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Paul Graham: Hiring is Obsolete
jazznjava writes "Paul Graham has a new essay covering what the influences of declining operating costs will have on startup companies, and the undervaluation of undergraduates."
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Besides recent grads, of course.
Hiring someone with no work experience is extremely risky. There's a very good chance you're going to get someone with no clue, or someone who finds out your job isn't really what he wants to do for the next 5 years or so.
Because of that risk, recent grads will not get paid top dollar. Period.
The basic costs to start a business in today's market is very small. Web storefronts have replaced real storefronts and the cost of 'renting' space is close to nothing now a days. Along with the fact that a bachelor's degree doesn't set you apart by any means the same margin it did a decade ago. More and more people are finding graduate school a necessity for job security.
The article says nothing new. Some people who are younger are smarter than some people who are older. Big deal. We all knew that. Investors don't necessarily want smart people; they want people with experience because they're the ones who have the judgment to make good decisions. Being smart is certainly important, because that determines whether you can learn from your experiences. The younger a person is, the less likely they will have had the same breadth/depth of experience as an older person, and may be less capable of making good business decisions.
Therefore, there should be one big huge company that always employs everybody in the labor force
I thought we didn't like communism...
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
Please stop pretending that you are anything more than a very good programmer and a good teacher (On Lisp was good).
You're beginning to sound like Eric Raymond with this non stop barrage of contentless gasbag articles.
"Orthodoxy means not thinking--not needing to think. Orthodoxy is unconsciousness." --Eric Blair
Cisco pursued this strategy of buying small companies with promising technology but in the dotcom days. Effectively, Cisco let others finance the R&D and initial market testing that all start-ups perform. If the start-up failed, it was no skin off Cisco's nose. If the start-up worked and had a product (and company vision) that matched Cisco, then they bought you.
Its a great way to get innovative and market-proven technologies, but it can be a little piece-meal. Not all the great start-up techs are going to fit into your architecture or segment the market in a clean way. Also, due diligence can't uncover every problem when you take the start-up's tech and try to scale it to big-company volumes and service expectations. Finally, buying start-ups is a very public affair compared to a tightly secured internal R&D function -- the minute you buy a startup (with a product on the market), all your competitors know where you are going.
Buying start-ups is a nice tool, but it can't totally replace (only augment) an internal, integrated approach to R&D, product development and architecture development.
Two wrongs don't make a right, but three lefts do.
Well, the point is that we don't want equilibrium. We're the ones with the advantage right now, and we want to keep it.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
This is slashdot - capitalism is bad... Everyone is equal here - and frankly if it really was that way Microsoft and Intel would have lost a long time ago to Apple and AMD
I have mod points and I am not afraid to use them
Hiring is obsolete. This is why we need enough wars, famines, diseases, and poverty to reduce the population sizes. We simply don't need new labor or new consumers.
2) Low barriers to entry also means there is going to be hundreds of other "undergrads" trying to sell the same idea. This means your chances of eventual payback are much smaller!
3) Why should bigger companies buy startups when they can just partner with them or outsource company services to them?
4) Yeah, starting a web based startup doesn't cost significantly more than just being a slacker. But if you haven't noticed, 99% of us can't afford to just set around and be a slacker either! SOMEBODY has got to be paying your food and rent. Apparently Mr. Graham thinks most students graduate with tens of thousands of dollars in the bank and can afford to not have any income for several years. I've got about $130,000 in student loans that say otherwise...
I've abandoned my search for truth; now I'm just looking for some useful delusions.
And where are we today? Microsoft is #1 in Internet browsers. IBM is #1 in open source applications. WalMart is #1 in retail. The number of programmers in the US is down 25% since 2000. Almost all the dot-coms are dead.
There are interesting things to be done in software, but the "make money fast by selling stuff on the Internet" ideas have been done.
So learn to do something that the Indians and Chinese and Filipinos can't. Or are you asking for exemption from competition?
