[ten_fingers]

PG,

In part you are correct, but you are making some huge mistakes and, in a saying from my past, are "straining over gnats and forgetting elephants".

> That's made harder by the fact that the best startup ideas seem at first like bad ideas. I've written about this before: if a good idea were obviously good, someone else would already have done it.

That's likely true from what you and Silicon Valley see, but that's just a gnat.

Basically you are saying that success is a shot in the dark and it is impossible for an entrepreneur and their financiers to design success with good reliability. That is, from enormous data, obviously nonsense.

Paul, instead of shooting in the dark, you need to turn on a light!

I claim that we can design success, on just clean sheets of paper, with high reliability and that how to do so is well known with a fantastic track record with the long track record right in front of us.

Also, we need to address your:

> if a good idea were obviously good, someone else would already have done it.

Nonsense. Paul, where do you get such stuff? You have one of the best backgrounds of anyone in Silicon Valley entrepreneurship, and yet you still fall for that nonsense that fills the trash and the offices on Sand Hill Road.

What you mean by "a good idea" is just a good 'business idea', e.g., a very short, nearly superficial, description of the business to, say, an early customer. But, Paul, that's nearly irrelevant.

Want a good business idea? Make a billion dollars quickly? A sure fire winner? Okay, this is your lucky day. May I have the envelope, please (drum roll). Yes, here it is: One pill to take once that provides a safe and effective cure for any cancer. That's your guaranteed, 100% true, died in the wool, sure fire, billion dollar "good business idea". And it's obvious, and no one has done it. Done.

Since the 'idea' is obvious, why has no one done it? Sure: No one knows HOW to do it.

Are you beginning to understand?

So, for a hand up, in case you were up all night drinking beer with the boys, here is a 'generic method' (ALL TRUE hackers just LOVE such verbiage):

Step 1. Think of a big, unmet need, something a billion people will pay a little for or thousands of people will pay a lot for. E.g., the one pill cure for any cancer. That is, think of an important, unsolved problem.

Step 2. Find a way to meet this need. E.g., for the cancer pill, have to do some quite good biomedical research. Uh, did I say that it was all easy? I don't remember saying it was all easy. If Step 2 is too difficult, then return to Step 1 (we're writing this in the form of an 'algorithm' since ALL TRUE hackers just LOVE algorithms). Else proceed to Step 3.

Step 3. Sell the solution to the customers and take the money to the bank.

There it is, in just three steps. Of course, likely the bigger the unmet need from Step 1, the more difficult will be the research in Step 2. Whatever, the key to the 'algorithm' is the research in Step 2.

Did I mention 'research'? Gee, does anyone on Sand Hill Road consider research? Well, Paul, you and Y Combinator have high qualifications in evaluating research, but a cursory look at several of the best known venture capital firms in Silicon Valley, Boston, Winter Street, and NYC show little to no ability or willingness to evaluate research. Uh, to evaluate research, as usual, we want at least a relevant Ph.D., a tenure track faculty position in a research university, and some relevant peer-reviewed publications of original research.

So, research is being ignored! Opportunity knocks!

Now, should we have any faith in the promise of research to get solutions to practical problems, or is all of research just ivory tower intellectual self-abuse that has yet to be proven totally useless forever?

Let's see: It turns out that there is in all of the world in all of history exactly one, unchallenged, unique grand champion of doing research to get powerful solutions to important practical problems. And the track record is much better and much longer than that of Silicon Valley.

Without further ceremony, here's the envelope. Yes, the answer is, the US DoD. They got going about 70 years ago and did little projects like "the bomb, the hydrogen bomb", radar, synthetic aperture radar, spread spectrum radar, encoded with shift register sequences, adaptive beam forming passive sonar, inertial navigation, GPS, and on and on.

So, for the question, is it possible to do research that yields powerful solutions to important practical problems? Sure. Done.

So, should Silicon Valley fund research? Well, perhaps not. But, if an entrepreneur has selected a good "unmet need" in Step 1 and done some good research to get a powerful solution in Step 2, should Silicon Valley consider the research?

