Y Combinator in the Age of AI | Ep. 43

Jack Altman 0:00 I think like AI and like a big change like this, like, favors younger people and for all sorts of reasons. So I, I get it.

Garry Tan 0:05 For what it's worth, I'm a late bloomer. I did YC when I was twenty-seven, and-

Jack Altman 0:09 I was twenty-six.

Garry Tan 0:09 Yeah. So, hey, late bloomers, high five. [laughing]

Jack Altman 0:13 [laughing] The old guys. [on-hold music] All right, guys, I'm really excited to be here with you. Thanks for, thanks for

Jack Altman 0:18 all doing this with me. So I guess just to start, when did you all first go through YC as founders?

Jared Friedman 0:22 I think I did it first. I was summer two thousand and six, so the third batch ever.

Speaker 0:26 I did winter two thousand and seven, so six months later.

Garry Tan 0:29 And then summer '08.

Jack Altman 0:30 Okay. So a long time.

Garry Tan 0:32 Yeah.

Jack Altman 0:32 It's, like, pretty close to the beginning.

Garry Tan 0:33 Yeah.

Jack Altman 0:34 So I guess where I wanna start is, like, you all have, in many incarnations, seen, you know, what YC has been like as founders, as partners. You know, you've sort of worked outside of YC, inside of it. What has changed? And so I guess maybe the lens I wanna ask this question through is what was the value proposition to founders in 2006 versus 2016, 2026? Like, what has changed? What has stayed the same?

Garry Tan 0:59 Yeah, what was it like in '06?

Jared Friedman 1:00 The most surprising thing to people from, from the outside, I found, is actually how little has changed, and I think that's kinda by design, which is, like, the thing that Paul Graham created, that we all did in the early two thousands. Like, it was great. It was a great product, and as you know, when you have a great product, you're like, "Don't fuck with it."

Jack Altman 1:18 [chuckles]

Jared Friedman 1:18 You know? There are some things had to change, but I would say in broad strokes, it's much more the same than it is, is different.

Jack Altman 1:24 How would you capture the essence of that product? Like, to a founder, if you had to boil it down to, like, two or three things, like, what is that product about?

Jared Friedman 1:32 So we recently worked on a redesign of the Y Combinator website. Actually, Garry had it.

Garry Tan 1:36 Garry Tan.

Jared Friedman 1:36 But we actually, like, tried to, like, write it down m- possibly for the first time. Do you wanna explain this? Since it's really your words on the website.

Garry Tan 1:44 Oh, gosh. I mean, it was team effort, but, like, honestly, we tried to return to, you know, what is the founder's experience, and then we found all of these old photos of, you know... I-- actually, your brother is, like, the first-

Jack Altman 1:58 Yeah

Garry Tan 1:58 ... one on there, and it's, like-

Jack Altman 1:59 First batch

Garry Tan 1:59 ... him with the double pop collar.

Jack Altman 2:00 Yeah.

Garry Tan 2:01 And then-

Jack Altman 2:01 We'll pop that up on the screen.

Garry Tan 2:03 [laughing] That's right. And then you start flipping through, and it's, you know, Patrick and John Collison. It's Brian and Joe and Nate-

Jack Altman 2:09 Yeah

Garry Tan 2:10 ... at Airbnb, and you see them so young. And then you see them, you know, ring the bell, and it's like, basically what we're trying to create is, like, Disneyland for transformation from, you know, startup founders who are just starting out to literally the people who sort of make these, the companies that really matter. It's actually a social process. Like, all reality is sort of, um, socially constructed. And then uniquely, like, I remember when I found, uh, YC and then came to my fir- my first startup school, it was kinda like being a fish out of water and then jumping into water.

Jack Altman 2:46 Mm.

Garry Tan 2:46 Like, I was surrounded by people who were builders, who, like, were earnest. And, uh, you know, basically, when you get into YC, like, we take people who are earnest and technical, and then at the end of that process, hopefully they become formidable. And so when you go to the homepage, that's what that's about. It's like YC is, like, a transformative process.

Jack Altman 3:06 Yeah.

Garry Tan 3:07 It's like Hoffman or something. It's like this... It's not that new agey. It's actually very chill. It's more like, um, you know... I, I don't know how you would describe it.

Jack Altman 3:16 I'm a Harry Potter fan, so I prefer to think of it like Hogwarts.

Garry Tan 3:19 That's good.

Jared Friedman 3:19 Yeah.

Garry Tan 3:20 Yeah.

Jack Altman 3:20 I mean, I kinda felt like when I... I did in winter '16, and I felt like starting a company is such, like, a, it's such, like, a weird, odd experience, and in some ways, having this group that normalizes what it's about, where you're, like, surrounded by other people, where they, like, talk about, like, "Here's the new language and the new set of things you should be thinking about," it almost, like, makes the strange dream that you're in, like, you, like, get calibrated or something like that.

Jared Friedman 3:42 Totally.

Jack Altman 3:43 So I thought that was a big part. And then I guess also there's always been the thing of, like, there is some stamp of approval. I think that's, like, hard to, you know, sort of underweight. I'm curious how you guys think about that with, like, outsiders in particular. One of the things that seems different to me at least is now more than ten years ago, and I'm sure more than twenty years ago, like, the ecosystem is, like, an understood thing, and, like, a lot of founders, like, you know, they can read a lot of stuff online. People can read a lot about them online. There's more known in general. But I still feel like there's this thing that YC can do, which is take people who maybe aren't yet in that vortex and identify talent somehow and bring them into the vortex. I'd just be curious if you guys, like, spend, like, active cycles thinking about that.

Garry Tan 4:26 All the time. I mean, actually, I'm in the middle of my, uh, very intense addiction to CloudCode and Codex, and, like, actually using this stuff-

Jack Altman 4:36 [chuckles]

Garry Tan 4:36 ... is pretty wild because, um, like, I basically recreated my two thousand and eight startup. It's like seventy thousand lines of code. I did it in about, like, I don't know, ninety hours over two weeks 'cause I have a full-time job and, like, [chuckles] also, like, trying to raise kids. But it just, like, really compressed a lot of my sleep. But, uh, at the end of it, I have a code base that is better than what it took, like, five engineers and me taking anti-narcoleptics to, like, [chuckles] build for my YC startup.

Jack Altman 5:04 Yeah,

Jack Altman 5:05 it's crazy.

Garry Tan 5:05 It's, like, unbelievable, right? It's, like, actually something, something happened November, end of November, when Opus four point five came out that, uh, you know, I, I, I heard about it, and I was like, "Hey, what's going on?" Like, the, the most interesting thing for us is, like, we'd been talking about it for years.

Jack Altman 5:22 Yeah.

Garry Tan 5:23 And we'd been using it for years, and then it wasn't until really even December where AGI's here, guys, for code. Like-

Jack Altman 5:30 Yeah

Garry Tan 5:30 ... I feel like I could create, like, in eighty hours something that I could not create with five million dollars and five engineers in two years.

Jack Altman 5:38 So to stick with that, like, this coding topic, I guess my two questions flowing from that are, one, what are you trying to identify as greatness if before this moment you were like, "We need to find great engineers"? Like, what is the, what is the, the thing you're looking for now? How has that changed? And then my second question is, like, these startups, you know, like, the advice has been, you know, write code, talk to users. Like, it-

Speaker 6:02 What's, what is that now? Is that different?