At first I thought it was all rosy and unrealistic and then he balanced out with the fact that yes, you will probably fail. But taking that chance at that point in your life is an interesting proposition.
As a father of 3 I know I can't afford to do anything too risky. But what if I had done it 14 years ago when I was 22 and had no responsibilities to anyone else. As he points out, there is a lot to gain but not nearly as much to lose.
It seems to me a lot of the criticism in the thread revolves around small points of the article but don't take the entire essay into account. And we know why this is the case.
It's hard to believe that's how Micronians are made. Why don't we see it right now by having you both kiss one another?
According to the US Small Business Administration, 50% of small businesses fail within the first year, and 95% fail within five years. To start and run a business without ever having held a job is a sure path to disaster for all but the most talented, hardworking, and lucky.
Or are you asking for exemption from competition?
Yes. Especially if that competition is unfair competition. Why is asking the government to do one of the few things it *should* (protect its citizens) a bad thing? Or should we all live on the same pay as the least paid people in the world?
This "free trade" idea only works if all countries are created equal. They are not. Thus there must be some form of compromise, unless you *want* the United States to become like India*?
* Not that I think India is aweful, I just think the standard of living overall leaves something to be desired when compared to the US.
"Ignorance more frequently begets confidence than does knowledge"
- Charles Darwin
Now it's, "Don't hire anyone older than 30."
DT
Is this thing on? Hello?
I have hired graduates (generally with first class honours) who have been less than brilliant and not worth their starting salary. I have hired undergrads who have been outstanding and have paid them twice or more that of a graduate starting package. Why? Undergrads who get up off their bums, seek employment, and still continue college are generally: a. really motivated (often due to personal financial reasons) b. really interested in the work, and want more than the generic college course/degree can offer c. grateful to get the work d. not lazy It's too big a generalisation I know, because plenty of grads I have hired have been good too, but just to exaggerate to make the point, grads are: a. coasting along on the coat tails of a well funded education b. 9-5'ers c. expect a lot more than they are worth based on the supposed merit of their graduation d. not particularly self motivated So those are the best and worst traits of the two types, albeit deliberately thrown into high contrast. But I would take an interested, keen, poor, grateful undergrad any day, and pay them fairly for their contribution.
I'm sure you've been modded -1 for your post, but I share your sentiment to some degree or other. What I wish is that Slashdot spent more time promoting what non-geeks had to say about technology and less promoting what some select group of "ubergeeks" had to say about non-technology subjects.
It's not that Paul Graham or Linus or ESR or whoever don't necessarily have something interesting to say, and in an interesting way, about subject matter outside their area of expertise (in this case the squishy areas of management and economics), but it's the sycophancy and lack of criticism with which it's presented.
So, I hear you're starting your own business?
Welcome, welcome.
Welcome to 16 hour days, and your employees earning more than you. Welcome to heartache and racking your brains for something to give you an edge, calling on experience you don't have yet. Welcome to doing boring and tedious tasks that if you fail, can land you in prison, like accounting and keeping receipts. Welcome to trying to protect your ideas from much larger and more powerful companies who will take and exploit them in a heartbeat.
Welcome to getting your first solicitor. Welcome to earning far less than minimum wage for months on end, and lets not forget that you may never get anything back. Welcome to friends and family slowly becoming more distant as you have no time to devote to them, welcome to becoming a fanatical zealot, welcome, oh yes, welcome to compromising most of your ideals just to stay afloat.
Welcome to management - you're the boss now! Welcome to having to see both sides of the story, welcome to slow or non paying customers, welcome to learning how to manipulate your fellow man to achieve your ends, welcome to grey hair and addiction to mild stimulants.
Welcome, welcome, one and all. Do stay a while.
And that light at the end of the tunnel you are striving for? Well I'm not sure what it is, exactly, are you?
Let your shitty employees go.
Not so hard really. 2/mo salary, fine, cut your losses, and cut your dead weight.
