Paul Graham - The Record Label Executive(maximusklein.com)
maximusklein.com
Paul Graham - The Record Label Executive
http://www.maximusklein.com/2007/05/03/paul-graham-the-record-label-executive/
22 comments
The odd thing about this post is that it's not merely mistaken,
but diametrically opposite from the truth. The thesis seems to
be that because of my "position as a partner in an investment
portfolio" (what?) I'm forced to choose bland, unimaginative
startups that will turn a quick profit. In fact one of the
defining differences of YC is that we don't have to do this.
Because we make a large number of small investments instead of
a small number of large ones, we can and do fund the
riskiest projects we can find.
This whole article seems to be based on a misunderstanding of why Reddit succeeded. It looks so simple; therefore it must have succeeded merely because I promoted it. But everything simple looks easy in hindsight. If it was so easy, why didn't anyone do it before? Technically it was possible to build 10 years ago.
(And no, Reddit didn't copy Digg. The founders of Reddit didn't know about Digg when they started, and the two derive from different sources. Digg is Slashdot with voting instead of editors. Reddit is Del.icio.us/popular driven by voting instead of bookmarking.)
This whole article seems to be based on a misunderstanding of why Reddit succeeded. It looks so simple; therefore it must have succeeded merely because I promoted it. But everything simple looks easy in hindsight. If it was so easy, why didn't anyone do it before? Technically it was possible to build 10 years ago.
(And no, Reddit didn't copy Digg. The founders of Reddit didn't know about Digg when they started, and the two derive from different sources. Digg is Slashdot with voting instead of editors. Reddit is Del.icio.us/popular driven by voting instead of bookmarking.)
After all this time, this is the first I've thought of the slashdot/digg and reddit/delicious comparison. Unfortunately, reddit is more digg and less 'delicious-like' nowadays.
As I said in the guy's comments, if he saw the stuff you guys chose this summer, he'd realize how wrong he is. I can't wait until people start launching. I'm almost as excited about some of the other startups I saw out there in Mountain View as I am about ours.
"It's easy to look at Paul Graham and think - hey, he's one of the boys! He's a hacker, just like us! He cares about the technology! Well, if you ever were put in Paul Grahams position as a partner in an investment portfolio, you would stop being the way you are now. Being an investor means that you are playing a hacking game too, but the object of this hacking game is to make you some money. And to do that, you cannot take 10 risky investments - you have to go with 8 safe investments, and take 2 risky investments."
The point of diversifying is that you can make only risky investments. If a VC is honestly putting his money into the safest companies, rather than the ones with the highest risk-adjusted return, he should be fired.
The point of diversifying is that you can make only risky investments. If a VC is honestly putting his money into the safest companies, rather than the ones with the highest risk-adjusted return, he should be fired.
Even if you take what the article says at face value, the implication that PG is morally bankrupt doesn't work, because of the following: music bosses are morally bankrupt because they get wildly unimaginably rich off artists' efforts, and prevent said artists from getting even mildly well-off. If PG were like a music boss, he would take 100% of the company for $20k, and proceed to make the startup sign an agreement that prohibited investment from any other firm. Then, he'd sue the users of said startup for using said startup's product, on the rationale that he was defending said startup's founders.
Record Label Executives aren't out finding bands. They have low-level lackeys that do that. Designated representatives are the guys that put on the "hip" face for the company, not anyone with actual power and connections. The only real important thing about them is that they've been designated to hold the keys to the kingdom. Their main purpose is to get the band to sign a preliminary agreement to prevent them from signing with anyone else. [1]
By the time you get to the actual contract, the deal is a complicated 40-page mess that could very well be screwing the artists using a variety of different tricks. [2]
The YC teams can confirm or deny this, but from everything I've read, the terms are quite clear and straightforward. The basic exchange is funding and support for shares in the company, though there may be some relevant adjustments on an individual basis. Participants understand the deal before they have to agree to it, and so far basically always decide it's a win-win. PG is not a lackey for some larger organization, and doesn't try to confuse young companies and trick/coerce them into signing bad deals.
[1] http://negativland.com/albini.html - Semi-Rant about the situation from the guy who produced Nirvana's "In Uetero"
[2] http://www.music-law.com/contractbasics.html - Article about Music Contracts
By the time you get to the actual contract, the deal is a complicated 40-page mess that could very well be screwing the artists using a variety of different tricks. [2]
The YC teams can confirm or deny this, but from everything I've read, the terms are quite clear and straightforward. The basic exchange is funding and support for shares in the company, though there may be some relevant adjustments on an individual basis. Participants understand the deal before they have to agree to it, and so far basically always decide it's a win-win. PG is not a lackey for some larger organization, and doesn't try to confuse young companies and trick/coerce them into signing bad deals.
