#277 Paul Graham's Essays Part 3

What I learned from reading Hackers and Painters: Big Ideas From The Computer Age by Paul Graham ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- [4:00] How To Make Wealth by Paul Graham [4:01] Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn't need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn't matter how much money you had.[6:00] All a company is is a group of people working together to do something people want. [7:00] It turns out, though, that there are economies of scale in how much of your life you devote to your work. In the right kind of business, someone who really devoted himself to work could generate ten or even a hundred times as much wealth as an average employee. [8:00] And the people you work with had better be good, because it's their work that yours is going to be averaged with. [9:00] In the Company of Giants: Candid Conversations With the Visionaries of the Digital World by Rama Dev Jager and Rafael Ortiz. (Founders #208) [10:00] A very able person who does care about money will ordinarily do better to go off and work with a small group of peers. [10:00] Paul Graham’s Essays (Founders #275) [11:00] What is technology? It's technique. It's the way we all do things. [12:00] Sam Walton got rich not by being a retailer, but by designing a new kind of store. [12:00] Sam Walton epiosdes #150 Sam Walton: The Inside Story of America's Richest Man by Vance H. Trimble. #234 Sam Walton: Made In America by Sam Walton. [13:00] Use difficulty as a guide not just in selecting the overall aim of your company, but also at decision points along the way. At Viaweb one of our rules of thumb was run upstairs. Suppose you are a little, nimble guy being chased by a big, fat, bully. You open a door and find yourself in a staircase. Do you go up or down? I say up. The bully can probably run downstairs as fast as you can. Going upstairs his bulk will be more of a disadvantage. Running upstairs is hard for you but even harder for him. [14:00] So few businesses really pay attention to making customers happy. [15:00] What people will give you money for depends on them, not you. [16:00] Hackers and Painters by Paul Graham [20:00] The other way makers learn is from examples. For a painter, a museum is a reference library of techniques. For hundreds of years it has been part of the traditional education of painters to copy the works of the great masters, because copying forces you to look closely at the way a painting is made. [21:00] Relentelssness wins. A great product has to be better than it has to be. [21:00] Relentlessness Wins: Many painters might have thought, this is just something to put in the background to frame her head. No one will look that closely at it. Not Leonardo. How hard he worked on part of a painting didn't depend at all on how closely he expected anyone to look at it. He was like Michael Jordan. Relentless. Relentlessness wins because, in the aggregate, unseen details become visible. [22:00] All those unseen details combine to produce something that's just stunning, like a thousand barely audible voices all singing in tune. [24:00] The right way to collaborate, I think, is to divide projects into sharply defined modules, each with a definite owner, and with interfaces between them that are as carefully designed and, if possible, as articulated as programming languages. [25:00] It turns out that looking at things from other people's point of view is practically the secret of success. [25:00] You only get one life. You might as well spend it working on something great. [26:00] The Other Road Ahead by Paul Graham [26:00] Subscribe to listen to Founders Daily (my new daily podcast) [29:00] Use your product yourself all the time. [29:00] Mind The Gap by Paul Graham [29:00] When people care enough about something to do it well, those who do it best tend to be far better than everyone else. There's a huge gap between Leonardo da Vinci and second-rate contemporaries. [32:00] Technology will certainly increase the gap between the productive and the unproductive. [33:00] So we should expect to see ever-increasing variation in individual productivity as time goes on. [34:00] Paul Graham’s answer to how big of a difference can a single developer or a small team make? The answer is increasingly much. Increasingly much. Achrimedes said if he had a lever long enough he could move the world. Well nowawadys from your bedroom —thanks to all the infrastucture that exists — a combination of open source and services like AWS — the lever is enourmoulsy long. You could be sitting in your bedroom programming … a single person … and if you make something that people like and is novel it can really have a huge effect. That is very exiciting. You guys may take this for granted but anybody who is as old as me realizes how that was not the case 20 years ago. It will be interesting to see how far it goes because it is certainly not over yet. (How far can it go?) Always further than people expect. [37:00] Beating The Averages by Paul Graham [37:00] Paul Graham on Econtalk: I found that the interesting parts of programming you can’t make scientific. [Startups are the same.] What makes a programmer good at programming is more like what makes a painter good at painting. It is something a little less organized. It is taste. A sense of design. A certain knack. [40:00] In business, there is nothing more valuable than a technical advantage your competitors don't understand. [40:00] A startup should give its competitors as little information as possible. [41:00] Taste For Makers by Paul Graham [42:00] Whatever job people do, they naturally want to do better. [43:00] It's surprising how much different fields' ideas of beauty have in common. The same principles of good design crop up again and again. [44:00] If something is ugly, it can't be the best solution. [46:00] In most fields the appearance of ease seems to come with practice. Perhaps what practice does is train your unconscious mind to handle tasks that used to require conscious thought. [48:00] "It is my opinion," Ferrari once wrote, "that there are innate gifts that are a peculiarity of certain regions and that, transferred into industry, these propensities may at times acquire an exceptional importance... In Modena, where I was born and set up my own works, there is a species of psychosis for racing cars." — Go Like Hell: Ford, Ferrari, and Their Battle for Speed and Glory at Le Mans by A. J. Baime. (Founders #97) [50:00] The recipe for great work is: very exacting taste, plus the ability to gratify it. ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  How to make wealth. There are a lot of ways to get rich, and this essay is about only one of them. This essay is about how to make money by creating wealth and getting paid for it. The advantage of creating wealth as a way to get rich is that it's more straightforward. You just have to do something that people want. Money is not wealth. This paragraph is key to understanding this entire essay. Wealth is the stuff we want. Food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car, or cook you dinner, or do anything else that you wanted, you wouldn't need money. Whereas if you were in the middle of Antarctica, where there's nothing to buy,

• 0:46David Senra?

  it wouldn't matter how much money you had. Wealth is what you want, not money. But if wealth is the most important thing, why does everyone talk about making money? It is a kind of shorthand. Money is a way of moving wealth, and in practice, they are usually interchangeable, but they are not the same thing. The people most likely to grasp that wealth can be created are the ones who are good at making things, the craftsmen. Their handmade objects become store-bought ones. But with the rise of industrialization, there are fewer and fewer craftsmen. One of the biggest remaining groups is computer programmers. A programmer can sit down in front of a computer and create wealth. A good piece of software is, in itself, a valuable thing.

