Paul Graham thinks that startup founders need to sell their companies to get freedom and security:

They want enough money that (a) they don’t have to worry about running out of money and (b) they can spend their time how they want. Running your own business offers neither. You certainly don’t have freedom: no boss is so demanding. Nor do you have security, because if you stop paying attention to the company, its revenues go away, and with them your income.

I think he’s wrong in general and I know he’s wrong for me personally.

Fallacy #1: Owning a profitable company is like earning a salary
Getting your company to the point where you can pay yourself a decent salary is a great milestone. You created something sustainable that doesn’t rely on spending other people’s money. You deserve to pop a bottle and celebrate!

You certainly shouldn’t curb your ambitions because of that, though. The real economic pay-off for taking the risk of starting a business is what comes after this. That the company starts making enough money that you can take some and put away. After a while, that coveted financial independence you thought would make your life perfect should be achieved (and you’ll realize that it didn’t make it perfect).

But I can see how this line of thought would arise. If you’re building to flip, then profits aren’t really that interesting. If you can just get to break-even, you’re probably doing better than the majority of other companies in your made-to-flip space. So instead you focus on getting more eyeballs, more sign ups, or more of whatever you think an acquirer would place the highest premium on.

I would want to sell a company built like this too. But there are other ways to build companies. Lots of self-made millionaires made their money selling products for a profit.

So let’s strike out the security claim. Most successful business owners could walk away from their business tomorrow and still live very comfortable lives off the money they put away.

Fallacy #2: There’s always something you’d much rather do
You don’t have to work 60, 80, or 100 hours per week just because you run your own business. Many business owners do that, but if they’re successful, it’s usually because there’s nothing they’d rather be doing. Look at the top tech CEOs. None of them need to work, many of them are billionaires, but still Steve Jobs, Jeff Bezos, and others continue to helm their companies for decades because they love what they’re doing.

I don’t personally like to work 60 or more hours per week. Even 40 hours is pushing it. At 37signals, we all try to work just four days a week. That’s a perk in addition to the fact that we don’t count vacation days (I probably spent 4 weeks last year) and many of us often attend conferences and other out-of-the-daily-rhythm activities.

But when I actually do sit down to work, it’s very often that there’s nothing else I’d rather do. And I don’t think that’s really an uncommon phenomenon. I think lots of people really like what they do and for bursts of the time consider it the most interesting thing they could be working on.

If you’re building a company to flip, though, and feel like you have to put in endless hours to please investors and potential acquirers, I can certainly appreciate that there’ll often be something you’d much rather do. And that it can feel like you’re trapped trying to chase a prize that keeps moving. I don’t personally think that’s a rewarding way to live, but to each his own.

For me, the secret has been to do many other things besides work on 37signals. I enjoy working on Ruby on Rails and pursue a lot of hobbies. When you work less than 40 hours per week on something you actually like doing, it doesn’t feel very much like work at all. It feels like I’ve already retired and get to do a little of many things that I like so none of them really gets boring. There’s what I perceive to be healthy balance instead of a constant sprint.

This comes back to the earlier topic of early retirement as a false idol. I’ve talked to many entrepeneurs who’ve thought that they could just sit back and live the sweet life of no work after selling out. Most of them were right back working another idea after six months. Often times, the second idea wasn’t as good as the first one.

Bottom line is that you really should try to find something to work on that at least for substantial amounts of time constitutes that “nothing I’d rather do” feeling. I think it’s hard to be truly happy if the only reason you work is to win a paycheck. Whether it’s as an employee or a business owner.

I can’t even begin to imagine the complexity of rolling out something as big as the iPhone 3G/2.0. You have to coordinate retail, marketing, web services, support, manufacturing, shipping, and many of other business and tech units months in advance.

They all have to be ready by a a date determined by guesswork, pressure, and wishful thinking. Which means that you essentially have to make the call that the product is going to be done long before it actually is.

For the iPhone 1.0 launch, that bet paid off. The software for the phone felt solid. Everything just worked well. Fondling with the phone for the first time was intoxicating. It just tasted so incredibly Apple.

