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The financial fix and the shift in international regimes are critical explanatory factors because they are the two elements that distinguish the late-nineteenth- and late-twentieth-century periods of globalization from the thirty to forty years following the Second World War. As we argued in Chapter 4, the Golden Age of Capitalism in the 195 Os and 1960s was characterized by continual spatial, technological, and product fixes that weakened labor movements at specific points in time and space, but that overall produced a trend of labor movement strengthening that lasted until the 1970s. The turning point was in the 1980s, with the intertwined take-off of the financial fix and dismantling of the labor-friendly international regime.
World labor unrest in the twentieth century, we argued in Chapter 4, has been embedded in a pendulum swing between crises of profitability and crises of social legitimacy. The crisis of profitability marked by the Great Depression of the late nineteenth century was resolved through a series of fixes that undermined livelihoods and established ways of life throughout the world. The outcome was a deep crisis of social legitimacy and a vicious circle of mounting labor unrest, revolutionary crises, and world war. After a half century of increasing systemic chaos, the postwar social contracts involved an explicit recognition that workers had to be protected from unregulated global market forces. Although profits were never completely subordinated to livelihood, there was a widespread recognition that unless capitalism could be shown to be capable of providing physical and economic security, it would not survive the growing revolutionary challenges from below. Workers could not be treated as simple commodities to be used or left unused according to market forces. Nevertheless, such a philosophical and policy stance by the 1970s had come to be seen as a growing fetter on profits, and in the 1980s it was abandoned by the world's elites. The world-scale dislocations of established ways of life and livelihood caused by this late-twentieth-century swing toward unregulated markets is once again producing a deep crisis of social legitimacy for world capitalism. Whether the crisis of social legitimacy is (will become) sufficiently troublesome to the world's elites so as to provoke a new swing of the pendulum back toward an emphasis on livelihood and security remains to be seen.
Why the disconnect? I think there's a general principle at work here: the less energy people expend on performance, the more they expend on appearances to compensate. More often than not the energy they expend on seeming impressive makes their actual performance worse. A few years ago I read an article in which a car magazine modified the "sports" model of some production car to get the fastest possible standing quarter mile. You know how they did it? They cut off all the crap the manufacturer had bolted onto the car to make it look fast.
Business is broken the same way that car was. The effort that goes into looking productive is not merely wasted, but actually makes organizations less productive. Suits, for example. Suits do not help people to think better. I bet most executives at big companies do their best thinking when they wake up on Sunday morning and go downstairs in their bathrobe to make a cup of coffee. That's when you have ideas. Just imagine what a company would be like if people could think that well at work. People do in startups, at least some of the time. (Half the time you're in a panic because your servers are on fire, but the other half you're thinking as deeply as most people only get to sitting alone on a Sunday morning.)
i love how you can tell just by glancing at this passage that this is a 100% paul graham production ... his brain is so predictable
PayPal was started during the Internet Bubble, but it was in no sense a Bubble startup. Its success was a direct reflection of the intelligence of the people who built it. PayPal won because they built a better mousetrap.
sure thing
Then we had the famous Buck's beaming—at Buck's restaurant in Woodside, which is sort of the home away from home for many VCs. Our first round of financing was actually transferred to us via Palm Pilot. Our VCs showed up with a $4.5 million preloaded Palm Pilot, and they beamed it to us.
good to know
Levchin: It was actually sort of a side effect. We had this merger with a company called X.com. It was a bit of a tough merger because the companies were really competitive—we were two large competitors in the same market. For a while, Peter took some time off. The guy who ran X.com became the CEO, and I remained the CTO. He was really into Windows, and I was really into Unix. So there was this bad blood for a while between the engineering teams. He was convinced that Windows was where it's at and that we have to switch to Windows, but the platform that we used was, I thought, built really well and I wanted to keep it. I wanted to stay on Unix.
work this into 2A neil speculation
The thing that kept us going in the early days was the fact that Peter and I always knew that both of us would not be in a funk together. When I was like, "This fraud thing is going to kill us," Peter said, "No, I've seen the numbers. You are doing fine. Just keep at it. You'll get it." On the flip side, when Peter would be annoyed by some investors or board dynamics or whatever, I was usually there trying to support him. That sort of sounds touchy-feely, but I think you have to really have good people. If you have a good team, you are halfway there. Even more importantly, perhaps, you have to have a really strong cofounder. Someone you can rely on in a very fundamental way.
weirdly relatable
Levchin: We hit it off really quickly. I have this IQ bias—anybody really smart, I will figure out a way to deal with.
It was very positive. Both of us are really competitive and really—not mistrusting, but not willing to assume that the other guy knows what he's talking about. When we met, we sort of hung out socially, and then one night we had this showdown where we sat around in this café for like 8 hours and traded puzzles to see who could solve puzzles faster—just this nonstop mental beating on each other. I think after that we realized that we each couldn't be total idiots since we could solve puzzles pretty quickly.
lol
We started building the product and then started looking around for funding. We went to a number of VCs and many of them turned us down because they were like, "How are you going to make money if you are going to give it away for free? What's the revenue mechanism?" We said we would capture detailed demographic information about people and that detailed quality of information on individuals would help us advertise to them. But of course advertising was not a proven revenue model at that time.
created 1996
Bhatia: It helped us because we knew what kind of hardware we would need to be able to handle the kind of traffic to our site. Also, when you are hardware designers, you have tremendously more discipline in writing and describing software because in hardware you cannot get it wrong. Every turn of every chip costs you millions of dollars, so when hardware designers design any piece of software, they normally get it right. They use something called state machines to describe the functioning of the software. When you do that, you are very deterministic: if this is the input, then this will be the output.
So you write it in a very deterministic fashion and therefore you tend not to make too many mistakes. Whereas the pure software writers—the way they think and architect software is very creative. They put in lots of bells and whistles, but they think, "No big deal. If there is a bug, we'll fix it. Put in a patch." You can't do that in hardware. There's no patch. Once you ship a chip, it has to work all the time. So in terms of being able to test it out, there is somewhat of a difference, but I just think that hardware designers would be pretty good software designers as well.
i dont fully agree with the last part but he's not wrong in positing a technical limit that does help ensure a certain discipline