Risks can be mitigated. Basic basic risk investment; you can try 6 employees for two months throughout a years, one of which should prove to be at least 6 times more productive than all the others. In two months at 6x productivity, that employee will already have produced a man-years worth the next guy's work.
I suggest companies take grads who think they're the shit, offer them two months trial at reduced pay and hope pray you can be disruptive and dynamic enough to keep them interested.
Thats the real killer. But I see you see that; "or someone who finds out your job isn't really what he wants to do for the next 5 years." Most people who start startups do it because they'd rather commit sepuko than deal with being forced to continue doing such useless unproductive work on your ass ugly product. Finding smart kids is not hard, keeping us busy is a lot harder to do. Most companies cannot deal with disruptive players.
Myren
Admitedly I may be somewhat biased against this guy because of his stupid claims about nerds and web service applications. It is obviously outright false that nerds are not popular in secondary school because they have better things to do than spend time trying to be popular. In both my personal and observed experience nerds often try despartly hard to be popular (in fact they often have a problem of trying too hard and too transparently). Moreover, it just isn't true that other groups with large time comitments and interests outside of school are automatically as unpopular (music people etc..). While I am uncertain about the future of web service applications I expect a better analysis than the same crap which has been used to predict network computers for years.
As for this actual point I agree there is a small grain of truth in it. The advent of computer programming and other large profitable fields of intellectual endeavor makes intelligence hugely more valuable for a company. The productivity difference between someone who is just average and someone who is really fucking brilliant can be very large. So it really does make sense for companies to pay new recruiters big bucks just for being smart and train them on the job. Oracle is already doing this recruiting people from caltech with no programming experience for 80k starting salaries. However, people with those sort of smarts are extremely rare and so this trend does not hold out hope for the vast majority of CS students much less undergrads in general. As a TA at Berkeley it is clear that even here most of the CS students are not of the caliber necessery to launch compelling new products.
Moreover, I think the fundamental flaw in this analysis is the authors assumption that people, even young just out of college types, are interested in maximizing their expected revenue. Sure these people would like to earn more but alot of them just don't find it worthwhile to live for years eating Raman and living in a hovel for the promise of later riches. Happiness and utility are sub-linear in wealth and so great riches later in life don't necessarily compensate for prior poverty. In short many people really would prefer to be comfortably well off for most of their life and have the time and resources to start a family or pursue other interests out of college rather than being poor and working 100 hour weeks for several horrible years for later money. Heck I sure as hell wouldn't want to waste my youth as a workaholic just to end up as one of those rich bachelors at 35.
Also while the author touches on risk he radiclly misunderstands most people's attitudes towards risk. Sure studies have shown that there is some percent of society who are naturally thrill seekers and thrive on risk but many of the rest of us find risk itself (and not just the bad consequences if things go bad) unpleasent. Most people don't like risking alot for the hope of a big reward but would prefer a comfortable sure thing.
Big companies with stable employment and paychecks which don't depend entierly on project success exist for a reason. Most people prefer that sort of comfortable stable life. It isn't all about accumulating the biggest bank account but also about knowing you can provide for a family, have free time and safely plan for the future. It isn't just the economic situation that needs to change to make start-ups as prevalent as the author imagines but human nature itself
If you liked this thought maybe you would find my blog nice too:
Employers filter by degrees. For example, if the applicant does not have at least a four year degree, their resume is thrown in the trash.
People who graduate from college learn the theories, but lack the real world experience unless they know how to apply the theories to real situations, and adapt to change and learn new ideas and technologies.
Many people have the real world experience, but lack the degrees, so HR screens them out.
Citing a lack of qualified canidates, businesses lobby the government to raise work visa quotas or eliminate them.
When they cannot get enough qualified people into the country, they turn to Offshoring.
Offshoring has problems, due to barriers of language, culture, religion, society, and location. They are ISO 9000 Certified, but are not producing quality results. They are being managed like they are in the USA, but that management style does not work in their native country.