Garry Tan 6:04 It's prompt and-

Speaker 6:05 Yeah

Garry Tan 6:05 ... prompt to users. [chuckles]

Speaker 6:06 Yeah. But like there's a lot less time prompting, I guess, right?

Garry Tan 6:08 So we just-- Like literally this happened, and then all of us have been sort of collectively do-- Like Harj did a project, like Jared's coding all the time.

Speaker 6:16 Yeah.

Garry Tan 6:17 Uh, our team is all using this stuff, and then we realized, "Hey, why don't we actually put it in the application process?" So for the first time, for the spring batch, you can upload a transcript of your Codex or Claude code transcript making a feature. And, uh, we're like starting to figure out how to process it, and, uh, we put it in a security sandbox 'cause we figure it'll be pro-prompt injected very quickly. You can tell a lot about whether someone can build just from like how they prompt the agents. And it's like, do they know systems? You know, for YC, you get a T-shirt that says, "Make something people want" on day one. It's like, you know, if you look at a resume, like you can sort of guess at whether they can make something, and then you really can't tell whether they can make something people want.

Speaker 7:01 Mm-hmm.

Garry Tan 7:01 You can look at their GitHub, and you can maybe see if they can make something. Like, the only way you can really tell if they can make something people want is like they did it already.

Speaker 7:09 Right. And there's not exactly like a GitHub for prompting, I guess.

Garry Tan 7:11 Yeah.

Speaker 7:12 'Cause that's what you're asking people for.

Garry Tan 7:13 But, you know, you can tell how-- You know, do they use plan mode? Like, do they think about systems? Like, you know, are they prematurely optimizing? Are they over-engineering? Like, you know, are they... Yeah. Basically, like what, what is a feature to them? What is a complete release? Do they think about like the edge cases? You know, how you do anything is how you do everything.

Speaker 7:33 Hmm.

Garry Tan 7:34 Uh, my favorite Steve Jobs quote, I mean, he talks about like, you know, if you're a carpenter, you can tell other, other really great carpenters, and you don't look at the front. Like, everyone looks at the front, and they're like, "Oh, yeah, this seems good." You, uh, you know, what a great carpenter does is, is, you know, an artisan looks at the back of the cabinet 'cause like the cabinet, the back of the cabinet, only other carpenters are gonna look at. And so I feel like that was one of my favorite things, like when I funded companies at Initialized, when I, you know, was a partner at YC the first time around, like that was my number one thing that I loved, was just like, is there game recognize game?

Speaker 8:09 Yeah.

Garry Tan 8:09 Like, you know, would this person... Would I go work for this person if I weren't doing the thing that I was doing now?

Speaker 8:14 This is how you spotted Arpit with Instacart, right?

Garry Tan 8:16 Yeah. Yeah, he came in, and honestly, like it was craft to get. He was literally, uh, had built, you know, an iPhone app that was a demo app. Uh, Claude Code didn't exist, so he actually had to build it himself.

Speaker 8:28 Hmm.

Garry Tan 8:28 And then, um, the way I could tell is, uh, you know, turning the cabinet to the back was, he could scroll it, and it scrolled really smoothly, and that wasn't true for like that era of iPhone apps. Like the, the App Store and the iOS app was brand new.

Speaker 8:41 Yeah.

Garry Tan 8:41 And then I feel like you guys do this all the time.

Speaker 8:43 I think so. I mean, to your question of like how does it change the way we might think about picking founders, I think it's gonna just expand the net versus necessarily change it. I think we're all still in agreement that we absolutely wanna fund like genius engineers who aren't necessarily using Claude Code. There's always like-

Garry Tan 8:56 Mm-hmm

Speaker 8:57 ... there's gonna be like a Patrick Collison of every era, and you wanna like fund those people. The way we've talked about it internally is that this is probably an era where we might find more Parker Conrads. Like Parker, when he applied with Zenefits at least like two thousand and thirteen, like I remember the applica-the application, extremely well written, but like single founder, kind of not in central casting. Like, kind of te- like, not quite technical. Like technical enough that I think he had like a demo, but like didn't have a CS degree, wasn't like sort of like the traditional YC archetype. As soon as, um... I think actually the only reason we interviewed him is at that point his previous company, SigFig, I had used it. It was like a personal finance app. It's like he's clearly capable of doing stuff.

Garry Tan 9:35 Yeah.

Speaker 9:35 In the interview, it was clear immediately that he like deeply understood what he was talking about, super articulate, clearly like a really strong product thinker.

Garry Tan 9:42 Yeah.

Speaker 9:42 It worked out for him 'cause he recruited a co-founder during the batch, and then obviously Zenefits had its thing, but then-

Garry Tan 9:47 Yeah

Speaker 9:47 ... Rippling's obviously huge. But I suspect that there's probably just like if Parker hadn't got his co-founder during the batch, it would've been a totally different story. And I suspect now, like Parker of today is just in Claude Code-

Garry Tan 10:01 Right

Speaker 10:01 ... like actually building quite sophisticated applications.

Garry Tan 10:03 And I guess it's also interesting 'cause like Parker is one of the most probably like commercially intelligent people there is, and I guess, you know, coding applications are probably making people with that shape increase, you know, increase their advantage. Obviously, I'm sure like the, you know, the, the, the real technical breakthroughs are always gonna be really important. And this is like markedly better than just looking at a resume or really... I mean, you know, I, I, you know, when I first came back to YC, like I read all the feedback. Like I, you know, we're on r/ycombinator too with our Anons, and we know like, you know-

Speaker 10:37 Yes, we are

Garry Tan 10:37 ... what people are saying.

Speaker 10:38 Yeah.

Garry Tan 10:38 It's like, yeah, like we should pay attention to this, and frankly, like we need to do better than that.

Speaker 10:43 Yeah.

Garry Tan 10:44 Right? Like just because someone... You know, Parker did go to Harvard, but like actually, we shouldn't fund someone because they went to Harvard. We should fund someone because they actually understand the user and are super unbelievably tenacious.

Speaker 10:55 Yeah.

Garry Tan 10:56 That's actually universal for any product, any vertical, any like set of customers you could have. Like, the most important thing is, you know, agency and taste.

Speaker 11:06 Yeah.

Garry Tan 11:07 Like agency is I see this person, and they have this problem, and I believe I can solve it using technology. And then taste is like, oh, well, let me actually build the first version and then get it in the hands of people.

Speaker 11:18 Yeah.

Garry Tan 11:19 And did it work? And like, oh, how did it break? Like you go all the way into the weeds, and it's like this incredible amount of like... Imagine like this, you know, hundreds of thousands of lines of code, and then you're going through and fixing like all the bugs.

Speaker 11:33 Hmm.

Garry Tan 11:33 Like think about the tireless, ceaseless gardener that is like necessary to... Like have you ever been to like, uh, the Bahai Gardens in Haifa? It's the most beautiful gardens I've ever been.

Speaker 11:44 Hmm.

Garry Tan 11:45 There's not a single weed. There's not a leaf out of place.

Speaker 11:48 Wow.

Garry Tan 11:49 It's like I think about like the best products in the world, the best experiences in the world are like that set of gardens, and it's because people... Like it's actually-

Speaker 11:57 Yeah

Garry Tan 11:57 ... a religion, and like they really, really care.

