Hackers & Painters: Big Ideas from the Computer Age

by Paul Graham

I studied click trails of people taking the test drive and found that at a certain step they would get confused and click on the browser’s Back button. (If you try writing web-based applications, you’ll find the Back button becomes one of your most interesting philosophical problems.)

software development is an ongoing process. I think it’s cleaner if you openly charge subscription fees, instead of forcing people to keep buying and installing new versions so they’ll keep paying you. And fortunately, subscriptions are the natural way to bill for web-based applications.

A salesman has to deal with customers, and a developer has to deal with competitors’ software, but a system administrator, like an old bachelor, has few external forces to keep him in line.

Starting a startup to write mainframe software would be a much more serious undertaking than just hacking something together on your Apple II in the evenings. And so you didn’t get a lot of startups writing mainframe applications.

The arrival of desktop computers inspired a lot of new software, because writing applications for them seemed an attainable goal to larval startups. Development was cheap, and the customers would be individual people that you could reach through computer stores or even by mail-order.

The application that pushed desktop computers out into the mainstream was VisiCalc, the first spreadsheet. It was written by two guys working in an attic, and yet did things no mainframe software could do.12 VisiCalc was such an advance, in its time, that people bought Apple IIs just to run it. And this was the be...

There is all the more reason for startups to write web-based software now, because writing desktop software has become a lot less fun. If you want to write desktop software now, you do it on Microsoft’s terms, calling their APIs and working around their buggy OS. And if you manage to write something that takes off, you may find that you were merely doing market research for Microsoft.

If a company wants to make a platform that startups will build on, they have to make it something that hackers themselves will want to use. That means it has to be inexpensive and well-designed. The Mac was popular with hackers when it first came out, and a lot of them wrote software for it.14 You see this less with Windows, because hackers don’t use it. The kind of people who are good at writing software tend to be running Linux or FreeBSD now.

The Web let us do an end-run around Windows, and deliver software running on Unix direct to users through the browser. That is a liberating prospect, a lot like the arrival of PCs twenty-five years ago.

Back when desktop computers arrived, IBM was the giant that everyone feared. It’s hard to imagine now, but I remember the feeling well. Now the frightening giant is Microsoft, and I don’t think they are as blind to the threat facing them as IBM was. After all, Microsoft deliberately built their business in IBM’s blind spot.

IBM made a late and half-hearted entry into the microcomputer business because they were ambivalent about threatening their cash cow, mainframe computing. Microsoft will likewise be hampered by wanting to save the desktop. A cash cow can be a heavy monkey on your back.

Over time the teams have gotten smaller, faster, and more informal. In 1960, software development meant a roomful of men with horn-rimmed glasses and narrow black neckties, industriously writing ten lines of code a day on IBM coding forms. In 1980, it was a team of eight to ten people wearing jeans to the office and typing into VT100s. Now it’s a couple of guys sitting in a living room with laptops.

Desktop software forces users to become system administrators. Web-based software forces programmers to. There is less stress in total, but more for the programmers.

There are only two things you have to know about business: build something users love, and make more than you spend.

You may not at first make more than you spend, but as long as the gap is closing fast enough you’ll be ok. If you start out under funded, it will at least encourage a habit of frugality. The less you spend, the easier it is to make more than you spend.

As for building something users love, here are some general tips. 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.

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.

You may not believe it, but I promise you, Microsoft is scared of you. The complacent middle managers may not be, but Bill is, because he was you once, back in 1975, the last time a new way of delivering software appeared.

If you wanted to get rich, how would you do it? I think your best bet would be to start or join a startup.

Startups usually involve technology, so much so that the phrase “high-tech startup” is almost redundant. A startup is a small company that takes on a hard technical problem.

Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four. This pays especially well in technology, where you earn a premium for working fast.

If a fairly good hacker is worth $80,000 a year at a big company, then a smart hacker working very hard without any corporate bullshit to slow him down should be able to do work worth about $3 million a year.

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.

There is a large random factor in the success of any company. So the guys you end up reading about in the papers are the ones who are very smart, totally dedicated, and win the lottery.

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.

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.

Money is a side effect of specialization. In a specialized society, most of the things you need, you can’t make for yourself.

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.

I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else. Many people seem to continue to believe something like this well into adulthood.

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.

The people most likely to grasp that wealth can be created are the ones who are good at making things, the craftsmen. Their hand-made objects become store-bought ones.

A programmer can sit down in front of a computer and create wealth. A good piece of software is, in itself, a valuable thing.

Everyone in a company works together to create wealth, in the sense of making more things people want.

A great programmer, on a roll, could create a million dollars worth of wealth in a couple weeks. A mediocre programmer over the same period will generate zero or even negative wealth (e.g. by introducing bugs).

When those far removed from the creation of wealth — undergraduates, reporters, politicians — hear that the richest 5% of the people have half the total wealth, they tend to think injustice! An experienced programmer would be more likely to think is that all? The top 5% of programmers probably write 99% of the good software.

What a company does, and has to do if it wants to continue to exist, is earn money. And the way most companies make money is by creating wealth.

In a company, the work you do is averaged together with a lot of other people’s. You may not even be aware you’re doing something people want. Your contribution may be indirect. But the company as a whole must be giving people something they want, or they won’t make any money.

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.

In the right kind of business, someone who really devoted himself to work could generate ten or even a hundred times as much wealth as an average employee. A programmer, for example, instead of chugging along maintaining and updating an existing piece of software, could write a whole new piece of software, and with it create a new source of revenue.

Because an ordinary employee’s performance can’t usually be measured, he is not expected to do more than put in a solid effort. Whereas top management, like salespeople, have to actually come up with the numbers.

If you want to go faster, it’s a problem to have your work tangled together with a large number of other people’s. In a large group, your performance is not separately measurable — and the rest of the group slows you down.

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.

I think every one 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.

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.

If you took ten people at random out of the big galley and put them in a boat by themselves, they could probably go faster. They would have both carrot and stick to motivate them. An energetic rower would be encouraged by the thought that he could have a visible effect on the speed of the boat. And if someone was lazy, the others would be more likely to notice and complain.

But the real advantage of the ten-man boat shows when you take the ten best rowers out of the big galley and put them in a boat together. They will have all the extra motivation that comes from being in a small group. But more importantly, by selecting that small a group you can get the best rowers. Each one will be in the top 1%. It’s a much better deal for them to average their work together with a small group of their peers than to average it with everyone.

That’s the real point of startups. Ideally, you are getting together with a group of other people who also want to work a lot harder, and get paid a lot more, than they would in a big company. And because startups tend to get founded by self-selecting groups of ambitious people who already know one another (at least by reputation), the level of measurement is more precis...