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Paul Graham: Hiring is Obsolete 638

Posted by samzenpus
from the listen-up dept.
jazznjava writes "Paul Graham has a new essay covering what the influences of declining operating costs will have on startup companies, and the undervaluation of undergraduates."
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Paul Graham: Hiring is Obsolete

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  • frist? (Score:2, Insightful)

    What is this? PaulGrahamFilter?
  • Outsourcing... (Score:4, Interesting)

    by Virtual Karma (862416) on Wednesday May 11, 2005 @07:35PM (#12504993) Homepage
    Outsourcing will definately bring down the average wages. The only way for local graduates to be hired will be to offer their services for lesser pay. This will also translate to lower standard of living. Think about it...
    • Re:Outsourcing... (Score:4, Interesting)

      by wpiman (739077) * on Wednesday May 11, 2005 @07:36PM (#12505005)
      The dollar is likely to fall- and the Rupee gain-- so I think equalibrium will eventually come.

      But your point is valid- he doesn't mention outsourcing at all.

      • Re:Outsourcing... (Score:5, Insightful)

        by mrchaotica (681592) on Wednesday May 11, 2005 @07:49PM (#12505098)
        Well, the point is that we don't want equilibrium. We're the ones with the advantage right now, and we want to keep it.
        • Re:Outsourcing... (Score:4, Insightful)

          by GlassHeart (579618) on Wednesday May 11, 2005 @08:19PM (#12505304) Journal
          Well, the point is that we don't want equilibrium. We're the ones with the advantage right now, and we want to keep it.

          So learn to do something that the Indians and Chinese and Filipinos can't. Or are you asking for exemption from competition?

          • Re:Outsourcing... (Score:3, Insightful)

            by Atzanteol (99067)
            Or are you asking for exemption from competition?

            Yes. Especially if that competition is unfair competition. Why is asking the government to do one of the few things it *should* (protect its citizens) a bad thing? Or should we all live on the same pay as the least paid people in the world?

            This "free trade" idea only works if all countries are created equal. They are not. Thus there must be some form of compromise, unless you *want* the United States to become like India*?


            * Not that I think India
            • Re:Outsourcing... (Score:5, Insightful)

              by enjahova (812395) on Wednesday May 11, 2005 @10:18PM (#12506090) Homepage
              This "free trade" idea only works if all countries are created equal.

              You obviously have no grasp of economics. Free trade works BECAUSE countries are not equal. A country should specialize according to its comparitive advantage.

              I think it can be argued that this outsourcing is part of the natural cycle of growth in the computer industry.

              Computers started out as custom built machines by scientists of high education. Now they are built by 3rd world countries. Why are you not crying that computer manufacturing should be done in the US? Programming is (arguably) the same way.

              This is some of the most basic economics (I have only had one class in international trade). There is no "unfair" competition going on, people need to learn to adapt to a changing economy (this includes me, as I will be going into the CS field when I graduate)
            • Re:Outsourcing... (Score:4, Insightful)

              by skeptic1 (852999) on Wednesday May 11, 2005 @10:38PM (#12506189)
              I think you've got it totally wrong here. If American companies don't outsource to reduce costs, they won't be able to compete with their rivals, and this would result in a loss for the entire American economy.

              Inefficient companies that don't try to minimize operating costs just won't cut it in our market. They would stagnate and lose their business to more efficient firms. Outsourcing is good for both America and the countries being outsourced to (like India). There's nothing "unfair" about competition. It's good for us all in the long term.

              It's scary that you actually think the government should take action in this situation. Most ideas that go something like "the government should ...", are not bound to work. In fact they're more likely to make things worse. The government can't (and shouldn't try to) control the direction of the international market. As for jobs being lost, structural changes have come before in our economic past, and we've always gotten through them all right. The workers who aren't willing to compete and sharpen their skills to survive probably don't deserve the jobs they're losing to begin with.

              Our country is at the top position in the world today for a reason. We earned our way there, but can only stay as long as we can keep ourselves there. We must continue to evolve and compete to avoid being outdone by others, who have every right to try their best as well.

              The solution is not to waste our time trying to keep others down, but rather to be smart and keep trying to get better and stay ahead of the pack. And this requires innovation, not regulation.
        • Re:Outsourcing... (Score:3, Insightful)

          by wheelbarrow (811145)
          And everyone else can eat cake! Right?

          What about your moral obligation to your fellow man? Doesn't that extend to workers outside of the USA?
          • Re:Outsourcing... (Score:4, Insightful)

            by back_pages (600753) <back_pages@co[ ]et ['x.n' in gap]> on Wednesday May 11, 2005 @09:34PM (#12505786) Journal
            What about your moral obligation to your fellow man? Doesn't that extend to workers outside of the USA?

            That's so thoughtful that I can't even tell if you're being ironic. If you're seriously asking that question, be advised that a person with a passing knowledge of history and economics, such as myself, cannot ascertain whether you are being ironic. The question is exactly that interesting.

