Be Good

<i>When I was a kid I was firmly in the camp of bad. The way adults used the word good, it seemed to be synonymous with quiet, so I grew up very suspicious of it. You know how there are some people whose names come up in conversation and everyone says "He's such a great guy?" People never say that about me. The best I get is "he means well." I am not claiming to be good. At best I speak good as a second language.</i><p>There are a lot of people out there who spend an enormous amount of time coming up with rationalizations to justify doing bad things. What I realized after spending a lot of time around Paul Graham is that he's actually the opposite: He spends an enormous amount of time coming up with rationalizations to justify doing good things. However bad he may want to be, his fundamental good nature always seems to win out in the end.

Peter Drucker said much the same thing: profit is the <i>cost</i> of doing business, not the <i>purpose</i>. The true purpose of a business is to provide goods &#38; services to its customers. The "profit motive" is essentially a check on the resources consumed by the business, to ensure that it's not spending resources inefficiently, much as PG mentions in the 2nd footnote.<p>Up until the 1970s, it was common for corporations to be managed "to balance the interests of all stakeholders - employees, customers, shareholders, and the community." You can blame Milton Friedman for changing that: he popularized the notion of a corporation existing purely to maximize shareholder value, enshrining it so deeply in American culture that it's become law, and corporate directors can now be sued if they consider anything other than the interests of shareholders. It <i>is</i> important that companies pay attention to shareholder value, but it was a huge mistake to make that the <i>only</i> mission of a corporation. Score one for market fundamentalism...

I have no idea how Digi-Key is interacting with Octopart, but I have been buying parts from them for a long time and have nothing but good things to say about them. I like the company so much that I called to see if they were public so that I could buy stock; they're not.<p>Although Octopart and its investors may be frustrated, it does Digi-Key a disservice to characterize it as "evil", not "good" or a company that isn't concerned with its customers - it is extremely concerned with customer satisfaction and I have been very pleased with every interaction I have had with it.<p>Sure it would be great if Digi-Key facilitated Octopart's objective, but that doesn't justify conflating it with the all-star "evil" hall-of-famers.

Regarding Microsoft... it really struck me when I watched Steve Ballmer talk with Guy Kawasaki ( <a href="http://visitmix.com/blogs/News/Watch-Steve-Ballmer-and-Guy-Kawasaki-Live/" rel="nofollow">http://visitmix.com/blogs/News/Watch-Steve-Ballmer-and-Guy-K...</a> ) that Steve over and over again touted that it was important for them to get big into online advertising. Not once did he frame a single Microsoft goal in the form of how it was going to help a customer.

Oh man does this ring some bells for me.<p>I started bugmenot.com years ago to help people. And then I started retailmenot.com with much the same end in mind.<p>Because people dug bugmenot I got the critical mass I needed for retailmenot to work. Then it turns out you can make money off online shopping stuff.<p>Fast forward to now, we've got 5 staff still building cool stuff (that helps people), having fun and making money.<p>And curiously enough the business is called StatelessSystems.com<p>:)

pg writes that "starting an organic farm, though it's at least straightforwardly benevolent, doesn't help people on the scale that Google does".<p>Although I agree with pg's main point about scale and about trustafarians, an organic farmer seems to resemble a founder of a tech company more than he or she resembles a founder of an ineffectual or parasitic charity, foundation or NGO: a friend of mine knows countercultural types who dropped out of the rat race in the 1970s to start organic farms in Mendocino[1] for reasons other than financial, and she says they all seem to have become millionaires. (If there is interest I could ask this friend exactly how many people she knows who started organic farms.)<p>[1]: Mendocino County is the closest place to San Francisco that in the 1970s had aesthetically pleasing terrain and cheap farm land.

I've heard something similar before:<p>"Why did Greg and I do something so ludicrous as sneaking into an eight-billion-dollar corporation to do volunteer work? Apple was having financial troubles then, so we joked that we were volunteering for a nonprofit organization." -- <a href="http://www.pacifict.com/Story/" rel="nofollow">http://www.pacifict.com/Story/</a>

This isn't a new idea at all; in fact it's as old as capitalism itself. Adam Smith was one of the first to recognize that capitalism helps align the self-interest of the entrepreneur (selfishness) with the general interest of others (charity): "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages."