Speaker 11:59 Actually, I'm interested on that topic. I feel like, um, a piece of advice I found myself

Jack Altman 12:04 ... change a little bit over the years is I think, um, it used to feel a little bit more like you could just like ship something broken fast and then iterate from there. And I still think that's like a good general mindset, but I do feel like the bar for products is just so high now. Like, you know, like the quality of a software product at Series A seems really high to me lately. I don't know, how do you guys like advise people as they're like getting like MVPs out?

Jared Friedman 12:32 Well, if Garry was able to ship seventy thousand lines of code in a week while also running YC at the same time-

Jack Altman 12:36 And kids

Jared Friedman 12:37 ... I feel like the bar for what, you know, two founders working on their idea full-time could do before they interview with YC like should be a lot higher.

12:45 And we see this in the batches. Like a few weeks into the batch, we do, or some of the groups do what we call, we call it product showcase now. You just like get up there and like demo, quick demo of what you've built so far. And it's just like every six months over the last three years, it's like the bar for what you should demo even a few weeks into the batch just

Jared Friedman 13:01 keeps going up and up.

Jack Altman 13:02 It also makes me wonder like inside a batch, a company ought to be able to pivot more times than they used to be able to. Like-

Jared Friedman 13:08 Hmm.

13:08 Yeah

Jack Altman 13:08 ... companies ought to be able to try stuff-

Jared Friedman 13:09 Yeah

Jack Altman 13:09 ... see if they get traction in a few weeks, and if they don't like it and move. Like, are you seeing that happen? I mean, I know a lot of this is new, but do you feel like that's gonna be happening? Is it happening?

Jared Friedman 13:20 Absolutely. I think we're seeing companies try many things during the batch.

Jack Altman 13:24 Do you advise in that direction? I felt like historically there was, um, the YC school of thought I interpreted a little bit more as like ship fast, iterate, you know, see where you're at, go from there. And I've interpreted versus in contrast, the Keith Rabois school of thought was like, you're a movie producer, like dream your movie and then like ensure it happens and like don't let anybody say no.

Jared Friedman 13:45 I feel like the YC job is so much more in sort of almost like the psychology therapist end of the spectrum on this stuff. And I think when it relates to ideas, at least for me, a lot of it is more going off the vibe of the founder. Like, I don't really have a blanket like, should you pivot quickly and give up on this idea or stick with it for a long time? It's just like usually when you're meeting with founders, you can just tell. Like, if someone's like been working on something, like they've just never seemed excited about it, and like two weeks in they're still not very excited about it, it's like hard to tell them, "Oh, you just need to like persevere and keep going." It's usually better for them to like find the thing they have the, like, spark-

Jack Altman 14:21 Mm-hmm

Jared Friedman 14:21 ... about. I don't know, what do you think?

14:23 Yeah, I agree. I think like an anti-pattern for founders who are pivoting is like they have no existing prior on what a good idea is, and they're hoping that the outside world will tell them what a good idea is. And so they launch like five totally different things for five totally different groups of users, hoping that like one of them takes off.

Jack Altman 14:41 Yeah.

Jared Friedman 14:42 They usually don't. Typically, what I'll try to do is I'll try to like dig deeper with them to try to find an idea that they actually care about and then see how we can like turn that into a startup idea.

Jack Altman 14:52 One of the things that I've, like, noticed, which a lot of people have noticed this isn't some big insight, is that the sort of, uh, median startup in YC batches is a good indicator of, like, trends that are upcoming. Like, I noticed a couple years ago before AI was what, like, there was, like, one batch where, like, all of a sudden, like, half the companies were AI companies. Then the next batch it was, like, seventy-five percent. And then it was, like, it all looks like AI companies basically, except for, you know, hard tech. You got hard tech too.

Jared Friedman 15:16 Ten percent hard tech.

Jack Altman 15:17 YC is the hard tech of hard tech.

Jared Friedman 15:18 Yeah. [laughs]

Jack Altman 15:18 But there's a lot of... But so, um, what is the trend right now that you are seeing a lot of that you think, um, YC might be particularly, you know, attuned to early?

Jared Friedman 15:31 I don't think there's any strong trends yet.

Jack Altman 15:33 It's all just AI right now.

Jared Friedman 15:34 It's all just AI right now. I'd say some, some things that are smaller trends that might be glimmers of the, of the future, um, just in the, in the, in the current batch, um, prediction markets is big. I think, like, Kalshi is, like, very inspirational to a, a, a generation of people. Um, stable coins and crypto stuff-

Jack Altman 15:51 Mm-hmm

Jared Friedman 15:51 ... might, might be an-another interesting, like, non-AI trend to talk about.

Jack Altman 15:54 Yeah.

Jared Friedman 15:55 Harj is very involved with-

Jack Altman 15:55 Do you have a sense for why Kalshi and Pal- Like, why, why are these companies... 'Cause I agree they've captured something. Like, what is, what is that, do you think? Like, I feel like there is a generation that has been very motivated and interested in it, and it's clearly taking off. Do you have a feel for what that thing is?

Jared Friedman 16:12 I mean, anytime there's a regulatory change, you know, these things were, like, in a gray area, and then now it's green light.

Jack Altman 16:18 Mm-hmm.

Jared Friedman 16:18 So dude, everyone's gonna do it. Like, there's go- you know, capital flows to it. Uh, you know, capital is required for building consumer businesses, and boom, you got a consumer business growing super fast. Like, you get more capital, the flywheel happens, and you got another DoorDash, which is great. I mean, capital, you know, capital as a bludgeon works there-

Jack Altman 16:35 Yeah

Jared Friedman 16:35 ... really, really well.

Jack Altman 16:36 Yeah, it's interesting.

Jared Friedman 16:37 So but what's funny is, like, it's not clear to me capital as a bludgeon works as well with AI companies anymore.

Jack Altman 16:45 Hmm. What do you mean?

Jared Friedman 16:46 Like, you kinda don't need to have, like, the thousand-people company anymore.

Jack Altman 16:50 It's interesting. I still feel like I'm waiting for that, where, like, I know there are obviously some companies, like I've backed YC companies that are like, "I'd love to... Like, you know, I invested, and I'd love to invest more, but they're super profitable." I'm like, "Okay. That's great. I'm very happy for you."

Jared Friedman 17:01 Yeah.

Jack Altman 17:01 Um, but there's also companies raising bigger rounds than ever and consuming crazy amounts of capital, and in some ways it looks even more capital consumptive than ever before. And I, I don't feel like I have a good mental model to square exactly why that's happening.

Jared Friedman 17:15 It certainly seems like it's easier to get to, like, a million or two million dollars of ARR without hiring, like, anyone. Like, we're alwa- we're used to seeing this. We get so many investor updates, and usually we're used to seeing, like, "We just hit a million ARR, and we had, like, ten people," and now it's just, like, consistently like, "And we haven't hired anyone."

Jack Altman 17:30 [laughs]

Jared Friedman 17:31 So that's, like, new. I agree that, like, the step after that, though, it seems like the Bs are bigger than ever. Like the-

Jack Altman 17:37 They're huge.