          • Re:Outsourcing... (Score:4, Insightful)

            by dnoyeb (547705) on Wednesday May 11, 2005 @09:58PM (#12505943) Homepage Journal
            Does supporting countries and companies that treat their workers like dirt and pay them little to nothing amount to satisfying our moral obligation?

            Countries should respect their workers. Then I will accept their cheaper products without complaint (for the most part).

            Why is it that USA must step down to everyone else's level? Why can't they step up?
    • Try offering your programming talents at minimum wage, you won't get hired. Post Carnegie Mellon Degree, I've found the best way to make money is selling MMOG items on ebay for 2-3$/hr.
  • by Anonymous Coward on Wednesday May 11, 2005 @07:36PM (#12504999)
    Besides recent grads, of course.

    Hiring someone with no work experience is extremely risky. There's a very good chance you're going to get someone with no clue, or someone who finds out your job isn't really what he wants to do for the next 5 years or so.

    Because of that risk, recent grads will not get paid top dollar. Period.
    • by Austerity Empowers (669817) on Wednesday May 11, 2005 @08:05PM (#12505230)
      I'm not a recent grad, I think they're undervalued. They're generally the workhorse of any professional establishment (esp. engineering, medicine and law). They're still deluded into thinking hard work alone will move them up, and they work hard. They usually have no families and their friends are all slaving away like they are. They have big college loans. They're pretty canonical "good" employees, they deserve to be paid well. Further, if you want new workhorse types, you need a steady supply from school so wages have to be there or people will major in something else. Sure, they don't know as half as much as they think they know but that's why they're slaving for the man.

      Second, not many people want to do the same job for 5 years. Older people may be more inclined to find peace in a lower paying, lower responsibility job owing to having a family or just finding zen. Young people are less likely to do that. But expecting anyone to stay in the same job for 5+ years is not rational. In addition to just wanting to move up and be CEO, professionals MUST change jobs periodically or become obsolete. It may just be going from one project to a different kind of project. It may be a company change or even a career change. But it's dangerous to stay put too long. Finally, we all work for the man to make $$$. Most companies do not give raises sufficient for employees to keep up with market value. 5 years is a good time for employees to go rectify the situation. Some may just be comfortable and not do so, but in my experience about half will.

      I don't expect a graduate to have much work experience. Most in field work experience opportunities are unpaid, most college kids don't have a trust fund and must make money. Most do just fine, they may leave you quicker (if opportunities are limited) but I would be concerned if they stayed doing that shit work.
      • I think the grandparent post was making the point that: given a pool of recent graduates, and a pool of early-career (2-5 yrs experience) professionals, the reliability of getting a good employee out of the former group is much lower. Not because an individual "recent grad" isn't going to be good at his job (the old wisdom), but because more of those recent grads are GenY'ers that still aren't sure what they want to actually do with their lives. There's too little information to determine whether or not a
    • disruptive (Score:5, Insightful)

      by LordMyren (15499) on Wednesday May 11, 2005 @08:53PM (#12505531) Homepage
      Let your shitty employees go.
      Not so hard really. 2/mo salary, fine, cut your losses, and cut your dead weight.

      Risks can be mitigated. Basic basic risk investment; you can try 6 employees for two months throughout a years, one of which should prove to be at least 6 times more productive than all the others. In two months at 6x productivity, that employee will already have produced a man-years worth the next guy's work.

      I suggest companies take grads who think they're the shit, offer them two months trial at reduced pay and hope pray you can be disruptive and dynamic enough to keep them interested.

      Thats the real killer. But I see you see that; "or someone who finds out your job isn't really what he wants to do for the next 5 years." Most people who start startups do it because they'd rather commit sepuko than deal with being forced to continue doing such useless unproductive work on your ass ugly product. Finding smart kids is not hard, keeping us busy is a lot harder to do. Most companies cannot deal with disruptive players.

      Myren
    • Hiring someone with no work experience is extremely risky.

      Nothing in TFA contradicts this statement, or any of the others you made.

      The point he's making is that founding a startup, even if it fails, is probably more attractive to a potential employer than years of work experience at some other company. It's staggeringly unlikely that you'll get bought out, but the fact that you even tried implies that you do have a clue.
  • by edtstu (877701) on Wednesday May 11, 2005 @07:36PM (#12505006)
    The basic costs to start a business in today's market is very small. Web storefronts have replaced real storefronts and the cost of 'renting' space is close to nothing now a days. Along with the fact that a bachelor's degree doesn't set you apart by any means the same margin it did a decade ago. More and more people are finding graduate school a necessity for job security.
    • by TheOriginalRevdoc (765542) on Wednesday May 11, 2005 @08:05PM (#12505225) Journal
      The basic costs to start a business in today's market is very small.

      I think this is where Graham gets it very wrong.

      Granted, the cost of IT gear is pretty low, and if you administer it yourself, running costs won't be high.

