Blake Borgeson, in blog form

suspected facts. validated opinions.

Posts Tagged ‘paulgraham

ooga vs. y combinator, apple vs. google, designer vs. curator

with 5 comments

Innovation and entrepreneurship are two of my favorite foods for thought, so naturally their intersection grabs my attention.  Pushing entrepreneurship forward–whether by getting more people excited enough to try it, lowering the barriers to reasonable success, bringing more investor money to bear on funding great people with good ideas, or attacking the challenge from any other angle–can have some of the biggest impacts achievable on the rate of innovation and progress.

Reading through the online essays of Paul Graham, leader and co-founder of Y Combinator (and whom I talk about a lot here), and the blog of James Currier, leader and co-founder of Ooga Labs (my previous post mentions Medpedia, their biggest about-to-release project I know of), convinces me that both these guys have an understanding of how to achieve the biggest impact they can imagine doing something they love.  Despite what I think are similar goals and understandings about entrepreneurship and value creation, they use fairly different approaches.  Both, I think, will create tremendous value, but their different models will have a big effect on the businesses they develop.

Google and Apple are both great companies, and I have tremendous respect for their leaders.  What they do, they do well.  But they go about their jobs differently.  Larry and Sergei have from the beginning seen themselves as the ones with an eye on the vision, looking for the best creators they can find, and helping them unleash their creative energies towards the Google mission.  The  “20% time” engineers there enjoy, the fact that the wide world knows quite a lot about the general day-to-day goings on of the googleplex, and the amassing of talent and technology through dozens of acquisitions all point to a pair of leaders who see themselves as curators over designers.  Steve Jobs falls into the opposite camp, managing the direction of the organization much more directly.  Not to say that apple doesn’t acquire companies at all, but the roughly $1B Apple has put into the effort (compared with Google’s unknown but numerous billions), over a much longer history and with a recently fairly equivalent valuation, says that Apple’s acquisitions seem more designed around profit than innovation.  They prefer to innovate from within.  Even though the companies aren’t even in the same market, their familiarity and success draw these kinds of comparisons.

The same contrasts can be drawn between the self-incubator model of Ooga and others, and the pre-seed  model Y Combinator has pioneered.  Both companies aim to create as much wealth and value as possible by starting and/or growing startups to tackle what they see as important problems.  There’s a bit more emphasis on social value over profit at Ooga, but aside from that, the main difference I see is that of incubating in-house (aka designing) at Ooga, versus finding tiny startups with tons of potential, bringing them into the fold, then unleashing them (aka curating) at Y Combinator.

Which is better?  I’m personally right on the fence: I’m in love with both models.  On one hand, I love making things myself (the Steve Jobs way), and though I’m not foolish enough to think I’m the best at it, I’m smart enough to know that in many cases “just good enough” is good enough.  On the other hand, I love being a part of others’ success, and if I can create more value by helping others succeed, then that could be an even more compelling offer.

But which model is better, as in the one that will “win out”?  Not in the sense that they’re actual competitors in the marketplace–both models can coexist and take nothing away from the other.  But both are shooting for the same goal: generating value and propelling entrepreneurship.  And both have similar requirements to getting started: you need a lot of startup smarts and credibility, and some relatively deep pockets, to really get an incubator or a pre-seed funder off the ground.

So far the evidence is too slim to be very telling as to which can produce more value, just between Ooga and Y Combinator.  Ooga is more recent, supposedly having 5 projects under way about a year ago according to this article, but the Medpedia project looks phenomenal.  Y Combinator has already helped launch dozens of companies (see ‘investments’ here), many of which are widely known already (loopt, reddit, disqus, justin.tv, snipshot), and a few of which have already been acquired (reddit by conde nast, omnisio by google).  Of course, it makes sense that Y Combinator will have more and larger successes–since it picks up, pumps up, and pushes out startups, it scales to a lot more companies and is responsible for a much smaller share of the value created.  And that is the real difference, in my mind–incubators invent and develop companies; microfunders just help with the developing.

It’s also worth noting that these two companies don’t necessarily represent their entire breed.  Y Combinator perfected the pre-seed funding model, but TechStars and a few others belong there as well.  In the incubator camp, Ooga is hardly the first.  IdeaLab is widely credited with pioneering the idea incubator model in the 90s (see their massive list of insanely successful spin-offs, including citysearch, commissionjunction, compete.com, overture, …).  Not included in the category with Ooga and Idealab are the nonprofit “business incubators” that offer counseling, shared office space, and business services to pre-existing startups.  Y Combinator actually looks a lot like these nonprofit business incubators as far as the basic services provided and the startups targeted, but where the nonprofits are usually funded by regional government and incented to just provide support as needed, Y Combinator gets paid via ownership in the startups and does everything it can to make the startups as valuable as possible upon leaving the program at the end of 3 months.

