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The Book of Graham
- tomblomfield 13y agoThere's an uncomfortable truth here. In the last 3 or 4 years, tech startups have started to become the fashionable choice for unthinking MBAs, taking the place of Investment Banking and Private Equity before it. I was at a conference recently organised by University College, London (arguably the top science & engineering school in the UK). With no hint of irony, the organiser welcomed attendees - "we're all here because startups are the best way to get rich after college". In the last week, I've been contacted by 3 separate people I knew from Law school asking me how they can get into startups.
- lostcolony 13y agoGood. Keep the unthinking MBAs out of sectors where they can do real damage.
- arbuge 13y agoMy 2 cents: He is correct that YCombinator is running little risk doing what it does at this point. That seems pretty obvious now - though it was not when they started. Accelerators were a novelty back then, and YC could have fallen flat on its face. YCombinator is a pretty low risk deal for entrepreneurs too, come to think of it. Perhaps the author misses this point. If your startup does fail and/or you get tired of the startup game, there's probably a large number of companies willing to take you on as an employee, given the skillset you likely had to get into YC.
- ballard 13y agoNow there's some guy in every coffee shop claiming to have an accelerator without any idea how to succeed (specialize/differentiate). They're 95% wooly propositions with the occasional one that can sell nontrivial epsilon of value. My favorite so far is this guy that hangs out at a cafe near Stanford that has alienated everyone in his potential "deal-flow" by anger outbursts on conference calls and generally acting like a dick.
- arbuge 13y agoSpeaking of bad accelerators: http://www.davidgcohen.com/2013/08/29/a-shocking-accelerator-story-that-youll-need-to-read-twice/ http://www.davidgcohen.com/2013/08/29/a-shocking-accelerator...
- achompas 13y agoThis is faulty though, no? You're risking your best alternative to eating ramen over the course of those N years. That alternative is very, very high for anyone getting into YC at this point.
- tomasien 13y agoIf anyone is feeling bad for not necessarily knowing what to think about this piece, don't. I think it takes a while to realize this isn't a blog and the narrator isn't NECESSARILY the hero, but rather it's a story and there's a LOT to think about out of it. My take is, of course, that the narrator is the villain, but that's just me.
- aelaguiz 13y agoAs a YC founder I know exactly what I signed up for. YC is in the business of placing a series of low risk bets twice annually and then sorting through those bets looking for likely winners, doubling down and helping when possible It doesn't matter though, they still lower my overall risk profile by being involved and (I believe) increase my odds of success. I believe it's a square deal. I also believe that fundamentally if there's a time to aim high rather than minimizing downside risk in one's life, it's your 20s. Furthermore to a certain type of personality (mine) a secure life making a few hundred thousand dollars a year in an essentially mind-numbing profession that does little for humanity is unthinkably depressing. It ain't for everyone, but I don't think it's fair to act as if it's some sort of sinister delusion projected by YC in order to benefit Paul Graham.
- akbar501 13y agoThere are people who aim high whether they are in the 20's, 30's, 40's ... and then there are those who aim low. Age is rarely a factor for those who are shooting for the moon, but it's a great excuse for those who don't.
- aelaguiz 13y agoYeah I didn't say people past their 20s don't aim high. I said your 20s is a great time to aim high.
- chrislloyd 13y agoGoogle cache: http://webcache.googleusercontent.com/search?q=cache%3Ahttp%3A%2F%2Fwww.leveragedsellout.com%2F2014%2F02%2Fthe-book-of-graham%2F&oq=cache%3Ahttp%3A%2F%2Fwww.leveragedsellout.com%2F2014%2F02%2Fthe-book-of-graham%2F&aqs=chrome..69i57j69i58.1178j0j7&sourceid=chrome&espv=210&es_sm=119&ie=UTF-8 http://webcache.googleusercontent.com/search?q=cache%3Ahttp%...
- avodonosov 13y agofunny reading :)
- SworDsy 13y agoYC didn't invent startups, and everyone should be able to do something they actually want to do all day at least once. And for their benefit it should be in their 20s.
- Aqueous 13y agoHe's 22 and a Harvard grad. If you believe this is a mistake, let him fail. He will recover.
