Tim Bauer’s Running Thoughts

Semi-daily webcast summaries/insights

Paul Graham (YCombinator): Unleash the Cockroach In You

Here is a sign when you need to watch a webcast. You briefly scan the comments … and then, for some reason, one image … one phrase … sticks in your head.

Such was my experience w/ Paul Graham’s reference to why we all (but especially startups) need to be more like cockroaches. I was impressed since:

  1. What better visual could a new businesses have for its stakeholders and themselves on the attitude they wanted to take on how time and money should be spent?
  2. The cockroach as a role model was an interesting one. On one hand you have the eventual masters of planet earth. On the other hand they are ugly.

I needed some grounding, so I fired it up to see the context that Paul positioned our six legged friend in.

Details Notable Points
Title/Link:

Duration:

  • ~30m

Speakers:

  • Paul Graham
    • Founder, YCombinator (startup VC) but made his mark by selling Yahoo his company ViaWeb which then became the basis for Yahoo! Store.

Recommend to Watch? Amen Brother!

  • Paul is an excellent speaker and I think what he is talking about here applies to startups, businesses, and people in general.
1. First The Cockroach … Symbol of Humility

  • Actually the cockroach didn’t play a large part of his talk … but I liked it and I am writing this … so it gets top billing. What was interesting was that startups, businesses, and people tend to go large with their risks. Similar to the U.S. “Shock and Awe” foreign policy. Unfortunately, while “Shock and Awe” sounds cool it doesn’t seem to work in war (has Iraq given up yet?) and it doesn’t work in alot of business conditions. What works more consistently is focusing on survival and adaptation. Granted, not as sexy. But buying time and adapting till the moment arrives to go big just resonates with me. It removes/reduces the timing variable in any investment model (since few ideas are right out of the gate). So, as Paul Graham recommends, start as a cockroach, then wait for the time to morph.

2. His Primary Point In The Talk — Get the Wind At Your Back From Benevolence

  • He positioned this in the context of sea battles. How early sailing ships jockeyed for weather gauge (wind). Then he pointed out the wind advantage in business (or personal life) is having your cause be one that people can rally around. A ‘benevolent’ cause. If you can get your business to resonate with benevolence you get (1) better employee moral (2) better help from external entities and (3) have a decisive standard to act from. Craiglist was one example of a company w/ a inner spirit of benevolence. He pointed out they could have charged more but instead they focused on a culture that tried to be as small as possible and charge less (if not zero). Definitely against the supersize culture (and marketing style) in the USA.

3. Benevolence is Like Being Robin Hood … But Careful … Or You’ll Become The Rich

  • He showed how since the late 90’s MSFT has been flat in valuation. He then asked the audience to think about if that was that due to Robin Hood (MSFT) winning the battle against John of England (IBM) but in doing so forgetting that their appeal to the people was operating in a lifestyle similar to their own (underdog)? If that is true (which it is) how did leaving Sherwood Forest’s simple way of life (doing business) impact the passion of the employees that worked for them? How their partners treated them? How customers saw them? Is that temptation repeating now with Apple (the new Robin Hood) taking on MSFT (the new John of England)? I have to agree I have begun to feel Apple is manipulating me more and more … can’t put programs on iPhone without getting approval from them and selling through them, can’t use anything but their hardware/software bundles, etc. Sounds like John of England to me. Sorry Apple Fan Boys.

I am now a Paul Graham fan. Great insights and style of presentation. If you are still reading I would be curious on your views on:

  1. How do the businesses we work for (or own, our ourselves personally) do to avoid the temptation of leaving Sherwood Forest (embracing a simple life and giving the rest back)?
  2. Is that viable? Or just idealism talking?
  3. And how about that Cockroach. Is that inspiring or just a gross visual?

Deep stuff … for me anyway.

