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0 | What I Wish Someone Had Told Me | 2023-12-21 22:44:25 | Optimism, obsession, self-belief, raw horsepower and personal connections are how things get started.
Cohesive teams, the right combination of calmness and urgency, and unreasonable commitment are how things get finished. Long-term orientation is in short supply; try not to worry about what people think in the short term, which will get easier over time.
It is easier for a team to do a hard thing that really matters than to do an easy thing that doesn’t really matter; audacious ideas motivate people.
Incentives are superpowers; set them carefully.
Concentrate your resources on a small number of high-conviction bets; this is easy to say but evidently hard to do. You can delete more stuff than you think.
Communicate clearly and concisely.
Fight bullshit and bureaucracy every time you see it and get other people to fight it too. Do not let the org chart get in the way of people working productively together.
Outcomes are what count; don’t let good process excuse bad results.
Spend more time recruiting. Take risks on high-potential people with a fast rate of improvement. Look for evidence of getting stuff done in addition to intelligence.
Superstars are even more valuable than they seem, but you have to evaluate people on their net impact on the performance of the organization.
Fast iteration can make up for a lot; it’s usually ok to be wrong if you iterate quickly. Plans should be measured in decades, execution should be measured in weeks.
Don’t fight the business equivalent of the laws of physics.
Inspiration is perishable and life goes by fast. Inaction is a particularly insidious type of risk.
Scale often has surprising emergent properties.
Compounding exponentials are magic. In particular, you really want to build a business that gets a compounding advantage with scale.
Get back up and keep going.
Working with great people is one of the best parts of life. |
1 | Helion Needs You | 2022-07-13 15:47:32 | Helion has been progressing even faster than I expected and is on pace in 2024 to 1) demonstrate Q > 1 fusion and 2) resolve all questions needed to design a mass-producible fusion generator.
The goals of the company are quite ambitious—clean, continuous energy for 1 cent per kilowatt-hour, and the ability to manufacture enough power plants to satisfy the current electrical demand of earth in a ten year period.
If both things happen, it will transform the world. Abundant, clean, and radically inexpensive energy will elevate the quality of life for all of us—think about how much the cost of energy factors into what we do and use. Also, electricity at this price will allow us to do things like efficiently capture carbon (so although we’ll still rely on gasoline for awhile, it’ll be ok).
Although Helion’s scientific progress of the past 8 years is phenomenal and necessary, it is not sufficient to rapidly get to this new energy economy. Helion now needs to figure out how to engineer machines that don’t break, how to build a factory and supply chain capable of manufacturing a machine every day, how to work with power grids and governments around the world, and more.
The biggest input to the degree and speed of success at the company is now the talent of the people who join the team. Here are a few of the most critical jobs, but please don’t let the lack of a perfect fit deter you from applying.
Electrical Engineer, Low Voltage: https://boards.greenhouse.io/helionenergy/jobs/4044506005
Electrical Engineer, Pulsed Power: https://boards.greenhouse.io/helionenergy/jobs/4044510005
Mechanical Engineer, Generator Systems: https://boards.greenhouse.io/helionenergy/jobs/4044522005
Manager of Mechanical Engineering: https://boards.greenhouse.io/helionenergy/jobs/4044521005
(All current jobs: https://www.helionenergy.com/careers/)
|
2 | DALL•E 2 | 2022-04-06 18:15:13 | Today we did a research launch of DALL•E 2, a new AI tool that can create and edit images from natural language instructions.
Most importantly, we hope people love the tool and find it useful. For me, it’s the most delightful thing to play with we’ve created so far. I find it to be creativity-enhancing, helpful for many different situations, and fun in a way I haven’t felt from technology in a while.
But I also think it’s noteworthy for a few reasons:
1) This is another example of what I think is going to be a new computer interface trend: you say what you want in natural language or with contextual clues, and the computer does it. We offer this for code and now image generation; both of these will get a lot better. But the same trend will happen in new ways until eventually it works for complex tasks—we can imagine an “AI office worker” that takes requests in natural language like a human does.
2) It sure does seem to “understand” concepts at many levels and how they relate to each other in sophisticated ways.
3) Copilot is a tool that helps coders be more productive, but still is very far from being able to create a full program. DALL•E 2 is a tool that will help artists and illustrators be more creative, but it can also create a “complete work”. This may be an early example of the impact AI on labor markets. Although I firmly believe AI will create lots of new jobs, and make many existing jobs much better by doing the boring bits well, I think it’s important to be honest that it’s increasingly going to make some jobs not very relevant (like technology frequently does).
4) It’s a reminder that predictions about AI are very difficult to make. A decade ago, the conventional wisdom was that AI would first impact physical labor, and then cognitive labor, and then maybe someday it could do creative work. It now looks like it’s going to go in the opposite order.
5) It’s an example of a world in which good ideas are the limit for what we can do, not specific skills.
6) Although the upsides are great, the model is powerful enough that it's easy to imagine the downsides.
Hopefully this summer, we’ll do a product launch and people will be able to use it for all sorts of things. We wanted to start with a research launch to figure out how to minimize the downsides in collaboration with a larger group of researchers and artists, and to give people some time to adapt to the change—in general, we are believers in incremental deployment strategies. (Obviously the world already has Photoshop and we already know that images can be manipulated, for good and bad.)
(A robot hand drawing, by DALL•E)
|
3 | Helion | 2021-11-05 13:39:16 | I’m delighted to be investing more in Helion. Helion is by far the most promising approach to fusion I’ve seen.
David and Chris are two of the most impressive founders and builders (in the sense of building fusion machines, in addition to building companies!) I have ever met, and they have done something remarkable. When I first invested in them back in 2014, I was struck by the thoughtfulness of their plans about the scientific approach, the system design, cost optimizations, and the fuel cycle.
And now, with a tiny fraction of the money spent on other fusion efforts but the culture of a startup, they and their team have built a generator that produces electricity. Helion has a clear path to net electricity by 2024, and has a long-term goal of delivering electricity for 1 cent per kilowatt-hour. (!)
If this all works as we hope, we may have a path out of the climate crisis. Even though there are a lot of emissions that don’t come from electrical generation, we’d be able to use abundant energy to capture carbon and other greenhouses gases.
And if we have much cheaper energy than ever before, we can do things that are difficult to imagine today. The cost of energy is one of the fundamental inputs in the costs of so much else; dramatically cheaper energy will lead to dramatically better quality of life for many people. |
4 | The Strength of Being Misunderstood | 2020-12-01 18:56:39 | A founder recently asked me how to stop caring what other people think. I didn’t have an answer, and after reflecting on it more, I think it's the wrong question.
Almost everyone cares what someone thinks (though caring what everyone thinks is definitely a mistake), and it's probably important. Caring too much makes you a sheep. But you need to be at least a little in tune with others to do something useful for them.
It seems like there are two degrees of freedom: you can choose the people whose opinions you care about (and on what subjects), and you can choose the timescale you care about them on. Most people figure out the former [1] but the latter doesn’t seem to get much attention.
The most impressive people I know care a lot about what people think, even people whose opinions they really shouldn’t value (a surprising numbers of them do something like keeping a folder of screenshots of tweets from haters). But what makes them unusual is that they generally care about other people’s opinions on a very long time horizon—as long as the history books get it right, they take some pride in letting the newspapers get it wrong.
You should trade being short-term low-status for being long-term high-status, which most people seem unwilling to do. A common way this happens is by eventually being right about an important but deeply non-consensus bet. But there are lots of other ways–the key observation is that as long as you are right, being misunderstood by most people is a strength not a weakness. You and a small group of rebels get the space to solve an important problem that might otherwise not get solved.
[1] In the memorable words of Coco Chanel, “I don’t care what you think about me. I don’t think about you at all.” |
5 | PG and Jessica | 2020-09-25 14:45:50 | A lot of people want to replicate YC in some other industry or some other place or with some other strategy. In general, people seem to assume that: 1) although there was some degree of mystery or luck about how YC got going, it can’t be that hard, and 2) if you can get it off the ground, the network effects are self-sustaining.
More YC-like things are good for the world; I generally try to be helpful. But almost none of them work. People are right about the self-sustaining part, but they can’t figure out how to get something going.
The entire secret to YC getting going was PG and Jessica—there was no other magic trick. A few times a year, I end up in a conversation at a party where someone tells a story about how much PG changed their life—people speak with more gratitude than they do towards pretty much anyone else. Then everyone else agrees, YC founders and otherwise (non-YC founders might talk about an impactful essay or getting hired at a YC company). Jessica still sadly doesn’t get nearly the same degree of public credit, but the people who were around the early days of YC know the real story.
What did they do? They took bets on unknown people and believed in them more than anyone had before. They set strong norms and fought back hard against bad behavior towards YC founders. They trusted their own convictions, were willing to do things their way, and were willing to be disliked by the existing power structures. They focused on the most important things, they worked hard, and they spent a huge amount of time 1:1 with people. They understood the value of community and long-term orientation. When YC was very small, it felt like a family.
Perhaps most importantly, they built an ecosystem (thanks to Joe Gebbia for pointing this out). This is easy to talk about but hard to do, because it requires not being greedy. YC has left a lot of money on the table; other people have made more money from the ecosystem than YC has itself. This has cemented YC’s place—the benefits to the partners, alumni, current batch founders, Hacker News readers, Demo Day investors, and everyone else around YC is a huge part of what makes it work.
I am not sure if any of this is particularly useful advice—none of it sounds that hard, and yet in the 15 years since, it hasn’t been close to replicated.
But it seems worth trying. I am pretty sure no one has had a bigger total impact on the careers of people in the startup industry over that time period than the two of them. |
6 | Researchers and Founders | 2020-06-19 17:39:12 | I spent many years working with founders and now I work with researchers.
Although there are always individual exceptions, on average it’s surprising to me how different the best people in these groups are (including in some qualities that I had assumed were present in great people everywhere, like very high levels of self-belief).
So I’ve been thinking about the ways they’re the same, because maybe there is something to learn about qualities of really effective people in general.
The best people in both groups spend a lot of time reflecting on some version of the Hamming question—"what are the most important problems in your field, and why aren’t you working on them?” In general, no one reflects on this question enough, but the best people do it the most, and have the best ‘problem taste’, which is some combination of learning to think independently, reason about the future, and identify attack vectors. (This from John Schulman is worth reading: http://joschu.net/blog/opinionated-guide-ml-research.html).
They have a laser focus on the next step in front of them combined with long-term vision. Most people only have one or the other.
They are extremely persistent and willing to work hard. As far as I can tell, there is no high-probability way to be very successful without this, and you should be suspicious of people who tell you otherwise unless you’d be happy having their career (and be especially suspicious if they worked hard themselves).
They have a bias towards action and trying things, and they’re clear-eyed and honest about what is working and what isn’t (importantly, this goes both ways—I’m amazed by how many people will see something working and then not pursue it).
They are creative idea-generators—a lot of the ideas may be terrible, but there is never a shortage.
They really value autonomy and have a hard time with rules that they don’t think make sense. They are definitely not lemmings.
Their motivations are often more complex than they seem—specifically, they are frequently very driven by genuine curiosity. |
7 | Project Covalence | 2020-06-16 17:08:44 | Almost every company and non-profit working on COVID-19 that I offered to help asked for support with clinical trials—for companies focusing on developing novel drugs, vaccines, and diagnostics, rapidly spinning up trials is one of their biggest bottlenecks.
Science remains the only way out of the COVID-19 crisis. Dramatically improving clinical trials, which are usually time-consuming and cost tens to hundreds of millions of dollars, is one of the highest-leverage ways to get out of it faster.
The goal of this project, in collaboration with TrialSpark and Dr. Mark Fishman, is to offer much better clinical trial support to COVID-19 projects than anything that currently exists.
Project Covalence’s platform, powered by TrialSpark, is uniquely optimized to support COVID-19 trials, which are ideally run in community settings or at the patient’s home to reduce the burden placed on hospitals and health systems. Project Covalence is well-positioned to tackle the operational and logistical challenges involved in launching such trials, and supports trial execution, 21 CFR Part 11 compliant remote data collection, telemedicine, biostatistics, sample kits for at-home specimen collection, and protocol writing.
Researchers across academia and industry can leverage this shared infrastructure to rapidly launch their clinical trials. To facilitate coordination between studies, we will also be creating master protocols for platform studies to enable shared control arms and adaptive trial designs.
If you’re interested in getting involved or have a trial that needs support, please get in touch at [email protected] or visit www.projectcovalence.com. |
8 | Idea Generation | 2020-05-28 19:12:40 | The most common question prospective startup founders ask is how to get ideas for startups. The second most common question is if you have any ideas for their startup.
But giving founders an idea almost always doesn’t work. Having ideas is among the most important qualities for a startup founder to have—you will need to generate lots of new ideas in the course of running a startup.
YC once tried an experiment of funding seemingly good founders with no ideas. I think every company in this no-idea track failed. It turns out that good founders have lots of ideas about everything, so if you want to be a founder and can’t get an idea for a company, you should probably work on getting good at idea generation first.
How do you do that?
It’s important to be in the right kind of environment, and around the right kind of people. You want to be around people who have a good feel for the future, will entertain improbable plans, are optimistic, are smart in a creative way, and have a very high idea flux. These sorts of people tend to think without the constraints most people have, not have a lot of filters, and not care too much what other people think.
The best ideas are fragile; most people don’t even start talking about them at all because they sound silly. Perhaps most of all, you want to be around people who don’t make you feel stupid for mentioning a bad idea, and who certainly never feel stupid for doing so themselves.
Stay away from people who are world-weary and belittle your ambitions. Unfortunately, this is most of the world. But they hold on to the past, and you want to live in the future.
You want to be able to project yourself 20 years into the future, and then think backwards from there. Trust yourself—20 years is a long time; it’s ok if your ideas about it seem pretty radical.
Another way to do this is to think about the most important tectonic shifts happening right now. How is the world changing in fundamental ways? Can you identify a leading edge of change and an opportunity that it unlocks? The mobile phone explosion from 2008-2012 is the most recent significant example of this—we are overdue for another!
In such a tectonic shift, the world changes so fast that the big incumbents usually get beaten by fast-moving and focused startups. (By the way, it’s useful to get good at differentiating between real trends and fake trends. A key differentiator is if the new platform is used a lot by a small number of people, or used a little by a lot of people.)
Any time you can think of something that is possible this year and wasn’t possible last year, you should pay attention. You may have the seed of a great startup idea. This is especially true if next year will be too late.
When you can say “I am sure this is going to happen, I’m just not sure if we’ll be the ones to do it”, that’s a good sign. Uber was like this for me—after the first time I used it, it was clear we weren’t going to be calling cabs for that much longer, but I wasn’t sure that Uber was going to win the space.
A good question to ask yourself early in the process of thinking about an idea is “could this be huge if it worked?” There are many good ideas in the world, but few of them have the inherent advantages that can make a startup massively successful. Most businesses don’t generate a valuable accumulating advantage as they scale. Think early about why an idea might have that property. It’s obvious for Facebook or Airbnb, but it often exists in more subtle ways.
It’s also important to think about what you’re well-suited for. This is hard to do with pure introspection; ideally you can ask a mentor or some people you’ve worked with what you’re particularly good at. I’ve come to believe that founder/company fit is as important as product/market fit.
Finally, a good test for an idea is if you can articulate why most people think it’s a bad idea, but you understand what makes it good.
This is from my notes for a talk I gave at a YC event in China in 2018. Thanks to Eric Migicovsky for encouraging me to post it!
I wrote it when I thought mostly about startups; now I think mostly about AI development. I am struck by how much of it applies, particularly paragraphs 5-9. |
9 | Please Fund More Science | 2020-03-30 17:46:36 | Experts on the COVID-19 pandemic seem to think there are three ways out—that is, for life, health, and the economy to return roughly to normal.
Either we get a vaccine good enough that R0 for the world goes below 1, a good enough treatment that people no longer need to be afraid, or we develop a great culture of testing, contract tracing, masks, and isolation.
I wish that the federal government were doing much more—it would be great to see even a few percent of the recent stimulus bill go to funding R+D. But they don’t seem to be funding enough science, and although I think concerns about the private sector and philanthropy doing what the government is supposed to be doing are somewhat valid, there isn’t a great alternative right now.
On the positive side, I have never seen a field focused on one problem with such ferocity before. The response of biotech companies and research labs is amazing, and the speed they are operating at seems to have increased by more than 10x. It’s the best of the spirit of innovation, and it’s inspiring to see what these companies and research labs are doing.
Scientists can get us out of this. What they need are money and connections.
Investors and donors—this is where we can help. Please consider shifting some of your focus and capital to scientific efforts addressing the pandemic. (And future pandemics too—I think this will be a before-and-after moment in the world, and until we can defend against new viruses quickly, things are going to be different.)
The learning curve is quick, and there are a lot of experts willing to help you with diligence. It feels good to do something that might be useful, it’s interesting to do something totally new, and it will make you more optimistic.
If you make it known to your network that you want to fund efforts working on COVID-19, you’ll get flooded with opportunities. And it’s always good to invest where the best founders are congregating. |
20 | Funding for COVID-19 Projects | 2020-03-15 16:31:23 | I’m trying to fund startups/projects helping with COVID-19, because it’s basically the one thing I know how to do that can help. I think we will soon have enough testing capacity, so now I’d like to start funding more startups working on:
Producing a lot of ventilators or masks/gowns very quickly. This will require a lot of repurposing and creativity but thankfully is an engineering problem not a scientific ones.
Screening existing drugs for effectiveness.
Novel approaches to vaccines (i.e., not doing what the big pharma companies are already doing).
Novel therapeutics that the big pharma companies are unlikely to work on.
We tried this public spreadsheet but it didn't work that well; please email me instead.
Also, if anyone knows of a contract research company that can run a viral challenge against SARS-CoV-2 in a humanized ACE2 animal model, that would help a startup I’m working with. Please reach out!
And of course, I think the best thing to do is still to get people to stay home. |
21 | The Virus | 2020-03-07 18:58:55 | Although I still hope things will go differently, the experts I’ve spoken to think we are likely to face a global tragedy—hundreds of thousands of deaths from Covid-19.
I hope that society views this as a warning for the future. Covid-19 is bad, but only a warm-up. I think it’s unlikely that this is the worst new pandemic (human-created or otherwise) we’ll see in our lifetimes. We need to be ready to deal with it much better next time.
