The Life and Times of Paul Graham (Part 1) – Hour 1

Audio Transcription

Meet Paul Graham (the man) behind AirBNB, DropBox, Reddit, Stripe, Weebly and ViaWeb (Yahoo! Store).

Who is Paul Graham? – He is the computer entrepreneur, venture capitalist, computer scientist, author, venture capitalist and the co-founder and programmer behind Viaweb, which was sold to Yahoo for $49.6 million and later became known as Yahoo store. As of 2017, the company Paul Graham started, Y Combinator has invested in well over 1,000 companies. The success stories that he has helped to produce include: Reddit, Stripe, Weebly, Airbnb and Dropbox. The total market valuation of the companies that he has invested in is over $80 billion.

His also the co-founder behind the startup accelerator known as Y Combinator which invests capital, counsel and connections into promising your tech businesses in exchange for a 7% equity ownership in the business. As of 2017, Y Combinator has invested in well over 1,000 companies including: Reddit, Stripe, Weebly, Airbnb and Dropbox. The total combined capitalization of the Y Combinator companies is over $80 billion. The program also provides aspiring entrepreneurs with something they call “office hours” where the founders of the young company get to meet individually with other Y Combinator partners for mentoring and advice. Paul has also written many long form essays and books including: On Lisp, (1993), ANSI Common Lisp (1995), and Hackers & Painters (2004).

1964 – Paul Graham was born in Weymouth, England.

FUN FACT – Weymouth, England is a coastal city located at the very far south coast of the United Kingdom. Weymouth has a metropolitan population of 71,083. Weymouth is a tourist resort, and its economy depends on its harbour and visitor attractions.

Paul Graham’s family decided to move to the United States in ______ and he grew up in suburban Pittsburgh. His father worked as a physicist. He designed nuclear reactors while his mother basically raises Paul and his sisters. While still in high school, Paul

starts writing computer. He wrote one program that could accurately predict the flight path of model rockets.

1986 – Age 22 – Graham earned his Bachelor of Arts in philosophy from Cornell University, which is located in Ithaca, New York.

FUN FACT –  Cornell University was founded in 1865 by Ezra Cornell (an American businessman and the founder of Western Union) and Andrew Dickson White (an historian who served as the school’s president for the first two decades).

1988 – Age 24 – He then attended Harvard University, earning Master of Science.

FUN FACT – Harvard University is one of the most prestigious schools on the planet. The school is located in Cambridge, Massachusetts, and was established in 1636. The school’s history of producing success has made it one of the most world renowned universities. The school was originally established by the Massachusetts legislature and was quickly named after the school’s first and largest donor, the minister John Harvard who dies at just the age of 31 of tuberculosis.

1990 – Age 26 – Earned his doctorate in philosophy from Harvard.

He has also studied painting at the Rhode Island School of Design and at the Accademia di Belle Arti in Florence

Famous Harvard Attendees Include:

1. John Adams – The nation’s 2nd United States President.
2. John Quincy Adams – The nation’s 6th United States President.
3. Rutherford Hayes – The nation’s 19th Unites States President.
4. Theodore Roosevelt – The nation’s 26th United States President.
5. Franklin Delano Roosevelt – The Nation’s 32nd United States President.
6. John F. Kennedy – The nation’s 35th United States President.
7. George Bush – The nation’s 43rd United States President.
8. Stanley Marcus – The CEO of Neiman Marcus
9. Tommy Lee Jones – The famous director and actor. Al Gore was his college roommate.
10. Mitt Romney – The 70th Governor of Massachusetts.
11. Al Gore – The 45th Vice President of the United States.
12. Bill O’Reilly – The national radio talk show host, TV personality and best-selling author.
13. Bill Gates – The founder of Microsoft.
14. Barack Obama – The nation’s 44th President of the United States.
15. Matt Damon – The Academy Award winning Actor.
16. Natalie Portman – The award-winning actress from Black Swan, Star Wars Episode II, V for Vendetta and more.
17. Mark Zuckerberg – The founder of Facebook.