Hmm ...? But, such research is rare! Right! Did I notice that you have already noticed that big winners are rare, 'black swans', outliers, "few"? Yup.

How many $200 billion winners does a $100 million venture fund need to give good returns to its limited partners? Many? Several? A few? How about just one?

Silicon Valley is shooting in the dark into a pond with nearly only small fish. Silicon Valley needs to turn on some lights, look, pay attention to powerful research for big unmet needs, and then evaluate pulling the trigger.

My guess is that the real problem is the limited partners (LPs) who really prefer to look at reports from accountants. So, the LPs tell their venture funds to do all evaluations as close to accounting as possible. Since the usual accounting metrics are not yet available, the venture firms use surrogates, and their favorite is 'traction'. They want their coveted 'traction' to be high and growing rapidly. E.g., in the case of the bomb, they would have said "You build and test one and get one ready for delivery, and we will chip in for the gas for the Enola Gay.".

[harryh]

I'm sympathetic to what you are saying, but the DoD bit is the worst part of your argument. The DoD wasn't trying to profitably conduct (or fund) research.

[ten_fingers]

You deliberately misread or need a remedial reading course: I was clear, totally clear, crystal clear: My point was that the DoD research shows that research can be powerful for finding solutions to practical problems.

Your point does not contradict what I wrote and is hardly even relevant.

Also I was totally clear that venture capital might not want to fund research. Instead my point, my recommendation, was that venture capital should consider and evaluate research that has already been done. But in information technology, Sand Hill Road will NOT do that. A-H won't do it. Menlo won't do it. KP won't do it. Sequoia won't do it. Founders's Fund won't do it. Silicon Valley will NOT evaluate research. PERIOD. No wonder their returns suck.

For the DoD, actually, if do some arithmetic on something like ROI, their deployments and even their research look good, MUCH better than Silicon Valley.

Let's take a simple example: If read Richard Rhodes, the atomic bomb project, The Manhattan Project, cost about $3 billion. And there was a LOT of duplication and failed directions. But apparently the Bomb saved about 1 million US casualties by avoiding invading the islands of Japan. So, we're talking $3000 per casualty. We're talking a financial bargain.

Want to do some ROI calculation on, say, GPS? How about the ROI of GPS and laser guided bombs? So, roughly get one bomb to do the work of some power of 10 bombs without GPS and laser guidance.

Want to do some ROI on, say, packet communications networks, i.e., the Internet, and just for the DoD uses?

Again, yet again, my point was that DoD has shown in rock solid terms for over 70 years that research can provide astoundingly powerful solutions to important practical problems. So, in my 'algorithm', the key in Step 2 is just such research, and the DoD has shown that such research is possible.

Just what part of this simple argument is too difficult to understand?

Look, guys, I know that it's possible to dream of typing in some Java, Python, C++, etc. for a social, mobile, sharing, app and hope to get rich. But, PG's essay explained how tough it is to evaluate such work early on, and the averages along Sand Hill Road just SUCK.

But the DoD has done well in essentially my three steps for 70+ years.

Gotta tell you, in broad parts of our economy and technology, what YC and SV use as project evaluations won't pass either the giggle or sniff tests. Instead, projects in applied science and engineering receive careful, detailed evaluation early on and, when a passing grade is given, execute with high success. We're talking dams, bridges, tall buildings, airplanes, and much more. Net, the evaluation techniques of SV are back in the paper airplane days.

[sidcool]

Why's your post blurred?

[bryanallen22]

It's a downvoted post. (There are a few shades of gray.)

Note that you can't downvote until you have enough karma, which I believe is 500 right now. The threshold goes up as the site grows and karma becomes easier to acquire.

[ucee054]

You overestimate the value of academic research and of PhDs

[ten_fingers]

No, I never claimed that academic research and Ph.D.s have high average value.