In the meantime, young healthy people should try to avoid getting Covid-19 for as long as possible. It’s true that it doesn’t seem to be very bad for young people, but more people getting it—particularly people who don’t get sick enough to stay home—will accelerate the spread, and this virus seems quite bad for old people and people with pre-existing conditions.
I expect society will shift to a new normal pretty fast. Some of these elements—e.g., much less business travel, much less handshaking, much more handwashing—I expect to just stick. Some others—e.g., people working from home all of the time—I expect to not stick.
The economic disruption is still probably under-appreciated and will remind us that our systems are more fragile than we think. For example, I do not think the recent plunge in US Treasury yields is explained by Covid-19 alone, but rather a reminder of cascading effects that can happen in a complex system. |
22 | Hard Startups | 2020-02-26 18:28:47 | The most counterintuitive secret about startups is that it’s often easier to succeed with a hard startup than an easy one. A hard startup requires a lot more money, time, coordination, or technological development than most startups. A good hard startup is one that will be valuable if it works (not all hard problems are worth solving!).
I remember when Instagram started to get really popular—it felt like you couldn’t go a day without hearing about another photo sharing startup. That year, probably over 1,000 photo sharing startups were funded, while there were fewer than ten nuclear fusion startups in existence.
Easy startups are easy to start but hard to make successful. The most precious commodity in the startup ecosystem right now is talented people, and for the most part talented people want to work on something they find meaningful.
A startup eventually has to get a lot of people to join its quest. It’s usually reasonably easy to get the first five or ten people to join—you can offer large equity grants and areas of responsibility. But eventually, what you have to recruit with are the mission of the company, the likelihood of massive success, and the quality of the people there. [1]
Few recruiting messages are as powerful (when true) as “the world needs this, it won’t happen any time soon if we don’t do it, and we are much less likely to succeed if you don’t join.”
There is a derivative of the Peter Principle at play here—your startup will rise to the level where it can no longer attract enough talented people. (This sometimes holds true for careers too—the limiting factor for many careers eventually becomes how many talented people you know and can get to work with you.)
An easy startup is a headwind; a hard startup is a tailwind. If people care about your success because you seem committed to doing something significant, it’s a background force helping you with hiring, advice, partnerships, fundraising, etc.
Part of the magic of Silicon Valley is that people default to taking you seriously if you’re willing to be serious—they’ve learned it’s a very expensive mistake, in aggregate, not to. If you want to start a company working on a better way to build homes, gene editing, artificial general intelligence, a new education system, or carbon sequestration, you may actually be able to get it funded, even if you don’t have a degree or much experience.
Let yourself become more ambitious—figure out the most interesting version of where what you’re working on could go. Then talk about that big vision and work relentlessly towards it, but always have a reasonable next step. You don’t want step one to be incorporating the company and step two to be going to Mars.
Be willing to make a very long-term commitment to what you’re doing. Most people aren’t, which is part of the reason they pick “easy” startups. In a world of compounding advantages where most people are operating on a 3 year timeframe and you’re operating on a 10 year timeframe, you’ll have a very large edge.
Thanks to Luke Miles for reviewing drafts of this.
[1] Another solution to this problem is to think about startups that can become quite successful with less than ten people. As compensation packages from the giant tech companies continue to increase, I suspect this will become a trend. |
23 | How To Invest In Startups | 2020-01-13 16:41:14 | There is a lot of advice about how to be a good startup founder. But there isn’t very much about how to be a good startup investor.
Before going any further, I should point out that this is a particularly hard time to invest in startups—it’s easier right now to be a capital-taker than a capital-giver. It seems that more people want to be investors than founders, and that there’s an apparent never-ending flow of capital looking for access to startups.
The law of supply and demand has done its thing. Valuations have risen, and the best investment opportunities are flooded with interest. As a friend of mine recently observed, “it’s much easier to get LPs to give you money for your seed fund than it is to get a meaningful allocation in a ‘hot deal’”.
That said, to do well as an investor, you need to do three things: get access to good investment opportunities, make good decisions about what to invest in, and get the companies you want to invest in to choose you as an investor. That’s it! You can often help the companies you invest in become bigger than they otherwise would have been, but the sad reality is that your best investments will do quite well without you.
Access
Getting access to investment opportunities is the easiest of the three categories: you can just work hard. It’s surprising that most investors don’t work hard, but it’s true, and a bug that you can exploit.
Putting a lot of energy into networking actually works, as long as you aren’t just trying to touch base when people can find some time away from their crazy calendars to grab coffee. If you actually figure out how to help other investors you respect, and to really help good founders, then good investment opportunities will come your way.
If you’re starting out as a full-time investor, make it your full-time job to figure out how to help people that will become your future investment-sourcing network. Instead of just asking your contacts to tell you about investment opportunities, ask them if you can spend a day per week helping their best company. In general, early-stage investors can help a lot with closing candidates, future fundraising, customer introductions, and generic advice.
A brand is the other way to get access. There are a lot of ways to build one, but by the same principle of working hard, a good example is to write long-form content (hard, few people do a good job at it) instead of tweeting (easy, everyone does a pretty good job at it).
Decisions
Great founders are the key to great startups. One way to do really well as a startup investor is to get good at predicting who is going to be great before they are—the market rewards finding great but inexperienced people. You can also do well by investing in people who are already proven, but the price of the shares you buy will reflect that.
So how do you identify future greatness?
It’s easiest if you get to meet people in person, several times. If you meet someone three times in three months, and notice detectable improvement each time, pay attention to that. The rate of improvement is often more important than the current absolute ability (in particular, younger founders can sometimes improve extremely quickly).
The main question I ask myself when I meet a founder is if I’d work for that person. The second question I ask myself is if I can imagine them taking over their industry.
I look for founders who are scrappy and formidable at the same time (a rarer combination than it sounds); mission-oriented, obsessed with their companies, relentless, and determined; extremely smart (necessary but certainly not sufficient); decisive, fast-moving, and willful; courageous, high-conviction, and willing to be misunderstood; strong communicators and infectious evangelists; and capable of becoming tough and ambitious.
Some of these characteristics seem to be easier to change than others; for example, I have noticed that people can become much tougher and more ambitious rapidly, but people tend to be either slow movers or fast movers and that seems harder to change. Being a fast mover is a big thing; a somewhat trivial example is that I have almost never made money investing in founders who do not respond quickly to important emails.
Also, it sounds obvious, but the successful founders I’ve funded believe they are eventually certain to be successful.
In addition to learning to predict who will become great founders, you have to be at least okay at predicting what markets will be good.
Startups are likely to happen in many more industries—startups can win wherever costs can be low and cycle time can be fast. Startups do particularly well in industries with rapid technological change, because their fundamental advantages over large competitors are speed and focus. A higher rate of change gives startups more opportunities to be right and the large competitor more opportunities to stumble.
Like the founder, and like a company, what you should care about is the growth rate and eventual size of a market (I don’t know why most investors are so obsessed with the current size of a market instead of how big they think it will be in ten years, but it’s an opportunity for you).
The best companies tend to have the courage to lead the market by a couple of years, but they know the secret for telling the difference between a real trend and a fake trend. For a real trend, even if there aren’t many users, they use the new platform a lot and love it. For example, although the iPhone was derided for not having many users in its first year or two, most people who had an iPhone raved about it in a way that they never did about previous smartphones.
The very best companies tend to ride the wave of a new, important, and rapidly growing platform.
The spectral signatures of the best companies I’ve invested in are remarkably similar. They usually have most of the following characteristics: compelling founders, a mission that attracts talented people into the startup’s orbit, a product so good that people spontaneously tell their friends about it, a rapidly growing market, a network effect and low marginal costs, the ability to grow fast, and a product that is either fundamentally new or 10x better than existing options.
You should try to limit yourself to opportunities that could be $10 billion companies if they work (which means they have, at least, a fast-growing market and some sort of pricing power). The power law is that powerful. This is easy to say and hard to do, and I’ve been guilty of violating the principle many times. But the data are clear—the failures don’t matter much, the small successes don’t matter much, and the giant returns are where everything happens.
The central learning of my career so far has been that you can and should scale up things that are working. The power of scale, and the emergent behavior that sometimes comes from it, is tremendous. I think about the potential energy of future scale for every investment I make. Most people seem terrible at this, so it’s another bug you can exploit.
Although good ideas are understandably seductive, for early-stage investing they are mostly valuable as a way to identify good founders. However, sometimes bad founders have good ideas too, and investing in them is the chronic investing mistake that has been hardest for me to correct. (My second biggest chronic mistake has been chasing investments primarily because other investors like them.)
Close rate
The better the investment opportunity is (i.e., expected value relative to valuation), the harder it usually is to get the company to choose you as an investor.
Traditional sales tactics works pretty well here. Spend a lot of time with the founder, explain what you’re willing to do to help them, ask founders you’ve worked with in the past to call them, etc.
A reputation for being above-and-beyond helpful and accessible is worth a lot here, and rare among all but the best investors. A reputation for being founder-friendly helps too. What helps most of all is other founders you’ve previously invested in saying “that person was my best investor by far”.
In addition to helping get access to investment opportunities, a strong brand also helps close them. It’s a nice tailwind if you can get yourself to the place where simply taking your money helps a company get taken more seriously.
Decisiveness also helps—everyone wants to be wanted, and most investors wait for someone else to act first. If you decide quickly, and especially if you decide before others do, founders tend to appreciate that. The two most recent significant investments I made were 1) telling people I’d previously backed and had huge conviction in that I would do their Series A before they finished telling me what their idea was, and 2) offering to do the seed round of founders I’d never met before at the end of a one hour meeting. I don’t recommend doing that very often, but when your conviction is strong, let it show.
The best way to have a poor close rate is to not treat founders like peers. If you’re picking well, you should be investing in founders that you think of as your peers at least. Founders have a sixth sense for who is going to treat them like a peer and who is going to treat them like a boss. And if they’re good, they know you’re failing an intelligence test if you act like their boss.
Help them
The most important way to help founders is to get them to be more ambitious—to think bigger and to have more self-belief. Help them set ambitious but achievable goals. Momentum is important and self-reinforcing—most people set goals that they expect to be just out of reach, which is usually demotivating. It’s better to continuously set goals that you can just barely hit.
The second most important thing to do is to give them specific, tactical advice (instead of general strategy) about how to achieve their goals. Good tactical advice is something like “it seems like you’ve figured out yourself how to do sales for this company, so here is where to look and what to look for in your first sales hire, and here is the sales tool you should use”.
There are a lot of specific things you can do to help—make introductions, help them hire, help them find other investors, help them find an office, etc.—but generally you should wait to do these until asked.
A big exception is that you should proactively let them know when you have very high conviction that they’re about to make a big mistake, especially once things are working and they aren’t setting themselves up to scale.
In theory, another big exception is actually helping founders come up with good new ideas. The first investor I ever watched in action was PG and so I assumed this was something all investors were fantastic at. But it turns out he is a sui generis idea generator, and even most great investors are usually still bad at telling founders what to work on. It’s worth trying to be self-aware.
Finally, I’ve found that most of the time when founders call asking for vague help, what they are really asking for is emotional support from a friend. Invite them over to your house, make them tea or pour them a drink, and start listening to their struggles.
Thanks to Jack Altman, Max Altman, and Luke Miles for reviewing drafts of this. |
24 | How To Be Successful | 2019-01-24 21:01:07 | I’ve observed thousands of founders and thought a lot about what it takes to make a huge amount of money or to create something important. Usually, people start off wanting the former and end up wanting the latter.
Here are 13 thoughts about how to achieve such outlier success. Everything here is easier to do once you’ve already reached a baseline degree of success (through privilege or effort) and want to put in the work to turn that into outlier success. [1] But much of it applies to anyone.
1. Compound yourself
Compounding is magic. Look for it everywhere. Exponential curves are the key to wealth generation.
A medium-sized business that grows 50% in value every year becomes huge in a very short amount of time. Few businesses in the world have true network effects and extreme scalability. But with technology, more and more will. It’s worth a lot of effort to find them and create them.
You also want to be an exponential curve yourself—you should aim for your life to follow an ever-increasing up-and-to-the-right trajectory. It’s important to move towards a career that has a compounding effect—most careers progress fairly linearly.
You don't want to be in a career where people who have been doing it for two years can be as effective as people who have been doing it for twenty—your rate of learning should always be high. As your career progresses, each unit of work you do should generate more and more results. There are many ways to get this leverage, such as capital, technology, brand, network effects, and managing people.
It’s useful to focus on adding another zero to whatever you define as your success metric—money, status, impact on the world, or whatever. I am willing to take as much time as needed between projects to find my next thing. But I always want it to be a project that, if successful, will make the rest of my career look like a footnote.
Most people get bogged down in linear opportunities. Be willing to let small opportunities go to focus on potential step changes.
I think the biggest competitive advantage in business—either for a company or for an individual’s career—is long-term thinking with a broad view of how different systems in the world are going to come together. One of the notable aspects of compound growth is that the furthest out years are the most important. In a world where almost no one takes a truly long-term view, the market richly rewards those who do.
Trust the exponential, be patient, and be pleasantly surprised.
2. Have almost too much self-belief
Self-belief is immensely powerful. The most successful people I know believe in themselves almost to the point of delusion.
Cultivate this early. As you get more data points that your judgment is good and you can consistently deliver results, trust yourself more.
If you don’t believe in yourself, it’s hard to let yourself have contrarian ideas about the future. But this is where most value gets created.
I remember when Elon Musk took me on a tour of the SpaceX factory many years ago. He talked in detail about manufacturing every part of the rocket, but the thing that sticks in memory was the look of absolute certainty on his face when he talked about sending large rockets to Mars. I left thinking “huh, so that’s the benchmark for what conviction looks like.”
Managing your own morale—and your team’s morale—is one of the greatest challenges of most endeavors. It’s almost impossible without a lot of self-belief. And unfortunately, the more ambitious you are, the more the world will try to tear you down.
Most highly successful people have been really right about the future at least once at a time when people thought they were wrong. If not, they would have faced much more competition.
Self-belief must be balanced with self-awareness. I used to hate criticism of any sort and actively avoided it. Now I try to always listen to it with the assumption that it’s true, and then decide if I want to act on it or not. Truth-seeking is hard and often painful, but it is what separates self-belief from self-delusion.
This balance also helps you avoid coming across as entitled and out of touch.
3. Learn to think independently
Entrepreneurship is very difficult to teach because original thinking is very difficult to teach. School is not set up to teach this—in fact, it generally rewards the opposite. So you have to cultivate it on your own.
Thinking from first principles and trying to generate new ideas is fun, and finding people to exchange them with is a great way to get better at this. The next step is to find easy, fast ways to test these ideas in the real world.
“I will fail many times, and I will be really right once” is the entrepreneurs’ way. You have to give yourself a lot of chances to get lucky.
One of the most powerful lessons to learn is that you can figure out what to do in situations that seem to have no solution. The more times you do this, the more you will believe it. Grit comes from learning you can get back up after you get knocked down.
4. Get good at “sales”
Self-belief alone is not sufficient—you also have to be able to convince other people of what you believe.
All great careers, to some degree, become sales jobs. You have to evangelize your plans to customers, prospective employees, the press, investors, etc. This requires an inspiring vision, strong communication skills, some degree of charisma, and evidence of execution ability.
Getting good at communication—particularly written communication—is an investment worth making. My best advice for communicating clearly is to first make sure your thinking is clear and then use plain, concise language.
The best way to be good at sales is to genuinely believe in what you’re selling. Selling what you truly believe in feels great, and trying to sell snake oil feels awful.
Getting good at sales is like improving at any other skill—anyone can get better at it with deliberate practice. But for some reason, perhaps because it feels distasteful, many people treat it as something unlearnable.
My other big sales tip is to show up in person whenever it’s important. When I was first starting out, I was always willing to get on a plane. It was frequently unnecessary, but three times it led to career-making turning points for me that otherwise would have gone the other way.
5. Make it easy to take risks
Most people overestimate risk and underestimate reward. Taking risks is important because it’s impossible to be right all the time—you have to try many things and adapt quickly as you learn more.
It’s often easier to take risks early in your career; you don’t have much to lose, and you potentially have a lot to gain. Once you’ve gotten yourself to a point where you have your basic obligations covered you should try to make it easy to take risks. Look for small bets you can make where you lose 1x if you’re wrong but make 100x if it works. Then make a bigger bet in that direction.
Don’t save up for too long, though. At YC, we’ve often noticed a problem with founders that have spent a lot of time working at Google or Facebook. When people get used to a comfortable life, a predictable job, and a reputation of succeeding at whatever they do, it gets very hard to leave that behind (and people have an incredible ability to always match their lifestyle to next year’s salary). Even if they do leave, the temptation to return is great. It’s easy—and human nature—to prioritize short-term gain and convenience over long-term fulfillment.
But when you aren’t on the treadmill, you can follow your hunches and spend time on things that might turn out to be really interesting. Keeping your life cheap and flexible for as long as you can is a powerful way to do this, but obviously comes with tradeoffs.
6. Focus
Focus is a force multiplier on work.
Almost everyone I’ve ever met would be well-served by spending more time thinking about what to focus on. It is much more important to work on the right thing than it is to work many hours. Most people waste most of their time on stuff that doesn’t matter.
Once you have figured out what to do, be unstoppable about getting your small handful of priorities accomplished quickly. I have yet to meet a slow-moving person who is very successful.
7. Work hard
You can get to about the 90th percentile in your field by working either smart or hard, which is still a great accomplishment. But getting to the 99th percentile requires both—you will be competing with other very talented people who will have great ideas and be willing to work a lot.
Extreme people get extreme results. Working a lot comes with huge life trade-offs, and it’s perfectly rational to decide not to do it. But it has a lot of advantages. As in most cases, momentum compounds, and success begets success.
And it’s often really fun. One of the great joys in life is finding your purpose, excelling at it, and discovering that your impact matters to something larger than yourself. A YC founder recently expressed great surprise about how much happier and more fulfilled he was after leaving his job at a big company and working towards his maximum possible impact. Working hard at that should be celebrated.
It’s not entirely clear to me why working hard has become a Bad Thing in certain parts of the US, but this is certainly not the case in other parts of the world—the amount of energy and drive exhibited by entrepreneurs outside of the US is quickly becoming the new benchmark.
You have to figure out how to work hard without burning out. People find their own strategies for this, but one that almost always works is to find work you like doing with people you enjoy spending a lot of time with.
