If people this young can start successful companies…

… old people must really be stupid and lazy.  http://www.paulgraham.com/sfp.html is a report on what happens when you give seed capital to 18-21-year-olds so that they can start little tech companies.  My personal theory is that most supranormal profits are the result of people who understand one class of customer better than anyone else.  College-aged kids generally haven’t spent enough time with customers to know anything at all.  They might have a lot of energy, skill, and dedication, but have not seen customers first-hand.  The programmers who built SAP, for example, spent years at IBM doing consulting work.  After having seen 10+ companies’ problems and built 10+ similar solutions they decided to go off on their own, rewrite it all, package it up, and sell it.

Graham has introduced some bias into the experiment by hand-picking companies to fund.  The teams that he funded were the ones who came to him with the ideas that he liked best.  On the other hand, if these guys are succeeding as well as he suggests it must mean that the competition is very weak.  Who are the competitors?  Older programmers working in bureaucracies at larger companies, which have strong brands and near-infinite capital.  So basically what Graham is proving is that these folks are incredibly unproductive and their aggregate work product is almost worthless.

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