

David Heinemeier Hansson's Speech about Making Money at SS2008 - vlad
http://docs.google.com/View?docid=dd8936t8_66g2ngbchb

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1gor
The credo of a tycoon of old (think JPMorgan or Vanderbilt) was to build an
empire. His own empire, in his lifetime.

Tycoons of today have build their own empires (Microsoft, Google, Apple,
Oracle etc.), same principle, same philosophy.

When and why did it happen that flippers took over this market's mindshare? A
young entrepreneur today dreams of selling out to Yahoo/Google/Microsoft as
soon as possible. Quite often even before his business is profitable.

Hey, if you have a growing business that is profitable, you should keep it for
yourself. Many people with money I know (so-called 'professional investors')
dream of having such a business in their possession. Such business is not
listed, so you cannot buy it on the market. What you can buy on the market
(what is listed) normally grows slower and is over-researched and over-valued.

But of course, if you focus on building the cash flow for yourself, and
keeping the option of striking it very big at some time in the future for
yourself, then the whole industry of undervalued option-buyers (VCs, angels
etc.) will be left without work. So the propaganda is put to work... When is
my next funding round?.. A round of what? When is your next client subscribing
to your app - that should be the question.

DHH thrives on being controversial, but the point he makes here is simply a
well forgotten truth about entrepreneurship. Building your business slow and
taking full credit for it for yourself used to be the norm before the flipper
ethics kicked-in.

~~~
dissenter
Times change, and America is much more corporate than it used to be. When a
market becomes saturated innovative people will look elsewhere to make their
mark.

I don't want to spend my life managing a business. I want to make some money
and do something else. I have no doubt that I would make a fitting CEO. But
the hours are long and the work is unappealing. There aren't any CEOs I want
to be like. Apple's CEO, maybe, but what price does he pay to do what he does?

I really get the feeling that anyone ('anyone') could be a CEO these days. I
feel like the CEO is a reward that keeps everyone else on the corporate
pyramid. Maybe I'm wrong. I could be. But I haven't seen the argument that
debunks that idea. (And I have seen a lot of instances of CEOs who didn't
deserve what they received.)

The money is a silly motivation. What am I going to do with $6 billion that I
couldn't do with $6 million? Spend conspicuously? Raise a family of layabouts?

I would much rather become financially independent and begin doing the work I
want to, when and where I want to. I like to make things, and I like to talk
to creative people. I like to do small things really, really well. And I don't
like to spend my time dealing with red tape. I feel like I have an obligation
to society, but that I don't have to fulfill it by spending my time managing a
large corporation. There a lots of other less flashy positions desperate for
someone to do a really great job. I want to do something small perfectly, not
something huge good enough. Does that make sense?

~~~
inovica
I have created a good growing company that leaves me financially independent
anyway - on a monthly basis at least - and I can continue to do other things
also. I think this attitude of short-term gain misses out that success is a
journey and not a destination. Your motivation still IS money - most of the
successful people I know achieved the money because they loved what they are
doing and the by-product was a financial reward

~~~
tokipin
why waste time fiddling with a company when you have all the money you will
ever need?

and not everyone's passion can make them money

~~~
inovica
Because I'm interested in startups, in commerce and not everyone can run a
company. I provide employment to people and a social responsibility via my own
and my companies actions. That's just for starters!

~~~
tokipin
right, but those are _your_ interests. mine, for example, are completely
opposite -- i want to stay home and play with theories

i agree that if you have nothing better to do, and you want to be one of those
famous CEO's, then selling out early doesn't sound right. but some people do,
in their definitions, have something better to do

~~~
kingnothing
What's your point? You asked for his opinion, got it, then shot him because of
it.

~~~
tokipin
it was a rhetorical question, it didn't occur to me that it would pertain
directly to who i was responding to

my point is not everyone wants to accomplish the same things in life, but
everyone needs money to be able to accomplish them (at minimum to pay the
bills)

why would someone want to just get some money and be done with all the company
stuff? because they have something better to do. maybe they want to visit
every city in the world. maybe they want to raise their children full time and
homeschool them. having money, they have those options

if you don't have something better to do (in your definition of 'something
better',) then you are already doing what you think is best, and more power
levels to you. may your hair glow yellow or gold at some point

------
iamelgringo
Really, as soon as Justin TV gets the video online, people should see it.
DHH's presentation really was the best of the bunch in my opinion, followed by
San Altman's.

He really made a lot of sense. There is so much talk and buzz about getting
funded that it was really refreshing to hear some one talk about just plain
starting a business. The profit margins in the software business are very,
very high. If you can offer a decent product and get people to pay for it, you
can make a rather nice living for yourself without having to play the funding
game.

~~~
attack
HUGE if's.

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zkinion
Yes, it was a very nice presentation.

There's too many kool-aid drinkers in the web 2.0 world these days, and its a
true breath of fresh air to see somebody with some real business fundamentals
talking. I hope his talk makes more people wake up and realize that by trying
to build a solid business over time, you have a much much MUCH greater chance
at success than people flipping dodgy startups.

