Paul Graham: Hiring is Obsolete

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."

frist?

[BorgCopyeditor]

What is this? PaulGrahamFilter?

Who thinks recent grads are undervalued?

[Anonymous Coward]

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.

In many ways he is right.

[edtstu]

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.

Article says nothing new.

[dotslashdot]

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.

Take chances - fail often - win big

[Anonymous Coward]

When you're young and full of energy and ideas, it's good to take chances, fail often, and then find the winning idea and make it big...

But that requires knowing a lot of things, and recognizing that you aren't invincible and will need help from experienced people, too.

But it's heck of a lot better than going to school, toil away in classes just for the sake of being in the classes, and then working for a good salary...

Re:Specialization.

[Fulcrum of Evil]

Therefore, there should be one big huge company that always employs everybody in the labor force

I thought we didn't like communism...

A plea to Paul Graham...

[jay-be-em]

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.

Buying startups: Pro and Con

[G4from128k]

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.

Re:Outsourcing...

[mrchaotica]

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:Specialization.

[MerlynEmrys67]

I thought we didn't like communism

This is slashdot - capitalism is bad... Everyone is equal here - and frankly if it really was that way Microsoft and Intel would have lost a long time ago to Apple and AMD

Buyers required

[aggles]

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 time, its just not worth the risk. Building a better mouse trap doesn't guarantee that people will beat a path to your door.

Re:A plea to Paul Graham...

[swimmar132]

Why? You don't have to read them.

This is why we need to reduce the population.

[elucido]

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.

Overgeneralization

[Locke2005]

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...

Re:In many ways he is right.

[TheOriginalRevdoc]

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?

Re:Who thinks recent grads are undervalued?

[Austerity Empowers]

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.

This is so 1998

[Animats]

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.

Brilliant

[psetzer]

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.

Re:Outsourcing...

[GlassHeart]

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?

I liked it

[stoolpigeon]

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.

Re:Exactly, we have an ownership society now.

[category_five]

"Now of course only some of us can be the man, this is why we need population control"

What does a limited amount of society being in a position control production have to do with population control? You have supplied no logical connection between the two ideas.

He's correct, and therefore incorrect

[levl289]

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.

Re:startups

[GlassHeart]

I think the idea behind the article was that undergraduates should start their own companies instead of seeking a ground level job.

According to the US Small Business Administration, 50% of small businesses fail within the first year, and 95% fail within five years. To start and run a business without ever having held a job is a sure path to disaster for all but the most talented, hardworking, and lucky.

Why free software makes sense.

[Erris]

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.

Re:Outsourcing...

[Atzanteol]

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 is aweful, I just think the standard of living overall leaves something to be desired when compared to the US.

Old people are obsolete

[DuctTape]

Back in the 60s, it was, "Don't trust anyone older than 30."

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

DT

Re:Specialization.

[rice_burners_suck]

Remind me again how a system where no-one gives a damn about doing a good job is good again?

Perfect example: Microsoft. From the complete lack of quality in Microsoft code, as demonstrated by the unreliability and inefficiency thereof, you can tell that a company consisting entirely of people who do not give half a rat's behind about doing even a mediocre job, let alone a good one, can become one of the richest companies in the world.

Actually, speaking of Microsoft, I was just thinking how Microsoft could reduce the complexity of the next version of Windows, Longtooth, due in 2009.

Longtooth will include a tremendous amount of new features implemented in completely new code. Many, but not all, existing features would be reimplemented in VisualBasic.NET just for the heck of it, even if mature versions are already implemented in C or C++. Programmers making the new VisualBasic.NET code would not be allowed to look at the code that already exists, so that new ideas might be better implemented. The features will be chosen by random for reimplementation.

All Microsoft code would assume that any Microsoft code (the OS and any Microsoft applications) is secure. This code will always execute with no checks to make it run faster. All other code will be subject to Longtooth's new security system, dubbed Microsoft Longtooth Security Center 2003. This feature will give users more control over processes that execute in their computers. I will explain some of its features here:

To maximize security, Microsoft Longtooth Security Center 2003 will make certain assumptions about the user. For example, users who use Microsoft products are assumed to know what they are doing. However, users of 3rd party applications not made by Microsoft are always assumed to be complete idiots. Therefore, all user interface events occurring outside of Microsoft applications will trigger a safety mechanism.

For example, each time the user moves the mouse in an area not controlled by a Microsoft application, the user will see crosshairs moving across the screen to indicate where the mouse will be located. When the user stops moving the mouse, an authentication window will appear and state: "The user has requested that the mouse be moved to the location on the screen indicated by the crosshairs. This area of the screen is controlled by untrusted code that may cause damage to your computer, your documents, or your network. Do you wish to allow the mouse to move to this location?" Buttons for "yes", "no", "details", and "help" will be displayed.