After offshoring fails, some companies turn to consulting. Hiring workers from another company to work via contracts, and letting that company hire and fire employees and provide benefits to the employees.
Global Economics states that the nation that provides the products or services the most efficent, will have an advantage. India is able to offer Engineering and IT products and services, but as the Indian economy grows, so does the money paid to the workers. This makes India lose its advantage as the gap between the rich and poor narrows, proving that capitalism works. Meanwhile Brazil, Thailand, The Phillipines, China, etc are all offering IT and Engineering services at rates that are cheaper than India's. Slowly, India starts to lose its advantage.
Meanwhile after not being able to hire qualified and skilled local labor, many companies turn to headhunters (recruiters) to screen applicants for them.
Due to the qualified, but undereducated people being discriminated against, companies find that their quality is getting worse. As a result, the economy suffers. More money is going overseas due to the work visas and offshoring, which also hurts the domestic economy. The government is told to do something about it, so they raise tariffs, which raises the price of that commodity in the market. This leads to higher costs of many companies, which are forced to lay off more employees. Yet these high tariffs are exactly what people wanted, they just don't know the economic effect it has on their economy. Many of these problems are caused by other nations and corporations, but people blame the President anyway, after all, he was the one who did what they told him to do, and raise tariffs to save jobs, which led to losing more jobs.
In short, we are so doomed in the United States. We are going to become a third world country if this keeps up, and have a double digit unemployment rate. By the time the Baby Boomers retire, it will wreck the stock market, and cause even more economic problems. Kiss your pensions and Social Security goodbye, or at least consider a 25% cut if they manage to save them somehow by a government bailout due to taking on more debt to fund them. As corps like United, cut out their pension programs, the feds have to take over, but often cut 25% of out the money owed to pensioners.
My advice to survive is to live minimulist living and save as much money as you can. Try not to spend too much, if you own stocks, sell them before 2015 happens and the Baby Boomers start cashing in stocks and crash the market. If it survives, the stock market is going to have some really cheap stocks after 2017.
China and India formed an economic partnership, that is 1/3rd the world's population right there. Don't ignore the EU either. These two will be big competitors to the United States of America.
If you can start a business, learn to do what other people do not want to do. For example, someone started a business to sell stuff on eBay for others too lazy to do it themselves. It sort of is like a garage sale, only online. They market mostly to people who do not have Internet access, but want to sell their stuff for whatever cash they can get from eBay. The key is to keep customer statisfaction high, so that they keep having repeat sales.
Remember, Slashdot does not have a -1 disagree moderation, and no, troll, flamebait, and overrated are not substitutes.
That's so thoughtful that I can't even tell if you're being ironic. If you're seriously asking that question, be advised that a person with a passing knowledge of history and economics, such as myself, cannot ascertain whether you are being ironic. The question is exactly that interesting.
Actually, this is a great reason for reducing offshoring and outsourcing. We shouldn't be dependent on other nations for our strategic needs.
I don't think the dollar situation is all that dire. Consider the following:
1- Oil accounts for much less of our trade deficit than in the 70's.
2- Oil consumption accounts for less of our economic output (barrels/gdp lower now than during 70s) cite
3- Our current account deficit is small compared to the size of our economy.
4- Capital markets in the U.S. are quite fair & liquid and the gov's is stable, meaning holding your wealth in U.S. dollar-demoninated assets incurs minimal political risk.
In all, the U.S. Dollar serves as a good place to park your wealth, mostly for reason #4.
As far as a persistent trade deficit, one can't make a normative statement; it's not good or bad. Consider this: you run a persistent trade deficit with your local grocery store and gas station. Is that "good" or "bad"? And for whom? When the U.S. economy does well, the trade deficit increases because we're consuming resources, and presumably, putting them to better use than the next highest bidder.
Does supporting countries and companies that treat their workers like dirt and pay them little to nothing amount to satisfying our moral obligation?
Countries should respect their workers. Then I will accept their cheaper products without complaint (for the most part).
