
After Credentials - mqt
http://www.paulgraham.com/credentials.html
======
aristus
I think Paul is treading ideas with some interesting implications for him,
personally. He is the head of an organization that funds companies on the
basis of a written & oral exam, whose principal selling point is the
transmission of "credentials" upon the kids they pick. Part of it is the kids'
merit, but part of it is YC's past success.

People go to YC for many of the same reasons people went to Stanford -- past
seed stage, it's still largely a credentials game. So you have to ask whether
the same potential for "corruption" is present. Are they failing to transmit
credentials over generations because it's a revolutionary model, or because
it's only been around less than one generation?

What if someone did a sweetheart deal for a YC startup as a personal
favor/quid-pro-quo/etc? What does it mean when founders who got rich from a YC
company start funding new YC companies because they are YC companies? Is that
"corruption" in the same sense?

~~~
pg
Some of what you say is true, but it's not true that the principal value of YC
is the brand name. The YC brand has little weight to the _customers_ of a
startup, and without those it quickly dies. YC's principal value is the advice
we (and the other YC startups) offer.

The part you're right about is that "admission" to YC is structurally a lot
like college or grad school admissions. The difference, though, is that our
choices are immediately tested. College admissions officers do not, as far as
I know, follow up on the careers of the people they accept and see how they
did. Whereas if we pick a bad group, that fact will immediately be thrust in
our face. This causes us to work very hard to try to pick the best people.

It was being in a sense a colleague of college admissions officers that made
me think about such topics. We're the next bottleneck downstream from them,
and it quickly became clear to us what a bad job they were doing:

<http://paulgraham.com/colleges.html>

~~~
cperciva
_College admissions officers do not, as far as I know, follow up on the
careers of the people they accept and see how they did._

In Canada, one of the strongest selling points of universities is what
fraction of their students got a job in a related field within X years of
graduation -- so at least here, institutions do track this sort of data.

In addition, there's a lot of work done to validate admissions processes based
on the success of students during their undergraduate years; universities have
extensive "black books" which tell them how a student graduating from high
school X compares to a student graduating from high school Y given the same
nominal high school marks (here in Canada, admissions are done primarily based
on high school marks -- we don't have any equivalent to SATs).

~~~
arebop
I've heard that U.S. universities have similar "black books." It's too bad
they don't publish their data, because that would be an interesting way to
compare the performance of high schools.

~~~
cperciva
They're probably afraid that publishing their data would result in lawsuits.

------
cperciva
PG claims that a shift towards smaller companies results in people being
judged on their performance rather than based on factors which do rather poor
jobs of predicting said performance; my experience with tarsnap indicates
otherwise.

I have a small number of customers -- somewhere between 10% and 20% -- who are
using tarsnap based on a recommendation from another tarsnap user; but the
vast majority of tarsnap users signed up based on some other factor which is
at best predictive of the quality of tarsnap. Reasons I've heard include:

    
    
      * I am the FreeBSD Security Officer,
      * They find my blog to be interesting and well-written,
      * I have a doctorate from Oxford,
      * They like the fact that I made the tarsnap client source code available, and
      * I beat them on a mathematics competition 10 years ago.
    

There are a great many instances of companies succeeding with inferior
products as a result of having superior marketing; while I am fortunate that
people are interested in using tarsnap for reasons which are quite unrelated
to the quality of the tarsnap code or service, the fact remains that the
market isn't (in PG's words) _"[taking] every organization and [keeping] just
the good ones"_ \-- rather, the market takes every organization and keeps just
the ones which rank best on a nebulous combination of quality, marketing, and
luck.

Yes, credentials are an imperfect way of predicting quality; but are they any
worse than the marketing and luck which the market introduces?

~~~
pg
Initially the users of a new product will have random motivations. They can't
all come from recommendations when you've only just launched. But a year from
now the number of users you have will depend mainly on how good tarsnap is.

~~~
cstejerean
Certainly, once you get some momentum your startup will survive or die based
on how good it is. But if I hear cperciva correctly, had it not been for his
credentials lots of users might not have even tried tarsnap to begin with, and
I assume that would also translate into far less users a year from now, even
though the product would be the same.

~~~
pg
_I assume that would also translate into far less users a year from now_

That's the mistake. The number of users you get long term depends more on the
"interest rate" than the size of the initial seed. E.g. Google.

~~~
mhartl
I'm sympathetic to this argument, but the "long term" could easily be quite
long on the timescale of a startup's solvency. FogBugz, for example, might
well not have survived without the initial user base provided by the readers
of Joel on Software. Having that promotion channel could easily have meant a
factor of ten in the initial customer base compared to a "normal" startup. And
that factor of ten represents more than three years of growth even if you
double your users each year. Of course, with growth like that presumably you
could raise money to increase your runway, but that adds the complexity of
dealing with investors and adds more time for things to go wrong.

~~~
hs
i'm having difficulty imagining a bug tracking? software having viral growth
... so i guess the 'interest rate' is steadily low; therefore, initial capital
is important

~~~
shimon
Bug tracking software, like other tools for programmers, often travels as a
virus with team members. You hire some guy, he says "why are you using this
horrible crap we used fogbugz at my last job and it wuz not teh suck", and so
you try it.

Maybe we can call this resume-viral: products that are passed around by virtue
of become recognizable bullet items on resumes.

------
alexandros
Paul seems to be hitting on the optimization by proxy issues seen in many
areas, even in pagerank. Google looks not for quality of a page but for
indicators of that quality, namely inbound links by quality websites.
Similarly exams and credentials do the same. If you can write about these
books, you know literature. If you got a degree there, you must be very
capable. And in the first generation it works.

However, as people become aware of the ranking mechanism, they try to get
ahead by overoptimizing for the narrow areas inspected. So pages do linkfarms
and black-hat SEO, students goto cram schools, etc. etc. essentially producing
the exact opposite of what was initially sought. I believe Joel spolsky had a
good article on a simillar pattern in sales.

The question is if an algorithm that affects its input data can be made so
that it adapts to the changes and gradually reaches some kind of equilibrium
with the input data or stabilizes in some other way. As paul suggests, one way
would be to make the system more transparent, or even 'social' such that the
participants have a way to update it in an agreed way. This would keep the
minority from cheating on the majority.

Doing away with such filters though might be a bit harder than we think,
especially given the breadth of their applications. As aristus commented, even
YCombinator has an examination system. In fact it wouldnt be too hard to
imagine cram schools for YC given enough incentive. I fear this is a problem
we have to either solve or live with.

~~~
netcan
How would you run a cram school for YC?

Say you were given 19 yr olds at the end of Year 1 of Uni. You have 2-3 years
part time. How would you get them in? Activities? Interview coaching? Resume
building? Portfolio building? Specialised learning?

~~~
alexandros
Intresting question, but the feasibility of it is not dependent on my ability
to give a good answer. Regardless, I'll give it a shot for argument's sake. Of
course everything you say is valid. you would need to do these things.

I would also mine all the successes, details of interview process and
characteristics of successful applicants and their applications for
commonalities and then see how many of these can be easily added to an
application for 'bonus points'. Of course it depends on how black-hat you want
to get about this.

The first thing that came to my mind though, having read pg's essays, would be
'teach them LISP' :)

~~~
netcan
My intention wasn't to corner you, just to start a discussion. For arguments
sake, let's get about as black hat as a Chinese mother with a shot at Oxford.

I don't know much about YC or what influences them apart from fragments from
pg's essays.

Insisting that LISP or some other language no one uses is absolutely the best
tool seems like it might be a bonus point. But I think that is as a _bonus_.
What would be the core? They say smartness & an attitude that they are going
to do something big with or without the program. The latter can be gamed. The
former, I don't know much about the criteria.

------
edw519
One could easily amend this to include "After Perceptions".

As a young geek, I was often passed over because I didn't _look like_ I could
do the job. It started with little league and continued on through high school
and into the work place. I even quit one of my better jobs because a slicker
looking but far less talented peer was promoted into what _should have been_
my job.

No more. As a mild mannered adult geek, I still get the same pseudo-negative
first impression reaction until I open my mouth and show them how much they'd
benefit from me and technology.

The Performance Economy was a long time coming (and probably taken for granted
by anyone under 25), but now that we're there, there's no going back.

