1) Innovation
We've still got it, including making things that are not just ways to waste time on the Internet. Evidence: sci-fi writers dramatically underestimate progress in our industry.
2) Biotech
Sexy like cleantech, but doesn't require government subsidies to make money. Also has competitive moat, because biotech is hard. (Don't worry, software still worthwhile, too).
3) Efficient markets
Free flow of information creates efficient markets where not possible before. Many of our startups do this, such as AirBnB, an efficient market in lodging. YC = "mass production techniques, applied to VC"
4) Measurement
"You make what you measure." Put a paper graph on the wall plotting your favorite metric. You'll optimize for it, celebrate improvements, and shoot yourself in the foot if you picked the wrong metric. Metrics show social customs are obsolete (like, e.g., display ads).
5) The United States
PG was born in England, is not "wild, jingoistic patriot", but still thinks reports of US's impending obsolescence are greatly exaggerated. The only thing that kills empires is when people can't make money by building stuff. Three ways this can happen:
a) Bandits steal the money. (NYC)
b) Your government steals the money. ("The England that I escaped from.")
c) Other countries steal the money. (The Netherlands.)
6) Silicon Valley
Budget crisis in California is two sets of idiots playing chicken. You don't have to start in Valley, but it really, really helps.
7) Small companies
World is "higher resolution": stuff gets done but it doesn't require industrial empires anymore. Networked small organizations are more efficient. Economies of scale paper over all the other sins of large corporations, but nimbleness of small companies means little guys win.
8) Economic inequality
A network of small companies plus money not getting stolen will produce massive economic inequality. (Patrick notes: PG's essay on wealth creation is my favorite of all he has ever written. He has a convincing take on why massive economic inequality is a good thing, and it isn't based on trickle-down economics.) If your business model bets on increasing economic inequality, good for you.
9) Moore's Law
Computers getting better, but in uneven fashions (e.g. SSD, not "all components improve 2 years"). Programmers are lazy. Companies which enable programmers to be lazy (i.e. not change practices or working code to benefit from uneven improvements) and get automagic speed increases win.
10) Things On Screens
We spend a lot of time staring at screens. Wider population spending more time staring at screens. PG has a suntan from his monitor.
11) Server-based apps
(I missed this one.)
12) Super good customer service
Customers can switch easily, people are talking together more, so have such good customer service like it seems like a mistake. Customers can now participate in design of products in virtually real time.
13) Apparently frivolous stuff
Our startup founders use Facebook to talk to each other about work, not email. "Facebook has not found its monetization model yet", haha. This sort of adoption shows there is something really at work here. "It is surprisingly hard to do math that has no practical applications."
PG skipped Twitter. Can't get a good name on it, but it turns out Twitter is really useful as a "non-deterministic messaging protocol."
14) Programming languages
There will be a succession of new, popular languages. Use the next hot language. You can be the guy who writes the library for such-and-such. Server-based apps can now be cobbled together from multiple languages. "Super abstract languages, like the ones people successfully write applications in now, were once called 'scripting languages.'"
15) OSS
I can't name a company which did too much OSS. If no one has gone too far, we're probably not doing OSS enough yet.
16) Linux will never be a factor on the desktop
Limiting edge of OSS is design. Everyone thinks they are good at design. Most people are not good at design: look at the contents of their houses. What this means for the desktop: buy AAPL stock.
17) iPhone
iPhone is a big deal, and I'm bummed because Apple are jerks. There are two problems startups have that aren't their own faults: immigration and AppStore approvals. They're like something out of Kafka.
(Sidenote: We're not giving our startups too little money: they can all afford iPhones.)
Android will be crushed under Steve Jobs' heels, because Apple cares about the iPhone like Google cares about search.
iPhone (or something similar) will do for laptops what laptops did to desktop.
18) Design
Design is why the iPhone wins. 20 years ago, it would have been surprising to say American companies can beat Japanese companies in consumer electronics devices. Core competency moved from manufacturing to design after people got microprocessors to shoot themselves in the foot with. Plus, China commoditized manufacturing expertise.
