Re: Startups, Bubbles, and Unemployment
On Tuesday, August 27, 2002, at 06:36 AM, Matt Curtin wrote: Tim May [EMAIL PROTECTED] presumably wrote: [I'm not sure if Tim actually wrote the following, as a splat proceeded the Back but nothing else in the paragraph. Apologies in advance if I'm misattributing.] This is a problem as articles get bounced around, sometimes to some of the many similar lists run by one person. Back in the 1970s and early 80s, high tech start-ups were difficult to do. It took some really good ideas, or at least the departure of a talented group of people who had already developed something. Examples like Sun and Cisco are examples of where the core technology had already been developed (Stanford, in both cases) and where the companies could begin to SELL PRODUCTS almost immediately. I cannot help but wonder how the cycle of start company, get financing, hire friends, build stuff, retire rich was influenced by increasingly Draconian intellectual property agreements and whatnot. I was too young for gainful employment in the 1970s, but maybe some folks who worked in high technology at that time could shed some light. I'm particularly interested to know whether this we all of your thoughts business came about as a result of people going out on their own to sell products they developed on their own time while in another technology company's employ. I was there, at Intel, and will give you my thoughts on this. * When there were about 10 chip companies, extensive patent cross-licensing deals had been struck (mostly in the 1960s). There _were_ a few lawsuits (notably Fairchild suing others for violating the oxide isolation patents), but not many. * The focus on patents was minimal. Trade secrets were much more important. I can tell you that Intel had several tricks (Getter III V-over-I, Pyroglass, Dip-back, special equipment custom-built, proprietary CAD systems long before CAD companies existed, etc.) that were not patented, just kept secret. Something crypto folks ought to appreciate. * The focus on patents was so low that our patent guy, Ed Taylor, kept his office in LA and only came up to Santa Clara a few times a year. Mostly he discouraged the filing of patents, and certainly middle managers did not encourage engineers to waste time trying to get patents. I got one during this time. A friend of mine was told not to bother to file for a patent on something that other chip companies later (two years later) were trumpetting as their patented invention. * Things began to change for many reasons. *First, the entry of the Japanese, Taiwanese, and Koreans into the market. They had not be party to the cross-licensing deals. * Second, some American companies only peripherally involved in chips attempted to sue chip companies for violating their patents (a notable example being the Hughes Corporations suits against chip companies doing ion implantation...Hughes claimed that a patent they had gotten on ion implantation meant huge royalties were due them). * Third, patent portfolios came to be seen as valuable in takeovers, as part of the good will that could be charged for. Some large companies bought small companies just to acquire their patents. * It is not likely that patents and IP have had much effect on movement of people between companies. Just my opinionI see as much moving as ever. (I know not what Stanford's intellectual property rules are, but at Ohio State, if you develop something significant while working there and go off to take it to market, they're almost certain to want a piece of that action. Stanford has gotten pieces of the action from many companies. This shows up in their holdings of stocks in those companies, reported on the Form 144 Insider pages on Yahoo and other places. In the case of CISCO and Sun, I don't know all of the details, but there were no lawsuits against either. As I said, my understanding is that Stanford said Go ahead to those seeking to commercialize their projects. Somewhere during all of this time, the whole push technology stupidity came about, and people wanted to know how our product stacked up against other push products, when it wasn't really comparable to what most of the other guys were doing. Ah, push technology, the buzzword of around 1997, just after set-top boxes and just before whatever. Bootstrapping a company is hard if you don't have a bunch of money to throw at it. And, I would argue, even harder if you DO have a bunch of money to throw at it! (I watched friends burn through $8 million as they sat around thinking cool thoughts. More germanely to this list, look at several crypto start-ups who threw tens of millions at problems.) It is possible, but requires serious financial discipline, throughout the company. People who expect to walk into a job with super deluxe office space, a big support staff, and a huge salary just aren't going to find a place in a company that's getting
Re: Re: Startups, Bubbles, and Unemployment