A more abstract way to compare the underlying designer and curator models of starting and growing new companies to drive innovation is to look at which better fits the big trends that seem to be dividing strategic winners and losers recently–here are a few I can think of: open beats closed, listening beats talking, good beats evil.  I don’t have the answer to that, but rest assured I’ll keep working on it, and let you know as soon as I’ve got the answer.  =)  In seriousness, though, if you have thoughts on this, I’d love to hear them.  If you’ve seen a discussion on this elsewhere, please point me to it.  I care a lot about this stuff, as you can see from the incredible length of this post.

Written by blakeweb

August 16, 2008 at 12:52 am

should everything people use be free?

with one comment

People justifiably have strong opinions on the “everything’s free” model that google, facebook, linkedin (mostly), and most of the biggest up-and-comers in the new web espouse.  The conversation reached mass proportions a while ago when it made the cover of Wired, but I found a couple more interesting perspectives this week, and they tie in well together:

  • The economics of creativity – This post comes from James Currier, founder of Ooga Labs, the company behind the Medpedia project, which looks awesome.  He tells of how his great-great-grandfather married into royalty for his musical abilities, while today it’s tough for an incredibly gifted pianist to make ends meet.
  • If someone can do it for free, it will inevitably be free – a discussion at Hacker News (of YCombinator) with (yep, you guessed it) some more good insights from Paul Graham.  [Click the link at the top of that discussion if you’d like to read the blog post the discussion references.]

[ I wrote this two weeks ago, so that discussion above at YC is a little stale.  Didn’t post it right away for some reason. ]

Written by blakeweb

August 15, 2008 at 2:31 pm

some good web finds last week: zembly platform, startup ideas, a postmortem

with 2 comments

If you have been following my friendfeed, you may have noticed I decided sharing my delicious links there was overkill, so I stopped.  Instead, I’m going to try summing up a few interesting blog posts I’ve read and websites I’ve seen this past week.  I may stick to this, I may do it more often, I may stop completely.  I’ll try to keep it to things you may not have seen, and I’ll also try to stay away from really timely stuff, since I probably should have already twittered or posted that if I was going to.  I’ll also probably pull out and post separately for topics that seem worth discussion beyond just “that’s cool.”  So what’s left for this post?  Let’s find out…

+ Launched 6 weeks ago, but I just heard about it: zembly.  Coming out of Sun Microsystems, zembly is an online social simple software development platform, for creating facebook apps, meebo apps, widgets, and iphone web apps.  To explain, you can go to their website (if you can get into the beta, which is somewhere in between private and public I think), see the top apps created so far, copy one over into your account, modify it and publish it to facebook right there, on the spot.  They host the apps for you.  Its functionality is definitely limited so far, but it seems incredibly promising.  We need easier ways for more people to develop and share better software to use all over the place, and the web as a true software platform (level 3 in Marc Andreessen’s world) is a big step in that direction.

+ More VCs, and more people in general, should publish their ideas openly like this: YCombinator: Startup Ideas We’d Like to FundPaul Graham, point man and founder at YCombinator, writes essays about startups and whatever else he thinks is important, and they’re almost all phenomenal.  A few of my recent favorites:

  • Lies we tell kids – unlearning the lies we’re told growing up is hard–are they worth the protection they provide?
  • The future of web startups – web startups are easier to get going than any startups ever have been–what does that mean for their future and the future of the internet?
  • How to disagree – to-the-point guide to constructive argumentation.

+ Writing a postmortem on a failed startup is incredibly valuable to the community, and I’m sure it takes guts.  They often contain excellent insights better shared than kept close, and this is no exception: Monitor110: A Post Mortem.  If you follow fred wilson or brad feld, you’ve seen this already.  If not, here’s the author’s list of the “7 deadly sins” that he believes together prevented the company’s success:

  1. The lack of a single, “the buck stops here” leader until too late in the game
  2. No separation between the technology organization and the product organization
  3. Too much PR, too early
  4. Too much money
  5. Not close enough to the customer
  6. Slow to adapt to market reality
  7. Disagreement on strategy both within the Company and with the Board

Written by blakeweb

July 27, 2008 at 9:42 pm

paul graham and umair haque: be good

with one comment

Being good as a company is something I think about a lot. And since I just read these two interesting perspectives, I thought it was time to pull thoughts together.

