No Priors Ep 66 | With Y Combinator President and CEO Garry Tan

1. 0:00 – 0:53

   Introduction

   1. EGElad Gil0:00

      (instrumental music plays) So today on Underpriors, we're very lucky to have Garry Tan. Garry is currently the CEO... Is that- is that the right title?

   2. GTGarry Tan0:11

      Yeah. President and CEO-

   3. EGElad Gil0:12

      The- the president and CEO of Y Combinator. Prior to that, he ran Initialized, a early stage venture fund. He started Posterous, which was acquired by Twitter, and has had a storied career working at a variety of Silicon Valley companies, including Palantir and others. Thank you so much for joining us today, Garry.

   4. GTGarry Tan0:25

      Thanks for having me. Well, this is gonna be our, uh, our first collabo e- episode. So part one on this podcast, part two, uh, over at the Garry Tan YouTube channel. So, thanks for having me. Thanks for doing the collab.

   5. SGSarah Guo0:38

      Super excited about it. Love to work with, like, a real creator. Um, okay, let's start with, like, you obviously need no introduction but people wanna know the story, like, how'd you go from being a founder to an investor at Y Combinator?

   6. GTGarry Tan0:50

      I think, uh, Paul Graham basically took a chance on

2. 0:53 – 5:10

   Transitioning from founder to investing

   1. GTGarry Tan0:53

      me as a founder, and then later I got burnt out and, uh... Well, YC itself I like to think of as... You know, today people sort of look at it as this sort of institution, it's sort of the defining place where people wanna start their billion dollar companies. But I feel like in 2008 when I first found out- found out about it, it was a little bit more like, uh, you know, a punk club in the '90s in Seattle and, you know, sort of grunge was just getting started or something (laughs) . Like- like, these things are basically subcultures, and, uh, they sort of start off of the internet. And so one of the reasons why Y Combinator was so dominant and, you know, start- e- even had its chance to start was that, uh, Paul Graham's essays for, you know, sort of time immemorial, you know, from his experience creating Yahoo Stores, um, that he would write these essays that basically spoke to the experience of trying to start a company at that moment. So when you go around sort- sort of the legends of, uh, you know, YC, whether it's, you know, Patrick Collison at Stripe or, uh, my buddy Harj who I work with who co-founded a company with Patrick, um, you know, lots of people. Even me. I mean, I basically found out about starting a startup, uh, you know, from the news. Like, that suddenly, hey, there's this person who could sit in front of a computer, create software that could then touch a billion people, and was like, "Oh, it's, like, perfect mimesis." You're like, "Oh, I- I want that. How do I do it?" And then you go into Google and you type in, "Start a startup," and, uh, you find Paul Graham's essays (laughs) . And then increasingly they're finding this pod, and they're finding my YouTube channel, and they're finding the Y Combinator YouTube channel, and, uh, you know, I think all of that is sort of the direction we're going in. But that's how it started. It was like literally starting a company was a very strange thing. Like, when all of us came into tech that was, I- I think, more true. Today, I think it's something that a lot more people aspire to, and that's a really, really good thing, and that's sort of what we want.

   2. EGElad Gil2:56

      Yeah. It's funny, in 2007 I started my first company, and I remember at the time, um, people... If you a- if you talked to the investor community about Y Combinator they'd say things like, "Oh, there's probably adverse selection," and, "Who would take that deal?" And all this stuff. And that's right when Airbnb got funded by YC, when Dropbox got funded by YC. And so it- it's- it's always striking how right when people start naysaying something, that's actually the moment you know it's working. I'm a little bit curious, uh, in 2008 when you were going through YC, who were some of the other people who were in your batch or in that same year?

   3. GTGarry Tan3:23

      Yeah. Uh, I remember, you know... Actually there were probably three or four companies that ended up, uh, s- quote/unquote making it, I think. Um-

   4. SGSarah Guo3:31

      And how big was a batch at that time?

   5. GTGarry Tan3:32

      Oh, it was only... Uh, I think it was 25 companies total, so... Which is funny because that's the number of companies that a group partner now has. We have 14 group partners at YC now, and each of them fund between 15 and 25 companies each. So I like to say that we basically have, uh, 14 of those sort of 2008 era batches happening all of the time. Um, let's see. Uh, there was a company that actually also sold to Twitter, uh, Mike Montano-

   6. EGElad Gil4:00

      Mm-hmm.

   7. GTGarry Tan4:01

      ... and, uh, Chris Gold's startup.

   8. SGSarah Guo4:03

      Yeah.

   9. GTGarry Tan4:03

      And, uh, I think it was in basically, like, comment- comment analytics, and then Mike ended up being VP of Eng at-

   10. EGElad Gil4:09

       Mm-hmm.

   11. GTGarry Tan4:10

       ... Twitter for many years.

   12. SGSarah Guo4:11

       Chris still does a ton of YC investing.

   13. GTGarry Tan4:12

       That's right.

   14. SGSarah Guo4:13

       Yeah (laughs) .

   15. GTGarry Tan4:13

       Chris is doing incredible investing now.

   16. SGSarah Guo4:15

       Yeah.

