Excerpts, Good Reads, Technology

How to Make Money

Says Paul Graham:

Of course you have to have a business model eventually. But experience so far suggests that figuring out how to make money from something popular is a lot easier than making something popular.

I get a lot of criticism for telling founders to focus first on making something great, instead of worrying about how to make money. And yet that is exactly what Google did. And Apple, for that matter. You’d think examples like that would be enough to convince people.

Is this another Bubble? I don’t think so, not so far. There may be a lot of lame startups being started, but that’s not the definition of a bubble. A bubble is when a lot of money is being invested in lame startups, and that’s not happening yet. The reason so many new startups are getting started is that the cost has gone down, not that funding has gone up.

This is one reason I’m optimistic about my present employer: we’ve got something that is proving to be very popular. We’ve got a good thing going such that we can become hugely popular, and if we can capitalize on that even a little bit, we should be doing alright.

As to whether this is the mentality that brought us the Bubble, I think the thing to watch out for is Irrational Exuberence, and over-reaching. Popular or not, VC-backed or not, I haven’t heard any of that since the bust. I’d like to think that we of the Silicon Valley have Gotten Over Ourselves a bit–our experiments, called “startups”–have some sense of scope, and few companies outside of Microsoft or Google have barrels of F-U money to throw around. We’re no longer surrounded by IPO-funded Mercedeses and BMWs, and nobody I know is paying $2,000/mo rent. I hope we retain this sense of sensibility.

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Categories: Excerpts, Good Reads, Technology

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