"Generally, productivity -- output -- rises rapidly from the start of a career to a peak and then declines gradually until retirement.

This peak in productivity varies by field, from the late 20s to the early 50s, for reasons that are field-specific.

Precocity, longevity, and output rate are linked. "Those who are precocious also tend to display longevity, and both precocity and longevity are positively associated with high output rates per age unit." High producers produce highly, systematically, over time.

The odds of a hit versus a miss do not increase over time. The periods of one's career with the most hits will also have the most misses. So maximizing quantity -- taking more swings at the bat -- is much higher payoff than trying to improve one's batting average.

Intelligence, at least as measured by metrics such as IQ, is largely irrelevant."

1. "everything that’s already in the world when you’re born is just normal;
2. anything that gets invented between then and before you turn thirty is incredibly exciting and creative and with any luck you can make a career out of it;
3. anything that gets invented after you’re thirty is against the natural order of things and the beginning of the end of civilisation as we know it until it’s been around for about ten years when it gradually turns out to be alright really.
4. Apply this list to movies, rock music, word processors and mobile phones to work out how old you are."

I then moved on to Dean Simonton's observations, beautifully covered in Marc's article. My thinking was driven by books like "The Black Swan," "Fooled by Randomness," DeVany's analysis of Hollywood Economics and Home-Run Hitting, and a casual observation of how Evolution creates things (massive trial and error). Basically, the number of swings at bat, poems attempted, paintings painted, etc. determine the success rate. The more you try, the more you learn, the faster you iterate, the better you get, and the more chances that you have of being productive. Your outcome scales more with the number of bets than the size of the bets. As the violinist Pablo De Sarasate put it, "For 37 years I've practiced 14 hours a day, and now they call me a genius. "

Now I prefer a slightly different hypothesis. More of the creative instinct is driven by the sublimated sex drive and the desire to attract a mate than we give it credit for. And more of it is squelched by the demands of family than anything else. An extreme take on it is presented by Kanazawa:

"Scientists tend to 'desist' from scientific research upon marriage, just like criminals desist from crime upon marriage."

Marc asks:

"So here's my first challenge: to anyone who has an opinion on the role of age and entrepreneurship -- see if you can fit your opinion into this model!"

• huge amounts of free time (more swings at the ball)
• less to lose (more swings)
• enthusiasm (more likely to swing)
• sublimated sex drive (more likely to swing to stand out from your peers).

As you age, you have

• less free time, more family demands, larger social networks (less swings)
• more to lose (public embarrassment in front of an established social circle means you don't want to start anything fresh) (less swings)
• experience (if you're probably going to miss, why bother swinging) (less swings)
• fulfilled sex drive (have sex rather than swing)

"And here's my second challenge: is entrepreneurship more like poetry, pure mathematics, and theoretical physics -- which exhibit a peak age in one's late 20s or early 30s -- or novel writing, history, philosophy, medicine, and general scholarship -- which exhibit a peak age in one's late 40s or early 50s? And how, and why?"

Unfortunately for an aging me, anecdotal evidence aside, entrepreneurship favors the young.

The difference between poetry, pure math, theoretical physics, and novel writing, history, philosophy, medicine, scholarship, is that the former set requires huge (multi-year) intense, focused, almost isolated blocks of free time, whereas the latter set can be picked up and put down and resumed later without too much cost. The first set comprises problems that are solved by an emotional state (poetry, painting), by loading a very difficult single framework into your head (math, physics, coding), and / or competition (driven by sex drive and time-sensitive). The latter set are more rational, are systems problems rather than point problems, and don't have time-sensitive competition.

Modern entrepreneurship, especially web entrepreneurship, is extremely competitive / time sensitive, requires enormous amounts of iteration even within a single product life-cycle, and often requires solving many challenging technical and business problems one after the other in a public view (with the opposite sex watching). So, it favors the young and single.

Which is not to say that one can't do it if one is older and settled down. Mathematician Paul Erdos was famous for his prioritizing his work above all else (he remained single, by the way). There are many older successful entrepreneurs who spend tremendous amounts of time away from their families.

...and the rest give up and just become VCs...

 Full description on Nivi's blog here.

The option pool shuffle: beat the game and raise your valuation:

Summary: Don’t let your investors determine the size of the option pool for you. Use a hiring plan to justify a small option pool, increase your share price, and increase your effective valuation.

Focus on your share price, not your valuation

Summary: Focus on your share price and the number of shares you own — metrics like valuation and percent ownership can fool you.

Hope you guys are finding these useful. Nivi is also talking and posting about them, usually faster than me...

Read all about it here.

Update: Coverage at VentureBeat, Brad Feld, Bart Decrem, GigaOm, etc.

• Acquire the future of video on the Internet for roughly 1% of your market cap.
• Get $500M in escrow to protect against copyright lawsuits
• These are lawsuits that Google would probably have to defend YouTube against anyway, even if Google didn't own YouTube. Huh? Let's see, YouTube stores and serves up copies of videos without copyright holders' advance permission and removes them when removal is requested, under DMCA Safe Harbor. Google copies books, and serves up copies of pages without copyright holders' advance permission...

