Paul Graham, The Information, And The Era of New Media

Paul Graham

Well, there’s nothing like a little controversy to wrap up a year.

Unless you’ve been living under a rock, you probably know all about the recent shitstorm over Paul Graham and his interview with The Information. For those of you blissfully under your rock, here’s the rundown:

  • First, The Information posted the edited transcript of an interview staff writer Eric Newcomer did with Graham.
  • Then, Valleywag published a story full of indignation and accusations about Graham being sexist.
  • Twitter exploded with the rage of angry, tweeting feminists.
  • There were a few posts over the weekend dissecting the whole issue. Here’s ours, and here’s one we love from Fred Wilson.
  • Today, first Graham then Lessin wrote their own responses to the controversy and to each other.

This whole issue has been centered on whether or not tech is a sexist industry. Age-ism and sexism have been debated again and again, which is awesome. Hopefully the dialogue will actually get us somewhere.

Another focal point of the story is the state of modern journalism. Portions of both Graham’s and Lessin’s posts address this issue and provide the perfect example of the era of new media.

Graham’s Post

Graham says that the context for the interview was to get comments on a feature about his wife, Jessica Livingston. In his view, this misunderstanding led him to respond differently. “In a conversation you stop explaining as soon as the other person’s facial expression shows they understand. In an interview…you don’t have that real-time feedback, so  you have to explain everything completely,” he wrote.

Two statements, according to Graham, were especially affected by the interview/conversation distinction. First, he takes issue with the fact that The Information edited out the word “these” from this commentt:

We can’t make “these” women look at the world through hacker eyes and start Facebook because they haven’t been hacking for the past 10 years.

Graham says that he meant a subset of women–specifically women who aren’t already programmers. That sentence was in response to a question about whether YC should train its women founders to be hackers.

“We” doesn’t refer to society; it refers to Y Combinator. And the women I’m talking about are not women in general, but would-be founders who are not hackers.

I didn’t say women can’t be taught to be hackers. I said YC can’t do it in 3 months.

The second comment, and the one that Graham says bothers him the most, is the idea that programmers have to start young or they won’t be successful. He explains it like this:

I was explaining the distinction between a CS major and a hacker, but taken in isolation it sounds like I’m saying you can’t be good at programming unless you start as a kid. I don’t think that In fact, I err on the side of late binding for everything, including metiers. What I was talking about here is the idea that to do something well, you have to be interested in it for its own sake, not just because you had to pick something as a major.

Lessin’s Post

After Graham posted his view, The Information editor-in-chief Jessica Lessin responded on her personal blog. The Information is a new subscription publication that is seeking to reach tech professionals. It’s only a few weeks old, but Lessin spent 8 years covering tech and Silicon Valley for the Wall Street Journal, so she’s no newbie.

The upshot of Lessin’s rebuttal is that they did in fact originally interview Graham for a feature on his wife. However, the interview ended up covering so many topics that they later decided to publish the whole thing on its own. According to Lessin, they got permission from both Graham and his PR person and provided them with a transcript, which they ok’d.

She defended The Information’s policy like this:

On the record discussions with journalists are exactly that: on the record, meaning the material may be published. It is very common to use parts of older interviews in related stories, sidebars or even stories in the future…The Information will always go a step further and follow up and let you know when we plan to use the on-the-record comments.

The Era of New Media

“On-the-record” means “on-the-record,” and it always has. The practice of using quotes in other stories–and even out of context, intentionally or not–is as old as journalism.

The problem, of course, is that journalism has changed dramatically. In the age of Twitter, any one sentence can be pulled out of a greater conversation, skewed a little, and then find its way around the world. And, just like ugly rumors in high school, the truth rarely proves so viral.

Graham found that out with his whole women hacker thing. He felt the sentence was taken out of context and the meaning completely changed by the exclusion of “these.” Whether it makes that much of a difference or not, Graham received a lot of backlash for an opinion he doesn’t hold.

No one has really found an answer to this yet, and, because this new era also thrives on pageviews, plenty of  publications don’t really care about the problem.

As for Nibletz, there are a few things sources can always expect from us:

  1. If you tell us “off-the-record,” you will never see your comments in the pages of our site.
  2. When we plan to publish a story that spins off the reason for an original interview, we’ll let you know.
  3. If we make a mistake or misquote, we will update the story with a correction and a note pointing out the mistake.

Ultimately, we strive to be the voice of startups everywhere else. As humans, we’ll make mistakes, but we’ll always attempt to report with integrity and honesty.

Paul Graham learned, again, that nothing we say is safe, even when honest journalists work hard to get quotes right. Social media and the pageview game have changed the industry too much.

Needless to say, 2014 should be an interesting year.

Demo Days Are The Worst Source Of Deal Flow? Mark Suster Says Yes

YCombinator,Paul Graham,Mark Suster, Demo Day,startup,acceleratorSince starting our nibletz sneaker strapped startup road trip last year we’ve seen hundreds of startups pitch at countless demo days. Nick and I were finally relaxing with one of our advisors, Patrick Woods’ with a>m ventures, on the last night of SXSW and we had counted over 65 startups that we saw pitch through a variety of demo events at the annual festival.

