Posted by: Michael Mandel on May 19
Graham is a programmer, computer language designer, and author. The main point of his essay is that today it makes sense for more and more college grads to try starting their own companies, rather than trying to get hired by big companies.
This benefits both the grads and the big companies. The grads get a chance to take risks and gain experience, at a time when their costs are relatively low. And the companies get to find who, among the new grads, are truly competent.
Like everything else in technology, the cost of starting a startup has decreased dramatically. Now it's so low that it has disappeared into the noise. The main cost of starting a Web-based startup is food and rent. Which means it doesn't cost much more to start a company than to be a total slacker. You can probably start a startup on ten thousand dollars of seed funding, if you're prepared to live on ramen.
The less it costs to start a company, the less you need the permission of investors to do it. So a lot of people will be able to start companies now who never could have before.
The most interesting subset may be those in their early twenties. I'm not so excited about founders who have everything investors want except intelligence, or everything except energy. The most promising group to be liberated by the new, lower threshold are those who have everything investors want except experience.
He then goes on to point out:
Startups are a comparatively new phenomenon. Fairchild Semiconductor is considered the first VC-backed startup, and they were founded in 1959, less than fifty years ago. Measured on the time scale of social change, what we have now is pre-beta. So we shouldn't assume the way startups work now is the way they have to work."
The important point here is that the venture capital system--which I consider to be one of the great financial innovations in recent history--is still evolving.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.