I think people who pretend you can be super successful professionally without working most of the time (for some period of your life) are doing a disservice. In fact, work stamina seems to be one of the biggest predictors of long-term success.
One more thought about working hard: do it at the beginning of your career. Hard work compounds like interest, and the earlier you do it, the more time you have for the benefits to pay off. It’s also easier to work hard when you have fewer other responsibilities, which is frequently but not always the case when you’re young.
8. Be bold
I believe that it’s easier to do a hard startup than an easy startup. People want to be part of something exciting and feel that their work matters.
If you are making progress on an important problem, you will have a constant tailwind of people wanting to help you. Let yourself grow more ambitious, and don’t be afraid to work on what you really want to work on.
If everyone else is starting meme companies, and you want to start a gene-editing company, then do that and don’t second guess it.
Follow your curiosity. Things that seem exciting to you will often seem exciting to other people too.
9. Be willful
A big secret is that you can bend the world to your will a surprising percentage of the time—most people don’t even try, and just accept that things are the way that they are.
People have an enormous capacity to make things happen. A combination of self-doubt, giving up too early, and not pushing hard enough prevents most people from ever reaching anywhere near their potential.
Ask for what you want. You usually won’t get it, and often the rejection will be painful. But when this works, it works surprisingly well.
Almost always, the people who say “I am going to keep going until this works, and no matter what the challenges are I’m going to figure them out”, and mean it, go on to succeed. They are persistent long enough to give themselves a chance for luck to go their way.
Airbnb is my benchmark for this. There are so many stories they tell that I wouldn’t recommend trying to reproduce (keeping maxed-out credit cards in those nine-slot three-ring binder pages kids use for baseball cards, eating dollar store cereal for every meal, battle after battle with powerful entrenched interest, and on and on) but they managed to survive long enough for luck to go their way.
To be willful, you have to be optimistic—hopefully this is a personality trait that can be improved with practice. I have never met a very successful pessimistic person.
10. Be hard to compete with
Most people understand that companies are more valuable if they are difficult to compete with. This is important, and obviously true.
But this holds true for you as an individual as well. If what you do can be done by someone else, it eventually will be, and for less money.
The best way to become difficult to compete with is to build up leverage. For example, you can do it with personal relationships, by building a strong personal brand, or by getting good at the intersection of multiple different fields. There are many other strategies, but you have to figure out some way to do it.
Most people do whatever most people they hang out with do. This mimetic behavior is usually a mistake—if you’re doing the same thing everyone else is doing, you will not be hard to compete with.
11. Build a network
Great work requires teams. Developing a network of talented people to work with—sometimes closely, sometimes loosely—is an essential part of a great career. The size of the network of really talented people you know often becomes the limiter for what you can accomplish.
An effective way to build a network is to help people as much as you can. Doing this, over a long period of time, is what lead to most of my best career opportunities and three of my four best investments. I’m continually surprised how often something good happens to me because of something I did to help a founder ten years ago.
One of the best ways to build a network is to develop a reputation for really taking care of the people who work with you. Be overly generous with sharing the upside; it will come back to you 10x. Also, learn how to evaluate what people are great at, and put them in those roles. (This is the most important thing I have learned about management, and I haven’t read much about it.) You want to have a reputation for pushing people hard enough that they accomplish more than they thought they could, but not so hard they burn out.
Everyone is better at some things than others. Define yourself by your strengths, not your weaknesses. Acknowledge your weaknesses and figure out how to work around them, but don’t let them stop you from doing what you want to do. “I can’t do X because I’m not good at Y” is something I hear from entrepreneurs surprisingly often, and almost always reflects a lack of creativity. The best way to make up for your weaknesses is to hire complementary team members instead of just hiring people who are good at the same things you are.
A particularly valuable part of building a network is to get good at discovering undiscovered talent. Quickly spotting intelligence, drive, and creativity gets much easier with practice. The easiest way to learn is just to meet a lot of people, and keep track of who goes on to impress you and who doesn’t. Remember that you are mostly looking for rate of improvement, and don’t overvalue experience or current accomplishment.
I try to always ask myself when I meet someone new “is this person a force of nature?” It’s a pretty good heuristic for finding people who are likely to accomplish great things.
A special case of developing a network is finding someone eminent to take a bet on you, ideally early in your career. The best way to do this, no surprise, is to go out of your way to be helpful. (And remember that you have to pay this forward at some point later!)
Finally, remember to spend your time with positive people who support your ambitions.
12. You get rich by owning things
The biggest economic misunderstanding of my childhood was that people got rich from high salaries. Though there are some exceptions—entertainers for example —almost no one in the history of the Forbes list has gotten there with a salary.
You get truly rich by owning things that increase rapidly in value.
This can be a piece of a business, real estate, natural resource, intellectual property, or other similar things. But somehow or other, you need to own equity in something, instead of just selling your time. Time only scales linearly.
The best way to make things that increase rapidly in value is by making things people want at scale.
13. Be internally driven
Most people are primarily externally driven; they do what they do because they want to impress other people. This is bad for many reasons, but here are two important ones.
First, you will work on consensus ideas and on consensus career tracks. You will care a lot—much more than you realize—if other people think you’re doing the right thing. This will probably prevent you from doing truly interesting work, and even if you do, someone else would have done it anyway.
Second, you will usually get risk calculations wrong. You’ll be very focused on keeping up with other people and not falling behind in competitive games, even in the short term.
Smart people seem to be especially at risk of such externally-driven behavior. Being aware of it helps, but only a little—you will likely have to work super-hard to not fall in the mimetic trap.
The most successful people I know are primarily internally driven; they do what they do to impress themselves and because they feel compelled to make something happen in the world. After you’ve made enough money to buy whatever you want and gotten enough social status that it stops being fun to get more, this is the only force I know of that will continue to drive you to higher levels of performance.
This is why the question of a person’s motivation is so important. It’s the first thing I try to understand about someone. The right motivations are hard to define a set of rules for, but you know it when you see it.
Jessica Livingston and Paul Graham are my benchmarks for this. YC was widely mocked for the first few years, and almost no one thought it would be a big success when they first started. But they thought it would be great for the world if it worked, and they love helping people, and they were convinced their new model was better than the existing model.
Eventually, you will define your success by performing excellent work in areas that are important to you. The sooner you can start off in that direction, the further you will be able to go. It is hard to be wildly successful at anything you aren’t obsessed with.
One of the biggest reasons I'm excited about basic income is the amount of human potential it will unleash by freeing more people to take risks.Until then, if you aren't born lucky, you have to claw your way up for awhile before you can take big swings. If you are born in extreme poverty, then this is super difficult :( It is obviously an incredible shame and waste that opportunity is so unevenly distributed. But I've witnessed enough people be born with the deck stacked badly against them and go on to incredible success to know it's possible.I am deeply aware of the fact that I personally would not be where I am if I weren't born incredibly lucky.
Thanks to Brian Armstrong, Greg Brockman, Dalton Caldwell, Diane von Furstenberg, Maddie Hall, Drew Houston, Vinod Khosla, Jessica Livingston, Jon Levy, Luke Miles (6 drafts!), Michael Moritz, Ali Rowghani, Michael Seibel, Peter Thiel, Tracy Young and Shivon Zilis for reviewing drafts of this, and thanks especially to Lachy Groom for help writing it.
Until then, if you aren't born lucky, you have to claw your way up for awhile before you can take big swings. If you are born in extreme poverty, then this is super difficult :(
It is obviously an incredible shame and waste that opportunity is so unevenly distributed. But I've witnessed enough people be born with the deck stacked badly against them and go on to incredible success to know it's possible.
Thanks to Brian Armstrong, Greg Brockman, Dalton Caldwell, Diane von Furstenberg, Maddie Hall, Drew Houston, Vinod Khosla, Jessica Livingston, Jon Levy, Luke Miles (6 drafts!), Michael Moritz, Ali Rowghani, Michael Seibel, Peter Thiel, Tracy Young and Shivon Zilis for reviewing drafts of this, and thanks especially to Lachy Groom for help writing it.
Thanks to Brian Armstrong, Greg Brockman, Dalton Caldwell, Diane von Furstenberg, Maddie Hall, Drew Houston, Vinod Khosla, Jessica Livingston, Jon Levy, Luke Miles (6 drafts!), Michael Moritz, Ali Rowghani, Michael Seibel, Peter Thiel, Tracy Young and Shivon Zilis for reviewing drafts of this, and thanks especially to Lachy Groom for help writing it.
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25 | Reinforcement Learning Progress | 2018-06-25 16:10:37 | Today, OpenAI released a new result. We used PPO (Proximal Policy Optimization), a general reinforcement learning algorithm invented by OpenAI, to train a team of 5 agents to play Dota and beat semi-pros.
This is the game that to me feels closest to the real world and complex decision making (combining strategy, tactics, coordinating, and real-time action) of any game AI had made real progress against so far.
The agents we train consistently outperform two-week old agents with a win rate of 90-95%. We did this without training on human-played games—we did design the reward functions, of course, but the algorithm figured out how to play by training against itself.
This is a big deal because it shows that deep reinforcement learning can solve extremely hard problems whenever you can throw enough computing scale and a really good simulated environment that captures the problem you’re solving. We hope to use this same approach to solve very different problems soon. It's easy to imagine this being applied to environments that look increasingly like the real world.
There are many problems in the world that are far too complex to hand-code solutions for. I expect this to be a large branch of machine learning, and an important step on the road towards general intelligence. |
26 | US Digital Currency | 2018-05-10 17:07:07 | I am pretty sure cryptocurrency is here to stay in some form (at least as a store of value, which is the only use case we have seen work at scale so far). There was possibly a time when governments could have totally stopped it, but it feels like that’s in the rearview mirror.
However, I think it’s very possible that the dominant cryptocurrency hasn’t been created yet (Google was years late to the search engine party, and Facebook came long after most people assumed the social network wars were won). And from the perspective of a nation, there are real problems with current systems, especially around pseudo-anonymity, ability to function as an actual currency, and taxability.
Although I don’t think the US government can stop cryptocurrency, I do think it could create the winner–let’s call it “USDC” for US Digital Currency–and fix some challenges that governments currently face with cryptocurrency.
I think the first superpower government to do something like this will have an enviable position in the future of the world, and some power over a worldwide currency.
The US government could decide to treat USDC as a second legal currency, which would be hugely powerful. (I think the US doing this would be significantly more impactful than the smaller governments thinking about it now.)
Ideally the initial coins would be evenly distributed to US citizens and taxpayers—something like everyone with a social security number gets two coins, one that is immediately sellable and one that you have to keep for 10 years.
USDC could require that certain transaction can only happen with wallets with known owners. It could even build a tax system into the protocol.
A tricky part of this would be how to balance letting the network have control over itself and letting the government have some special degree of input on ‘monetary policy’. It’s certainly ok for the government to have some, but I think the network needs to be mostly in charge (e.g., the government couldn’t be allowed to arbitrarily inflate the currency when it wanted to).
The current practices seem to be for governments to mostly ignore cryptocurrency and cryptocurrency enthusiasts to mostly ignore government, which seems to me to be unsustainable in both directions. But I believe there exists a middle ground where the government can get a lot of what it wants, and cryptocurrency users can get a lot of what they want too.
The government can likely create a lot of de novo wealth for its citizens in the process.
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27 | Productivity | 2018-04-10 16:18:00 | I think I am at least somewhat more productive than average, and people sometimes ask me for productivity tips. So I decided to just write them all down in one place.
Compound growth gets discussed as a financial concept, but it works in careers as well, and it is magic. A small productivity gain, compounded over 50 years, is worth a lot. So it’s worth figuring out how to optimize productivity. If you get 10% more done and 1% better every day compared to someone else, the compounded difference is massive.
What you work on
It doesn’t matter how fast you move if it’s in a worthless direction. Picking the right thing to work on is the most important element of productivity and usually almost ignored. So think about it more! Independent thought is hard but it’s something you can get better at with practice.
The most impressive people I know have strong beliefs about the world, which is rare in the general population. If you find yourself always agreeing with whomever you last spoke with, that’s bad. You will of course be wrong sometimes, but develop the confidence to stick with your convictions. It will let you be courageous when you’re right about something important that most people don’t see.
I make sure to leave enough time in my schedule to think about what to work on. The best ways for me to do this are reading books, hanging out with interesting people, and spending time in nature.
I’ve learned that I can’t be very productive working on things I don’t care about or don’t like. So I just try not to put myself in a position where I have to do them (by delegating, avoiding, or something else). Stuff that you don’t like is a painful drag on morale and momentum.
By the way, here is an important lesson about delegation: remember that everyone else is also most productive when they’re doing what they like, and do what you’d want other people to do for you—try to figure out who likes (and is good at) doing what, and delegate that way.
If you find yourself not liking what you’re doing for a long period of time, seriously consider a major job change. Short-term burnout happens, but if it isn’t resolved with some time off, maybe it’s time to do something you’re more interested in.
I’ve been very fortunate to find work I like so much I’d do it for free, which makes it easy to be really productive.
It’s important to learn that you can learn anything you want, and that you can get better quickly. This feels like an unlikely miracle the first few times it happens, but eventually you learn to trust that you can do it.
Doing great work usually requires colleagues of some sort. Try to be around smart, productive, happy, and positive people that don’t belittle your ambitions. I love being around people who push me and inspire me to be better. To the degree you able to, avoid the opposite kind of people—the cost of letting them take up your mental cycles is horrific.
You have to both pick the right problem and do the work. There aren’t many shortcuts. If you’re going to do something really important, you are very likely going to work both smart and hard. The biggest prizes are heavily competed for. This isn’t true in every field (there are great mathematicians who never spend that many hours a week working) but it is in most.
Prioritization
My system has three key pillars: “Make sure to get the important shit done”, “Don’t waste time on stupid shit”, and “make a lot of lists”.
I highly recommend using lists. I make lists of what I want to accomplish each year, each month, and each day. Lists are very focusing, and they help me with multitasking because I don’t have to keep as much in my head. If I’m not in the mood for some particular task, I can always find something else I’m excited to do.
I prefer lists written down on paper. It’s easy to add and remove tasks. I can access them during meetings without feeling rude. I re-transcribe lists frequently, which forces me to think about everything on the list and gives me an opportunity to add and remove items.
I don’t bother with categorization or trying to size tasks or anything like that (the most I do is put a star next to really important items).
I try to prioritize in a way that generates momentum. The more I get done, the better I feel, and then the more I get done. I like to start and end each day with something I can really make progress on.
I am relentless about getting my most important projects done—I’ve found that if I really want something to happen and I push hard enough, it usually happens.
I try to be ruthless about saying no to stuff, and doing non-critical things in the quickest way possible. I probably take this too far—for example, I am almost sure I am terse to the point of rudeness when replying to emails.
I generally try to avoid meetings and conferences as I find the time cost to be huge—I get the most value out of time in my office. However, it is critical that you keep enough space in your schedule to allow for chance encounters and exposure to new people and ideas. Having an open network is valuable; though probably 90% of the random meetings I take are a waste of time, the other 10% really make up for it.
I find most meetings are best scheduled for 15-20 minutes, or 2 hours. The default of 1 hour is usually wrong, and leads to a lot of wasted time.
I have different times of day I try to use for different kinds of work. The first few hours of the morning are definitely my most productive time of the day, so I don’t let anyone schedule anything then. I try to do meetings in the afternoon. I take a break, or switch tasks, whenever I feel my attention starting to fade.
I don’t think most people value their time enough—I am surprised by the number of people I know who make $100 an hour and yet will spend a couple of hours doing something they don’t want to do to save $20.
Also, don’t fall into the trap of productivity porn—chasing productivity for its own sake isn’t helpful. Many people spend too much time thinking about how to perfectly optimize their system, and not nearly enough asking if they’re working on the right problems. It doesn’t matter what system you use or if you squeeze out every second if you’re working on the wrong thing.
The right goal is to allocate your year optimally, not your day.
Physical factors
Very likely what is optimal for me won’t be optimal for you. You’ll have to experiment to find out what works best for your body. It’s definitely worth doing—it helps in all aspects of life, and you’ll feel a lot better and happier overall.
It probably took a little bit of my time every week for a few years to arrive at what works best for me, but my sense is if I do a good job at all the below I’m at least 1.5x more productive than if not.
Sleep seems to be the most important physical factor in productivity for me. Some sort of sleep tracker to figure out how to sleep best is helpful. I’ve found the only thing I’m consistent with are in the set-it-and-forget-it category, and I really like the Emfit QS+Active.
I like a cold, dark, quiet room, and a great mattress (I resisted spending a bunch of money on a great mattress for years, which was stupid—it makes a huge difference to my sleep quality. I love this one). Not eating a lot in the few hours before sleep helps. Not drinking alcohol helps a lot, though I’m not willing to do that all the time.
I use a Chili Pad to be cold while I sleep if I can’t get the room cold enough, which is great but loud (I set it up to have the cooler unit outside my room).
When traveling, I use an eye mask and ear plugs.
This is likely to be controversial, but I take a low dose of sleeping pills (like a third of a normal dose) or a very low dose of cannabis whenever I can’t sleep. I am a bad sleeper in general, and a particularly bad sleeper when I travel. It likely has tradeoffs, but so does not sleeping well. If you can already sleep well, I wouldn’t recommend this.
I use a full spectrum LED light most mornings for about 10-15 minutes while I catch up on email. It’s great—if you try nothing else in here, this is the thing I’d try. It’s a ridiculous gain for me. I like this one, and it’s easy to travel with.
Exercise is probably the second most important physical factor. I tried a number of different exercise programs for a few months each and the one that seemed best was lifting heavy weights 3x a week for an hour, and high intensity interval training occasionally. In addition to productivity gains, this is also the exercise program that makes me feel the best overall.
The third area is nutrition. I very rarely eat breakfast, so I get about 15 hours of fasting most days (except an espresso when I wake up). I know this is contrary to most advice, and I suspect it’s not optimal for most people, but it definitely works well for me.
Eating lots of sugar is the thing that makes me feel the worst and that I try hardest to avoid. I also try to avoid foods that aggravate my digestion or spike up inflammation (for example, very spicy foods). I don’t have much willpower when it comes to sweet things, so I mostly just try to keep junk food out of the house.
I have one big shot of espresso immediately when I wake up and one after lunch. I assume this is about 200mg total of caffeine per day. I tried a few other configurations; this was the one that worked by far the best. I otherwise aggressively avoid stimulants, but I will have more coffee if I’m super tired and really need to get something done.