We’ve also seen countless accelerator demo days and with it being May and most of the spring accelerators graduating this month, we’re on track to enjoy another dozen or so before we get to the thick of the summer. Speaking of summer, last August their were three accelerator demo days in Tennessee alone.

Startup community members and leaders are constantly debating “the rise of the accelerator” and where accelerators should focus their resources. Is the best accelerator model general tech and cohort based? Or vertical and rolling? Who knows, it will take several more iterations until each community finds the accelerator model that works best for them.

But what about demo day?

On Friday Business Insider ran this piece which references an indepth article about YCombinator and it’s historic demo day from the New York Times.  In it, author Nathaniel Rich, quotes an investor saying that YC’s demo day, often thought of as the super bowl of demo days, “used to be a can’t-miss event, but that’s not so anymore. It’s a different vibe. Some major investors are starting to skip it.”

Rich points out that one investor said that YC Demo Day used to be a feeding frenzy for deal flow and it’s just not anymore.

Of course YC’s demo day is all the way at one end of the spectrum. Y combinator is said to take the best of the best and with hits like DropBox and Airbnb, the newer teams know they can set their valuations and standards higher, pricing a lot of smaller VC firms out of the deal. This either leaves VC’s empty handed or startups empty handed.

“The only way for a company to be overvalued is if there’s someone willing to pay that price,” Graham told the NYT. “So what they’re saying is: Going through Y.C. causes companies to raise money on better terms than they would have otherwise. We wouldn’t have the barefacedness to make that claim ourselves!”

Graham acknowledges that YC does take some bad startups though, saying sometimes investors can’t pick out the good startups; “Well, it’s not because the good start-ups look bad,” Graham says. “It’s because the bad start-ups look good! Which means we’re doing our job.”

Business Insider recently shared some of Mark Suster’s, a VC with GRP Partners and the founder of LaunchPad LA, best and worst sources of deal flow from his personal blog.

Surprisingly, blogging was revealed to be the best source of deal flow available. “The sheer number of relationships I’ve built through being public, transparent and being willing to engage in comments and through social media has enabled me to get to know entrepreneurs even before they launch their next company,” Suster said on his blog.

Investment bankers were said to be bad sources of deal flow, but the worst? Demo Day.

“Getting excited about a company at a conference and investing is a sucker’s bet,” Suster writes. “Entrepreneurs raising at prices not normally supported by progress face risks downstream when they have to raise more capital. And that fund raising is part of the job of being an entrepreneur – not something that gets in the way of your doing your job.”

Startup accelerators everywhere else are having a hard enough time getting investors in the door for demo day as it is. One accelerator participant in the middle of the country told us “outside of the investors that had a stake already in the cohort, no investors came to our demo day last year.” That can be hard to swallow.

As to the blogging, we have a handful of angels and VC’s that email us from time to time to get the vibe on some startup we wrote about. We also get thank you cards in the mail from startups that have gone on to raise money after getting their first piece of press from nibletz. To that end, we live off of our crowdfunding so to help out the everywhere else cause, click here.

 

See Dave Tisch’s biggest pet peeve when VC’s are talking to women entrepreneurs.

sneakertaco

In The Wake Of The Boston Marathon Bombings Paul Graham Turned To Watsi, And Then Took His First Board Seat On Their Board

Watsi,YCombinator,Paul Graham,Startup

Chase Adam founder of Watsi (photo: Jim Wilson/New York Times)

Y Combinator founder Paul Graham is a busy man. Based on the West Coast, when America’s hearts turned to the Boston Marathon bombings, his did as well. Being so far away there wasn’t much he could do to help the situation in Boston so he turned to Watsi.

Graham tweeted on Monday “When terrible things happen to people I can’t help, I go to watsi.org and help people I can”.

grahamtweetWatsi is a crowdfunding platform that allows users to connect with patients with real serious needs for low cost medical care and enables users to fund high impact treatments.

For example the Watsi home page shows Eliazar a young Guatemalan man who had to have his right arm amputated after gang members threw a grenade into his home. For just $650 he can get a prosthetic device that will help him perform simple daily tasks that are impossible at the moment. He is just $205 away from that goal.

Currently Eliazar is the only fundraising patient on the site, to date they’ve funded over 300 patients and helped them get their much needed medical attention.  Now you can see why Graham would choose such a service to actually help people.

It was this revolutionary new concept in crowdfunding for social good that motivated Graham to invite the founders out to Silicon Valley for a meeting and then invite them into Y-Combinator as the accelerator’s first ever non-profit startup.

Like many Silicon Valley power players, Graham is a very busy man. He enjoys helping and nurturing the startups that are in the YC program and serves as a “father figure” to many of them, well beyond their YC days. He’s known for going to bat for his startups with other power players in the investment community, like the ever so famous Paul Graham, Fred Wilson debate over Airbnb.

grahamtweet2While many power player’s resumes include laundry lists of board seats that they serve on, until now Graham has never taken a board seat.   Just like Watsi was the first ever non-profit in the Y-Combinator program, it was also the first startup that Graham has ever decided to take a board seat on.