• 1 Billion plus reasons to be thrilled
• Uncle Google takes on monetization risk and legal risk

• $50 Million each
• A promise from YouTube that within 6 months, the copyrighted nasties will be gone

• Small Labels: Don't have the money or the resources to mount a serious legal challenge to Google. Didn't get paid.
• Small video-sharing sites: The major labels are going to sue them out of existence to establish a precedent, doing the dirty work for Google et al.
• Artists: Royalties? What royalties? The $50M to each label is structured as an equity investment, and not subject to royalty splits.

Yes, you can make money without being evil. But for YouTube's competitors, small labels, and the artists, evil is relative.]]>http://www.startupboy.com/journal/rss-comments-entry-750414.xmlScienceStartupBoyWed, 12 Jul 2006 07:37:43 +0000http://www.startupboy.com/journal/2006/7/12/why-we-may-think.html44924:386145:584004When I was young, I thought the point of the body was to protect the brain. Now I realize it's the other way around. The brain exists to protect the body.

There are two kinds of animals - those who move and those who don't.

Animals who don't move count on a stable and predictable environment and replicate like crazy to compete for scarce resources, and to outlast environmental changes.

Animals who do move have to adapt to ever-changing environments, and therefore need a central nervous system.

We call the first set of animals "plants."

If you move, your environment changes a lot, which means you need a nervous system to detect and respond to those changes. So, your brain exists to protect your body as it moves, and it does this by constantly trying to predict the environment around it.

Stop predicting, and you may as well be a plant, except unlike that plant you haven't cloned yourself a million times. You were counting on one shot at reproduction with sexual mutation to make up for one million shots with random mutation...and you lose.

So, keep moving, and be alert.

"Rael Dornfest and Tim O’Reilly heard about it and, not to be outdone, declared Web 4.0 over pizza last night at Il Fornio."

As they say, read the whole thing.

 <iframe src='http://www.mobber.com/embed/ajax?v=c' width=775 height=115 frameborder=0 scrolling=no></iframe>

A little more detail:

- We are crawling the web and large parts of the blogosphere with a general crawler, similar to the ones operated by Yahoo!, Google, Ask, MSN, and Gigablast.

- The crawler activates forms, and digs deep to find even dynamic data (although it certainly doesn’t fill in any logins and passwords)

- We automatically recognize classifieds listings - currently cars for sale, job postings, and personals profiles, and extract and normalize the surrounding metadata (make, model, price, mileage, salary, location, title, age, gender, etc.).

Currently, we have some of the largest databases anywhere, of over 15 Million classified listings across these three categories, automatically extracted and structured with no human oversight, from nearly 50,000 web sites and blogs. (We actually crawled many, many times that number, but these are just the sites that have results to date).

If you are an end-user, you should be able to search for that hard-to-find listing without having to visit hundreds of sites, and compare cross-site results, with images, sorting, and statistics.

If you are a web-site owner or web developer, we’re offering a no-hassle API to show this data to your visitors, or to mash it up to your hearts content. You can use it build a huge destination site, an interesting application, or to supplement content and listings that you have today. You CAN use it for commercial purposes, and as long as it’s being shown to real end users, there’s NO LIMIT on the number of queries. Everything you see on the site is built on our API, so you should be able to replicate Vast.com on your own site or blog.

If you have a classifieds site or a blog and would like your ads to be included in our results, you shouldn’t have to do anything. Just post like you normally would, and we’ll find you. If we’re not getting your results or not getting them all, drop us a note at help - at - vast - dot - com and we’ll try and fix it.

We’re going to keep this site and the API as open as possible, and like a good net citizen, link directly back to the results. We don’t compete with the people that we crawl by taking direct listings. We don’t rely on explicit tagging. And we do an enormous amount of de-duplication and spam filtering to keep the results clean.

Of course, this is a search service, not a listing service, so you can expect some spam and mis-classified results will sneak through. Some links will break due to changes, expirations, and finicky databases that were not designed to be “deep crawled.” In those cases, the cache is your friend. There’re also rivers of pornographic content that had to be filtered out, and occasionally, we miss a few. Please help out by reporting bad results using the links next to each result.

We will be adding more sources, better crawling, improved classification, and many more categories over time - this is just a start. We want to support the web community that wants to take highly-structured content and build applications on top of these massive data flows. When we start making revenue through syndicating this data, we will share it with the developers and sites distributing it via the API.

What more would people like to see? How can we help or improve?

Update: Some coverage of the launch and reviews from TechCrunch, Paul Kedrosky, Peter Ripand CNet.

If the Genie of the Market were to offer you all of the future earnings from EBay or Craigslist, which would you take? I'd take Craigslist.

Note that I'm talking about the strengths of the business models here. I'm fully aware that EBay owns 25% of Craigslist, so to say that Craigslist the company is worth more than EBay the company, I'd be saying that the capitalized Craigslist business model earnings are equal to twice the capitalized EBay business model earnings, and that is not what I'm saying. For evaluating the above numbers, look at the earnings generated by the business models, or assume that EBay owns 0% of Craigslist.