I’m vegetarian and have been since I was a kid, and I supplement methyl B-12, Omega-3, Iron, and Vitamin D-3. I got to this list with a year or so of quarterly blood tests; it’s worked for me ever since (I re-test maybe every year and a half or so). There are many doctors who will happily work with you on a super comprehensive blood test (and services like WellnessFX). I also go out of my way to drink a lot of protein shakes, which I hate and I wouldn’t do if I weren’t vegetarian.
Other stuff
Here’s what I like in a workspace: natural light, quiet, knowing that I won’t be interrupted if I don’t want to be, long blocks of time, and being comfortable and relaxed (I’ve got a beautiful desk with a couple of 4k monitors on it in my office, but I spend almost all my time on my couch with my laptop).
I wrote custom software for the annoying things I have to do frequently, which is great. I also made an effort to learn to type really fast and the keyboard shortcuts that help with my workflow.
Like most people, I sometimes go through periods of a week or two where I just have no motivation to do anything (I suspect it may have something to do with nutrition). This sucks and always seems to happen at inconvenient times. I have not figured out what to do about it besides wait for the fog to lift, and to trust that eventually it always does. And I generally try to avoid people and situations that put me in bad moods, which is good advice whether you care about productivity or not.
In general, I think it’s good to overcommit a little bit. I find that I generally get done what I take on, and if I have a little bit too much to do it makes me more efficient at everything, which is a way to train to avoid distractions (a great habit to build!). However, overcommitting a lot is disastrous.
Don’t neglect your family and friends for the sake of productivity—that’s a very stupid tradeoff (and very likely a net productivity loss, because you’ll be less happy). Don’t neglect doing things you love or that clear your head either.
Finally, to repeat one more time: productivity in the wrong direction isn’t worth anything at all. Think more about what to work on. |
28 | A Clarification | 2017-12-16 19:00:42 | I made a point in this post inelegantly in a way that was easy to misunderstand, so I’d like to clarify it.
I didn’t mean that we need to tolerate brilliant homophobic jerks in the lab so that we can have scientific progress. Although there are famous counterexamples, most of the best scientists I’ve met are unusually nice, open-minded people. Generally I expect that labs that don’t tolerate jerks will produce more impressive results than the ones that do, and choosing not to employ jerks is a good idea—jerks usually reduce the net output of organizations.
What I meant is simply that we need, as a society, to tolerate controversial ideas. The biggest new scientific ideas, and the most important changes to society, both start as extremely unpopular ideas.
It was literally heretical, not so long ago, to say that it was ok to be gay—the Bible has a different viewpoint. In a society where we don’t allow challenges to the orthodoxy, gay rights would not have happened.
We need to allow free speech because sometimes society is wrong—we needed people to be able to say “gay people are ok” at a time when “gay people are evil” was the consensus opinion.
It’s probably impossible to design a simple set of rules that will always allow the right speech and not the wrong speech (although I am sure that in this particular case, it is wrong that gay people in some places still fear for their safety.)
So we agree as a society that people are allowed to say controversial things, and that free speech goes both ways. Much of the time people use that privilege to be jerks, and we can, should, and do point out why their bigotry is bad. Sometimes they use it to say that people deserve more rights, or that the solar system works in a different way from what the church says—and sometimes we collectively listen.
Over time, this system produces a more and more just world, which says something really good about people as a whole.
I wish we could figure out a way to just never allow hate, discrimination, and bigotry and always allow debate on controversial but important ideas. If that were possible, I’d support it. The distinction is usually clear, but the exceptions are sometimes critically important. Figuring out exactly where to draw the line is really hard.
Generations before us believed a lot of things we now believe (correctly, in my opinion) to be unethical or wrong. Future generations will think a lot of things we believe today are unethical or wrong.
For example, today it is pretty unpopular to say “anyone who eats meat is unethical”. But this is easily a stance I could imagine being commonplace in 50 years, because of evolving views on animal rights, impact on the planet, and availability of lab-grown replacements. Perhaps even the arrival of AI makes us think differently about being ok eating other beings just because they’re much less smart/emotionally sophisticated than we are.
The last time I tried to discuss this with someone, he said something like: “Banning eating meat would be infringing on my rights, this is not up for discussion.”
I expect the fact that we let people live in poverty is also something that future generations will consider an absolute moral failing. I could go on with a long list of other ideas, and I’m sure I can’t even think of some of the most important ones.
The point I most wanted to make is that is that it’s dangerous to just ban discussion of topics we find offensive, like what happened yesterday. |
29 | E Pur Si Muove | 2017-12-14 17:12:38 | Earlier this year, I noticed something in China that really surprised me. I realized I felt more comfortable discussing controversial ideas in Beijing than in San Francisco. I didn’t feel completely comfortable—this was China, after all—just more comfortable than at home.
That showed me just how bad things have become, and how much things have changed since I first got started here in 2005.
It seems easier to accidentally speak heresies in San Francisco every year. Debating a controversial idea, even if you 95% agree with the consensus side, seems ill-advised.
This will be very bad for startups in the Bay Area.
Restricting speech leads to restricting ideas and therefore restricted innovation—the most successful societies have generally been the most open ones. Usually mainstream ideas are right and heterodox ideas are wrong, but the true and unpopular ideas are what drive the world forward. Also, smart people tend to have an allergic reaction to the restriction of ideas, and I’m now seeing many of the smartest people I know move elsewhere.
It is bad for all of us when people can’t say that the world is a sphere, that evolution is real, or that the sun is at the center of the solar system.
More recently, I’ve seen credible people working on ideas like pharmaceuticals for intelligence augmentation, genetic engineering, and radical life extension leave San Francisco because they found the reaction to their work to be so toxic. “If people live a lot longer it will be disastrous for the environment, so people working on this must be really unethical” was a memorable quote I heard this year.
To get the really good ideas, we need to tolerate really bad and wacky ideas too. In addition to the work Newton is best known for, he also studied alchemy (the British authorities banned work on this because they feared the devaluation of gold) and considered himself to be someone specially chosen by the almighty for the task of decoding Biblical scripture.
You can’t tell which seemingly wacky ideas are going to turn out to be right, and nearly all ideas that turn out to be great breakthroughs start out sounding like terrible ideas. So if you want a culture that innovates, you can’t have a culture where you allow the concept of heresy—if you allow the concept at all, it tends to spread. When we move from strenuous debate about ideas to casting the people behind the ideas as heretics, we gradually stop debate on all controversial ideas.
This is uncomfortable, but it’s possible we have to allow people to say disparaging things about gay people if we want them to be able to say novel things about physics. [1] Of course we can and should say that ideas are mistaken, but we can’t just call the person a heretic. We need to debate the actual idea.
Political correctness often comes from a good place—I think we should all be willing to make accommodations to treat others well. But too often it ends up being used as a club for something orthogonal to protecting actual victims. The best ideas are barely possible to express at all, and if you’re constantly thinking about how everything you say might be misinterpreted, you won’t let the best ideas get past the fragment stage.
I don’t know who Satoshi is, but I’m skeptical that he, she, or they would have been able to come up with the idea for bitcoin immersed in the current culture of San Francisco—it would have seemed too crazy and too dangerous, with too many ways to go wrong. If SpaceX started in San Francisco in 2017, I assume they would have been attacked for focusing on problems of the 1%, or for doing something the government had already decided was too hard. I can picture Galileo looking up at the sky and whispering “E pur si muove” here today.
Followup: A Clarification
[1] I am less worried that letting some people on the internet say things like “gay people are evil” is going to convince reasonable people that such a statement is true than I fear losing the opposite—we needed people to be free to say "gay people are ok" to make the progress we've made, even though it was not a generally acceptable thought several decades ago.
In fact, the only ideas I’m afraid of letting people say are the ones that I think may be true and that I don’t like. But I accept that censorship is not going to make the world be the way I wish it were. |
30 | The Merge | 2017-12-07 16:56:28 | A popular topic in Silicon Valley is talking about what year humans and machines will merge (or, if not, what year humans will get surpassed by rapidly improving AI or a genetically enhanced species). Most guesses seem to be between 2025 and 2075.
People used to call this the singularity; now it feels uncomfortable and real enough that many seem to avoid naming it at all.
Perhaps another reason people stopped using the word “singularity” is that it implies a single moment in time, and it now looks like the merge is going to be a gradual process. And gradual processes are hard to notice.
I believe the merge has already started, and we are a few years in. Our phones control us and tell us what to do when; social media feeds determine how we feel; search engines decide what we think.
The algorithms that make all this happen are no longer understood by any one person. They optimize for what their creators tell them to optimize for, but in ways that no human could figure out — they are what today seems like sophisticated AI, and tomorrow will seem like child’s play. And they’re extremely effective — at least speaking for myself, I have a very hard time resisting what the algorithms want me to do. Until I made a real effort to combat it, I found myself getting extremely addicted to the internet. [1]
We are already in the phase of co-evolution — the AIs affect, effect, and infect us, and then we improve the AI. We build more computing power and run the AI on it, and it figures out how to build even better chips.
This probably cannot be stopped. As we have learned, scientific advancement eventually happens if the laws of physics do not prevent it.
More important than that, unless we destroy ourselves first, superhuman AI is going to happen, genetic enhancement is going to happen, and brain-machine interfaces are going to happen. It is a failure of human imagination and human arrogance to assume that we will never build things smarter than ourselves.
Our self-worth is so based on our intelligence that we believe it must be singular and not slightly higher than all the other animals on a continuum. Perhaps the AI will feel the same way and note that differences between us and bonobos are barely worth discussing.
The merge can take a lot of forms: We could plug electrodes into our brains, or we could all just become really close friends with a chatbot. But I think a merge is probably our best-case scenario. If two different species both want the same thing and only one can have it—in this case, to be the dominant species on the planet and beyond—they are going to have conflict. We should all want one team where all members care about the well-being of everyone else.
Although the merge has already begun, it’s going to get a lot weirder. We will be the first species ever to design our own descendants. My guess is that we can either be the biological bootloader for digital intelligence and then fade into an evolutionary tree branch, or we can figure out what a successful merge looks like.
It’s probably going to happen sooner than most people think. Hardware is improving at an exponential rate—the most surprising thing I’ve learned working on OpenAI is just how correlated increasing computing power and AI breakthroughs are—and the number of smart people working on AI is increasing exponentially as well. Double exponential functions get away from you fast.
It would be good for the entire world to start taking this a lot more seriously now. Worldwide coordination doesn’t happen quickly, and we need it for this.
[1] I believe attention hacking is going to be the sugar epidemic of this generation. I can feel the changes in my own life — I can still wistfully remember when I had an attention span. My friends’ young children don’t even know that’s something they should miss. I am angry and unhappy more often, but I channel it into productive change less often, instead chasing the dual dopamine hits of likes and outrage.
(Cross-posted from https://medium.com/wordsthatmatter/merge-now-430c6d89d1fe to here for consistency; thanks to Medium for inviting me to write this!) |
31 | American Equity | 2017-11-27 17:24:42 | I’d like feedback on the following idea.
I think that every adult US citizen should get an annual share of the US GDP.
I believe that owning something like a share in America would align all of us in making the country as successful as possible—the better the country does, the better everyone does—and give more people a fair shot at achieving the life they want. And we all work together to create the system that generates so much prosperity.
I believe that a new social contract like what I’m suggesting here—where we agree to a floor and no ceiling—would lead to a huge increase in US prosperity and keep us in the global lead. Countries that concentrate wealth in a small number of families do worse over the long term—if we don’t take a radical step toward a fair, inclusive system, we will not be the leading country in the world for much longer. This would harm all Americans more than most realize.
There are historical examples of countries giving out land to citizens (such as the Homestead Acts in the US) as a way to distribute the resources people needed to succeed. Today, the fundamental input to wealth generation isn’t farmland, but money and ideas—you really do need money to make money.
American Equity would also cushion the transition from the jobs of today to the jobs of tomorrow. Automation holds the promise of creating more abundance than we ever dreamed possible, but it’s going to significantly change how we think about work. If everyone benefits more directly from economic growth, then it will be easier to move faster toward this better world.
The default case for automation is to concentrate wealth (and therefore power) in a tiny number of hands. America has repeatedly found ways to challenge this sort of concentration, and we need to do so again.
The joint-stock company was one of the most important inventions in human history. It allowed us to align a lot of people in pursuit of a common goal and accomplish things no individual could. Obviously, the US is not a company, but I think a similar model can work for the US as well as it does for companies.
A proposal like this obviously requires a lot of new funding [1] to do at large scale, but I think we could start very small—a few hundred dollars per citizen per year—and ramp it up to a long-term target of 10-20% of GDP per year when the GDP per capita doubles.
I have no delusions about the challenges of such a program. There would be difficult consequences for things like immigration policy that will need a lot of discussion. We’d also need to figure out rules about transferability and borrowing against this equity. And we’d need to set it up in a way that does not exacerbate short-term thinking or favor unsustainable growth.
However, as the economy grows, we could imagine a world in which every American would have their basic needs guaranteed. Absolute poverty would be eliminated, and we would no longer motivate people through the fear of not being able to eat. In addition to being the obviously right thing to do, eliminating poverty will increase productivity.
American Equity would create a society that I believe would work much better than what we have today. It would free Americans to work on what they really care about, improve social cohesion, and incentivize everyone to think about ways to grow the whole pie.
[1] It’s time to update our tax system for the way wealth works in the modern world—for example, taxing capital and labor at the same rates. And we should consider eventually replacing some of our current aid programs, which distort incentives and are needlessly complicated and inefficient, with something like this.
Of course this won’t solve all our problems—we still need serious reform in areas such as housing, education, and healthcare. Without policies that address the cost of living crisis, any sort of redistribution will be far less effective than it otherwise could be.
|
32 | The United Slate | 2017-07-12 14:33:41 | I would like to find and support a slate of candidates for the 2018 California elections, and also to find someone to run a ballot initiative focused on affordable housing in the state. A team of aligned people has a chance to make a real change.
I believe in creating prosperity through technology, economic fairness, and maintaining personal liberty.
We are in the middle of a massive technological shift—the automation revolution will be as big as the agricultural revolution or the industrial revolution. We need to figure out a new social contract, and to ensure that everyone benefits from the coming changes.
Today, we have massive wealth inequality, little economic growth, a system that works for people born lucky, and a cost of living that is spiraling out of control. What we've been trying for the past few decades hasn't been working—I think it's time to consider some new ideas.
More information about the principles and policies I believe in is at the link below.
http://unitedslate.samaltman.com |
33 | Join the YC Software Team | 2017-05-19 00:25:07 | If you want to get funded by YC as a founder in the future, but you don't have a startup that's ready for that yet, joining the YC software team is a great hack to get there.
The YC software team is a small group of hackers in SF that write the software that makes all the parts of YC work.
As a member of the software team, you'll get full access to the YC program, just like founders do. You'll learn the ins and outs of how YC works, and you'll get to follow and learn from hundreds of companies. You'll meet the best people in the startup world and get exposed to the best startup ideas.
Software is how we can scale YC, and the limits of that are probably further out than most people think.
You can apply here: http://bit.ly/1Od0T2l. |
34 | Quora | 2017-04-21 13:42:36 | I'm a strong believer in the importance of the internet in helping people to share knowledge and learn from each other. So I’m delighted to share, on behalf of YC Continuity, that we’re investing alongside Collaborative Fund in Quora.
Quora is doing extremely well. They now have more than 190 million monthly unique visitors, almost doubling from a year ago. The combination of their ever-improving machine learning and the increasing amount of knowledge shared means the product gets better as it gets bigger. The content I see from Quora constantly gets more personalized for me.
I also believe they have some of the highest-quality user-generated content on the internet, and a real chance at being one of the few places that contain all human knowledge. The engineering challenges between here and there are great, but if there’s a team and product to bet on, this is one we're backing with confidence.
Adam is one of the few names that people consistently mention when discussing the smartest CEOs in Silicon Valley. And he has a very long-term focus, which has become a rare commodity in tech companies these days.
My relationship with Quora goes back to May 2014 when the company participated in YC. Funding an already successful company was an unusual experiment for us. At that point we didn't have any specific thoughts on how YC might invest in graduates from our program and help them scale. In a way, Quora was the inspiration for deciding we needed to figure out how to do that, and we launched YC Continuity in October 2015.
As an early admirer of Quora and returning investor, I’m thrilled to see the progress they've made and excited to be part of what they do next. |
35 | Tech Workers' Values | 2017-03-31 17:46:28 | For good and bad, technology has become a central force in all our lives.
As members of the community, we're interested in ways in which tech companies can use their collective power to protect privacy, rule of law, freedom of expression, and other fundamental American rights.
We’d also like to discuss how tech companies can heal the divide in our country. We believe that tech companies can create a better economic future for all Americans by spreading high-paying technology jobs around the country and other measures. We also believe tech companies have an opportunity and an obligation to reduce the polarization we've helped create.
Tech companies are very receptive to their employees' influence. We believe that employees should come together and clearly define the values and policies they'd like to see their companies uphold. A tech union isn't the perfect metaphor for this, but it's not far off.
We are planning to hold a meeting on the evening of April 9th in the Bay Area. Please sign up here or message us at 415 569-2751 on Signal if you'd like to come.
We're going try to keep this first group smaller than 50 people so that everyone can actually participate. If more people than that want to attend, we'll try to select a diverse group of people from a large set of companies. If this event seems to go well, we expect to host similar meetings in the future.
--Sam Altman, Debra Cleaver, Matt Krisiloff |
36 | Keep the Internet Open | 2017-03-14 18:36:03 | The FCC has announced plans to roll back policies on net neutrality, and its new head has indicated he has no plan to stop soon.
The internet is a public good, and I believe access should be a basic right. We've seen such great innovation in software because the internet has been a level playing field. People have been able to succeed by merit, not the regulatory weight of incumbency.
It seems best to keep it regulated like a common carrier. [1] Doing this allows the government to ensure a level playing field, impose privacy regulations, and subsidize access for people who can't afford it.
But this idea is under attack, and I'm surprised the tech community isn't speaking out more forcefully. Although many leading tech companies are now the incumbents, I hope we'll all remember that openness helped them achieve their great success. It could be disastrous for future startups if this were to change--openness is what made the recent wave of innovation happen.
We need to make our voices heard. We won this fight once before, and we can win it again. I really hope an activist or tech leader will step up and organize this fight (and I'm happy to help!). It's important for our future.