- gatehouse 13y agoDup: https://news.ycombinator.com/item?id=7220385 https://news.ycombinator.com/item?id=7220385
- gus_massa 13y agoI think that the fist comment in the other thread is interesting. (I just notice that it was wroten by you.) > To the uninitiated, this is a humour blog that was active until the debt crisis, focused on made up stories and rumors: http://www.leveragedsellout.com/2008/10/remember-the-titans/ http://www.leveragedsellout.com/2008/10/remember-the-titans/ .
- smoyer 13y agoI thoroughly enjoyed reading the article - yet I don't believe any of it. When you've got a wife, kids, mortgage, private school, etc, etc, etc, you've got to be a bit more risk averse. In this case, why not let the kid see what life is like when you're not a corporate drone?
- spindritf 13y agoI don't get it. What's the intended message for his younger brother? That you should go into a steady, well-paying career because then you'll be able to impress women by picking up the tab at a fancy restaurant/bar? Or was it just poking fun at YC-as-a-cult?
- deleted 13y ago[deleted]
- andreasvc 13y agoThe message is satire.
- sanderjd 13y agoI am still unsure whether the author was 1) seriously making some decent points about YC's model underneath a (self-aware and -effacing or just tone-deaf, I'm really not sure) veneer of old-school snobbery and greed, or 2) sarcastically making the opposite points by presenting the counterargument in such unappealing terms. Either way, it left something of a bad taste in my mouth for both industries.
- speeder 13y agoActually, you are one of the few people that got the article 100% That IS the intention of the author (make you feel a bad taste for BOTH industries)
- unclebucknasty 13y agoI'm pretty sure it was option 1. In general, it was pretty scathing and precise in its take-down approach. And any lingering doubt about where he was aiming was removed by his closing comment.
- eru 13y agoI think the article pokes fun at startups and finance alike.
- kd0amg 13y agoWell, if you're not setting out to read something clearly stupid into the author's intent, you might conclude that he's questioning whether equity in some early-stage startup is really worth anywhere near as much as what those who have/offer it talk like it's worth.
- jjoe 13y agoGreat! Let's see what we have here. Random guy from Greed Street is giving sound advice on what's good for his cousin's soul and something about hope? Oh, it's a sarcastic piece. Phew! Wait a minute... I'm so glad I seized the opportunity to leave Wall Street.
- kunle 13y agoProbably the biggest sign we're in a bubble[1] is that the Leveraged Sellout guy is back and has trained his focus on Silicon Valley. 1. Not saying we're actually in a bubble. Just pointing out that the last time he was around, he was poking fun at 22 year olds going into finance for absurdly high incomes.
- abvdasker 13y ago22 year-olds still go into finance for absurdly high incomes.
- deleted 13y ago[deleted]
- lmg643 13y agoConsidering this guy is running a finance/consulting parody website, I have to assume there's a measure of jealousy and regret that the website he is running does not have attractive enough characteristics to be let into Y Combinator, although he must swim in some of the same circles as these startups. The main question I take away from reading this is how the average payout to a young college grad compares on wall street, to the elite VC/startup track, taking away the unquantifiable benefits and focusing on average hard dollars earned. Of course - that's probably not the comparison to make. Most of PG's stuff was written for technical folks considering entry level technical jobs. I would guess that even considering survivorship bias, the average outcome for elite startup tracks versus entry level tech track is extremely good, considering the jobs it can lead to (would love to hear if otherwise). It's a little harder to compare for the theoretical econ major from harvard contemplating a wall street track. wall street is not a normal business environment - oligopolistic, heavy regulatory protections - much more like joining a club earning economic rents off capital flows than a group doing much to change the world. IMHO the main reason people work 100 hour weeks in finance is to prove they are willing to give up everything in their life to make it to the next rung - not because they are doing anything particularly noteworthy or unusual that demands intensive focus. from first hand experience, I've noted most M&A customers have sophisticated in house teams that can run the numbers plenty well on their own, which does raise the question what the six banks typically advising them are doing. All I can say is - for the average econ major contemplating the future on wall street - it will be really interesting when Amazon (and/or others) decide to take on financial services. regulations can hold them off for a while, but as they eat the rest of the world, it's inevitable hungry eyes will aggressively turn to where the money is (literally) - only a matter of time I'm sure. Plan accordingly, I say.