   17. GTGarry Tan4:15

       So, uh, who else? D. Scott Phoenix is-

   18. EGElad Gil4:18

       Mm-hmm.

   19. GTGarry Tan4:18

       ... uh, now I think over at 50 years, but-

   20. SGSarah Guo4:20

       The Vicarious.

   21. GTGarry Tan4:21

       Yeah. He did Vicarious-

   22. SGSarah Guo4:22

       Yeah.

   23. GTGarry Tan4:23

       ... which was one of the top AI startups for some time, and then that sold to Google. So, you know, it's kinda cool.

   24. EGElad Gil4:28

       Mm-hmm.

   25. GTGarry Tan4:29

       Like, I mean, you- you get started in the biz, you, like, befriend people over pizza and beers, and then years later you just, like, sort of try... You're just, you know, still- still at it, still doing things-

   26. EGElad Gil4:42

       Mm-hmm.

   27. GTGarry Tan4:42

       ... and then now we're trying to help the next generation, which is fun.

   28. EGElad Gil4:45

       Yeah. People forget how much longevity there is sometimes in Silicon Valley, and they forget how you act early really impacts almost how people perceive you 10 years later or 15 years later, et cetera. And so it's- it's... If you're very n- non-zero-sum early, it really matters in the long run, because all these relationships end up unfolding over time. And so it's one of those things that I feel is very underdiscussed.

   29. GTGarry Tan5:03

       Yeah. That's definitely true.

   30. EGElad Gil5:05

       Yeah.
3. 5:10 – 7:50

   Early social media startups

   1. SGSarah Guo5:10

      when do you start making angel investments?

   2. GTGarry Tan5:12

      Oh gosh, it was much later. I mean, let's see. Posterous was funny because we had a sh- a chance to be Instagram but we didn't know it at the time (laughs) . Obviously no- like, nobody did. I mean, you- you were working in the social space too a lot, like-

   3. EGElad Gil5:26

      Yeah.

   4. GTGarry Tan5:26

      ... that was a really interesting moment in (person sneezes) internet history. It... I think it, like, kind of parallels what people are probably experiencing right now with-

   5. EGElad Gil5:33

      So, so similar.

   6. GTGarry Tan5:33

      ... uh, AI, isn't it?

   7. EGElad Gil5:35

      Yeah. Yeah.

   8. GTGarry Tan5:35

      Like, we all knew that something very different was happening with the way humans were sort of communicating. Um, you know, there was Six Degrees, there were like... I mean-

   9. EGElad Gil5:45

      Mm-hmm.

   10. GTGarry Tan5:45

       ... all of the same parallels. Like, there were, uh, a whole generation of social networks that failed-

   11. EGElad Gil5:50

       Mm-hmm.

   12. GTGarry Tan5:51

       ... and then those were the obvious ones to point to and say, "Oh, this... The whole trend is bunk. Like, it's not gonna work." You know, Six Degrees didn't work, that was a, you know, good enough team, what happened to that?

   13. EGElad Gil6:01

       Mm-hmm.

   14. GTGarry Tan6:01

       Or like, oh, Blogger, you know... Uh, it's funny because it's sometimes the same characters, right? Like, Evan Williams worked on Blogger, it was mostly forgotten at Google, and then he just never really, like, lost the bug to work on this social space.Um, probably the, the craziest thing was, uh, do you remember what Facebook, like, meeting Facebook people was like back then?

   15. EGElad Gil6:23

       Mm-hmm.

   16. GTGarry Tan6:24

       Like, it was like meeting cult members.

   17. EGElad Gil6:26

       Yeah, they had a, a really strong culture. And to your point on the waves, you know, before they had Friendster that everybody thought was gonna be the winner, and then MySpace there we thought was gonna be the winner. And then I remember when Facebook came out, everybody kind of poo-pooed it because they were like, "Well, it's just colleges, and who's really gonna care? And MySpace is for everyone," and all this stuff. And then of course, um, MySpace eventually just kind of died in part due to over-monetizing the, the site with too many ads and things like that. Um...

   18. GTGarry Tan6:47

       But also, the founders were not technical.

   19. EGElad Gil6:50

       Yeah.

   20. GTGarry Tan6:51

       Which actually, I think that's even, you know, going back to the YC, the cult of YC, I'm starting to realize, that is actually one of the core things that we've always believed.

   21. EGElad Gil6:59

       Mm-hmm.

   22. GTGarry Tan7:00

       That extremely technical people, uh, those are the people who probably should be like, the Zucks and the Larry and Sergeys of the world. Like, those are the people who we should give extra support to and actually fund and tr- you know, basically the hard part about, uh, playing chess is not knowing how the pieces move, it's being smart. So let's go find the smart people, and then we can teach them, like, the community will teach them-

   23. EGElad Gil7:23

       Mm-hmm.

   24. GTGarry Tan7:24

       ... how to, uh, you know, play, play chess, the game itself.

   25. EGElad Gil7:27

       Mm-hmm.

   26. GTGarry Tan7:27

       Your analog to AI in, um, mobile is really interesting because I remember during the early days of mobile, like 2009, 2010, uh, I remember seeing half a dozen different companies all go from zero to a few hundred thousand users in like a week or two for mobile uploads, photo uploads, and then they die, and Instagram is the only one that sustained.