The "value" of these two in nearly all cases is low. But, the value in particular cases is astoundingly high, totally blows away nearly everything else. What is crucial, then, as I explained very clearly, is EVALUATING the research. Then what the "value" is in most cases is irrelevant. Instead, what is relevant and crucial is the value after good results from a careful evaluation.

I didn't suggest investing in research and only suggested evaluating research that has already been done.

The US DoD has a fantastic track record both in evaluating projects to do research and in evaluating research already done.

The US research universities are also good at evaluating projects to do research and also research already done. Believe me, in technical fields, the US research community is quite good at evaluating both research proposals and completed research.

The information technology part of Silicon Valley won't even attempt to evaluate research even that is already done.

Does Silicon Valley get a lot of project proposals with such research? Likely not. But, as PG's essay explained, so far Silicon Valley nearly never gets project proposals for projects that are "big wins" and that SV can tell with good accuracy are "big wins" early on.

So, since, as in PG's essay, SV is struggling, especially in project evaluation and refuses to evaluate research, I mentioned, as in my Step 2, that research can yield powerful solutions to important problems from my Step 1 and that the US DoD does well in evaluating research. So do many other parts of our economy, e.g., essentially all of aerospace and huge fractions of all the parts of our economy involved with challenging engineering, and in these cases the evaluations are for high financial ROI.

In simplest terms, the ROI averaged across Sand Hill Road and Winter Street sucks; as PG's essay explained early project evaluations are shot in the dark; research can provide powerful solutions for important problems; research really can be evaluated with good accuracy; but SV refuses to evaluate research. As PG's essay explained, to get SV's returns up takes only a tiny number of "big wins"; well, the US DoD has done well evaluating "big wins" with high accuracy for over 70 years. So, I made a contribution, but I got attacked with heavy down voting. There are people on HN with a lot of power who don't want to hear about different ways to operate that promise to solve the problems they are struggling with. Piss poor.

[pbreit]

You're not making any sense whatsoever and your points are far from clear.

For starters, as an asset class, sand hill returns are probably as high as it gets so "sucks" is definitely the wrong description.

The DoD comparisons are just weird.

[ten_fingers]

You are not reading and are just angry for no good reason.

And what you are saying is total nonsense.

For the venture capital asset class, average returns over the past 10 years have been poor, including on Sand Hill Road. For the returns, there are many good sources; one of these I mentioned here is an old post of Mark Suster.

Some of Suster's data shows that in the last ten years roughly half of venture partners are no longer.

Common statements are that limited partners are disappointed in the returns and that many are stopping investing in venture funds.

A few venture funds have done well and have been able to raise funds recently. The total number of venture funds able to raise a round easily now may be under 20.

For information technology venture returns, "sucks" is a fully appropriate word. But if you are a venture partner, then you and your LPs know these facts of life very well already. Also there is enough data so that most entrepreneurs know the truth, also.

The DoD evidence is rock solid and right on target: If you suppress your anger and actually read and pay attention, as I have now explained in this thread in overwhelming clarity at the level of about the fourth grade over and over and over, my point is that the DoD shows that research can yield powerful solutions to practical problems. Apparently this very simple, rock solid, overwhelmingly well supported point is just too difficult for you to understand.

To hell with this HN user ID. Mods: Vote it down to zero. Your site and your mod work SUCK. To hell with you. Use your HELL BAN tricks, etc.

Your down voting mods are chicken sh!ts who won't engage in rational discussion but just sit back, silently, and attack carefully written, helpful posts with down voting. HN is arrogant and just SUCKS.

Hell, just go ahead and delete the UID.

Users be warned: HN is run by nasty people.

[pbreit]

You're calling _me_ angry?

[ten_fingers]

Okay, you dirty, filthy, rotten chicken bastards, ANSWER with THOUGHTS or STOP the voting attacks, you dirt bags.

[ten_fingers]

More attacks. No thoughts. WHAT a flock of bird brains.

[abbasmehdi]

I think you might have not been down voted as much if you had written less sarcastically and with more practical solutions (versus ideological). The solutions you are offering are so general that by following this high-level point of view we can solve world peace, world energy and world poverty and still make the evening tea.

