It's not surprising something like this would happen. Most fields become more specialized—more articulated—as they develop, and startups are certainly an area in which there has been a lot of development over the past couple decades. The venture business in its present form is only about forty years old. It stands to reason it would evolve.
And it's natural that the new niche would at first be described, even by its inhabitants, in terms of the old one. But really Y Combinator is not in the startup funding business. Really we're more of a small, furry steam catapult.
You Weren't Meant to Have a Boss
A few days ago I was sitting in a cafe in Palo Alto and a group of programmers came in on some kind of scavenger hunt. It was obviously one of those corporate "team-building" exercises.
They looked familiar. I spend nearly all my time working with programmers in their twenties and early thirties. But something seemed wrong about these. There was something missing.
And yet the company they worked for is considered a good one, and from what I overheard of their conversation, they seemed smart enough. In fact, they seemed to be from one of the more prestigious groups within the company.
So why did it seem there was something odd about them?
I have a uniquely warped perspective, because nearly all the programmers I know are startup founders. We've now funded 80 startups with a total of about 200 founders, nearly all of them programmers. I spend a lot of time with them, and not much with other programmers. So my mental image of a young programmer is a startup founder.
The guys on the scavenger hunt looked like the programmers I was used to, but they were employees instead of founders. And it was startling how different they seemed.
So what, you may say. So I happen to know a subset of programmers who are especially ambitious. Of course less ambitious people will seem different. But the difference between the programmers I saw in the cafe and the ones I was used to wasn't just a difference of degree. Something seemed wrong.
I think it's not so much that there's something special about founders as that there's something missing in the lives of employees. I think startup founders, though statistically outliers, are actually living in a way that's more natural for humans.
I was in Africa last year and saw a lot of animals in the wild that I'd only seen in zoos before. It was remarkable how different they seemed. Particularly lions. Lions in the wild seem about ten times more alive. They're like different animals. And seeing those guys on their scavenger hunt was like seeing lions in a zoo after spending several years watching them in the wild.
What's so unnatural about working for a big company? The root of the problem is that humans weren't meant to work in such large groups.
Another thing you notice when you see animals in the wild is that each species thrives in groups of a certain size. A herd of impalas might have 100 adults; baboons maybe 20; lions rarely 10. Humans also seem designed to work in groups, and what I've read about hunter-gatherers accords with research on organizations and my own experience to suggest roughly what the ideal size is: groups of 8 work well; by 20 they're getting hard to manage; and a group of 50 is really unwieldy. [1]
Whatever the upper limit is, we are clearly not meant to work in groups of several hundred. And yet—for reasons having more to do with technology than human nature—a great many people work for companies with hundreds or thousands of employees.
Companies know groups that large wouldn't work, so they divide themselves into units small enough to work together. But to coordinate these they have to introduce something new: bosses.
These smaller groups are always arranged in a tree structure. Your boss is the point where your group attaches to the tree. But when you use this trick for dividing a large group into smaller ones, something strange happens that I've never heard anyone mention explicitly. In the group one level up from yours, your boss represents your entire group. A group of 10 managers is not merely a group of 10 people working together in the usual way. It's really a group of groups. Which means for a group of 10 managers to work together as if they were simply a group of 10 individuals, the group working for each manager would have to work as if they were a single person—the workers and manager would each share only one person's worth of freedom between them.
In practice a group of people never manage to act as if they were one person. But in a large organization divided into groups in this way, the pressure is always in that direction. Each group tries its best to work as if it were the small group of individuals that humans were designed to work in. That was the point of creating it. And when you propagate that constraint, the result is that each person gets freedom of action in inverse proportion to the size of the entire tree. [2]
Anyone who's worked for a large organization has felt this. You can feel the difference between working for a company with 100 employees and one with 10,000, even if your group has only 10 people.
A group of 10 people within a large organization is a kind of fake tribe. The number of people you interact with is about right. But something is missing: individual initiative. Tribes of hunter-gatherers have more freedom. The leaders have a little more power than other members of the tribe, but they don't generally tell them what to do and when the way a boss can.
It's not your boss's fault. The real problem is that in the group above you in the hierarchy, your entire group is one virtual person. Your boss is just the way that constraint is imparted to you.
So working in a group of 10 people within a large organization feels both right and wrong at the same time. On the surface it feels like the kind of group you're meant to work in, but something major is missing. A job at a big company is like high fructose corn syrup: it has some of the qualities of things you're meant to like, but is disastrously lacking in others.
Indeed, food is an excellent metaphor to explain what's wrong with the usual sort of job.
For example, working for a big company is the default thing to do, at least for programmers. How bad could it be? Well, food shows that pretty clearly. If you were dropped at a random point in America today, nearly all the food around you would be bad for you. Humans were not designed to eat white flour, refined sugar, high fructose corn syrup, and hydrogenated vegetable oil. And yet if you analyzed the contents of the average grocery store you'd probably find these four ingredients accounted for most of the calories. "Normal" food is terribly bad for you. The only people who eat what humans were actually designed to eat are a few Birkenstock-wearing weirdos in Berkeley.
If "normal" food is so bad for us, why is it so common? There are two main reasons. One is that it has more immediate appeal. You may feel lousy an hour after eating that pizza, but eating the first couple bites feels great. The other is economies of scale. Producing junk food scales; producing fresh vegetables doesn't. Which means (a) junk food can be very cheap, and (b) it's worth spending a lot to market it.
If people have to choose between something that's cheap, heavily marketed, and appealing in the short term, and something that's expensive, obscure, and appealing in the long term, which do you think most will choose?
It's the same with work. The average MIT graduate wants to work at Google or Microsoft, because it's a recognized brand, it's safe, and they'll get paid a good salary right away. It's the job equivalent of the pizza they had for lunch. The drawbacks will only become apparent later, and then only in a vague sense of malaise.