      However, finding paying customers is time-consuming and expensive. I've worked for a startup, and they went under because they had a product, but no customers. Marketing ought to be 80% of your starting budget. A few businesses might escape this requirement, if they have a ready-made market, but most won't. Expect to bleed cash for a year or two before turning a profit. (It'll cost a lot more than $10k.)

      Coupled to that, if you're out marketing, who's looking after your servers and fixing the bugs in your app?
      • Welcome (Score:5, Insightful)

        by Anonymous Coward on Wednesday May 11, 2005 @08:52PM (#12505521)

        So, I hear you're starting your own business?

        Welcome, welcome.

        Welcome to 16 hour days, and your employees earning more than you. Welcome to heartache and racking your brains for something to give you an edge, calling on experience you don't have yet. Welcome to doing boring and tedious tasks that if you fail, can land you in prison, like accounting and keeping receipts. Welcome to trying to protect your ideas from much larger and more powerful companies who will take and exploit them in a heartbeat.

        Welcome to getting your first solicitor. Welcome to earning far less than minimum wage for months on end, and lets not forget that you may never get anything back. Welcome to friends and family slowly becoming more distant as you have no time to devote to them, welcome to becoming a fanatical zealot, welcome, oh yes, welcome to compromising most of your ideals just to stay afloat.

        Welcome to management - you're the boss now! Welcome to having to see both sides of the story, welcome to slow or non paying customers, welcome to learning how to manipulate your fellow man to achieve your ends, welcome to grey hair and addiction to mild stimulants.

        Welcome, welcome, one and all. Do stay a while.

        And that light at the end of the tunnel you are striving for? Well I'm not sure what it is, exactly, are you?

        • Re:Welcome (Score:4, Insightful)

          by spauldo (118058) on Thursday May 12, 2005 @02:03AM (#12507034)
          True, true, true...

          But lemme tell ya, nothing's as satisfying. My business tanked in six months - my partner and I really didn't understand a lot of stuff we should have (like accounting) and had about three thousand dollars starting cash and a few computers. That's not enough to open a computer shop. But I tell ya, even though we both lost our asses in the deal, it was the most rewarding work I've ever done.

          And yeah, anytime you see someone 18-20 walk in the door all clean cut with a tie and a backpack, kick 'em out as soon as they walk in. Frikkin' solicitors. They'll try to sell you stuff in front of customers. Hell, one tried to sell stuff to my customers when I was showing them a computer.

          If you do it, make sure that you have someone that can do real accounting, decent startup money, and a good partner (if any). A partner helps spur you on, but if you make a bad choice, you'll have nothing but problems (in my case, my partner was excellent, but his wife was pure, unadulterated evil). And make sure you can bail if you need to - if we hadn't gotten out when we did, we'd have been stuck in Illinois for who knows how long.
  • by rice_burners_suck (243660) on Wednesday May 11, 2005 @07:37PM (#12505007)
    In my opinion, companies shouldn't have to hire anymore. The hiring and firing process creates a lot of overhead costs that most companies should avoid.

    We know from the study of basic economics that specialization creates synergies between global organizations and that by leveraging innovative technologies, content providers streamline compelling enterprise solutions. Therefore, there should be one big huge company that always employs everybody in the labor force, and those employees would be rented on an hourly basis to other companies for their use. This would have the following advantages: First, this big huge company would have its payroll system totally dialed in, so that it would happen with minimal overhead. Secondly, everybody would have benefits. Third, you could never get fired. Fourth, when a company decides not to "use" you anymore, the big huge company will automatically place you in a job by the next day. This would maximize the amount of employment throughout the country, reduce the amount corporations are spending on the hiring and firing process, reduce litigation, and give everyone a good, stable job.

    I think that's what Graham means when he says that hiring is obsolete.

  • by nitrocloud (706140) on Wednesday May 11, 2005 @07:37PM (#12505014)
    I find there is much a problem in underestimation of high school education and reluctance to hire students.
  • by dotslashdot (694478) on Wednesday May 11, 2005 @07:38PM (#12505024)
    The article says nothing new. Some people who are younger are smarter than some people who are older. Big deal. We all knew that. Investors don't necessarily want smart people; they want people with experience because they're the ones who have the judgment to make good decisions. Being smart is certainly important, because that determines whether you can learn from your experiences. The younger a person is, the less likely they will have had the same breadth/depth of experience as an older person, and may be less capable of making good business decisions.
    • If investors only chose people with experience, they'd have missed Google and Yahoo (and Microsoft, if they'd needed venture funding). Those would be pretty lousy investors.
  • by jay-be-em (664602) on Wednesday May 11, 2005 @07:44PM (#12505067) Homepage
    Please stop pretending that you are anything more than a very good programmer and a good teacher (On Lisp was good).

    You're beginning to sound like Eric Raymond with this non stop barrage of contentless gasbag articles.
  • by MarkEst1973 (769601) on Wednesday May 11, 2005 @07:46PM (#12505079)
    Have you noticed the essays [paulgraham.com] he's written? They all trend in the direction of this most recent essay. I say he's rather encouraging.

