Gems from the Book "Hackers And Painters BIG IDEAS FROM THE COMPUTER AGE"

Today on Spet 11 2011, I just finished reading the book "Hackers and Painters: Big Ideas from the Computer Age" written by Paul Graham. It's an excellent book which as books title indicates is filled with full of ideas and great observations on its pages. I recommend this book if you are reading this post and I guess  you are probably working in software field, you should read it. It gives a new dimension to your thoughts.

I am just collecting some of the best gems found in the book here, so that I can reread and rethink and practice the things he has mentioned in the book.

Difference b/w Architectures & Engineers

Architects decide what to do and engineers figure out how to do it.

What and how should not be  kept too separate. You are asking for trouble if you try to decide what to do without understating how to do it

How to win over a big company with a start up?

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 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.

So if you can figure out a way to get in a design war with a company big enough that its software is designed by product managers, they’ll never be able to keep up with you. These opportunities are not easy to find, though. It’s hard to engage a big company in a design war, just as it’s hard to engage an opponent inside a castle in hand-to-hand combat. It would be pretty easy to write a better word processor than Microsoft Word, for example, but Microsoft, within the castle of their operating system monopoly,
probably wouldn’t even notice if you did.
The place to fight design wars is in new markets, where no one has yet managed to establish any fortifications. That’s where you can win big by taking the bold approach to design, and having the same people both design and implement the product. Microsoft themselves did this at the start. So did Apple. And Hewlett Packard. I suspect almost every successful startup has.

If you want to make money, you tend to be forced to work on problems that are too nasty for anyone to solve for free.

How to identify a person is interested in programming?

It seems surprising to me that any employer would be reluctant to let hackers work on open source projects. At Viaweb, we would have been reluctant to hire anyone who didn’t.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.

Right Mode For Collaboration In Software

As far as I know, when painters worked together on a painting, they never worked on the same parts. It was common for the master to paint the principal figures and for assistants to paint the others and the background. But you never had one guy painting over the work of another.

I think this is the right model for collaboration in software too. Don’t push it too far. When a piece of code is being hacked by three or four different people, no one ofwhomreally owns it, it will end up being like a common-room. It will tend to feel bleak and abandoned, and accumulate cruft. The right way to collaborate, I think, is to divide projects into sharply defined modules, each with a definite owner, and with interfaces between themthat are as carefully designed and, if possible, as articulated as programming languages.

How the people is buying things?

You might think that people decide to buy something, and then buy it, as two separate steps. That’s what I thought before Viaweb, to the extent I thought about the question at all. In fact the second step can propagate back into the first: if something is hard to buy, people will change their mind about whether they wanted it. And vice versa: you’ll sell more of something when it’s easy to buy. I buy more new books because Amazon exists. Web-based software is just about the easiest thing in the world to buy, especially if you have just done an online demo. Users should not have to do much more than enter a credit card number. (Make them do more at your peril.)

Marketing method to get rich customers

There is always a tendency for rich customers to buy expensive solutions, even when cheap solutions are better, because the people offering expensive solutions can spend more to sell them. At Viaweb we were always up against this. We lost several high-end merchants to web consulting firms who convinced them they’d be better off if they paid half a million dollars for a custom-made online store on their own server. They were, as a rule, not better off, as more than one discovered when Christmas shopping season came around and loads rose on their server. Viaweb was a lot more sophisticated than what most of these merchants got, but we couldn’t afford to tell them. At $300 a month, we couldn’t afford to send a team of well-dressed and authoritative-sounding people to make presentations to customers.

At times we toyed with the idea of a new service called Viaweb Gold. It would have exactly the same features as our regular service, but would cost ten times as much would be sold in person by a man in a suit. We never got around to offering this variant, but I’m sure we could have signed up a few merchants for it.

A large part of what big companies pay extra for is the cost of selling expensive things to them. (If the Defense Department pays a thousand dollars for toilet seats, it’s partly because it costs a lot to sell toilet seats for a thousand dollars.) And this is one reason intranet software will continue to thrive, even though it is
probably a bad idea. It’s simply more expensive. There is nothing you can do about this conundrum, so the best plan is to go for the smaller customers first. The rest will come in time.