Jared Friedman 17:38 Yeah, right. [laughs] And so-

Jack Altman 17:39 Yeah.

Jared Friedman 17:39 Well, I mean, venture is contracting a little bit. It's, like, not on a dollar basis. On a dollar basis, like, there's a quote-unquote "flight to quality."

Jack Altman 17:46 Mm-hmm.

Jared Friedman 17:47 And then, uh, one of the things-

Jack Altman 17:48 Yeah

Jared Friedman 17:48 ... we've been talking about internally is, like, the world is actually, um, increasingly full of these mega funds that are our friends, and they do great work, but it's, like, more and more dollars behind fewer and fewer people, and so you're actually-

Jack Altman 17:59 By fewer firms.

Jared Friedman 18:00 Yeah, fewer firms and fewer people at those firms.

Jack Altman 18:02 Yep.

Jared Friedman 18:03 Right? And then the natural thing is, like, then capital is a bludgeon. Like-

Jack Altman 18:07 Mm-hmm

Jared Friedman 18:07 ... the fix is in, which is great. Like, often, like, for YC, uh, YC is sometimes the number one, number two, and number four, uh, you know, of any given, like, vertical SaaS space, and we're in the billion-dollar one. We're in the half-a-billion-dollar one.

Jack Altman 18:21 Yeah.

Jared Friedman 18:21 We're in the arm the rebels one that works with a partner. Like, this happens over and over again, I mean.

Jack Altman 18:26 So do you think in this environment then is the, like, king-making meme, is that, like, more true because of the capital as a bludgeon thing? Like, is it more effective in this type of environment?

Jared Friedman 18:36 Basically, if the founders are good, like, the capital, like, helps them get there a little faster, but I don't believe that, like, capital a bl- as a bludgeon- Especially when things move so quickly. Like, you can end up having capital and then, like, moving-

Jack Altman 18:50 Yeah

Jared Friedman 18:50 ... like

Speaker 18:50 Fast in the wrong direction

Garry Tan 18:52 Like Harj funded Giga.

Speaker 18:54 Yeah.

Garry Tan 18:54 And these guys beat... I mean, we love Brett, we love Sierra. Uh, but yeah, like Giga, this sort of 10-person team beat all the incumbents for, you know, things like DoorDash.

Speaker 19:07 Yeah.

Garry Tan 19:07 I mean, the back to back to back. It's like they have the best tech, and I don't- I think they're maybe like still under 20 people right now.

Jack Altman 19:13 And Jack, speaking of like insiders versus outsiders, that's such like a classic like insider versus outsider story. I mean, what were the backgrounds of the Giga founders?

Speaker 19:20 Oh, they were like, they were two, they got IIT in India, um-

Jack Altman 19:24 They were still in India when-

Speaker 19:26 Yes, they were in India when they applied.

Jack Altman 19:26 You funded them, yeah. [laughs]

Speaker 19:27 They actually couldn't make it out here for the batch for visa reasons, but they were just like brilliant. They were clearly like brilliantly smart.

Jack Altman 19:32 Yeah.

Speaker 19:32 They were like the top-ranked IIT students. Um, they had done their sort of, as undergrads, they'd done sort of PhD level research in fine-tuning LLMs before like everything really took off, so they were just like clearly exceptional in that.

Jack Altman 19:45 Yeah. I mean, to this point about like the king-making stuff, and not to like talk our own book too much, but like, you know, like Legora was a, you know, startup that was like coming behind something that was, seems really established and they're based in Europe, and then they went through YC and they're doing great, and so it doesn't seem like stuff is like locked up immediately.

Speaker 20:01 And that's a good example of like the pri- It's like even if you have the capital, you might not build like the right product off the bat and then things change. Um, I think Garry-

Garry Tan 20:09 The model's getting better. The model's getting better so, so, like-

Jack Altman 20:12 Yeah

Garry Tan 20:12 ... back to back to back, like every single year the models are getting better. You know, the rumor for Harvey is that like, you know, you might've, they might've spent a bunch of money, a bunch of the VC capital on fine-tuning models that are like not better than the frontier models. I mean, you don't have a crystal ball. You couldn't have guessed that, that, you know, it was just an idea that maybe that might happen. Of course, it did happen, and then now we're sort of in this situation where like, you know, if you have hundreds of millions of dollars sitting in your bank account-

Jack Altman 20:40 Yeah

Garry Tan 20:40 ... you're tempted to use it.

Jack Altman 20:41 It... the, the models thing is so interesting to me because one of the things that has struck me is that a lot of the source of product market fit actually exists outside the startup delivering the service. And so it's, you know, like you take an amazing founder like Max, you put them in a market like legal, where there's just a lot of uptake for some set of reasons, and then it's like you have this tailwind outside the startup that's actually driving a lot of the like aha moment. Not to take away from anything that they've done, but this is the case for all these startups, and so that just sort of changes some things to me.

Speaker 21:11 I think this is from the founders' perspective at least, uh, and a reason why they're raising the bigger B rounds. One, one of the... I mean, there's always that case of just like bank the money while you can get it, but it just feels like the surface area for the products is bigger than ever and they are like still fundamentally constrained on like the number of people they have to go and execute on things.

Jack Altman 21:28 Yeah.

Speaker 21:28 And it feels like we're now... SaaS era was sort of like you build one core feature and you hit product market fit with that and maybe just run with that for a few years and then add on things, whereas now it's like even within the batch, people are trying to like add like more into the product and have it do more, and so they just fundamentally feel constrained by how much they feel they should be doing, and then they have competitors-

Jack Altman 21:46 Yeah

Speaker 21:47 ... and the competitors are moving faster. So haven't as yet seen the, like once you're post product market fit, it doesn't feel like the, oh, people won't need to hire as many pe- or they're at least not acting on the belief they don't need to hire as many people yet, I would say.

Jack Altman 21:58 One thing that doesn't seem automated yet is sales, for example. Like it seems like you still... a lot of people thought that it would be automated by now. It hasn't been automated by now. Support has, but sales hasn't, and so like you still need a lot of salespeople. Seems like, you know, engineers are way more effective, but if you've got the capital, 50 engineers still gonna be better than five engineers. So like I think some of these things just haven't necessarily played out intuitively.

Speaker 22:19 It's great for everyone using the products. It just, like the bar for like what you expect out of like the products you use just keeps going up and up.

Jack Altman 22:25 Yeah.

Speaker 22:25 Which is

Speaker 22:26 awesome.

Jack Altman 22:26 There's also a lot of these markets that are so genuinely blue ocean and like they look like good ideas and they are good ideas, and it's totally new. And so the result of that is 50 startups doing something similar. And I think that's like a good thing for end consumers. Obviously, you guys have a lot of companies that are in that situation like we all do. I'm curious like how you, you know, in this competitive of a market moment when every startup's got a ton of competition, like does that change anything? Like when you're working with like specific companies, do you find yourself saying, "You need to go faster. You need to be thinking about something differently"? Does it update anything when we're in this type of environment?

Garry Tan 23:05 Me? [laughing]

Jack Altman 23:07 I felt like Garry was holding back an answer.

Garry Tan 23:08 What's that? I'm hoping you guys have a good answer. Not gonna answer my own question, by the way. [laughing]

Speaker 23:14 I guess the reason maybe why we're pausing on it is just again, just the YC like getting things off the ground.

