Wandering Wandering Star

There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on “features” instead of world-changing ideas. Founders Fund published a provocative article summed up by the subtitle: “We wanted flying cars, instead we got 140 characters”. Alexis Madrigal writes in The Atlantic that “we need a fresh paradigm for startups”, and dismisses the significance of recent “hot” startups:

What we’ve seen have been evolutionary improvements on the patterns established five years ago. The platforms that have seemed hot in the last couple of years — Tumblr, Instagram, Pinterest — add a bit of design or mobile intelligence to the established ways of thinking.

One thing these critics need to be careful about is that, as Clay Christensen has long argued, many important new inventions start out looking like toys. Twitter (Founder Fund’s headline example of a “trivial” startup) started out looking like a toy but has since transformed the way information is distributed for tens of millions of people. Madrigal dismisses cloud computing as “a rebranding of the Internet” whose only effect has been to make “the lives of some IT managers easier,” overlooking that cloud-based services solve the “third party payer” problem of enterprise sales, thereby completely changing how enterprises adopt new technology.

That said, I generally agree with the sentiment that the startup world is too focused on chasing trends. I don’t think this is the fault of entrepreneurs. I meet entrepreneurs all the time who are working on ideas that seem quite meaningful to me. Some of them are building futuristic new technologies. Some are trying to disintermediate incumbents and thereby restructure large industries. Others are trying to solve stubborn problems in important sectors like education, healthcare, or energy.

The problem I encounter is that many of these “meaningful” startups have trouble raising money from VCs. An entrepreneur working on groundbreaking robot technology recently joked to me that he’d have an easier time raising money if his robots were virtual and existed only on Facebook. He was only partly joking. His startup will require a lot of capital and doesn’t have an obvious near term acquirer. Only a small group of VCs today will even consider such an investment.

Pink bubblegum. Smurf-blue cotton candy. Fading perfume basenotes. Midnight drive fleeing Las Vegas w/ the top down.

ESQ: Tell me about your amps, though. How much would you tinker with your amps back in the day?

EVH: Always. We were tinkering until we left on tour.

ESQ: I’m talkin’ back in the old days, with your Marshall. What did you do to that thing?

EVH: That was a stock amp.

ESQ: Come on man, rumor was that you rebuilt the damn thing.

EVH: I lied in. Okay, this is a long story, actually. I think this is also my paranoia of interview, because, is because the very first — Dave and I did a promo, a radio promo, an interview promo thing before the first record came out. And here we were on live radio, and the guy’s going, “We have Van Halen, a brand-new band from L.A. here in the studio. So Dave, tell me” … And here’s Dave, “Bop, bop, yabba, dabba, doo,” you know? Then he turns to me and says, “I understand you and your brother, Alex, are from Amsterdam, Holland.” And I went, “Yeah.” Dead air. Dead air. And then the guy starts going like this, and I go, “I’m over here.” And I’m looking at him, and I start gesticulating, too, and then I say, out loud, “What the fuck does this mean?” It was a fuckin’ disaster. So afterwards, Dave goes, “Here’s what you’re gonna do. You’re gonna lie. You’re gonna make up some shit so they don’t remember it.” And, you know, I had to say something. I couldn’t just say, “Yeah.” But he asked me a stupid question. “Yeah” sufficed. You know, I wasn’t about to say “Van Gogh’s from there, you should see it during the winter,” you know? I’m not good at elaborating in that respect. So anyway, I do my first full-blown interview with Guitar Player, and that whole thing is in my head. You gotta make up shit. You gotta keep it interesting. All that Dave told me. So — oh, Joe Walsh calling me?

ESQ: Really? Joe Walsh?

EVH: Yeah. Grab it. Tell him I’m in the middle of an interview. But, so — okay, what I did was the amp was completely stock, but I used a light dimmer.

ESQ: You used a light dimmer on what?