- allworknoplay 13y agoTo be clear (from the guy who submitted this), leveraged sellout was an incredibly popular blog that covered wall street from a junior insider's perspective for years. It was generally ironic, but as a friend of mine once asserted, irony is kind of like absolute value -- the more ironic you are about something the more seriously you take it, and it becomes difficult to distinguish the intensity of your irony from real belief at some point. A lot of people (like myself) are still subscribed to this blog, and a lot of people (unlike myself) are still subscribed to an unironic version of its world view.
- mikeknoop 13y agoThis read as sarcasm to me. Isn't there a name for not being able to distinguish parody and sarcasm?
- nvader 13y agohttp://en.wikipedia.org/wiki/Poe's_law http://en.wikipedia.org/wiki/Poe's_law is the inability to distinguish between parody of, and sincerity in, extremism.
- whatgoodisaroad 13y agoI can't thin of anything in English, but I'm reminded of this Russian word. http://betterthanenglish.com/stiob-russian/ http://betterthanenglish.com/stiob-russian/
- deleted 13y ago[deleted]
- etrain 13y agoIt seems that a lot of people are missing the point. Leveraged Sellout was famously satirical of the financial markets in the heady pre-crisis days of '06-'08. Even published a book: http://www.amazon.com/Damn-Feels-Good-Be-Banker/dp/B0023RSZKU http://www.amazon.com/Damn-Feels-Good-Be-Banker/dp/B0023RSZK... The site was quiet for a long time and has very recently re-emerged to take on the tech industry - albeit from the perspective of the New York finance type. Outlandish and uncomfortably true.
- ycmike 13y agoYeah some of these comments seem to take the piece on face value. However, the satire is brilliant.
- argonaut 13y agoA side note: If you claim that people are missing the point, then you need to state that point (and why). Otherwise you're just leaving those people confused and/or angry.
- PakG1 13y agoI thought the point was made clear that it's a satirical website?
- argonaut 13y agoAnd what is the point that the satire makes? Just saying that something is "satire" or "sarcasm" is a total cop-out.
- norswap 13y agoSatire makes people laugh at the absurdity of things, by means of exageration. The point of satire is not always to "make a point". I don't think it is in this case anyway. But if you really want to see something you could see a criticism of the startup ecosystem that "puts bright people to work by making them shuffle bits of questionable value".
- ajju 13y agoThis is satire guys. Hopefully it's intentional satire, and not an unintentional self-parody of how wall street guys think.
- ycmike 13y agoThis is incredibly well-written. As someone who has a brother at Wharton and parents in the healthcare and legal fields I found myself smiling often. Was the iPad smashing too much though? Is that what rich people do?
- dethstar 13y agoAnd when the check came, I passed it to Eric and watched his eyes widen at the total. The host came over, expecting his card. I could see Eric sweat. “Oh, this shouldn’t be a problem,” I assured him. I turned to the host: “You accept equity, right?” Her face contorted. I elbowed my cousin. “Eric – tell her about your startup.” he's such a dick, I love it.
- deleted 13y ago[deleted]
- hughes 13y agoWe killed it. Anyone got a paste of the text?
- nicklovescode 13y agohttp://pastebin.com/h5Q5RNz2 http://pastebin.com/h5Q5RNz2
- peterwwillis 13y agoYou can use pastebin to save on the wall of text.
- nicklovescode 13y agoGood suggestion. Updated.
- rdl 13y agoThis was surprisingly entertaining. There's some truth to it, but it essentially misses three things: 1) The intangible benefits of being at a startup (as a founder or early employee) -- working on interesting problems, with smart people, in a well funded environment. You learn things, meet people, get to use amazing tools. (Startups definitely aren't the only way to do this -- academia or, for engineering, some parts of the military or government or big enterprises have some awesome toys, and some world-class experts, and interesting problems, too. But in Silicon Valley, the barrier to entry is really low, and the problems are generally the right size for individuals or small groups to solve (partially) and quickly. 2) The downside to failure is exceptionally low. It's all other people's money (at least in Silicon Valley); your real cost is opportunity, but generally the market values a failed startup founder or early employee at enough of a premium over a member of a later stage team that you can catch up quickly. 3) The EV of upside is both the odds of success (correctly identified as low) and the magnitude of that success. 1% odds in an even game suck; 1% odds where you're given your wager by someone else and you get to keep 50% of the upside and the upside is potentially 10000:1 is pretty awesome. Doubling down on success, moving away from failure, and you can do this 5-10 times pretty easily.