1994 and Before – Age 30 – A Starving Artist Until the Age of 30

To Graham, this was exciting news, yet Graham was really in no position to invest in anything at this point in his life. After he graduated from Harvard with a PhD in computer science he had found himself stuck in a life pattern that he didn’t like too much. Basically he would find a part-time consulting job working in the software business and then after he had grown his savings to a certain level he would then quit this job and focus as much of his time as he could into his real love which was painting and art.

NOTABLE QUOTABLE – “Many people feel confused and depressed in their early twenties. Life seemed so much more fun in college. Well, of course it was. Don’t be fooled by the surface similarities. You’ve gone from guest to servant. It’s possible to have fun in this new world. Among other things, you now get to go behind the doors that say “authorized personnel only.” But the change is a shock at first, and all the worse if you are not consciously aware of it.” – Paul Graham

1995 – Age 31 – The Radio and the Netscape News

In 1995, Paul was listening to the radio show that was discussing the massive opportunities and the near endless possibilities of online commerce which at that moment nobody was really using.

The promotional program was being paid for by Netscape, which was trying to convince people to invest in their business before their initial public offering.

NOTABLE QUOTABLE – “Paying attention is more important to reliability than moving slowly. Because he pays close attention, a Navy pilot can land a 40,000 lb. aircraft at 140 miles per hour on a pitching carrier deck, at night, more safely than the average teenager can cut a bagel.”

1996 – Age 32 – Founding Viaweb with Robert Morris

In 1996, he and his friend Robert Morris started the company called Viaweb to be the first application service provider written primarily in the Common Lisp coding language.

NOTABLE QUOTABLE – “The way to get startup ideas is not to try to think of startup ideas. It’s to look for problems, preferably problems you have yourself. The very best startup ideas tend to have three things in common: they’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way.”

1996 – Age 32 – Let’s Start a Business That Sells Something People Want

He sincerely hated doing the consulting, but he had to do it to finance his love of art. He then had the idea that he and his friend from Harvard, Robert Morris could work together to start their own business. They weren’t really sure what kind of business they would start, but they knew they were going to team up to start something. Eventually, they decided to create a program that would allow a business to quickly create their own online store.

However, in those days in order for a product to gain mass acceptance it had to work on the Windows operating systems and thus, it had to be written for windows. However, as an artist and a hacker he hated everything about Windows to the extent that he had never even invested the time to learn how to write programs for it. In fact, he preferred writing using a coding language called Lisp which was an open-source operating system.

DEFINITION – OPEN SOURCE 101 – Open source is software with source code that anybody else can adjust, modify, inspect and improve upon. Most software that you can buy today or that you can download is available in the compiled ready-to-run version. This means that the actual program coding that was created by the developer known as the source code had run the final program through another program called a compiler that translates the source code into a version and form that the end user’s computer can actually understand. It is very difficult and almost impossible to modify a compiled version of most applications and it’s even harder to see how the program was actually developed. Most big commercial software companies like Adobe and Microsoft use this to their advantage to keep people from illegally copying their code for their own personal use or to make a competing product.

Open source is really is the exact opposite of commercial software that has been run through a compiler. Open source programs are created to include the source code with the compiled version and the customization of the software is actually encouraged by the original developers who believe that their application will work better and will be more likely to become error free if developers have access to their code.

FUN FACT – The Y-Combinator slogan and main mantra is: Make something people want.

NOTABLE QUOTABLE – “Make something people want…If you make something users love enough to tell their friends, you grow exponentially, and that will convince any investor.” – Paul Graham

NOTABLE QUOTABLE –  “I made it myself. In 1995 I started a company to put art galleries online. But galleries didn’t want to be online. It’s not how the art business works. So why did I spend 6 months working on this stupid idea? Because I didn’t pay attention to users. I invented a model of the world that didn’t correspond to reality, and worked from that. I didn’t notice my model was wrong until I tried to convince users to pay for what we’d built. Even then I took embarrassingly long to catch on. I was attached to my model of the world, and I’d spent a lot of time on the software. They had to want it!”

Creating Viaweb in the Unix open source code

The inner artist in Paul made him go ahead and write Viaweb using the open source code Unix anyway. He thought he that after he had designed something he liked using Unix, he could then go ahead and adjust the program to work on Windows, which he strongly disliked.