Jack Altman 23:18 Mm-hmm.

Speaker 23:19 It's usually... I don't know, especially during the batch, we're so focused in on the like is this even like, is this worth investing like another two weeks of your time in as sort of like the units of time that we're-

Jack Altman 23:28 Is there a glimmer of product market fit or not?

Speaker 23:30 Yeah. Is it anything? So-

Jack Altman 23:31 And that doesn't really have to do with competition-

Speaker 23:32 Yeah

Jack Altman 23:32 ... at all. Exactly. And so I feel like we actually spend the vast majority of our time talking about competition telling founders not to worry about competition because it's all founders who are like, like imagine if the Legora founders-

Speaker 23:43 Yeah

Jack Altman 23:43 ... had like not launched Legora because they had looked at Harvey-

Speaker 23:46 Yeah

Jack Altman 23:46 ... and been like, "Oh, it's over."

Speaker 23:47 You're right.

Jack Altman 23:47 That's what we see 100 times a batch-

Speaker 23:49 You're right

Jack Altman 23:49 ... is, is, is that story. And so it's just, just being like, "Don't worry about it. Like just out execute them."

Garry Tan 23:54 Yeah. I think we always just go back to the make something people want and that like it says make something people want. It, it doesn't say like-

Jack Altman 24:00 Make something people want

Garry Tan 24:00 ... do a market map.

Jack Altman 24:01 Yeah. [laughing]

Garry Tan 24:02 Yeah. Based, based on what-

Jack Altman 24:03 Yeah

Garry Tan 24:03 ... you know, Perplexity tells you about the market.

Jack Altman 24:04 You could add that. You could say make a market map and then make something people want within it.

Garry Tan 24:08 That'd be... We should make a April Fools T-shirt-

Jack Altman 24:10 Yeah

Garry Tan 24:10 ... that says that.

Jack Altman 24:11 That'd be good.

Garry Tan 24:11 It's just like make a market map, then make something people want. And it's like, what the hell are you talking about? [laughing] Like that's definitely not how you do this.

Jack Altman 24:18 So like let's say like somebody's working on customer support. Like I'm pretty con- Like that market is not saturated. Like I'm pretty confident that a good team that comes into customer support and is like, "I'm gonna go find some more customers," like they could do it. And so basically the view is just like, hey, if you can find customers and you get it going, like don't even think about who else is out there. Just go.

Speaker 24:35 I think that's basically... I think like it's like go out and get customers, and if you have good competition, then like you have a hard time getting customers. [laughs] It's like, I don't know, if I try and launch a new payment processor, I'm going to run into Stripe. [laughs] And like it's gonna be hard for me to grow really quickly. And think that ends up being a lot of the advice during the batch.

Jack Altman 24:49 Yeah.

Jack Altman 24:50 I'm curious how much you guys thinkAt like a macro level about stuff, 'cause I know like the, the most important thing, which is I believe obviously correct, is to think about the micro, getting this startup off the ground and going, and then things can go from there. I am curious about some of the like macro things. Like one of the ones that comes to mind for me is like the recent, you know, trend in public markets about sort of like SaaS multiples just getting totally hammered. Do you guys feel like SaaS is dead? Does that resonate for you? Do you see anything different in the companies you're working with?

Speaker 25:22 Is SaaS dead?

Jack Altman 25:23 Is SaaS dead?

Garry Tan 25:24 I mean, I think it's dead. The thing is, it doesn't... If you run a SaaS company, you don't have to be dead. All you have to do is embrace cloud code, or you have to embrace, you know, a top-to-bottom agentic view of like how everything's gonna work. Like put it this way, like the same week that I personally realized that everything was different, you know, I funded a team from, uh, Meta Superintelligence who had left, and they were pointing out like, you know, Meta has twenty thousand people working on reality, you know?

Jack Altman 25:54 Wow.

Garry Tan 25:54 Uh, Alexa has twenty thousand people and it's like, and I thought about my experience, it's like I didn't even have like twenty thousand people. I had five people and like, why did it take two years? Well, it's because like I knew what the architecture was, I knew what I wanted to build, and then I had to farm this out. But then I had to have meetings and I had to, you know, come up with a, a, a doc, and then other people have other opinions and we have like five meetings about like the architecture and like we argue about it and then, you know, two weeks later, like maybe something happens. But if you're in a big company, it's like three months later something maybe happens. And it's like, look, like we don't have to do that now. Like we could just try both, like go into plan mode-

Jack Altman 26:33 Yeah.

Garry Tan 26:33 -and then just do it. And then literally like an hour later we will have something done that would've taken like two weeks to or two months-

Jack Altman 26:41 Mm-hmm.

Garry Tan 26:41 -or sometimes two years for... If you're not a tech company and you know you're an incumbent, like it's like two years or never-

Jack Altman 26:48 Yeah.

Garry Tan 26:48 -that you would even make that decision, right? So like the speed of making that decision, like how decisive you can be, like honestly, I think like going back to the transformation thing, like that's actually the thing that I feel like I learned-

Jack Altman 27:01 Mm.

Garry Tan 27:01 -at YC. It's not like I didn't know how to do it, it's just that like I was for, you know, I was employee number ten at Palantir. It's like we were moving, like I was sleeping at the office. The big diff-difference was realizing like instead of, you know, getting twenty basis points of Palantir, which now is actually a, a astronomical amount of money by the way [laughs] like we didn't know it at the time. I was like, "Well, I'd rather-"

Jack Altman 27:20 We'll run some math. We'll put the math up on the screen, on the screen.

Garry Tan 27:22 I know, right?

Speaker 27:23 Yeah.

Garry Tan 27:23 It's in the billions I think.

Speaker 27:24 Just find a mountain [laughs] .

Garry Tan 27:25 It's, uh-

Jack Altman 27:26 That's a thumbnail.

Garry Tan 27:27 Yeah.

Jack Altman 27:27 That's perfect.

Garry Tan 27:28 Yeah. I mean, basically I wanted ninety-seven percent of the company that I started, right?

Jack Altman 27:31 Yeah.

Garry Tan 27:32 And then I think that that's like I went from a place where it was already fast and then being the founder and the CEO, like YC sped me up even more 'cause you're in office hours with people and it's like, oh man, this person actually grew ten percent this week, twenty percent this week. Like how did they do it? I need to do it. And I think all of this is an accelerant like cloud code and Codex and being able to like make two years worth of product progress in about two weeks. How could that not make YC more insane?

Jack Altman 28:04 Totally.

Garry Tan 28:04 Like the amount of things that you could try and do, it's like honestly you could do two years of work, realize that like actually nobody wants this or there's too much competition, and you throw it out and then do it again. And the thing is like that's not throwaway. You learn something. You also got better at like using these tools and then you went out and you get another shot. And so what's funny about like, uh, like Seed is you could think of people raising like two or three million dollars. You know, that used to be Series A by the way, which is hilarious.

Jack Altman 28:33 Now it's barely a seed.

Garry Tan 28:34 Yeah. Yeah, yeah. I was like, oh, that's kind of a small seed. It's like, are you serious?

Jack Altman 28:37 It's a pre-seed.

Garry Tan 28:38 That's so much money. This is outrageous.