Why is it that USA must step down to everyone else's level? Why can't they step up?
This "free trade" idea only works if all countries are created equal.
You obviously have no grasp of economics. Free trade works BECAUSE countries are not equal. A country should specialize according to its comparitive advantage.
I think it can be argued that this outsourcing is part of the natural cycle of growth in the computer industry.
Computers started out as custom built machines by scientists of high education. Now they are built by 3rd world countries. Why are you not crying that computer manufacturing should be done in the US? Programming is (arguably) the same way.
This is some of the most basic economics (I have only had one class in international trade). There is no "unfair" competition going on, people need to learn to adapt to a changing economy (this includes me, as I will be going into the CS field when I graduate)
"how can they call it a MINE if everything here is THEIRS?!?!" -Straight Jacket
Or let's say that they don't, and you're talking about the meanest form of modern corporate exploitation possible, for argument's sake lets say Nike hiring south east asian sweatshops for garment manufacturing, surely this is a heinous crime which can be unequivocally written off as the purest example of concentrated evil, right?
But what about;
According to a UNICEF study an estimated 5,000 to 7,000 Nepalese children turned to prostitution after the U.S. banned that country's carpet exports in the 1990s. Also, after the Child Labor Deterence Act was introduced in the US as estimated 50,000 children were dimissed from their garment industry jobs in Bangladesh, leaving many to resort to jobs such as "stone-crushing, street hustling, and prostitution," --"all of them more hazardous and exploitatitive than garment production" according to the UNICEF study. [1]
This?
A lot of people seem to be viewing the american job drain from a vacuum, I too am a coder and a sysadmin and I admit in my more primitive moments the same sense of panic and dismay strikes me when I ponder how I can compete with someone willing to do the same work as I am for 40$ per day, but the thing is you're not taking into account the entire equation.
A bunch of jobs go to india, there's less money in the domestic economy to spend on necessities of life, even if this is limited to a degree by government economic controls or other inefficient controls on natural reality, it can still be said to be a significant drain, so what's the result of the drop in demand for higher priced housing and goods? Those prices drop, also, they simply *have* to, if noone is buying them then it makes no sense for the businesses involved to maintain an unrealistic pricing structure and not actually get paid for their goods / services. The end result is a slow equilibrium being imposed upon the entire globalised economy, prices drop in the overpriced areas to match the decreased demand and raise in the underpriced areas to deal with the increased demand.
So what am I getting at? If you want someone to shout at, shout at the people making your life such a ridiculously high cost, your goods and service providers and the government that sucks the lifeblood from both you and them.
I think you've got it totally wrong here. If American companies don't outsource to reduce costs, they won't be able to compete with their rivals, and this would result in a loss for the entire American economy.
...", are not bound to work. In fact they're more likely to make things worse. The government can't (and shouldn't try to) control the direction of the international market. As for jobs being lost, structural changes have come before in our economic past, and we've always gotten through them all right. The workers who aren't willing to compete and sharpen their skills to survive probably don't deserve the jobs they're losing to begin with.
Inefficient companies that don't try to minimize operating costs just won't cut it in our market. They would stagnate and lose their business to more efficient firms. Outsourcing is good for both America and the countries being outsourced to (like India). There's nothing "unfair" about competition. It's good for us all in the long term.
It's scary that you actually think the government should take action in this situation. Most ideas that go something like "the government should
Our country is at the top position in the world today for a reason. We earned our way there, but can only stay as long as we can keep ourselves there. We must continue to evolve and compete to avoid being outdone by others, who have every right to try their best as well.
The solution is not to waste our time trying to keep others down, but rather to be smart and keep trying to get better and stay ahead of the pack. And this requires innovation, not regulation.
I've never understood why the US view on higher education is that the moment you get into university, your main goal in life becomes the consumption of fermented vegetables and goldfish.
Seriously, this is not the view in Canada, or other countries. There is no inferiority complex for going to a tech school vs. a principles school (IE: University). If you go to a tech school, they teach you how. If you got to a University, they teach you why (you're expected to be able to learn how on your own).