19) Real Time Stuff
Web 2.0 doesn't mean anything. Real time does. Google Wave will actually be important, not just somebody's 20% project. It is like Google-branded Etherpad, and Etherpad is useful, so Wave will be a gamechanger. See also Twitter, useful in a way different than Wave. If you make the convex hull around Twitter/Wave, and see a space which is unoccupied, that is a worthwhile opportunity.
20) VC
VC won't go away because VCs need to give you money. They can make the terms arbitrarily better to put money in your pockets [Patrick notes: can't get 2 and 20 if you can't invest the money]. Great news for you, since [owners] will now have the market leverage. Expect better valuations and board control.
21) Founders
Founders will more and more have the upper hand. Investors have learned firing the founders is a bad play. More and more founders will be technical founders. Programmers can learn to do business: make something people want, charge them money for it.
There should be an O'Reilley book for business. It would be really short. "Make something people want, charge them money for it. Advanced: charge more money."
---
Trends Not To Bet On
1) Credentials granted by institutions
Admissions officers are terrible. Look at our applicants: college graduated from (and by implication, admitted to) does not predict success. Not surprising: colleges admissions are impersonal evaluation of 17 year olds based on criteria which can be successfully gamed for money. Credentials are an example of an illiquid market. (Pagerank for people would be nice -- our startup doing it didn't work out.)
2) Business school
B-school is West Point for industrial capitalism. It trains generals, not footsoldiers. Market now rewards people who can do stuff. The kind of people who would be good teachers own their own businesses, became rich, and now have no reason to teach B-school. Instead, we get folks who cannot do and are forced to teach.
3) Government
The people on the bridge changes, but the engine room is the same as always. There is an increasing disconnect between public and private sector: government and 1960s PG (Proctor & Gamble, not the other PG) fit each other like gloves, and now government does not match startups/software/etc much. Folks want to work in electronic medical records: they're going to think bureaucracy is terribly slow.
4) Copyright
"Don't start a music starup unless one of your co-founders is Johnny Cochran." Expect a long, bloody fight that the content industry loses.
5) Restricted flow of information
Getting more liquid, faster.
Believe it or not, teaching IS doing. It is a separate skill set, a separate collection of values, and a separate set interests.
The idea that all who choose to be professors are failures at business is totally juvenile. What's more, it's arrogant in the extreme to think that those who are successful in business would automatically make good professors, and it's even worse to think that someone who happened to have both skill sets would find no reason to teach once they were rich.
Edit: Of course, this is addressed to PG, not to the poster of the summary.
The traditional teacher-pupil relationship is well over-rated, and may be more efficient in the very start of the learning curve. Once the basic toolset is available, I'd much rather transition to deliberate solo practice and a mentor-mentee/craftsman-apprentice relationship.
In my experience, during any kind of medical/surgical training, these "wet-fingered" surgeons/mentors are the really ones that are sought for, not the big names who are famous on lectures halls and congresses. I believe this is also true for other complex skills as well, such as in startups. YMMV though.
"For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. "
I think wealth (the PG way) and an healthy society are not mutually exclusive.
I don't want to be rich in a desolated and poor Land. And it is not something to hope for. For you too.
The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.
[0] Apple is a lot like a proprietary Unix vendor in a lot of ways, but Apple hardware is not more than 50% more expensive than PCs with similar capabilities.
s/did too much OSS/didn\'t do OSS early enough/
i'm very curious what this means. what are some examples of start-ups that make this bet? the only thing that comes to mind is private security and gated community development.
My coworker has an HTC Legend, and it seems better than the iPhone in every way; including design.
Have you heard about HTC Evo?
There's a big difference between Android now and Android a year ago.
I also wasn't aware that the Legend was only released this year, I thought it was an older model.
I think it's amazing how many leaps the Android has jumped in this one year.
I finally decided to buy a smart phone and made the mistake of asking a stranger what kind of phone he had and how he liked it. It was an Evo and I literally had to cut him off after 5 minutes of complaining because I had to go. Anecdotal, I know, but I wouldn't go anywhere near an Evo after that.
But even with 2.2, apple's ui kicks butt on android.
I also had a g1devphone (gave it to my brother), and every iphone that has been released.