Jack Altman 28:39 It depends on-

Garry Tan 28:39 You don't even need this money. It's crazy that you can go so much faster.

Jack Altman 28:43 I actually, I do wanna come back to fundraising advice 'cause I feel like it's gotten into an interesting place there. But the opposite question of the is SaaS dead is what do you feel is not AI but safe from AI? Like are there areas where you feel that you think are sort of insulated from this mega trend that you're like happy to back without sort of fear of that?

Speaker 29:03 No, I think the obvious one, yeah, and certainly the first one is just like marketplaces that are like aggregating people. I think Airbnb is like very safe. I think while not safe, I think there's a bunch of marketplaces since DoorDash is totally safe. It's like a very clear one, right?

Garry Tan 29:18 One of the things we've document- been talking about is, um, what the agents want. What the coding agents tell you to do turns out to be like itself a really big moat. So GEO like making your, uh, API docs like actually written to prompt inject cloud code to force it to use you.

Jack Altman 29:36 Mm.

Garry Tan 29:36 I'm just joking, like it's not clear that you can do that [laughs] but like-

Speaker 29:39 Sure, hopefully.

Garry Tan 29:39 -if you could, you would because it's that powerful. Like people will just, I need X and then, you know, what's the best thing on the internet to do that? And, uh, actually that's really powerful.

Speaker 29:49 Yeah, I think, yeah, I think you might say like going back to maybe the SaaS thing is like even within SaaS you might say like things that feel like they are essentially databases or systems of record. Things like Rippling feel like they're going to be in a good spot, and then things where they, like the moat was around the number of integrations they built or like data connectors or that kind of stuff which you can now just like build code in thirty minutes is brittle.

Jack Altman 30:13 Do you think it's system of record that makes payroll sticky or do you think it's touching money?

Garry Tan 30:18 Touching money, regulatory. I mean, once it's you... I mean, you have systems that are working, you don't wanna touch that unless you have a really good reason.

Jack Altman 30:25 Yeah. 'Cause like one of the ones that comes up a lot right now is like are CRMs safe? You know, like our old, which I don't have any, I don't have actually a particular strong opinion to, but it just seems like an interesting question where it doesn't exactly touch money, doesn't exactly touch regulatory.Includes a lot of information that's important, but, like, that information also now can, like, live in email or somewhere else like that. So-

Speaker 30:45 Yeah, I think that, I think Salesforce is probably screwed. Like, I feel like there have been so many attempts to do the Stripe strategy of you get the startups in the YC batch using your CRM 'cause everyone hates Salesforce, but no one could ever really grow into a big company 'cause at some point your head of sales is like-

Jack Altman 31:00 Yeah

Speaker 31:00 ... "No, I need, like, these reports."

Jack Altman 31:01 And to your point, you need the integrations-

Speaker 31:02 Yeah

Jack Altman 31:02 ... badly.

Speaker 31:03 Exactly. And now, like, that's all just going away, so I don't... I, I suspect, like, the next Salesforce is gonna come out of, like, a YC batch that sells to all the other YC startups and investors will say, "Oh, like, it's not gonna grow 'cause, like, you know, one can really compete with Salesforce," and, like-

Jack Altman 31:17 Also, all its customers are YC companies.

Speaker 31:19 Yeah [laughs] .

Jack Altman 31:19 It can't be-

Speaker 31:20 Yeah, exactly, exactly.

Jack Altman 31:21 It'll never work.

Speaker 31:21 How big can a company be?

Jack Altman 31:22 They're... Yeah. [laughs] What about hardware? Is hardware safe?

Garry Tan 31:25 Hard tech is just hard, so the moat comes from it being just, you know, hard to source, hard to make it work. Like-

Jack Altman 31:31 Yeah

Garry Tan 31:32 ... you have... I mean, it's just another-

Jack Altman 31:33 And it's atoms

Garry Tan 31:33 ... muscles. Like-

Jack Altman 31:34 But the AI hasn't exactly-

Speaker 31:35 Yeah, I've seen parts do this, so

Jack Altman 31:35 ... the AI hasn't, the AI hasn't exactly come for atoms yet.

Garry Tan 31:39 Yeah, robotics-

Jack Altman 31:39 I think it will

Garry Tan 31:39 ... is still a little ways.

Jack Altman 31:40 Yeah.

Garry Tan 31:41 But we just need mo- we need ASI. We have... I think we have AGI now, and then ASI is coming, like super intelligence is just clearly just around the corner.

Jack Altman 31:49 You think it'll just be like a when we know, we know, or you think there'll be, like, a thing that to you would say that, like, that new moment is here?

Garry Tan 31:56 I mean, I think, like, we have limited versions of ASI right now. Like-

Jack Altman 32:00 Yeah

Garry Tan 32:00 ... uh, I saw demo-

Jack Altman 32:01 Like all the bots talking together? That was crazy.

Garry Tan 32:02 Yeah, that was crazy. I mean, that's a great example of, like... that's the first example of, like, swarm intelligence-

Jack Altman 32:07 Yeah

Garry Tan 32:07 ... in a while.

Jack Altman 32:08 I was like, "Oh no, this is bad." [laughs]

Garry Tan 32:09 Like in AI research, that's like... swarm intelligence is, like, this huge field-

Jack Altman 32:13 Yeah

Garry Tan 32:13 ... but, like, this was a huge validation for that field 'cause, you know, it's kind of an interesting question, like will there be... Like, all the m- the main labs talk about... if you talk out, talk to the AI research, to the big AI labs, they're like, "Yeah, we're just gonna build the God model."

Jack Altman 32:28 Yeah.

Garry Tan 32:29 You know, it's just gonna be mega big, and it'll, you know, just think about, like, Dr. Manhattan or something. And then, you know, biological systems and even human society are not modeled that way.

Jack Altman 32:38 Yeah.

Garry Tan 32:38 It's like we have lots of people with lots of diverse, uh, hardware, [laughs] a lot of different opinions about all kinds of things, and then you sort of come together and see what sticks, and-

Jack Altman 32:48 Yeah

Garry Tan 32:49 ... that's what, like, research is, for instance.

Jack Altman 32:51 Totally.

Garry Tan 32:51 So, um, I think swarm intelligence versus, you know, sort of God-level intelligence is actually ver- a very interesting thing that-

Jack Altman 32:58 Mm-hmm

Garry Tan 32:58 ... that's like just the beginning of that. That just happened literally last week.

Jack Altman 33:02 Is there a type of project or pathway for a startup to build that you're not currently funding that you'd like to? And, like, the example that I'm thinking of when I'm, you know, I'm thinking about some of these hardware companies or projects at the beginning that I don't think can start with a million dollars. Like, some of these genuinely do need to start with $10 or $20 million. Is that something that you think about? Is that something that, like... is that... would, would a divergence like that ever be worth it to YC, or is it like we don't need to back every single type of company of all time?

Speaker 33:36 We would like to back every single type of company [laughs] of all time if we could. Um-

Jack Altman 33:41 Yeah, that's actually the kind of thing I was curious about is, like, is the conversation when you guys are thinking about, like, YC growing and all of that, is it like we have our style and we'd like to just get everything within that? Or it's like, no, we'd like to back every company of all time?