Graham will now provide guidance to the young company that money can’t even buy.  With that in mind you also have to consider the fact that this is a non-profit so Graham can’t expect a large return, if any at all.

For decades, heart wrenching commercials have shown up on the TV urging people to sponsor kids in foreign countries for education, clothing and food. For just $.25 a day you can make a difference. While those programs are great, most people receive a photo in the mail of one kid and aren’t clear on where their money actually went. With Watsi it’s very clear. Of course they are also vetting the patients’ stories as well to make sure the money goes in the right place.

With all that’s going on in the world today, this is just a great story to share on a Sunday. Share it below!

sneakertaco

YCombinator Shrinks Class Size Too, Smaller Is Better

YCombinator,Startup accelerator,Paul GrahamLate last week we reported that Paul Graham’s YCombinator was changing it’s seed investment structure going into the “Winter 2013” class of startups. What began as power angels Ron Conway and Yuri Milner investing $150,000 into each of the YCombinator startups has been reduced to a seed investment of $80,000 with four stake holders, further diluting the risk.

When Graham started YCombinator it was (and still is) one of the best startup accelerators in the country. Graham and the YC team made it big, big, big. Big money, big names, big startups. After two years though, it seems that Graham and his cohorts are honing in on the things that really matter. While their first class was 66 startups and their next class was 84 startups, you still needed to be the “best of the best”, for your team to get in.

Of course with 84 teams, there were even some bad apples in the “best of the best”. Graham reports in this blog post that:

“The reason we accepted fewer applications was that in summer 2012 we grew too fast. We had 66 companies in winter 2012, and that was fine, but for some reason more things than usual broke when we jumped from 66 to 84.”

While some may suggest the reduction in class size this time around is about stacking the deck, what YCombinator is really trying to do is weed out as much possible failure as they can. This way they can focus on growing the best of the best, to be, well, the best.  Graham says to do that they needed to start looking at the predictors of failure rather than the predictors of success.

They’ve finished the interviews for the Winter class and right now have less than 50 startups signed up. That doesn’t mean that number will stay the same. As Graham explains there are startups that get in after the interview process and others that drop out or fall apart before they can be funded. He’s also quick to point out that this number may not stay the same. As odd it it may be to hear, YCombinator, is itself still a startup and they’re still iterating themselvers.

Linkage:

YCombinator original blog post

More startup news from “Everywhere else”

Are you coming to “everywhereelse.co The Startup Conference” It’s the biggest in the country

Y Combinator: The Power In An Accelerator Is Not The Cash

Ycombinator,startups,startup accelerator,Paul Graham,Ron ConwayStartups around the world, who’ve had their eyes set on Y Combinator, have all been scratching their heads over the past two days while stomaching a major change in the way the accelerator program at Y Combinator is run.

Two years ago Russian venture capitalist Yuri Milner and Ron Conway, principal at SV Angels, decided that they would invest $150,000 in seed money to each of Y Combinator’s startups. In a blog post Monday Y Combinator said that they often ended up managing the investments and the program, which was awkward because they hadn’t actually started it.

Y Combinator has announced a new program called YCVC where four Yuri Milner and three other firms will join together to invest $80,000 in each of the startups as opposed to the $150,000 figure. Joining Milner are Andreessen Horowitz, General Catalyst and Maverick Capital. Absent from this program is Conway and SV Angels.

Graham explained to Forbes magazine that while SV Angels fund doesn’t fit into the new mold of the program, Conway is still one of YC’s “favorite investors”

So what’s going on?

Startup spinmasters everywhere are wondering why this change in investment strategy. Some worry does this have to do with the bubble bursting? Others wonder if it has to do with the general trend in consumer tech investing going down? While others understand that cash isn’t the core to a good accelerator program.

That’s just what YC has said as well.

By decreasing the actual cash investment in the startups, YC is asking that the investors take a more active interest in the program itself. Each of the investors will participate in office hours helping to cultivate the startups in the program. Graham, along with the powers that be at YC are hoping that this invaluable investment with time will more than compensate for the decrease in seed funding.

YC also says that $150,000 may not have been the optimal investment. In some cases a seed investment that size was too much for a new startup.

“$150k was more than the successful startups needed, and it sometimes caused messy disputes in the unsuccessful ones. Switching from $150k to $80k may not completely eliminate such problems, but it will make them at most half as bad.” YC posted on their blog.

YC is confident that even in Silicon Valley $80,000 should be more than adequate to give startup founders about a year to work on their idea, and live financially above water.

Many successful accelerators across the country including MassChallenge, DreamIt Ventures, TechWildCatters and even the Brandery have been making do with substantially less seed funding for startups, and more active programs.

Some startups feel that having a name like Y Combinator, 500 Startups or TechStars behind them is enough to help them get ahead. Others really want the opportunity to work the program, beef up their contacts, and learn from the triumphs and failures of the top shelf mentors associated with funds like those backing the newest program at Y Combinator.

What do you think, tell us in comments.

Linkage:

YC’s original blog post

More startup stories from “everywhere else”

Startup Conference? Yes!