~~~
davidw
> until I open my mouth and show them

On a complete tangent, this is one of the perks of living in a foreign country
if you speak the language well - _instant_ recognition that you have mastered
their language, and that you must therefore not be a complete moron.

The downside of this in Europe, for me, has been moving about 4 hours away
(absolutely nothing in the US, in terms of distance) and completely losing
this advantage.

~~~
gruseom
You'll have to start over. That's not such a bad thing. So, Italian before,
what now?

It's good to still have a bit of an accent. I knew an American who had
mastered Russian to the extent that he was indistinguishable from a native
speaker. There were, however, glitches that would show up in his speech - an
occasional wrong phrase or something. Because he spoke perfectly otherwise,
Russians sometimes thought he was a dumb Russian. This made me realize that
you want people to know you're a foreigner, just a foreigner who speaks
amazing X.

I never spoke Russian as well as this fellow did (and most of it is now
sitting freeze-dried in my brain somewhere), but there was one funny thing in
my case. Much of what I learned came from reading, so sometimes I would speak
Russian like a 19th century novel. This made my friends laugh, but they also
liked it - Russians are big on literacy.

Edit: your core point is quite right, and is easy to verify by the impression
it makes when you meet a non-native speaker who speaks excellent English.

~~~
wheels
Agree on the accent point. I knew a Dutch girl who'd lived in the US from the
ages from 5 to 11, so she spoke English with an American accent ... but with
the vocabulary of an 11-year-old. If she'd garbled the language just a wee bit
she'd have been impressively good; as it was, she just sounded dumb.

But I'll agree with David that being an American that speaks the local
language can be quite a novelty in Europe. I'm in the same boat. :-)

------
bayam
Ask someone who works at Google if there was ever a time when in the company's
history when a Stanford or Berkeley degree wasn't a major advantage in the
hiring process. Even at a small startup, you're probably going to have more
faith in an unknown from Stanford than an unknown from Western Kentucky U.

Paul's essay is interesting, but I don't think any of recent academic /
sociological studies would confirm his conclusions. In general, the best
indicator of one's success is (a) your parent's income and (b) your education.
Academic connections open so many more doors and opportunities, even to those
who don't have the intelligence and skills to match. An idiot who graduates
from an unknown college will probably go nowhere, but one from Stanford may
end up as CEO. (Personally, I've seen the latter occur.)

~~~
mstoehr
I've definitely seen evidence that the school one goes to correlates with
success, but are you sure that the causality flows in the direction: academic
credential --> success? It seems plausible at least that if the parent is
wealthy, seeing to it that their kid is well-educated is a good way of
signaling that their kid is decent material, it's a costly signal so only the
wealthiest of parents will probably be able to afford it. And since the kids
of wealthier parents tend to do better, the education signal, by some accident
ends up being used a great deal to gauge future success.

I actually think that it used to just be a straightforward signal of wealth,
but these days we don't want to admit that that's the case, we instead want to
justify it as producing some useful economic product.

------
prakash
_On College-Entrance Exam Day, All of South Korea Is Put to the Test. Noisy
Flights Can't Land; Offices Open Late To Avoid Traffic; Mothers Pray a Lot._

<http://online.wsj.com/article/SB122644964013219173.html>

------
smanek
I honestly don't think that 'cram schools' are particularly effective. I
taught for the Princeton Review for a while ($20+/hr when I was 18 sounded
pretty good). In my experience, the average student would only gain about an
extra 50 points the SAT (relative to what they would have gained studying on
their own). If memory serves, a standard deviation (on the old 1600 point
test) was usually in the neighborhood of a 110 points.

Increasing your score by less than half a standard deviation was nice, but it
rarely made or broke your college application.

~~~
rsheridan6
Applications to top schools are extremely competitive; I could easily see 50
SAT points making or breaking an application. I was under the impression that
these days your application has to be more or less perfect to even have a
chance to get into an Ivy League school, unless you're a legacy or a URM.

~~~
nostrademons
Amherst isn't quite Ivy League, but I had a bunch of friends there with SATs
in the 1400s, or even the high 1300s. I believe the median (from stats, not
from friends) is about 1460.

It _was_ fairly scary how many of my friends had 1590s or 1600s, though.

------
jackchristopher
Paul, how much of the conclusion did you decide on before starting the essay?

It felt more like an attempt to convince us, rather than a revelation to
yourself. Not that that's bad, but you didn't seem excited.

What were _your_ diffs?

~~~
pg
Actually there were a lot of surprises. That credentials are seals between
generations; the distinction between direct and indirect methods of helping
your kids; that sealing off direct methods promotes indirect ones; the
emptiness of the explanation schools give of legacy admissions (which now
seems to me as damning evidence as the practice itself); the precise
connection between credentials, measurement, and organization size; the fact
that falsely impressing colleagues in a small organization wouldn't have a
lasting effect, because the organization wouldn't last; the reason the word
yuppie arose, and the connection between startup founders and yuppies; that
the spread of measurement would bring credential granters into line as well;
and that the left, because their attachment to equality (of result, not
opportunity) makes them dislike markets, have to fall back on a broken method
of preventing transmission of power between generations.

I think the reason I didn't sound excited was the way this got written. I
started it this summer, didn't work on it for months, and then started again
in November. I rewrote it so many times that all that's left of the first
version is the beginning, up to "Chinese example," and one paragraph in the
middle that used to be in the beginning.

~~~
jackchristopher
I agreed with the point of the piece beforehand. And there was plenty of
newness in it. I wanted to gauge how it was written. And the analysis is
helpful.

A lecturely, authoritative voice seems inevitable as you move away from the
excitement phase. But excitement may be more convincing.

And that's one advantage that blogs have over essays, that I hadn't
considered. Being published so much quicker, it's easier to retain excitement.
But I'm a bigger fan of essays. The medium still has steam left, even if you
include it's other anachronisms.

------
DThrasher
One important factor Paul left out was the ability to terminate bad employees.
If an organization can't get rid of poor performers at reasonable cost, due to
restrictive labor contracts or tenure for example, the organization will have
to put much more effort into screening candidates.

~~~
miked
The usefulness of measuring depends on how actionable the measurements are. I
think this is one of the big reasons that the startup culture in Europe has
never really developed. In most European countries (and US government
agencies) it's almost impossible to fire someone after a short probationary
period. This distorts labor markets so badly that even left-leaning labor
economists (e.g., Brad DeLong) have sharply criticized European labor laws.

This brings up an interesting sorting issue. If it's easy for people to be
terminated and/or quit (because they know that there are other jobs, available
in part because other employees have been fired or quit), there should, over
time, be an improvement in the matching between employees and jobs. This
should lead to higher productivity as well, not to mention greater job
satisfaction.

------
BKmke
PG, I enjoy your essays a great deal. Often while reading the content I click
on your numerically referenced notes. Clicking on the numbered reference takes
you to the details of that note. Please link the number in the notes section
back to the location in the essay. This way I can click the note in the text
and read the note and then click the note reference to return to the essay
content and continue reading. This will prevent me from having to scroll back
up to place where I left off. I would appreciate this user interface
improvement. Thank you again for your thought provoking work.

~~~
msg
use the back button?

~~~
BKmke
Thanks, not an intuitive option, but it'll do.

------
rakesh_d
You seem to be overlooking the fact that most of the times the academic
credentials of a candidate tend to be directly proportional to his/her
performance. In places like South Korea or India (my place), it is damn hard
to find qualified people for the posts of professors even in 'Institutes of
Excellence' like the IITs. There's an astronomical amount of gap between the
amount of funding a normal university receives and the grants that IITs
receive. It should be then very easy for a prospective employer to decide
between a candidate from IIT and one from a normal university. The candidate
from IIT most probably (99.99%) outperforms the other guy.