Paul's thesis here seems to be a confused grasp at what others have described, more simply, as the benefits of capitalism: "A good company is honest. In a world of complete information, two parties will transact iff they both benefit. This positive-sum interaction creates wealth."<p>What am I missing?

I agree that being benevolent and not focusing on profits in the early days is a good strategy for Internet businesses. Success on the Internet is all about scale. Growing faster than your competitors is key because your product can iterate faster and achieve a dominant position. Giving it away for free and being benevolent helps spur growth and is thus a very important strategy.<p>But I'm not sure that this holds outside the Internet realm. In other industries, you cannot be too benevolent and non-profit-like. I can't think of many examples that have succeeded via this route. I'm not sure I agree with your idea that Microsoft started out as benevolent. I think the profit motive was there from day one. To back this up, look at this letter written in 1976 by BillG:<p>"As the majority of hobbyists must be aware, most of you steal your software...The fact is, no one besides us has invested a lot of money in hobby software...Most directly, the thing you do is theft...I would appreciate letters from any one who wants to pay up."<p>(<a href="http://www.blinkenlights.com/classiccmp/gateswhine.html" rel="nofollow">http://www.blinkenlights.com/classiccmp/gateswhine.html</a>)<p>So acting like a non-profit is important in the Internet world where scale is key, but I think in other industries the non-profit strategies should be left to the non-profits.

I find it somewhat amusing that pg suggests in the footnote that Microsoft ought to recommend their customers switch to Mac OS X.<p>The problem with that is that there is one supplier of hardware for Mac OS X: Apple. And they charge a significant premium for that hardware. Kinda like IBM back before Microsoft pulled a fast one and licensed their OS to all comers and (benevolently) changed the face of personal computing. pg recognized the evil that was IBM, but fails to recognize the same evil in Apple, because the facade is so much nicer to look at.

There must be something in the air right now. I published an article about this very issue on March 27th (you can view it at <a href="http://uberdigi.blogspot.com/2008/03/secret-of-life-in-participation-age.html" rel="nofollow">http://uberdigi.blogspot.com/2008/03/secret-of-life-in-parti...</a>). My main point is that being useful is the most important value in the participation age. If an individual or business makes usefulness their number one priority they increase their chance for success. In this case I think goodness and usefulness are synonymous.<p>I got this idea from Buckminster Fuller. He failed miserably until he had an epiphany that he would not concentrate on success, but rather on making himself a servant to the universe. Ultimately this meant that he would just start working on good and useful things. As a result, he became a controversial figure but also pretty successful.

The business literature of previous generations often talked about "service to mankind" as an ingredient of success. This essay sheds some light on what they might have meant by that.

It's scary how good the prose of some lispers is. I wonder what made Peter Norvig and Paul Graham write this well. "I am not claiming to be good. At best I speak good as a second language." is just brilliant.

"Fifty years ago it would have seemed shocking for a public company not to pay dividends. Now many tech companies don't. The markets seem to have figured out how to value potential dividends. Maybe that isn't the last step in this evolution. Maybe markets will eventually get comfortable with potential earnings. (VCs already are, and at least some of them consistently make money.)"<p>Does this not worry anyone? It's basically a statement justifying investment based on confidence, not that an investor is able to reliably guess whether a company will be able to generate PROFIT or not, but that it will be able to generate EARNINGS at all!<p>this is not investing in two birds in a bush (likely to be profitable). It's investing on the basis of four in the nest (potentially earning money at all!).<p>that's astoundingly risky. Now, either you believe investors are stupid and risk-insensitive (or risk-blind! not uncommon in a bubble) and will keep investing the same sums of money as they ever have, or you believe they are clever, credit strapped and most certainly not risk insensitive. Option A means a world of pain up ahead for investors and their backers, because we're in a mighty bubble. Option B means PG is wrong (though doubtless he'd like to be right, because it makes flipping seedstage companies from the YC stable a hell of a lot easier)<p>Based on the total inability of even the biggest players on the scene - e.g.YouTube, Facebook and Bebo - to monetise, I really don't see how the confidence to move to an earning-optimistic (from profit-optimistic) investing mode is at all justified. If anything, earnings are less certain than they ever have been, the slide should be the other way.