   27. EGElad Gil7:44

       Yeah.

   28. GTGarry Tan7:44

       And its growth was actually a little bit more linear. Um, how do you all think about that in the context of the batches that you fund at YC?

4. 7:50 – 10:03

   Trend predicting at YC

   1. GTGarry Tan7:50

      'Cause you have, you know, over 200 companies per batch now. I think a large proportion are AI-centric. Is it half of them?

   2. EGElad Gil7:56

      About 70% right now.

   3. GTGarry Tan7:56

      70%? Wow, yeah.

   4. EGElad Gil7:57

      Yeah, so quite a lot. Uh, yeah.

   5. SGSarah Guo7:58

      Mm-hmm. And that's gotta be really different from year and a half ago.

   6. GTGarry Tan8:01

      Yeah, I mean, there's... I mean, it started back then, and then now, um, it's the, I guess the secret is out that-

   7. EGElad Gil8:08

      Mm-hmm.

   8. GTGarry Tan8:09

      Um, I think GPT-4 was actually a really big breakthrough if you talk to, uh, Jake Heller at Casetext, he was one of the first people to actually get access to GPT-4, and then when he comes and speaks at the batch... You guys should have him on the show, he's actually, I mean-

   9. EGElad Gil8:23

      Hmm.

   10. GTGarry Tan8:23

       The story, his story is really crazy actually. Um, they actually, well, only two of the co-founders had, uh, access to it, and then they went off into a room to play with it. They had gotten access to 3 and 3.5 before, uh, but 4 was the first one where definitively they almost never got hallucinations.

   11. EGElad Gil8:42

       Mm-hmm.

   12. GTGarry Tan8:43

       And so they said, "This is actually the moment where-"

   13. EGElad Gil8:45

       Mm-hmm.

   14. GTGarry Tan8:46

       "... um, they can apply large language models in a practical way and actually charge money." And so it was actually, uh, fascinating to hear, like, y- you should hear this story directly from him, but, um, I'm just obsessed with it because they were just very pragmatic about here's this API, it literally is, um, a form of intelligence on tap.

   15. SGSarah Guo9:05

       Mm-hmm.

   16. GTGarry Tan9:06

       And then because Jake was a lawyer, he's able to sort of go into the mechanics of what a lawyer would do, like, you know, basically just very, even like tailored time and motion level, like, detail of, well, this is what a lawyer does when they look at a brief or when they're writing a chronology, specifically he's doing X. And like they're opening, they're, they're reading paragraph by paragraph.

   17. EGElad Gil9:30

       Mm-hmm.

   18. GTGarry Tan9:30

       They're converting that into a score, like that's what highlighting is, at the end you, you know, take the outputs of that. And then so he, he would, you know, map the specific things that a human would do in this very pure form of knowledge work that pays a lot of money-

   19. EGElad Gil9:44

       Mm-hmm.

   20. GTGarry Tan9:45

       ... and then he would turn that into prompts and workflow and testing and scoring and... There's just like a billion different things that frankly like, all, like probably half of our portfolios right now are in the weeds trying to make those things work.

   21. SGSarah Guo9:59

       Totally. And I think like this sort of like, if you have somebody

5. 10:03 – 12:06

   Selecting YC founders

   1. SGSarah Guo10:03

      who is really technical and understands what the models can do, right? They might not be a researcher, but like sees it and has intuition for how to manipulate them, and you have, as you said, like the time and motion domain person, it's kind of an obvious pattern. Like we're both investors in Harvey, like this is actually a very related story.

   2. GTGarry Tan10:18

      Totally. Exactly.

   3. SGSarah Guo10:18

      But I bet... Uh, I mean I want to hear about some of the things you're selecting for in like YC founders in this era.

   4. GTGarry Tan10:24

      Yeah. That hasn't changed though, by the way.

   5. SGSarah Guo10:25

      Okay.

   6. GTGarry Tan10:25

      I mean, we're just selecting the same type of people that we want like all the time. We want highly technical people who are very clear communicators. And so, you know, the bad version of it, which, I mean, you guys get pitches like this all the time. Like you go to an event and someone's like, "Oh, I'm working on this thing," and you dig a little bit and it's like they haven't talked to customers, they haven't talked to users, there's no, uh, insight.

   7. SGSarah Guo10:47

      It does everything, yeah.

   8. GTGarry Tan10:48

      Right, it does every-

   9. EGElad Gil10:49

      Mm-hmm.

   10. GTGarry Tan10:49

       It's a general purpose thing.

   11. SGSarah Guo10:51

       Yeah.

   12. GTGarry Tan10:51

       Um, it's, there's not like a thin edge of the wedge. There's not, you know, some set of users that will absolutely love it. And then I guess like I was speaking about this at, what was it, the Startup Grind, uh, conference recently that like I'm realizing there are just really two totally different, uh, ways to think about the world and then the founders that really do it, do it almost entirely from first principles and the, for a startup founder that, what that means is actually going to talk to founder, uh, talk- not, not talk to other founders or even talk to investors, you know, that's all sort of secondhand. Like to go, to pick a very specific set of people, it's like not just all lawyers but like, "I'm just going to-"

   13. EGElad Gil11:34

       Mm-hmm.