That's why admission to the IITs becomes the all-important thing not only for
the students, but also to the parents whose only hope to get rich is through
their wards. The offshoring / outsourcing phenomenon further catalyzes the
sexiness of 'Brand IIT' as the students from IIT end up with offers from MNCs,
which are far more lucrative than what the Indian Space Research Organization
offers to its most senior scientist.

IITs get to chose their students from a vast pool of 500,000 students who cram
day and night for more than 3 years during their high school. This further
adds to their glamor. Hence it is not uncommon to find companies preferring a
chemical engineering graduate from an IIT over a computer science graduate
from other universities for the job of a programmer.

Thus third world citizens still live in the age where "Credentials Do Matter".

------
Shamiq
For those who care, there is a whole branch of labor economics surrounding
this topic:

<http://is.gd/c0a2>

 _(The wikipedia link had a set of paren that killed the URL)_

------
jbert
If large organisations are less efficient:

\- why do they survive?

\- if they survive despite all, why do we permit them?

If the market was regulated to set a cap on the size of a single company's
workforce (or some other metric, perhaps market capitalisation), we'd also
avoid the 'too big to fail' problem we have at the moment.

Not to mention quasi-monopolistic practices like large chains killing off
small local competitor with an externally-funded price war (then raising
prices once the competition disappears).

Is it that we need the largest companies for some large-scale activities (chip
fabs, aircraft manafacture), or that they can be efficient at scale (fast
food, wal-mart)?

Would the world/market be a better place if companies were forced to fission
at a certain size?

~~~
retyred
this entire "lots of small firms are the future" meme is probably just wrong.
paul graham knows a lot about websites but very little about the rest of the
economy. show me the ten person company that can produce the equipment to
generate and transmit electricity. or food production. where are all the ma
and pa grocery stores? and banking...we have fewer banks now than ever and the
number is still dropping. and PCs...making a PC is easy....so what happened to
the 10,000 strip-mall PC makers?

show me real examples outside of the web industry that this theory is even
remotely correct

~~~
evgen
Music production. Video production.

Any industry where the capital costs are low, or where a small group of niche
specialists can add a significant multiplier to the value chain are candidates
for this sort of effect. As more industrial tasks are farmed out to large
companies that specialize in flexible production it is possible that you will
see this show up in industries that are currently have strong vertical
integration.

For example, ten people can't mass-produce a car. Ten people can provide
spcialized bodywork and personalization of a mass-produced car. Ten people
could probably design and oversee the outsourced manufacturing of discrete
components in the car. Ten people could probably manage a company that deals
with other small firms to create bespoke vehicles based upon mass-produced
frames and engines. As you increase the specialization and make more parts
interchangeable it is possible to decentralize and distribute a production
chain to the point where a large collective of ten person companies can
provide a higher-value good at a lower per-unit cost than a single large
company.

Certain activities will always need large, high-capitalization organizations,
but it seems that more and more of these companies and factories are being
forced to become more flexible and nimble which is leading to a point where a
larger and larger part of your world can be serviced by smaller teams than by
large enterprises.

~~~
davidw
> Any industry where the capital costs are low

How do these things change with time, though? Do they always, invariably drop?
Might computing conceivably go through another phase where things get
consolidated into some kind of big servers that cost a ton of money? Doesn't
sound likely to me, but I'm not very good at predicting the future. Actual
research into these trends would be interesting to see.

------
netcan
Paul mentions small companies interacting directly with markets as the
catalyst to shifting from credentials to performance.

Another potential catalyst is the growth of freelance/contract labour.
Essentially, what is being created is a less secure labour environment where
there is more incentive & ability to directly measure performance. The
assumption is that you are fired at the end of the job. If you can get further
work or a referral, it's a bonus.

There is something obscuring the effects of this though. The growth of
freelance/contacting partly coincides with & partly is driven by the
internationalisation of labour markets. That will obscure some aspects of it.
A copywriter in a cushy job in a high wage country won't leave to pursue a
$25/hr career as a elence copywriter. They stay away from competition with
international labour markets.

I don't think that will go away any time soon. What _would_ be interesting to
study would be these kinds of markets in low wage countries where hiring
freelancers on international labour markets is not a cost advantage to hiring
local employees

In any case, if we are moving to a higher performance/credentials ratio, I
think this is a big part of the equation, bigger then startups.

------
lionheart
"In our country, college entrance exams determine 70 to 80 percent of a
person's future."

I'm sure that I can speak for many of us here when I say, thank God that's not
the case here anymore.

------
nostrademons
Could also be because of increasing specialization. When my parents'
generation was going to work, the sort of things you'd actually do might
include serving beverages on a plane, assembling cars, or shuffling papers
around. There's not much room for differentiation in these jobs: you either do
them well or you don't do them, without many gradations in between. So the
only way to "prove" that you had qualified, top-notch employees was to use
their degree as a substitute for their competency.

A similar effect occurs in the financial and management consulting industries
today, two of the most degree-conscious industries. It's nearly impossible to
measure performance in these industries, because the results of an
individual's work don't become apparent until 5-10 years later, and there are
a whole host of confounding factors. Did the money manager get rich because he
was good, or did he get rich because he was lucky?

------
gqwu
PG, when you were looking at YC apps, how many +points did you give to
candidates who worked at Google?

~~~
pg
It counts for something with us-- probably more than school, for example--
because it seems like Google is a pretty good filter. But what we care most
about is what people have built.

------
rsheridan6
"History suggests that, all other things being equal, a society prospers in
proportion to its ability to prevent parents from influencing their children's
success directly."

Can we assume that pg is in favor of restoring the estate tax?

~~~
pg
Actually I don't think inherited money is that dangerous. Unless it's coming
from more than a generation back, you don't even get it till you're old
yourself. And when people inherit money young, if anything it seems to screw
them up rather than giving them an advantage.

~~~
dhimes
_if anything it seems to screw them up_

That's why it's dangerous :)

Buffet has it right: leave them enough so that they can do anything, but not
enough so that they can do nothing.

~~~
strlen
It's dangerous, but not to society as a whole.

I.e. Paris Hilton has the money that she uses for hedonistic purposes, but she
won't be put into a position of power.

~~~
dougp
Paris Hilton is a bad example she makes like 200 million a year. Perfume sales
at Target, clothing lines, etc.

~~~
blasdel
And she didn't inherit any money, just status.

------
mattchew
We've always had entrepreneurs in the U.S., but clever little firms haven't
taken over the economy yet.

Big clumsy companies still have the advantage in a lot of areas. I'd like to
see those areas eroded, but I suspect some of them are growing.

For example, my impression is that fewer doctors are in private practice than
there used to be, with more of them belonging to clinics. There are certainly
fewer independent pharmacies than there used to be.

------
geebee
I agree with much in the essay, but it's interesting that PG used law as an
example of an organization that broke from the deferred compensation
principle.

Most "elite" law firms actually do pay by seniority. An associate is generally
paid according to the number of years he or she has been with the firm. And
while the salaries for young lawyers is very high, they are actually (often)
working for the potential of becoming partner - a reward for work done earlier
in life. This is the essence of deferred compensation.

Law firms also tend to be more impressed with credentials than almost any
other segment of the economy. The pecking order of law schools would surprise
many people from the engineering world. Of course, some schools do have
stronger reputations (for good reason), but in law, Harvard > Columbia >
Cornell. Students accepted to a school higher in the chain will prefer that
school by a wide margin. Whereas engineering students, especially at the grad
level don't tend to have an MIT > Stanford > Berkeley kind of mentality...
they'd be more interested in how their research interests match up with
faculty in that area.

I think Law, Medicine, and other professions will be the holdouts against the
trend away from school-based credentials. It's probably no surprise - these
are the few sectors of the economy that can actually ban someone (with the
full weight of government behind them) from practicing based on degrees and
exams.

The question is, when will the tide overtake them (if ever)? Will the
opportunities in a free market eventually become so appealing that only
second-rate people will seek out the credentialed industries?

I'm not joking here. Law school is three years, but we all know that people
learn at different rates. I suspect that some people could learn the material
in a few months, whereas others would need six years, and some would never be
able to learn it at all. The requirement of a 3 year degree most definitely
sends some of the brightest folks into other fields where they can leverage
their exceptional ability to learn quickly (software seems to be a favorite
field for these people).