This article is nice, and I agree with the part about momentum gained by holding to greater values than simply building a successful company.<p>However, PG doesn't mention the incredibly successful startups that <i>start out with evil/crime and then later go good:</i> ones that start with spammy &#38; unethical means to get initial users and pirated content startups.<p>I think most people strive to do good, but the world itself is a very evil place that sometimes needs adapting to.

Mr. Graham,<p>Thanks for this piece. It's something that's been kicking around in my head since Nov. '06 or so when I discovered Newsvine. I found a community and community genuinely interested in promoting quality news discussion and content, AND in making money. There's something powerful happening now, with the profit-motive acting in a socially-beneficial way.<p>Your blurb about the malaria company inspired me to do a little thought exercise about whether it'd be possible for a for-profit company to successfully help pull people out of poverty, and what that company would look like. If you're interested in reading it, here is a link: <a href="http://www.tightwind.net/2008/04/mesh-networks-relationships-and-poverty-non-profit-becomes-for-profit/" rel="nofollow">http://www.tightwind.net/2008/04/mesh-networks-relationships...</a> .<p>Thanks again for your great piece.

<i>I didn't want to start another company, so I didn't do it. But if someone had, they'd probably be quite rich now...</i><p>You would be correct:<p><a href="http://www.news.com/Symantec-snaps-up-antispam-firm/2100-7355_3-5266548.html" rel="nofollow">http://www.news.com/Symantec-snaps-up-antispam-firm/2100-735...</a>

One thing I've realized personally about why good works: when you are evil, you can only fool those people who are less intelligent than you. You can bully only those people who are weaker than you. If you are very smart or very strong, that could be a lot of people, and you can benefit a lot, and you are necessarily setting a hard limit on the number of people who are willing to help you. When you are good, when you give more than you receive, the opposite is true. You gain the aid of those who are smarter and stronger than you, others who "get it" and who have chosen to commit to the "cooperate" branch of the Prisoner's Dilemma.

A lot of people do startups to get rich, so that they can then use that money or free time to do good. I've wondered though, if doing the startup is actually the most benevolent thing they will ever do. In a startup your survival is dependent on helping other people. Without that focus, it's easy to do something that appears good, but isn't really helping that much.<p>The only difference between a non-profit and a company is that a non-profit cannot have equity investors. If a non-profit figures out a model to help people, there is no way to scale it. Thus, non-profits are the last entities that a country wants to subsidize through the tax code.

I admit that I haven't really explored this vein of thought, but what are the reasons that "good" startups (in the sense of good used in this essay) don't usually make their apps open-source?

Have you followed the rise of social entrepreneurship at all? Under its banner there are quite a lot of startups taking on problems exactly like the malaria dilemma you describe in the piece. They come at the issue from the opposite side of the spectrum: they're reacting to all of the waste and inefficiency in the old fashioned non-profit world, where something gets done because a millionaire's brother's wife is interested in it and done badly because she's not very good at solving the problem. So, they're trying to harness the power of market forces and the attendant efficiencies and motivations that go with them in order to solve these big intractable social problems. The social entrepreneurship movement encompasses everything from micro-finance -- which was pioneered by Mohammed Yunnus at Gramin Bank (for which Yunnus just won the nobel prize) -- to a revolution in funder logic and an increased focus on effectiveness metrics.<p>I'd be curious to read your thoughts on social entrepreneurship from a startup point of view.

Brings new meaning to "software as a service."