    His points over many essays are nearly always the same, but looked at from different angles:

    • do hard work (and work hard)
    • hang around with smart people
    • don't follow trends, blaze your own trail
    • start with good ideas
    • spend as little as possible
    • the internet leverages your investment
    • your biggest investment is time
    • Tech matters (as do languages and platforms)
    • He did it (started a successful company and sold out). All of his essays encourage you to as well.
    I cannot understand why anyone on this site does not like what he has to say. He's saying the time has never been better to start a business, keep your costs low and make better technology your advantage, and he's entirely encouraging with his style of presentation.

    I, for one, thank Paul Graham for his insight into something I want to do.

    Oh, and if you didn't know this nugget of wisdom: Find and listen to someone who has done what you want to do. Don't listen to the masses. Listen to someone's who's done it.

    • I cannot understand why anyone on this site does not like what he has to say.

      I don't think many people on this site like to admit that others know more than them.
    • Well I for one agree with Paul Graham and since reading Hackers and Painters really feel he is on to something. If nothing else, his encouragement of smart people to think in an entrepreneural fashion is something that many of us in tech need to hear.
    • Why should I listen to him if I don't want to do what he did in the first place? Really, his line of reasoning, I shouldn't pay any attention to him whatsoever.

      I don't want to run my own company. I don't want to be my own boss. I don't want the headaches, hassles, frustration, and migraines of getting a struggling business off the ground. I have, in my circle of friends in just the past 5 years, been witness to two different marriages that ended in divorce because of people spending so much time and

      • Why should I listen to him if I don't want to do what he did in the first place? Really, his line of reasoning, I shouldn't pay any attention to him whatsoever.
        Ironically, he would probably agree with you.
    • Which is great if you have a good idea, the self-motivation to stick to it, and the time to put into it.

      For those of us lacking all three, that's not so useful. My abilities lie in coding, not in creativity, or design, or management, or marketing. I'm terrible at working on projects I want to do in my free time, I imagine I'd be equally bad at running my own company. And finally, I'm trying to put more time into my social life, not less!
  • by G4from128k (686170) on Wednesday May 11, 2005 @07:46PM (#12505087)
    Cisco pursued this strategy of buying small companies with promising technology but in the dotcom days. Effectively, Cisco let others finance the R&D and initial market testing that all start-ups perform. If the start-up failed, it was no skin off Cisco's nose. If the start-up worked and had a product (and company vision) that matched Cisco, then they bought you.

    Its a great way to get innovative and market-proven technologies, but it can be a little piece-meal. Not all the great start-up techs are going to fit into your architecture or segment the market in a clean way. Also, due diligence can't uncover every problem when you take the start-up's tech and try to scale it to big-company volumes and service expectations. Finally, buying start-ups is a very public affair compared to a tightly secured internal R&D function -- the minute you buy a startup (with a product on the market), all your competitors know where you are going.

    Buying start-ups is a nice tool, but it can't totally replace (only augment) an internal, integrated approach to R&D, product development and architecture development.
  • Buyers required (Score:2, Insightful)

    by aggles (775392) *
    Anyone can create a business - but to be successful, someone has to buy the product. History is littered with great products that failed to survive, because nobody plunked down money to keep the company alive. Buyers are increasingly less willing to acquire products from start-ups, because long term support is a real question. The start up may be bought - they may choose to do something else - they may just go away. If the product doesn't provide a return on the investment required within a very short t
  • by quark101 (865412) on Wednesday May 11, 2005 @07:57PM (#12505172)
    It seems to me that while, as several users have pointed out, Paul doesn't really present anything new; what he does do is to point out things that most people don't see. While some people already know in detail what he is talking about, many do not, and he is opening the eyes of these people.

    Having read about 2/3 of his articles, I have realized that most of what he talks about, I already, at some level, know. The article helps to see a topic in a new light though. Yes, some of his articles aren't all that great, and are stuff that is generally know, but very few writers are always successful.

    It is the same reason that we have books on science or programming or how to use Windows, or any other number of topics. A subset of the population already intimately understands these ideas. However, to the rest of us, it lets us understand and explore the ideas in ways that never would have occurred to us/been possible.

    If you really don't like Paul's articles, then don't read them. They only come up every few weeks. It's not like he posts a new one every other day.
  • by elucido (870205) on Wednesday May 11, 2005 @08:01PM (#12505198)
    Hiring is obsolete. This is why we need enough wars, famines, diseases, and poverty to reduce the population sizes. We simply don't need new labor or new consumers.

  • by timeOday (582209) on Wednesday May 11, 2005 @08:03PM (#12505207)
    "In fact, if Bill [Gates] had finished college and gone to work for another company as we're suggesting, he might well have gone to work for Apple. And while that would probably have been better for all of us, it wouldn't have been better for him."
  • Overgeneralization (Score:5, Insightful)

    by Locke2005 (849178) on Wednesday May 11, 2005 @08:04PM (#12505214)
    1) He says barriers to entry of startups is low. Wrong. Barriers to entry of web services is low; most other startups still require huge infusions of capital, e.g. anybody that wants to do actual manufacturing or sell actual hardware. Are web based startups different from hardware manufacturing startups? Absolutely.

