{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

Paul Graham, one of the founders of web incubator Y Combinator, says we’re not in a bubble, and he’s right. There’s way too much talk about this mythical bubble. It ain’t a bubble, folks.

However, I think Paul is wide of the mark on a number of his assertions made when interviewed by Ian Delaney, who is currently writing a book on Web 2.0. Paul says he has spotted “a social trend that will last”, namely: “the startup world will increasingly be ruled by technical people rather than business people”.

God forbid!

I’m amazed that a savvy investor would think that way. Paul is a hacker himself of course, and a successful entrepreneur to boot, so I could be wildly out on this one. It just seems… wrong… on… so… many… levels…

“The idea of building something popular then figuring out how to make money from it was born in the Bubble. It sounds irresponsible, but it works,” he says. He should maybe append that sentence with “some of the time”. Or “once in a blue moon”.

Paul’s reasoning is: “As in so many other areas, Google is the pattern for the future. The hackers dominate Google, and that's why Google wins.”

Yet it is an open secret that Google has struggled with the internal strife that accompanies massive success. Some commentators have said that Google executives seem more worried about the concerns of employees, than Wall Street, or indeed any number of other challenges. Do you think Google’s technologists are staying awake at night pondering how to deal with this stuff? Or is it their business executives, the HR people, the internal comms people, and the PR folks?

Google is struggling to be a corporate, which, given its scale, it undoubtedly is. It doesn’t want to be a corporate, and certainly it doesn’t want to behave like one. Amen to all that. But a company that has doubled its headcount in the space of a year (to almost 7,000) needs some serious coordination. I don’t think most technologists are even remotely interested in that sort of thing.

So it is safe to say hackers don’t run Google, not in 2006. Hackers founded Google, sure, but Messrs Brin and Page will be the first to admit that they had no clue about how to monetise it when it launched. Remember that Adwords only became a reality about five years ago. Google mined gold, but as internet wannabes without a business model any right-minded VC in 1997 would have a) admired their ambition but b) showed them the door, on the grounds that they had no business model. The VCs would have been cursing themselves now of course, but would it have been wise to invest back in the day?

Hackers may have serious amounts of influence at Google, and yes, they build lots of lovely new Gproducts for fun, but Google is a big advertising network, and its clients are advertisers. Most techies I know hate advertising, marketers, account managers, and so on. Techies are good at the detail, not necessarily the big picture. I’m generalising here, but so is Paul.

Google, like other companies of that size, is most likely governed by the demands of its marketing department, driven by its business goals. Not by what Google’s internal tech purists want.

The fact is, Google built something really cool, and it worked, so it went viral. Like Digg, Bebo and MySpace went viral. None of these sites were engineered to ‘go viral’. They hoped to gain support from users, who became evangelists, raising brand awareness by word of mouth. But they could never have forecasted that level of success, and nor could a VC.

Paul says: “A lot of the most characteristically lame startups of the Bubble were that way because they were started by business guys, who then went looking for hackers to implement their ideas.” Hmmm. The really lame startups were those that were overfunded by dumb VCs who jumped on the bandwagon before realising where it was heading. I blame the VCs way more than the entrepreneurs waving the beermats around. They should have known better.

We’re not in a bubble nowadays partly because consumer internet behaviour has caught up with some of the crazy forecasts of yore, which means today’s crazy valuations might actually be rooted in something approaching reality. But back in the day, VCs were demanding that newly-funded companies spent their cash to acquire ‘eyeballs’, a metric that is slowly (sadly) but surely working its way back into favour. Look at the Superbowl ads in 2000 for proof of this. Eyeballs! Eyeballs count for shit. Eyeballs are a goddamned cost to the business, if there isn’t a business model (existing or prospective).

Many Web 2.0 startups are overly reliant on the ‘get scale, get acquired’ maxim (aka 'get lots of eyeballs, start hawking'). Which is a rubbish throwback to the madness of 1998-2000. This seems to be what Paul is hoping for too… get scale, then pin on some sort of business model (wooo, Adsense!), then get acquired. Or, in his case, implement an exit strategy. Let us not forget that Paul is an investor. If you were investing money in some cool technology product / web app, then wouldn’t you take a very close look at risk / reward, at market size, at market trends, and at opportunities to cash in somewhere down the line?

Coming at this from a developreneur perspective (I just coined a term there, people), you need to remember that just because you can build something doesn’t mean you should. Every minute spent working on your own web app is a minute you can’t bill a client for. If you are a developer, then time is money. You might learn new things building new web apps, so there is a value there. And yes, your new web app might ‘get scale, get business model, get acquired’. But that happens much less often than you might imagine. And besides, you need to know about business, about online (and offline) marketing, about quality content, about attracting users, about design, about encouraging interaction, about making sense of the data, about customer support, and so on. Most developers I know just don’t have all these skills, whereas internet business people might (but they won't know how to code).

Businesses are typically engineered and operated by business folk. Technologists solve problems for users. Marketers sell. That’s the way it should be. You see what happens when a marketer tries to tell a techie how he should implement his technology! Carnage! Or when a techie writes copy for a web page. Rubbish!

Solving problems with technology can be fun, it can put you on the map, and yes, you can probably bolt on some sort of business model to a successful website (like Google did) once you’ve got enough users to merit thinking about revenue streams / paying bills. But to suggest that “the business belongs to the hackers” is crazy talk. That’s tail wagging dog, in my view.

Chris Lake

Published 13 July, 2006 by Chris Lake

Chris Lake is CEO at EmpiricalProof, and former Director of Content at Econsultancy. Follow him on Twitter, Google+ or connect via Linkedin.

582 more posts from this author

Comments (2)

Avatar-blank-50x50

rolex replica

$75 Replica Rolex watches sale, Our site provides Replica Rolex, replica Rolex Watches, Breitling, Cartier,Omega, Tag Heuer Watches..more than 100 famous brands.

about 7 years ago

Avatar-blank-50x50

craiglist chicago

are hackers really the reason for the google win...???

and is paul right on his purpose. its a controversy that needs hell lot of explanation. you did mentioned many things in your blog to support your argument but still its not enough to convince others. thanks for the post.

about 6 years ago

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.