Take the Next Step, Paul
In college I had a wonderful Humanities professor who insisted on making us write short essays so we could practice writing succinctly. After each essay she would personally sit down with us and critique our logic (and our grammar!). Her feedback to me was almost always the same, “your argument is logical and supports your conclusion but you need to take the next logical step. What does your argument imply?”
I was never able to take the next step, even when pressured. And she never took it for me. It would be fair to say that I hated her during these meetings.
Today I ended up quoting her while reading Paul Graham’s “You Weren’t Meant to Have a Boss.”
Paul’s thesis is that typical big business drains the life out of its employees because we weren’t meant to work in such large groups. It’s unnatural. To truly live, we need to be in groups small enough that we have room for creativity and freedom of action. That’s the way nature intended.
I agree. Jay and I talk all the time about how much more fun we’re having at CrowdVine than any of our other programming jobs. We’re free to build product. Programming isn’t just a job for us, it’s our hobby and passion. Being in a small group for the first time really is bliss. We’re not the only ones saying that either. Talk to people who’ve been much more successful than us like 37Signals or SmugMug. They’re not just successful, they’re happy.
So while I agree with everything Paul wrote, I found myself screaming, “take the next step, Paul!”
He’s a venture capitalist. He’s promoting programmers joining startups. Venture backed startups start as everything he describes–small companies that are great places to work and learn. But they only stay that way for a few years.
By definition the startups are either going to grow into an awful company with bosses or be acquired by an awful company with bosses (or fail). The startup founders are either going to turn into bosses (which Paul correctly points out isn’t very rewarding either) or they’re going to turn into employees with bosses.
The logical step that Paul couldn’t take is that he’s wrong for being in the venture business. The venture business depends on an ecosystem of bosses. Even if his founders feel like they’re getting a fair trade for a few unhappy years at a big company, they wouldn’t have the option of either growth or acquisition if other programmers couldn’t be pursuaded to work “unnaturally.”
The difference with companies like 37Signals and SmugMug (and CrowdVine) is that while they have the same natural working conditions, they’re structured so that those conditions don’t have to end. If Paul really wants to create good jobs he should turn YCombinator into a small business incubator.
Great discussion of this on Hacker News including responses from Paul. One commenter there made a big fuss that I was technically incorrect to call Paul a venture capitalist. True he’s a new un-labeled form of investor who’s using his own money and experience, and not using money from a venture fund. However I stand by my argument, which is based on the exit pressures which are very VC.
Tags: 37signals, smallbiz, smugmug, vc, ycombinator
March 23rd, 2008 at 9:23 am
This is insightful…your humanities prof would be proud!
I wonder what you think also about his statement that “the essence of programming is to build new things” and how it relates to your satisfaction of working in a small group. Because I read that and, as a person who’s worked with developers, I cringed. There’s so many systems that need updating and repair work, and it always seemed so hard to find any programmer willing to really dig in and do that.
But I’ll bet that you and Jay do quite a bit of updating and maintenance work, and that you feel quite differently about it than you might have doing that same kind of work, er…let’s just say “at a larger company”.
My point is that I don’t think that it’s so much that programmers are different breed and need to always be working on new things (unlike sales or support people, as Paul suggests — oh those boring dull uncreative non-programmers!). I think it’s that people want to feel like they MATTER. It’s harder to feel that the work you do matters in a larger company or group.
March 23rd, 2008 at 3:02 pm
Terrie,
That’s a great and simple way to put it: people want to do work that MATTERS.
You’re right that Jay and I do a lot of maintenance work. We’ve spent a lot of time in the last two months redoing things that were originally done poorly (i.e. done before Jay started) and it’s felt great.
There’s only two reasons we do maintenance or cleanup work. 1. A customer wants it. 2. One of us personally wants it. In other words we only do work when _we_ think it matters.
Some times it ends up that the work I do doesn’t matter and I end up feeling stupid. But overall, it’s pretty clear to me that I’d rather feel stupid than useless.
Unfortunately feeling useless has been common at other companies I’ve worked for. By far the best company I’ve worked for was O’Reilly. But I think we can both remember the website we launched for a book series that was about to be canceled.
That was a case of work that mattered to one person. At CrowdVine, when work matters to one person that person just does it. But at a bigger company, where the work is done by proxy, the work gets transferred to other people but the feeling of mattering doesn’t.
