I almost deleted these messages from Bob, but have decided to say a few words about financing companies "to help the Cypherpunks cause." As I lack the energy right now to compose an essay from scratch, I'll take the easier way out and respond to Bob's points. At 7:23 AM -0700 9/3/97, Robert Hettinga wrote:
At 11:21 pm -0400 on 9/2/97, Tim May wrote:
Sorry I "donated" my time making up this list,
To the contrary, it's not a donation at all. I see it as a set of investment criteria, myself. How is the market going to make something for you if it doesn't know what you want? Keeping in mind what I said about
To the contrary, I never write political and socioeconomic essays with the expectation that someone out there will be "making something for me." That's just plain disconnected from reality thinking. Why I write, and what I write, has various motivations. No time to delve into a psychoanalysis of this right now--my Cyhernomicon has sections describing the confluence of technologies and opportunities I saw beginning in about 1987 or so, with comments on why I think these are such exciting issues. I write because the ideas interest me, not to make a few bucks. (And, as I explain later, the odds of losing $1-2 million in VC investments grossly outweigh the odds of making $10-20 M. Grossly.) But generating "VC funding requests" is most definitely not even in my Top Ten of reasons.
Maybe they're misinterpreting all the stuff you've said over the years about "something must be done", "cypherpunks is not a group", and "we" ought to do to things, etc.
From Day One, I have not shied away from talking about interesting building blocks. Including remailers, which I briefed the attendees at the first meeting on (having been mightily influenced by Chaum's 1981 brief paper on untraceable e-mail). And so on. This is well-covered history.
It is true that I try to avoid using the language "Here's is what I want you to work on," and variants. My "things we need to work on" was my name for a list--and not the first one--of things which I think are a lot more interesting and important than working on, say, lists of "things that make Cypherpunks happy," or silk-screening new t-shirts with the slogan du jour.
Frankly, a discussion of specifications and desired results is worth much more than the wasted random effort saved when people just write code and let god sort it out. I mean, Michaelson-Morley may have been a neat experimental finding, but nothing really happened with gravity until Einstein figured out space-time, right?
I agree with this. Certainly for all of the chants about "Cypherpunks write code," and the several years worth of (apparently) several dozen folks here writing code of some sort, what are we really left with that has had a major effect? Most of the code apparently being written either never makes it into products, or is buried deeply, or just evaporates (as code tends to do, a la bit rot). PGP, SSH, the remailer code, and a few other such achivements are what lasts. I don't trash such efforts. Rather, I think it means that it is vitally important that we think carefully about what code is interesting and important. This beats the hell out of people just starting in at coding for the sake of coding. Part of coding is carefully deciding what to code. This is Programming 101, or at least should be. Deciding that a simple remailer would be an interesting thing to code was the important part of getting remailers deployed....the actual coding of the first actual remailer (of the Cypherpunks "true" style, not the WizVax/Kleinpaste/Helsingius nym server style) took a weekend of Perl hacking by Eric Hughes. Knowing _what_ to program is 90% of the effort. ...
Of course not. See above. There are many more people who know how to write code than there are like you, Tim, who know what to do it *for*. Unfortunately, people who write code need to eat. Fortunately, people who know what to do can raise money to hire people who write code if the idea's good enough to sell twice: once to investors, and again to the market for
This is the crux of my essay here. Read this part even if you skip the rest. First, this grossly oversimplifies the process of funding companies. Methinks Bob has read about Jim Clarke's decision to fund Andreesson and Company too many times. Rarely (very rarely) do the VCs hire people to write the code for some vision. Second, writing code is cheap, and requires almost no capital. No factories, no chip making machines, no clean rooms, etc. Just a bunch of people with ideas doing it themselves. Nearly all successful software companies started out with almost no working capital. (By contrast, I've watched several "idea" companies which had the "grand vision" first and then sought to hire the hired guns to write the code. All four that I have followed failed. One burned through about $5 million, another through $2 million. And one that just finally gave up the ghost is reported (by a friend of mine, and I haven't been able to confirm it) to have absorbed more than $30 million in funding by the initial investors and then by the parent company which acquired or semi-acquired them and pumped more money in.) Third, I've seen a lot of programmers here in the Bay Area, either because of my work at Intel on AI/Lisp sorts of stuff, or the Hackers Conference, or many years of Bay Area parties, Cypherpunks events, etc. A handful of these programmers seem to be truly gifted...the rest are, well, hackers. OK for churning out code with well-defined specifications (and even then the well known Brooks' Law sorts of factors can make some of them grossly unproductve). The few who seem really gifted would be fools to work for a pittance for me--and I'm not willing to give them their easily-gotten daily consulting rates for months on end, etc. Fourth, in my years of Cypherpunks involvement, I have never seen any reasonable investment opportunities. This is not to say there have not been any, especially with the benefit of hindsight. Side note: There have been several startups loosely associated, or even closely associated, with Cypherpunks. Some were started before (Cygnus. for example), and cannot really be called CP companies. What about C2 Net? I have no idea what that company is now worth, but I know that it evolved from Sameer's Community Connexxion. While we all nodded and applauded Sameer's plan to hook up his dorm or whatever with terminals in the bathrooms (I'm not joking, by the way), I never saw this as something to put hard-earned money into. Nor