Notes
[1] One valuable thing you tend to get only in startups is uninterruptability. Different kinds of work have different time quanta. Someone proofreading a manuscript could probably be interrupted every fifteen minutes with little loss of productivity. But the time quantum for hacking is very long: it might take an hour just to load a problem into your head. So the cost of having someone from personnel call you about a form you forgot to fill out can be huge.
This is why hackers give you such a baleful stare as they turn from their screen to answer your question. Inside their heads a giant house of cards is tottering.
The mere possibility of being interrupted deters hackers from starting hard projects. This is why they tend to work late at night, and why it's next to impossible to write great software in a cubicle (except late at night).
One great advantage of startups is that they don't yet have any of the people who interrupt you. There is no personnel department, and thus no form nor anyone to call you about it.
[2] Faced with the idea that people working for startups might be 20 or 30 times as productive as those working for large companies, executives at large companies will naturally wonder, how could I get the people working for me to do that? The answer is simple: pay them to.
Internally most companies are run like Communist states. If you believe in free markets, why not turn your company into one?
Hypothesis: A company will be maximally profitable when each employee is paid in proportion to the wealth they generate.
[3] Until recently even governments sometimes didn't grasp the distinction between money and wealth. Adam Smith (Wealth of Nations, v:i) mentions several that tried to preserve their "wealth" by forbidding the export of gold or silver. But having more of the medium of exchange would not make a country richer; if you have more money chasing the same amount of material wealth, the only result is higher prices.
[4] There are many senses of the word "wealth," not all of them material. I'm not trying to make a deep philosophical point here about which is the true kind. I'm writing about one specific, rather technical sense of the word "wealth." What people will give you money for. This is an interesting sort of wealth to study, because it is the kind that prevents you from starving. And what people will give you money for depends on them, not you.
When you're starting a business, it's easy to slide into thinking that customers want what you do. During the Internet Bubble I talked to a woman who, because she liked the outdoors, was starting an "outdoor portal." You know what kind of business you should start if you like the outdoors? One to recover data from crashed hard disks.
What's the connection? None at all. Which is precisely my point. If you want to create wealth (in the narrow technical sense of not starving) then you should be especially skeptical about any plan that centers on things you like doing. That is where your idea of what's valuable is least likely to coincide with other people's.
[5] In the average car restoration you probably do make everyone else microscopically poorer, by doing a small amount of damage to the environment. While environmental costs should be taken into account, they don't make wealth a zero-sum game. For example, if you repair a machine that's broken because a part has come unscrewed, you create wealth with no environmental cost.
[5b] This essay was written before Firefox.
[6] 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're not consciously aware of it.
[7] When VCs asked us how long it would take another startup to duplicate our software, we used to reply that they probably wouldn't be able to at all. I think this made us seem naive, or liars.
[8] Few technologies have one clear inventor. So as a rule, if you know the "inventor" of something (the telephone, the assembly line, the airplane, the light bulb, the transistor) it is because their company made money from it, and the company's PR people worked hard to spread the story. If you don't know who invented something (the automobile, the television, the computer, the jet engine, the laser), it's because other companies made all the money.
[9] This is a good plan for life in general. If you have two choices, choose the harder. If you're trying to decide whether to go out running or sit home and watch TV, go running. Probably the reason this trick works so well is that when you have two choices and one is harder, the only reason you're even considering the other is laziness. You know in the back of your mind what's the right thing to do, and this trick merely forces you to acknowledge it.
[10] It is probably no accident that the middle class first appeared in northern Italy and the low countries, where there were no strong central governments. These two regions were the richest of their time and became the twin centers from which Renaissance civilization radiated. If they no longer play that role, it is because other places, like the United States, have been truer to the principles they discovered.
[11] It may indeed be a sufficient condition. But if so, why didn't the Industrial Revolution happen earlier? Two possible (and not incompatible) answers: (a) It did. The Industrial Revolution was one in a series. (b) Because in medieval towns, monopolies and guild regulations initially slowed the development of new means of production.