You see HN is mostly a community of "doers", and though the ideas you presented might have merit among circles of people who.. discuss big ideas (for the lack of a better description), a community of doers says and does things they can actually attempt doing today, tomorrow, or in a week with a reasonable probability of success. I am not attacking you, just trying to explain why I think you're being down-voted.

These might be helpful, specifically the comments section: http://ycombinator.com/newsguidelines.html

[ten_fingers]

> The solutions you are offering are so general that by following this high-level point of view we can solve world peace, world energy and world poverty and still make the evening tea.

Nonsense. I'm talking applied research. There's rock solid, highly developed, high quality education for that called a Ph.D. in applied physics, applied science, applied math, the mathematical sciences, and many fields of engineering. The education is for 'doing' and is fully 'practical'. The shelves of the research libraries are stuffed with peer-reviewed journals of original research with 'applied' and synonyms in the titles. These journals state strongly that they like papers with actual applications. There is nothing too "general" about what I described.

It is true that the HN community and Silicon Valley are short on Ph.D. holders in applied physics, applied science, applied math, engineering, etc. But, as I stated up front, YC is unusually well qualified in these directions.

My post made some rock solid points but was written in a way to raise 'attention' although attacked no one. Instead, I was attacked. Likely the attackers were mostly just HN mods. I've seen such before at HN: There are some strong, secret PC norms sometimes enforced here. Thus HN is nothing like free and open discussion of IDEAS.

PG's essay raised some questions about some pressing issues, and I gave some rock solid answers, and was, thus, attacked. Piss poor.

[abbasmehdi]

Then why aren't you a billionaire yet and why do you need Paul?

[ten_fingers]

If my project is successful, I will be a billionaire, many times over. I have no desire to do that, and really don't want the down side of being that wealthy, and didn't try to pick a project that would make so darned much money, but that's just the way my project looks.

I picked a project using my Steps 1 and 2. So, in Step 1 I picked a big unsolved problem, one that nearly every Internet user, desktop to mobile, wants to have solved and that so far is at best poorly solved. Then I executed my Step 2 and drew from my background in pure and applied math, had some new ideas, wrote out some new theorems and proofs, as my education taught me very well how to do, and then wrote the corresponding software.

At this point what is left to do is not very much quite routine Web site construction and some initial data collection. The rest of the software is ready for at least initial production. I've written successful production software before and for this project had no desire to write 'prototype' software.

But what's crucial about my project is the research, just the research, or Step 2 in my post. All the rest is routine.

The main business risk is, will users like my solution. Why is there a question? Mostly because the UI and UX are different. The UI is much easier to use than anything in, say, Office, but there is still a little for users to do.

Can the solution 'scale'? Apparently. From how my software works, my software timings, and some fairly simple estimating, it appears that my software could serve the world from just 2000 square feet of standard rack space in a room of, say, 20,000 square feet. So, my software is relatively efficient. The needed scaling techniques are just the simplest ones -- lots of parallelism and redundancy and processing mostly read only data with good locality of reference.

For 'needing' Paul, really I'm not trying: I've never applied to a YC 'class' and wouldn't want to be part of one. E.g., I don't have a Mac laptop! And I'm building on Microsoft instead of Linux. And I'm writing in Visual Basic .NET instead of C#! So, my software writing doesn't 'fit in' with the YC or HN 'norms'! And, more importantly, I'm not writing just demo or prototype software. Also, I'm a one-person effort: As founder, I insist on knowing all the early software, and the way for me do to that is just to write it. Besides, I enjoy writing software.

The 'business idea', the research, and the corresponding software were all fast, fun, and easy for me. But learning enough about .NET and SQL Server administration has been a self inflicted root canal procedure bottleneck -- that maybe by now I'm mostly through.

When I get some revenue or equity funding, for more obscure details about Microsoft's software, e.g., when I get to be a big uses of Windows Server and SQL Server, I will just pick up a phone, call a Microsoft expert, and pay. My patience working through MSDN Web pages is drawing to a close. Similarly for boxes I get from Cisco.