NOTABLE QUOTABLE – “Like having a child, running a startup is the sort of experience that’s hard to imagine unless you’ve done it yourself. The best source of advice for new founders is not professors or investors but other founders,” says Paul Graham. “Those on this list know things only a handful of people know.”

The Web-Based Epiphany

One morning Graham woke up with a big idea. He dreamt that he was able to actually control the software on a server by simply clicking on links. This blew his mind because he realized that he could create a program that would run on the internet and not a person’s personal computer. He dreamt that people could download the program and then use it through their Netscape web browser by clicking links on the web page to get it set up.  This meant that Paul and Robert never need to create a windows version because their software just needed to work with a user’s web browser.

NOTABLE QUOTABLE – “It’s hard to do a really good job on anything you don’t think about in the shower.”

Revenge of the Nerds

At this point, there was not anything else like this on the planet, yet to Paul and Robert the solution no seemed so obvious. In a state of euphoria the two nerds agreed that they would make it happen. Within less than a week they were finished creating their first version and they now knew that creating a web-based software program would actually work.

NOTABLE QUOTABLE – “The main reason nerds are unpopular is that they have other things to think about.” – Paul Graham

Three Weeks of Intensity

During the following three weeks they found an angel investor who was willing to invest $10,000 for a 10% ownership of the business, however very few existing merchants were interested in their idea. This program that they created was the first internet-based program designed for starting a business on the planet.

NOTABLE QUOTABLE – “If your friends or family happen to be rich, the line blurs between them and angel investors. At Viaweb we got our first $10,000 of seed money from our friend Julian, but he was sufficiently rich that it’s hard to say whether he should be classified as a friend or angel. He was also a lawyer, which was great, because it meant we didn’t have to pay legal bills out of that initial small sum.” – Paul Graham

NOTABLE QUOTABLE – “Determination. This has turned out to be the most important quality in startup founders. We thought when we started Y Combinator that the most important quality would be intelligence. That’s the myth in the Valley. And certainly you don’t want founders to be stupid. But as long as you’re over a certain threshold of intelligence, what matters most is determination. You’re going to hit a lot of obstacles. You can’t be the sort of person who gets demoralized easily.” – Paul Graham

The Slow Exponential Growth Begins

The only reason that Paul’s subconscious mind was obsessing about the idea of creating a web-based program while he was sleeping was because he hated Microsoft products with a passion, yet creating Viaweb as an internet-based software create multiple unforeseen advantages for the company.

NOTABLE QUOTABLE – “Being strong-willed is not enough, however. You also have to be hard on yourself. Someone who was strong-willed but self-indulgent would not be called determined. Determination implies your willfulness is balanced by discipline.”

1st – Because the program lived on the internet, Robert and Paul could make consistent updates to software they were able to test immediately.

2nd – They could learn directly from consumers how they could improve the product and overall experience. Because the program was web-based they could actually make improvements to the program in days that would typically take most software companies months to implement.

3rd – Because they were both the company’s founders and the company’s only sales force they were able to learn directly from consumers what they liked about it and how they could improve it.

4th – Because they were the first web-based program in the history of the planet that made it possible for someone to start an online e-commerce business they had no competition.

1998 – Age 34 – Selling Viaweb
During the summer of 1998, Robert Morris and Paul Graham agree to sell Viaweb to Yahoo for $49.6 million in 1998.

2001 – Age 37 – Paul began to write long-form essays in 2001 on PaulGraham.com.

2005 – Age 41 – In 2005, Graham was asked to give a talk to the Harvard Computer Society. He gave the talk titled, “How to Start a Startup” and it gained significant praise from the student body. Soon after delivering this talk Trevor Blackwell, Jessica Livingston (his wife), Robert Morris and Paul Graham decided to team up to start Y Combinator.

2008 – Age 44 – The BusinessWeek publication named Paul Graham as one of, “The 25 Most Influential People on the Web.” In 2008, Paul Graham married Jessica Livingston.

2015 – Age 51 – In 2015, this website alone had 34,000,000 views.