• 1:30David Senra?

  Programmers literally think the product, one line at a time. It's also obvious to programmers that there are huge variations in the rate at which wealth is created. At ViaWeb, which was Paul's startup that he sold to Yahoo, at ViaWeb, we had one programmer who was a sort of monster of productivity. I remember watching what he did one long day and estimating that he had added several hundred thousand dollars to the market value of the company. A great programmer could create a million dollars' worth of wealth in a couple of weeks. A mediocre programmer, over the same period, will generate zero or even negative wealth. Steve Jobs repeated a variation of this idea his entire career. "You must find extraordinary people," is what he would repeat over and over again.

• 2:14David Senra?

  Wealth is whatever people want. That is a concise description of this essay. Wealth is whatever people want. Think about this Y Combinator's motto, which Paul is going to found. I think the year after, or a few months after this essay is written, Y Combinator's motto, "Make something people want." When Paul wrote that wealth is whatever people want, YC was not founded yet, but you could see the thinking behind it was there. The way most companies make money is by creating wealth. Nearly all companies exist to do something people want. A more direct way to put it would be, you need to start doing something people want. You don't need to join a company to do that. All a company is, is a group of people working together to do something people want, which is also why there's always limitless opportunities,

• 2:59David Senra?

  because people always want new things. A way to think about this is, my favorite quote on this is from Richard Branson, "A business is just an idea that is going to make other people's lives better." Now he gets to the part of the essay on working harder, which is something that he references a lot in a bunch of his essays. It turns out that there are economies of scale on how much of your life you devote to your work. In the right kind of business, someone who really devoted himself to work could generate 10 or even 100 times as much wealth as an average employee. He started this essay that if you wanted to get rich, how would you do it? And he says, "I think your best bet would be to start or join a startup." That's the very first sentence. This is a couple pages later, and we're seeing why. Main theme, it's really hard to generate wealth inside of large companies. Companies are not set up to reward people who want to do this,

• 3:43David Senra?

  meaning work 10 or even 100 times harder. Companies are not set up to reward people who want to do this. You can't go to your boss and say, "I'd like to start working 10 times as hard, so will you please pay me 10 times as much?" And one of the reasons Paul says that it's hard to do inside of large companies is the lack of measurement and leverage. He says, "To get rich, you have to have leverage." He's not talking about financial leverage, by the way. "To get rich, you have to have leverage, in the sense that the decisions you make have a big effect." If you're in a job that feels safe, you're not going to get rich, because if there's no danger, there's almost certainly no leverage. And then he goes into smallness equals measurement. That's the second part of this. You can measure the value of the work done by small groups. The opposite of this is why it's hard to generate personal wealth inside of a large

• 4:28David Senra?

  company. Starting or joining a startup is thus as close as most people can get to saying to one's boss, "I want to work 10 times as hard, so please pay me 10 times as much." There are two differences. You're not saying it to your boss, but directly to the customers, for whom your boss is only a proxy after all, and you're not doing it individually, but along with a small group of other ambitious people. And this line is so fantastic. "The people you work with had better be good because it's their work that yours is going to get averaged with." That is why all of history's greatest founders, including Steve Jobs, say you must find extraordinary people to work with. In fact, you might remember this from episode 208, where this interview of Steve Jobs is being done in 1997, and he says that the founder's most important job, he said recruiting,

• 5:13David Senra?

  is the founder's most important job. Back to the essay. Extra motivation comes from being in a small group. By selecting that small of a group, you can get the best rowers. Each one will be in the top 1%. That is the real point of startups. You are getting together with a group of other people who also want to work a lot harder and get paid a lot more than they would in a big company. A startup is not merely 10 people, but 10 people like you. Steve Jobs once said that the success or failure of a startup depends on the first 10 employees. I agree. I'm pretty sure Paul's referencing that same interview that I covered in the book In the Company of Giants back on episode 208. So let me just repeat that real quick. Steve Jobs once said that the success or failure of a startup depends on the first 10 employees.

• 5:58David Senra?

  I agree. "A very able person who does care about money will ordinarily do better to go off and work with a small group of peers." That's a really important part on 275, which is the first episode I did on Paul Graham, when I shared what he would do if he was starting a company now. That part really resonated. I had a ton of people share it publicly on social media, but also send me private messages about hearing that. And he says, I'm just going to read the second part of it real quick. He says, "At every point in the company's growth, I'd keep the company as small as I could." I'd always want people to be surprised by how few employees we had. Fewer employees equal lower costs and less need to turn into a manager. This is the most important point, though.

• 6:39David Senra?

  His punchline here, he says, "When I say small, I mean small in employees, not revenue." That is very important. He's writing that tweet, I think, 15 years, maybe even close to 20 years, no, about 15 years, after he's writing what he's writing in this essay. This is something you and I talk about over and over again, that the people building these companies, they don't have 20 things or 100 things that they want you to remember. They have a handful of core principles that they repeat decade over decade. And we see that here. "A very able person who does care about money will ordinarily do better to go off and work with a small group of peers." Then he gets into the point of what he means about leverage. For him, technology equals leverage. This is another very important line. What is technology? It's technique.

• 7:23David Senra?