[1] http://negativland.com/albini.html - Semi-Rant about the situation from the guy who produced Nirvana's "In Uetero"
[2] http://www.music-law.com/contractbasics.html - Article about Music Contracts
I oppose the authors assertions because
1. PG wrote a lisp book, practically invented Bayesian spam filtering, and is working on a new programming language. How much more hacker cred does he need?
2. Unlike record companies YC doesn't own the IP of the companies they fund, as far as I know. In the music biz it's common place for the record company to own publishing rights to your material.
Totally agree - also I am not aware of any essays written by music industry bosses encouraging you to start a band. They would be more likely to tell you that you don't compare to mainstream act xyz, so you better get lost.
In fact I suppose PGs essays would make good reading for forming bands, too - isn't a band a kind of startup as well?
In fact I suppose PGs essays would make good reading for forming bands, too - isn't a band a kind of startup as well?
Also YC does not have a history of ripping off both its "musicians" and its customers. And as far as I know, they've never sued anyone who used any product they've launched.
I think it is a good article from a completely different perspective than I had previously considered. I don't know that it's completely accurate, but it makes for a good read.
I would really like to see blog authors be more careful proofreading, though. I mean, at least read the first sentence to make sure that it is grammatically correct, because it sets the tone for the whole article.
I would really like to see blog authors be more careful proofreading, though. I mean, at least read the first sentence to make sure that it is grammatically correct, because it sets the tone for the whole article.
I do agree that the technology startup biz is a lot like music biz where startups have to impress VCs in order to become super-companies. Some startups prefer to do it on their own, much akin to independent labels. Comparing PG to a label boss however is a far stretch.
I think the top post on this thread makes it more balanced. Think of pg as an independent label(like sub-pop or Dischord) founder and it all fits well.
Paul has learned to reduce his risk by now rarely funding undergraduates and teams without demos.
I dunno about the undergraduates thing; if they have a killer demo, I think they'd still get in (though they'd probably need to be willing to take a leave of absence if the company has the capacity to succeed at the end of the program). But it also reduces the frustration that everyone feels (including other groups) when one group fails to launch due to lack of commitment to building a company.
Besides that, the number of applicants has sky-rocketed, and they can't take everyone. Having a demo just makes it clear what you're trying to build and that you have the capacity to build it.
Besides that, the number of applicants has sky-rocketed, and they can't take everyone. Having a demo just makes it clear what you're trying to build and that you have the capacity to build it.
We had two undergrads and one guy who never even graduated. And a demo but we didn't get to show it at all.Must have been lucky.
I really like this article. It has an opinion, bit sarcastic and tells a good story and totally misses the point. Lets start using the music industry analogy.
Firstly all the guys trying out in the contest are mostly musicians. Musicians that can firstly have enough skill to play instruments, have the youth, energy and attitude to create their own tunes and sound. They come from a different era of their predecessors. Turned off by the gimmicky clothes, fancy hairdo's and makeup of binary boys of the 80's and 90's.
More important they are students of music. They have a band, can play their own music but are missing something. Not talent, not ideas (well mostly) but the knowledge and chance to play a good gig and record and commercialise. Do they sell out and re-create the cheesy sounds of the middle of the road Windbag Recording studios? Do they defect to the artsy experimental Sol Records?
No. They know in their heart there is a new sound. More importantly they know there is a growing audience that is looking for a new sound. A new sound that says, "screw you record companies. we can do it for ourselves. we don't care what you think... %$ush off &!@(^@!!! " And so begins the bad-boy image.
Now lets look at the exec. He's a Rollins type guy. Had quite a few hits way back and understands the music industry. More importantly whats wrong with it. There is a gap. A big gap. All the suits are funding bands with mega-dollars for wardrobe, explosions and experimental albums with 27 minute guitar solos.
So along with a few other band members and roadies they create a company and hatch a plan to blow the other record companies and distributors out of the water. By reducing the cost to sign, nurture and release unknown bands and make some profit at the same time nurturing talent. Something the big boys have seem to have forgotten.
Thats right unknown bands. Untested, talented, raw and more importantly ones that want to succeed at all costs with an attitude that makes the older more established bands sneer at the youngsters. With their clunky looking instruments, ripped t-shirts and shorts and attitude. They sneer also because they realise, these youngsters can do what they cannot do. Faster, with less money still managing to listen to their audience and evolve where required.
Then one has a hit. Others in the label start getting serious airplay. The suits take notice and a new sound is created.
Sound fanciful? Well I'm really just re-telling the story of punk-music. A movement that smashed the pomposity of the glam-rock 70's and while short lived and patchy allowed a core group of musicians to succeed where they otherwise they could not have. In the process giving us Lou Reed, Pretenders, Romones, Blondie, Pattie Smith, Talking Heads etc.
YC is that anti-establishment incarnation of punk music in software. Long live 'minimalism, speed, and arrogance' ~ http://en.wikipedia.org/wiki/Punk_music#Early_history