Tag Archives: paul graham

What Does Rick Rubin and Paul Graham Have in Common?

My brother recently took me to a Sound City Players show here in New York.  I’d never heard of the band before other than hearing it was a mashup of Nirvana, Foo Fighters and a dozen other artists.  How bad could that be?

In order to prepare for the show, he told me to watch this iTunes movie which is the history of Sound City.   I was not able to watch it before the concert but did end up watching it last night (romantic Valentines evening).

To sum it up quickly, Sound City was a recording studio in California that became famous for it’s location, home-y yet raw venue, and the volumes of gold and platinum albums that it turned out.  The studio was dedicated to tape based recording (pre-digital) and was magical in how it produced and directed everyone from Fear to John Fogerty, from Stevie Nicks to Nirvana.  The list of artists that stepped foot through their doors is unbelievably diverse and deep.

While watching the documentary, it got me thinking about how Sound City is similar to some of the incubator and accelerators that we have in the marketplace today for technology companies.  Are YCombinator, TechStars, Science, and others the next Sound City?

In other words, are recording studios similar to accelerators and incubators;  In many ways, they are.

I’ve spent some time in recording studios – specifically one here in New York City during my music business days.  Producers and recording engineers play similar roles to mentors and advisors that come thru accelerators and incubators.

Producers help to shape the music and if good, get the very best out of the artist.  They push the artist forward and move them into uncomfortable zones… often telling the artist things that they might not want to hear.

Recording engineers are making sure the music is being captured correctly and in a way that can move into production after its mutually agreed upon.

Artists who go thru recording studios are not guaranteed a hit song or album.  But the chances of going thru a solid recording studio with a reputable producer and creating an album will have a higher probability (I would think, not grounded in fact) of being taken seriously by the music business (A&R folks, etc).  The album also is accelerated thru the recording process as there is a lot of time dedication, attention, and focus on shipping the very best album possible.

Bringing this back to entrepreneurship, is Paul Graham or David Cohen the Rick Rubin of the accelerator industry?

It sounds like a hyperbolic and trivial statement, but think about it.

Not all startups need to go thru a accelerator or incubator.  Many artists don’t necessarily go thru a recording studios.  A big reason for this is that the digital tools available today do not necessitate getting together in a professional studio when Ableton Live or Pro Tools can have similar output at a fraction of the cost.  This is also similar in the accelerator space, though while the tools can be had whether or not in an accelerator, the network of people you engage with are most important.

Just something fun to chew on.

YCombinator Ad Innovation Conference Keynote Breakdown

Today’s opening keynote was given by Paul Graham, at the YCombinator Ad Innovation Conference in Mountain View.  I attended along with @tdavidson and @barryl530 to see the early stage innovation that’s happening in the ad tech space.  We were certainly impressed not just with the innovation but with the amount of great agencies in attendance such as AKQA, Goodby, Sapient, Omnicom, Cadreon, VivaKi, and Jess3 amongst others.  We were in good company, to say the least.

Paul admitted he wasn’t an advertising guy, but knows technology enough to understand how tech will influence advertising in the next few years.  The data he used to back his claims were based on the thousands of applications YCombinator receives and is able to forecast and see trends in where innovation is happening.

Here is a summation of the 9 trends that’s pushing advertising, per Paul, but I tend to agree as well.

1. Tablets are important and might call for their own unique advertising platforms to take advantage of the user interface.  Apple and Android will dominate the market and Apple will dictate the ad formats.   Tablets are genuinely a big deal and we aint seen nothing yet.  My take:  Yes, he’s spot on.  Tablets penetrate and are both a content consumption device but increasingly, a content creation device, as long as we can innovate and create good input devices.

2.  All data lives in the cloud. All data about a consumer, transaction, records, etc will live in the cloud and ostensibly, be located in one database that can be used.  What will hold this back will not be technology, but will be government and policy.  My take:  Totally.  We’re seeing this today.  I’m all about data.

3.  More stuff happens peer 2 peer.  Paul used an analogy that I don’t know if I agree with, but he claims that hotels exist because consumers couldn’t find any other way of staying in a remote city or town, so hotels were built to meet this demand.  Now with services like airbnb, hotels could cease to exist as we know them.  My take:  I like what he’s trying to say, but don’t know if I buy the entire analogy.  Not everyone wants to stay in someone else’s home.

4.  There are going to be a lot more startups.   I liked where Paul went with this.  He basically said that engineers had 2 choices after college:  go to graduate school or join a big company.  Now, they have 3.  The third oppty is to create a startup.  Paul threw out the 1% number which was how many developers/engineers start companies… and if this increases 10%, then that’s 10x the amount of startups in the ecosystem.  Again, we aint seen nothing yet with the volume of startups out there… there are going to be many.

