. (In fact, I can't even imagine what it would mean for that to be true.) I mean what I said, and no more. So please, if you think you disagree with me, find the actual sentence or sentences in the essay that you believe are false.
  - staticshock 18y ago
    I'm going to venture a guess that the statement under attack is most probably this one: The best case, for most people, would be if you could hire someone to manage the company for you once you'd grown it to a certain size. startingup is making the assumption that the goal of hiring this manager is to maximize the startup's ROI with minimum attention from the founders. However, I believe pg's original point was not that anything can be maximized, but that things can more or less stay in check without the founder looking, which is a far weaker claim. This isn't about profit, but about giving the founders the opportunity to do something more interesting, if such a thing were to exist. The essay is cautions enough not to make any grandiose claims. Imho, you've got a straw man on your hands, startingup.
  - startingup 18y ago
    Here is the quote from your article: David isn't mistaken in saying you should start a company to live off its revenues. The mistake is thinking this is somehow opposed to starting a company and selling it. <i>In fact, for most people the latter is merely the optimal case of the former.</i>