    2) Low barriers to entry also means there is going to be hundreds of other "undergrads" trying to sell the same idea. This means your chances of eventual payback are much smaller!

    3) Why should bigger companies buy startups when they can just partner with them or outsource company services to them?

    4) Yeah, starting a web based startup doesn't cost significantly more than just being a slacker. But if you haven't noticed, 99% of us can't afford to just set around and be a slacker either! SOMEBODY has got to be paying your food and rent. Apparently Mr. Graham thinks most students graduate with tens of thousands of dollars in the bank and can afford to not have any income for several years. I've got about $130,000 in student loans that say otherwise...

    • by dr.badass (25287)
      2) Low barriers to entry also means there is going to be hundreds of other "undergrads" trying to sell the same idea. This means your chances of eventual payback are much smaller!

      Who cares if a company has the same idea as you? You just have to do it better. That's competition.

      3) Why should bigger companies buy startups when they can just partner with them or outsource company services to them?

      Because they can. Because they get control. Because it's potentially cheaper. Because they get quality p
  • ...All users care about is whether your site or software gives them what they want. They don't care if the person behind it is a high school kid...

    BS. Users care if the company will be around tomorrow. Users care if there are some hidden security vulnerabilities in the software. Users care if the software has any stolen IP in the code. Users care if the software will integrate with their existing stuff.

    A lot of this hinges on experience.

    This is why the dotcom era saw thousands of startups come and go
  • by ftzdomino (555670) on Wednesday May 11, 2005 @08:09PM (#12505255)
    This is just as likely as his previous essay stating that bayesian filtering [paulgraham.com] would end all of our spam problems.
  • I noticed that nowhere in TFA did he mention anything about where the money comes from (other than that its cheaper now). I'd have loved to try starting a company after college. But in the real world, I had students lots of expensive loans to pay off, rent on an apartment, various bills. Where would he expect me to have paid that from? How does he expect me to eat? He sort of seems to be overlooking the chicken and the egg problem. Yes, a newly graduated student can live cheaply -- but not for free.
  • This is so 1998 (Score:5, Insightful)

    by Animats (122034) on Wednesday May 11, 2005 @08:15PM (#12505289) Homepage
    That sounds like the stuff I was hearing in San Francisco in 1998. Mindshare! Viral marketing! Big companies are too inflexible! Profit doesn't matter! It's the New Economy!

    And where are we today? Microsoft is #1 in Internet browsers. IBM is #1 in open source applications. WalMart is #1 in retail. The number of programmers in the US is down 25% since 2000. Almost all the dot-coms are dead.

    There are interesting things to be done in software, but the "make money fast by selling stuff on the Internet" ideas have been done.

  • What strikes me most when I talk to undergrads is how ignorant and unmotivated many of them are. Most of them are better off being put in an entry level job, because they really need more training and experience before they are suitable for anything else.

    And the start-up-and-get-bought-out idea just doesn't work as well as Graham claims. I've seen it. Some few people get millions of dollars for their start-up companies, but most single person or very small operations that get bought out only take in a few

  • Brilliant (Score:3, Insightful)

    by psetzer (714543) on Wednesday May 11, 2005 @08:18PM (#12505297)
    This seems to be part of a long line of great ideas where we push the risks towards the bottom while keeping the reward distribution the same. Frankly recent college graduates can move back into their parents' houses, but it doesn't take much for that to happen. Paul Graham said that it's possible to start a company for $10,000, and get rich off of it. If the recent grad fails to do so, or even to recoup the costs, then they're likely completely out of money, and if their parents won't let them move back in, they're on the street. On the other hand, an established programmer can just keep his old car an extra 5 years and be able to take time off on a project and if it doesn't work out, they've at least got experience from an old job helping them get a new one. A major company would be best capable of handling the risk, with a one-person project setting them back aa miniscule amount a year with a possibility for much greater returns.

    Hence, it would seem logical to encourage the largest players to take risks, since they can not only manage the risk, but can best press the advantage. But we've got the current system where Microsoft is just sitting on piles of cash, and recent undergrads and grad students are risking their life savings to innovate. Frankly something is screwed up here.

  • I liked it (Score:5, Insightful)

    by stoolpigeon (454276) * <bittercode@gmail> on Wednesday May 11, 2005 @08:19PM (#12505308) Homepage Journal
    At first I thought it was all rosy and unrealistic and then he balanced out with the fact that yes, you will probably fail. But taking that chance at that point in your life is an interesting proposition.

    As a father of 3 I know I can't afford to do anything too risky. But what if I had done it 14 years ago when I was 22 and had no responsibilities to anyone else. As he points out, there is a lot to gain but not nearly as much to lose.