Garry Tan 33:53 We're generalists, and then the smart... I mean, YC funded Coinbase when crypto was, like, the weirdest thing, but, you know, Brian Armstrong was in the risk team at Airbnb. He was, like, you know, in the anti-fraud team, and he was already in the family-

Jack Altman 34:09 Mm

Garry Tan 34:09 ... and then he said, "Oh, well, how do I start a company? This is clearly the way to do it." And then what's funny about it is, like, you could start, like, 20 other Coinbase competitors, but, like, all of them died-

Jack Altman 34:18 Yeah

Garry Tan 34:18 ... 'cause it's sort of like it... when you're early, it doesn't matter. It matters more, like, who's the person and what do they believe, and then that person goes on and creates the future. So being generalist is an incredible thing. It's truly the best.

Jack Altman 34:31 Is there a slice of the market or a type of company or founder that you feel like you want better exposure to that you're, like, actively working on?

Garry Tan 34:40 I mean, coming back to YC, one of the things we realized is, like, we have a huge media presence, but on the other hand, like, on, on its own if you just watch the YouTube channel, it's like, oh, this is, like, something in the sky. I heard it's, you know, one percent acceptance rate. Like, people just kinda, you know, think that it's maybe not for them. And then what we find is, like, all of our best people either know someone who did YC or they met a partner directly and, uh, at a, at an event, or they actually ca- We, like we actually have to be in the community. We can't just be, like, in the sky on-

Jack Altman 35:12 Yeah

Garry Tan 35:12 ... the internet, right?

Jack Altman 35:13 Yeah. You can't just wait for apps to come in.

Garry Tan 35:15 So I mean, Jared led this. Like, you basically c- you know, got us to, like, how many college campuses last year?

Speaker 35:21 Over 30 college campuses. Yeah. So we have a huge, like, boots on the ground effort now to go and, and talk to, to undergrads, um, everywhere. We, we just got back from a big trip to Europe. We're going to India in the spring. To also go back to your point though about, like, groups of people that we would love to see more of, what we, we have a big effort this year to do what we've done with undergrads over the last two years, which I think has been pretty successful, and to expand that to grad students and people who are more like Brian Armstrong's-

Jack Altman 35:45 Mm

Speaker 35:45 ... age, like more like mid and late 20s.

Jack Altman 35:47 Yeah, I will say that, like, in a good way, like they're unbelievably impressive, but YC founders are young. Like-

Speaker 35:52 Yeah. Yeah

Jack Altman 35:52 ... and they seem like it's, like, in recent batches, have trended even younger potentially.

Speaker 35:55 They have, yeah. And, and-

Jack Altman 35:57 Which makes sense. I think, like, AI and, like, a big change like this, like, favors younger people and for all sorts of reasons, so I get it.

Garry Tan 36:03 For what it's worth, I'm a late bloomer. I did YC when I was 27, and-

Jack Altman 36:06 I was 26.

Garry Tan 36:07 Yeah. So-Hey, late bloomers, high five. [laughing]

Jack Altman 36:10 [laughing] The old guys.

Garry Tan 36:12 I mean, yeah.

Jack Altman 36:12 But that's the old guys for us.

Speaker 36:13 Many of, like, the biggest YC companies were started by founders in sort of like mid to late twenties. DoorDash, Airbnb-

Jack Altman 36:18 Oh, that's old.

Speaker 36:19 [laughing] Yeah. Super old. You should definitely quote me on that. It's, uh- [laughing]

Jack Altman 36:23 There are tons of old people in YC.

Speaker 36:25 [laughing] We have some-

Jack Altman 36:26 Well, yeah, I was twenty-nine

Speaker 36:26 ... twenty-six-year-olds.

Jack Altman 36:27 Yeah.

Garry Tan 36:27 You know,

Garry Tan 36:28 we started with, uh, going back to colleges, and-

Jack Altman 36:30 Mm-hmm

Garry Tan 36:31 ... I mean, this was kinda driven by them, though. I mean, I think big tech stopped hiring. Um, and then at-- simultaneous to that, like, we have a real vibe inside the batch sometimes among the young, uh, founders that-

Jack Altman 36:43 Mm-hmm

Garry Tan 36:43 ... this is the last time to participate in capitalism.

Jack Altman 36:46 Mm.

Garry Tan 36:47 Which I definitely think not, but it's like a powerful idea.

Jack Altman 36:49 No, I, I think a lot of people feel that way.

Garry Tan 36:50 Yeah.

Jack Altman 36:51 Yeah.

Garry Tan 36:51 Why is that?

Jack Altman 36:52 I think there's probably a lot of people who are like, "If AI is gonna, like, actually stay on this trend, what are we gonna-- what are we possibly gonna be better at? So I gotta, I gotta do it while I'm still better at something."

Garry Tan 37:03 I feel like that is so, like, shortsighted. It's unbelievable. Like, Ryan Petersen always talks about, like, don't you think that, you know, the human capacity for desire is, like, virtually unlimited? Like, we're just, you know, we have a God-shaped hole in our heart, you know? [chuckles] Like, we're gonna want more and more stuff. And the thing is, like, we can do it now. Like, I was just thinking about the, um, the turn of phrase, like, I'm sure you've been in business meetings or, like, making decisions about products where it's like, "Whoa, whoa, whoa, let's not boil the ocean now."

Jack Altman 37:29 Uh-huh.

Garry Tan 37:30 And it's like, I love that turn of phrase because I've said it a lot. I've used it to, like, justify not doing things. But, like, in the age of intelligence-

Jack Altman 37:37 You can just do things

Garry Tan 37:38 ... why not? Like, I mean, maybe not boil the ocean, but let's boil a few lakes.

Jack Altman 37:42 [chuckles]

Garry Tan 37:42 Why not?

Jack Altman 37:43 Yeah.

Garry Tan 37:43 Right? Like, actually, this is sort of the moment. Like-

Jack Altman 37:45 Yeah

Garry Tan 37:45 ... and so when you connect that to what Ryan says, it's like, that's what that would look like, you know? Why-- You know, if you're an investment firm and you, like, you know, beat the market, you're like twenty percent net IRR back to back, it's like, you know, what does this stuff mean? Does it mean that we're gonna hire-- like, we're gonna fire all of our analysts and, like, we're just gonna have the AI do it, and, like, this one person who runs the firm is gonna make all the money? Why would you wanna do that? Because your competitor isn't gonna do that.

Jack Altman 38:09 Totally.

Garry Tan 38:09 Your competitor is gonna say, "You know what? We have AI now. I want fifty percent net IRR."

Jack Altman 38:12 That's the thing I have not understood about, like, "Oh, we won't need capital."

Garry Tan 38:16 Right.

Jack Altman 38:16 Because I'm like, why would you only want five engineers if your competitor has fifty?

Garry Tan 38:20 Yeah.

Jack Altman 38:20 Doesn't make-- Unless they can't do anything productive with all the agents, it doesn't make any sense to me.

Garry Tan 38:25 Yeah. I think it's just like, yeah, let's boil a few lakes first, and then we can boil the ocean. Like, I think... I mean, I'm not serious about that.

Jack Altman 38:32 Yeah.