Selecting "no" will cause the mouse cursor to remain at its previous location. Selecting "yes" will bring up another window, requesting the user's password to authenticate the movement of the mouse. If the user enters the correct password, the mouse cursor movement will be authenticated to that user and the cursor will be placed at the new location. Selecting "details" will display the X and Y coordinates of the new position, followed by warnings against using untrusted rogue code such as Linux.

For additional protection, clicks, keys pressed on the keyboard, items selected in a menu, or other input events will trigger similar security mechanisms. Since Microsoft code is considered secure, these checks will not occur in windows owned by Microsoft code. Also, the mouse may be used to click on the above buttons and fields during mouse movement authentication. If any such movement of the mouse takes place during the authentication process, the mouse will still be moved to the location indicated by the crosshairs, but a bug in Windows will cause the cursor to immediately "bounce" back to the location where it was last used during authentication. Microsoft will refuse to fix the bug unless Linux is outlawed in all countries, even those countries that have no computers.

Many other authentication checks will be made by Windows. I'll return to this topic in a moment. First, let me mention that Clippy, the talking paperclip, along with other Micros

Grads vs Undergrads

[dark grep]

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.

Re:Outsourcing...

[wheelbarrow]

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:Please

[swb]

I'm sure you've been modded -1 for your post, but I share your sentiment to some degree or other. What I wish is that Slashdot spent more time promoting what non-geeks had to say about technology and less promoting what some select group of "ubergeeks" had to say about non-technology subjects.

It's not that Paul Graham or Linus or ESR or whoever don't necessarily have something interesting to say, and in an interesting way, about subject matter outside their area of expertise (in this case the squishy areas of management and economics), but it's the sycophancy and lack of criticism with which it's presented.

Re:Who thinks recent grads are undervalued?

[torinth]

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 particular pick out of the pool of recent grads is going to be reliable, effective, and committed.

On the other hand, early-career professionals with just a few years experience are more reliable from an HR perspective because you can look at their work history to see how they're getting used to things. Have they been progressing in one specialty? Have they jumped from Dev to IT to QA and now want a Dev position again? Did they take a year off to "find themselves" already? These are questions that you can find answers to in early-career professionals, and these are questions that can lead to less turnover and unpredictability from your workforce.

What this all means is that recent graduates are a risky gamble and that the market should probably value them significantly less for their first few years of building a work history. Interestingly, it also means that those that do demonstrate their commitment and reliability should receive just the kind of frequent and large salary increases that more senior employees resent.

Welcome

[Anonymous Coward]

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?

disruptive

[LordMyren]

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

The hardest part

[abigor]

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.

Re:Overgeneralization

[lionheart1327]

You do know that you don't have to pay $130,000 for a college education?

Go to a state school, you'll pay $20,000 and get pretty much the same education. After your first job nobody will give a shit where you went to school.

It isn't all about money!

[logicnazi]

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

Bah, notice some trends

[Orion Blastar]

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.

Re:Outsourcing...

[back_pages]

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...

[Vicissidude]

Actually, this is a great reason for reducing offshoring and outsourcing. We shouldn't be dependent on other nations for our strategic needs.

Re:Outsourcing...

[BreadMan]

I don't think the dollar situation is all that dire. Consider the following:

1- Oil accounts for much less of our trade deficit than in the 70's.
2- Oil consumption accounts for less of our economic output (barrels/gdp lower now than during 70s) cite [doe.gov]
3- Our current account deficit is small compared to the size of our economy.
4- Capital markets in the U.S. are quite fair & liquid and the gov's is stable, meaning holding your wealth in U.S. dollar-demoninated assets incurs minimal political risk.

In all, the U.S. Dollar serves as a good place to park your wealth, mostly for reason #4.

As far as a persistent trade deficit, one can't make a normative statement; it's not good or bad. Consider this: you run a persistent trade deficit with your local grocery store and gas station. Is that "good" or "bad"? And for whom? When the U.S. economy does well, the trade deficit increases because we're consuming resources, and presumably, putting them to better use than the next highest bidder.

Re:Article says nothing new.

[bugbear]

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.

Re:Outsourcing...

[wheelbarrow]

I see. So, in your world we have a USA where you will pay a protected worker $10 to produce a widget that will be purchasable for $12. Why am I not free as a consumer to import that widget for $7 and thereby pay a foreign worker $5? Are you going to stand in the way of the open and voluntary relationship I have with the foreign worker? It's clear who the losers are in that scenario: the consumer and the foreign worker.