  It's the way we do, we all do things. And when you discover a new way to do things, its value is multiplied by all the people who use it. And he goes into that this is the domain of small companies, right? Small companies are more at home in this world because they don't have layers of bureaucracy to slow them down. Also, technical advances tend to come from unorthodox approaches, and small companies are less constrained by convention. And I love what he does here. He ties this into, "No one thinks of Walmart as a technology company," but he makes the point. "Sam Walton got rich not by being a retailer, but by designing a new kind of store." Go back to the previous page. What is technology? It's a technique. It's the way we all do things. A few paragraphs later, he ties it in.

• 8:08David Senra?

  "Sam Walton, the founder of Walmart, to no one thinks of Walmart as a technology company. Sam Walton got rich not by being a retailer, but by designing a new kind of store." Episode 150 and episode 234, if you don't know what Paul Graham is talking about, you will see Sam Walton experiment decade after decade of trying to find a new kind of store and then stumbling onto this idea. It's like, oh, there's a ton of business out there in all these little, small rural towns that all the other big retailers ignored. And if you can offer the lowest prices, these people will drive far distances just to save money. It is also a good idea to go and read about the opening of the first Walmart store. The idea that's going to generate in the future one of the largest fortunes that a family's ever made in the history of humanity starts off with donkey crap and exploding watermelons.

• 8:54David Senra?

  That is not hyperbole. That actually happened. Back to this essay. His idea, very next paragraph, he talks about that. One of my favorite ideas that I've learned from him, again, taking a very complex idea and breaking it down to the aphorism level, "run upstairs," which means the harder something is to do, the less competition you're going to have. So Paul writes, "Use difficulty as a guide, not just in selecting the overall aim of your company, but also at decision points along the way. At ViaWeb, one of our rules of thumb was 'run upstairs.' Suppose you're a little nimble guy being chased by a big fat bully. You open a door and find yourself in a staircase. Do you go up or down? I say up. The bully can probably run downstairs as fast as you can. Going upstairs, his bulk will be even more of a disadvantage.

• 9:36David Senra?

  Running upstairs is hard for you, but even harder for him. What this meant in practice was that we deliberately sought hard problems. If there were two features we could add to our software, both equally valuable in proportion to their difficulty, we would always take the harder one, not just because it was more valuable, but because it was harder. We delighted in forcing bigger, slower competitors to follow us over difficult ground." Venture capitalists know about this and have a phrase for it: barriers to entry. If you go to a VC with a new idea and ask him to invest in it, one of the first things he'll ask is, "How hard would this be for someone else to develop?" Now he gets to the point of, "What's the catch? There is a large random multiplier in the success of any company.

• 10:20David Senra?

  Most startups tank. It's common for a startup to be developing a genuinely good product, takes slightly too long to do it, run out of money, and have to shut down." And I think this is a good line to end the essay part before I get to the footnotes. The ball you need to keep your eye on here is the underlying principle that wealth is what people want. So few businesses really pay attention to making customers happy.

• 10:44David Senra?

  And just two things in the footnote. This last sentence I'll get to in one second is a really good point at the very end of this paragraph. There are many senses of the word wealth, not all of them material. I'm not trying to make a deep philosophical point here about which is the true kind. I'm writing about one specific, rather technical sense of the word wealth. What people will give you money for. This is an interesting sort of wealth to study because it's a kind that prevents you from starving. This is a fantastic sentence that I double underlined that ends it. And what people will give you money for depends on them, not you. And then I'll end this essay on really just good life advice from Paul. This is more on his idea of running upstairs, on doing something difficult intentionally. This is a good plan for life in general.

• 11:28David Senra?

  If you have two choices, choose the harder. If you're trying to decide whether to go out running or sit home and watch TV, go running. Probably the reason this trick works so well is that when you have two choices and one is harder, the only reason you're even considering the other is laziness. You know in the back of your mind, what's the right thing to do? And this trick merely forces you to acknowledge it. So there's an excerpt from the book I'm going to talk to you about today, which is a collection of Paul Graham's essays. It's called Hackers and Painters: Big Ideas from the Computer Age. Okay, so I want to start with the essay that the book is named after, which is Hackers and Painters. And I think the point of reading this essay, from my perspective, is Paul's trying to describe and really teach, like, it's learning how to make good things.

• 12:12David Senra?

  So he says, "When I finished grad school in computer science, I went to art school to study painting. A lot of people seem surprised that someone interested in computers would also be interested in painting. They seem to think that hacking and painting were very different kinds of work." Then he goes into his main theme here. "Hacking and painting have a lot in common. In fact, of all the different types of people I've known, hackers and painters are among the most alike. What hackers and painters have in common is that they're both makers. What hackers and painters are trying to do is make good things." And so that ties together with his other essay, How to Make Wealth. If you can learn to make good things that people want, that is how you build wealth. And then what I found so interesting about the next section, he's talking about the fact that both hackers and painters learn by doing.

• 12:57David Senra?

  And I wrote, "This is similar to his perspective on how to build a company." "I was taught in college that one ought to figure out a program completely on paper before even going near a computer. I found that I did not program this way. I found that I liked to program sitting in front of a computer, not a piece of paper. Instead of patiently writing out a complete program and assuring myself it was correct, I tended to just spew out code that was hopelessly broken and then gradually beat it into shape. For a long time, I felt bad about this. If I had only looked over..." This is so, this is such a good point. "If I had only looked over at the other makers, the painters or the architects, I would have realized that there was a name for what I was doing: sketching.

• 13:39David Senra?