~~~
evgen
> I think Law, Medicine, and other professions will be the holdouts against
> the trend away from school-based credentials. It's probably no surprise -
> these are the few sectors of the economy that can actually ban someone (with
> the full weight of government behind them) from practicing based on degrees
> and exams.

These are also fields where the actions of a single bad/incompetent actor can
have very, very serious consequences for their customers. Death and long-term
incarceration are pretty heavy negative externalities and most of us do not
want to wait for "reputation" to sort out the bad apples. These are also
fields with large bodies of knowledge that an applicant in the field needs to
master, with relatively easy mechanisms for testing this knowledge.

There is a reason your doctor has copies of his diploma's on the wall, and a
reason why your eye searches them out when you are discussing your problem.
Sometimes knowing that the other party has passed through several well-
regarded and reputable gatekeepers is a good thing. Will the "wisdom of the
crowd" ever replace the bar exam, medical boards, and graduation from an elite
university? No.

~~~
geebee
I definitely don't want to give the impression that I am opposed to
credentials in all instances. Actually, Medicine isn't that great an example,
because you don't become licensed as a physician or surgeon until you've
completed a residency - ie., you've proved you can "do it". Whereas in Law,
you only need to obtain a degree and pass an exam. So in a way, you really are
relying on reputation in law - which may be why "big firms" like to broadcast
their connections with Ivies and so forth.

Anyway, the licensing process for MDs is so different from JDs that I
shouldn't have mentioned them in the same sentence.

Here's my worry, though. If a truly bright person can learn much more quickly
than the average, that person may eventually be discouraged from pursuing law
(or even medicine) because they are essentially throttled by the system. Also,
credentials may not matter as much to this person, because they seek out areas
where they can prove themselves without worrying about the particular degree.

If this happens (and I'll admit it is unlikely in the near term), you could
have a situation where professions that make heavy use of credentials are most
appealing to those who are good at getting credentials, but not much good at
anything else. For those folks, the payoff of a credential is highest. Whereas
for someone who could do well with or without a credential, it's just a path
with many irritating roadblocks.

The interesting thing will be to see if the professions adapt. Perhaps there
are some creative ways to retain some of the valuable aspects of credentialing
without forcing everyone to learn at the same pace? Perhaps a heavier focus on
exams, rather than than hours or years logged in a program? Another approach
might be to limit the most restrictive licensing to more specialized cases -
ie, require a 3 year degree and full membership in the bar (and, I'd hope,
even more than that) to try a death penalty case, but require a shorter and
easier exam for more transactional work where a minor amount of money is on
the line. Even in medicine, I suspect that nurses can handle many of the
things that only MDs are currently allowed to do (in some states, nurse
practitioners can do this - a two year MS followed by a one year
apprenticeship and exam is sufficient to independently treat some cases,
rather than a 4 year degree followed by a three year residency).

Hard to say if it can happen, or if it is even desirable. But I'd guess there
will be pressure, and that's not _necessarily_ a bad thing, depending on how
it all goes down...

------
aaronsw
The left likes credentials? The right doesn't like intergenerational
transmission of income?

These aren't any left or right I recognize. Who is PG thinking of?

~~~
pg
I didn't say either of these things.

I said that the left has to fall back on credentials (the wording of which
implies they don't like them).

And while the right may not like estate taxes, I don't think anyone on the
right (unless there are any ancien regime fans left) favors the use of that
wealth to buy position. At most they'd probably concede the possibility is an
unfortunate consequence of not taxing people twice.

~~~
illumen
Using the left/right abstraction is really silly. It's a broken, continually
redefined buzzword concept that is too simple... so don't bother with it.

~~~
Prrometheus
I don't think that's true. There are certain ideologies that travel together,
whose fortunes tend to wax and wane together. If you told me an ideology (say,
environmentalism or unionism), then I could easily tell you whether it was on
the right or left (in this case, both left).

There are exceptions in practice, but to say the labels are meaningless is
silly.

~~~
Radix
Meh, I disagree. There are groups that claim to be socially liberal and
fiscally conservative. There's no catch phrase for someone who tends toward
slight conservatism, but is generally open to government intervention, though
I imagine such people exist. That's at least two dimensions to consider, it
seems to me we should at least have a plane.

Here's one, Net Neutrality, what is that?

------
keithrbennett
Paul -

Very interesting article. I agree with you -- I was pursuing a degree in
accounting in the 80's, and started programming in 1981 when my department
bought a microcomputer with 16K RAM. I got hooked on software development and
made it my career. I finished the accounting degree not because it had any
value to my work, but because of the value perceived by employers in having a
(any, even in a nonrelated field) degree.

I'm curious what you think about precisely targeted certifications, though.
Many are not sufficiently expensive to be available only to the rich, and few
require years of unpaid study to achieve. They do demonstrate an objective
level of expertise. There are certainly many other factors to consider while
evaluating a team member, but, all other things equal, and assuming the
content is well chosen, do you think certifications have any value? (My
position is that they do have some value, but only when tempered with
consideration of other factors, and the realization that the lack of a
certification does not necessarily mean less competence.)

\- Keith Bennett <http://www.bbsinc.biz>

------
deltapoint
This article got featured on college confidential which is a forum site for
high achieving students striving to get into tops schools and worried parents.
It is interesting to see their thoughts:
[http://talk.collegeconfidential.com/parents-
forum/617548-aft...](http://talk.collegeconfidential.com/parents-
forum/617548-after-credentials-paul-graham.html)

------
russell
It's an interesting essay, but just to be argumentative, I think it takes the
wrong path to the conclusion. I posit that South Korea has only one highly
regarded university or some other suitably small number. Maybe it's the
University of Seoul. If you get into U of S, you are a superior being, you get
the choice government jobs, you get to be the department head, you get the
industrial fast track. If you don't get in, you are dross, just second class.
In Japan it's the University of Tokyo. Neither university is particularly good
or even much better than some of the others but they have the reputations to
make the careers of their students. Contrast that with the USA. Of the top 50
universities in the world, we probably have 40. If you get into Harvard, MIT,
Stanford, or Cal Tech, it certainly helps you career. If you don't, you aren't
automatically second class, because there are so many other good schools.

Then there is our culture a meme of the irrepressible underdog, the New
England inventor, the riverboat gambler, the mountain prospector, the Silicon
Valley programmer. Business failure is not career or reputation ending, it's
character building. It probably enhances you chances the second time around.
In contrast I remember reading that in Germany if you failed you were done; no
one would give you another chance. Banks controlled everything and were so
risk adverse you probably couldn't get the money in the first place. My
brother in law's business in Brazil went bankrupt. He didn't get a fresh
start. He just stayed out of jail until he could pay it back. He was a
chemical engineer, but he had to work in a grocery store. It is amazing how
low the barriers to entry are here. Anyone interested in how Silicon Valley
became Silicon Valley should read Regional Advantage: Culture and Competition
in Silicon Valley and Route 128 by AnnaLee Saxenian.

In most of the world it is difficult to start a business. According to the
Economist it takes $20,000 in fees and deposits to start a business. In many
countries it takes one or two years plus bribes to get permission to start. In
San Luis Obispo County it took me $120 and an hour at the county offices. And
YC may even give you the money.

I think I agree with Paul's conclusion if not with his antecedents. I think we
are moving away from a credentials based culture to a reputation based one,
not because parental manipulation can falsify credentials, but because an
individual on the web can build a reputation through a web of contacts,
through writing, through performance, through reputons (small quanta of
reputation). I went to Harvard. That's a reputon. I got my degree in
economics. That's probably an anti-reputon. At least in the software industry,
you can build a reputation thats worth more than a bunch of certificates.