[1] There's an argument that Internet Service Providers should be able to charge a metered rate based on usage. I'm not sure whether I agree with this, but in principle it seems ok. That's how we pay for public utilities.
What's clearly not OK is taking it further--charging different services different rates based on their relationships with ISPs. You wouldn't accept your electric company charging you different rates depending on the manufacturer of each of your appliances.
Emailed comment from Alan Kay:
Yes -- in fact, the original notion about all this was to be in the same spirit as the 1936 Electrical and Telephone Federal Act which was specifically aimed at rural areas that the utilities didn't want to spend money to reach, so the fed mandated "power and phone" as a kind of universal right. This has also been a theme of the EFF. The basic impulse was also one of the drivers behind Carnegie's huge support of the free library system in the US (the whole story there is interesting, including some of the high minded stipulations in the Carnegie bequests, which I've on occasion tried to get the Internet communities to buy off on).
Every Carnegie library had to have two special rooms -- one just for children, and the other where people could be taught to read. Part of the Carnegie money for the libraries supported the reading teachers and sessions. Carnegie was an immigrant and child laborer who could read a little. One of his earliest bosses would open his home library to his workers on Saturdays. Carnegie used this to raise himself up, and never forgot how it happened. (He was also one of the few truly rich people ever who said he was going to give it all away to benefit the civilization around him, and actually did it.)
P.S. I wanted to put the above comment on your blog but there was no button to allow this ... |
37 | Greg | 2017-03-07 16:01:27 | A lot of people ask me what the ideal cofounder looks like. I now have an answer: Greg Brockman.
Every successful startup I know has at least one person who provides the force of will to make the startup happen. I’d thought a lot about this in the abstract while advising YC startups, but until OpenAI I hadn’t observed up close someone else drive the formation of a startup.
OpenAI wouldn’t have happened without Greg. He commits quickly and fully to things. I organized a group dinner early on to talk about what such an organization might look like, and drove him home afterwards. Greg asked me questions for the first half of the drive back to San Francisco, then declared he was in, and started planning logistics for the rest of the drive.
From then on he was fully in, with an average email response time of about 5 minutes to anything. Elon and I were both busy with day jobs, but Greg kept everything moving forward with imperfect information and a very high-latency connection.
He recruited the founding team. Greg is a world-class recruiter (he plans every detail of interviews, heavily researches candidate’s backgrounds, sends thoughtful and persistent followups, and so on), and I now believe even more strongly that someone on the founding team has to be an amazing recruiter.
He’s incredibly open to feedback. Large or small, he’s always willing to hear it, never gets offended, and processes it very quickly. I once suggested to him that he wasn't communicating a bold enough vision for the organization, and the next time I heard him talk about it (and every time since) it was a perfectly calibrated explanation of how we were going to succeed at something that really mattered. Even on non-traditional ideas, like when I suggested he co-lead the organization with Ilya, he was always open-minded and thoughtful.
Greg also played the role of ‘non-technical cofounder’, which is a misnomer because most people who know him will say something like “Greg is the most productive engineer I know”. But he took on all the non-technical roles at the beginning, defining the culture, making offers, organizing offsites, letting everyone work out of his apartment, ordering supplies, cleaning up after meals, etc. It's important to have someone great in this role at a small startup—many people gloss over it.
Without someone dedicated to finding a solution to all problems, no matter how difficult, eventually a large problem will come along and kill you while you’re still weak. Founding teams need a Chief Optimist to rally everyone to press on despite the difficulties, and it’s always hard on that person because they can’t really lean on anyone else in the hardest times.
You for sure need great technical talent on a founding team, but make sure you also have someone like Greg. If they’re the same person, then you’ve hit the jackpot. |
38 | What I Heard From Trump Supporters | 2017-02-21 18:03:17 | After the election, I decided to talk to 100 Trump voters from around the country. I went to the middle of the country, the middle of the state, and talked to many online.
This was a surprisingly interesting and helpful experience—I highly recommend it. With three exceptions, I found something to like about everyone I talked to (though I strongly disagreed with many of the things they said). Although it shouldn’t have surprised me given the voting data, I was definitely surprised by the diversity of the people I spoke to—I did not expect to talk to so many Muslims, Mexicans, Black people, and women in the course of this project.
Almost everyone I asked was willing to talk to me, but almost none of them wanted me to use their names—even people from very red states were worried about getting “targeted by those people in Silicon Valley if they knew I voted for him”. One person in Silicon Valley even asked me to sign a confidentiality agreement before she would talk to me, as she worried she’d lose her job if people at her company knew she was a strong Trump supporter.
I wanted to understand what Trump voters liked and didn’t like about the president, what they were nervous about, what they thought about the left’s response so far, and most importantly, what would convince them not to vote for him in the future.
Obviously, this is not a poll, and not ‘data’. But I think narratives are really important.
Here’s what I heard.
The TL;DR quote is this:
“You all can defeat Trump next time, but not if you keep mocking us, refusing to listen to us, and cutting us out. It’s Republicans, not Democrats, who will take Trump down.”
What do you like about Trump?
“He is not politically correct.” Note: This sentiment came up a lot, probably in at least a third of the conversations I had.
“He says true but unpopular things. If you can’t talk about problems, you can’t fix them.”
“I'm a Jewish libertarian who's [sic] grandparents were Holocaust survivors. Over the last few years the mainstream left has resorted to name-calling and character assassination, instead of debate, any time their positions are questioned. This atmosphere became extremely oppressive and threatening to people, like myself, who disagreed with many of Obama's policies over the past several years. Intelligent debate has become rare.”
“It's a lot like political discussion was in Soviet Union, actually. I think the inability to acknowledge obvious truths, and the ever-increasing scope of these restrictions makes it particularly frustrating. And personally, for whatever reason, I find inability to have more subtle discussion very frustrating--things are not white or black, but you can't talk about greys since the politically correct answer is white.”
“He is anti-abortion.” Note: This sentiment came up a lot. A number of people I spoke to said they didn’t care about anything else he did and would always vote for whichever candidate was more anti-abortion.
“I like that he puts the interests of Americans first. American policy needs to be made from a position of how Americans benefit from it, as that is the role of government.”
“He is anti-immigration.” Note: This sentiment came up a lot. The most surprising takeaway for me how little it seemed to be driven by economic concerns, and how much it was driven by fears about “losing our culture”, “safety”, “community”, and a general Us-vs.-Them mentality.
“He will preserve our culture. Preservation of culture is considered good in most cases. What’s wrong with preserving the good parts of American culture?”
“He’s not Hillary Clinton.”
“I’m Mexican. I support the wall. The people who have stayed have destroyed Mexico, and now they want to get out and cause damage here. We need to protect our borders, but now any policy is like that is called racist. Trump was the first person willing to say that out loud.”
“I am socially very liberal. I am fiscally very conservative. I don't feel I have a party--never have. I grew up in a more socially conservative time and picked the "lesser of two evils" during elections. Now, the more socially liberal side supports bigger governments, more aid and support and that money has to come from somewhere. I see what's deducted from my check each week. I'm OK with never being rich but I'd like more security and that doesn't come from more government spending.”
“We need borders at every level of our society.”
“I’m willing to postpone some further social justice progress, which doesn’t really result in loss of life, in favor of less foreign policy involvement, the opposite of which does."
“Brown people are always the out-crowd. I think subconsciously, part of the reason I supported him was a way to be in the in-crowd for once.”
What don’t you like about him?
“The way he talks about women is despicable.”
“Everything about his style. We only voted for him because this election was too important to worry about style.”
“I don’t like most things about him. The way it worked is we got to choose one of two terrible options.”
“I think our nation needs Trumpism to survive long term, and to me that supersedes almost every other reservation I have. My issue is with Trump himself--I think he's the wrong vessel for his movement, but he's all we've got so I'm behind him.”
“I think the rollout of the immigration executive order is emblematic of a clusterfuck, to be completely frank.”
“I now believe the Muslim ban actually makes us less safe.”
“Isolationism and protectionism at this point is insane. We've done that before.”
“I, too, worry about the dishonesty. His relationship with Russia, his relationship with women. His relationship with questionable financial matters. These all worry me and were they to continue I would lose all respect.”
“He continually plays into a character that he has created to rile his fan base. Accepting anti-semitism, white nationalism, or hate emanating unnecessarily, creates a vacuum of fear on social media, on television, and around the dinner table. Even though the policies may be similar to that of any recent Republican President, the behavior to act so immaturely sets a bad example for children and undercuts many cultural norms, which more than anything causes disruption to our sociological foundations.”
“I hate that he discredits the press all the time. That seems to forebode great evil.”
What are you nervous about with Trump as president?
“The thing I’m most worried about is war, and that he could destroy the whole world. I think I may have underestimated that risk, because he is more of an alpha strongman that I realized when I voted for him. Otherwise I still like him.” Note: Most people weren’t that worried about war. More frequent comments were along these lines:
“I know he’s taking strong positions on certain foreign issues, but I feel in negotiations you need to do things to move the needle and when a whole country is watching its hard to keep a poker face, but at least his business track record overall gives us reason to believe ultimately stability will prevail.”
and
“He’s crazy, but it’s a tactic to get other nations not to mess with us.”
“I worry he will drive us apart as a nation. I believed him when he said that would stop with the campaign, but I haven’t seen signs of it so far.”
“I am nervous that his mental health is actually bad.”
“I worry he is actually going to roll back social change we’ve fought so hard for. But I hope not.”
What do you think about the left’s response so far?
“You need to give us an opportunity to admit we may have been wrong without saying we’re bad people. I am already thinking I made a mistake, but I feel ostracized from my community.”
“The left is more intolerant than the right.” Note: This concept came up a lot, with real animosity in otherwise pleasant conversations.
“Stop calling us racists. Stop calling us idiots. We aren’t. Listen to us when we try to tell you why we aren’t. Oh, and stop making fun of us.”
“I’d love to see one-tenth of the outrage about the state of our lives out here that you have for Muslims from another country. You have no idea what our lives are like.”
“I’m so tired of hearing about white privilege. I’m white, but way less privileged than a black person from your world. I have no hope my life will ever get any better.”
“I am tired of feeling silenced and demonized. We have mostly the same goals, and different opinions about how to get there. Maybe I’m wrong, maybe you’re wrong. But enough with calling all of us the devil for wanting to try Trump. I hate Hillary and think she wants to destroy the country of us but I don’t demonize her supporters.”
“I’m angry that they’re so outraged now, but were never outraged over an existing terrible system.”
“The attacks against Trump have taught me something about myself. I have defended him and said things I really didn't believe or support because I was put in a defensive position. Protesters may have pushed many people in this direction BUT it is ultimately our responsibility and must stop.”
“I'd like to also add that the demonization of Trump by calling him and his supporters: Nazis, KKK, white supremacists, fascists, etc. works very well in entrenching Trump supporters on his side. These attacks are counter-factual and in my opinion very helpful to Trump.”
“So far his election has driven our nation apart. So far I see most of the divisiveness coming from the left. Shame on them. I don't see it quite as bad as during Nixon's era but we are truly headed in that direction. I could not speak with my parents during that time because political division would intrude. This Thanksgiving and holiday season were as close as I've felt to that in 40 years. We are increasingly polarized. It doesn't seem to be strictly generational, though that exists. There is an east coast-west coast, rural vs. urban, racial, and gender division forming now. It has the potential to be devastating.”
“The amount of violent attacks and economic attacks perpetrated by the left are troublesome. My wife and I recently moved to the Bay Area. I was expecting a place which was a welcoming meritocracy of ideas. Instead, I found a place where everyone constantly watches everyone else for any thoughtcrime.”
“Silicon Valley is incredibly unwelcoming to alternative points of view. Your curiosity, if it is sincere, is the very rare exception to the rule.”
“There is something hypocritical about the left saying the are uniters not dividers, they are inclusive and then excluding half the population with comments on intelligence and irrelevance in the modern world.”
What would convince you not to vote for him again?
“War would be unforgivable.”
“If the Russia thing were true, I’d turn against him. Why don’t y’all focus on that instead of his tweets?”
“Give us a better option, and we’ll be happy. But it needs to be a moderate—Sanders won’t win.”
“I’ll happily vote for someone else. There’s a lot I hate about Trump. But our lives are basically destroyed, and he was the first person to talk about fixing that.”
“Generally hard to say. Extreme corruption would do it.”
Second person in the same conversation: “I don’t care if he’s corrupt. Y’all voted for Hillary and she was the most corrupt candidate of all time.”
“Another worry is an escalation of overreaches between him and the left that culminates in the breakdown of our system of law. I'd hold him responsible for that.”
“If he were to get the US involved in a major military conflict (I think the odds of this have actually decreased versus Hillary, but I'm willing to be proven wrong). If he were to substantially increase the cost of doing business (by increasing regulation or taxes for instance).”
“I'm socially very liberal. If he were to do something like restart a war on drugs, try to restrict rights of LGBT, or make first trimester abortions difficult or dangerous, I'd rethink my position. I think these type of things are extremely unlikely though, especially with an election a few years away the country as a whole becoming more socially liberal.”
“I think if 2008 happened again (further into Trump's tenure, so that causation can be shown, hypothetically), the base would evaporate.”
“Based on Trump's history before politics I don't believe he is racist, sexist, homophobic or bigoted. If that were true it would supersede everything else since it would be even worse for individual liberty and freedom than any freedom of speech restrictions or increases in government size proposed by the Democratic Party.” |
39 | 2017 YC Annual Letter | 2017-02-16 17:37:01 | Dear YC Community:
In response to a comment on Hacker News, I’m going to try writing an annual letter to the YC community with an update on our progress.
Our mission is to enable the most innovation of any company in the world in order to make the future great for everyone. We believe new technology, economic growth, and new ideas about how our society might function are more important than ever before.
As of January 1, 2017, YC has funded over 3,200 founders and 1,470 companies. This year, assuming there is not a macroeconomic meltdown, we expect the total valuation of companies that have gone through our program to surpass $100 billion. We have also funded more than 30 non-profits.
As always, most of the credit goes to our founders—they, and the astonishingly strong and helpful community they create, are what make YC special. The second-most credit goes to our team—I am incredibly thankful to work with such a talented and driven group of people.
YC Companies & Investments
We invested about $27 million in the Winter and Summer 2016 batches, and so far we have invested about $187 million in later-stage investments from our first Continuity fund.
We are excited to fund companies in any space that we believe is good for the world and can eventually sustain a very large company. Some of the many areas we’re interested in are noted in our Requests for Startups.
Our largest exit of 2016 was Cruise, a self-driving car company. We expect to fund many more machine learning-driven companies in the future (I will generally avoid calling out trends in these letters, because I’ve noticed doing that produced unintended consequences, but this one is so obvious and so important that I’m happy to mention it).
Helion, Oklo, and Bright are all working toward inexpensive clean energy, an area of great interest to us. LendUp and Coinbase are two examples of YC companies innovating in financial services technology. Boom and Relativity Space are pursuing strategies in aerospace that most companies haven’t pursued seriously in a long time, or ever.
Gingko Bioworks is learning how to design new organisms, and Science Exchange is making it easier to get new experiments done. FarmLogs is making it easier and more efficient to grow food, and Gobble, Instacart and Doordash are making it easier to eat it. Reddit and 9Gag continue to make me waste enormous amounts of time, but I love every minute I waste.
Docker, PlanGrid, Checkr, Flexport, Gusto are just a few of the enterprise companies we’ve seen begin to thrive. Machine Zone has become one of the largest gaming companies in the world. Rappi, Wave, and Strikingly are some of the many YC companies succeeding on other continents.
In addition to the three companies we are currently best known for—Airbnb, Dropbox and Stripe—more than 50 of our companies are worth more than $100 million each.
We’ve funded a lot of other companies, but in the spirit of not exhausting your patience, I’ll stop listing them here.
Hyperscale
There’s one more trend I want to mention, though it’s not about a specific market. I think we’re now in the era of hyperscale technology companies. If you believe Metcalfe’s law, it stands to reason that network-effected technology companies are now far more powerful than ever before, simply because the number of people connected to the internet keeps getting bigger, and n^2 gets big really fast.
Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages that are still not fully understood by most founders and investors. I expect that they will continue to do a lot of things well, have significant data and computation advantages, be able to attract a large percentage of the most talented engineers, and aggressively buy companies that get off to promising starts. This trend is unlikely to reverse without antitrust action, and I suggest people carefully consider its implications for startups. There will of course be areas where these companies are naturally weaker, and these are good areas to start companies.
Diversity & Inclusion
In 2016, we funded 68 female founders at 52 companies. About 22.3% of the companies we funded had a woman on the founding team, and about 12.5% of the founders we funded were women. In 2016, we funded 52 Black and Latino founders at 29 companies. 11.6% of the founders we funded were Black or Latino.
The percentage of women who apply to YC is roughly the same as the percentage of women who get funded. The same is true for Black and Latino founders.
From the data we have available, it seems that the percentage of women and people of color applying to YC is higher than the overall percentage of women and people of color starting startups. This is encouraging, but we continue to want to understand and address the barriers that prevent more founders from underrepresented groups from starting startups and applying to YC. We still have a long way to go.
While we remain committed to helping more underrepresented founders get started, we believe that’s only part of the solution. We still see significant dropoffs at the stages after YC (e.g. raising late-stage capital). The larger startup community needs to consider how little the unicorn-founder demographics resemble the early-stage demographics.
There’s clearly a lot more work to do here, and we’re committed to help do it. We’re hosting our fourth annual Female Founders Conference this year in June, continuing our Open Office Hours with underrepresented communities and bringing in unconscious bias experts to train our team. We’re always open to hearing how we can do a better job, so if you’ve come across practices or programs that work well to support diverse founders, please let us know.
YC Organization
Y Combinator is currently made up of 5 groups. I’ll talk a little about each of them here. We expect to add several more over the next few years, and in general you should expect us to try a lot of stuff (though of course not all of it will work). You should also expect us to continue to grow the number of companies we fund.
YC (our flagship program)
In October of 2016, Michael Seibel took over responsibility for our main program as CEO of YC. He’s doing an outstanding job, and I expect the program to significantly strengthen over the course of 2017 and beyond.
In 2016 (and the first part of 2017), we added three remarkable partners to the flagship group: Tim Brady, Adora Cheung and Daniel Gross.