So far I am 100% owner. Some venture funding would have helped me a little mostly just because I could have called Microsoft instead of worked through thousands of MSDN Web pages. Also a LOT of venture funding would have let me hire people for all the routine software. Net, so far being 100% owner has likely been for the best.

But in the future there may be a role for some venture funding. But it looks like the 'window' will be short: By the time I qualify for such funding, I should be close to no longer needing or willing to accept it.

But YC doesn't really do venture funding. So, I would not be looking to YC for venture funding. So, my post was not to try to get YC funding.

Instead my post was to try to help Paul with the struggles in project evaluation in his essay. Also, since SV has similar struggles, I was writing to help SV. If someone in SV wants to discuss venture funding soon, then okay, but I doubt they will.

For SV funding my project, from all I can tell there will be no problem if and only if my project is nearly far enough along that I no longer need or will accept funding!

My guess, from contacts with VCs I have had, is that to fund my project now, VCs would have to evaluate my research, which they won't do and would have a tough time doing, and then violate some rules from their limited partners.

So, really my post was to tell PG, YC, SV, VCs, and the LPs that for the few "big wins" they want, they should learn to evaluate research and, then, should do that.

Of course, the SV answer, should they ever actually think that far, would be, if the rest of the software is just a little, routine Web site construction, then that is not too much to ask before looking for equity funding. My response would be, okay, but then you risk trying to get on my airplane after it has already left the ground.

Net, then, my post was really to try to shock SV enough to get them to pay enough attention that maybe I could do them some good on one of their worst problems and not really to get funding for my project.

But I should be worth about $500 million: I helped start FedEx and saved it twice. My offer letter said I'd get stock. Later Fred Smith told me, with Mike Basch, that the amount would be $500,000, and that would be worth ballpark $500 million now. That FedEx wouldn't do what they promised in my offer letter is my loss but their shame. Ah, what the heck: If my project works, then I'll be worth more than Fred Smith anyway.

[ten_fingers]

Come on bird brains, cough up what passes for thinking in your flock of losers.

"Losers"? Sure: As the limited partners know all too well, the returns over the past 10 years from the 'information technology' venture capital 'asset class', in highly technical terminology, just SUCK. And PG's essay provides more evidence of the struggles to make money.

Bluntly, on average, even including the big winners, the HN flock is losing. So how to pick winners is a pressing issue with good answers not yet widely implemented or known.

So, I give some answers with rock solid foundations, and you HN bird brain chickens attack with votes but no thoughts. WHAT a flock of losers.

And since only a tiny fraction of users can downvote, no doubt the down votes are from mods. WHAT a bunch of yellow, brain-dead, bird-brain, head in the sand, chickens.

[ucee054]

Ad-hominems will get you nowhere.

Also you appear not to have any idea how much waste exists in Pentagon contracting. Look up the writings of Robert Higgs, Winslow Wheeler, Dina Rasor etc etc etc When DoD is throwing billions of dollars around with merry abandon of course some of it ends up used for useful projects. They use up all their money and then get their budgets bumped up automatically by the politicians.

And, if YC starts acting like DoD, who exactly is going to provide follow-on financing? None of the money men, not Sand Hill Road, not Wall Street, are willing to put money in the same way and with the same scale that DoD is.

What's even worse is academic research. The professors don't care about product development, they care about publish or perish. And the output from PhDs is predictably a lot of useless greek squiggles and not very much product actually usable by Grandma.

There is no fabulous opportunity because the incentives are out of whack, and your exhortations won't change that.

[ten_fingers]

You talked yourself into nonsense.

On waste in DoD, sure, but not the parts I was talking about. Some of the big waste was, say, getting AC working in Iraq and now getting Diesel fuel and jet fuel to Akrapistan. And the cost of the black oil to send a destroyer across the Pacific would really set one back.

> Also you appear not to have any idea how much waste exists in Pentagon contracting.