    It seems to me a lot of the criticism in the thread revolves around small points of the article but don't take the entire essay into account. And we know why this is the case.
  • by levl289 (72277) on Wednesday May 11, 2005 @08:23PM (#12505334) Homepage
    To put it simply, for every increase in widespead accessibility to something like starting a business, making music, or making art, one single person isn't the only one to capitalize on the benefits. A larger audience is brought into the arena with these advances, and effectively you're back to square one, because you're at the same proportion of talent/no talent given that the numbers of both increase.

    In previous generations, it might have been things like better farming equipment, cheaper building supplies, or the printing press - in all cases though, while the population was lifted as a whole, there were individuals in each case which outshined their less talented counterparts.

    Going back to the main point, in all of history, I can't think of anything that's repeatedly eclipsed education as the best means to your end - this time in history is no different, anyone who thinks so must not remember the Dot Com bust and the promised revolution therein.
  • by Erris (531066) on Wednesday May 11, 2005 @08:27PM (#12505344) Homepage Journal
    The article in a nutshell:

    Buying startups also solves another problem afflicting big companies: they can't do product development. ... The more general version of this problem is that there are too many new ideas for companies to explore them all. There might be 500 startups right now who think they're making something Microsoft might buy. Even Microsoft probably couldn't manage 500 development projects in-house... It's common for startup founders of all ages to build things no one wants. ...[go get to work so you can build something M$ can buy]

    A few things have changed since Bill Gates, who is mentioned frequently, was 19 years old. One of them is Paladium and other market dominance from one obnoxious early entrant. The other is that people have wised up about working in the Microsoft world, hoping to be the ONE that gets bought.

    Microsoft's publicly stated policy is to buy "loss leaders" in mature markets. It's no real change from the man who bought the Quick and Dirty Operating System (QDOS) and sold it to IBM or dumpster dived Basic when he was 19 and then sold it to others. Why the hell would I want to be one of those loss leaders? Competition is hard enough in a free world. It's impossible in a world that's owned by one or two dominant players. They are going to come to you an offer you some pathetic sum which they will gladly take to your striving and starving competitors and break you later if you don't play.

    M$ is 20 years ago, free software is where things are now. A few people made money on M$ but there are far more corpses than there are companies today. Since then, the real success like Yahoo, Google, Hotmail and others have taken free software and done the end run the author says but does not drive home: they pleased the end user. That's way better than being bought by some big dumb company so your ideas and talent can rot in it's even bigger belly.

  • by DuctTape (101304) on Wednesday May 11, 2005 @08:28PM (#12505350)
    Back in the 60s, it was, "Don't trust anyone older than 30."

    Now it's, "Don't hire anyone older than 30."

    DT

  • by dark grep (766587) on Wednesday May 11, 2005 @08:30PM (#12505358)
    I have hired graduates (generally with first class honours) who have been less than brilliant and not worth their starting salary. I have hired undergrads who have been outstanding and have paid them twice or more that of a graduate starting package. Why? Undergrads who get up off their bums, seek employment, and still continue college are generally: a. really motivated (often due to personal financial reasons) b. really interested in the work, and want more than the generic college course/degree can offer c. grateful to get the work d. not lazy It's too big a generalisation I know, because plenty of grads I have hired have been good too, but just to exaggerate to make the point, grads are: a. coasting along on the coat tails of a well funded education b. 9-5'ers c. expect a lot more than they are worth based on the supposed merit of their graduation d. not particularly self motivated So those are the best and worst traits of the two types, albeit deliberately thrown into high contrast. But I would take an interested, keen, poor, grateful undergrad any day, and pay them fairly for their contribution.
  • The hardest part (Score:3, Insightful)

    by abigor (540274) on Wednesday May 11, 2005 @08:54PM (#12505544)
    The hardest part is coming up with an idea. I don't think this is as easy as he seems to believe it is, his suggestion in some essay or other to read the Wall Street Journal for a week notwithstanding. It seems like it takes a certain type of thinker to come up with viable startup ideas.

    I work for a startup now, and the niche we plan to fill seems blindingly obvious in hindsight. But I would never have thought of it. And the other day, some guy was trying to hire me away with another startup idea that was also pretty good, but again, I wouldn't have thought of it, despite knowing the technology inside out.

    It does seem like people are starting businesses like crazy, though. There are so many development jobs here in Vancouver, it's unreal. We just cannot find people with the skills we need.
  • by logicnazi (169418) <logicnazi@gREDHATmail.com minus distro> on Wednesday May 11, 2005 @09:09PM (#12505650) Homepage
    Admitedly I may be somewhat biased against this guy because of his stupid claims about nerds and web service applications. It is obviously outright false that nerds are not popular in secondary school because they have better things to do than spend time trying to be popular. In both my personal and observed experience nerds often try despartly hard to be popular (in fact they often have a problem of trying too hard and too transparently). Moreover, it just isn't true that other groups with large time comitments and interests outside of school are automatically as unpopular (music people etc..). While I am uncertain about the future of web service applications I expect a better analysis than the same crap which has been used to predict network computers for years.