One of my partners that I’d like to especially thank is Dalton Caldwell. Dalton has been a YC partner since 2013, and now runs our admissions team, which is perhaps the most important function we have. Dalton has taken a process that used to be stressful and deeply imperfect and improved it by a huge amount. Though I’m sure we’ll still make mistakes, I sleep better at night thinking that we’re making far fewer in this area than we used to.
While I’m on the topic of recognizing partners, I’d also like to thank the three partners at YC that get some of the least public recognition. Kirsty Nathoo is our CFO, and Jon and Carolynn Levy are our General Counsels. They are full partners at YC but since they don’t advise our companies (as much) on business as the other partners, they are less well-known. However, they work incredibly hard and thoughtfully, and they are one of the secrets to our success. In fact, one of our most successful founders recently said to me “I tell every startup I meet they should do YC, and the reason is Jon Levy. I don’t get how he managed to take my calls at all hours of the day, because the other founders in my batch said he did the same for them, but he solved more problems for us than I can count, and also just listened to me when I had a bad day.”
Finally, I’d like to thank our entire software team, lead by my partner Jared Friedman. We’ve had an incredible improvement in our software over the past year, and someday when the history of YC is written, I expect that people will talk about software as one of our secret weapons. This shouldn’t be so secret—one might reasonably expect technology investors to understand the importance of great software for themselves—but it is generally not the case.
We give companies in this program $120k for 7% ownership in their company, and work with them intensively for 3 months and then less intensively for the rest of the company’s life. We run this program twice a year, and currently fund about 125 companies per batch. While at YC, founders get access to a range of resources, advice, connections, and special deals.
Anyone can apply on our website, and all sorts of people do (here are some common misconceptions about who YC accepts).
Companies often ask us how we decide who gets into YC. There are four questions I consider:
1) Will this company build something lots of people really love?
If so, and if ‘lots’ is sufficiently large, the company has the chance to produce substantial earnings.
2) Will this company be easy to copy?
The most successful companies I’ve worked with have a significant competitive advantage—network effect, proprietary technology, complex coordination, or barrier to entry of some other sort. I understand in theory it’s possible to build a very successful commodity company, but I don’t know how to do it.
3) Will these founders develop into “forces of nature”?
As most people say, it’s hard to make money unless you invest in great founders. Defining what that means is usually left as an exercise to the reader. Here are some questions I ask myself: Are these founders relentlessly determined? Are they original thinkers? Are they smart, and especially do they have new insights I haven’t heard before? Are they good communicators (and so will they be able to hire, sell, raise money, talk to the press, etc)? Are they focused and intense? Do they always seem to find a way around obstacles? Would I work for them?
This is the often the hardest factor for me to evaluate, because you have to make a judgment about trajectory—you are trying to predict where someone will be in five years.
4) Does this company have a clear and important mission?
Without this, I usually get bored. More importantly, companies that don’t have this usually have a hard time recruiting enough great people to work with them, and thus struggle to become very large.
We especially like founders who have some sort of non-traditional background; we are somewhat suspicious of founders with extremely “tracked” lives. Startups are not a resume item, and we don’t like founders who view YC as a stop on the way to B-school. Although in many ways it’s a good problem to have, the increase in the value of YC’s brand means we have to work harder to find people doing a startup for the right reason: to bring an idea they’re obsessed with to life, and willing to do something unreasonable to see it happen.
We have had great success funding “unknown” people, and we will keep doing this—it’s one of our two or three best secrets. Please help us spread the message: you don’t need to be experienced, well-known, or have an impressive resume to get into YC. We fund smart, ambitious people with a great idea and evidence that they can build things.
If you know a founder who should apply to YC, you can recommend them to us. That said, companies don’t need a recommendation or introduction, and most companies we fund don’t have one.
As I mentioned before, I think the strength and quality of our community is one of the most important things we have to offer. As with any community, this emerges from a complex set of factors, but I’ll mention three here.
One of the most important cultural values PG and Jessica put in place was to do the right thing for founders, even when it is not in our own short-term interest. When I was going through YC, it was the thing that most stuck out to me as different from other investors.
Another cultural value they created is to try to fund only good people (in the sense of doing the right thing, though separately we evaluate for effectiveness). We sometimes get this very wrong, and dealing with the repercussions is the most unpleasant part of our job. However, we manage to get it right a lot.
Thirdly, we have a ‘pay-it-forward’ mentality. Startups in the batch know they can ask any alumni for help, well beyond normal Silicon Valley expectations. Later, when they’re successful alumni, they help new companies without us ever asking.
YC Continuity
YC Continuity is our growth-stage fund. We started it in 2015, and it’s run by Ali Rowghani. Last year, Anu Hariharan joined as our second YC Continuity partner.
We do this to provide a source of friendly growth-stage capital to companies and founders that go through the YC program, especially to companies that other investors may not fully understand. We also hope to be a force for good in the growth-stage investing market.
YC Continuity will begin to experiment with programs to provide more advice and resources to growth-stage companies in 2017.
YC Research
YC Research is a non-profit research division of YC. Although we think startups are a good structure to align people to solve a problem, they are clearly not the best solution for everything. For some important problems, a non-profit research lab is a good approach.
We sometimes fund and run internal groups, and sometimes fund external organizations.
So far there are 5 groups: Basic Income, OpenAI, HARC, New Cities, and Universal Healthcare.
Basic Income is studying the effects of giving people unconditional monthly cash. We are currently in our pilot phase in Oakland. We are continuing to learn and make changes, and work with various public agencies and governments to enable the full-scale study. We are planning to run a larger study than we originally intended, and we hope to start fundraising for it soon.
OpenAI is trying to develop artificial intelligence for the benefit of humanity. In our first year, we released Gym, Universe, and a number of new ideas that were at the limits of my understanding but that I enjoyed reading about. In 2017, we hope to achieve significant new milestones that are not possible with current AI technology.
HARC is a group headed by Alan Kay inventing new ways for humans to learn and understand more. My visit to Bret Victor’s lab last year, which is a sort of computerized interactive room, remains one of the new technologies I think most about.
New Cities is still in the exploration phase, but we hope to have more to share over the course of this year.
Universal Healthcare is a project on which we are partnering with Watsi to study how we can use technology to make healthcare both better and more affordable.
We grew a little faster than we were expecting, so we are trying to take a breather on further growth at YCR. But we may still add one more group in 2017.
Startup School
Startup School is our new MOOC (which we will supplement with our existing series of conferences). It will be open to anyone (unless we get absolutely overwhelmed with interest) and is free. We will stream talks like the ones that happen during YC dinners, provide advice to startups, and help them connect to other startups in the program and other people that may be helpful.
Although we clearly stand to gain from this, we are doing it because we believe spreading the message about entrepreneurship and making the necessary information, community, and connections freely accessible to everyone who might want to start a company is important.
This year, I’ll be teaching it.
If this goes well, we hope to offer it every year. In future years, we also hope to explore how something like ‘financial aid’ might work for people that need a small amount of capital to help get their startup going.
Hacker News
Hacker News (HN) is an internet forum, created by Paul Graham shortly after YC got started and now run by Daniel Gackle. Its original purpose was to try out the programming language PG was developing—a dialect of Lisp called Arc, that HN still proudly uses today—and to be a place to find interesting things to read.
HN’s initial users were fans of the essays PG had been publishing about startups, programming, and a lot of other things. Soon it became a hub for everyone interested in YC and startups YC was funding. YC and HN grew up together, and many YC founders started as HN users.
HN remains focused on startups, programming, and lots of other things—anything intellectually interesting goes. The HN community has developed many unique features over the years, such as the "Show HN" format, where users share something they've made, and monthly "Who Is Hiring" threads that have helped many community members find jobs.
Hacker News has 3.4 million users per month and 350,000 users per day, with 4 million pageviews a day. There are just under 1 million registered accounts, with several hundred added each day. Users post around 1,000 articles and 6,000 comments to the site per day.
These numbers are all growing, but relatively slowly, and we like it that way. Internet forums are notorious for degrading over time--one of the ways PG described HN was as an experiment in seeing how long a forum could stay good before it deteriorated. We've mostly managed to stave that off, for 10 years now, but we're always mindful of this risk.
HN has grown into the leading community for tech and startups on the internet, known for its emphasis on civil, substantive discussion—at least in theory! Our team affectionately refers to HN as "the worst internet forum, except for all the others".
-----
We are only about 30 years into the age of software, about 20 years into the age of the internet, and about 2 years into the age of artificial intelligence. Each of these by themselves is a technology revolution that I believe we will look back on as being extremely significant; taken together, I believe they will represent the most significant technology revolution in human history—I believe we are likely to have less in common with whatever we call the most intelligent species on the planet in 600 years than we did with humans 60,000 years ago.
It’s an exciting time to do what we do.
Sam Altman
President, YC Group |
40 | Time to Take a Stand | 2017-01-28 18:48:17 | It is time for tech companies to start speaking up about some of the actions taken by President Trump’s administration.
There are many actions from his first week that are objectionable. In repeatedly invoking unsubstantiated conspiracy theories (like the 3 million illegal votes), he's delegitimizing his opponents and continuing to damage our society. So much objectionable action makes it hard to know where and when to focus, and outrage fatigue is an effective strategy.
But the executive order from yesterday titled “Protecting the Nation From Foreign Terrorist Entry Into the United States” is tantamount to a Muslim ban and requires objection. I am obviously in favor of safety and rules, but broad-strokes actions targeted at a specific religious group is the wrong solution, and a first step toward a further reduction in rights.
In addition, the precedent of invalidating already-issued visas and green cards should be extremely troubling for immigrants of any country or for anyone who thinks their contributions to the US are important. This is not just a Muslim ban. This is a breach of America's contract with all the immigrants in the nation.
This administration has already shown that they are not particularly impressed by the first amendment, and that they are interested in other anti-immigrant action. So we must object, or our inaction will send a message that the administration can continue to take away our rights.
In doing so, we should not demonize Trump voters—most of them voted for him for reasons other than the promise of a Muslim ban. We need their eventual support in resisting actions like these, and we will not get it if we further isolate them.
The tech community is powerful. Large tech companies in particular have enormous power and are held in high regard. We need to hear from the CEOs clearly and unequivocally. Although there is some business risk in doing so, there is strength in numbers—if everyone does it early this coming week, we will all make each other stronger.
Tech companies go to extraordinary lengths to recruit and retain employees; those employees have a lot of leverage. If employees push companies to do something, I believe they’ll have to.
At a minimum, companies should take a public stance. But talking is only somewhat effective, and employees should push their companies to figure out what actions they can take. I wish I had better ideas here, but we’re going to have a meeting on Friday at Y Combinator to discuss. I’d love to see other tech companies do the same.
If this action has not crossed a line for you, I suggest you think now about what your own line in the sand is. It’s easy, with gradual escalation, for the definition of ‘acceptable’ to get moved. So think now about what action President Trump might take that you would consider crossing a line, and write it down.
Almost every member of the GOP I have spoken to knows that these actions are wrong. Paul Ryan, Mike Pence, Kevin McCarthy and James Mattis said so themselves when Trump first proposed his Muslim ban. We need to remind anyone involved in this administration that, for the rest of their lives, they will have to explain why they were complicit in this.
In my first post on Trump last June, I said it would be a good time for all of us to start speaking up. We are now at the stage where something is starting that is going to be taught in history classes, and not in a good way. This morning, Kellyanne Conway posted on Twitter that Trump is "a man of action" who is "just getting started". I believe her. We must now start speaking up. |
41 | Affordable Care | 2017-01-13 17:27:57 | The Affordable Care Act is far from perfect–for one thing, I think health insurance should be entirely separate from employment–but I hate the thought of losing it without a replacement for people who will lose insurance. If Congress ends up repealing it, I hope they earnestly try to preserve the best parts, and put in place something better.
One thing the ACA definitely did was help a lot of founders start their companies--without it, being a founder would make sense for less people. The Department of Health and Human Services released a lot of new data yesterday showing how the ACA helped support entrepreneurs, and in light of that, I thought it would be good to collect and share stories of how the ACA helped some Y Combinator founders get started.
Here they are in the founders’ own words:
Dan Carroll, Clever, S12
March 3, 2012: I'm holed up in a hotel room in San Francisco with two of my best friends, wildly excited about the idea that will become Clever. We've packed the day with difficult conversations – Where will the company be founded? Do we have enough savings? Who will be CEO? – but the only topic that I'm truly afraid of is health. I've been living with Crohn's Disease for nearly ten years, and I know that without health care, I'd die, and without health insurance, I'd go broke. But some quick research tells me that, thanks to the ACA, I can join my parents' healthcare plan until I turn 26 the following January. Risk mitigated, I make the commitment to my cofounders - I'm in.
Ethan Perlstein, Perlara, W16
I left academia on Jan 1, 2013 as unemployed former postdoc. I would not have been able to move across the country to start my company, and my wife wouldn't have given up her employer-sponsored health insurance, if not for Obamacare. Also, some of the first employees at Perlara depended on the ACA for insurance.
Randall Bennett, VidPresso, W14
There's a good chance that without the aca my startup wouldn't exist... or I'd be dead. When launching my startup we couldn't get health insurance because one insurer denied us because I once had a sleep study for sleep apnea. Once you get one rejection, all the others reject you.
Then, last year I had a brain tumor. I had moved off to a more normal health plan... but with the last set of rules chances are it'd have been unlikely I could have gotten any insurance, let alone a somewhat reasonable plan.
Ben Maitland-Lewis, Pretty Instant, W15
We aren't yet at a stage where we can offer healthcare to our employees but thanks to the ACA we are all individually insured. This has been instrumental in helping us grow the business while keeping costs low. I hope the next administration doesn't repeal our access to individualized affordable healthcare as it would have a direct effect on the company at this stage.
Ravi Parikh, Heap, W13
The provision in ACA that allows young adults to remain on their parents' health insurance until they're 26 has helped me multiple times. In 2011, I was self-employed as a musician, which would have been much more difficult to pursue if I weren't able to take advantage of my parents' health insurance. Later, my co-founder Matin left his job at Facebook in 2012. He and I worked on a number of side projects, one of which eventually became Heap. Both him and I remained on our parents' insurance until Heap had enough funding and traction to offer health plans to employees. Again, without being able to remain on our parents' insurance, this would have been much more difficult.
Mike Romano, Lendsnap, S16
The ACA has been a blessing for me and my family, and without it, I could not pursue my entrepreneurial dreams. I began my new career within days of the birth of my son, and the fact he arrived five weeks early only complicated plans further. My wife is a graphic designer and usually only finds contract work without benefits. The ACA allows me to follow my passion of transforming the mortgage industry while ensuring our son gets the crucial care he needs during his early life.
Brian Merritt, Seed, W15
For me, the ACA was life changing. Prior to the ACA I was only able to obtain insurance either through an established group plan, or via Medical/Medicaid “last resort” insurance. This was because I have a pre-existing condition that made me ineligible to buy an individual insurance plan. Due to having a chronic condition that needs to be managed carefully, having a quality insurance plan was not an option, but a requirement. So my only option was to work for a large employer with an established health plan that would provide me with the appropriate benefits to support my situation. After the ACA made it so that pre-existing conditions don’t disqualify applicants, I was able to purchase an individual insurance plan outside of my employer, and as as a result I was able to start a company and work on it for almost two years before we were able to put our own group plan together.
Mick Johnson, Whereoscope, S10
The ACA was essential when starting my new business - I founded the company, was pre-funding for 9 months, and the only employee, so was unable to get small group coverage. I have a wife, a child, and another child on the way so health insurance was essential. Without the ACA I could never have left a regular job to found this new company, which has now raised funding and employs 7 people.
Kevin Law, Cambly, W14
I had to apply for individual health care twice while starting Cambly before the ACA exchanges launched at the end of 2013. It was incredibly difficult and expensive, because I had to keep paying for expensive COBRA coverage from my previous employer while repeatedly applying, appealing, and getting rejected by insurers for individual plans. I was still on a group plan during the ACA debates and assumed that the only people getting rejected were the chronically ill. I learned through my experience that nearly anyone who had past health care expenses would often be rejected when applying for individual plans (as was my case).
An especially ironic moment occurred when I was on a Blue Cross group plan via COBRA and appealing a rejection for a Blue Cross individual plan. I got a physical, so my doctor could write a letter saying I was in good health for the appeal. I simultaneously received a rejection letter for my individual plan appeal citing pasts health costs AND a letter from my group plan asking if the physical was related to a workplace incident (presumably so they could sue someone to get reimbursed for the costs).
The exchanges finally went live at the end of 2013, and I quickly got insurance coverage. No extensive health history paperwork. No rejections or appeals. It launched right around when we got into YC, so it was great to focus on building and growing our business rather than trying to obtain health insurance.
Tristan Tao, Leada, S15
I'm currently 24 years old (going on 25). I am fortunately covered under my parent's health insurance under ACA (until I'm 26). This was critical in reducing my personal burn. I would not go without health insurance; this meant I'd have to either join a larger company to gain coverage, or purchase them out of pocket. Either way it would've significantly hindered the 22 yrs old me to start a company as a Senior in College.
I strongly hope that the successor of Obamacare will include a clause that makes it cheaper for recent graduates to get coverage (or retain the current policy of enabling people younger than 26 to stay on their parents' coverage).
Looking back, the largest hindrance to starting a company would've been debt (which I didn't have any), and personal burn (insurance being a huge part).
Ram Jayaraman, PlateIQ, S15
5 out of 7 members of the initial team at Plate IQ were on ACA. Without ACA in the early days we would have to spend large amounts on employer health insurance and since the team was small we would not have gotten much discounts either. Since the team just needed something basic until we raise decent venture money, they were all able to find very affordable options with good networks like Kaiser.
In thinking of an ACA successor: very few plans are coupled with HSA accounts and HSA withdrawals are penalized. For startups with young teams I would ideally like to continue getting plans with large deductibles and large co-pays and instead contribute to an HSA account. Avoiding the 20% penalty for the HSA withdrawal would definitely encourage more participation.
Ben Thompson, Gitprime, W16
I have a family of 5. Had it not been for the affordable care act, it would have been incredibly difficult to take the leap to become a co-founder. Because of the ACA, I was able to take a calculated career risk without having to sacrifice health coverage for my family as part of that decision. Two years later, we’ve built a company that provides benefits for all of our employees and their dependents.
Brendan Lim, Kicksend, S11
In 2009 my wife was in a life threatening car accident. After her recovery, she was unable to get reasonably priced coverage due to her new "pre-existing conditions". During this time, my co-founder and I had quit our jobs and started working on Kicksend (S11) and were living off of our savings. As a result, we were unable to afford reasonable insurance. The ACA removed the "pre-existing conditions" and gave us peace of mind since my wife was finally able to get covered.