   14. GTGarry Tan11:35

       "... work with, um, litigators," right? Because, and then, "I'm actually gonna focus on corporate litigators who," you know-

   15. EGElad Gil11:41

       Yeah.

   16. GTGarry Tan11:41

       ... "uh, do this particular segment." And it's-

   17. EGElad Gil11:42

       I would almost view it as like, um, talking to customers is firsthand, talking to other founders is secondhand, talking to investors is thirdhand.

   18. GTGarry Tan11:48

       Yeah. (laughs)

   19. EGElad Gil11:49

       And if you ever go and talk to an investor and an investor and LP or whatever it's like fourth hand.

   20. GTGarry Tan11:53

       Yeah.

   21. EGElad Gil11:53

       And so you see this like-

   22. GTGarry Tan11:53

       God help you if you're like trying to, um, make-

   23. EGElad Gil11:55

       Yeah.

   24. GTGarry Tan11:55

       ... make your way by like reading the Wall Street Journal or TechCrunch or even Twitter.

   25. EGElad Gil11:59

       Mm-hmm.

   26. GTGarry Tan11:59

       It's like then that's fourth or fifth hand. The fourth or fifth hand retelling of things that happened six or nine months ago.

   27. SGSarah Guo12:05

       They don't know, yeah.

   28. EGElad Gil12:05

       Right.

6. 12:06 – 18:34

   AI trends emerging in YC batch

   1. EGElad Gil12:06

      So if you look at, um, the YC batches, so you have, you know, 70% of companies now doing AI. If you have say 200 to 250 companies a batch, there's somewhere between 150 and 200 startups, and to some extent you could argue each startup is in some sense a vote on what's interesting in AI.If you kind of aggregate up all those startups, are there common themes that are emerged? Is there sort of things that are more topical or interesting from a startup perspective? I almost view it as, like, a lens of, like a b- a giant, um, founder voting machine.

   2. GTGarry Tan12:32

      Yeah, totally. So, I'd, I'd say, like, 70% are somehow related to AI, and then two-thirds of them, um, you would sort of argue are, uh, SaaS wrappers, actually.

   3. EGElad Gil12:42

      Mm-hmm.

   4. GTGarry Tan12:42

      Like wrapper is, like, sort of the pejorative, but I definitely believe that the, the sort of, uh-

   5. EGElad Gil12:47

      I think wrappers work.

   6. GTGarry Tan12:48

      ... ChatGPT wrapper thing-

   7. EGElad Gil12:49

      Yeah.

   8. GTGarry Tan12:49

      ... is actually just wrong. It's like saying that, uh, all of SaaS and cloud are basically, you know, MySQL wrappers. It doesn't make any sense.

   9. SGSarah Guo12:57

      Exactly. Yeah.

   10. GTGarry Tan12:57

       Like, this is just a pure technology that can be implemented, and then essentially it's a concentrated form of intelligence.

   11. EGElad Gil13:04

       Mm-hmm.

   12. GTGarry Tan13:05

       Um, and then the funny thing about it is, like, it's probably only 85 IQ, actually. (laughs)

   13. EGElad Gil13:10

       Mm-hmm.

   14. GTGarry Tan13:10

       Like, if you look at who would you actually hire in your real workplace, like, y-

   15. SGSarah Guo13:15

       Sorry. 85 in terms of what you need, or 85 in terms of what people are using today?

   16. GTGarry Tan13:19

       Oh, 85 IQ in terms of, like, when you ask it a question, like, I mean, it's able to give you an answer.

   17. SGSarah Guo13:25

       Oh.

   18. GTGarry Tan13:25

       But-

   19. SGSarah Guo13:26

       So the model quality today.

   20. EGElad Gil13:27

       I think it's like a eager intern right now.

   21. GTGarry Tan13:29

       Right. Yeah. It's definitely-

   22. EGElad Gil13:30

       That you kind of have to direct it.

   23. GTGarry Tan13:31

       ... someone who doesn't know that much.

   24. SGSarah Guo13:32

       My interns are better than that.

   25. GTGarry Tan13:32

       It's not that-

   26. SGSarah Guo13:33

       Yeah.

   27. GTGarry Tan13:33

       The intern is often better.

   28. SGSarah Guo13:35

       (laughs)

   29. GTGarry Tan13:35

       Uh, I mean, you would hope that your interns would be higher IQ than that, right? So 100 IQ is average IQ, right?

   30. EGElad Gil13:40

       Mm-hmm.
7. 18:34 – 20:39

   Motivating culture at YC

   1. EGElad Gil18:34

      of the really, uh, one of the things that YC founders tell me often is that they feel that, um, YC's incredibly good at pushing near-term milestones. So every week, what have you done? Have you actually followed up on the things that you said you were gonna do? Are you talking to customers? Like it's very tangible and that pushes progress, and I think Cruise is a really good example of, "Here's a tangible thing I need to ship."

   2. GTGarry Tan18:52

      Yeah.