Perhaps if the US legal drinking age were lowered, University wouldn't be seen as such a booze zone (although, frankly, I'm guessing as much underage drinking occurs in the US as in Canada, despite the large legal drinking age gap). Perhaps if the US gov't made public education a priority, we'd also see generally accesible schools for people whose marks qualify them for it. I'd like to see what you could've done in University, instead of resenting people who went.
Of course, you could still go to Canada and pay 1/4th to 1/8th what you'd pay in the US (even after the usual 2-3x doubling of fees that citizens pay!). And you wouldn't have to deal with beer swilling!
--
Internet Explorer (n): Another bug -- that is, a feature that can't be turned off -- in Windows.
Well the reason I modded it down was that its so demeaning to us Indians. Yes this happens in India.
So who is responsible, do you have any idea. The problem is education. There is not enough of it. Did you fund any non-profit organisation here who was providing education to poor Indians. Who gave you the right to say such hurtful things.
The only reason why you are saying this is because of outsourcing of IT jobs. Because it hurts you. You are losing the advantage you had, of getting a much better salary than the average.
But don't forget that the things you said to not apply to the IT sector. The Software Engineers) are living much better in India than their American counterparts, at least on the things that we care about.
Can you eat outside daily in a decent restaurant without going over budget. Can you afford a Chauffer for your car in budget. Can you get house help who will clean your house, clothes and cook food in Budget. We can and that is what we care about more than the latest electronic gadgets.
I am just 33 and own a house and will be able to pay off the mortgage in a couple years more. And I will say that I am not as successful as my other friends. Can you say something like that.
You talk about safety regulations, what are those that would matter in the IT industry. An american should not talk about the Environment regulations, because they are the worst in the developed nations. They probably produce more emissions than India (except if you consider emissions from Cars).
Yes we work harder than you guys. Because we don't have labour unions, and nobody would protect us if we lost the job. There is no job security. We have to save our old age pension ourselves. There is no social security. So we save as much as possible.
We have been in this job insecure position since the beginning so we take it for granted. You will have to come to terms with it and work hard to be where you are. It is going to be harder on you than on us, because you cost more than us. Even though we live more lavishly (in the lower salary) than you.
Such rants are not going to help you. The only possibility of job security for you is to learn some foreign language (Indian or Chinese) and learn about our culture so that you can be the bridge between our technical people and your consumers.
If that's not the word you meant to use, it should have been.
Either way, it's a joke I'm going to steal.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
Uhm, dude, you have a really screwed up image of the Indian IT industry if you think it's 12 year olds banging on a keyboard for 80 hours a week.
I work for a large German IT company. We have a pretty ugly campus. I was in Bangalore last year. Not only are the IT campuses one of the nicest things that you find around, they're just plain helluva lot nicer than the campuses that you find in western companies. The employees make quite decent wages by local standards, and have one of the best work environments that you can find at any job there -- more or less comparable to a western work environment.
If you want to talk about the shitty living conditions in India that's fine. Things do get pretty ugly there. But don't talk about their IT industry in the same breath; it's one of the things that's actually helping to pull small portions of their economy and labor standards up a notch.
As much as I love Paul Graham's essays, and as much as I enjoyed his book, this is his one flaw in my opinion. He was one of the lucky, talented few that kicked some tail in a startup company, made a fortune, and in general took the fast lane to success through a startup.
He emphasizes again and again how much he believes in startups, but I really think his perspective is heavily skewed by what worked for him. The reality is, as you say, almost all startups will fail. Everyone - not even every smart/talented person - can go into a startup.
Let's not forget: PG made his money because his startup was purchased by a big corporation (Yahoo) and without the "old model" of business, the startup model doesn't work either. That's not to say he doesn't have good, insightful points, or that his writing isn't well worth reading...I think maybe it just needs to be tempered with a little more of the reality of the startup process.
-Jay