  You should figure out programs as you're writing them, just as writers and painters and architects do." And then he goes back to a very interesting thought about the edge that small companies have. And it's the edge of being able to make a truly great product. Only a small percentage of hackers can actually design software. And it's hard for people running a company to pick these out. So instead of entrusting the future of the software, of their software, to one brilliant hacker, most companies set things up so that it's designed by committee, and the hackers merely implement the design. If you want to make money at some point, remember this, because this is one of the reasons startups win. Big companies want to decrease the standard deviation of design outcomes because you want to avoid disasters." So essentially saying, "Hey, startups and small groups of people,

• 14:24David Senra?

  you're gonna have more tens, but you're also gonna have a lot more ones." As companies grow, they, they wanna get rid of these, what he calls oscillations. And so they're more comfortable with a bunch of fours, maybe four, like the four to six range, something like that, because they're worried about a disaster, right? So big companies want to decrease the standard deviation of design outcomes because they want to avoid disasters. But when you damp oscillations, you lose the high points as well as the low. This is not a problem for big companies because they don't win by making great products. Big companies win by sucking less than other big companies.

• 14:59David Senra?

  That's a very interesting point. And just one random paragraph in here for you. This is, he just mentions briefly what he looked for when he was interviewing people at his startup. At ViaWeb, when we interviewed programmers, the main thing we cared about was what kind of software they wrote in their spare time. You can't do anything really well unless you love it. And if you love to hack, you'll inevitably be working on projects of your own. And then he goes back into the importance of learning by doing. And really, the series of highlights I have here are on the magic of gradual refinement. One thing we can learn from the example of painting is how to learn how to hack. You learn to paint mostly by doing it. Ditto for hacking. You learn to hack mostly by hacking.

• 15:41David Senra?

  Because painters leave a trail of work behind them, you can watch them learn by doing. If you look at the work of a painter in chronological order, you'll find that each painting builds on things learned in previous ones. This is the same exact idea that you see when you read a biography of an entrepreneur. You'll find that each idea builds on things learned in previous ones. I just referenced Sam Walton is the clearest description of that. I think that's a really important idea because I think you and I also do this. Let me read, I'm gonna read this again. Because painters leave a trail of work behind them, you can watch them learn by doing. If you look at the work of a painter in chronological order, you'll find that each painting builds on things learned in previous ones. I think most makers work this way. And so that's the learning by doing part. Then he's saying, hey, you learn from other examples. Really, that's what Founders Podcast is for us.

• 16:25David Senra?

  That's what reading these books is, right? The other way makers learn is from examples. To a painter, a museum is a reference library of techniques. That's exactly what a biography of an entrepreneur is. For hundreds of years, it has been part of the traditional education of painters to copy the works of the great masters because copying forces you to look closely at the way a painting is made. This is such fantastic, such fantastic idea. Writers do this, too. Benjamin Franklin learned to write by summarizing the points in the essays of Addison and Steele and then trying to reproduce them. Hackers likewise can learn to program by looking at good programs, not just at what they do, but at the source code. Another example we can take from painting is the way that painters are created, or

• 17:07David Senra?

  excuse me, that paintings are created by gradual refinement. I think companies are created by gradual refinement as well. Now we get to my absolute favorite idea in this entire book. And it can be summarized in two words. Relentlessness wins. This sounds like a paradox, but a great painting has to be better than it has to be. So again, great painting, for our purposes, we're talking about a product, right? This sounds like a paradox, but a great product has to be better than it has to be. What the hell does that mean? For example, when Leonardo da Vinci painted the portrait of Ginevra da Benci, he put a juniper bush behind her head. In it, he carefully painted each individual leaf.

• 17:50David Senra?

  Many painters might have thought, this is just something to put in the background to frame her head. No one will look that closely at it. Not Leonardo. How hard he worked on part of a painting didn't depend at all on how closely he expected anyone to look at it. He was like Michael Jordan. Relentless. Relentlessness wins because in—oh my goodness gracious. This is just fantastic. Relentlessness wins because in the aggregate, unseen details become visible. When people walk by the portrait, their attention is often immediately arrested by it, even before they look at the label and notice that it says Leonardo da Vinci.

• 18:32David Senra?

  All those unseen details combined to produce something that's just stunning, like a thousand barely audible voices, all singing in tune. Great software likewise requires a—again, great products likewise, require a fanatical devotion to beauty. If you look inside good software—this is just like Steve Jobs talking about what he learned from his father, right? That you're not gonna put—when you're a carpenter, you're not gonna put a piece of crappy wood on the back of a dresser that you're making, even though no one's gonna see it. He also used the example of the other side of a fence, too. If you look inside good software, you'll find that parts no one is ever supposed to see are beautiful, too. When it comes to code, I behave in a way that would make me eligible for prescription drugs

• 19:16David Senra?

  if I approached everyday life the same way. And I think that what he's describing there at the very end is common to anybody that's capable of making a truly great product. Think about it, when it comes to code, for show in Paul's case, whatever you and I are building, right? I behave in a way that would make me eligible for prescription drugs if I approached everyday life the same way. Relentlessness wins because in the aggregate, unseen details become visible.

• 19:42David Senra?

  This is first on how to work well with other people. The example of painting can teach us not only how to manage our own work, but how to work together. A lot of the great art of the past is the work of multiple hands, though there may only be one name on the wall next to it in a museum. Leonardo was an apprentice in the workshop of some guy's name, I don't know how to pronounce, and painted one of the angels in this painting called Baptism of Christ. This sort of thing was the rule, not the exception. When painters work together on a painting, they never worked on the same parts. So again, he's really telling us how to work well with other people, okay? When painters work together on a painting, they never worked on the same parts. You never had one guy painting over the work of the other. I think this is the right model for collaboration in software, too. When a piece of code is being hacked by three or four different people, no one of whom really owns it,

• 20:27David Senra?

  it will end up being like a common room. The right way to collaborate, I think, is to divide projects into sharply defined modules, each with a definitive owner and with interfaces between them that are as carefully designed and, if possible, as articulated as programming languages. That's really good. I'm gonna read that again. "The right way to collaborate, I think, is to divide projects into sharply defined modules, each with a definitive owner and with interfaces between them that are as carefully designed and, if possible, as articulated as programming languages." Now, this is the customer-obsessed part. "Like painting, most software is intended for a human audience. You have to be able to see things from the user's point of view, from the customer's point of view.