5.  Facebook is already a big deal.   Paul said that the $1.6bln from Facebook is quick and simple money and they haven’t really began monetizing yet.  They are focused on growth and even have a Facebook Growth Group, which is one of the most powerful groups in Facebook.  He thinks that when they start monetizing, they can seriously move into markets and kill competitors such as PayPal or Wepay.  My take:  I agree with Paul, but they have to be careful in how they approach this as to not alienate developers and users.  I don’t want Facebook to be 100% of the services I use as a consumer.

6.  Software eating the world.  Don’t be an advertising company that does software.  Be a software company that does ads.  Having this mentality is obviously valley-driven, but allows you to scale a business and think more product focused, which theoretically, should have better outcomes.

7. Target Ads Precisely.  Google could target their ads much more precise but they don’t have to yet, as the market isn’t necessarily requiring it or does it make economic sense for Google to do it until they must.  Paul said a great quote:  “Assume you can read someone’s mind, what ad would you give them.”  My take:  This is one of our investment thesis at kbs+p Ventures – application of data to drive advertising decisioning.

8.  More things will be done by numbers.  If an investor had to place a bet on quantitative measurement/analytics of creative, bets should be placed on measurement.  Numbers will/can/do drive decisioning and with ROI driven world, we need to quantify it.  My take:  Spot on, another investment thesis of kbs+p Ventures as well as what we apply at VMM and The Media Kitchen.  Couldn’t agree more.  I even treat my fantasy football teams this way.. and I want 2-1 this past weekend!

9.  Creative.  Creative will begin to become “generated.”  Paul essentially argued that the best creative in the “future” world will have to be generated because of all the varieties that are needed.  My take:  I think he’s onto something if we’re able to deliver the right creative to the right person at the right time.

I loved Paul’s opening.  This wasn’t 100% of everything, but was a lot of it.  My friend Roger of IA Venturesc also talks about similar trends on his blog, in a post titled, changing polarity in advertising, if you want to continue being inspired…

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The Web Startup, or new Commodity

This post was inspired by Fred Wilson’s response to Paul Graham’s Future of Web Startups.   Both of these gentlemen agree that web startups are becoming commodities and that it’s going to be much harder to wade through the clutter of the thousands of web startups launching each year.

What’s interesting here is that Fred is an investor who focuses primarily (unless I don’t know something) in the web.  Many venture investors don’t like investing in commodities because the market becomes volatile.  That’s why we have bankers and traders who have giant analytics teams & analysts who study, study, and study more about their next position or holding.

What struck me about Fred’s post was his comment:

So it looks like we are going to need to hire our own Ruby/Java/PHP developer sometime soon. I guess that’s the way it is. And I am OK with it.

YES.  They get it.  It’s like trying to do A&R in the music world without having played music in the past.  However, every label has A&R reps so you’re going to have some stiff competition.

I like the way Union Square is thinking and this will not just help them on their technical due-diligence, but should help them on solid deal-flow of solid tech startups as the developer probably has great people around him.

Founders, Founders and More Founders

Paul Graham of Y Combinator success has released an insightful essay about traits he’s studied with the early stage entrepreneurs he deals with each day that are part of his program up in Boston.

The essay didn’t just strike me about founders, but it struck me about Y Combinators success rate as well:

We’ve now been doing Y Combinator long enough to have some data about success rates. Our first batch, in the summer of 2005, had eight startups in it. Of those eight, it now looks as if at least four succeeded. Three have been acquired: Reddit was a merger of two, Reddit and Infogami, and a third was acquired that we can’t talk about yet. Another from that batch was Loopt, which is doing so well they could probably be acquired in about ten minutes if they wanted to.

That’s pretty darn solid if you ask me. I do not know anyone personally who has been through the Y Combinator, but based on the essay that Paul has written and the statistics, the numbers certainly look positive.

In the essay that Paul has written, he talks about many reasons why people do not become entrepreneurial and talks about why those reasons should be ignored. The topics covered are:

  1. Too young
  2. Too inexperienced
  3. Not determined enough
  4. Not smart enough
  5. Know nothing about business
  6. No Cofounder
  7. No idea
  8. No room for more startups
  9. Family to support
  10. Independently wealthy
  11. Not ready for committment
  12. Need for structure
  13. Fear of uncertainty
  14. Don’t realize what you’re avoiding
  15. Parents want you to become a doctor
  16. A job is the default