- Original Message - From: Eric Cordian [EMAIL PROTECTED] Although I appear to have been the final catalyst for the discussion of unemployment. I agree with pretty much everything Eric Cordian said. In fact my current state of lack of work, has little to do with lack of employment, I am officially employed as a Substitute Teacher in the Gilroy Unified School District (Gilroy, Ca), but due to summer I am lacking in work. If you simply need a job, and have a bachelor's degree (or higher), sub teaching pays, barely enough to live on, but it does pay. Additionally I have several adding factors in this, of course I do consulting when available, have some investments from when I was more enjoyably employed, but most importantly I'm using the spare time I do have (sub teaching doesn't take much actual work) to actually do #4: 4. Don't expect anyone to pay you to sit around and figure out what the Next Big Thing is going to be. At which point I will attempt to get funding (if needed), work to make the world a better place, and most importantly make a great deal of money for the people funding the product/productline. A quick word of warning, in California it takes on the order of 6 months to get the piece of paper that says you can sub teach, so be prepared for a bit of a wait, find a job at McDonald's or whatever for a while. Joe
Re: Startups, Bubbles, and Unemployment
Tim philosophizes: I read with interest the comments on the why are so many applied cryptographers unemployed? thread. I know a _lot_ of unemployed folks. Or folks looking for more than part time consulting work. Lots of issues, lots of possible reasons for the high unemployment rate of applied cryptographers: (This writer, an acquaintance of mine, has been trying for several years to get various projects going. Sad to say, his very words above indicate just how flaky his ideas are. He thinks others will fund projects as a kind of charityware. Such people can be greatly helped by giving them an hour of your time, and repeating the words but what's the product? every 90 seconds as they are trying to talk. We're young, we're Cypherpunks, let's raise some money, get a nice office space with our espresso bar and hot tub, hire our friends, and become rich. There's nothing fundamentally wrong with this approach, as long as you are being paid to think about something, with no expectation that a product will be produced or sold. We're young. We're Cypherpunks. Let's find a research firm with a pool, tennis courts, and free Coke, and get the government to pay us for a few years to think about the cryptographic software needs of the Rehabilitation Services Administration. Where this model fails is when people want you to pay them to sit around the pool and think up some product that is going to put Intel and Microsoft out of business and make everyone rich. Of course, only people with no clue think in such terms, or expect someone else to fund their lifestyle while they sit around thinking off all day. Nice work if you can get it. Note: This is NOT directed at ZKS, which actually DID hire a guy like Ian Goldberg! And coasted for quite a long time on Ian Goldberg's reputation capital before the petard exploded and hoisted them. Of course, the fact that the actual users of the service were saying things like it's slow, it sucks, it blows, might have been a great hint that it was not destined to become the next AOL/Time Warner. The third and probably most important reason is that a good idea is not enough. Products that people actually pay money for is the raison d'etre of companies. Some of the most exciting, stimulating software engineering projects you can imagine are things no one in their right mind would ever want to buy. Yet, it's startling how often fun to work on rises to the top of why a project should be done. A lot of folks seem to think companies are just cool places to play around with ideas at. As the VP for RD at Boeing once put it, This isn't Boeing University. Most of my friends who are rich and retired now did it not by inventing any wonder product. They did it by taking any job that was secure and paid reasonably well, living on a shoestring, putting their money into rental properties, fixing them up, renting them out, and reselling them. A few lived on a shoestring, and put all their money into Fidelity Magellan before it was a household word, or put their money into stocks, or whatever, but you get the idea. After you're loaded, then you can tinker in your garage without having to ask anyone to fund your hobby. I worry when people with niche skills bemoan high unemployment in their niche. It's a very bad time for Applied Cryptographers, Smalltalk-80 programmers, Algol-68 compiler bug fixers, Lisp Machine operators, or whatever, they whine. Again, take any job that pays well. Live on a shoestring. Do something reasonably intelligent with your money. If someone wanders by who has the next wonder product already developed, and people are beating a path to their door to buy it, by all means pick up some stock pre-IPO. There's absolutely nothing wrong with being a wealthy McDonalds franchisee whose hobby is Applied Cryptography, instead of a poor unemployed Applied Cryptographer. To Summarize: 1. Hobbies are things we do for fun. Jobs are things we do because they provide the world with a necessary good or service. Don't make the mistake of thinking the world owes you a job that is also your hobby. It's nice, but it rarely happens. 2. Take any job that pays well. Live on a shoestring. Do something intelligent with the leftover money. 3. Invest some money in already developed products that look like they may become the Next Big Thing. 4. Don't expect anyone to pay you to sit around and figure out what the Next Big Thing is going to be. -- Eric Michael Cordian 0+ O:.T:.O:. Mathematical Munitions Division Do What Thou Wilt Shall Be The Whole Of The Law