• 21:11David Senra?

  It turns out that looking at things from other..." This is so good. "It turns out that looking at things from other people's point of view is practically the secret of success." And finally, I'll just end this essay, this part on this essay, with just one line. It's such a great line. I feel like I should put, like, print it out and paint it on the wall. "You only get one life. You might as well spend it working on something great." So then I just want to pull out a few highlights from this other essay. He wrote this back in September 2001. It's called "The Other Road Ahead." And I'm reading it to you because, one, I think the ideas are good. And, two, this is many years before he founded Y Combinator. And again, we see the prehistory.

• 21:52David Senra?

  What he just talked about is if you go and see a painter's, if you look at a painter's work in chronological order, you can see the gradual refinement, how one idea builds on another. You can see the same thing in writing, in Paul's writing. And so Paul writes, "There are only two things you have to know about business. Build something users love and make more than you spend." That made me think of one of my favorite quotes. I've read this on dozens of podcasts in the past, but it comes from Don Valentine, the founder of Sequoia. And he says, "There are two things in business that matter, and you can learn this in two minutes. High gross margins and cash flow. All companies that go out of business do so for the same reason. They run out of money." And so back to Paul.

• 22:34David Senra?

  "The less you spend, the easier it is to make more than you spend." I'm going to read something. If you have access to Founders Daily, this is episode 12 on Founders Daily, but it's from an essay that Paul wrote in 2008. And we're going to see the idea is very similar to what he's writing in the book that I'm holding in my hand. This essay was published in 2001. And so now this is from his essay, "Why to Start a Startup in a Bad Economy." It says, I'm reading directly from the podcast player. "If we have learned one thing from funding so many startups is that they succeed or fail based on the qualities of founders. The economy has some effects, certainly, but as a predictor of success, it's a rounding error compared to the founders, which means that what matters is who you are, not when you do it. If you're the right sort of person, you will win even in a bad economy.

• 23:19David Senra?

  If you're worried about threats to the survival of your company," this is one of my favorite parts. "If you're worried about threats to the survival of your company, don't look for them in the news. Look in the mirror. Fortunately, the way to make a startup recession-proof is to do exactly what you should do anyway. Run it as cheaply as possible. For years, I've been telling founders that the surest route to success is to be the cockroaches of the corporate world." What writing. That's such, because that, again... Great writing. Just, I always say like, reading a great book is like a movie for the mind. The words that are on the page are going to put an image, really great words on the page are going to put an image in your mind. And as soon as I read that, like, I see something in my mind, right? I've been telling founders for the surest route to success is to be the cockroaches of the corporate world.

• 24:01David Senra?

  The immediate cause of death in a startup is always running out of money, which is exactly what Don Valentine just told us. So the cheaper your company, this is the punchline here, so the cheaper your company is to operate, the harder it is to kill. So let's go back to this essay from the book, I'm holding my hand, "The less you spend, the easier it is to make more than you spend." As for building something users love, here's some general tips. Start by making something clean and simple that you would want to use yourself. The standard to compare your software to, and your product, right? The standard to compare your product to is what it could be, not what your current competitors happen to have. Use your software yourself all the time. Use your product yourself all the time. Okay, so I want to jump to Paul's essay, "Mind the Gap."

• 24:47David Senra?

  When people care enough about something to do it well, those who do it best tend to be far better than everyone else. There's a huge gap between Leonardo da Vinci and second-rate contemporaries. A top-ranked professional chess player could play 10,000 games against an ordinary club player without losing once. Like chess, or painting, or writing novels, making money is a very specialized skill. But for some reason, we treat this skill differently. You get paid by doing or making something people want. And those who make more money are often simply better at doing what people want. Steve Jobs saved a company that was in terminal decline.

• 25:29David Senra?

  The way I think about what Paul's about to get into right here is, Apple buys NeXT for what, 450 million, 500? I think it's 450 million, let's just say 500 million. They paid half a billion dollars essentially to rehire Steve Jobs, and it was the bargain of the century. Steve Jobs saved a company that was in terminal decline, and not merely in the way a turnaround specialist does, by cutting costs. He had to decide what Apple's next product should be. Few other people could have done it. It may seem unlikely in principle that one individual could really generate so much more wealth than another. What would Apple's next product look like if you replace Steve Jobs with a committee of 100 random people?

• 26:11David Senra?

  These things don't scale linearly, which is also probably why we don't understand them intuitively. Then he gets into the fact that people, you know, complain about, oh, this, this profession gets paid so much more than the other profession. And Paul's point is that in a free market, prices are determined by what buyers want. People like baseball more than poetry, so baseball players make more than poets. To say that a certain kind of work is underpaid is thus identical with saying that people want the wrong thing. So that was an interesting point. My interpretation for myself, the note I left for myself on this page is this means you should find the intersection of what you're good at and what people want. And then he spent some time writing about, you know, most people think, there's a lot of people that think, maybe not most people, a lot of people think that the amount of wealth in the world, it's like a pie, it's like static.

• 26:56David Senra?

  And as we know from Paul writing in his other essays, that's not true. You can actually create wealth, and you create wealth by making things that other people want, thus increasing the size of the pie. Steve Jobs and Steve Wozniak didn't have to make us poor to make themselves rich. Quite the opposite. They created things that made our lives materially richer. And I don't think he says it explicitly in this essay, but implicitly, it's like, well, technology is just going to lead to a more, an ever-increasing variance in the amount of productivity that one person can have, and therefore, an ever-increasing variance in the amount of wealth that one person has and one person doesn't. And so if you have this entire society that thinks that people only get wealthy by stealing or taking from other people, like, for example, Steve Jobs is getting richer, so therefore somebody else must be getting poorer.