- kawera 13y agoThe downside to failure is exceptionally low. It's all other people's money... Oh my!
- deleted 13y ago[deleted]
- nl 13y agoIt's easy to pull a quote like that and make it sound like a moral failing. If you read the comment it's quite smart observation: 1% odds in an even game suck; 1% odds where you're given your wager by someone else and you get to keep 50% of the upside and the upside is potentially 10000:1 is pretty awesome. The fact is is someone else's money directly modifies the costs to you, and therefore changes the risk/reward calculation. There is no implication that you wouldn't work as hard simply because it isn't your money.
- deleted 13y ago[deleted]
- d0m 13y agoI hoped to see PG' comment.
- thatthatis 13y agoRemember that in all brilliant satire there are elements of both truth and absurdity circling around a key absurd truth. I think that key truth is: YC is a value investor by any reasonable definition of the term. That's not in any way to say they're not a symbiotic value investor.
- eru 13y agoThey are both a value and a growth investor.
- danbmil99 13y agoDoing YC seems to me very similar to forming a band, writing a movie script, or attempting to become a successful actor, athlete, etc. If you go into the scenario expecting that failure is not an option, you will almost surely be disappointed. If you understand (really) that it is high risk/high reward, and the cost of failure can be as low as a teeny bit of your pride, it can be a great learning experience, providing you with a glimpse of a world outside the proverbial cubicle of a safe, predictable life.
- brudgers 13y agoI can't say I am entirely unsympathetic to the criticisms. But to be plausible the author had to reinforce the investment banking alternative with a close personal connection between good cousin Eric and someone already established in the industry. It's not that YC's model is perfect, but at least it is nakedly tuned toward making money for YC rather than providing good jobs for one's buddies.
- sytelus 13y agoThis article just doesn't sound right. YC has much higher success than most VCs. But even if you weren't doing your startup at YC, I still feel it's far better thing than having a corporate tech job (let alone pseudo-tech job in finance). The thing is that, you choose what you want to do. Even if you choose selling newspaper, its better than a random "manager" with half the competency telling you to fix a random bug in some product you didn't even cared before. You setup your own culture. If you don't like meetings, you don't do it. If you like blasting music and have grill in your office, go ahead. Above all, startups in SV is something that doesn't have downside to people coming out of college. Even with miserable failures, you would be most likely get aqui-hired with 3-5X better pay package than someone who had worked for a decade in that same company. However I totally discourage people dropping out of school to do startup. I get truly disgusted when people suggest that option. As Guy Kawasaki used to say, stay in school as long as you possibly can. Rest of your life is very likely going to be in one job or another unless you hit a lottery.
- djyaz1200 13y agoI don't know to what extent this is a joke but I am not laughing. Yc is a school where they pay you, Paul Graham et al did not take over Airbnb or Dropbox... the people who founded those companies run them. The idea that a life is worthless or wasted if you make less money is beyond flawed. It is the most american/capitalist/rewarding thing to make a go of building something of your own. Being a wall street banker has virtually no social utility. Airbnb and Dropbox improve the collective productivity of society and make real markets in the case of Airbnb. If it takes hundreds of people and millions of dollars failing in an effort to make a few big winners so be it, and when Yc makes money in the process they deserve it. They are taking REAL risk, and it seems the people who emerge from their program are better for it even if their dreams don't all come true. Finally, the girl next to him is an important part of this little story. Women love men who are passionate, who are alive and who take risks. If all of society fell apart I'd much rather be with a bunch of hackers than bankers, the hackers are creative, passionate, loving and ruthless when necessary. Women understand this and they they love it... because they know they are always safe with a man who can build something. They'd rather eat Mac & Cheese with a man who puts up a good fight before kneeling down THE MAN... or maybe never has to kneel at all. https://www.youtube.com/watch?v=GuDRGuOVjvU https://www.youtube.com/watch?v=GuDRGuOVjvU
- mkesper 13y agoBut women don't love men who care more for their Guru's messages on their iPad than themselves. :) This article is satire...