Why should the domestic worker be entitled to utilize the force of government to screw over the consumer and the foreign worker?

Re:Outsourcing...

[dnoyeb]

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?

Re:Outsourcing...

[NoMoreNicksLeft]

Yes, the consumer loses. Never mind that the consumer will have no $7 with which to buy his cheap widget. When all his jobs have been shipped to Bangalore, and the "service economy" that the Clinton nitwits promised us in the 90s is over there too, what's that leave for us? Maybe we should all become lawyers, or daytraders?

Why should the domestic worker be entitled to utilize the force of government to screw over the consumer and the foreign worker?

Because except for some minority cases (think ~1%) the consumer *is* the domestic worker.

Re:Outsourcing...

[enjahova]

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)

MOD PARENT UP

[alizard]

to disagree with this is to assert that the strategic interests of China and India will always be identical to that of the USA.

Even assuming that we actually put into production renewable energy systems that mean that we aren't competing with them on the oil market anymore, they aren't going to be and they really aren't supposed to be.

Re:Outsourcing...

[Etherael]

Or let's say that they don't, and you're talking about the meanest form of modern corporate exploitation possible, for argument's sake lets say Nike hiring south east asian sweatshops for garment manufacturing, surely this is a heinous crime which can be unequivocally written off as the purest example of concentrated evil, right?

But what about;

According to a UNICEF study an estimated 5,000 to 7,000 Nepalese children turned to prostitution after the U.S. banned that country's carpet exports in the 1990s. Also, after the Child Labor Deterence Act was introduced in the US as estimated 50,000 children were dimissed from their garment industry jobs in Bangladesh, leaving many to resort to jobs such as "stone-crushing, street hustling, and prostitution," --"all of them more hazardous and exploitatitive than garment production" according to the UNICEF study. [1]

This?

A lot of people seem to be viewing the american job drain from a vacuum, I too am a coder and a sysadmin and I admit in my more primitive moments the same sense of panic and dismay strikes me when I ponder how I can compete with someone willing to do the same work as I am for 40$ per day, but the thing is you're not taking into account the entire equation.

A bunch of jobs go to india, there's less money in the domestic economy to spend on necessities of life, even if this is limited to a degree by government economic controls or other inefficient controls on natural reality, it can still be said to be a significant drain, so what's the result of the drop in demand for higher priced housing and goods? Those prices drop, also, they simply *have* to, if noone is buying them then it makes no sense for the businesses involved to maintain an unrealistic pricing structure and not actually get paid for their goods / services. The end result is a slow equilibrium being imposed upon the entire globalised economy, prices drop in the overpriced areas to match the decreased demand and raise in the underpriced areas to deal with the increased demand.

So what am I getting at? If you want someone to shout at, shout at the people making your life such a ridiculously high cost, your goods and service providers and the government that sucks the lifeblood from both you and them.

Re:Outsourcing...

[skeptic1]

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:Welcome

[promantek]

I don't know why this parent post doesn't have a +5 insightful rating. A couple of his comments are a little overboard, but his point of view is valid: welcome to something very hard.

I'm an undergrad and started my software company 4.5 years ago (click the link below my name). I'm 23 years old.

Paul Graham makes a great point, the cost to get to market is smaller these days, but the rules of business haven't changed, and a startup will test you and your will more than you may imagine.

I'm a CS undergrad, and I think some of my collegues are undervalued, but many of them have never even had an internship. Without an internship prior to graduation, you may be overvalued.

Re:Paul's recurring theme...

[s.fontinalis]

Is his name Paul Graham? Or Anthony Robbins? He's just another self helper, i.e. a consultant for your life. And we all know consultants just charge you money for things you already know.

Re:Paul's recurring theme...

[phasm42]

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.

Re:Outsourcing...

[wpiman]

Because except for some minority cases (think ~1%) the consumer *is* the domestic worker.

This was the beauty of Henry Ford--- he started the $5 a day wage so that workers could buy cars.

Nobody bides by this anymore. People get the cheapest stuff at Walmart who doesn't care about workers- only the bottom line.

It is like buying your mp3s from allofmp3.com. An all America multimillionaire record company CEO gets screwed and a Russia geek profits.

Re:startups

[MourningBlade]

According to the US Small Business Administration, 50% of small businesses fail within the first year, and 95% fail within five years. To start and run a business without ever having held a job is a sure path to disaster for all but the most talented, hardworking, and lucky.

