Why This Matters
Paul Graham argues that the most valuable question for founders isn't 'how do we make more money?' but 'how do we become more powerful?' — a framing that pushes startups from incremental revenue gains toward structural advantages like owning the customer relationship, controlling payment flows, building platforms, and engineering network effects. For the industry, it's a plain articulation of why so many startups chase platform and marketplace positions rather than being component suppliers.
Key Takeaways
- Asking how to make a startup more powerful yields order-of-magnitude gains, while asking how to make more money tends to yield only incremental ones.
- Key power moves: own the customer relationship, make money flow through you, and let others build on your product app-store style.
- Network effects can often be engineered even into products that seem to lack them
transforming a service into a marketplace
via user sharing, comparative benchmarking, or opt-in model training on user interactions.
September 2026
One of the most useful heuristics I have when doing office hours with startups is to ask: what would make this company more powerful? Asking how the company could make more money is a good heuristic too, but it tends to yield incremental improvements. Whereas thinking about how to make it more powerful will sometimes make it orders of magnitude more valuable.
There are a lot of different variants of this question, depending on the type of company. Is there a way to transform the company from a mere component supplier into the one that owns the relationship with the customer? Or the related question: is there a way to make the money flow through it? It's always good when money flows through you. [ 1 ]
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