1. It’s not cheap to start startups.  It’s cheap to start bullshit Web 2.0 startups that rely on user-generated content.  Get your Venn diagrams right Paul.  I’ll give him the benefit of the doubt that he’s only referring to “web app” startups which are already a tiny subset of all startups in the world.  It’s not much cheaper to launch any sort of B2B web app.  Businesses still expect a high level of availability, service, and don’t want to wait for your poorly conceived product to end it’s 4-year beta period.

(Note to all of you: If it’s free, expect what a free service delivers.  This means that you shouldn’t expect 99.999% uptime.  You shouldn’t expect maturity.  You shouldn’t expect strong privacy policies or even a business plan.)

2. Sure we may have more startups but it doesn’t mean they are any more useful.  For all of Paul Graham’s “do good for the world” b.s. and the generally left-wing mind displayed by the Y-Bombs, you’d think they’d launch startups that actually have a positive impact on the world.  What positive impact does an inane dating site have?  What about another lame social news aggregation site in a virtual world for grandmothers who own dogs?  Nada.  Please solve a problem that actually exists or matters to more than 1 person outside Silicon Valley who does not read news.yc.

3. Standardized acquisitions are bullshit.  This is another example of how Paul Graham is extremely self serving.  Rather than using logic that leads to a conclusion, he reaches a conclusion and then tries to back into the logic.  It’s a sad example of a Harvard education gone to waste.  Rather than saying “hey I thought of all this stuff and decided to start Y-Combinator” he runs Y-Combinator and writes this pathetic essay to convince people that he’s the messiah.  This essay proves that he’s a shill.  Paul - you can pull the wool over the eyes of the average 25-year old geek.  Congratulations.  That’s like selling legal help to Vonage.

4.  Founders will get younger but not nerdier.  Yes, Y-Combinator attracts the types who struggle to put on a tie.  The internet does lower barriers to those of us with fewer personal connections and with lower levels of charisma.  That being said, the flip side of Paul’s argument is that startups are getting easy.  When every founder is really nerdy, the nerdiness is commoditized.   The charismatic founder will still be able to pull a team of nerdy guys together to work with him.  Larry and Sergey are a lot smarter than Paul Graham and they had the foresight to bring in Schmidt.  The person who takes a company from $0 to $10 million is often not the person who takes it from $10 million to $1 billion.  Then again, that’s not a concern at Y-Combinator since revenue always equals $0.

5. You can’t write software (yet) to evaluate acquisitions. I’m not one to say that it can’t be done.  Technology is a beautiful thing.  What I can guarantee though is that any attempt at this software will require an incredible grasp of statistics, economics, and finance.  These are three skills that Paul Graham doesn’t have.  As I’ve shown in other articles, he barely understands business.  I’m glad you sold your last business Paul.  Don’t confuse causation and correlation.  Don’t confuse intelligence and luck.  You are a successful guy Paul, far more so than I am.  That still doesn’t mean that you can debate or argue or even make a coherent point.

6. College will persist. No matter what happens, the vast majority of people will not be entrepreneurs.  Would you like to have a doctor who said, “Oh hey, I dropped out of college after reading Paul Graham’s essay and decided to do my own hospital start-up.  Who needs an M.D. anyway?  So I’ve been working on this really cool technique for endoscopic surgery, I’m going to give you this bottle of Everclear and we can get started in 20 minutes.”

Give me a break.  All sorts of people will still need professional qualifications.  Degrees allow us to have a proxy of someone’s knowledge.  We’ve created such a system to lower barriers and allow more trade.  If no accountants had certifications, all we’d be driven by is a brand name we trust.  If we have certifications, the power of brand names is diminished in that field.  Regardless, entrepreneurs have a tough time in such fields because the risk of getting screwed over is high as is the pain from the act of getting screwed over.

Where Paul Graham is almost right but fails again:

1. Riskier strategies are possible.   The problem with his analogy to portfolio theory is that in portfolio theory returns are independent at any point in time.  Success for an entrepreneur is not independent of past success or “returns” shall we say.  As you computer geeks like to say: FAIL.  Another example of poor logic and a poor understanding of finance, economics, and statistics.

2. Startup hubs will persist but their value will be diminished.  Sure, Silicon Valley will still be the top dog in 25 years.  In 50 years?  I’m not so sure.  Regardless, if launching a web app is commoditized, then why would people put up with sky high rents, tiny apartments, old housing stock, insane costs, and a culture of low employee loyalty with no-non-competes (let’s not even mention the fact that California is one of the most highly regulated states).

Yes, entrepreneurship will increase especially as a lot of the Third World develops.  Yes, the internet makes entrepreneurship easier.  No, you’re still wrong Paul because you contradict yourself and you don’t understand statistics.

I rest my case.  Goodbye.  Follow idiots like Paul Graham at your own risk.