Please read the article. It is linked in the story for your convenience.

Why must the US education system be so fucked?

[Inoshiro]

I've never understood why the US view on higher education is that the moment you get into university, your main goal in life becomes the consumption of fermented vegetables and goldfish.

Seriously, this is not the view in Canada, or other countries. There is no inferiority complex for going to a tech school vs. a principles school (IE: University). If you go to a tech school, they teach you how. If you got to a University, they teach you why (you're expected to be able to learn how on your own).

Perhaps if the US legal drinking age were lowered, University wouldn't be seen as such a booze zone (although, frankly, I'm guessing as much underage drinking occurs in the US as in Canada, despite the large legal drinking age gap). Perhaps if the US gov't made public education a priority, we'd also see generally accesible schools for people whose marks qualify them for it. I'd like to see what you could've done in University, instead of resenting people who went.

Of course, you could still go to Canada and pay 1/4th to 1/8th what you'd pay in the US (even after the usual 2-3x doubling of fees that citizens pay!). And you wouldn't have to deal with beer swilling!

Re:Outsourcing...

[killjoe]

It's not free trade is the rules are not uniform. In the US there are fair labor standards, there are environmental regulations, safety regulations, and all kinds of other "burdens" on business.

In india you can buy children and work them to death. There are entire industries where children are sold to satisfy the debt of their parents. These children start work sometimes as early as 5 carrying rocks or other hard labor. By the time they are 12 or 13 their bodies are ruined from poor nutrition and physical labor. As a bonus they have accumulated more debt then they can ever pay off because the company was charging for their room and board. Their best bet is to give birth and sell the child or go into prostitution. I won't even go into the atrocious sanitary conditions and complete lack of environmental regulations in the third world.

So how does an american company compete with that? In India there is an overabundance of human beings so they can specialize in cheap labor.

There is no such thing as free trade because the world is not playing by one set of rules.

Re:Welcome

[spauldo]

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.

Re:Paul's recurring theme...

[mark-t]

Consider that we have yet to hear of a case where somebody on their deathbed utters "I should have spent more time at the office".

That alone should tell you something.

Re:frist?

[GraemeDonaldson]

News for PHBs. Stuff nerds don't give a crap about.

Re:Outsourcing...

[Anonymous Coward]

"Our country is at the top position in the world today for a reason"

On most single metrics the USA is not at the top position in the world apart from being the most powerful, which is influenced by size.

In terms of GDP per capita per hour worked the USA lags a good few percent behind the leader which, surprisingly to some, is France. You could argue then, that the USA achieves its total GDP per capita (over all hours worked) by simply working longer hours, but if the USA could produce as much GDP per capita as the French per hour this would either improve USA competitiveness. The USA does beat a number of nations on GDP per capita per hour worked, though, for example the UK.

One of the other relevant statistics is the USA's position in the OECD PISA statistics for scholastic achievement at 15. The USA ranks around 25th for reading, mathemtical, and scientific literacy based on average scores. If the USA it to compete for higher level services requiring higher levels of education and innovation then the two options are either to improve the educational achievement of a significantly large subset of the US population to be able to fill these positions or else import more via H1Bs. (It is better for the USA to have highly educated foreigners living in the USA and paying taxes in the USA then being outside it and competing).

Re:Outsourcing...

[anandsr]

Well the reason I modded it down was that its so demeaning to us Indians. Yes this happens in India.

So who is responsible, do you have any idea. The problem is education. There is not enough of it. Did you fund any non-profit organisation here who was providing education to poor Indians. Who gave you the right to say such hurtful things.

The only reason why you are saying this is because of outsourcing of IT jobs. Because it hurts you. You are losing the advantage you had, of getting a much better salary than the average.

But don't forget that the things you said to not apply to the IT sector. The Software Engineers) are living much better in India than their American counterparts, at least on the things that we care about.

Can you eat outside daily in a decent restaurant without going over budget. Can you afford a Chauffer for your car in budget. Can you get house help who will clean your house, clothes and cook food in Budget. We can and that is what we care about more than the latest electronic gadgets.

I am just 33 and own a house and will be able to pay off the mortgage in a couple years more. And I will say that I am not as successful as my other friends. Can you say something like that.

You talk about safety regulations, what are those that would matter in the IT industry. An american should not talk about the Environment regulations, because they are the worst in the developed nations. They probably produce more emissions than India (except if you consider emissions from Cars).

Yes we work harder than you guys. Because we don't have labour unions, and nobody would protect us if we lost the job. There is no job security. We have to save our old age pension ourselves. There is no social security. So we save as much as possible.