Disclaimer: I want to make the point that I don’t agree with every single argument the authors make. I think it’s understood in the blogging world that when I link to someone else’s post, I’m not saying I agree with it 100%, but I just want to make sure. I’m just pointing to something you should read and digest for yourself. Hopefully soon I’ll be comfortable leaving this disclaimer out most of the time.

First is Paul Graham‘s most recent essay, entitled ‘be good‘. I guess he likes to write long blog posts, so he calls them essays so you won’t be turned off by how long it is–except that now it’s called an essay, which is equally off-putting to the people who avoid long blog posts. Anyway, I’m not familiar enough with YCombinator to say much as to what Paul Graham’s investment record is like with YC, but this essay (calling it that at least makes it sound more serious and sophisticated I guess) is very well written.

Overall Paul’s essay captures a lot of my own opinions on how valuable it is, to both companies and individuals, to be in the business of making the world a better place for everyone.

There’s a lot of external evidence that benevolence works. But how does it work? One advantage of investing in a large number of startups is that you get a lot of data about how they work. From what we’ve seen, being good seems to help startups in three ways: it improves their morale, it makes other people want to help them, and above all, it helps them be decisive.

He comes in at the end to reiterate that he isn’t just pushing the ‘be good’ mantra because he thinks it’s morally superior, and therefore the right thing to do in and of itself.

When you write something telling people to be good, you seem to be claiming to be good yourself. So I want to say explicitly that I am not a particularly good person. When I was a kid I was firmly in the camp of bad. The way adults used the word good, it seemed to be synonymous with quiet, so I grew up very suspicious of it.

You know how there are some people whose names come up in conversation and everyone says “He’s such a great guy?” People never say that about me. The best I get is “he means well.” I am not claiming to be good. At best I speak good as a second language.

So I’m not suggesting you be good in the usual sanctimonious way. I’m suggesting it because it works. It will work not just as a statement of “values,” but as a guide to strategy, and even a design spec for software. Don’t just not be evil. Be good.

Next, I’ve been reading Umair Haque’s blogs, bubblegen and his new hbs-located blog, for some time, and he is one of the most insightful writers I’ve found. He sometimes goes way beyond what he really means with sweeping statements and broad generalizations, but you get used to that and you realize he’s usually just in a hurry, which is why he’s often the first (I hear of) to make very original observations. In his most recent post on creating real value, he states very specifically that most of the ‘revolutionary’ innovation coming out of startups and venture capital these days is still focused on adding on useless features and providing new ways for people to waste time, despite some big problems in the global ecology and the global economy. As usual, he’s got some pretty harsh criticisms for the world at large.

The self-indulgence of today’s so-called revolutionaries in a darkening economic twilight is a recipe for strategic suicide.

So here’s my challenge. If you’re a revolutionary, then be one: put your money where your mouth is, and fix a big problem that changes the world for the better – if you really have the courage, the purpose, and the vision, that is.

At the bottom of it, both of these authors are talking about generating real value. The capitalism ingrained in the anglo-american core, at least for nearly everyone in the business world, tells us that the profit you make is the real measure of the value you’re creating. If enough people are willing to pay you more for something than it costs you to provide them with it, then congratulations, that’s value right there. You earned it, and now you get to buy stuff with it.

I definitely agree with that, as stated, but it leaves out at least a couple of considerations:

  • If the rules of the game (capitalism; the market) are drawn incorrectly (e.g., apportioning the costs of pollution or other environmental damage), and in such a way that you can profit more by taking advantage of that error or omission, are you really creating as much value as your profit says?
  • If you manufacture a sub-par or overpriced product, but you’re able to convince people to buy from you versus your competitors through manipulation (not presenting the whole truth), are you really creating value?

In the first situation, people look to experts and the government to set the rules correctly and adjust them as needed to keep value creation aligned with profit creation. Ideally that’s great, but is that a reasonable expectation, especially when people are saying that the government is owned by the companies, not by its citizens? In the second, you can always argue that your customers are responsible for their own buying decisions, and that obviously they’d rather have your product than the money they gave you–that’s why they made the purchase. In a world where full and complete information on companies and their products, sources, and practices is freely available and easy to use, I’d agree.

I think my main point is that, while it’s easier, in my opinion, to use profit as the judge of value in business, it can very often lead you to the wrong decisions. I think a better compass is impact, and by that I mean the change for the better you make in the world. And since that’s very difficult to quantify in full and think about in day-to-day business decisions, I think most of it is wrapped up in doing better than anyone else can for your customers and future customers and adding to their lives in a way you feel is really meaningful.

Written by blakeweb

May 2, 2008 at 7:06 pm

Posted in startups

Tagged with , , ,