This sounds a lot like my startup Embought (www.embought.com). After making the decision to donate 50% of all profits to charity it gives me another reason to 'not die'. There are people out there other than myself that can benefit from me making this project work, and that's a powerful motivator.

I have a real concerns with "Don't be evil" - 1. subvocalising "Don't" 2. focusing on the action "be evil"<p>As a cyclist, I often tell new cyclists: "if you see a rock in the middle of the road, focus on the clear road either side of the rock, focus where you <i>want</i> to go. If all you think is 'don't hit that rock' 'don't hit that rock' 'don't hit that rock' guess where your focus is? Guess what you will likely end up doing?"<p>I see Google's mantra in the same light. It is far better to focus on DOING something than NOT DOING something. "Be good" is a far better mantra to have, and that's before all the good reasons you cited, Paul.<p>Thanks for the essay, have been looking for some inspiration lately and had forgotten about YC and your essays.

I understand the concept of being good and benevolent, but not thinking about making money is the hardest part. It is really tough to ditch your job, and keep doing good for people whose psychology (at least on the Web) has become to expect everything for free. You can survive your own goodness for 6 months, 1 year but after that you surely expect something in return. And then, if you do not have or want VC funding but just want to run your startup based on the good old way of 'revenues' how long can your goodness keep you going? Even Jesus 'sold' his woodwork to feed himself, isn't it? :) People throwing money at you for the good you do to them is living on a charity. Whatever happened to the good old way of selling something in return for money?

Video of the talk here: [<a href="http://www.justin.tv/hackertv/98110/Paul_Graham_Partner_Y_Combinator_Founde" rel="nofollow">http://www.justin.tv/hackertv/98110/Paul_Graham_Partner_Y_Co...</a>]<p>I enjoyed the essay, but found the video communicated the idea much better somehow.

related to malaria, maybe you want to look at Amyris Biotechnologies as a living example of similar ideas to what you describe. They started with Bill and Melinda Gates money to produce artemisinin, which the grant stipulated had to be produced without a profit, but have taken that technology and have used it to grow an amazing Biotech startup that most PhDs in the field would die to work for. The Bill and Melinda Gates Foundation isn't usually thought of as a startup incubator, but this is one example of a company that started from the idea of treating malaria, and continues with that idea as they apply the same technologies to solve the other needs they see in the world.

I was unaware of Octopart but after checking it out, it seems like an excellent service. I posted it on my blog so that others can check it out too.<p>I also agree with the concept of being good and idealistic programmers. My blog is basically a development journal to record my progress and thinking as I write an open source wireless (Zigbee) protocol stack. Many companies charge large amounts for these embedded stacks, but I figure that hobbyists should have access to the same things that large companies do. Only good ideas can come out of it.<p>If anyone is interested, you can check out my dev journal and blog here: <a href="http://www.freaklabs.org" rel="nofollow">http://www.freaklabs.org</a>

Great article. I work for a startup company and these are exactly the issues that we go through. We're in the second phase of funding and it's always a tough time. Will we have enough money? Is there money? How will be get it? Where will we get it? How much do we need? All these question about money. What I got from the post is that we are here for a purpose. I totally agree with nostrademons post. Provide a great service and product, let the people be the judge. Let's get to work. We're not going down quietly.

Hi Paul, Great essay. The idea of a purpose to business transcending mere "stockholder value" is a powerful new meme, which I believe Forbes has labeled "Capitalism 2.0":<p><a href="http://www.forbes.com/columnists/forbes/2008/0310/030.html" rel="nofollow">http://www.forbes.com/columnists/forbes/2008/0310/030.html</a><p>Here's hoping the idea takes off -- and not just for startups! Sincerely, Dr. Ernie <a href="http://ihack.us/2005/10/07/capitalism-20/" rel="nofollow">http://ihack.us/2005/10/07/capitalism-20/</a>

While I am sure that there is a lot of truth in that post, I'd say that selling "sins" is much more profitable: sex, drugs, alcohol, tobacco - lots of money involved.