Startups, Bubbles, and Unemployment
I read with interest the comments on the why are so many applied cryptographers unemployed? thread. I know a _lot_ of unemployed folks. Or folks looking for more than part time consulting work. Lots of issues, lots of possible reasons for the high unemployment rate of applied cryptographers: * The collapse or sale or downsizing of several companies which formerly employed a fair number of Cypherpunks: PGP (used to employ about 6-10 list members that I know of), ZKS (maybe 5-8 active list memmbers, IIRC), C2Net in the 1994-97 years, Counterpane (several list members), and even Netscape (three list members, brothers, represented the security department for a while). This kind of collapse or downsizing dumps a lot of the same kind of people on the market. * End to crazy ideas of let's do a start-up! * An example. Here's part of an e-mail I received recently from someone who proposed that I give him some money for some kind of start up or charityware project in an area of interest to both of us. I have changed the details for obvious reasons: I had this vague hope that you might be interested in throwing some money at an interesting problem in FOO to see if something worthwhile might result with a view to seeing if it could produce money later. Nothing so risky as a startup - a startup might make money, whereas what I was thinking of would be absolutely guaranteed a ROI of 0%. No risk there :-) Hopefully a chance of some fun and benefit to humanity though. (This writer, an acquaintance of mine, has been trying for several years to get various projects going. Sad to say, his very words above indicate just how flaky his ideas are. He thinks others will fund projects as a kind of charityware. Given the loaded cost of people these days, even with reduced expectations in this current downturn, it hasn't even been possible for billionaires like Paul Allen to fund projects successfully. Many examples exist, even of some crypto startups, where tens of millions of dollars went into salaries, benefits, perks, facilities, with essentially nothing to show for the expenditures. More on this point later.) *Back in the 1970s and early 80s, high tech start-ups were difficult to do. It took some really good ideas, or at least the departure of a talented group of people who had already developed something. Examples like Sun and Cisco are examples of where the core technology had already been developed (Stanford, in both cases) and where the companies could begin to SELL PRODUCTS almost immediately. * A company formed at about the time the VC industry was transitioning from hard money (hard to fund a start up) to easy money was RSA Data Security. And though it owned a much more valuable property than most recent crypto startups have owned, it almost went under a couple of times. Read Levy's Crypto for some details of how it almost failed in the late 80s and again in the early 90s. * I've seen a bunch of applied crypto companies during this recent Internet bubble where the intellectual property is far, far less compelling than RSA was. I don't mean to insult any of my friends here, but the notion with a lot of these companies seems to have been We're young, we're Cypherpunks, let's raise some money, get a nice office space with our espresso bar and hot tub, hire our friends, and become rich. (This is perhaps too harsh a summary. But I'll let it stand as a reference point.) * There are still roles for start ups. But I think some really good ideas are needed. Just riding the wave is no longer working...it worked during the bubble years, for a bunch of companies...most of which are now greatly downsized or gone completely. * Don't quit your day job. And if you don't have a day job, get one (assuming you need some money...some folks have independent sources of some amount of money). (Note that during the tough period for RSA, most of the key technical people had other jobs, as professors, etc. I think Rivest took one year off from MIT to consult full-time for RSADSI, but mostly they had other jobs the whole time. Only after the revenues began consistently flowing were a lot of full-time people hired. During the bubble, of course, they staffed up to high levels, expanded, got involved in other ventures, etc. And Bidzos, of course, rode the bubble by co-founding and being Chairman of Verisign.) * Doing things in a garage is more than just a quaint image. It means doing things without _any_ burn rate. It means having a day job. * The notion that a group will raise ten million bucks, rent expensive facilities, hire their friends, and THEN get to work on product development (or, more often, playing around with potential ideas), is just not plausible any longer. * especially dangerous is the seductive idea that one can take a broad idea, seek funding, be the CEO, and then hire a bunch of guys like Ian Goldberg. Note: This is NOT directed at ZKS, which actually DID