   3. EGElad Gil18:53

      And I think there's a very strong shipping culture. Um, where does that come from? Is it the partners that you have? Is it originally from Paul Graham? I mean, sort of, I think there's a really strong culture of a lot of these things that really help drive progress forward in the earliest stages of a company.

   4. GTGarry Tan19:06

      Yeah. I mean, I think it was sort of like the blend of a whole lot of different things. Like, I actually don't ex- I, I think Paul Graham in particular was always about helping people see how big the idea could be. Like, you're doing-

   5. EGElad Gil19:19

      Mm-hmm.

   6. GTGarry Tan19:19

      ... this thin edge of the wedge, but, but if you do that really well and you do these other intermediate things, like wow, like you could be a $10 billion, $100 billion company.

   7. EGElad Gil19:26

      Mm-hmm.

   8. GTGarry Tan19:27

      And so, um, I think Paul Buchheit, like fr- creator of Gmail-

   9. EGElad Gil19:31

      Hmm.

   10. GTGarry Tan19:31

       ... he was one of the first people to make, uh, group office hours, which is sort of-

   11. EGElad Gil19:35

       Mm-hmm.

   12. GTGarry Tan19:35

       ... using social pressure. It's almost like, uh, Alcoholics Anonymous-

   13. EGElad Gil19:39

       Yeah. (laughs)

   14. GTGarry Tan19:39

       ... as like... But for founders-

   15. EGElad Gil19:41

       Mm-hmm.

   16. GTGarry Tan19:41

       ... where it's like, uh, you really don't wanna, you, I mean, it's a, a mild form of co-opetition.

   17. EGElad Gil19:47

       Mm-hmm.

   18. GTGarry Tan19:47

       Like, you're in competition with your friends. Like, you want them all to succeed-

   19. EGElad Gil19:51

       Mm-hmm.

   20. GTGarry Tan19:52

       ... but at the same time, like, if you come and you don't come correct, you're gonna feel bad that week. And, you know, our realities are very socially-

   21. SGSarah Guo19:58

       No, I mean, the YC founder, like founder friends will tell me, like, th- they're very stressed about group office-

   22. GTGarry Tan20:03

       Yeah.

   23. SGSarah Guo20:03

       ... hours because they have to show up, right?

   24. GTGarry Tan20:05

       Yeah, they have to show up, yeah.

   25. SGSarah Guo20:05

       And like, everybody's gonna look around-

   26. GTGarry Tan20:07

       And did you do your thing?

   27. SGSarah Guo20:07

       ... and say, "What have you done?" Yeah, yeah.

   28. EGElad Gil20:08

       Mm-hmm.

   29. GTGarry Tan20:08

       Yeah, did you hit your goal this week-

   30. SGSarah Guo20:10

       Yes.
8. 20:39 – 24:01

   Choosing the startups with longevity

   1. EGElad Gil20:39

   2. SGSarah Guo20:39

      In terms of just, uh, distinguishing, like what are ideas that you would actually be willing to back? You've used this analogy of like, it's a bunch of startups that are mice running around the feet of the elephant.

   3. GTGarry Tan20:50

      Oh yeah, that's definitely what's happening. (laughs)

   4. SGSarah Guo20:52

      How do you decide, like, what isn't gonna get stomped?

   5. GTGarry Tan20:54

      Um, we just ask them, and then if it's plausible and, uh-

   6. SGSarah Guo20:58

      (coughs)

   7. GTGarry Tan20:58

      ... makes sense, you know, why not? Like, I mean, that's the amazing thing about early stage.

   8. EGElad Gil21:03

      Mm-hmm.

   9. GTGarry Tan21:04

      Like, you can basically... If, if we learn something from people-

   10. NANarrator21:08

       (coughs)

   11. GTGarry Tan21:08

       ... if they are, you know, in direct contact with, uh, what's really happening, then that's the most powerful thing.

   12. EGElad Gil21:14

       Mm-hmm. What, uh, what has been the most surprising version of that, where you thought, "This company, uh, this YC company is definitely gonna get stomped by a incumbent," and they just ended up winning or doing really well?

   13. GTGarry Tan21:25

       That's a good question. I mean, there are just so many examples, right? Like, like Scale might be a good example.

   14. EGElad Gil21:31

       Mm-hmm.

   15. GTGarry Tan21:31

       Like, you know, there's really... You would've assumed that, like, wouldn't Google just do this? Or, eh, there are, like, so many other people who have more or less, like, infinite access to information.

   16. EGElad Gil21:41

       Mm-hmm.

   17. GTGarry Tan21:41

       Like, Amazon could have done that at some level. Like, they already have Turks. Like-

   18. EGElad Gil21:45

       Mm-hmm.

   19. GTGarry Tan21:46

       ... there, there's so many other people who could have done it, but-

   20. SGSarah Guo21:48

       It's true. I mean, Google had all these organizations where they were paying massive numbers of labelers internally.

   21. GTGarry Tan21:51

       Yeah.

   22. SGSarah Guo21:51

       They like had the operational expertise and the need, right? Yeah.

   23. GTGarry Tan21:54

       Yeah, exactly. So, uh, you know, I think that, that may- might be the good news for startups, because, uh, actually the, the mega tech companies have such unassailable moats, and they make so much money-

   24. EGElad Gil22:08

       Mm-hmm.