    As for this actual point I agree there is a small grain of truth in it. The advent of computer programming and other large profitable fields of intellectual endeavor makes intelligence hugely more valuable for a company. The productivity difference between someone who is just average and someone who is really fucking brilliant can be very large. So it really does make sense for companies to pay new recruiters big bucks just for being smart and train them on the job. Oracle is already doing this recruiting people from caltech with no programming experience for 80k starting salaries. However, people with those sort of smarts are extremely rare and so this trend does not hold out hope for the vast majority of CS students much less undergrads in general. As a TA at Berkeley it is clear that even here most of the CS students are not of the caliber necessery to launch compelling new products.

    Moreover, I think the fundamental flaw in this analysis is the authors assumption that people, even young just out of college types, are interested in maximizing their expected revenue. Sure these people would like to earn more but alot of them just don't find it worthwhile to live for years eating Raman and living in a hovel for the promise of later riches. Happiness and utility are sub-linear in wealth and so great riches later in life don't necessarily compensate for prior poverty. In short many people really would prefer to be comfortably well off for most of their life and have the time and resources to start a family or pursue other interests out of college rather than being poor and working 100 hour weeks for several horrible years for later money. Heck I sure as hell wouldn't want to waste my youth as a workaholic just to end up as one of those rich bachelors at 35.

    Also while the author touches on risk he radiclly misunderstands most people's attitudes towards risk. Sure studies have shown that there is some percent of society who are naturally thrill seekers and thrive on risk but many of the rest of us find risk itself (and not just the bad consequences if things go bad) unpleasent. Most people don't like risking alot for the hope of a big reward but would prefer a comfortable sure thing.

    Big companies with stable employment and paychecks which don't depend entierly on project success exist for a reason. Most people prefer that sort of comfortable stable life. It isn't all about accumulating the biggest bank account but also about knowing you can provide for a family, have free time and safely plan for the future. It isn't just the economic situation that needs to change to make start-ups as prevalent as the author imagines but human nature itself
    • by dr.badass (25287) on Thursday May 12, 2005 @01:24AM (#12506893) Homepage
      It is obviously outright false that nerds are not popular in secondary school because they have better things to do than spend time trying to be popular.

      Perhaps you should chalk this up to your own unique experience rather than assuming it is "obviously" false. I for one (and hordes of people on Slashdot would agree) that his essay sounds strikingly familiar. Grahams writing style seems to confound people that can't distinguish between a generalization (which isn't expected to apply universally), and an absolute statement.

      However, people with those sort of smarts are extremely rare and so this trend does not hold out hope for the vast majority of CS students much less undergrads in general.

      And that's precisely why Graham is suggesting that those few smart kids run out and start startups. Why get paid the same as the next guy if you're (potentially) ten times as productive as he is? Why not found a startup and have something that proves you're worth ten times as much to the company? Even if your company flops, it looks good on a resume.

      Heck I sure as hell wouldn't want to waste my youth as a workaholic just to end up as one of those rich bachelors at 35.

      It beats wasting your youth being a workaholic for someone else. Who says you have to waste your youth, anyway? After 16 years of schooling, 2 or 3 spent working for yourself sounds like a reasonable investment, given the potential payoff.

      Also, it's a lot easier to go from working for yourself to working for a company than vice-versa. You're going to have a harder time justifing the risk of founding your own startup when you're 35, and presumably have a lot more responsibilities, than you are when you're 22 and it really doesn't matter if you fail.

      It isn't all about accumulating the biggest bank account but also about knowing you can provide for a family, have free time and safely plan for the future.

      The question is how much time do you want to spend working to provide for a family. 30 years, or 3? Even if you waste that 3 driving a company into the ground, you've got 27 left to play it safe. The time to take chances is when you're young -- before you start worrying about those things.
  • Employers filter by degrees. For example, if the applicant does not have at least a four year degree, their resume is thrown in the trash.

    People who graduate from college learn the theories, but lack the real world experience unless they know how to apply the theories to real situations, and adapt to change and learn new ideas and technologies.

    Many people have the real world experience, but lack the degrees, so HR screens them out.

    Citing a lack of qualified canidates, businesses lobby the government to raise work visa quotas or eliminate them.

    When they cannot get enough qualified people into the country, they turn to Offshoring.

    Offshoring has problems, due to barriers of language, culture, religion, society, and location. They are ISO 9000 Certified, but are not producing quality results. They are being managed like they are in the USA, but that management style does not work in their native country.

    After offshoring fails, some companies turn to consulting. Hiring workers from another company to work via contracts, and letting that company hire and fire employees and provide benefits to the employees.

    Global Economics states that the nation that provides the products or services the most efficent, will have an advantage. India is able to offer Engineering and IT products and services, but as the Indian economy grows, so does the money paid to the workers. This makes India lose its advantage as the gap between the rich and poor narrows, proving that capitalism works. Meanwhile Brazil, Thailand, The Phillipines, China, etc are all offering IT and Engineering services at rates that are cheaper than India's. Slowly, India starts to lose its advantage.