EVH: I bought an English version, I had my 100-volt Marshall. I bought one through the recycling or the newspaper that was from England, and it was set on 220 volts. I didn’t know. So I plugged the thing in, but I’m going, “Fucking thing doesn’t work. I got ripped off.” I just let it sit there. After about an hour, there’s sound coming out, but it’s really quiet, cause it’s running on half voltage. So I go, “Hey, wait a minute. It sounds exactly like it’s supposed to all the way up, but it’s really quiet.” So we had a light dimmer in the house, and I hooked up the two leaves from the amp to the light, so I did it backwards, blew out the fuse box. Then I went down to DOW Radio and asked, “Do you guys have any kind of super duper light dimmer?” They go, “Yeah, it’s all Variac, variable transformer, you know.” And on the dial you could crank it up to 140 volts or down to zero. So I figured, if it’s on 220 and it’s that quiet, if I take the voltage and lower it, I wonder how low I can go and it still work. Well, it enabled me to turn my amp all the way up, save the tubes, save the wear and tear on the tubes, and play at clubs at half the volume. So, my Variac, my variable transformer was my volume knob. Too loud, [makes knob turning sound] I’d lower it down to 50.

ESQ: That’s amazing. But still, that was it? That was the only modification you did?

EVH: Just out of necessity. I need an amp I could play in clubs. We wouldn’t get hired, I would play so loud, you know, I’m going, what can I do? What can I do? Okay, I turned the voltage, the wall voltage into my volume knob.

ESQ: Did you lie to Guitar Player?

EVH: Wait, wait, wait, what I was gettin’ at was when I did my first interview, I told people the complete opposite. I told them I raised it up 140 volts. I felt so bad. I felt so fucking horrible, man. They said, “Please don’t attempt what Eddie Van Halen said in the last interview, because everyone was blowing their amps.” Everyone fried their amps ‘cause of me. I felt so bad. I never lied again after that.

The difference between the best worker on computer hardware and the average may be 2 to 1, if you’re lucky. With automobiles, maybe 2 to 1.

But in software, it’s at least 25 to 1. The difference between the average programmer and a great one is at least that.

The secret of my success is that we have gone to exceptional lengths to hire the best people in the world. And when you’re in a field where the dynamic range is 25 to 1, boy, does it pay off.

“The minute I dropped out (of college) I could stop taking the required classes that didn’t interest me, and begin dropping in on the ones that looked interesting…
Much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on…”

You can’t connect the dots looking forward; you can only connect them looking backwards.

So you have to trust that the dots will somehow connect in your future.
You have to trust in something — your gut, destiny, life, karma, whatever.
This approach has never let me down, and it has made all the difference in my life.”

The idea that a 10-person company of 20-somethings in Mesquite, Texas, could get its software on more computers than the largest software company in the world told him that something fundamental had changed about the nature of productivity. When he looked into the history of the organization, he found that hierarchical management had been invented for military purposes, where it was perfectly suited to getting 1,000 men to march over a hill to get shot at. When the Industrial Revolution came along, hierarchical management was again a good fit, since the objective was to treat each person as a component, doing exactly the same thing over and over.

The success of Doom made it obvious that this was no longer the case. There was now little value in doing the same thing even twice; almost all the value was in performing a valuable creative act for the first time. Once Doom had been released, any of thousands of programmers and artists could create something similar (and many did), but none of those had anywhere near the same impact. Similarly, if you’re a programmer, you’re probably perfectly capable of writing Facebook or the Google search engine or Twitter or a browser, and you certainly could churn out Tetris or Angry Birds or Words with Friends or Farmville or any of hundreds of enormously successful programs. There’s little value in doing so, though, and that’s the point – in the Internet age, software has close to zero cost of replication and massive network effects, so there’s a positive feedback spiral that means that the first mover dominates.

If most of the value is now in the initial creative act, there’s little benefit to traditional hierarchical organization that’s designed to deliver the same thing over and over, making only incremental changes over time. What matters is being first and bootstrapping your product into a positive feedback spiral with a constant stream of creative innovation. Hierarchical management doesn’t help with that, because it bottlenecks innovation through the people at the top of the hierarchy, and there’s no reason to expect that those people would be particularly creative about coming up with new products that are dramatically different from existing ones – quite the opposite, in fact. So Valve was designed as a company that would attract the sort of people capable of taking the initial creative step, leave them free to do creative work, and make them want to stay.

Consequently, Valve has no formal management or hierarchy at all.