Doubt to create and sell an innovative product/idea?

If you want to change the world, write a new Mosaic. Think it’s too late? In 1998 a lot of people thought it was too late to launch a new search engine, but Google proved them wrong. There is always room for something new if it is significantly better.

To Build A Start up Firm, you should have

If you’re a hacker who has thought of one day starting a startup,there are probably two things keeping you from doing it. One is that you don’t know anything about business. The other is that you’re afraid of competition. Neither of these fences have any current in them.

There are only two things you have to know about business: build something users love, and make more than you spend. If you get these two right, you’ll be ahead of most start ups. You can figure out the rest as you go.

Start by making something clean and simple that you would want to use yourself. Get a version 1.0 out fast, then continue to improve the software, listening closely to users as you do. The customer is always right, but different customers are right about different things; the least sophisticated users show you what you need to simplify and clarify, and the most sophisticated tell you what features you need to add. The best thing software can be is easy, but the way to do this is to get the defaults right, not to limit users’ choices. Don’t get complacent if your competitors’ software is lame; the standard to compare your software to is what it could be, not what your current competitors happen to have.
Use your software yourself, all the time. Viaweb was supposed to be an online store builder, but we used it to make our own site too. Don’t listen to marketing people or designers or product managers just because of their job titles. If they have good ideas, use them, but it’s up to you to decide; software has to be designed by hackers who understand design, not designers who know a little about software. If you can’t design software as well as implement it, don’t start a start up

From the Chapter:>How to Make Wealth

Startups are not magic. They don’t change the laws of wealth creation. They just represent a point at the far end of the curve. There is a conservation law at work here: if you want to make a million dollars, you have to endure a million dollars’ worth of pain. For example, one way to make a million dollars would be
to work for the Post Office your whole life,and save every penny of your salary. Imagine the stress of working for the Post Office  for fifty years. In a startup you compress all this stress into three or four years. You do tend to get a certain bulk discount if you buy the economy-size pain, but you can’t evade the fundamental conservation law. If starting a startup were easy, everyone would do it.

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. There are plenty of other ways to get money, including chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting. Most of the greatest fortunes have probably involved several of these.
The advantage of creating wealth, as a way to get rich, is not just that it’s more legitimate (many of the other methods are now illegal) but that it’s more straightforward. You just have to do something people want.

Until recently even governments sometimes didn’t grasp the distinction between money and wealth. Adam Smith (Wealth of Nations, v:i)mentions several that tried to preserve their “wealth” by forbidding the export of gold or silver. But having more of the mediumof exchange would not make a country richer; if you have more money chasing the same amount of material wealth, the only result is higher prices.

If you want to create wealth, it will help to understand what it is. Wealth is not the same thing as money.
Wealth is as old as human history. Far older, in fact; ants have wealth. Money is a comparatively recent invention. 

Wealth is the fundamental thing. 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.

Wealth is what you want, not money. But if wealth is the 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, and unless you plan to get rich by counterfeiting, talking about making money can make it harder to understand how to make money.

The advantage of a medium of exchange is that it makes trade work. The disadvantage is that it tends to obscure what trade really means. People think that what a business does is make money.
But money is just the intermediate stage just a shorthand for whatever people want. What most businesses really do is make wealth. They do something people want.

A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world. There is, in any normal family, a fixed amount of money at any moment. But that’s not the same thing.

What leads people astray here is the abstraction of money. Money is not wealth. It’s just something we use to move wealth around. So although there may be, in certain specific moments (like your family, this month) a fixed amount of money available to trade with other people for things you want, there is not a fixed amount of wealth in the world. You can make more wealth. Wealth  has been getting created and destroyed (but on balance, created) for all of human history.

Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is—and you specifically are—one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you’ll get
more for it.

In restoring your old car you have made yourself richer. You haven’t made anyone else poorer. So there is obviously not a fixed pie. And in fact, when you look at it this way, you wonder why anyone would think there was.