did Sameer solicit "angels" to fund this vision. At least I never heard him soliciting. He probably--and I haven't checked with him on this--knew that the best opportunities were funded on a shoestring, by those involved directly, by those living the dream, and that diluting his ownership with outside funding would be a mistake. And this shoestring operation was able to more nimbly move to take advantage of opportunities, e.g., dropping the original focus on being a kind of "local ISP" (which is what I perceived the original CC to be) and to instead focus on SSLeay/Stronghold stuff. Other companies have sought funding in a grander way. E.g., PGP, Inc. I had no desire to invest in them, for various reasons. I wish them well, of course. Eric Hughes has a company, "Simple Access." To tell the truth, and in spite of Eric being a longtime friend of mine (since 1990 at least), I really have no idea what they do. The "www.sac.net" site is remarkably uninformative. Perhaps by design. In any case, I don't think investing money in this is what I want to do. And there's Electric Communities (www.communities.com), containing several past or present Cypherpunks. I have a lot of hope from them, for "Microcosm," but,again, this is someone else's vision. It's too soon to tell if they have a killer app on their hands. If they do, then business magazines will write sage articles on the wisdom of the VCs. If not, as the odds must say is likelier, just by Bayesian odds, then they'll be forgotten, and the VC money will have just evaporated. Fifth, what I have seen from all of these experiences is that the popular impression of VC funding, that someone has a good idea, then finds a VC angel to provide seed funding, then worker bees are hired, etc., is basically wrong. Or at least a recipe for disaster. The best growth opportunities come from nimble, mostly self-funded small teams that can learn in an evolutionary way, changing focus as failures occur and learning from mistakes. The worst growth opportunities come from "grand vision" situations. Sixth, we often forget that "history is written by the winners." We ask the five star general what his strategies were, forgetting that he became a general because he survived the battles and triumphed. Sort of like asking the Lottery winner what her strategy was....one will get answers, but they probably won't be useful. Asking Jim Clarke or Bill Gates to opine on his strategies for success is not quite as pointless, but is not real useful either. Ask also Manny Fernandez about Gavilan Computer. Or ask the financiers of Ovation, Processor Technology, Mad Computers, Symbolics, Thinking Machines, Trilogy, or a hundred other examples of companies that burned through a billion dollars of hard-earned investor money. Seventh, I have no doubt that if I issued a cattle call for programmers to write C code for some pet project I'd get some bites. The "burn rate" for a supported programmer is higher than the salary, of course. (Many will work for a share of the company, plus a living wage, but this of course means incorporation....not a simple matter of just offering to hire programmers.) Those small software companies I mentioned burned through $5 million in 3 or so years, with nothing to show for it. And they sure did have the grand vision. Sorry, but I have no desire in even "giving away" a million bucks, let alone several. (Another sidenote: In 1993 I elected to help fund a small startup with an extremely promising technology. And the principals were, and still are, incredibly hard working people. I call them "sled dogs" for their perseverance and 80 hours a week (each) work habits. I bought a small stake in the company, for about $65K. So did several others. And some contract money came in. The entire funding was burned through in a matter of a year or two, and now they're struggling. They can't raise moe without giving their remaining ownership of the company away, and potential investors would want to see a real product, which they don't have. I still wish them well, but....tick tock. And that $65K investment necessitated my sale of $100K worth of various stocks, inclduding Intel, due to the income tax laws being what they are. That $100K worth of stock would now be worth $600K, roughly, given that Intel has gone from $15 to $100 in that period. C'est la vie. But is sure makes me more cautious about funding little startups. And I for damned sure won't write out checks for people I only casually know from this mailing list and from occassional Cypherpunks meetings!!!) I could easily spend $500K (costing me an actual $700K before taxes, less some tax deductions as a business, possibly) hiring a staff of several programmers for slightly more than a year. Then it'd be gone. Would a "product" be ready? You tell me the odds. And what would come out of such an effort? I've watched a certain American living in Europe burn through most (and maybe all?) of his fortune, and (some say) his family's fortune, and he had the best of pedigrees and the best set of ideas there is. Now many of us quibble with the choices he made, in licensing, etc., but this should be a cautionary tale to anyone who thinks such funding is easy. I'm not being defeatist. I know that sometimes a $500K investment could turn into tens of millions. It sometimes happens. But usually not, even for the proposals that get funded. (And VCs tend to look at 10 to 30 proposals for every one they actually fund, so the odds in the Cypherpunks pool ain't real great that even a single proposal would reach the funding stage, let alone turn into another Netscape or Yahoo.) No, I'm not a defeatist. But I worked very hard for many years, saving a large fraction of my paycheck and saving my purchased stock (including stock options, which were not as lucrative as popular myth might have it...what made them now worth so much money is that I didn't sell them when they became available, as so many of my coworkers did). I don't intend to blow through half a million or a million bucks a year funding some grand vision, especially when there seem to be few grand visions that are realistic. (Plenty of zealots, though.)
which the code's intended. And, rarely, as in your case, Tim, some people with money already know what to do and can hire people to do it. If they can "sell" *themselves* on the idea that the market will buy it. The guy who founded Aldus did it with Pagemaker. Osbourne did it, too, before he made the mistake of hiring a completely ignorant "professional" managment...