With the iPhone 2.0 launch, not so much. I’ve been using the phone every day for about a week now and it just isn’t up to the great expectations set by the first version. Everything feels so incredibly fragile. Here are just a few of the griefs I’ve felt:

• Annoying delays all over the place.
• Changing to the SMS view can take more than 10 seconds at times.
• Transitions between apps are being dropped entirely or cut short (the latter looks like a UI stutter).
• It some times requires 3 clicks on the fast-forward button in iTunes to get a response.
• The screen will freeze for 4-5 seconds not accepting any input, then replay ALL your feverous tapping when it finally returns.
• Some times the keyboard will not keep up with your input (and I’m not that fast of a typer).
• I’ve had applications crash numerous times.
• The entire phone has crashed twice.
• Restarting the phone kinda helps some of these problems, but not for long and it feels so dirty and Windows-like to do.

Now all of this could probably have been overlooked and forgiven if the payback from the new features was immense, but to me, it just isn’t. I have two screens of applications installed, but don’t really use them that much.

3rd party apps doesn’t make up for it
Twitterific is nice, but not much of a step up from just using the iPhone-optimized web version. I like WeatherBug too to get a doppler radar reading, but nothing a bookmark to weather.com didn’t do almost as well. I’ve installed but not actually used AIM, NetNewsWire, Yelp, Movies.app, Facebook, PayPal, NYTimes, Light, Sketches, and VNC yet.

It seems like the biggest new thing is the games. I’ve been playing some Tetris, some Super Monkey Ball, and a few others. And they’re really impressive! The graphics are great and controlling with the accelerometer often works better than you’d think.

3G is bliss and bastard all in one
The hardware features are also a nice improvement. The built-in GPS is fast and accurate. The 3G is a lot more mixed bag, though. When it works, it’s absolutely fantastic. It’s so much faster than Edge and really takes the experience that 2.0-like step up. The voice quality is also significantly up. But it’s just so incredibly unreliable.

Getting a 3G signal in central Chicago is like playing the corner on roulette. And when it drops back to edge, you lose all your chips of joy. I actually kinda like getting ultra fast just 20% of time and slowpoke speeds 80% of the time less than just being slow always.

As to double down on the insult, the battery life is absolutely terrible with 3G turned on. You’re absolutely required to recharge every day and it’s not unlikely that you’ll flame out in the middle of a day either with heavy use.

The cumulative effect of small problems is exponential
Combined, it’s a rather big disappointment. I’m surprised just how much impact the small griefs have when they add up to a lack of confidence in the system. It’s a great example of the cumulative effects of problems. They have an exponential damage on the experience.

And I haven’t even gone into much detail on how ridiculously bad the buying experience is compared to the first time around. Jason and I bought a EVDO card in a Sprint store the other day and we spent probably 30 minutes there. We joked about how lame that experience was. Buying the iPhone 3G took almost as long and felt almost as bad.

That’s not to say that the iPhone isn’t the best phone I’ve ever had. It is. By a wide margin. But the 2.0 launch itself has been a big disappointment and that’s too bad.

It feels a little like Apple got swept up in knocking down every single detraction point from 1.0 that they lost sight of what everyone loved about the first version. Yes, it got cheaper (not really), faster (some times), installable apps, and GPS, but it lost a bit of Apple soul in the process.

So somebody else built a successful business on that idea you had three years ago. What does that mean? That if you would just have pursued that idea, you would now automatically be enjoying their spoils? Sorry to burst your bubble, but I really don’t think so.

Ideas on their own are just not that important. It’s incredibly rare that someone comes up with an idea so unique, so protectable that the success story writes itself. Most ideas are nothing without execution.

Just because you thought of a site to share photos with friends wouldn’t have made you Flickr.

But I can see how fooling yourself into thinking otherwise is attractive. When someone else is having success with an idea similar to yours, it’s almost like you’re having that success, if only you would have pulled the trigger on it. It inflates the sense that your brilliant idea really was brilliant and that success was just a binary switch away (pursue/don’t).

On the other hand, it means that you don’t need divine inspiration to start a successful business. Doing well is not restricted only to those who can have paradigm-shifting ideas. You just need to do it better, or actually merely even good enough, to please enough paying customers that income can exceed expense and you’re off to a great start.

You’re probably too young to wear nostalgia gracefully, anyway.