   25. GTGarry Tan22:09

       ... that they're actually somewhat incapable of, like, stomping anymore.

   26. SGSarah Guo22:14

       It's a, it's a weak elephant.

   27. GTGarry Tan22:15

       Yeah.

   28. SGSarah Guo22:15

       It didn't do its pushups every week.

   29. GTGarry Tan22:16

       It just doesn't have to-

   30. SGSarah Guo22:17

       Yeah.
9. 24:01 – 29:24

   Shifting YC found demographics

   1. EGElad Gil24:01

      How have things shifted at YC over time? So I know in the earlier days, um, if I recall correctly, a subset of the companies would actually merge, right? And so they, you know, somebody would have an idea that wasn't quite working and they'd join one of the teams that was working, or they'd kind of shift ideas midstream. Um, and also it feels to me, without any data so I could be wrong, that the demographics used to be younger.In other words, if I look at the early batches of YC, you know, Sam Altman was in there when he was, like, a Stanford dropout. And there's other people, Patrick and John from Stripe. Like, people joined really young.

   2. GTGarry Tan24:32

      Yeah, totally.

   3. EGElad Gil24:32

      Um, have there been big shifts in those sorts of trends in terms of how many companies can actually raise money out of the program, the demographics of the people?

   4. GTGarry Tan24:39

      Yeah. Great question.

   5. SGSarah Guo24:40

      Wait. How old were you when you did YC?

   6. GTGarry Tan24:42

      I was 27.

   7. SGSarah Guo24:43

      Okay.

   8. GTGarry Tan24:43

      So yeah.

   9. SGSarah Guo24:44

      A grownup, almost.

   10. GTGarry Tan24:45

       Yeah, yeah, yeah. Totally. I think that that's actually the average age of, uh, YC at this point. It is trending younger. Like, I wouldn't be surprised if this year was this- this current batch for summer was closer to 25 or 26.

   11. EGElad Gil24:56

       Mm-hmm.

   12. GTGarry Tan24:57

       Um, but it did trend much older for some time. Um, I think some of it was probably, uh, shifting alongside, like, what was fundable and what people wanted to work on. Um, you know, now we're deep in the AI boom, so actually working on software-

   13. NANarrator25:13

       (coughs)

   14. GTGarry Tan25:13

       ... and being a great software engineer is, uh, actually almost all you need sometimes.

   15. EGElad Gil25:18

       Mm-hmm. Yeah.

   16. GTGarry Tan25:18

       Like, when you're in a- a sh- a m- a m- a world where things are shifting this quickly, like literally week to week, uh, people are creating, uh, new ideas, new ways to do things, um, I actually think that that really shifts back towards much younger founders. So-

   17. EGElad Gil25:34

       Mm-hmm.

   18. GTGarry Tan25:35

       ... we've seen far more, you know, 19, 20, 21-year-olds dropping out of college to start AI companies now mainly because if they don't, like, they'll just miss the boom.

   19. EGElad Gil25:45

       Yeah.

   20. GTGarry Tan25:45

       And that's actually a very interesting thing. Um, but I will say, like, maybe three to five years ago, I mean, some of it, like sitting here, I have to say, like, "Thank you, Sam Altman. Thanks, Greg Brockman." Like, they took a really mega bet-

   21. EGElad Gil25:59

       Mm-hmm.

   22. GTGarry Tan25:59

       ... on transformers and those architectures, and they basically showed that, like, you know, scaling, you know, you can-

   23. EGElad Gil26:06

       Mm-hmm.

   24. GTGarry Tan26:06

       ... scale this stuff and that you can get a lot of valuable- value out of it.

   25. EGElad Gil26:10

       Mm-hmm.

   26. GTGarry Tan26:10

       So, uh, if that didn't happen, I actually sort of wonder where startups would be right now. You know, three to five years ago-

   27. EGElad Gil26:15

       Mm-hmm.

   28. GTGarry Tan26:15

       ... I think YC even was, like, somewhat known a little bit better for, uh, you know, uh, international companies still chasing, like, uh, standing up vertical marketplaces.

   29. EGElad Gil26:26

       Mm-hmm.

   30. GTGarry Tan26:26

       And so if you're doing a vertical marketplace, like, you can't even do the vertical marketplace if you have never, you know, been in a shipyard in, you know-
10. 29:24 – 31:01

    Building in San Francisco

    1. SGSarah Guo29:24

       How do you think about, you know, being in the SF ecosystem?

    2. GTGarry Tan29:28

       I mean, I think being in person just makes sense. Going from zero to one, uh, you need to be with, like, the smartest people around you. And then, um, I actually think there's a lot of value in just, like, the dinner discussions that are happening around San Francisco. You know, only here can you- you know, can the tool makers and the foundational model builders and the researchers literally sit down and break bread with the people way out on the edge, like, trying to practically deploy these things to every industry and every type of knowledge work in the world. And those are literally sort of the most high value conversations on the planet right now 'cause, you know, on the one hand, like, maybe AGI will happen, like, relatively soon. On the other hand, like, it might be longer, and then, uh, we're gonna be sort of trying to squeeze, like, the most out of, uh, you know, RAG, out of, like, how do we make embeddings work? How do we actually, uh, make this workflow and test work? And, like, I- people don't know, like (laughs) , you know, the- the difference between something that is a very good AI, uh, you know, app and, like, something that is outrageously stellar is actually the devil's in the details on all of that stuff. And those people are literally coming up with the concepts and the- writing the open source and, like-... sharing it on, you know, the, the forums are global, but, like, the people making them, like, I think they're within, like, five miles of where we're sitting right now.

