Y Combinator's Graham Discusses Start-Up Industry

In the later part of the interview she asks some questions about the recent discussions regarding minorities in the startup community. I thought his response was insightful:<p>"Well, I think the problem is upstream from us. I don't think it's that, like, huge numbers of women and minorities want to start startups and that we're filtering them out because they're not white or men or something like that. I think that the applicant pool, the applicant pool has the same problem that people see in our output, right? The same problem is in our input that people see in our output. The problem is further upstream. The problem is that the pool of startup founders is the people who are messing about with computers at age 13. If you want to fix the problem, that's what you have to change."

I really enjoyed the interview but I found this exchange puzzling:<p>Emily Chang (quoting Max Levchin): ‘Entrepreneurs aren’t taking big enough risks … ’<p>Paul Graham: ‘Well, that probably isn’t true because it’s gotten cheaper and cheaper and cheaper to start a startup and when the cost of failing gets lower usually people can do riskier things’<p>Risk is the potential for loss. If the cost of starting a startup is lower then the potential for loss is lower which means the risk is also lower. More people are starting startups because it is less risky, not more. That means the number of companies being formed is going up; in turn, that means that more people are <i>taking the risk</i> of starting a company, whether they are risking much or not. This might seem a subtle distinction but I think it is an important one.<p>A week ago I sat down opposite an entrepreneur who built a 24-hour transaction layer on top of the UK’s banking system which runs on nightly batch-processing. It made the transition from 9-3 banking to 24-hour online banking possible. He started out with a <i>really big</i> vision and had to take <i>really big</i> risks and the result was a <i>really big</i> company that created a lot of value economically and socially. It took him two decades and nearly bankrupted him on dozens of occasions. His vision sustained him. It kept him going through all the terrible lows and in the end he shook up one of the slowest-moving industries out there. That was a big risk. That was a big reward.

"it's gotten cheaper and cheaper and cheaper to start a startup"<p>"maybe it's just not the right time yet for a vacation on the moon"<p>There is a terrible amount of segment bias here. It is orders of magnitude cheaper than it used to be to start a <i>software or virtual service</i> startup. Other varieties of tech startups (chip fabs, space launches, flying cars, etc.) aren't nearly as cheap yet and represent far greater risk. It's a big world. Lots of markets. Lots of possibilities.

You know, it's always a visceral pleasure to hear/watch pg talk; at least for the way my brain is (soft-)wired, he's so charming and listenable.<p>But every time I see him interviewed, my "he's got an axe to grind" detector is going off so loudly that it's starting to drown out the charisma. It's understandable, in that high-tension soundbyte-oriented environment, that pg wants to ensure he stays on-message, but it's also disappointing from someone who we know is capable of being so much more informative.<p>He says, in response to several questions, "oh, that's not how a perfectly rational market would work, so it's probably not what's happening". I mean, I agree with the argument as far as it goes, generally reality roughly approximates an ideal market, but the approximation is always rough, and pg repeating this is sort of wasted air, isn't it? Examples:<p>at 2:08 in response to "big enough risks",<p>starting at 2:38 in response to valuations like Dropbox's,<p>at 5:25 in response to Aston Motes's very plausible theory about bias in "pattern-recognition"<p>Everyone's entitled to try to manipulate the media as best they can, and I'm not even doubting the sincerity of pg's claims about the market's effect on all those issues. But it sure would be nice to hear you dig a little deeper, pg.

I don't understand the women+minority problem. Different people have different interests, and I believe this is a good thing and not a problem. If more diversity were to come to the startup world that would be awesome, but I don't see this as a problem that needs fixing.<p>Startup people just have to keep doing what they do and if more people get interested in startups then things will all fall into place. What about the percentages of women and minorities in such places as politics? Is this a problem too? What about other industries that are dominated by women, is there a problem there?<p>People like what they like and that's that!

Eric Ries claims to have had "shocking" results when having recruiters remove all demographics from resumes. His suggestion for YC:<p><i>I suggest the following experiment: for your next batch of admissions, have half of your reviewers use a blind screening technique and the other half use your standard technique, on your first screen (before you’ve met any applicants). Compare the outputs of both selection processes. I predict they will show different demographics.</i><p><a href="http://techcrunch.com/2011/11/19/racism-and-meritocracy/" rel="nofollow">http://techcrunch.com/2011/11/19/racism-and-meritocracy/</a><p>Obviously YC needs to interview applicants, but as it already cuts people before the first interview, it might be an interesting experiment.

Why is the "not enough women and minorities" question even on the radar? Did I miss something?

Thought she handled the, "well, this is news to me! i don't know anything about the recent IPOs!" response pretty well.

A bit OT but would be nice to have a [video] tag for these autostarting videos.

I love Emily Chang's facial expression :)))))