The classic argument for enduring 80 to 100 hour work weeks for years on end — sacrificing relationships, hobbies, and anything else that doesn’t progress the mission — is that at the end of the rainbow lies early retirement. The reward for risking it all on a crazy startup idea. This wonderful place is filled with anything you want it to be. Never a dull moment again, all the flexibility and freedom in the world.

I’m Jack’s sense of utter disbelief.

Why does the idea of work have to be so bad that you want to sacrifice year’s worth of prime living to get away from it forever? The answer is that it doesn’t. Finding something you to love to work on seems to be a much more fruitful pursuit than trying to get away from the notion of work altogether.

It’s much easier too! The likelihood that you’ll strike gold after year’s of death-march living is still pretty low. The chance of finding something you love doing? So much more achievable. Millions of dollars not required.

If you come to the realization that work in itself isn’t evil, you can stop living your life as a waterfall-planned software project too. No need to divide your timeline on earth into the false dichotomies of Sucky Work Era and Blissful Retirement Era. Instead, you can just fill your life with a balanced mix of activities that you can sustain for decades.

The internet is full of vapid words and catch-less phrases, but one that I’ve long been particularly peeved about is the word “play”. As in this company is an “infrastructure play” or a “CPM play”. Blogger, please.

Using “play” feels like it’s just pointing to how unsubstantial something is. Like that this is their third play. And oh hell, if that doesn’t work, we’ll just get more of other people’s money and try to play again. Or that it’s a play as in pulling the lever on a slot machine and if you’re lucky gold will flow.

Do, or do not. There is no try.

There’s a popular book on entrepreneurship called The E-Myth which claims that bakers shouldn’t run bakeries, plumbers shouldn’t run plumbing companies, and everyone else should think about how they could turn their small business into a franchise. On the face of it, there’s a lot of good advice about how you can’t just be a good baker if you don’t have a business bone in your body and expect commercial success.

Problem is that the reverse is also often true. If you just put MBAs in place — or other professional managers without deep subject matter expertise — you’re equally likely to end up with an uninspiring business that fails to be passionate about the right things. To stay on the ball you need to know what’s a good pass and the best way to do that is to be able to make one yourself.

Many of my favorite companies are driven by people at the top who intimately know how things should be because they could make them so. The obvious example is the detail-oriented nature of Steve Jobs at Apple. But a few other examples I like are Ulrich Bez at Aston Martin who’s not only the CEO but also part of the company racing team at places like Le Mans. Or Thierry Nataf at Zenith who’s CEO and head designer of their luxury watches as well.

But what made me think about all this was Joel Spolsky’s tale of a technical review with Bill Gates back in the 90’s:

Bill Gates was amazingly technical, and he knew more about the details of his company’s software than most of the people who worked on those details day in and day out. He understood Variants and COM objects and IDispatch and why Automation is different than vtables—and why this might lead to dual interfaces. He worried about date and time functions. He didn’t meddle in software if he trusted the people who were working on it, but you couldn’t bullshit him for a minute because he was a programmer. A real, actual programmer.

For people who love what they do, whether that’s programming, design, designing watches, or building cars, that’s a great motivation to not grow your company too quickly. Enjoy the time when you can actually be a full participant in the actual activities themselves, rather than just managing them.

Startup mythology demands that to create something great, you need superhuman sacrifices. You need to work for no pay, you need to put in 120 hours/week, you need to preferably sleep under the desk and live off pizza as a sole form of nutrient. As a result, you need to abandon your family and risk life without insurance.

Hogwash!

We’ve repeated this story so many times that it’s starting to wear a little thin, but here it goes again: Basecamp was created with 10 hours/week of programming time and as a 3rd or 4th project alongside paying customers for the designers over the course of about 6 months. In other words, we didn’t drop everything we had to create Basecamp, and you don’t have to either.

There are plenty of startup ideas that can be done without millions in funding, thousands of man hours, and dramatic risk. But I can excuse people from failing to see them when blinded by press and popular opinion. Everywhere you turn it’s stories about how ever-younger entrepreneurs with nothing to lose are defying all odds and making mortal sacrifices to reach their impossibly unlikely goals and succeeding.

Did I say hogwash already?