• 27:40David Senra?

  If society doesn't catch up to understanding that wealth is not finite and something that should be growing over time, it could lead to a lot of, you know, social unrest and cultural issues. And so he goes back to this main theme that technology is leverage. Remember, he's writing this essay in 2004. This has only, you know, increased, has increased even more so in our time, and it looks like, you know, will continue unabated. And so this section is called "The Lever of Technology." Will technology increase, increase the gap between the rich and the poor? It will certainly increase the gap between the productive and the unproductive. That is the whole point of technology. With a tractor, a farmer could plow six times as much land in a day as he could with a team of horses, but only if he mastered a new kind of farming.

• 28:22David Senra?

  That is a very excellent point about the value of learning about and then using technology and that most people won't, actually. If you take two farmers that have both spent their entire lives... Plowing their field with a team of horses, the one that is reluctant to change, the one that is reluctant to learn about new technology is going to be left in the dust by the other one that isn't. So with a tractor, a farmer could plow six times as much land in a day as he could with a team of horses, but only if he mastered a new kind of farming. I've seen the lever of technology grow visibly in my own time. In high school, I made money by mowing lawns and scooping ice cream at Baskin Robbins. This was the only kind of work available at the time. Now, high school kids could write software or design websites, but only some of them will. The rest will still be scooping ice cream. That's another great point.

• 29:07David Senra?

  I remember very vividly when in 1985, when in 1985, improved technology made it possible for me to buy a computer of my own. Within months, I was using it to make money as a freelance programmer. A few years before, I couldn't have done this. A few years before, there was no such thing as a freelance programmer. That was a great illustration of his main idea that more wealth can always be created. No one is getting poorer because Paul Graham is sitting there now making money as a freelance programmer in 1985, but he is getting wealthier. And then to wrap this section up with a fantastic line, and I'm betting everything I have on this idea being accurate. So we should expect to see ever increasing variation in individual productivity as time goes on.

• 29:51David Senra?

  This is an idea that I've just been absolutely obsessed with for many, many years. It's how big a difference can a single person or a small team make? In fact, there's a video saved on my phone. I recorded the video on September 29, 2018, and I cannot find the video that I was making a recording of a screen, which is really funny, like filming my computer with my phone. But it's actually Paul Graham onstage. He's at this thing. I zoomed in on his badge. It's something called the Cloudent Con. So the Cloudent Conference. He's wearing a navy blue sweater. If anybody can find this video for me. And I think he's being interviewed by the founder of Cloudent, and the founder asked him this question. How big a difference can a single developer or a small team make? And he says the answer is increasingly much. Increasingly much.

• 30:36David Senra?

  Remember, he's saying this in 2018. It's really what he's writing, a variation of the idea that he's writing all the way back in 2004, that, hey, we should expect to see ever increasing variation in individual productivity as time goes on because the lever of technology is going to keep increasing, right? So it says. The answer is increasingly much, increasingly much. Archimedes said if he had a lever long enough, he could move the world. Well nowadays, from your bedroom, thanks to all the infrastructure that exists, a combination of open source and services like ADWS and the like, the lever is enormously long. You could be sitting in your bedroom, programming, a single person. And if you make something that people like and is novel, it can have a really huge effect. That is very exciting. You guys may take this for granted, but anybody who is old as me realizes that was not the case 20 years ago.

• 31:18David Senra?

  It will be interesting to see how far it goes, because it is certainly not over yet. And then he's asked a follow-up question. How far can it go? And his answer gives me goosebumps. Always further than people expect. And then before I leave this essay, I just gotta point, bring something to your attention. Paul is constantly putting what he's talking about in a historical context. He's like, the key for societies, for countries, is founders, the people that have founder mentality, they're gonna go build wealth. They will make our societies richer. But the only way they'll make our societies richer, if you let them keep a percentage of the wealth that they create. And then he says, a lot of countries in history make the mistake where they turn this off.

• 32:03David Senra?

  They don't let people with like founder mentality, people trying to build new companies, new forms of wealth, keep the fruits of their labor. And when they try to decrease the variance in economic out, like this person has too much wealth compared to the average person, the end result is making everybody poor. So he says, "At various times and places in history, whether you could accumulate a fortune by creating wealth, had been turned on and off." This is fantastic. Northern Italy in 800, off. Northern Italy in 1100, on. Central France in 1100, off. England in 1800, on. England in 1974, off. I didn't know what he was talking about here. And then he puts it into parentheses, which is fantastic. So in England, 1800, you get to keep your wealth, it's on.

• 32:48David Senra?

  England in 1974, it's off, because they give a 98% tax on investment income. That's crazy. United States in 1974, on. We've even had a twin study. West Germany, on. East Germany, off. In every case, their creation of wealth seems to appear and disappear, that's a really important point, like the noise of a fan as you switch on and off the prospect of keeping it. And he's got a fantastic way to distill the ideas he's talking about. If you let Henry Ford get rich, he'll make you a tractor to replace your horse. So before I jump into this next essay, which is called "Beating the Averages", I want to read, I have notes on this podcast Paul was on back in 2009. It's an episode of this podcast called Econ Talk.

• 33:33David Senra?

  The name of, the title of the episode is "Program on Startups: Innovation and Creativity", but there's a quote he mentions on hackers and painters that I think related to, is going to relate to this essay and the next essay I'm going to share with you. And this is what Paul said. He says, "I found that the interesting parts of programming, you can't make scientific. Startups are the same. What makes a programmer good at programming is more like what makes a painter good at painting. It is something a little less organized. It is taste, a sense of design, a certain knack." And so I just want to pull out a few random ideas from this essay called "Beating the Averages". So the first idea is thinking of ideas as tools. If a painter were offered a brush that would make him a better painter, it seems to me that he would want to use it in all of his paintings, wouldn't he?

• 34:16David Senra?