I use iPhone as my day to day phone right now, and I can't say I'm too happy with it. My main complaint is how closed it is.
I'd think most hackery types of people would be annoyed for not being able to drag and drop music/videos, and for not being able to install* stuff and customize the device.
* You can't install stuff unless Apple approves.
Jail-breaking doesn't count; it defeats the point and gives a shitty experience.
- It's hard to start a software company. You are creating value when you write software. Good place to be.
- 'Efficient Markets' emerging as information flows around. (AirBNB)
- Side note: YC is applying mass production techniques to venture funding.
- Measurement - Google Ads are popular because returns can be measured. Inventing a new way to measure more stuff is a good idea.
- Thoughts on the U.S.: As long as you have peace and people can make money and be entrepreneurs - then society will be prosperous. If bandits, government, invaders steal the money from people who make it then society could collapse.
- Let the good times roll in Silicon Valley. California is still rich. you can start a co. anywhere but it helps to be here.
- Higher resolution world, stuff gets done. Networks of little organizations that make things happen are more efficient. As products have more and more of a technical component, it becomes less of a good idea to become a big company.
- Economic inequality
- Moore's Law working, but differently. Moving towards multi-core. There is a gap to be spanned in helping to build software on advanced systems.
- Want to deliver something? Think about what screen they are sitting in front of. (TV, iPad, Phone)
- Server based apps will continue to have a long run. Will become more complicated. Software and data will by default live on servers.
- Good customer service will be more important as it's easier for customers to switch. They can also research and find out if you have good service. Customers now involved in designing your product. You learn alot from talking to customers.
- Apparently frivolous stuff often turns out very useful. (Facebook, Math, Twitter) - Bummed he missed out on his Twitter name.
- Popular programming languages will emerge. Adopt the hottest languages. You should write server based apps in lots of languages. Don't look down on "scripting languages" which are more abstract/powerful.
- Open source is big.
- Linux will never be a factor on desktop. (Paul cowers) The world has done design for you. Linux will be on servers for sure. Buy Apple stock. hackers are a leading indicator of what ppl will be using in the future. (Audience was 40% - 50% Macs)
- Everybody wants iPhones. Good for browsing the web. Problem for hackers because Apple are jerks. Android can't compete with iPhone. Apple cares about the iPhone the way Google cares about search.
- Design is something to bet on. China has made manufacturing a commodity. Design is software winning over hardware.
- Real-time is not bogus in the way "Web 2.0" was. Something definite going on, it's the computing equivalent from the change in going from dial-up to cable internet. Protocols may go real-time.
- Google Wave is going to be important. (Whoops)
- Venture funding is not going to go away because VCs need you. They may not have the upper hand they've had in the past. Will give people money on better terms.
- Founders will more and more have the upper hand. Investors are learning it does not work to fire founders. Really matters who the founders are. Technical founders more and more important. Programmers can learn to do business.
- It's a lot easier for hackers to learn business than business men to hack.
http://www.markfulton.com/2010/08/25/paul-graham-on-the-futu...
It's going to be important in the way Lisp and Smalltalk are important. Many of the key ideas will find their way into other things which will be less pure, still powerful, and a lot more popular.
Is the fancy Wave stuff cool for hackers? Maybe. Is it good in a product? No. I'd go far as to say Wave is to Fridge as Linux is to OS X -- Wave might be important, but not in actually using it :)
I actually use it though. I brew beer, and I use it to store and share my beer brewing recipes. It has the property of being both a document that I can edit and a record of when I brewed the beer. There are no plugins supporting this yet, but I want to write some that do calculations within the wave. There are currently better apps for beer recipes (Beersmith, BeerAlchemy, etc) but I can imagine free Wave plugins taking over that space.
So what is it -- why do people think Wave is irrelevant? Do they have no imagination for how Wave could start to dominate collaboration with a few cheap-to-develop apps? Was Wave excessively hyped before it developed the features needed to support the needs of the masses?
Wait. Isn't Ubuntu just a Linux distro? Well, that depends on how you look at it.
Is FreeBSD a factor on the desktop? OS X is based on FreeBSD, but no one thinks of FreeBSD as "a competitor to windows", or "a user friendly OS".