Vishal Joshi, Joy, S16
When we started Joy, we had insurance as dependents and did not need to create company healthcare offer for a bit. But soon we had a new employee very eager to join Joy but needed health insurance. We agreed to start the process but it so happens that the entire ordeal to get company healthcare setup takes a couple of months. If not for ACA, Joy would had lost a really good employee who is still with us and actually helped us build our website. She was able to keep afloat using ACA while we got our company policy setup.
Jason Chen, Verge Genomics, S15
The Affordable Care Act makes it easy for us to purchase and manage health insurance plans – all of our employees are covered rapidly with no medical underwriting. However, we pay high premiums, incur rising deductibles, and plans are bloated with benefits we cannot use. We have also had to pay for "retroactive coverage" for some employees to avoid penalties from the individual mandate, even though no services were used. Future patient-centered health reform should facilitate access to coverage for small business and individuals while allowing greater customization of benefits.
Zachary Garbow, SocialBrowse, W08
When I began working on my startup full time, my wife and I wanted to start a family. At that time, when trying to purchase private insurance being pregnant was considered a pre-existing condition. My wife also had undertaken some preventative procedures years earlier, which made it difficult to obtain coverage. As a result, we were stressed and anxious about not being able to get coverage, and fearful that we'd not be covered for our pregnancy and I'd have to quit my startup to find a corporate job with health insurance. Luckily, the ACA passed just in time to provide us the peace of mind to both start our family and continue building my startup. We now have 2 kids and a thriving, growing business.
Varun Aroroa, OpenCurriculum, W14
ACA has allowed me to have health insurance. Before I got on Obamacare, I had no insurance and had stopped all physical activity beyond basic exercise for years, being too scared to hurt myself. Living below the adjusted poverty line, I just can't afford normal plans. It is amazing how much mental comfort and freedom it can bring in life.
Mike Knoop, Zapier, S12
Thanks to the ACA and my parents, the provision to cover dependents through the age of 26 enabled me to take more risk starting Zapier. Specifically, I did not have to worry about healthcare coverage when the company was small and could not afford health benefits. Now, Zapier provides health benefit coverage to our 50+ US employees.
Zachariah Reitano, Shout, S14 |
42 | The 2016 Election | 2016-10-17 19:09:02 | I am endorsing Hillary Clinton for president. I've never endorsed a presidential candidate before, but I'm making an exception this year, because this election is exceptional. Donald Trump represents an unprecedented threat to America, and voting for Hillary is the best way to defend our country against it.
A Trump presidency would be a disaster for the American economy. He has no real plan to restore economic growth.
His racist, isolationist policies would divide our country, and American innovation would suffer. But the man himself is even more dangerous than his policies. He's erratic, abusive, and prone to fits of rage.
He represents a real threat to the safety of women, minorities, and immigrants, and I believe this reason alone more than disqualifies him to be president. My godson’s father, who is Mexican by birth and fears being deported or worse, is who convinced me to spend a significant amount of time working on this election at the beginning of this year, when Trump still seemed like an unlikely possibility.
Trump shows little respect for the Constitution, the Republic, or for human decency, and I fear for national security if he becomes our president.
The only two vocal Trump supporters I am close to are Peter Thiel and my grandma. Peter is a part-time partner at YC, meaning he spends a small fraction of his time advising YC companies, does not have a vote in how YC is run, and in his case waives the equity part-time partners normally get.
This has been a strain on my relationship with both of them—I think they are completely wrong in their support of this man. Though I don’t ascribe all positions of a politician to his or her supporters, I do not understand how one continues to support someone who brags about sexual assault, calls for a total and complete shutdown of Muslims entering the US, or any number or other disqualifying statements. I will continue to try to change both of their minds.
Some have said that YC should terminate its relationship with Peter over this. But as repugnant as Trump is to many of us, we are not going to fire someone over his or her support of a political candidate. As far as we know, that would be unprecedented for supporting a major party nominee, and a dangerous path to start down (of course, if Peter said some of the things Trump says himself, he would no longer be part of Y Combinator).
The way we got into a situation with Trump as a major party nominee in the first place was by not talking to people who are very different than we are. The polarization of the country into two parallel political realities is not good for any of us. We should listen to each other more, not less.
We should all feel a duty to try to understand the roughly half of the country that thinks we are severely misguided. I don’t understand how 43% of the country supports Trump. But I’d like to find out, because we have to include everyone in our path forward. If our best ideas are to stop talking to or fire anyone who disagrees with us, we’ll be facing this whole situation again in 2020.
That kind of diversity is painful and unpopular, but it is critical to health of a democratic and pluralistic society. We shouldn’t start purging people for supporting the wrong political candidate. That's not how things are done in this country. |
43 | $1 Million VotePlz Sweepstakes | 2016-09-26 17:07:56 | The 2016 US Presidential election feels like the most important one so far in my lifetime. No one able to vote in the US should be sitting this one out—we have a major choice to make.
With some friends, I helped start VotePlz to make it easier for young people to participate—technology has moved forward but registration has not (for example, young people generally don’t have printers or stamps, and many states still don’t have online registration).
A lot of people are working hard to get their friends registered to vote, and we wanted to do something for them.
So today, we’re announcing a VotePlz sweepstakes with a million dollars in prizes.
Some of the prizes are $50,000 in student loan payoffs or scholarship.
After you check your registration, you get a referral link. For each person you get to check their registration, you’ll get one entry into the sweepstakes (up to 25).
You can see how you’re doing here and how your school is doing here.
Also we just launched an iOS app that lets you register just by taking a photo of your Driver’s License, and easily share VotePlz with your contacts.
We need your help. Please check your registration (https://plz.vote) and share this with your friends and family! |
44 | Don't Read The Comments | 2016-08-23 20:55:16 | I sent this email to the current YC batch this morning:
I've talked to some of you who are really bummed about negative press coverage or online comments about your company. Often this takes the general form of "ugh, all these new startups suck, everything good has already been started."
It sucks to have haters, but every founder who now runs a huge company faced this for a long time. Please don't let it get you down (some criticism is useful, and that you should pay attention to, but that's not normally what gets people down). The sooner you can develop a thick skin for this, the better.
Unless the world ends soon, the most valuable company the world will ever see has not yet been started.
Most startups will fail, so you can say everything sucks and be right most of the time. Although you never lose money with that strategy, you never make any either.
The best startups take a long time to be recognized as good. Go read the things people wrote about Google, Facebook, Airbnb, Uber, etc in their first few years of existence. Overnight success usually takes a decade of uphill work.
YC itself faced this for a long time. We turned out to do ok.
A friend of mine likes to say "there are two kinds of people in the world--the people that build the future, and the people who write posts on the internet about why they'll fail". Keep trying to be in former category.
Unless the world ends soon, the most valuable company the world will ever see has not yet been started.
Most startups will fail, so you can say everything sucks and be right most of the time. Although you never lose money with that strategy, you never make any either.
The best startups take a long time to be recognized as good. Go read the things people wrote about Google, Facebook, Airbnb, Uber, etc in their first few years of existence. Overnight success usually takes a decade of uphill work.
YC itself faced this for a long time. We turned out to do ok.
A friend of mine likes to say "there are two kinds of people in the world--the people that build the future, and the people who write posts on the internet about why they'll fail". Keep trying to be in former category.
The people who have said there is nothing new left to do in the world have been wrong every time. Don't let their lack of imagination hold you back. |
45 | Trump | 2016-06-20 19:36:08 | I'm going to say something very unpopular in my world: Trump is right about some big things.
He's right that many Americans are getting screwed by the system. He’s right that the economy is not growing nearly fast enough. He's right that we're drowning in political correctness, and that broken campaign finance laws have bred a class of ineffective career politicians. He may even be right that free trade is not the best policy. Trump supporters are not dumb.
But Trump is wrong about the more important part: how to fix these problems. Many of his proposals, such as they are, are so wrong they’re difficult to even respond to.
Even more dangerous, though, is the way he's wrong. He is not merely irresponsible. He is irresponsible in the way dictators are.
Trump's casual racism, misogyny, and conspiracy theories are without precedent among major presidential nominees. He has said that a judge of Mexican descent isn't treating him fairly because of his heritage and that we should ban Muslims from entering the country.
When his supporters beat up a homeless Hispanic man and cited Trump, he called them “very passionate”. He has accused Obama of somehow being responsible for the recent shooting in Orlando.
To anyone familiar with the history of Germany in the 1930s, it's chilling to watch Trump in action. Though I know intellectually it’s easy in hard economic times to rile people up with a hatred of outsiders, it's still surprising to watch this happen right in front of us.
It's hard to tell, as it often is with demagogues, how much is calculation and how much is genuine belief. But it's a real and terrifying possibility that Trump actually believes much of what he says. In any case, when he says it, it signals to other people that it’s ok to believe.
Demagogic hate-mongers lead down terrible paths. It would be particularly embarrassing for us to fall for this—we are a nation of immigrants, and we know that immigrants built this country (and Trump, of course, is the grandson of immigrants and married to an immigrant).
Hitler taught us about the Big Lie—the lie so big, and so often repeated, that people end up believing it.
Trump’s Big Lie is hiding in plain sight. His Big Lie is that he’s going to Make America Great by keeping us safe from outsiders.
But he has no serious plan for how to restore economic growth, which is what we actually need. Without it, we’ll be in a zero-sum game and face continued infighting. And without it, we’ll lose our position as the most powerful country in the world.
He distracts us with hate of outsiders in the hopes that we don’t notice he has no plan for the inside. He has failed to put forward a serious plan for major investments in research and technology that we so desperately need. Instead, he tries to distract us with fear of Them.
At least Trump is willing to talk about the fact that the US is not on an acceptable growth trajectory. The Big Truth in Trump’s slogan is “Again”—we do need a fundamental change to get back to where we were. Clinton’s dangerously bad Big Lie is that there’s no big problem here at all.
Trump is right about the problem, but horribly wrong about the solution.
I take some risk by writing this (even though I’ve supported some Republicans in the past), and I’ll feel bad if I end up hurting Y Combinator by doing so. I understand why other people in the technology industry aren’t saying much. In an ordinary election it's reasonable for people in the business world to remain publicly neutral. But this is not an ordinary election.
In the words of Edmund Burke, "The only thing necessary for the triumph of evil is for good men to do nothing." This would be a good time for us all—even Republicans, especially Republican politicians who previously endorsed Trump—to start speaking up.
Note: Anyone is welcome to republish this.
Note 2: Apparently the Burke quote was not definitively said by him :( |
46 | 'We're in a Bubble' | 2016-06-15 01:19:58 | A lot of people have been saying we’re in a tech bubble for quite some time. Someday they’ll be right, but in the meantime, I thought it'd be fun to look back at some articles from the last 10 years:
2007, Coding Horror -- Welcome to Dot-Com Bubble 2.0. “You might argue that the new bubble has been in effect since mid-2006, but the signs are absolutely unmistakable now.”
2008, Gigaom -- Is Linkedin worth $1B? “The valuation of $1 billion – not as insane as the [$15 billion] valuation placed by Microsoft on Facebook – was jaw dropping.”
2009, Wall Street Journal -- The Bursting of the Silicon Valley Bubble (2009 Edition). “Some think that this round of Silicon Valley blowups might be more damaging than the last.”
2010, Daily Beast -- Facebook's $56 Billion Valuation and More Signs of the Tech Apocalypse. “One analyst predicts Facebook will easily be worth $200 billion by 2015. Right on! And by 2020 it could be the first company with a $1 zillion market value, so buy-buy-buy, everybody!”
and, famously, Signal v. Noise, Facebook is not worth $33,000,000,000. "But the bullshit monopoly-money valuation merry-go-round has to stop."
2011, The Economist -- The New Tech Bubble (cover story). “Some time after the dotcom boom turned into a spectacular bust in 2000, bumper stickers began appearing in Silicon Valley imploring: ‘Please God, just one more bubble.’ That wish has now been granted.”
2012, The Guardian -- Facebook’s IPO and the new tech bubble. “So yes, the collapse is beginning even as the bubble is filling. Some of us call this fun.”
2013, Gawker / ValleyWag -- The $4 Billion Secret: Don’t Bother Making any Money. “[Pinterest and Snapchat] were both recently, insanely valued by investors at around $4 billion . . . how is this not a bubble, and why aren't more people saying this is crazy?”
2014, Wall Street Journal -- David Einhorn: ‘We Are Witnessing Our Second Tech Bubble in 15 Years’. “ ‘There is a clear consensus that we are witnessing our second tech bubble in 15 years,’ said Mr. Einhorn.”
2015, TechCrunch -- The Tech Industry is in Denial, but the Bubble is About to Burst. “The fact that we are in a tech bubble is in no doubt. . . The tech startup space at the moment resembles the story of the emperor with no clothes.” |
47 | Housing in the Bay Area | 2016-05-26 00:42:18 | Jerry Brown has proposed legislation that would allow a lot more housing to be built in the Bay Area, and hopefully significantly reduce the cost of housing here. More supply should lead to lower prices.
I believe that lowering the cost of housing is one of the most important things we can do to help people increase their quality of life and to reduce wealth inequality.
A huge part of the problem has been that building in the Bay Area is approved by discretion; even when developments comply with local zoning, they can still be vetoed or stalled by local planning commissions, lawsuits, or ballot measures.
This type of discretionary approval isn't common in most of the US, and Governor Brown's legislation helps align California with most states. His bill would make it so multi-family buildings are automatically approved by right as long as they comply with local zoning, and have 5-20% affordable units--the percentage depending on location and subsidy offered.
The bill is currently being debated in California's State Legislature as part of the upcoming annual budget, which will be voted on on June 15. If you'd like to help pass this bill, consider calling the members below, as well as the Governor, in support of the Budget Trailer Bill--it only takes a few minutes [1], and it will likely hinge on their support.
Assemblyman Phil Ting (SF): (916) 319-2019
Senator Mark Leno (SF): (916) 651-4011
Senator Kevin de León (Los Angeles): (916) 651-4024
Assemblyman Rendon (Los Angeles): (916) 319-2063
Governor Jerry Brown: (916) 445-2841 |
48 | Cruise | 2016-04-13 17:21:10 | There is a long and sordid history of people coming out of the woodwork with bogus claims when huge amounts of money are on the line. This has just happened to Cruise, which is run by my friend Kyle Vogt. Cruise is a YC company, and I also personally invested in the company last year.
As detailed in a complaint filed by Kyle and Cruise, Jeremy Guillory collaborated with Kyle for a very short period early on in the life of Cruise. I know that at least Kyle had been thinking about autonomous vehicles for quite some time, and I assume Jeremy had been too given all of the attention on the topic in the press about Google’s activities. After a little over a month, Kyle and Jeremy parted ways. This event happened more than two years ago, and well before the company had achieved much of anything.
There is more detail in this footnote [1] if you’re curious, or you can read the complaint online here.
Jeremy is now claiming to Kyle that he should own a substantial amount of Cruise’s equity, and by doing so is interfering with the pending Cruise/GM merger.
Kyle made an extremely generous offer to settle this claim by offering to give Jeremy a lot of his own money. [2] In my opinion, Jeremy’s claim is completely baseless and opportunistic—it obviously comes at a bad time for the company with the merger still pending, and Kyle understandably wanted to avoid a protracted litigation. Kyle has worked incredibly hard to settle this claim amicably, despite what I consider to be the obvious ridiculousness of it, and has done far more than I would have personally done under these circumstances.
Kyle and Cruise are now suing Jeremy for making a false equity claim. It’s an incredible bummer these situations have to happen in the first place. This is one of the least sensible professional situations I’ve ever been involved with, but unfortunately these situations are not uncommon.
I recognize that I place myself at risk talking about this, but it’s time that someone speaks publicly about situations like what is happening at Cruise. And so I’ve decided to say something before the lawyers can stop me. Even with this issue, both sides still expect the merger to close on schedule in Q2.
[1] Kyle and Jeremy applied to YC together but Jeremy left before the YC interview. Neither took a salary, and Kyle was funding the company by himself at that point.
According to Kyle, Jeremy did not write any code or build any hardware during this exploratory period. He did help find an office for the company. At the point of Jeremy’s departure, neither he nor Kyle had signed employment agreements, stock agreements, or any documents of any sort with the company. Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity.
Kyle told me that Jeremy would occasionally reach out to congratulate him on press about Cruise (for example, he reached out to congratulate Kyle on Cruise’s Series A), but he never asked for anything—until now, when, in my opinion, he saw an opportunity to make a ton of money.
[2] I was personally involved all day on Friday last week to try to help settle this claim. Given the time pressure because of the pending merger, we had to set a Friday at 5 pm deadline for Kyle’s offer, which Jeremy let expire. |
49 | Asana | 2016-03-30 15:08:42 | I’m delighted to finally be investing in Asana, which I’ve wanted to do for a long time.
One of the things I’ve learned about companies is that 1) clear tasks and goals, 2) clearly communicated, and 3) with clear and frequent measurement are very important to success. Most companies fail at all 3 of these, and they become more important as companies get bigger. Asana is the best way to excel in these 3 areas.
“You make what you measure” is really true, and most companies don’t measure well at all. I spend a lot of time talking to people who work at startups, and most employees feel like they don’t have a good sense of what specifically the company needs to get done and how all the tasks are going. Better work tracking leads to better collaboration and better decision-making.
Another thing I’ve learned investing in startups is how important it is to have some users that really love a product (instead of liking it pretty much). Asana has the level of product love that all great companies have in common. As a small example, their recurring revenue has been incredibly sticky and more than doubled every year.
Asana is the kind of lever that could someday massively increase the productivity of hundreds of millions of people around the world. There’s not only an opportunity for Asana to be a huge company, but also for Asana to materially increase the output for the planet—somewhat amazingly, software has not yet eaten this important part of the world.
Finally, Asana has an incredible team that, as far as I can tell as an outsider, really believes in the mission and loves the work environment (the Glassdoor reviews, something I check before every late-stage investment, are among the best I’ve ever seen).
These are all the ingredients that go into the development of an incredibly impactful and valuable company. I’m very happy to be along for the ride. |
50 | Hard Tech is Back | 2016-03-11 16:19:09 | First of all, congrats to Kyle, Dan, and the rest of the Cruise team. You all have made amazing progress and we look forward to seeing more in the future.
