A challenge to startups

"From those unto whom much has been given, much shall be expected." In various forms this sentiment has been expressed at least as far back as the third century AD, via the Gospel of Luke; more recently it has been cited frequently by US Presidents, and can be seen in modified form in such places as Spider-Man ("With great power comes great responsibility") and the demands of the Occupy movement that the "1%" pay higher taxes. I started thinking about this a few days ago after re-reading an essay by Paul Graham and thinking about how lucky I was to be running a startup company now rather than two decades ago.

In that essay, Paul remarked upon four developments which had made it cheaper than ever to launch a startup: Open Source Software, which dramatically reduced the cost of software (although as Jamie Zawinski famously pointed out, it only becomes free if your time has no value); Moore's Law, which dramatically reduced the cost of hardware; the Web, which made it possible to reach large audiences cheaply; and better programming languages (I would broaden this to software development tools generally) which made software development much faster. All of these remain very important ten years after Paul wrote that essay; while I think Paul somewhat overstated his case with the assertion that the Web made promotion free — the Web is now so packed full of better mousetraps that it's hard for the world to beat well-worn paths to every door — it's still startling to think about the effort which would be involved in marketing a social network, a hundred million item mail-order catalogue, of even a brand of mobile phones without the Web.

For all that what Paul wrote remains true, I'll add four more developments. First, starting with Y Combinator, which Paul co-founded and was in the process of getting off the ground even as he wrote that essay, there has been a dramatic expansion of the funding available to new startup companies; while I was lucky to be able to "bootstrap" my startup, the easy availability of funding helps a great many companies which would otherwise never start. Second, where startup founders previously had to figure things out largely on their own, there is now a very large amount of mentorship available — ranging from large organized programs like Y Combinator down to helpful individuals who declare that their inbox is always open. (My inbox, like Patrick's, is also always open, but I'm probably not the best person to ask for business advice, given that I'm famously bad at business.) Third, the availability of a large number of straightforward services for processing credit cards has made life dramatically simpler for startups which go the direction of having customers who pay for their products and services. It's hard to imagine, but when I started Tarsnap in 2006, Paypal was the least painful way of getting paid. And fourth, where Moore's law brought the cost of hardware down, cloud computing has reduced the capital cost of hardware to zero — which both allows for cheaper experimentation, and reduces the need for startups to find investors.

And so I have a challenge for my friends in the startup community: Seeing that so much has been given to us, think about what you can do to make things better for the next generation of startup founders.

There are no wrong answers here. Paul Graham contributed back in the form of mentorship and funding for startups; many founders of successful startups make such investments of money, but Paul Graham may be unique in combining it with such a successful mentorship program. Patrick and John Collison, having grown frustrated with the problem of receiving payments online, launched Stripe to solve that. Erin and Thomas Ptacek and Patrick McKenzie decided to fix technical hiring, which will doubtless be a great boon to future startups. My friend Terry Beech went from running a startup to teaching university courses about entrepreneurship, and then moved into Federal politics, winning a seat as a Member of Parliament in the recent election; I have no doubt that his background will allow him to make important contributions there. And my own small startup, being built heavily on Open Source Software, contributes each year an amount equal to its December operating profits to supporting Open Source Software; rather embarrassingly, this makes Tarsnap the 7th largest donor to the FreeBSD Foundation in 2015, something which I hope will change before the year end. Five examples, all entirely different; I have no doubt that there are far more with whom I am not personally familiar.

There are two weeks left in 2015, and it's a good season for thinking about such things. How will you contribute back?

Posted at 2015-12-18 12:30 | Permanent link | Comments
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