How about you turn your perceived weaknesses into strengths. Embrace your constraints, work with limited budget of your own money and write less software. That’s how we built Basecamp on the side, next to the every day obligations of paying the bills and having a life.

It didn’t turn into a smash hit overnight either. We ran Basecamp for a year alongside our other obligations before it was doing well enough to pay all the bills and afford our full-time attention. Most good businesses didn’t become great ones within the 12-18 months that the poster boys of the startup lottery did.

So don’t despair, just start small. Reserve a couple of nights per week, a Sunday morning here, and a day from vacation time there. It’s never been cheaper or faster to build a web startup, it’s never been more possible to do it as a side-business.

That still doesn’t make it easy. Odds are you’ll fail. Just as odds are you’ll fail if you take millions of VC money, hire a staff of twenty, and spend 120 hours/week on it. But if lost opportunity is a risk when you try, it’s a guarantee if you don’t.

Popular perception holds that companies must always be growing or they’re dying. There’s either up or down, win or lose, success or failure. I think that’s a harmful dichotomy that leads to the death of perfectly viable companies in their quest for constant growth.

Not all companies are meant to have thousands of employees or a billion-dollar market cap. Some companies are meant to be just 10 people or 5 people or just one guy. That’s what their product, niche, or technique is capable of sustaining and there’s absolutely no shame in that. Finding your natural size should be a triumph, not a capitulation.

We haven’t found the natural size for 37signals yet, but I can tell you that it’s not a thousand people. It’s highly unlike to be a hundred. Right now it’s 10 and it’s been in that vicinity for quite some time. Our revenues have been more than doubling every year since the beginning, but that probably won’t last forever either. That’s okay too!

Chasing growth as an end in itself makes it all too easy to give up optimizing for today: “When we break 5 million dollars, we’ll start working less”, “when we’re 50 people, we’ll start giving more back to open source”. Bah. Growth begets growth and you’ll end up chasing even bigger numbers and never have the time to do what you really want.

Don’t let growth be your primary yardstick of success. You only get to celebrate breaking 5 million dollars in revenue once, taking Fridays off will make every single week a better one. Stop making excuses for why you can’t do this or that in the name of growth. Just Do It.

The web is a world of constraints, the materials of HTML and CSS flex and give in ways that encourage particular styles. And being able to understand and bend within that scope is what makes a design feel native. Designers who work directly with the materials rather than through simulated environments like Photoshop are at a distinct advantage for making that happen.

If you’re working on a Flash game or a media campaign to introduce a new watch, you can afford to disregard that advantage. That’s when the graphical prowess of a completely blank canvas, sky’s-the-limit approach is exactly what you want. You want dazzle and glitz. Making something that’s native to the web doesn’t really matter.

But barring that niche, designing for the web is a lot less about making something dazzle and a lot more about making it work. The design decisions that matter pertain directly to the constraints of the materials. What form elements to use. What font sizes. What composition. What flow. Those decisions are poorly made at an arm’s length.

I’ve worked with many web designers in the past who only did abstractions and then handed over pictures to be chopped and implemented by “HTML monkeys”. It never really gelled well. The things that got strong attention were all the things that Photoshop did well. Imagery, curvy lines, and the frame. All the around stuff, never the it stuff.

That’s why all the designers at 37signals work directly with HTML and CSS. We simply don’t consider designers who don’t get their hands dirty with the materials relevant to the kind of work we do.

If you’re a designer working with the web who still doesn’t do your own implementation, I strongly recommend that you pick up the skills to do so.

Jealousy doesn’t have to be a negative emotion. It doesn’t have to be a cohort of anger or resentment. All it needs is a dash of hope.

I’ve always been a jealous person. I’ve always wanted things that others had. Skills they possessed. Authority they held. Success they enjoyed. But instead of feeling sorry for myself and growing spiteful of others, I found it to be the best motivation to imitate, adopt, and strive for the same rewards.

For me, all it took was a core belief that there was no reason I couldn’t do the same. That there was no such thing as a cosmic conspiracy allowing just a chosen few to prosper and oppressing the many.

I’m saddened every time I meet those who believe to the contrary. I think it’s such a fundamental enabler for achieving more that it almost seems unfair that it’s not a universal instinct instead of an acquired belief.