There’s certainly work that I do that sucks (I hate scanning documents) but at least all of it matters. Wow. That feels good.
March 24th, 2008 at 11:50 am
You voiced very well the suspicion I had reading this article. I think Paul’s logical next step would hinge on the assumption that YC startup founders will always move on to the next startup and won’t be part of the long term growth or subsuming into a behemoth. I like the 37Signals mantra of building something you love and clutching it to your chest, dearly and tenderly for the rest of time, or at least long beyond the typical exit strategy window.
I’d be interested in hearing about companies that grew (organically or inorganically) into big companies and managed to maintain this dynamic. Or, second best, companies that managed to re-introduce this dynamic over time.
For example, I had heard that Amazon moved to scrum partially to empower smaller teams. I’m sure I heard a glossy version of this, since it was from an Amazon VP. Does anyone work at a reasonably sized company (500+ employees, maybe?, 200+ developers?) that organized around small units, removed vertical organization insanity and increased happiness and quality?
March 24th, 2008 at 12:23 pm
Looks like that humanities teacher didn’t proof grammar close enough to teach the difference between “it’s” and “its”. :) (Nice post, though!)
March 24th, 2008 at 12:53 pm
@Justin. Thanks. I just heard some MBA students talking about the Amazon structure being pretty crazy, like there’s often multiple competing projects. I really liked Terrie’s point above about people just wanting to work on things that matter. No matter how small your group, if your company pulls the plug on your project then it’s hard to feel like your work mattered. Of course, Yahoo seemed to let competing groups get competing products launched and I never heard that was the secret to employee happiness.
@David. Fixed.
March 24th, 2008 at 1:36 pm
“Paul’s thesis is that typical big business drains the life out of its employees because we weren’t meant to work in such large groups. It’s unnatural.”
No, that’s not really his thesis at all. Or at least I don’t think it is.
I think his thesis is, “working in a startup or small company tends to make people feel happier and more alive than the alternative”– there’s a subtle, but really important, difference.
The rest of your post is really interesting… I’d point out that Paul isn’t trying to create good jobs– he’s trying to create wealth and success. Founder creates great company, makes it grow big, sells it, becomes an angel investor. Big payout for founders, big payout for YC.
Building “happy” little companies is a laudable goal, but a pretty lousy focus for an investor. If you take out the “grow big” and “sells it” parts… how does he make money? Dividends? Interest on a loan?
March 24th, 2008 at 2:45 pm
@Tony, I think if you quote my whole paragraph that I did a reasonable job of getting his thesis right. If people move from a big company to a small company then they’ll be happier, the reason being that working in a big company is unnatural and working in a small company is closer to our true nature.
Paul’s as much about creating happiness as anything. You should see the look on his face when he talks about YC. He’s giddy. If he’s going to go this route, and champion himself as a creator of founder happiness, then he should look at other options. There’s more than one way to make money off of small businesses.
March 24th, 2008 at 6:46 pm
Re: Tony Wright’s “Building ‘happy’ little companies is a laudable goal, but a pretty lousy focus for an investor.”
Actually if an investor can put the “last equity dollar in” then there are a number of ways to make a profit. One of the things working against venture capital is short time horizon. The funds last ten years but most investments don’t take place until years two through five, and they have to hold back significant dollars to prevent dilution in a later round.
Graham has clarified his thinking here http://news.ycombinator.com/item?id=143480
“We actively encourage startups to stay as small as possible for as long as possible. And like all investors we would prefer the startups we fund to go public rather than get acquired. I bet if you outsourced all the inessential stuff you could grow a company to that stage without needing more than 150 people, which you could do with only two layers.”
Which would indicate he has taken to heart “a bureaucracy is an organization that energy into solid waste” with his desire to see his portfolio companies stay lean, not only are they likely better places to work but his investment is less likely to be lost.
March 25th, 2008 at 10:24 pm
I went to the last two StartupSchools YC put on (and had a great time). None of the speakers said “forget VC, bootstrap it!”, but none of the attendees I talked to were interested in VC. Instead they wanted to build something first and then see if went anywhere.
Most web startups aren’t capital intensive, so why bother with VC? The only VC that seems worthwhile is YC, not for the money, but for the experience of working with the YC team and a bunch of other founders.