Nonsense. All my early career was in DoD work, mostly in research, especially in applied math. E.g., I saved a project to improve the system that keeps an SSBN at the right depth in rough seas (and, thus, got my company a nice development contract). I found a solution to a problem of global nuclear war limited to sea, apparently later sold to a place near Langley, VA. I reduced to simple Lagrangian relaxation and the Kuhn-Tucker conditions a problem in non-linear, integer, max-min for evaluating the SSBN fleet. I know my way around the DC beltway, out to Vienna, VA, down Shirley Highway, up to Howard County, etc. very well, thank you.

What I saw in DoD spending was quite efficient, amazingly so.

For academic research, it takes some effort to understand it and how it can connect with entrepreneurship. Much of academic research is too far from real products for my tastes, and I complained about that when I was a grad student and, by accident for a while, a prof.

Still, the best of academic research is by far the best stuff, including for entrepreneurship. But it is crucial to pick and choose. And how to connect from academics to entrepreneurship is not so easy to see at first glance, varies across subjects, easy in some fields of engineering, super tough in some other fields, has varied across time, especially in recent years, but, net, in many cases can be quite easy, efficient, and effective.

The idea that the academic research is just generalized abstract nonsense and Greek chicken tracks is dangerously misinformed: In simple, blunt terms, for the technical areas of research, it is funded for essentially one purpose from essentially one source. The source is Congress, and the purpose is US national security. E.g., that's where Silicon Valley came from. Along with microelectronics. And the Internet. And the last I heard, the Department of Energy funded the BSD effort at Berkeley, and Congress funds that department also mostly just for national security.

In funding this research, Congress is quite correct, amazingly so. The beginning of the movie on Nash was correct: Essentially math research won WWII. No joke.

You are correct that SV would not be able to deploy the results of the research the way the DoD often does, but you are wrong to assume that there is nothing that SV could do. First, notice that much of the best research, especially for 'information technology', is done dirt cheap, typically by one person with paper and pencil. Second, notice that now with current computing, in a major fraction of cases, such research can be deployed at shockingly low cost. Not all research has to be as expensive to deploy as the B-2 bomber or GPS satellites.

There are many ways to waste money, and for SV to waste money. And PG's essay indicated some serious struggles in project evaluation. And there are plenty of posts, e.g., by Mark Suster, that on average VC ROI over the past 10 years sucks. So, SV is wasting money now.

But there are also some ways to make money, and I gave some rock solid ideas for how, based on research.

Long ago I guessed that no one would believe me short of my having a 300 foot yacht in Long Island Sound. By then I'm not sure I'll still give a sh!t about telling people things they so much don't want to hear.

[salemh]

But there are also some ways to make money, and I gave some rock solid ideas for how, based on research.

There has been nothing concrete out of your posts in improving evaluation of ideas / founders / research.

[ucee054]

This is so silly. You don't have a startup idea until you have a product that you can sell to Grandma, that will work for her on a standalone basis. It can't require an Act of God to take it market. It has to be cheap enough that Grandma can buy it, and it has to be simple enough that it can be built by 3 guys in a shack in Palo Alto.

Often this means taking stuff that exists already and chopping off the most expensive features, even if they are the best features, to make it cheap enough for Grandma. Whole books have been published on this; lookup "The Innovator's Dilemma".

This is a completely different goal from the goals of research, which has to be new to be published. Taking an old idea, even which was impractical to build/deploy, and productizing it, is a very hard sell to the professors and very difficult to get published papers out of.

(Some academics just do not care about practicalities, no matter how hard one tries to persuade them.)

Both these situations are also completely different from the military, who care about maximum effectiveness even if it means throwing money at problems and even if it means redeploying the very oldest ideas. If a ceramic capacitor works, instead of a funky DSP algorithm, they'll use the ceramic capacitor. If it somehow proves necessary to defend against a nuclear attack, they'll switch the ceramic capacitor for a solid gold ingot in a heartbeat.

The incentives and goals are not aligned.