Of course, Ubuntu to Linux is not really like OS X is to FreeBSD. Ubuntu didn't invent a new desktop, it's based on Debian and it uses GNOME (or Xfce or KDE). But there's still a point to make here.
While the open source community as a whole might fail at designing a great desktop experience, this limitation doesn't necessarily apply to Ubuntu. The design efforts there are lead by Canonical, and it's not horribly fragmented. It has so far produced some pretty decent results. See https://wiki.ubuntu.com/SoftwareCenter and https://wiki.ubuntu.com/NotifyOSD as examples.
The desktop as a whole is not quite there yet, but it does stand a good chance, and it's already making a lot of strides.
Linux on the desktop has arrived, I thought. But I'll wait one more iteration before recommending it to my clients.
Dapper (2006) came and broke lots of things. Months later, all is well, mostly.
Once bitten, I didn't upgrade until Heron (2008) was released, and when I upgraded I did so one version behind, to Gutsy (2007); thinking that it should be stable.
Many things worked, but some, like video drivers and wireless networking, didn't. They'd been working fine since Badger.
By Jaunty (start 2009) everything was working. I still have this machine on Jaunty and no way am I upgrading it. It has some weird video behaviours, but Ubuntu has never bedded these down; it's always a bit of a lottery.
2010, I bought a new laptop (Sony Vaio). I loaded Lucid (2010 Long term support version) and I can't tell you issues it has. There is a dedicated group for resolving the issues. When I plug in the USB soundcard I use on the aforementioned machine -- it's playing now -- a card that has worked since Badger, the machine locks solid; it needs a power-down to restart it.
This is not an uncommmon story when dealing with Ubuntu. This and the vagaries of Shuttleworth. As he says, "This is not a democracy".
Ubuntu, like all things, is great when it works, but is constant shifting sand under your feet. And stability -- on the same machine, same OS -- is fundamental, imo. Ubuntu doesn't have this, and history has shown me that it is unlikely too. I've chosen to move away because of this.
Personally I've had less compatibility problems with Ubuntu than with Windows, but I don't expect everyone else to be the same.
That music start-up might have a chance in China, since they are not going to enforce foreign copyright, especially if they grease the party a bit.
I'm interested in what PG has to say, but I really can't spare an hour to watch the video.
Perhaps there would be IP problems though...
Is there a market for letting individuals deliver packages instead of FedEx/DHL?
Perhaps with the private wind mills/solar cells that are becoming more common, something that helps the owner sell electricity to their neighbors.
I can see it now - you sign up and log where/when you're going, and how much space you have to take packages/letters with you. Some algorithm matches your as a courier up with people who need stuff taken where you're going.
The service is free if you act as the courier (...or mule, I can totally see that being misused rapidly).
I don't know how you get around the depot and 'guy who goes door to door' model though.
For some reason, "The Fridge" came to mind when I heard him mention restrictions of information flow. Can someone comment on how The Fridge does or does not fit this description.
PG was wrong when it said Apple are jerks about it. The process is certainly slower than one would like but nearly all apps get approved. It's just an extremely noisy minority that are incorrectly setting people's perception.
Because seriously, those guys are just unbelievable
http://pwpwp.blogspot.com/2010/08/paul-graham-on-trends-for-...
I wouldn't bet on copyright either, but isn't that at odds with selling software?
It doesn't apply to web apps, but it sure applies to other kinds of apps, like mobile device apps (which YC occasionally funds). On the iPhone it's not a big problem because the device is so severely restricted. But what about the Android platform? I hear copying is easier over there.
Fundamentally, the only way to make money from software is to restrict something against non-paying users. Traditionally, companies restrict using the software. With web apps, the software is not what you sell, but rather you sell the service (the user doesn't even have a copy of the software).
Open Source is also at odds with that, because the whole idea of Free Software is to not impose any artificial restrictions on the usage of software.
The only companies I've heard of that go too far with Open Source are Red Hat and Canonical.
What most people nowadays tend to do is "open core". They open source certain libraries and infrastructure, but not the whole thing. That's not necessarily a bad thing, and it might actually be the balance that's needed between open source and (traditional) commercial software.