    Meanwhile after not being able to hire qualified and skilled local labor, many companies turn to headhunters (recruiters) to screen applicants for them.

    Due to the qualified, but undereducated people being discriminated against, companies find that their quality is getting worse. As a result, the economy suffers. More money is going overseas due to the work visas and offshoring, which also hurts the domestic economy. The government is told to do something about it, so they raise tariffs, which raises the price of that commodity in the market. This leads to higher costs of many companies, which are forced to lay off more employees. Yet these high tariffs are exactly what people wanted, they just don't know the economic effect it has on their economy. Many of these problems are caused by other nations and corporations, but people blame the President anyway, after all, he was the one who did what they told him to do, and raise tariffs to save jobs, which led to losing more jobs.

    In short, we are so doomed in the United States. We are going to become a third world country if this keeps up, and have a double digit unemployment rate. By the time the Baby Boomers retire, it will wreck the stock market, and cause even more economic problems. Kiss your pensions and Social Security goodbye, or at least consider a 25% cut if they manage to save them somehow by a government bailout due to taking on more debt to fund them. As corps like United, cut out their pension programs, the feds have to take over, but often cut 25% of out the money owed to pensioners.

    My advice to survive is to live minimulist living and save as much money as you can. Try not to spend too much, if you own stocks, sell them before 2015 happens and the Baby Boomers start cashing in stocks and crash the market. If it survives, the stock market is going to have some really cheap stocks after 2017.

    China and India formed an economic partnership, that is 1/3rd the world's population right there. Don't ignore the EU either. These two will be big competitors to the United States of America.

    If you can start a business, learn to do what other people do not want to do. For example, someone started a business to sell stuff on eBay for others too lazy to do it themselves. It sort of is like a garage sale, only online. They market mostly to people who do not have Internet access, but want to sell their stuff for whatever cash they can get from eBay. The key is to keep customer statisfaction high, so that they keep having repeat sales.
  • by epine (68316) on Wednesday May 11, 2005 @11:05PM (#12506313)
    Does anyone else see the irony in a long essay about undervalued 22 year-olds posted on Slashdot?

    I was impressed with his observation that when you're young "you occasionally say and do stupid things even when you're smart". Apparently we've had it backwards all along. Slashdot should immediately adopt a negative moderation system:

    -1 lacks penetrating insight
    -1 not so funny as always
    -1 rare knowledge gap exposed
  • by otisg (92803) on Thursday May 12, 2005 @01:42AM (#12506957) Homepage Journal
    The timing of this is quite interesting. In one paragraph Paul Graham says:

    "What companies should do is go out and discover startups when they're young, before VCs have puffed them up into something that costs hundreds of millions to acquire."

    And what did Google do today? It bought a 2 people company [dodgeball.com].
  • Dammit!!! (Score:4, Funny)

    by Rick and Roll (672077) on Thursday May 12, 2005 @02:20AM (#12507103)
    I have a final tomorrow. So, today, Joel Spolsky and Paul Graham both write essays.

    Don't they know this is a big finals week?

  • Garbage (Score:3, Interesting)

    by BenEnglishAtHome (449670) on Thursday May 12, 2005 @08:20AM (#12508346)
    Have you ever noticed that when animals are let out of cages, they don't always realize at first that the door's open? Often they have to be poked with a stick to get them out. Something similar happened with blogs. People could have been publishing online in 1995, and yet blogging has only really taken off in the last couple years. In 1995 we thought only professional writers were entitled to publish their ideas, and that anyone else who did was a crank. Now publishing online is becoming so popular that everyone wants to do it, even print journalists. But blogging has not taken off recently because of any technical innovation; it just took eight years for everyone to realize the cage was open.

    Garbage.

    It took years for bloggers to latch onto the same teat at which most "artists" have been suckling for millenia: You just have to have balls.

    Put together some collage/sculpture thingie that your three-year-old could have regurgitated, stick it in your front yard, and your neighbors will call you a twit and call the homeowners association to get that eyesore removed. Put together some collage/sculpture thingie that your three-year-old could have regurgitated and HAVE THE BALLS TO CALL IT ART and put it in a gallery with a ridiculous price tag and wankers who have no taste and no heart but fat wallets will try to buy an image of intelligence and sophistication by flinging dollars at you. You may be forgiven for laughing all the way to the bank.

    When it comes to blogs, most people, some years back, had a reasonable enough sense of shame to realize that their idiotic ramblings were of no interest to anyone but themselves and, maybe, in return for enough monetary compensation, their therapist. Fast forward nearly a decade and several things have happened. Familiarity has bred contempt. Some scam artists have made some money. And way the hell too many people have gotten the idea that it's actually a legitimate use of their time to immortalize their verbal diarhhea via the intarweb.

    And I'm posting this on one big-ass blog. Damn. I should shoot myself now.

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