~~~
DaniFong
I like the notion of 'reputons' but might I suggest a different word, 'reps',
or perhaps 'props'?

~~~
rms
Karma? Guānxi?

------
mbac
The problem with the French is that they don't have a word for entrepreneur:

MLstate - currently in stealth mode - is an IT company, whose functional
programming approach to SaaS and cloud computing has been recently recognized
by the French Ministry of Research Innovation Award and support from leading
investors.

We are research-oriented, we value technical excellence and innovation and we
believe our technology has a potential to dramatically change the way web
applications are being built.

MLstate opens several new permanent positions to meet this challenge:

    
    
        * Senior Developers: Outstanding PhDs with at least 3 years of research experience in functional languages and/or formal verification and the ability to manage a small technical team.
        * Developers: PhDs with strong FP skills. Applications from PhD students defending their thesis soon are also welcome.

~~~
pl0nk
> the French is that they don't have a word for entrepreneur

Hmm. You might want to check the etymology of the word.

~~~
stephant
< the etymology points where you suggest :) but the fact is that in France if
you can align a "good" school name in your CV you can be a moron you get the
job!

------
JimCooper
And how are you supposed to measure performance? Many jobs are just not
susceptible to doing that. It is well known in the software industry that
attempts to measure programming performance result in programmers skewing
their efforts in order to make the metrics look better. Teachers in the UK are
measured on students' grades, so for some <sarcasm> totally unrelated reason
</sarcasm>, students grades have gotten better every year for the last 20
years.

Proven ability to do your job is one thing; measuring your individual
performance whilst doing it is another thing altogether.

~~~
huherto
You bring up an interesting point. Anyone has any idea of how to do it(Or how
not to do it)? I've been developing for a long time and I do not have any good
ideas.

------
kwamenum86
"History suggests that, all other things being equal, a society prospers in
proportion to its ability to prevent parents from influencing their children's
success directly."

I would love to see some evidence for this claim.

------
rokhayakebe
_the transmission of power between generations_ is also happening within the
startup environment. How? Successful entrepreneurs are funding their friends
or friends' friends. Furthermore, VCs are known to fund people within their
close network. Power Bloggers are known to cover their friends' startups or
their friends friends'.

Luckily technology is fairly cheap, learning how to do stuff is free and only
requires commitment and time so we can still turn our ideas into products and
put it in front of millions of people without bloggers, angels, vcs.....

------
jmtame
I see a lot of discussion about YC, but I don't think this has much to do with
YC as much as it does with the market in general. The two really important
things I took away from this were:

1) Instead of trying to make credentials harder to hack, we can also make them
matter less.

> Comment: I think this is a general statement being made, correct me if I'm
> wrong. I didn't think this was a "At YC, we can make credentials matter
> less." I see this happening at the successful startups. They no longer say
> "B.S. in C.S. required" they say it's "optional, or equivalent experience."
> I would say that is brilliant.

2) Now we seem to be entering a new era based on measurement.

> Comment: I would agree 100%, and I'm glad you used the example of East Asian
> culture. There was a lot of turmoil, but one of the biggest things was
> feudalistic societies. If you haven't read the Biography of Yukichi
> Fukuzawa, I would highly recommend it (especially if you're an
> entrepreneur). His father hated Japan because it was feudalistic, so where
> he exerted the most effort and was far more intelligent than his superiors,
> he never moved up. Your position in society was not driven by merit, it was
> essentially determined by your family and birth. That frustrated a lot of
> the people who were very smart, even though they lacked "credentials" of
> going to a nice school because they couldn't afford it (or taking the Civil
> Service Exams for the same reason).

------
rdixit
Paul says, _"There's an even better way to block the transmission of power
between generations: to encourage the trend toward an economy made of more,
smaller units"_

this very aptly describes _"small-world Networks"_ which are ubiquitous in
societal/biological/information centric complex systems.

It's the tribe reflected in the organization of smallworld networks: many
small, high clustered groups working together, yet connected to any random
person in any given subgroup within 6 degrees of separation or less.

How? The distance between any two separate nodes ("people") is much lower on
average than you'd think, mostly because of "shortcuts" or giant hubs in the
network to which two distant regions can both connect. This is a huge
advantage, because the increased information throughput becomes so much
greater, bringing great opportunities. (For example, when you desperately need
a date for the prom, you ask the girl with the most friends on Facebook to set
you up.)

with the internet's advent, the most gigantic hub in history now offers the
possibility of a "perfect ad-hoc group", be it a tribe of hackers building an
experimental project, a band of economic analysts parsing through financial
data, or any group of like-minded people engaged in any endeavour.

What i'm saying is, exponential growth of smaller groups isboth dynamically
driving AND benefiting from the spread of the Internet. So... it is
inevitable.

How do we deal with this?

------
meterplech
I think that in the United States a lot of the pressure on students to succeed
on entrance exams are in terms of getting into more prestigious schools has
more to do with desired prestige and college experience than future success.
Few parents would unequivocally claim that going to Harvard over Big State
University = more success for their kids. For parents and their kids I think
its more of matter of wanting the prestige and college experience that's
possible at Harvard.

~~~
justindz
I think it's effectively like buying an advertising and PR firm to work for
you in the job market. Word of mouth and demonstrable talent substitute for
the expense to the degree to which you stay in the (sadly) smaller circles who
aren't significantly influenced by PR and advertising.

------
flashgordon
All credentials are just another way to reduce the "blameable" risk on a
party. People fork out hundreds to do a whole bunch of certifications which
are happily accepted by large organisations as they are somehow proven... This
in turn is just a manifestation of an aspect of the Principal Agent Problem -
Adverse Selection!!

(by the way I hate doing exams and I absolutely suck at them because when I
study I am interested in learning more than I am in getting a great mark at an
exam...)

------
eddieleskowski
Dear Mr. Graham,

Could you please give Harvard Psychology Ph.D Abraham Zaleznik, the old 3
Stooges Curly "nyuk nyuk nyuk"? Zaleznik must not be very happy publishing or
perishing in his ivory tower, because on CNN's web site a few days ago he has
this to say about entrepreneurs who want to start a startup:

\-----------------------------------------------------------
[http://www.cnn.com/2009/LIVING/worklife/01/12/entrepreneur.p...](http://www.cnn.com/2009/LIVING/worklife/01/12/entrepreneur.psychology/)

Research by Harvard Business School psychology professor emeritus Abraham
Zaleznik has unveiled a darker side to the entrepreneur's psyche.

"Entrepreneurs tend to have a singular weakness that allows them to do things
without checking their conscience," Zaleznik said. "Juvenile delinquents act
and then try to sort things out afterward. I think entrepreneurs have this
tendency."

\-----------------------------------------------------------

Juvenile delinquency psychological tendencies? Oh good heavens, there is such
a thing as spectrum. Entrepreneurs come in all sorts of flavors. And its not
true those starting startups are immature or don't take their responsibilities
seriously. It is very sad to see this commentary coming from Harvard.

Eddie

------
drlindalynch
Paul. You certainly don't have the "Credentials" you claim are no longer
needed, and if you did...how much did you pay the person who took English and
Grammar courses for you? Tell them that they didn't teach you much. Not to
mention the person who was seated in your place, in the courses they took for
you concering ethics and honesty.

Your broad unfounded statements,based on what "Paul" thinks, sound really
stupid. Certainly, you must have learned in 6th grade or so, that facts should
be backed by citations - the basics of research. Citations are the proof that
what you say is true or proven to some degree. In other words..who conducted
the research of any sort to prove what you are telling others. If there is no
proof or citation, your statements become the world according to what the
author, Paus tells others, unfactual or unproven, unless of course the facts
are insurmountable - grass is green, the sky is blue. So Paul, you are nothing
more than full of the stuff that comes out of the rear end of a cow (obvious
fact).

Challenge yourself to either proving your blanket statements through research,
or do your homework and cite those who have. Professor L.

------
fab13n
Reactions on a couple of secondary points:

First, there's a huge drawback in the "reward accordingly to the value you
produce" paradigm: you can't punish people accordingly to the value they
destroy. So if you estimate that an operation has 50% chances of winning
$100M, and 50% chances of loosing $200M, your rational interest is to make
that operation, even if it's not in your employer's interest, because you
can't lose more than your job (this only works if your salary is much lower
than $100M, but you can pick other numbers).

This effect is much stronger when individuals work for extremely wealthy
companies, but I'd guess the protection from bankruptcy must have some
comparable effect. It depends on your national business laws obviously.

About the footnote "[3] Progressive tax rates will tend to damp [the] effect
[of money as an incentive]": it's only true if you suppose that money has
linear value for individual, i.e. if going from $50K to $550K is roughly as
valuable as going from $5M to $5.5M. But if you suppose that money has less
importance when you have more of it, states should rather get it from where
it's the least efficient as an incentive, i.e. from wealthier taxpayers.

------
bootload
_"... It was not so easy 25 years ago for an ambitious person to choose to be
judged directly by the market. You had to go through bosses, and they were
influenced by where you'd been to college ..."_

What was the hack Apple, MS and other tech companies used? Aligning themselves
to rapidly improving technology where greater performance was really
noticeable?

I still see the barriers described here occurring particularly in market
bottle-necks (interfaces where technology collides with its ancestry) where
old-world business has influence. The biggest one I can think of is access to
capital. It seems the closer you get to capital, the greater the effect
credentials can come into play balancing out performance.

 _"... What cram schools are, in effect, is leaks in a seal. The use of
credentials was an attempt to seal off the direct transmission of power
between generations, and cram schools represent that power finding holes in
the seal. Cram schools turn wealth in one generation into credentials in the
next ..."_

Is YC acting as an anti-cram school hack? Using YC credentials to gain
leverage to gain capital to the next generation Startups to be measured by
performance?