    3. EGElad Gil30:51

       You're, you're widely credited externally as somebody who's really bringing a lot of, um, almost like founder energy back into YC again and helping to really drive, um, future directions. How do you

11. 31:01 – 33:17

    Making YC a beacon for creators

    1. EGElad Gil31:01

       think about where you want YC to be over the next couple of years? Like, five years from now, looking back, what do you want to have changed or built or accomplished?

    2. GTGarry Tan31:09

       I, I'm sort of assuming that there's a scenario where, um, there will always be a need for people who understand how this stuff works to continue to build the next version. Um, if we're in a scenario where that's not true, like, I have no intelligent thoughts (laughs) on, like, what's gonna happen there.

    3. EGElad Gil31:27

       Mm-hmm. Yeah.

    4. GTGarry Tan31:27

       Um, on the, on the flip side, like, I think that, I mean, there's no s- there's no substitute for human, like, intent and ingenuity and belief and, frankly, ideology.

    5. EGElad Gil31:40

       Mm-hmm.

    6. GTGarry Tan31:40

       Like, I think that, uh, you know, what I love about YC, it is sort of like the defining magnet for people who are ambitious and optimistic about technology, and smart. And, you know, those are the people who we really desperately need to save from working at Goldman Sachs. Like, sorry, my friends at Goldman Sachs, but like-

    7. EGElad Gil32:00

       (laughs)

    8. GTGarry Tan32:00

       ... you know, sort of saving people from investment banking, from consulting, from middle management, from working in big tech. Like, you know, we're not numbers, we're free people, you know? (laughs)

    9. EGElad Gil32:11

       Yeah, yeah.

    10. GTGarry Tan32:11

        Like, we need to escape and, uh, create. And, you know, if, if it's one thing I've learned, like, that sort of, um, the responsibility and the obligation, uh, you know, to whom much is given, much is expected. And, you know, what I want YC to be is, like, sort of that, like, beacon and institution. Like, y- you know, if you have an idea, if there's a problem in the world to solve, it could be s- if it could be solved through capitalism and technology, which, like, I fully admit, like, you know, some people might say, like, absolutely everything can be solved that way. There probably are things that can't be solved that way. But if it can be, like, come fill out this 12-question form on the internet-

    11. EGElad Gil32:52

        Mm-hmm.

    12. GTGarry Tan32:52

        ... and, uh, people who came before you who are, you know, basically pure of heart and, uh, you know, ideologically with you, will try to help manifest that with you and will put you in a room with hundreds or thousands of other people who all believe that. And if not us, then who? You know, it has to be us. Like, we have to create a movement of people who believe this thing and then create it.

12. 33:17 – 39:59

    Garry Tan is bringing San Francisco back

    1. GTGarry Tan33:17

    2. SGSarah Guo33:17

       Should we talk about SF being back?

    3. GTGarry Tan33:19

       Yeah.

    4. SGSarah Guo33:19

       What is that gonna take?

    5. GTGarry Tan33:20

       Uh, I mean, I guess I'm still figuring it out and then, um-

    6. EGElad Gil33:24

       And, and for context, by the way, for, for, uh, people listening in, at least on our side, you know, Gary has really emerged as one of the leaders in San Francisco in terms of really taking a moderate, thoughtful stance in terms of, you know, what does a city need? How can we encourage development in different ways? How can we make sure that different types of people across a city are taken care of properly? And just being very thoughtful about, how do we just think about society and culture in our city? And so, I think that's kind of the-

    7. GTGarry Tan33:50

       Thank you.

    8. EGElad Gil33:50

       ... context.

    9. SGSarah Guo33:50

       And I, and I think the, the stance is also, like, um, also in terms of ambition, like, expecting excellence in San Francisco and that being possible, both in term, uh, you know, anything from, like, safety to support of businesses to support of different communities. And so, uh, I think there, there is an expectation that Gary is putting on, um, you know, on a policy agenda and, um, people here.

    10. GTGarry Tan34:10

        Right. Some of it is we just actually want effective government. So there's lots of things-

    11. EGElad Gil34:14

        Mm-hmm.