  The second idea is aiming for monopoly, or really, when you think about it, what he was referencing earlier, you should have a barrier to entry in what you're doing. If what you're doing is easy to copy, a lot of people are going to copy it. And then the best businesses are very hard to copy. In later essays, he uses the example of Stripe and Airbnb to illustrate this point. And so he writes, "Software is a very competitive business prone to natural monopolies. A company that gets software written faster and better will, all other things being equal, put its competitors out of business." Paul writes a lot about the advantages that small teams and small companies have over larger ones, but there's also disadvantages. And one thing that startups cannot, or small companies cannot afford to do is not focus. And so he has this idea that you should ignore what other people are doing and consider only what will work best.

• 34:59David Senra?

  In a big company, you can do what all the other big companies are doing, but a startup can't do what all other startups do. I don't think a lot of people realize this, even in startups. Then he goes into the fact that a small company can actually succeed by only, they actually only need to be good at one thing. "When we started ViaWeb, we had no experience in business. We didn't know anything about marketing, or hiring people, or raising money, or getting customers. Neither of us even, ever even had what you'd call a real job. The only thing we were good at was writing software, and we hoped that would save us." And he talked about some other good ideas they did when he was building a startup. One, they focused on speed. Our development cycle was so fast that we could sometimes duplicate a new feature within a day or two of a competitor announcing it in a press release. And he said a key to that was they had a technical advantage.

• 35:44David Senra?

  He talks a lot about this book, in this book about programming languages. I've omitted this. He felt that the fact that they used this, I guess, unknown, but really advanced programming language called Lisp was a massive advantage to ViaWeb. He says, "In business, there is nothing more valuable than a technical advantage your competitors don't understand." Let me read that again. "In business, there's nothing more valuable than a technical advantage your competitors don't understand." He thought Lisp was that for them. And we see an idea that you and I have talked about over and over again. Bad boys move in silence. For hundreds of years of the history of entrepreneurship, we see people, they have an edge and they shut up about it. I never said anything publicly about Lisp while we were working on ViaWeb. This was no accident.

• 36:28David Senra?

  A startup should give its competitors as little information as possible. Okay, so now I want to jump to Paul's essay called Taste for Makers. He says, "I was talking recently to a friend who teaches at MIT. His field is hot now." He's writing this back in 2002. "His field is hot now, and every year he is inundated by applications from would-be graduate students. A lot of them seem smart," he said. "What I can't tell is whether they have any kind of taste." Taste. You don't hear that word much now. And yet, we still need the underlying concept, whatever we call it. What my friend meant was that he wanted students who were not just good technicians, but who could also use their technical knowledge to design beautiful things.

• 37:12David Senra?

  For those of us who design things, these are not just theoretical questions. We need good taste to make good things. Let's try considering it as a practical question. How do you make good stuff? So again, I think all this ties together, right? He says, "How do you know what to work on? Once you know what to work on, how do you make something great? Why is that important? Because when you make great things, or good things, that other people find valuable, that is how you build wealth." All of these ideas connect across multiple decades and, I don't know, 100 different essays. It's really remarkable, and I don't know if that would have clicked if I haven't spent the last few weeks not only reading through his entire website, but also picking up this book and reading this as well. So back to this idea of taste. Remember, this is Taste for Makers.

• 37:56David Senra?

  If you mention taste nowadays, a lot of people will tell you that, quote, "Taste is subjective." They believe this because it really feels that way to them. Saying that taste is just personal preference is a good way to prevent disputes. The trouble is, it's not true. You feel this when you start to design things. Whatever job people do, they naturally want to do it better. Football players like to win games. CEOs like to increase earnings. It's a matter of pride and a real pleasure to get better at your job, which is why I think people read essays like this, read biographies of people that have achieved great things. Whatever job people have, they naturally want to do better. As in any job, as you continue to design things, you'll get better at it. Your tastes will change.

• 38:38David Senra?

  And like anyone who gets better at their job, you'll know you're getting better. If so, your old tastes were not merely different, but worse. Poof, goes the axiom, "That taste can't be wrong." And so he talks about examining what other people learned about designing things in different domains, like the idea that a hacker can learn from a painter, just like a writer can learn from a hacker, or a founder can learn from a baseball player or a poet. And this is part of Paul's own personal curriculum, as he's gone and spent his entire life trying to learn and answer this question for himself. And his conclusion is exactly what I noticed by reading hundreds of biographies, which you and I talk about all the time. Once you start to examine the question, it's surprising how much different fields' ideas of beauty have in common.

• 39:22David Senra?

  The same principles of good design crop up again and again. And so the rest of the essay is, what is good design? And he has these headings, like, "Good design is simple." "Good design is timeless." And so I'm just going to read a couple of the highlights from that. "Good design is simple. You hear this from math to painting. Less is more. It means much the same thing in programming. In writing, it means, say what you mean and say it briefly. It seems strange to have to emphasize simplicity. You think simple would be the default, but something seems to come over people when they try to be creative. When you're forced to be simple, you're forced to face the real problem. When you can't deliver ornament, you have to deliver substance." Next one is "Good design is timeless." If something, this is such a great line that I've never heard before.

• 40:06David Senra?

  If something is ugly, it can't be the best solution. There must be a better one, and eventually, someone else will discover it. "Aiming at timelessness is a way to make yourself find the best answer." So, one of my favorite sayings, and something I don't even think I have any other good filter besides this, is that time is the best filter. Paul gets into that now. "Strangely enough, if you want to make something that will appeal to future generations, one way to do it is to try to appeal to past generations. If you can make something that appeals to people today and would also have appealed to people in the year 1500, there's a good chance that it will appeal to people in the year 2500." Next one is "Good design is suggestive." Jane Austen's novels contain almost no description.

• 40:49David Senra?