~~~
motoko
"Is YC acting as an anti-cram school hack?"

Isn't a startup itself an "economic cram?"

"Cramming" isn't necessarily "bad" when the most effective preparation is
achieving thing itself.

------
kailashbadu
A good school doesn’t just give you a degree. It’s the whole experience that
makes it worth going to a great school. A reputed school does a very good job
at bringing smart people together. You get to network with future CEOs,
innovators, and innovators. And when you spend a few years with a bunch of
other smart people around you, some of it rubs off on you and you become
smarter.

------
tmcmhughes
"History suggests that, all other things being equal, a society prospers in
proportion to its ability to prevent parents from influencing their children's
success directly."

I'm not sure I agree. Surely a lesson from the fall of Communism is that
private property matters to the efficient functioning of an economy; and the
value of most private property to most people is in their ability to transmit
it to their heirs.

Obviously there is a need for balance here. Too much inheritance and society
loses all cohesion; too little, and society loses forward motion. (I'm
deliberately ignoring any moral question about whether inheritance is unjust;
this is purely about the pragmatic question of what creates the most wealth
for the most people.)

At a macro level, of course, we want the best person for the job. The best
line in The Communist Manifesto, actually, is (this quote may not be precise)
"to each according to his needs; from each according to his abilities." The
hard part is knowing how to get there!

Thank you for an interesting essay on a fundamental question.

------
kops
I tend to agree. But I also think that people who are cunning enough to beat
the system are then usually good enough to perform at a job as well provided
the right kind of carrot is being shown. A very similar stinking system exists
in India where a future of a kid is sort of nailed right after high school.
But invariably the guys who crack the engineering entrance were cracking the
civil service exam at the end of their graduation. Funny thing is that now a
management course is values better than civil services, so again best of our
engineers (in terms of resume) are sweeping the top MBA seats. So probably
though it is some cram exam or something similar but it seems to get you some
intelligent people who are capable of chasing anything. But that's true only
for the top layer. Average ivy league student is mobbed big time in the
industry by smart kids from unknown colleges. At least half the programmers I
admire come from useless colleges.

------
IgorG
I think this is an excellent, well-observed piece. Credentials mattered more
at a time when the measurement of effective results took longer to read so
that university degrees and performance badges were indicators of the
probability of future success. However, the modern age is an accelerated age
and turn over of results based on performance is almost immediate. Companies
have to be able to make much quicker, adaptive decisions than ever before;
it's like everything is in a state of constant crisis management. Obviously
the younger and leaner the company, the less baggage its accumulated and the
more nimble it can be, but not always. Larger enterprises that adapt with more
localised, distributed structures are able to operate and respond as smaller
units but still maintaining the strength of size. Anything that is more based
on measured results is going to be better as long as the means of measurement
are also measured.

------
brett1211
The hiring process in general is outdated, if not broken. It is exactly the
same (Resume to Interview) regardless of the type of job in question (Banker
vs Developer vs Babysitter). Where is the customization?

As more and more work becomes digitally distributable thought-work, why aren’t
we judging people based on relevant examples of their work? Why is an entry
level hedgefund analyst judged by a 30 minute "tell me about yourself"
interview as opposed to the performance of her personal account (and the
verbalization of the rationale behind it)?

I think it is interesting that we just assume that "talking to someone" is the
ultimate tool for determining intelligence, competence, and fit. Ultimately,
talking to someone measures how well they can talk, not how well they perform.
Are there more pertinent tools for assessment or will hiring always come down
to how we "feel" about someone after a 30 minute interview?

(Good related post on interviewing by Eric Ries:
[http://startuplessonslearned.blogspot.com/2008/11/abcdefs-
of...](http://startuplessonslearned.blogspot.com/2008/11/abcdefs-of-
conducting-technical.html))

Also, a provocative essay on "elite education" that is a good foil to Paul’s
point about how elite education makes people feel about themselves. From this
author’s perspective, it is a disadvantage. Get past the first four paragraphs
and some ridiculous ivy-towerishness and I think he makes some good points):
[http://www.theamericanscholar.org/su08/elite-
deresiewicz.htm...](http://www.theamericanscholar.org/su08/elite-
deresiewicz.html)

Postscript: This is a tangential point related to measurement. I just spent a
scholarship year interviewing entrepreneurs and venture capitalists to
understand how they evaluate or measure the progress of early stage ventures
before the standard financial metrics become available. Paul, would love to
hear your thoughts given your unique position. Thanks.

------
greg
Paul argues testing will be pushed aside by measurement of actual performance.
He may be right but existing methods of testing are amazingly unsophisticated
and open to improvement. For instance:

Most work in the real world is done in teams, but schools tend to grade on
average team output, which is vulnerable to free riders. Why not rotate
individuals through teams and measure independent contributions with some
simple statistics? That's what coaches do for sports like rowing.

Knowledge in the real world is rarely all or nothing. It matters how confident
you are in what you know. Will you risk your company's future on an algorithm?
Why not adjust test results by student's own ratings of their confidence in
their answers? Then we could see who can really be _trusted_ with their
knowledge.

------
rams
"All it takes is a few beachheads in your economy that pay for performance.
Measurement spreads like heat. If one part of a society is better at
measurement than others, it tends to push the others to do better. "

There is little evidence of that - Car companies, investment banks, etc, etc

------
fauigerzigerk
The problem with taking everyone and keeping just the best is that it takes a
lot of resources to do that. A lot more resources than an exam would take.
Just imagine YC taking on everybody who applied and working with them even
just for a month.

I generally agree with the trend that pg describes, but don't think it can
ever be universal (unfortunately). To be rewarded by the market you need
access to the market and that's not always as easy as with consumer web apps.
I would say consumer web apps are pretty atypical, because you don't need much
investment, you don't need any certifications to be allowed in, there is no
risk for the customer if you go bust (unlike with enterprise software), etc.

