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Comment by vasilipupkin | Hacker News Reader

I think it's possible to vehemently disagree ( as I do ) with Paul Graham on his inequality thesis, and still be logical and coherent. This article is neither. It's patent nonsense.

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I actually think it's quite well written. It's not out there to dispute PG's central point. It's written to dispute the idea that Silicon Valley's engineering/business/vc minds have demonstrated skill at building anything more than an economically better future for themselves and those within the system. If it achieves that it seeks to invalidate PG's expertise. (From which much of his authority is derived. A concept familiar to Holly Wood as she is a sociologist.) It also criticizes his breadth of knowledge in the subject area, something an academic would be in a position to comment on. (I'd love to hear from an economist or another social scientist on whether PG's suppositions reflect the broader literature.)

Getting back to the article's main attack- It does so by making a logical, if emotion filled, attack. Venture capitalism is still capitalism. Participants work to, primarily, their own economic benefit rather than the benefit of society. (Yes, it's the worst system except for all the rest, but it still doesn't make the most long term beneficial allocations. See: poor funding for fundamental science research.)

Moreover the article criticizes PG (citing his lack of perspective) for promoting a "bootstraps" ideology. It tries to illustrate that the ideology is flawed in two ways: 1. The people who could most benefit don't necessarily have the personal capital (time, knowledge, etc.) to effectively run a startup. 2. It implies that there is only so much problem space that can be effectively addressed at any given time.

This is written in the style of a qualitative sociology monograph. I find it quite compelling, however, I'm not surprised that the crowd here doesn't share my view.

Plenty of paragraphs that are utter nonsense. Example:

"First of all, over 95% of startups fail. Every venture capitalist knows this. Those pesky things, for the most part, just eat money and more often than not actually destroy wealth. But the second reason why you should not allow yourself to think that startups create wealth is because of how they are funded."

This is nonsense that displays utter lack of understanding of startups, venture capital, economics, finance. To refute it, I would have to start with an Econ 101 lecture, followed by a lecture on basic statistics and probability distributions. In short, it's just incoherent nonsense

You might find your posts to be more persuasive if you started advancing an actual argument rather than trying to see how many times you can type “nonsense”. You might not agree with Holly Wood but she at least stated several ideas which can be debated, whereas your statement has nothing except an unsupported assertion that we should trust your authoritative judgement.

95% of books are not good, therefore writing books creates no value. The article makes a similar claim, but there is no mechanism that connects the part before therefore with the part after - it's assumed to be self evident. But that's nonsense. If you make such a claim, the onus is on you to explain how is it that failure rate, whatever it is, leads to value being not X, not Y, but <= zero

That doesn't seem relevant to the discussion at hand in the absence of a publisher claiming that the entire world should run like a publishing house with poor quality standards and telling everyone that their only sure path to success comes from writing books.

Your response does, however, nicely illustrate the problem: if someone went around telling kids that they should quit school, put everything into becoming NBA stars, hit musicians, etc. they'd rightly be mocked. When similar claims are made by Silicon Valley VCs, however, they're taken far more seriously despite not being much more realistic in practice.

Similarly, there are the costs to others from startup-style churn: people losing jobs due to VC-mandated unsound business plans or replacing many jobs with automation. To be clear, that isn't automatically wrong but definitely has a real measurable cost to society which many people prefer not to take seriously. Holly Wood might not have captured every detail of that debate but she's doing a great job of reminding us that we shouldn't forget it exists.

I'm specifically questioning nonsensical claims that startups create no value made by Holly Wood. I'm not sure what you are even talking about. Who is telling everyone to quit school and what does that have to do with any of this ?

Peter Thiel, for one. You haven't noticed on HN and other startup circles the idealization of the college dropout who becomes a startup founder?

Peter Thiel advocated for everyone not to go to college ? I think he advocated that college may not be the necessary for some people. But, I don't see what that has to do with the discussion at hand

Did you like Thiel's 'women have ruined everything' polemic in 2009 ?

"The 1920s were the last decade in American history during which one could be genuinely optimistic about politics. Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women - two constituencies that are notoriously tough for libertarians - have rendered the notion of "capitalist democracy" into an oxymoron."

http://www.cato-unbound.org/2009/04/13/peter-thiel/education...

I'd love to hear it, because it took me a quick Google search to find numbers for startup failure from 80%-95% cited. (Much higher than the 48.8% I found for small business failure rate.)

Moreover, I'd be interested if anyone has actually done a comprehensive study on total value (long-term economic and short term investor profits) added/lost from startups. I wouldn't be surprised if we found something that looks net/net negative or even pretty small.[1] (That is startups globally, not just VC funded or SV startups.)

If startups are engines of wealth re-allocations rather than drivers of long term economic benefit. Well, then silicon valley is just as bad as Wall Street.

[1] We're quick to count the successes, but struggle to count the failures. More than that, many startups, as the author points out, are entertainment companies that don't add much economically. Finally, how much money is churned out of investable capital into acqui-hires? How much of that delivers a meaningful return vs. defending a market position?