The Pagemaker team wrote it on a shoestring. No VCs until much later, when a product existed. (BTW, similar to the models for both PGP, Inc. and C2Net, where actual products are actually being sold or distributed.) As it happens, I knew Adam Osbourne. (I used to go to the Homebrew Computer Club, circa 1976-78, and met many of those who later became famous. This also helped shape my skepticism about predicting success, as I would surely have funded Bob Marsh at Processor Tech before funding Woz and Jobs...and in fact I bought a Proc Tech Sol-20 in 1978 rather than an "Apple.")
Well, it was more for the list's benefit than yours, Tim. You're just my unsuspecting foil, here. :-).
If, say, John Gilmore were here saying the same kinds of stuff you were, I'd have sprung my little rhetorical trap for him instead, by getting him to list what we should do next, and then asking him which ones he's going to invest in. He'd probably be just as pissed off.
The problem with your "rhetorical traps," by your own admission, is that you just don't know what you're talking about in most cases, at least insofar as startups and funding go. I recall your "hothouse" VC proposal (I may have the name wrong, but the idea was the same as one of those hothouse schemes, with offices for budding entrepreneurs, etc.). Maybe in another post I'll give my views on why such hothouse schemes are lousy ideas. But if yours is up and running and headed for success, I'll be happy to stand corrected.
Actually, if you count the money and time he's thrown at politics and lawyers, and S/WAN, and cypherpunks, and a few other things, you might say Gilmore's made an investment or two. Unfortunately, since he's not using actual investment criteria -- profits, in other words -- you might consider those investments to have been accidental. On the other hand, investing is always about personal choices, whatever they are, and so the loop closes on itself, I suppose.
John chooses to do the things he chooses to do. He has more interest in, or faith in, the legal process. I have more interest in, or faith in, the expository process. I write about 100 times as much as he does. To each their own. I won't get involved in Bob's seeming challenge to me to start matching John's investments.
The point is, all of the stuff you've listed costs money to do, Tim, or it would have been done already. Which means, unless you're doing this for a hobby, spending a very small fraction of your total income, (or an
It costs money, but almost certainly not VC money. Take just one example, an offshore credit reporting agency not bound by U.S. restrictions under the FCRA. There is no need for a VC to fund this...this is best done "on a shoestring" by someone who starts small and expands. (Think of how Amazon.com got started. Lots of similar examples.) Personally, I would only get involved in such a thing if I lived offshore, as the government could otherwise come after me (even for funding such a thing). But the interesting pros and cons of such a project are well worth discussing. Maybe someone out there will do it. (This space reserved for someone to chime in about Vince Cate's ISP operation in Anguilla.)
So, Tim, why don't you pick your favorite project on that list, hire some people to write code, and go for it? Most of the stuff on your list can't cost that much to do, and, if it did, then it's probably the wrong project for you, personally, financially, to work on. If that project makes money, you can reinvest it in something bigger anyway. Capitalism 101.
Why don't you knock off the "Put up or shut up" kinds of remarks? It's never a good basis for investment, to respond to "dares." I'll say what I want to say. Maybe even someday a good investment will appear. But from what I've seen of the folks at gatherings I meet them at, few of them would be good candidates for a VC-funded approach.
I think that Sameer in particular proves that the barriers to entry for some financial cryptography markets are still practically nonexistant from an investment perspective. Not for the stuff Sameer's doing, of course.
No, what it shows is the power of small entrepreneurs doing very local things, with the things that succeed being all that we remember (the losers are forgotten).
Anyway, especially in anonymous digital bearer settlement, which is the really important stuff in financial cryptography, there are lots of opportunities out there, and some of them are bootstrapable. Some of those which aren't should be funded by single, monomaniacal, investors like the Aldus guy did with Pagemaker, or you, Tim, should do with your favorite project on the list. Hopefully, the rest the non-bootstrap stuff can be done with e$lab or something like it. At least that's what *I'm* hoping... ;-).
Yeah, well let us know when "e$lab" gets really rolling. Personally, I think you undercut your own significance by the heavy reliance on cutesy names centering around "$" in place of "s," as in "e-$pam" and "e$lab." Cutesy wears thin fast.
So, Tim, again, which one of those projects do you want to do? Who are you going to hire to do them? More important, how much money do you think you'll get back by doing it?
See above for my answer. In the meantime, knock off with the dares. Maybe we should just mutually ignore each other for a while. --Tim May There's something wrong when I'm a felon under an increasing number of laws. Only one response to the key grabbers is warranted: "Death to Tyrants!" ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Higher Power: 2^1398269 | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."