------
perpetapaul
Paul sees a major trend - the value and meaning of "education" is changing.
For too long, it meant getting into a school, going to classes and graduating.
That means less today when you can be "educated" on how to learn a new
software language, develop a market-driven solution and earn a living from it.

I am one of those who 10 years ago stopped caring about hiring people based on
college degrees. I cared more (and still do) about their skills, abilities and
what they had created.

I am also a firm disbeliever in having to get software "certifications" - they
are meaningless, as Paul proves out, because they have no indication in
regards to performance.

------
CatDancer
Aha, that explains why resumes are so useless: a resume is a listing of
credentials.

~~~
jpcx01
I've transitioned my resume to be more of a portfolio list and abilities
description with a 2 liner for school graduated.

Any company that respects a traditional resume is a company I don't want to
work for.

------
kailashbadu
Moreover, a great school doesn’t produce great minds out of a dumb soul.
Rather the people who attend these schools are already smart to begin with.
Just as birds of a feather flock together they decided to go to the same few
elite schools. The successful people who are alumnus of Ivy Leagues would
still have been just as much smart had they attended a nondescript school.
Likewise, a not-so-smart person wouldn’t go very far even if he made it
through (somehow) to a great school.

------
vivekzone
VCs are the most biased individuals when it comes to judging an individual's
calibre based on his/ her academic credentials . Why is it that almost all of
the founders of the hugely succesful and VC backed companies like Yahoo,
Google, Youtube, Cisco, Facebook are graduates or drop outs from the elite
colleges? Simply because an elite VC is clouded by the belief that smartness
resides only within the corridors of the elite schools.

------
rw
Paul said: _History suggests that, all other things being equal, a society
prospers in proportion to its ability to prevent parents from influencing
their children's success directly._

I am studying development policies and growth economics this year. His
statement really doesn't count for the countries who have very little wealth
to begin with. In fact, he needs to clarify that it is better for wealth to be
passed through families, than for that wealth to be destroyed.

------
CharlieInCO
A quibble in an essay I mostly agree with; the Confucian exams were on
"classical literature" -- but also skill with both composition and
calligraphy, and the "classical literature" was "religious" in the sense that
the teachings of K'ung Tzu are religious. However, they also are the basis for
the whole legal system. In our terms, it would be more like a BA in Poly Sci
followed by Law School -- a credential some people expect from our political
leaders.

------
passerby
In 2008 there were essentially three real candidates for president of the US:
one had degrees from Wellesley and then Yale Law, one was a third-generation
Annapolis man, the winner had been editor of the Harvard Law Review. I guess
one could argue that the US counts as a large organization.

In Trollope's autobiography you will find an interesting defense of patronage
as against the then examination system for the British civil service.

------
profitess
I was awaken on march/28/09 God said there is a code ,i desire you know,i said
o.k Lord,i figured it out,then asked Jesus Christ,why?He said i have a special
reason,ill show,confirm soon why,on march 31,i found out there was a world
wide alert on a person causing trouble,on computer,hes a hacker,must be
stopped,he has linked into 10,000 or more sights,in world,there is a 20,000.00
award,i can stop him.

------
paddy_m
I can't help but read this passage " They also tell you when you're succeeding
in fixing them: when cram schools become less popular." and think of campaign
finance reform.

The way to solve corruption in government isn't to outlaw large contributions
to campaigns (cram schools), but to make large contributions less valuable.
The most expidient way to do that is to decrease the power of elected
politicians.

------
partdavid
It seems like Graham here is talking about one specific kind of credential--a
university degree--and making conclusions about all kinds of credentials.

It's impractical and inadvisable to "just measure performance" for all kinds
of medical practitioners, for example. And credentials can be used to
determine factors other than just "performance", like trustworthiness.

------
pwharton
Have you overlooked the impact that the education behind the credentials might
have on performance? A good grasp of the law that a Harvard law degree implies
is surely relevant to a career as a lawyer. Ditto for a computer scientist. I
don't think I'd want to be operated on by a surgeon without a medical degree,
no matter how talented.

------
akd
Paul - you assert that the economy is less controlled by the biggest companies
than it was 50 years ago. Is this supported by data? I would be curious to see
what % of total GDP is booked by the top 1% of companies in 1950 and in 2000.

------
syntostic
definitely true. meritocracy is the way a free market works; instead of the
alarmist notion that the fit survive and thus it's unfair for the unfit, i see
a new treatment:

the good will cause the bad to conform, either by peer pressure, economic
competition, or simply by social imitation.

the human being is not designed to be wiped out like now-extinct animals, nor
were those animals unfit for survival. instead, the human being is pre-
programmed to survive. got a sprained ankle? it self-heals. so does the body--
and the mind.

the measurement system then will work out just fine. it will be only a matter
of time.

Jamal in Beijing

------
adamc
Best pg essay in a while, in my assessment. It all rings true for me, although
I don't think big organizations (complete with flawed, credential-based
assessments) are going away any time soon.

------
helveticaman
A question:

I'm in Stanford but I want to be in a start up when I'm done. Should I give up
on good grades and a degree in favor of learning more (i.e. not let my
schooling get in the way of my education)?

------
asimjalis
You know this is almost like spam filtering. Maybe use Bayesian filtering -
look at credentials and other factors and then figure out if a candidate is
spam or not.

------
mmphosis
bonus point! cred. your wow score. dollars indicated by an abstract number in
a computer. What's the diff? I notice that universities seem to have become
profit centers to scam parents wealth and create student debt. I would rather
go to a free university to learn and only to learn. That I might get a piece
of paper some day means as much to me as the share price for a startup.

this has not been a test

------
galactus
hmmm.. I remember a recent article in The Economist about how social mobility
in the US is decreasing, which seems to contradict the idea there is a shift
towards a more merit-based society.

(btw, the same article also showed with hard data that contrary to popular
belief social mobility was higher in europe than in the US, despite the idea
that european countries are more "credentials based" than the US.)

------
shuleatt
I posted a few responses on my blog <http://leveragingideas.com>

------
NeatManatee
I wish paul would go back to writing again about lisp and computer science,
hate this essays all about business...

------
BillSeitz
not about this post, but about YCombo moving to SV because it's a better
environment for raising kids.

Could you be more specific about what makes SV better for kids? Personally,
the whole suburb-traffic thing there makes me nuts. Is it the basic dynamism
thing?

------
firebolt
principle true,the spread to society is questionable. The public sector and
unions have enough power to hold the walls from change. Competition there does
not exist. So seniority and organizational politics still dictate rewards.

------
stuntgoat
Ha! I just finished reading your essay and earlier today I was thinking about
the the current and future opportunity for the youth. ( I am 32 ) Seeing some
high school kids acting silly and waiting the bus, while I was driving by made
me think about what opportunities there are for them when they graduate high
school. 3 thoughts came to mind as I made my way to the hardware store:

a) Youth are generally cynical towards the older generation because we won't
let them have as much fun as they would like to have.

b) Older generations generally hold on to their wealth and could potentially
stifle innovation by keeping much of the up and coming generation in the ranks
of those living paycheck to paycheck.

c) How can a society let the youth innovate more efficiently ( and safely ).

College may not be the panacea for innovation and personal happiness but:
attending college helps to put an individual's impact on the world in
perspective and can perhaps demonstrate that people do cool things that affect
the world. College is also a good way to show people how to learn effectively.

In theory, great schools are difficult to do well in and have high standards;
this is the reason that particular graduates are selected for the jobs or
funding. It is more difficult to graduate from Reed than Sonoma State- it
takes more time studying, writing and thinking. I would consider hiring or
working with a person who, theoretically, spent more time thinking in college
over another applicant who went to one of the greatest party/drinking schools.
Credentials from a school with rigorous curricula is much different than a
doing well at a standardized test. What I mean is that some credentials * are
* a measurement of performance ( performance, as in study hard and think
clearly ). I think the performace VCs and people who hire graduates to work in
their factories and cubicles are trying to measure is called 'return on
investment'.

Here is a question for you: what would be your standardized test for measuring
return on investment.

I'll think of 3.

1) Applicant, write a short essay about how you might generate $200 in total
income in a day given only the clothes you are wearing right now, a $50 bill
to spend on anthing you might need, having eaten the breakfast of your choice
and a wish for good luck. ( you have 30 minutes )

2) Applicant, how do you manage your time when you are trying new ways of
solving a problem? Give one or many examples with your reasoning explained in
context. ( you have 30 minutes )

3) Applicant, how willing would you be to share your innovative ideas with me
if I helped you succeed at implementing them? ( all my best ideas; most of my
greatest thoughts; some cool ideas; not many _OK_ ideas; perhaps one daydream;
you'll never know what I am thinking next )

------
flashgordon
oh and by the way, what should be the policy on inheritances?? those are a
direct transfer of power/resources between generations which can just easily
be seen as unfair advantages.

------
utsmokingaces
Respectfully, why are PG's articles so damn long? If your goal isn't to make
beautiful writing, you should just get to the point. Who has time to read long
articles in this day and age.

------
slvrspoon
i believe, without having done any research, that credentialism worldwide has
GROWN massively as the middle classes try to protect their positions for the
selfish reasons PG states. less biased, more thoughtful research would make
for a more reasoned debate about an important topic, to Y combinator, and to
wider society.