Paul, I've been reading your stuff for six years, and that's the first one that made me cry.<p>It's the last step on a good path, and I was worried you would never take it. I'd been quite enamored of YC for a while, but I had my doubts about its ability to do good things.<p>It's also something I never thought of. I just always mentally separated "good, charitable" and "successful company" in much the same way as people generally separate "work" and "what you love".

Since Malaria was a specific example, this headline caught my eye yesterday:<p>Web guru targets malaria with social network site <a href="http://news.yahoo.com/s/nm/20080420/tc_nm/britain_malaria_dc_1" rel="nofollow">http://news.yahoo.com/s/nm/20080420/tc_nm/britain_malaria_dc...</a><p>I admit some skepticism but haven't read beyond the article. Maybe it is possible to "Facebook" malaria out of existence...

It struck me that this essay shares many things in common with the last chapter of Guy Kawasaki's book, "The Art of the Start". That chapter is called "The Art of Being a Mensch", and argues that to build a lasting organization, you need to help lots of people, do what's right and pay back society. Sounds about right to me.

You made me think of the power and success of the Obama campaign. Lots of people donating $5 or $10 to his website was a lot like a charitable fundraising campaign. A unqiue, personal approach that focused on conecting with his 'users' and giving them what they wanted.

&#62;The trouble with lying is that you have to &#62;remember everything you've said in the &#62;past to make sure you don't contradict yourself.<p>Il faut bonne mémoire après qu'on a menti (A good memory is needed after one has lied). [ Le Menteur, IV, 5, Cliton ] Pierre Corneille

Here's the deep-link to the part of Paul's speech where he discussed Octopart's battle of good vs evil:<p><a href="http://omnisio.com/startupschool08/paul-graham-at-startup-school-08/14:50" rel="nofollow">http://omnisio.com/startupschool08/paul-graham-at-startup-sc...</a>

The talk on which the essay is based: <a href="http://omnisio.com/startupschool08/paul-graham-at-startup-school-08" rel="nofollow">http://omnisio.com/startupschool08/paul-graham-at-startup-sc...</a>

Paul Graham revisits Adam Smith on economics?

Thanks for a great read, I was recommended this essay by a good friend of mine, and it was time well spent!

Hey PG, I bought www.benevolentcorporation.com a few months ago while thinking about these memes.<p>I'll sell it to you for $5M ;-)

The last thing I ever thought to see in a PG essay was a P. O'Brian reference! That was a nice surprise.

Asking a corporation to be "good" or moral is like asking a car to be good or moral.

When people see some things as good, other things become bad.<p>Hold on to the center. -- Lao-tzu

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Paul Graham for President!

The contrast between this and DHH's talk is worth mentioning.

"And the very best hackers tend to be idealistic. They're not desperate for a job. They can work wherever they want."<p>I've heard PG repeat this but I think it's fallacious. A lot of up-and-coming hackers can't pick and choose where to work except in the sense that any person can quit one job and apply for another one. They can't unilaterally get themselves into Google, for example.<p>Established hackers also may have constraints, such as time and family commitments, that keep them working a stable job instead of a startup, or keep them where they are rather than uprooting to go work at e.g. Google for a lower standard of living (possibly less salary and almost certainly higher cost-of-living, if you work at the HQ) even if they'd prefer to work there.<p>Or your company may fold and you may have trouble finding an awesome job right away and have to settle for a tolerable one instead. Considering that so many start-up founders live hand to mouth, they are <i>quite</i> likely to be "desperate for a job" at various points, or at <i>least</i> unable to work "wherever they want".<p>They might also find that the startup they <i>want</i> to do is just not as profitable or likely to succeed as some other one, and end up working on the other one instead. Scratching your own itch does not necessarily coincide with "making something people want" on a commercial scale.

&#62; The markets seem to have figured out how to value potential dividends.<p>Over the last eight years a dividend focused investor kicked the ass of an appreciation focused investor. Those who picked dividend paying stocks in non USD denominations are even farther ahead.

Excellent stuff. A manifesto for change.