  Instead of telling you how everything looks, she tells her story so well that you envision the scene for yourself. Likewise, a painting that suggests is usually more engaging than one that tells. Everyone makes up their own story about the Mona Lisa. In software, it means that you should give users a few basic elements that they can combine as they wish, like Lego. Then he brings up a main theme that he repeats over and over again in different essays, different time periods, like the value in hard work. "Good design is hard. If you look at the people who've done great work, one thing they all seem to have in common is that they worked very hard. If you're not working hard, you're probably wasting your time. Hard problems call for great efforts. Good design looks easy."

• 41:33David Senra?

  Like great athletes, and I think these "good design is hard" and "good design looks easy", I think the ideas in both of these sections really relate to each other. "Like great athletes, great designers make it look easy. Mostly, this is an illusion. The easy conversational tone of good writing comes only on the eighth rewrite," what I jotted down to myself when I got to that part, something that I learned from Arnold Schwarzenegger that's really important, "everything is reps, reps, reps, reps." You're not going to pick up any of these books and see a founder, an entrepreneur, an athlete, an explorer, an artist, do their best work in year one, or two, or three. It is year after year after year, practice, practice, practice. Everything is reps, reps, reps. In most fields, the appearance of ease is exactly what I was saying here.

• 42:17David Senra?

  In most fields, the appearance of ease seems to come with practice. Perhaps what, I love that word. Perhaps what practice does is train your unconscious mind to handle tasks that used to require conscious thought. This one was very interesting. Good design resembles nature. This is going to be, this is something that the founder of Visa, D. Hawk, I covered him back on episode 260, talked about over and over again. He spent a lot of time in nature. He had a lot of ideas on how to build his business by observing how things work in nature. Paul Graham writes, "Good design resembles nature." Nature, and this is why, nature has had a long time to work on the problem. So it's a good sign when your answer resembles nature's. Next one, good design is redesign. It's rare to get things right the first time.

• 43:02David Senra?

  Experts expect to throw away some early work. They plan for plans to change. It takes confidence to throw work away. You have to be able to think, there's more where this came from. Mistakes are natural. Instead of treating them as disasters, make them easy to acknowledge and easy to fix. Leonardo da Vinci more or less invented the sketch as a way to make drawing bear a greater weight of exploration. And then, good design can copy. Attitudes to copying often make a round trip. A novice imitates without knowing it. Next, he tries consciously to be original. Finally, this is, this is excellent. Finally, he decides it's more important to be right than original. The ambitious are not content to imitate.

• 43:45David Senra?

  The second phase in the growth of taste is a conscious attempt at originality. I think the greatest masters go on to achieve a kind of selflessness. They just want to get the right answer. And if part of the right answer has already been discovered by someone else, that's no reason not to use it. They're confident enough to take from anyone without feeling that their own vision will be lost in the process. And then, "Good design happens in chunks." So, he's gonna talk about actual, physical places. I'm gonna read from this book, Go Like Hell. I think I covered it back on Founder's Number 97. Enzo Ferrari came to the exact same conclusion that Paul Graham is... This section in the essay. Enzo said, "It is my opinion that there are innate gifts

• 44:30David Senra?

  that are a peculiarity of certain regions, and that transferred into industry, these propensities may at times acquire an exceptional importance." "In Modena, where I was born and set up my own works," meaning his own company, "there is a species of psychosis for racing cars." Back to Paul Graham. "Good design happens in chunks." Something was happening in Florence in the 15th century, and it can't have been genetic, because it isn't happening now. Nothing is more powerful... This is, again, I feel, the main... Another main theme about the importance of having ambitious people, like, know each other, to be around each other. I think I talked about this in both the last two episodes of Paul Graham. He's saying it again here. "Nothing is more powerful than a community of talented people working on related problems."

• 45:14David Senra?

  "Great work still comes disproportionately from a few hotspots." And then, I absolutely love how he ends this. He talks about that great work, good design, usually comes... Starts with somebody saying, "Hey, I could do better than that." "In practice, it is easier to see ugliness than to imagine beauty." "Most of the people who've made beautiful things seem to have done it by fixing something that they thought ugly." Remember, that's not just an appearance. What did Steve Jobs say? "Design is how it works." People think it's how it looks. It's like, no, it's how it works. So, you could apply this to a product you're building, an industry. You just see something, it's like, this isn't quite right. "In practice, I think it's easier to see ugliness than to imagine beauty." "Most of the people who've made beautiful things seem to have done it by fixing something they thought ugly." "Great work usually seems to happen,

• 45:57David Senra?

  because someone sees something and thinks, 'I could do better than that.'" "Intolerance for ugliness is not in itself enough." "You have to understand a field well before you develop a good nose for what needs fixing." Another important point. "You have to do your homework." And this is the absolute perfect sentence to end on. I love this. "The recipe for great work is: very exacting taste, plus the ability to gratify it."

• 46:29David Senra?

  And that is where I'll leave it for the full story. Highly recommend buying the book. You can read the essays for free online, but it's so nice having some of them in book form. And I hope some publishing helps. One day, Prince, all of his, all of Paul's essays, you know, probably have to be a multi, multi-book series, but I would love to own them in, you know, physical book form. So if you are going to pick up the book, it'd be helpful if you use the link that's in the show notes, available on your podcast player and also available at founderspodcast.com. You'll be supporting the podcast at the same time. I have already been inputting a bunch of the highlights, not only from Paul's essays, but also from this book into my Readwise. The past few weeks, Readwise has already started reminding me a lot of the highlights that I previously read. I think it's a super valuable tool.

• 47:13David Senra?

  It's my favorite app that I pay for, and I could not make the podcast without it. If you read a lot and you want to remember what you read and you want to use the same app that I do, you can go to readwise.io/founders and you can try it for 60 days for free and see if you like it as much as I do. That is 277 books down, 1,000 to go, and I'll talk to you again soon.