Estimating Valuation by listings

Craigslist currently carries 6M ads per month. At least 200,000 of these listings are job postings. They are in close to 200 cities (looking at their home page). They probably only have critical mass in about ten of those cities or less (from some casual browsing).

Currently, Craigslist charges only for Job postings, and only in three cities. Taken from Craigslist itself, we can see the rates:

And now they are adding fees for apartments in NY, and jobs in Washington DC, San Diego, Boston, and Seattle. Basically, as soon as a category in a city hits unassailable critical mass, look out!

So, jobs alone is today worth about $5 Million per month ($25 * 200K). Craigslist isn't monetizing it all, but the direction and the intent are both clear.

Of course, Craigslist will eventually be able to charge for jobs, apartments, real estate, cars, a little bit for personals, vacation rentals, services, big local items, and in some countries, small EBay items. Notice that online, each of those 7-8 other categories is on the same order of magnitude as jobs, or bigger. The EBay items part may need some clarification - in countries where the development of the Internet precedes the development of a reliable postal system, more product commerce will happen over a Craigslist-style local system than over an EBay-style national system.

If Craigslist only monetizes half of these, that's $20M per month. All of them and it's $40M per month.

But Craigslist is still growing. A LOT.

Here are some stats that Craigslist itself has been handing out (these are about three months old):

Growth

Overall Page View Growth Rate (all cities combined) for last 12 months: 195%

Raleigh, NC: 13M pages/month +800% last 12 mos
Vancouver, BC: 21M pages/month +675% last 12 mos
Dallas, TX: 22M pages/month +650% last 12 mos
Minneapolis: 21M pages/month +625% last 12 mos

Can they double in size within a year? Easily. More likely, Craigslist will triple or quadruple in size before growth starts slowing significantly. Our previous range of $20-$40M / month now goes to $40 - $160M / month (as we make more guesses, our accuracy goes down, of course). The midpoint has us at $100M in revenue per month, or about $1.2B per year!

Try it another way: Take 6M listings a month. Multiply by 10 as they hit critical mass in 100 cities, as opposed to approximately 10 cities today. Multiply by 2 since existing cities like NY, LA, SF will continue to grow. Charge for a mere 10% of the listings, and charge $10 per listing (that's a steal compared to the newspapers, and lower than Craigslist's current rates. It's also an average charge of $1 per listing). That's $1.4 Billion in revenue per year. Their cost is near-zero (no content, no marketing, community-based customer service, a dozen engineers). After taxes, that's still $1B in profit per year. Give them EBay's P/E and it's worth $50+ Billion.

I'm not adjusting the P/E for the fact that they are growing much, much faster than EBay (although that will inevitably slow down), or that their international opportunity is larger than EBay's (that pesky postal system thing again).

Traffic Check:

Here's another fun way to look at it. Alexa and other ranking sites mis-classify Craigslist as a community site. It has a traffic rank of 33 on Alexa (up from #40 when I wrote my first draft of this article last November!!), but if you were to consider it as a commerce site (it's classifieds, after all), it would be the 4th largest one, right behind Amazon, Ebay, and Yahoo.

Craigslist's growth has actually picked UP. How many big, successful companies are doing that?

2005 has been a great year for Craigslist.

Of course, for the other classifieds sites, it's a massacre:

So, will Craig take the money? Well, 25% of the company already belongs to EBay (they bought it from a co-founder of Craig's). Of the remainder, undoubtedly some is in the hands of employees. Craig is probably somewhere between 50% and 60%. He may want to give some of it to charity. Or family. Inevitably, he will own less than 50%. At that point, you can bet that the company will embrace capitalism and the virtues of liquidity.

Craigslist is a dot-org no more. It's a supercharged monopoly in the making for the single most monetizable category in the world (high-ticket items and classifieds), tripling or better year-over-year. And Craig Newmark, Customer Service Representative, is worth more than Larry Page or Sergei Brin.

The real story is that Craig is well on his way to building an EBay / Yahoo! sized business with no venture capital, no big-shot management, no marketing, no patents, no real technology, etc. He's taken all the value from newspapers with none of the cost. And everyone loves him for it (probably because he's leaving the money on the table). That's the power of the Internet.

Sneak peek of IE7 Dialog

Ok, so I Photoshopped this. But, when Microsoft decides that it doesn't want Google's revenue stream as much as it wants Google gone, why wouldn't it do this? And what's wrong with helping consumers filter out unwanted content on the Internet? 

Update - I've created a monster. Abhishek ran off and wrote a Firefox extension to do this. Then again, Customize Google has been around for a while. Actually, this is hitting Mozilla, not Google. You know the Firefox default home page with Google search inside? Well, rumor has it that all of the ad revenue from it goes to the Mozilla foundation - that's over a billion dollars to fund their fight against IE 7!

Update 2 - IE 7 breaks Adsense! (Hat tip to Ram).