- 205guy 13y agoOn the subject of women who love passionate startup founders, did you see his previous vignette? http://www.leveragedsellout.com/2014/01/the-founder-hounder/ /ducks
- djyaz1200 13y agoHilarious!
- dbkbali 13y agoEntertaining to read all the comments on this thread. Great article and as a former investment banker, yes so true, really no difference from, what I observe for SV startup accelerators, and an investment banking approach of hiring the best. I guess the same could be said of other elite professions such as law etc. With respect to other derogatorary comments on this thread, about bankers and MBA's. I suspect most are written by people attempting to self justify there choice of startup vs a traditional careers. Good laugh re: the comments about the social utility of startups vs banks and how unproductive to society investment bankers are. But face it without these investment banking "parasites" who add no value to society, most startups who need to raise capital wouldn't exist. Anyway back to work on my bootstrapped startup!..
- pgl 13y agoThis is returning a 404 now. Does anyone have a mirror?
- dschiptsov 13y agoBrainwashing youths to this or that habit of thinking and then to use them for a great good is an idea as old as humanity. All sorts of religious sects, political fractions even hobbyists are doing this. What is going on around YC is absolutely nothing special from a psychological point of view. "If you want loyal workers pay them less, so they would escape from the pain of cognitive dissonance by leveraging the big idea" a textbook says, and goes on about in-groups dynamics and notion of us versus them. What is interesting is that all this was not created and orchestrated by the evil mind of Paul Graham, and it is not even a sect with him as a great guru. The whole thing was bootstrapped applying that very same bottom-up process he advocated in his technical books about Lisp. Another part why the whole thing works, which was not mentioned in the pamphlet, is analogy to insider trading. PG has reputation and connections so he could sell teams and/or technologies to "friends". So, YC is rather remarkable example that good ideas work, while banal practices of housing young naive fools are exactly the same in investment banking or politics or whatever. And it is not risk offloading, it is mere business among connected guys in a valley. One more subtle difference. Contrary to investment products, which is a cheating by definition, teams and technologies YC selects and sells are "fair" and we could see and use them in our everyday life. We also could see CDS and HFT and mortgage and stock market scams all over the place. This is the difference between finance and tech - it is much more difficult to cheat, and hence succeeded in tech. YC is the same kind of success based on proper ideas as viaweb was at its time, you like it or not. The analogy with banking is selling piles of java crap to ignorant fools.
- sjg007 13y agoHuh?
- dbkbali 13y agoGreat article and as a former investment banker so true. Good laugh reading the comments, I speculate mostly from insecure startup employees, executing their "post purchase rationalization" for taking the accelerator route. The reality is that the accelerator model has more parallels to the investment banking model than many of the commenters are recognizing. Very entertaining to see some commenters trying as well to justify that startups have more benefit to society than bankers or MBAs, in fact hilarious as the reality is that without those "dumb" MBA investment bankers who can attract IPO money to feed the VC's to fund startups, many with questionable and untested business models, accelerators and most startups wouldn't exist. Thanks for the entertainment, better not waste too much more time and get back to trying to bootstrap my startup.
- spajus 13y agoThere is way too few upvotes on this.
- admnor 13y agoDon't work with PG, he's evil! Come and work on Wall Street and be evil yourself.
- gagaga 13y agoI interpreted this piece of satire attacking both industries. I don't think the author's intention is to state the Wall Street is better.
- thesz 13y agoThe question is: can I have that interesting presentation too?
- jheriko 13y agoi enjoyed this - maybe a bit extreme, but since his family is involved it makes good sense. a lot of what he says is common sense and knowledge though. something lacking massively in this community it would seem...
- tipsy 13y agoIt's interesting how one can take any phenomena and demonize the actors playing in it. The author focuses on the tangible benefits of working at a startup vs. working in finance (e.g. corporate card, company car, free food), but leaves out the journey which drive so many entrepreneurs to continue to do what they do and what ultimately makes many of them come alive. It's a stark contrast to finance where many engage in soul-crushing work and anxiously await their bonuses, so they can find a more fulfilling job. Entertaining read.