** START OF RAW SCRIBBLE TAKEN WHILE RUNNING **

• Make Something People Want - Paul Graham founder of Ycombinator
• http://omnisio.com/startupschool08/paul-graham-at-startup-school-08
• 5/5/2008, 6:34 AM
…………….○ 280slides is being used for his presentation (some hiccups prior to his pitch)
…………….○ Make something people want
…………………………..§ Not 3 words
…………….○ Don’t worry about money
…………….○ Add together = Non profit
…………………………..§ Weird result … bug or new discovery?
…………….○ For example, Craigslist … is the above
…………………………..§ # of employees @ Craigslist … $/employee is HUGE
…………….○ Get ‘weather gauge’ … to decide when / where to engage
…………………………..§ Low op size gives you weather gauge
…………….○ Focus this thought
…………….○ Focus just on your 1st stage of your company
…………….○ Google was like that … low size
…………….○ There are ideas that have to be profit making companies to be done right (not non-profit)
…………….○ Successful startups … look like non-profits?
…………….○ Would all non-profits make good companies?
…………………………..§ Users have to have money
…………….○ To test idea … ask how far you would go to bet against it
…………………………..§ Benevolent models are hard to beat
…………….○ Just internet startups?
…………………………..§ Look at MSFT
…………………………..§ They were robin hood early on … IBM was the sheriff of nottingham trying to chare high $ for PCs
…………………………..§ They changed to the sheriff later
…………………………………………□ Stock has been flat since they went to sheriff role (due to size)
…………………………..§ Small you can’t bully users … you have to be nice … but once big … you can be mean …
…………….○ Don’t be evil might be the most important point of Paul B. to Google
…………………………..§ Catch is people will hold you to it
…………….○ A lot of evidence is benevolence works
…………….○ 5/5/2008, 6:44 AM
…………….○ 3 ways it helps (benevolence)
…………………………..§ Morale
…………………………………………□ Roller coaster of emotion … downside is your people stop working on downside
…………………………………………□ SO less times of feeling failures … if you feel like you have a greater mission … someone needs your help
…………………………..§ Others want to help
…………………………..§ You are decisive
…………….○ 5/5/2008, 6:46 AM
…………….○ Blogger … low lows … and survived
…………………………..§ One point ran out of money
…………………………..§ Evan Williams came back and he was the only one there … users needing him kept him going
…………………………..§ Users to take care of you are forced to take care of what they want
…………….○ Founder of Chatterous
…………………………..§ They realized they didn’t care if they had to move into their house ..
…………………………..§ Cared less about $
…………………………..§ Investors became more interested … their lack of need … the passion
…………….○ 5/5/2008, 6:48 AM
…………….○ Cockroach image
…………………………..§ This is the model for early phase business
…………………………..§ All come close to death … multiple times
…………………………..§ One attribute … doing good for the world … makes you get off the mat like rocky (my comment)
…………….○ Octapart
…………………………..§ Search site for industrial components
…………………………..§ Right way to search
…………………………..§ Bauer comment - edging in on manufacturers as well of parts
…………………………..§ Digikey … another competitor … trying to force them to stop … they operate on little information on price
…………………………..§ Nice founders
…………………………..§ Dropped out of Berkeley to do this
…………………………..§ He wanted to help them … because people are trying to stop them
…………………………..§ Because they are robin hood (benevolence)
…………………………..§ People will rally …employees, investors, customers
…………….○ A good plan, violently executed now, is better than a perfect plan next week
…………………………..§ Picture of a general
…………………………..§ Translation get out there and start the battle … get engaged w/ the customers … will they tell their friends?
…………….○ 5/5/2008, 6:53 AM
…………….○ Being good … good in situation where things change fast
…………………………..§ Lying you have to remember a lot
…………………………..§ Truth you have to remember little
…………………………..§ Example … 80 startups … 57 are alive … invested in
…………………………………………□ When advising 57 … have to have a stateless (not specific to startups) due to they can’t remember
…………….○ Talk about being good … people assume you are beating the drum that you are good
…………………………..§ He isn’t not good
…………………………..§ He was loud … as a kid
…………………………..§ People don’t say he is a great guy … just say ‘he means well’
…………………………………………□ So he is average
…………….○ Don’t just be evil … be good
…………….○ 5/5/2008, 6:56 AM
…………….○ Q&A
…………………………..§ How many startups company’s have motto’s / mission statements / creedo’s?
…………………………………………□ He talked in general
…………………………………………□ Then pointed out the ‘good plan, execute’ concept
…………………………..§ Should people finish college grad degree or go start a company after undergrad
…………………………………………□ Not excited about leaving college
…………………………………………□ Making $ and startups isn’t the only thing in life … have fun … learn stuff …. Your idea might be that great … ideas come along quite often
…………………………..§ Most college graduates work for dropouts
…………………………………………□ Maybe
…………………………………………□ (guy sterotypes that everyone that runs /advises companies … )
……………………………………………………….® Follow your passion
……………………………………………………….® Guy gets loud
…………………………………………□ Maybe (nice counter … must be a Jim Fay fan
…………………………..§ Ideas that are already out there … what material to you read to get ideas
…………………………………………□ Look for problems … find good problems … stuff that seems broken
…………………………..§ What emphasis on web2.0 … all your companies you have funded are web2.0 … versus fundamental problem like search or security
…………………………………………□ Searching for components is fundamental
…………………………………………□ They have funded some infra players … like 2 DBMS players
…………………………………………□ They fund what is applied
…………………………………………□ It’s really driven by what the entrepreneurs are offering to do
…………………………..§ What factors used to determine what you fund
…………………………………………□ What they like …people that do stuff they like
…………………………………………□ No evil
…………………………………………□ Look for people that looks like they are going to exceed
…………………………………………□ Fund founders they like and think they are going succeed … and it turns out their bio is one of benevolence

** END RAW SCRIBBLE TAKEN WHILE RUNNING **

May 6, 2008 - Posted by bauertim | 1-Definitely Watch This | , , , | 3 Comments

3 Comments »

  1. As an Apple Fan Boy I will concede that you have a bit of a point here. I would however, say that Steve Jobs is the sheriff who gives a wink and a nudge to those who break the law in small interesting ways. How hard is it to cripple a jail broken iPhone? Has the good sheriff done that to you lately?

    On to your main topic here… I like the cockroach metaphor. This reminds me of the OODA loop put forth by USAF Colonel John Boyd. In essence the bold pilot doesn’t win as often as the pilot who can quickly observe, orient, decide and act. Same is true in business and you nailed it in your Microsoft example - Mr. Softy is too big, too dispersed to run tight little OODA loops while Apple still does. Music players are the perfect example - by owning the entire ecosystem, Apple was quicker to evolve in this space despite being late, despite investing less than the aggregate of the Microsoft consortium, and despite having a relatively miniscule platform to launch from.

    I suppose the coach roach metaphor breaks down at this point because I think most agree that of the two, Microsoft looks more buggy than Apple…

    Comment by davidallen | May 7, 2008

  2. True. Jobs might be a benevolent sheriff but you have to acknowledge he gets pricing power via his ecosystem monopoly. That is not benevolent.

    Power corrupts, absolute power … absolutely.

    Still, I like Apple and am pondering switching over. One sheriff for another in my view. At least the younger one is more hip.

    What I liked in the cockroach example / metaphor was the reminder that survival is the key. So many businesses start out with the goal of dominating instead of focusing on survival models that enable them to listen to the market for the opening that allows them to get bigger.

    Comment by bauertim | May 7, 2008

  3. [...] Paul Graham (YCombinator): Unleash the Cockroach In You I told a CFO friend of mine today I was modelling my business to be a cockroach. That image has [...]

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