I don't think his message was controversial at all. Instead, its a shot of
common sense in a world of disinformation.

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dcurtis
Wow, this typed version destroyed the power of his talk. Please wait until you
can see the video (on justin.tv?); his presence is huge.

It has been the best talk by far.

~~~
tptacek
Don't be a dick. Those notes were awesome. None of my partners are going to
sit through a DHH talk; I was able to cut-paste from this to start a
conversation.

~~~
jamiequint
so its not worth watching for 25 minutes, but you're going to have a dialog
based on the transcript? (Which doesn't really fully capture what he was
talking about) That makes no sense.

~~~
tptacek
Hey, you know what? I'm not particularly interested in having a conversation
about DHH's company. His company runs fine without my input. I'm also not
particularly interested in faithfully replicating all of DHH's ideas. That's
why my eyes aren't glued to the screen every time he talks. I'm glad he has an
audience. I like him. But I've got a pipeline to help manage. So really, and
I'm asking you, Jamie, who gives a shit?

My point was, don't snipe at some guy who took the time to write up notes from
the talk because his hero worship wasn't total enough to prevent him from
doing me a favor. I'm sorry he folded up your favorite player's rookie card
and stuck it in his BMX spokes --- that must drive you nuts --- but that
writeup gave me a useful idea. I'm going to make a judgement call that says
that watching some Flash video of DHH talking isn't going to be worth the
billable 25 minutes.

~~~
jamiequint
Enough with the straw men.

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anewaccountname
>Try solving your own problems. Your own company is not unique, there are
probably two hundred others who have the same problems.

But if someone solves the same problem as _you_ , whine about it and have a
quasi book-burning ordeal where you get it permanently removed from the
internet. (Campfire)

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chaostheory
video courtesy of justin.tv:
[http://www.justin.tv/hackertv/97862/DHH_Talk__Startup_School...](http://www.justin.tv/hackertv/97862/DHH_Talk__Startup_School_2008)

~~~
vlad
Great! Turns out this speech was in fact recorded successfully and completely
by Justin.tv, but apparently some others like Arrington's were not due to
technical difficulties (like I remembered last year.) I was actually very
nervous because I made a decision to publish these notes to the public asap,
but I was missing out on the first part of Paul Buchheit's speech to do so.
Why was I nervous, when surely there would be perfect, uninterrupted video
recordings , with full and clear audio after the event? Well...

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axod
For new technology, it seems to me to be a land-grab. Grab the users who want
X, then either figure out how to make money off them (As google did), or sell
to someone who sees the value of your audience share.

So... is it:

1\. Find a problem - something's broken 2\. Find a solution - make what people
want 3\. Price it 4\. Get users

Or

3\. Get users 4\. Work out how to monetize them

I think either can work, and both have disadvantages. Charging up front sort
of goes against what PG said in his talk (Great talk I thought) - about being
nice and helpful and giving users stuff they need. Waiting until you have the
userbase before you start monetizing means you don't have cashflow, and may
need funding.

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wallflower
I liked his comment about scalability. When you have paid subscribers, you
like scaling issues. Scaling issues (server capacity being utilized) means
your business is doing well. With your subscription fees producing a healthy
profit, you can buy another server (a kick-ass one).

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kyro
I don't think his speech was that great. Loud and arrogant doesn't make for a
great speech. He kept stressing the ease of settling for the middle and just
asking people to pay for your services. He used the analogy of us paying for
cars but I think there's one huge difference. There is a huge barrier of entry
into the car business which ultimately results in us having to pay what we
pay, but I'm the web world, your product can be copied on the fly, look begged
and be free, and that's why people want to horde the masses, something he
criticized, so they can offer a free service and yet monetize using
advertisements.

It happened with his product, the launch of huddlechat, but that as you know
was taken down.

~~~
tptacek
"His product" is Basecamp, not Campfire; a tiny fraction of their revenue
comes from Campfire.

Most people would take good odds of running a multi-million dollar business
over infinitessimally small odds of flipping and retiring. And he's obviously
right about the odds: what percentage of YC companies have flipped?

~~~
davidw
Ok, but the point that the economics of information goods are often quite
different from physical products is a valid one. That said, the idea that you
should look for markets that aren't winner take all, where you could have a
sustainable, mid-sized business, is a good one.

~~~
tptacek
There is a difference between an entrepreneur and a speculator.

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mhidalgo
It all goes back to the mentality of loving what you do...if that results in
you being the next google so be it. The problem is people set their minds on
being the next big thing instead of worrying about what they are doing in the
present. DHH is speaking to living in the present and not compromising your
ideals.

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rantfoil
Thanks for these notes. Very detailed and captured the meaning perfectly. But
you just had to be there to see the frenetic energy with which he boils on
stage.

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attack
Well, anecdote != data:)

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edw519
Great presentation! I'm already building a startup predicated upon the
subscription model and I'm already familiar 37 Signals, DHH, and Getting Real.
I just needed this talk to give my a little extra kick in the butt. New
business plan in the works today.