A popular criticism of Silicon Valley, usually levied by people not building anything at all themselves, is that no one is working on or funding “hard technology”. While we disagree with this premise—many of the most important companies start out looking trivial—we want to be clear that we’re actively looking to fund more hard tech companies, and would love to see more get started.
At YC, we started funding these sorts of companies in earnest in 2014, to widespread commentary that this was a silly waste of time. Cruise, which we funded that winter, is getting acquired by GM. From the Summer 2014 batch, 3 of the 4 companies who have raised the most money since graduating YC are “hard tech” companies.
We expect many more big wins. The YC model works much better for these sorts of companies than most people, including ourselves, thought.
So, if you’re thinking about starting one, we’d like to talk. And we think we can help. (You’ll probably find a lot of other people willing to help too, although unfortunately you’ll still face major fundraising challenges. But in many ways, it’s easier to start a hard company than an easy company—more people want to join the mission.)
Leave the Medium thought pieces about when the stock market is going to crash and the effect it’s going to have on the fundraising environment to other people—it’s boring, and history will forget those people anyway. There has never been a better time to take a long-term view and use technology to solve major problems, and we’ve never needed the solutions more than we do right now.
Different YC partners have different interests, but I’m particularly excited about AI (both general AI and narrow AI applied to specific industries, which seems like the most obvious win in all of startups right now), biotech, and energy.
We hope to hear from you. |
51 | Before Growth | 2016-01-15 18:23:06 | We tell startups all the time that they have to grow quickly. That’s true, and very good advice, but I think the current fashion of Silicon Valley startups has taken this to an unhealthy extreme—startups have a weekly growth goal before they really have any strong idea about what they want to build.
In the first few weeks of a startup’s life, the founders really need to figure out what they’re doing and why. Then they need to build a product some users really love. Only after that they should focus on growth above all else.
A startup that prematurely targets a growth goal often ends up making a nebulous product that some users sort of like and papering over this with ‘growth hacking’. That sort of works—at least, it will fool investors for awhile until they start digging into retention numbers—but eventually the music stops.
I think the right initial metric is “do any users love our product so much they spontaneously tell other people to use it?” Until that’s a “yes”, founders are generally better off focusing on this instead of a growth target.
The very best technology companies sometimes take awhile to figure out exactly what they’re doing, but when they do, they usually pass that binary test before turning all their energy to growth. It’s the critical ingredient for companies that do really well [1], and if you don’t figure it out, no amount of growth hacking will make you into a great company.
As a side note, startups that don’t first figure out a product some users love also seem to rarely develop the sense of mission that the best companies have.
[1] The other thing that these companies have, and that also usually gets figured out early, is some sort of a monopoly. |
52 | The Tech Bust of 2015 | 2015-11-02 21:26:17 | Maybe instead of a tech bubble, we’re in a tech bust. No one seems to fervently believe tech valuations are cheap, so it’d be somewhat surprising if we were in a bubble. In many parts of the market, valuations seem too cheap. In the part where they seem too high, maybe they aren’t really valuations at all, because the deal structure has changed to become more like debt.
Many of the small cap public tech companies have taken a beating this year. Companies like Yelp are trading at less than 4 times trailing revenue.
The tech mega-caps are monopolies and have deservedly high valuations. But even then, I would not be willing to short a single one of Apple, Google, Amazon, or Facebook against the S&P. Apple in particular trades at a single-digit ex-cash forward P/E.
2015 has seen the lowest level of tech IPOs as a percentage of all IPOs in seven years. The S&P Tech P/E is lower than the overall S&P P/E. Neither of these facts seems suggestive of a tech bubble.
On the private side, people complain all the time about early-stage valuations (and to be fair, they’ve felt high to me for four years). But if you invested in every single YC company over the past three years at their Demo Day valuation (average Demo Day valuations haven’t moved much in the past three years) you’d be very happy, even though investors complain that YC is the worst example of overpriced companies.
The mid-stages also seem generally reasonable, though of course there are notable exceptions. These exceptions get all the attention—not the hundreds of companies doing remarkably well, but that handful that have raised money at high valuations and are struggling or dead.
On the whole, it seems harder than any time in the past four years to raise mid-stage rounds. This is also not suggestive of a bubble.
So where is the problem? Late-stage private valuations. But perhaps the answer is that these “investments” aren’t really equity—they’re much more like debt. [1] I saw terms recently that had a 2x liquidation preference (i.e. the investors got the first 2x their money out of the company when it exited) and a 3x liquidation cap (i.e. after they made 3x their money, they didn’t get any more of the proceeds).
This is hardly an equity instrument at all. [2] The example here is an extreme case, but not wildly so. Investors are buying debt but dressing it up close enough to equity to maintain their venture capital fund exemption status. In a world of 0 percent interest rates, people become pretty focused on finding new sources for fixed income.
There is a massive disconnect in late-stage preferred stock, because if you’re using it to synthesize debt it doesn’t matter what the price is. The closer the rounds get to common stock (a less-than-1x liquidation preference, for example), the more I think the valuation means something. Unsurprisingly, the best companies usually have the most common-stock-like terms (and “the best companies” are never the ones that seem overpriced for long anyway).
Some of this debt is poorly underwritten. Some unicorns will surely die (and those are the ones everyone will talk about). That doesn’t make it a tech bubble. It’d be more accurate to say it’s a tech bubble if no unicorns die in the next couple of years.
To summarize: there does not appear to be a tech bubble in the public markets. There does not appear to be a bubble in early or mid stages of the private markets. There does appear to be a bubble in the late-stage private companies, but that’s because people are misunderstanding these financial instruments as equity. If you reclassify those rounds as debt, then it gets hard to say where exactly the bubble is.
At some point, I expect LPs to realize that buying debt in late-stage tech companies is not what they signed up for, and then prices in late-stage private companies will appear to correct. And I think that the entire public market is likely to go down—perhaps substantially—when interest rates materially move up, though that may be a long time away. But I expect public tech companies are likely to trade with the rest of the market and not underperform.
But no matter what happens in the short- and medium-term, I continue to believe technology is the future, and I still can’t think of an asset I’d rather own and not think about for a decade or two than a basket of public or private tech stocks.
Thanks to Jack Altman, Patrick Collison, Paul Graham, Aaron Levie, Geoff Ralston, and Ali Rowghani for reading draft of this.
[1] There are real problems with these distorted "valuations". Employees these companies hire often think of them as real valuations. It also often makes the company think of itself as much bigger than it is, and do the wrong things for its actual stage. Finally, too much cheap money lets companies operate with bad unit economics and cover up all sorts of internal problems. So I think many companies are hurting themselves with access to easy capital.
[2] Even before the shift to debt-like rounds, the disconnect between how much people will pay for 5% of a company in preferred stock vs. 100% of a company in common stock was massive (and for good reason--the downside protection alone with preferred stock makes it much different than common stock). As this delta has accentuated, the public/private disconnect has gotten worse, and caused a number of problems for companies accustomed to valuations always going up. |
53 | Airbnb and San Francisco | 2015-09-28 17:22:39 | Airbnb has recently been attacked by San Francisco politicians for driving up the price of housing in the city. San Francisco has tried, and will continue to try, to ban Airbnb in various ways. Last week, this excellent post was published on Prop F—“the Airbnb law”.
I recently reached out to Brian Chesky, the CEO of Airbnb, to learn more about this. I am decidedly a non-expert on this topic, but here are some thoughts from a layperson.
I met Brian in 2008, when he started Airbedandbreakfast as…an affordable housing company. He couldn’t afford to pay his rent in 10 days and his credit cards were maxed out. He looked around and realized that he did have one asset he could monetize—his extra space. And eventually, Airbnb was born and the sharing economy began.
Unfortunately, a lot of other people have problems paying their rent or mortgage. 75% of Airbnb hosts in San Francisco say that their income from Airbnb helps them stay in their homes, and 60% of the Airbnb income goes to rent/mortgage and other housing expenses. Making it harder to use Airbnb in San Francisco may make it impossible for some of these hosts to afford to stay in their homes and in this city.
In 2014 (the most recent year with available data) there were about 387,000 housing units in SF. About 38% were owner-occupied, and the remaining 62% or 240,000 were rental units. About 33,000 of these were vacant, generally as a side effect of rent control laws. (I don’t honestly know if rent control is a net good or bad thing—I assume more good than bad—but it certainly keeps units off the market.) [1]
In the past year, only about 340 units in SF were rented on Airbnb more than 211 nights, which is what Airbnb has calculated as the break-even point compared to long-term rental. This is less than one out of every thousand units of housing in SF. Looking at it another way, it’s just over 1.1% of all unoccupied units.
There have been about 10,700 SF units that have rented on Airbnb in the last year (obviously a much lower number of units are actively listed at any particular time). The median number of trips per unit was 5, and mean was 13.3. The mean revenue per host was about $13,000 per year. More than 90 percent of Airbnb hosts in SF are listing their primary residence, and making money with an extra room or their entire place when they are out of town.
The whole magic of the sharing economy is better asset utilization and thus lower prices for everyone. Home sharing makes better utilization out of a fixed asset, and by more optimally filling space it means the same number of people can use less supply. In fact, Airbnb worked with economist Tom Davidoff of the University of British Columbia and found that Airbnb has affected the price of housing in SF by less than 1% either up or down.
But in the last 5 years, the cost of housing in the city has about doubled. The reason for this is a lot more people want to live in SF than we have housing for, and the city has been slow to approve new construction. Who is to blame for this? The same politicians that are trying to distract you with Airbnb’s 340 “professionally rented” units.
What should the politicians actually be doing about the housing crunch? The obvious answer would be to support building more housing and fixing the supply side of the equation. But instead they’re doing the opposite (e.g. a moratorium on new construction in the Mission) and trying to turn Airbnb into a scapegoat.
I love San Francisco. I wish housing here were much cheaper. This is a special city and more people are going to want to live here, and more are going to want to come visit and do business with people here. Instead of trying to ban the future, we should be making it easier for middle class families to stay in the city. We can do this by building more units to push the market price of housing down and by making it easier for San Franciscans to share their homes.
[1] Selected Housing Characteristics, 2014 American Community Survey 1-Year Estimates |
54 | Unit Economics | 2015-09-21 18:22:13 | Commentators are looking hard for what’s wrong with startups in Silicon Valley. First they talked about valuations being too high. Then they talked about valuations not really meaning anything. Then they talked about companies staying private too long. Then they talked about burn rates.
But something does feel off, though it’s been hard to precisely identify.
I think the answer is unit economics. One of the jokes that came out of the 2000 bubble was “we lose a little money on every customer, but we make it up on volume”. This was then out of fashion for a long time as Google and Facebook hit their stride.
There are now more businesses than I ever remember before that struggle to explain how their unit economics are ever going to make sense. It usually requires an explanation on the order of infinite retention (“yes, our sales and marketing costs are really high and our annual profit margins per user are thin, but we’re going to keep the customer forever”), a massive reduction in costs (“we’re going to replace all our human labor with robots”), a claim that eventually the company can stop buying users (“we acquire users for more than they’re worth for now just to get the flywheel spinning”), or something even less plausible.
This is particularly common in startups that don’t pass the Peter Thiel monopoly test—these startups seem to have to spend every available dollar on user acquisition, and if they raise prices, customers defect to a similar service.
Most great companies historically have had good unit economics soon after they began monetizing, even if the company as a whole lost money for a long period of time.
Silicon Valley has always been willing to invest in money-losing companies that may eventually make lots of money. That’s great. I have never seen Silicon Valley so willing to invest in companies that have well-understood financials showing they will probably always lose money. Low-margin businesses have never been more fashionable here than they are right now.
Companies that have raised lots of money are at particular risk. It’s so tempting to paper over a problem with the business by spending more money instead of fixing the product or service.
Burn rates by themselves are not scary. Burn rates are scary when you scale the business up and the model doesn’t look any better. Burn rates are also scary when runway is short (i.e., burning $2M a month with $100M in the bank is fine; burning $1M a month with $3M in the bank is really bad) even if the unit economics look great.
The good news is that if you’re aware of this you can avoid the trap. If there’s no other way to operate in your space, maybe it’s a bad business. The low-margin, hyper-competitive world is not the only place to be. Companies always have an explanation about how they’re going to fix unit economics, so you really have to go out of your way not to delude yourself.
If you hold yourself to the standard of making a product that is so good people spontaneously recommend it to their friends, and you have an easy-to-understand business model where you make more than you spend on each user, and it gets better not worse as you get bigger, you may not look like some of hottest companies of today, but you’ll look a lot like Google and Facebook. |
55 | Financial Misstatements | 2015-08-21 16:25:44 | First-time startup CEOs make a lot of mistakes, mostly due to ignorance.
One particularly bad one is misunderstanding or misusing basic financial terms. I started noticing this in Y Combinator applicants a couple of years ago, but see it now in startups at all stages (including some YC companies).
It is very important to make accurate financial statements to investors, and it is well worth the time it takes to learn the difference between concepts like “revenue” and “GMV” (gross merchandise volume) and revenue from a “contract” or “LOI” (letter of intent). Most terms have very specific definitions, and it’s well worth a little bit of time learning what these are. When in doubt, you will never get in trouble for defining the way you’re using a financial term too precisely.
I’ve seen people use GMV for revenue or refer to an LOI as a contract many times in the past year when talking to investors. This is a felony.
Although investors should be doing more diligence than is currently in fashion, this issue is on the founders to fix.
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56 | The Post-YC Slump | 2015-08-20 16:47:06 | At the end of a YC batch, the general consensus among the partners is that about 25% of the companies are on a trajectory that could lead to a multi-billion dollar company. Of course, only a handful of them do. Most go on to be decent or bad.
These companies have a beautifully exponential growth curve during YC, and then a few months after YC is over, it essentially flatlines. Because it would be so much better for us if this did not happen, we wonder a lot about why.
The main problem is that companies stop doing what they were doing during YC—instead of relentlessly focusing on building a great product and growing, they focus on everything else. They also work less hard and less effectively—the peer pressure during YC is a powerful force.
The startups justify this to themselves in all sorts of ways—“We’re doing some longer-term strategic work. You wouldn’t understand.” “We’re cleaning up our technical debt.” “We’re building out the organization.” “We’re focusing on PR for this month. I’m going to speak at 6 conferences and writing two thought leadership pieces.” “We are different; growth isn’t our most important thing.” We’ve heard all of these from startups that have gone on to disappoint.
In general, startups get distracted by fake work. Fake work is both easier and more fun than real work for many founders. Two particularly bad cases are raising money and getting personal press; we’ve seen many promising founders fall in love with one or (usually) both of these, which nearly always ends badly. But the list of fake work is long.
I tell founders to consider how directly a task relates to growing. Obviously, building and selling are the best. Things like hiring are also very high on the list—you will need to hire to sustain your growth rate at some point. Interviewing lots of lawyers has got to be near the bottom.
During YC, we are ruthless about reminding startups that fake work does not count and will still get you a failed startup no matter how intensely you do it. We are also ruthless about asking for your progress, and being honest with you if things aren’t working. After YC, we have less contact with startups—you can go dark on us if you want. This, by itself, is almost always a sign that a startup is doing badly.
Momentum is everything in a startup. If you have momentum, you can survive most other problems. If you do not have momentum, nothing except getting momentum will solve your problems. Founders internalize this during YC; many seem to forget in the few years after YC. Burnout seems to almost always affect founders whose startups are not doing well, and then becomes a downward spiral. In fact, one of my top few startup commandments is “never let the company lose momentum”.
There are a few other common problems. One is a feeling of “we made it” that comes after a big financing round and a reduction in intensity. A related problem is that after you’ve raised a lot of money or become somewhat well-known, it’s harder to admit that things aren’t working and you need to change direction. Also, very small startups can grow by sheer force of will, even with a bad product. This stops working after a few months as the numbers get larger, and if you haven’t built something people love, you will not be able to continue growing.
So how can startups avoid this slump? Work on real work. Stay focused on building a product your users love and hitting your growth targets. Try to have a board and peers who will make you hold yourself accountable—don’t lose the urgency that you developed during YC. Keep sending updates on your traction to your investors and anyone else who will read them (in fact, we’re building some new software at YC to automate this for our startups in the hope that it prevent some of them from going off the rails). Make the mistake of focusing too much on what matters most, not too little, and relentlessly protect your time from everything else. Don’t ever let yourself feel like you’ve won before you have. I still don’t think the Airbnb founders feel like they’ve won. You have to keep up a high level of intensity for many, many years.
Many YC startups learns these lessons after a year or two in the wilderness, but for some it’s too late and for all it’s a waste of time.
The best startups we fund keep on doing exactly what they did during YC. This sounds so simple and so obvious, but in practice so few founders do it.
The good news is it’s doable with deliberate effort. If every founder (YC and otherwise) did it, the number of successful startups would probably double.
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Dataset Card for Sam Altman Essay Collection Dataset
Dataset Description
This dataset contains a complete collection of essays written by Sam Altman, an entrepreneur, investor, and former president of Y Combinator. The essays cover a wide range of topics including startups, technology, artificial intelligence, leadership, and personal growth. Each essay has been cleaned and processed to extract the title, date of publication, and the full text content.
Dataset Structure
The dataset is provided in a tabular format with the following columns:
title: The title of the essay.date: The date when the essay was originally published, in the ISO format YYYY-mm-dd HH:MM:SS.text: The full text content of the essay.
Data Sources
The essays in this dataset have been sourced from Sam Altman's personal blog at https://blog.samaltman.com/.
Data Preprocessing
The essays have undergone the following preprocessing steps:
- Extraction of title and publication date from the essay's metadata.
- Removal of promotional material and navigation elements unrelated to the essay's content.
- Conversion of the essay text to plain text format.
- Cleaning of the text to remove any extraneous whitespace or special characters.
Intended Use and Limitations
This dataset is intended for various natural language processing tasks such as question-answering, summarization, text generation, and text-to-text generation. The essays provide valuable insights and perspectives on a range of topics and can be used for training models or conducting analyses related to startups, technology, artificial intelligence, and leadership.
However, it's important to note that the essays reflect the personal views and opinions of Sam Altman and may not be representative of a broader population. The content should be used with appropriate context and understanding of its subjective nature.
License and Attribution
This dataset is released under the MIT License. When using this dataset, please attribute it to Sam Altman and provide links to his personal website at https://blog.samaltman.com/.
Contact Information
For any questions or inquiries about this dataset, please contact [email protected].
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