Why Aren’t there More Paul Grahams?
Paul Graham has an interesting essay “Why There Aren’t More Googles.” In it, he talks about how VC are shying away from doing lots of little deals, and how the bold ideas are the ones that are hardest to fund:
And yet it’s the bold ideas that generate the biggest returns. Any really good new idea will seem bad to most people; otherwise someone would already be doing it. And yet most VCs are driven by consensus, not just within their firms, but within the VC community. The biggest factor determining how a VC will feel about your startup is how other VCs feel about it. I doubt they realize it, but this algorithm guarantees they’ll miss all the very best ideas. The more people who have to like a new idea, the more outliers you lose.
Paul is absolutely right. The more people who have to like a new idea, the more outliers you miss. However, any really good new idea is likely a combination of one really good insight, and several bad ones. It’s hard to dis-entangle them until you engage with the market. There’s a real question of how expensive that will be. There’s also the question of will a really bold new inventor listen enough to make the idea successful?
When I was at Zero-Knowledge, we spent a lot of time exploring ideas which have now come to fruition. Zero-Knowledge, under the name RadialPoint, is thriving. Selling security and privacy to consumers makes sense as part of an ISP package. Making it work, and figuring out what people were ready for, took a while. Some of the bits that they weren’t ready for, and perhaps weren’t ready for the market include the IP level privacy, a problem that the Tor Project is hard at work on. We also worked hard on ‘private credentials, which Credentica launched as U-Prove, and has since been acquired by Microsoft.
We had lots of new ideas at Zero-Knowledge, and a set of happy outcomes (as shareholders know).
But Zero-Knowledge, while bold, wasn’t even absolutely new. It was built on the ideas of the cypherpunks, and we even had a Chief Cypherpunk. Similarly, Google wasn’t the first of the search engines. It was innovative in how it worked, but it was several years after Yahoo!, AltaVista, and Ask. The bold ideas took a while to become profitable ideas.
So I think that it’s absolutely wonderful that we have a creative, chaotic froth of very little companies, and that Paul helps make that happen. I wish there were more. I love seeing what emerges from that chaotic experimentation. But that experimentation can be tremendously expensive, with people chasing many variations of the ideas.
Paul is chasing a variation on how funding happens. He believes passionately in that vision, and is putting his money where his mouth is. Will it work? Who knows? I’m glad there’s chaotic experimentation, and if Paul succeeds, I’m sure he’ll have many imitators.