What a Job Is?

Someone graduating from college thinks, and is told, that he needs to get a job, as if the important thing were becoming a member of an institution. 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. It’s doing something people want that matters, not joining the group.

Measurement And Leverage

To get rich you need to get yourself in a situation with two things, measurement and leverage. You need to be in a position where your performance can be measured, or there is no way to get paid more by doing more. And you have to have leverage, in the sense that the decisions you make have a big effect.

Measurement alone is not enough. An example of a job with measurement but not leverage is doing piecework in a sweatshop. Your performance is measured and you get paid accordingly, but you have no scope for decisions. The only decision you get to make is how fast you work, and that can probably only increase your earnings by a factor of two or three.

An example of a job with both measurement and leverage would be lead actor in a movie. Your performance can be measured in the gross of themovie. And you have leverage in the sense that your performance can make or break it.

I think everyone who gets rich by their own efforts will be found to be in a situation with measurement and leverage. Everyone I can think of does: CEOs, movie stars, hedge fund managers, professional athletes. A good hint to the presence of leverage is the possibility of failure. Upside must be balanced by downside,
so if there is big potential for gain there must also be a terrifying possibility of loss. CEOs, stars, fund managers, and athletes all live with the sword hanging over their heads; the moment they start to suck, they’re out. If you’re in a job that feels safe, you are not going to get rich, because if there is no danger there is almost certainly no leverage.

But you don’t have to become a CEO or a movie star to be in a situation with measurement and leverage. All you need to do is be part of a small group working on a hard problem.

So all other things being equal, a very able person in a big company is probably getting a
bad deal, because his performance is dragged down by the overall lower performance of the others. Of course, all other things often are not equal: the able person may not care about money, or may prefer the stability of a large company. But a very able person who does care about money will ordinarily do better to go off and work with a small group of peers.

Technology = Leverage

What is technology? It’s technique. It’s the way 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. 

If you look at history, it seems that most people who got rich by creating wealth did it by developing new technology. 

Big companies can develop technology. They just can’t do it quickly. Their size makes them slow and prevents them from rewarding employees for the extraordinary effort required. So in practice big companies only get to develop technology in fields where large capital requirements prevent startups from compet-
ing with them, like microprocessors, power plants, or passenger aircraft. And even in those fields they depend heavily on startups for components and ideas.

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.

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’d always take the harder one. Not just because it was more valuable, but because it was harder. We delighted in forcing big-
ger, slower competitors to follow us over difficult ground. And I’d be delighted, because something that was hard for us would be impossible for our competitors.

This is not just a good way to run a startup. It’s what a startup is. 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? That is, how much difficult
ground have you put between yourself and potential pursuers?

And you had better have a convincing explanation of why your technology would be hard to duplicate. Otherwise as soon as some big company becomes aware of it, they’llmake their own, and with their brand name, capital, and distribution clout, they’ll take away your market overnight. You’d be like guerillas caught in the open field by regular army forces.

Here, as so often, the best defense is a good offense. If you can develop technology that’s simply too hard for competitors to duplicate, you don’t need to rely on other defenses. Start by picking a hard problem, and then at every decision point, take the harder choice.

When you’re running a startup, your competitors decide how hard you work. And they
pretty much all make the same decision: as hard as you possibly can.

Why Some People Are Good At Making Money?

Like chess or painting or writing novels, making money is a very specialized skill. But for some reason we treat this skill differently. No one complains when a few people surpass all the rest at playing chess or writing novels, but when a few people make more money than the rest, we get editorials saying this is wrong.

Why? The pattern of variation seems no different than for any other skill. What causes people to react so strongly when the skill is making money?

I think there are three reasons we treat making money as different: the misleading model of wealth we learn as children; the disreputable way in which, till recently, most fortunes were accumulated; and the worry that great variations in income are some how bad for society. As far as I can tell, the first is mistaken, the
second outdated, and the third empirically false. Could it be that, in a modern democracy, variation in income is actually a sign of health?