There was a research .in 2010 measuring a decrease of 40% in empathy among college students since 2000[1]. And Israeli researcher who talks with teens everyday and deals with those subject recently did an interview in an Israeli newspaper , and he thinks that the cause is smartphones and social media. He frames this as "our children are becoming less human".

If you add that into the calculation, it could be that the total value of all internet startups, Paul Graham's specialty , is greatly negative, and they're not just silly entertainment.

[1]https://www.psychologytoday.com/blog/born-love/201005/shocke...

How are startups responsible for empathy in college students?

Teenagers have little face to face time , and a lot of social media time , due to the addictiveness of smartphones, and various social media apps and probably various games -mostly created in silicon valley.

Face to face time is where you learn emotional intelligence and empathy. A simple example: usually in real life , when you hurt someone , you see him getting hurt and you might feel ashamed. Social media lacks that.

That's an interesting theory. How would you test it to prove (or disprove) it? Would you predict that it would change as video chat becomes more commonplace? Why or why not?

There's this study :

http://www.csudh.edu/psych/Virtual_empathy_-_Positive_and_ne...

It says "little negative effects for online usage, except for gaming both for males and females", but the other thing it says - "little decrease in face to face time" contradicts other research that talks about greatly decreased face-to-face time :

http://www.studentpulse.com/articles/1137/the-effect-of-tech...

So it does require more research.

As for changing to video chat - i'm sure that would help(to some extent, and depending on video chat quality [things like eye contact]) but the weird question is - how do you make face to face chat as addictive as facebook/reddit/HN ?

Well, the startups that don't fail generate financial returns that far outweigh lost capital from faulures. But value isn't just returns to investors, it's value for customers and employees which even failed startups generate But more importantly, you don't get to make claims that you can't substantiate and then ask others to prove to you they are false. Do you think Zeus is real? No? Well, prove to me he isn't. If you claim startups don't create value without actual evidence to back that statement up - that's a nonsensical way to converse

My evidence is not high quality, but it's evidence. Just because I don't have higher quality evidence at hand doesn't make it true. The sky is blue. You can disagree, but where I sit it looks blue.

I claimed my point and my evidence centers on failure rate and personal observation. You can disagree or choose to maintain your own anecdotal/limited evidence. Neither hypothesis is proven invalid until clear high quality evidence is provided.

I find your strawman distasteful bordering on offensive.

Failure rate is in no way any evidence of whether or not startups create value. Failure rate of drug discovery is also high, would you say drug discovery doesn't create value? I'm sorry if you feel offended but I'm not trying to offend you personally, I'm just pointing out that it is a nonsensical way to converse, to offer up claims that make no sense outside of personal observation

I'm not claiming that failure rate is the sole value destruction mechanism. Rather that it is one. The other, perhaps more pernicious, mechanism is solving problems with little to no long term social benefit. (i.e. much entertainment)

Your point about drug discovery helps illustrate the second item. If most of the drugs being pursued were cosmetic in nature, we could challenge the long term benefit of drug discovery.

I appreciate the apology, but that's part of my frustration. My claims do have some grounds for validity and consideration. They have a rational basis.

I don't see the rational basis. You keep repeating it exists but at no point have you explained how it follows that a failure rate of startups in any way whatsoever to any degree at all leads to them not creating any value. You have simply assumed this link - that's nonsensical

In fact, simple economics teaches us that a high failure rate is a good thing. Low failure rate would be consistent with very low risk projects that tend to be about some form of rent seeking or regulatory arbitrage. High failure rate means people are actually working on things that are hard to do. That's very valuable

If a new drug to cure something is discovered, we have a new drug no matter how many other startups fail and people who might have died are cured by it.

This is completely independent of what other people are doing, or whether other people have, say, failed music startups / failed websites that fail at whatever rate.

I'd say that startups can create wealth though, as 'value' is either tied to currency or not objective at all, and funny business with numbers isn't the most important thing in life.

I don't know, I don't agree with the article but I don't think it is a stretch to say something like "95% of startups fail, everyone knows this;" I don't know what the actual percentage is but I think this comports generally with reality and what most people understand.

Also, many people, even startup founders see VCs as somewhat predatory, even founders that are very fondly though in the HN community.

i also think it's also possible to disagree on some points.

moreover, i think a lot of the people that disagree do not have the time to fully research the issue that some people do or the platform to be heard that pg has.

finally, i would point out that pg's argument is not entirely based on logic. using phrases like "shooting at poverty" and "pie in the sky thinking" mark the original text as what it is: an opinion piece, not a research paper.

EDIT: there are citations. to make a (probably) logically true statement given assumptions that a large percentage of people can agree with, it's not a peer-reviewed research paper, except whatever measure of peer-review posts on medium, here, and elsewhere provide.

for all i know, some economists proof-read the thing, and if so, i'd like to know which ones.

indeed. Although, I prefer opinions I value to be based on logic :)

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