    12. GTGarry Tan34:14

        ... that, like, pri- you know, private enterprise cannot fix. Like, private enterprise literally cannot help people have a great public school education, you know? I'm the product of public schools. Like, if I couldn't study algebra in middle school, if I couldn't study calculus by senior year, I couldn't have gotten into Stanford, I couldn't have studied computer science, and I never would've been able to participate in, like, what is the craziest thing that's, like, I think very important, like, to be able to create technology that solves problems, right? So, uh, and it's crazy that we have people from around the world, the smartest people, you know, the most ambitious people in the world who immigrate here from all around the world. Like, we literally brain drain every other s- you know, sort of city and country in the world to come to... Like, that's why San Francisco is so diverse. Like, that's actually amazing. Like, every type of food that you could possibly want, like, you can get, like, a very good version of it here. Like, this is like the definition of a cosmopolitan city. And then, you know, we say, "Come, like, build the future." And then, you know, when they have kids, it's like, "Oh, yeah, your kids can't learn algebra."

    13. SGSarah Guo35:17

        Mm-hmm.

    14. GTGarry Tan35:17

        Like, it doesn't make any sense.

    15. EGElad Gil35:18

        Mm-hmm.

    16. GTGarry Tan35:18

        Like, how could we do that to ourselves? And when I dug a little bit more, it's actually just that people are too afraid to say things. And so, my main thing is like, if you're listening, um, you know, if you're watching, please, like, speak out, right? You know, I think that SF got very, very bad because you couldn't say basic things like, "I believe in algebra for middle schoolers," right? And that war is raging in, you know, i- in the hallways of the School of Education at Stanford right now. P- you know, uh, there are researchers who are highly politically and ideologically motivated who have control of the apparatus that is, like, you know, sort of quote unquote "science," I guess. And then you have real scientists, real mathematicians, real computer scientists at Berkeley and Stanford coming and saying, "What do you mean you shouldn't, you know, teach children math at that age?" And that, that, that's like-

    17. EGElad Gil36:12

        Mm-hmm.

    18. GTGarry Tan36:12

        ... the level of discourse that we're at. And then when you remove the access to math, like, how could... Like, that actually hurts the most, the people who most need good public education because, you know, if you're, if you don't have money, you go to public school. And if you can't even take math, how could you even create stuff? Like, we desperately need that. This is literally the most vibrant community of people in the world. It's like this sort of pressure cooker of, uh, the smartest people with the best, with the most ambition. And that's a good thing. And their children should be allowed and should have, you know, they don't h- they shouldn't have to be rich-... to be able to actually participate in what's going on.

    19. EGElad Gil36:52

        Yeah, there's a lot of that. I'm, I'm also a product of, uh, public schools and I feel like there's a lot of (clears throat) ideological removal of ladders. You know, it's kind of preventing other people from climi- climbing up as well, and so I think it's great that you're doing a lot of this work to say, "Okay, let's, let's extend the ladders, let's allow more people to rise up in different ways, learn things that are important for their education and participate in the modern economy."

    20. GTGarry Tan37:12

        I think we're just getting started at some level. Uh, you know, I think it's, there's gonna be bumps along the way but, um, it's actually not more complicated than knowing about the issues, talking about it at dinner and then voting. Like, making sure you vote and make sure you use the Grow SF Voter Guide (laughs) . You know, like, you actually have to, you know, educate yourself on, you know, the pros, cons and what's going on and then, you know, there might be a moment in the future where it's like, "Oh, a- a- actually, like, maybe we did everything we could," but we are still very far from that. Like, the, the, it's very obvious still what we need to do.

    21. SGSarah Guo37:47

        It's interesting how, um, controversial, like, in narrative some of these issues become because so much of it is framing, and I think, like, a voter guide that talks specifically about, uh, initiatives and budget spending is a great way to, sort of disambiguate that. Because to some degree I can't imagine, like, um, access to math education is a, it, like, uh, I mean, I'm a public school math nerd, right?

    22. GTGarry Tan38:12

        Yeah.

    23. SGSarah Guo38:12

        And I look at, like, the, the people that we get to back that are changing the world, that have massive access to opportunity, many of whom are immigrants and children of immigrants, um, that come from diverse backgrounds, and I'm like, "I think what we should be trying to do is get more people into competition math and, like, more access, um, versus shove down the ceiling."

    24. GTGarry Tan38:30

        Oh, absolutely.

    25. SGSarah Guo38:31

        But again, n- now I'm using pointed language because I, I think, uh, I think when you frame it as an issue of racism or, uh, or whatever else, like, you know, it becomes a lot more complicated than it actually is.

    26. GTGarry Tan38:41

        Yeah. I mean, there is a lot of nuance in these things.

    27. SGSarah Guo38:43

        Mm-hmm.

    28. GTGarry Tan38:44

        Um, and so getting it right is hard but, um, I think what happened is, you know, in tech but, like, broadly just, like, normal human beings trying to make their way about in, you know, just taxpaying citizens who are just trying to, like, live their lives, we sort of put blinders on it. Like, it got too, like, messy and it got a little bit too scary to talk about. And, uh, I guess what I'd love and what I think is happening right now is that people are speaking up.

    29. SGSarah Guo39:12

        Well, and I think a message that is, um, perhaps not at all political but is a good and inspiring one to, uh, to end on before we go to part two, Gary's YouTube channel, um, and talk, you know, again, more about AI and such is, uh, um, like, you know, reigniting a grassroots degree of civic engagement across the spectrum, making it possible to talk about these issues with nuance is a very good thing.

    30. GTGarry Tan39:35

        Yeah.

Episode duration: 39:59