We have been in this job insecure position since the beginning so we take it for granted. You will have to come to terms with it and work hard to be where you are. It is going to be harder on you than on us, because you cost more than us. Even though we live more lavishly (in the lower salary) than you.

Such rants are not going to help you. The only possibility of job security for you is to learn some foreign language (Indian or Chinese) and learn about our culture so that you can be the bridge between our technical people and your consumers.

Re:actually, it is about you

[unitron]

"...every time they try to push piratizing Social Security.

If that's not the word you meant to use, it should have been.

Either way, it's a joke I'm going to steal.

Re:Outsourcing...

[sultanoslack]

Uhm, dude, you have a really screwed up image of the Indian IT industry if you think it's 12 year olds banging on a keyboard for 80 hours a week.

I work for a large German IT company. We have a pretty ugly campus. I was in Bangalore last year. Not only are the IT campuses one of the nicest things that you find around, they're just plain helluva lot nicer than the campuses that you find in western companies. The employees make quite decent wages by local standards, and have one of the best work environments that you can find at any job there -- more or less comparable to a western work environment.

If you want to talk about the shitty living conditions in India that's fine. Things do get pretty ugly there. But don't talk about their IT industry in the same breath; it's one of the things that's actually helping to pull small portions of their economy and labor standards up a notch.

Re:startups

[jayloden]

As much as I love Paul Graham's essays, and as much as I enjoyed his book, this is his one flaw in my opinion. He was one of the lucky, talented few that kicked some tail in a startup company, made a fortune, and in general took the fast lane to success through a startup.

He emphasizes again and again how much he believes in startups, but I really think his perspective is heavily skewed by what worked for him. The reality is, as you say, almost all startups will fail. Everyone - not even every smart/talented person - can go into a startup.

Let's not forget: PG made his money because his startup was purchased by a big corporation (Yahoo) and without the "old model" of business, the startup model doesn't work either. That's not to say he doesn't have good, insightful points, or that his writing isn't well worth reading...I think maybe it just needs to be tempered with a little more of the reality of the startup process.

-Jay

Re:disruptive

[Anonymous Coward]

Finding smart kids is not hard, keeping us busy is a lot harder to do. Most companies cannot deal with disruptive players.

"Prima Donna" ... "Does not work well with others" ... "High Maintenance" ... "Whiner" ... "Smartest guy in the room" (that last one is NOT a compliment, BTW)

Have you heard these words before?

You will.

Re:Outsourcing...

[hesiod]

> So we save as much as possible.

Right after claiming you have a chauffer? You obviously do NOT save as much as possible if you are buying unnecessarily lavish things.

Re:We Don't Hire ... We Invite The Best

[Anonymous Coward]

"We do not believe in medicority and therefore we do not hire ordinary people."

I guess you mean you don't believe in hiring mediocre people. I would think that the "best" people would be a bit less sloppy using language, but what do I know.

Re:Overgeneralization

[kfg]

If you want to differentiate your hardware you won't do it by slapping your logo on someone else's design.

Go talk to Netgear and Dell. This is exactly what they do. Go talk to the soap trade. The entire industry is built around doing this, or, as per my above post, violin companies, all of whom market a nearly identical 400 year old Italian design.

Some people want to start up a business that competes with that outsourcer in Asia.

What, are they nuts?! Doctor, it hurts when I go like this. If you want to start a manufacturing business that competes with the Asian factories, but you only have $10k in capital available, then what you can do is . . .abandon that idea and come up with another that you can do for only $10K.

As it happens I make simple flutes, entirely in America and entirely out of American materials. I compete with the Pakistani flute makers, who you can find all over ebay, because my capital outlay came to less than $50 (which is the very reason the Pakistanis are making flutes instead of aircraft carriers). I did not go into the video card manufacturing business because it would cost more than $50. Don't decide what business you want. Decide what business you can afford. It's a pretty simple concept and the very point of the Slashdot article. Your suggestion is thus, in fact, off topic.

. . .you still have a lot of infrastructure required to do it.

Yeah, you need some means of getting to and from the store. Most of that infrastructure is socialized. Roads, the internet, etc. The same infrastructure as is needed by the software trade (that book on Java is a manufactured good, by the way, as is your computer. All businesses require manufacturing infrastructure to support them. Even "mowing" lawns with sheep).

Other than that all you need is the capital to purchase your first unit. A brown truck will even bring it right to your basement window.

KFG

Re:But, of course, that's impossible

[mrchaotica]

Yeah, but that won't happen. See: prisoner's dilemma [wikipedia.org].