~~~
jwesley
So without doing any research, you arbitrarily take the opposite position and
demand that more research be done? Feels like a non sequitur...

------
bradma
I think that there seem to be two schools of thought in the USA on what
defines performance and competence. If you follow the money you’ll see exactly
the same thing happening in China happening here.

You've got wall street on the east coast and investment banks then you have
the west coast with VC funding smaller businesses. As the size of the
businesses get bigger and they are no longer created to be sold in six years,
the downside of failure becomes much much higher. It's easy to assess
performance in a small company and it's easy to kill projects that don't work
in a small company. When you're Ford and your Firestone tires kill some folks
life is a bit different, funding projects is a bit different, cash flow
necessary to stay in business when disaster strikes is different, the types of
employees you need to stay in business are different. What does this have to
do with education and credentials? In these large companies it's much harder
to measure performance and you get back to the old world view of who knows and
trusts who. You're looking for a minimum level of reliability and competence
since the downside of a screw up is much larger and the consequences are very
different. I think these small companies are funded by people in large
companies eventually buying them and those people agreeing to make the
purchase I suspect went to Harvard and Stanford as did many of the VC partners
who organized the funding. At the beginning and end of the project, the money
passed through the ibanking system.

Silicon valley creates tons of companies which are bought and produce nothing
but cash for the VC and deliver no or very little incremental profit to the
company which buys it. It can no doubt be produced faster with a small company
driving the project, but if you step back and look at the quality of the
investment, you have an entirely different way to measure performance.

That means that the VC founders got money from east coast investors and the
executive authorizing the purchase came from the exact same social circle.
Performance metrics at the project level Paul Graham refers to are clearly met
by any qualified professional from any school, but that employee amounts to an
assembly line worker. If you measure performance in profit

I would suspect that the people who funded the startup attended top
universities as those who bought it. Access to this kind of sure thing bet is
limited to a group of people who are trusted by the previous generation who
were doing the exact same thing.

The USA is good at moving money around into investments that often have no
value to the investor. The founders and VC are out of the investment and the
executives that authorized it are out of it long before anyone knows if it
delivers real value. To call this performance based rewards is a pretty narrow
view of performance. I think Paul Graham is brilliant, but he lives in a west
coast piece of the puzzle which exits the process long before the end result
of the pieces he’s created is known.

------
retyred
sadly i think college credentials in the US have lost their luster because its
always a let-down. without a doubt there is only one school that i have never
met a single retard from: caltech. cmu is a close second. every other school
has let me down by graduating some goof who i have interviewed or worked with.
never again will i get uptight or impressed by stanford, mit or the ivies.

my attitude is that i do not care where you went to school. in an interview,
if you ace the questions, why do i care if you went to ball state? so what,
maybe that is all you could afford. on the other hand, if you can't answer my
questions, why do i care if you went to stanford?

furthermore its likely that most people here do not know what the best
colleges in korea, japan, china and india really are. so best to just skip the
education section of the resume entirely

~~~
mthg
I agree with this sentiment entirely. I went to a public magnet high school
with SAT scores averaging around 1480 and at least half our graduating class
every year ends up in an ivy / mit / stanford. I'd say more than half of those
who made it to the top tier got in from legacy / extracurriculars / obsessive
dedication to good grades and making teachers happy as opposed to genuine
intelligence and love of learning. Also curiously, like you said, everybody
from my graduating class who went to caltech, although not necessarily teh
uberg3nius math wiz, was at least minimally competent in some technical field.

Although one could make the case that a lot of those schools, especially the
ivies, are picking people based on their ability to lead and 'make a
difference' in some general sense rather than pure raw ability. Therefore they
may intentionally focus on apparently manifested soft qualifications like
achievement in extracurriculars, personal discipline as exhibited by a
flawless GPA, or well-established personal connections.

This is all strictly re: undergrads of course. I've never seen a single retard
get admitted to a top-tier PhD program in science or engineering.

~~~
quantumhobbit
"This is all strictly re: undergrads of course. I've never seen a single
retard get admitted to a top-tier PhD program in science or engineering."

That's not the case as I've witnessed it. I won't directly name names, but I
am thinking about a school that is ranked number 4 for graduate engineering on
U.S. News.

~~~
Retric
U.S. News has a fairly broken ranking system. I think they try and set things
up so schools jump around with little rime or reason so people will buy this
years ranking vs just reading last years. I mean if if my school will rise and
fall 5-10 points while I am their why try and give a number just list those
that make the cut.

------
kingkongrevenge
Credentialism and Mandaranism are artifacts of state dominated societies. It's
really that simple. Free market economies feature so much creative destruction
that power has little chance of persisting across generations. Only in a
system lacking Darwinian market selection mechanisms do credentials become so
critical. Credentialism emerged in China because the Chinese state was always
much more powerful than the European crowns.

Credentialism has declined in the US to the extent that certain segments of
the economy have adapted and grown so fast as to escape the clutches of
government control. The segments still under firm influence of regulation are
heavily Mandarin and Credentialist. Think medicine or law.

~~~
Tangurena
Inheritance taxes eliminate the persistance across generations of power and
wealth. However, since the bush administration chose to repeal estate taxes,
they intended to return the US to the sort of nation with a hereditary
aristocracy.

In IT, we saw the problems with "credentialism" in the problems with "boot
camps" and the "paper engineers" who came out with CNE/MCSE credentials who
also were basically useless.

~~~
anamax
> Inheritance taxes eliminate the persistance across generations of power and
> wealth.

No they don't. The persistence of the Kennedy s and Rockefellers demonstrate
otherwise.

US inheritance taxes just hit family biz, and destroy them because the tax
bill can only be satisfied by selling the biz.

The wealth of the truly rich (Gates et al) is not subject to inheritance tax.
It is, however, passed on. (What - you thought that the Gates foundation was
to do good?)

------
albertcardona
_Now we seem to be entering a new era based on measurement. The reason the new
model has advanced so rapidly is that it works so much better. It shows no
sign of slowing._

I wish the measurement system was more accurate for science. Counting
publications is not just mislead, but the root of a great evil: pollutes
information sources with redundant or highly speculative information, i.e.
papers published just to tell the measurement-obsessed bureaucrats that a
given researcher still exists.

I wish we could just work quietly, sharing information informally with our
peers over internet and at meetings, and only publish when ready, even if this
means publishing every 10 years.

------
arjungmenon
A very similar situation exists in India. There are literally thousands of
cram schools all over the country that prepare students to get into
engineering colleges, med. schools, e.t.c.