Garry Tan 38:32 Obviously, there are limitations to it. But, like, the, the invective against AI-

Jack Altman 38:37 Yeah

Garry Tan 38:37 ... and this idea that, like, society is gonna fall apart-

Jack Altman 38:40 Yeah

Garry Tan 38:40 ... is so extreme-

Jack Altman 38:41 Yeah

Garry Tan 38:41 ... that I'm like, maybe that is... Like, we need some-

Jack Altman 38:43 Totally

Garry Tan 38:43 ... other alternative turns-

Jack Altman 38:45 Yes

Garry Tan 38:45 ... of phrase-

Jack Altman 38:46 Totally

Garry Tan 38:46 ... than, like, apocalypse for this.

Jack Altman 38:47 It's been a weird... I mean, on that, it's been a, just like a weird thing watching sort of the efforts to both sort of like manage but also, like, impact sort of like societal, like, understanding of, like, what AI is, and I feel like there is still a lot of, like, fear embedded. And, like, I think outside of San Francisco, you go to other places in the country, I think, like... You know, I'm from St. Louis. Like, I don't think everybody trusts AI fully and, you know, whether that's right or wrong, like, I think it's, um... I do think it's important to, like, get out of our little bubble sometimes on a lot of this stuff just to know where the world's at a bit more.

Garry Tan 39:19 That's for real.

Speaker 39:20 It's interesting, though. It, it feels different this time because-- So clearly in our little bubble here, everyone's all pro-AI. I would say in my other extreme, I have, like, parents, immigrants, like, don't speak great English. Like, my mom's, like, totally addicted to ChatGPT 'cause now she can just, like, do all this stuff that she, like, need, like... She can just, like, send letters to reply people in a way that's, like, super empowering for her. It's, like, the kind of middle, like, the people who are, like, threatened by, like, "Is AI gonna, like, take my job?"

Jack Altman 39:47 Yeah.

Speaker 39:47 Hasn't really been, like, a threat to sort of knowledge work or white-collar people. Like, usually I feel like people who are actually not early adopters but tend to get on the train immediately-

Jack Altman 39:56 Yeah

Speaker 39:56 ... after sort of the San Francisco-

Garry Tan 39:58 Yeah

Speaker 39:58 ... train takes off are now resistant to it, and it sort of bypassed them and has gone to, like, the other end.

Garry Tan 40:02 I mean, I sympathize with that, and, like, as, you know-

Jack Altman 40:04 Yeah

Garry Tan 40:05 ... labor that became management and capital, I, like, totally feel that. And I think it is actually about, you know, in the Marxist sense, it is a- actually about, like, where you fit in there. And then my argument would be like, it has been way more important to become a founder, which is like management beca- that becomes capital now than ever.

Jack Altman 40:23 Yeah.

Garry Tan 40:23 It's way more possible.

Jack Altman 40:24 Yeah.

Garry Tan 40:25 I think that, like, that fear of for workers about, like, what's going to happen, that is actually something that, uh, management and capital has to take-

Jack Altman 40:34 It's serious

Garry Tan 40:34 ... a responsibility.

Jack Altman 40:35 I think so too. I think it's, like, very easy to, like, be like, "Oh, in the arc of history, there's always these-

Garry Tan 40:41 Yeah

Jack Altman 40:41 ... new technologies, and people find new jobs." It's like, well, yeah, but there's, like, a lot of structural unemployment that happens-

Garry Tan 40:47 Yeah

Jack Altman 40:47 ... in the middle of that, and that's, like, real.

Garry Tan 40:49 Yeah. But this unemployment only happens in zero-sum games, right? It happens in a case where it's like, actually, my company does X.

Jack Altman 40:56 Mm-hmm.

Garry Tan 40:56 Like, I make widgets.

Jack Altman 40:57 Yeah.

Garry Tan 40:57 The widgets will never change. They will never get better. There's, I mean-

Jack Altman 41:00 Yeah

Garry Tan 41:00 ... some of it is in the context of, like, no competition. One of the things we learned from hard tech companies, for instance, is that, like, it's impossible to get, like, a certain block of metal.

Jack Altman 41:08 Mm.

Garry Tan 41:08 Like, you have, you know, you have to get it fabricated or, like, smelted in China.

Jack Altman 41:12 Yeah.

Garry Tan 41:12 Like, America's, like, lost the ability to do it, right?

Jack Altman 41:15 Yeah.

Garry Tan 41:15 Like, when you have a market that is so broken that you can't get it inside America, like, how did this happen, right? And so I would go back to, you know, capital and management and say-

Jack Altman 41:25 Yeah

Garry Tan 41:25 ... this is a lack of fucking imagination, right? Like, we're not here to, like, just continue to do, like, let's shave off, like, one or two percent every single year and, like, increase our net profit, and that's it-

Jack Altman 41:38 Mm-hmm

Garry Tan 41:38 ... right? Like, we need to think way more about how can we use this technology to radically change how businesses work, how-

Jack Altman 41:45 Yes

Garry Tan 41:45 ... like, what products are, how much better could they be?

Jack Altman 41:48 I completely agree, and I think if capital and management don't, like, take some responsibility there, like, there's not just the unemployment, there's also, like, reduced employment. There's also, like, the whole world's getting more expensive. Home prices are going up while there might be, like, pressure on wages because you can do it more cheaply with AI.

Garry Tan 42:05 Yeah.

Jack Altman 42:06 And so you have, like, inflation happening with wage pressure at the same time. Like, I, I do think it's, like, a more real thing than, like, our echo chamber wants... Like, and again, like-Totally for it too. But I think it's like s- I think it's an important thing.

Garry Tan 42:18 I mean, that's why we've been so, uh, vocal about this idea of little tech. You know, we have Luther Lowe, who used to work at Yelp, and he's in DC full-time fighting for startups to be able to actually train AI models, to be able to enter markets, and, you know, frankly, like I know we, we have lots of friends at, uh, you know, Apple and Alphabet.

Jack Altman 42:38 Mm-hmm.

Garry Tan 42:38 And, you know, we have huge respect for those companies. And then once in a while, like, you'll see in the press like, "Oh yeah, like we submitted an amicus about Apple and Alphabet," not because we hate those guys, but because actually we need tech to allow new startups and new entrants to come in. And so to me, it's like it's all very consistent.

Jack Altman 42:56 Yeah.

Garry Tan 42:56 It's like we need to be way more aggressive about, like, what our products and services should be and sh- can do, and then we need markets that allow those people to actually, you know, exist, thrive, hire lots of people, and create new, new, like, new jobs. Like, that's, that's basically like, you know, a lot of people are like, "Oh, I work in tech. I don't know how to do this." And it's like, look, it's actually abundance. Like, we actually have to build again. Like-

Jack Altman 43:24 Yeah

Garry Tan 43:24 ... we've become a litigious culture. I'm sure you've read this book Breakneck-

Jack Altman 43:28 Mm-hmm

Garry Tan 43:28 ... about like China versus the US.

Jack Altman 43:30 Yeah. No, but I want to.

Garry Tan 43:31 It's Dan Wang's book.

Jack Altman 43:32 Yeah. Yeah.

Garry Tan 43:32 It's incredible.

Jack Altman 43:32 Yeah. It's really good. Mm.

Garry Tan 43:33 It's, uh, basically we, you know, we built a lot in like the '40s, the '50s, and then sometime around the '60s and '70s, you know, six-seven, I mean, they [laughs] literally-

Jack Altman 43:43 Right

Garry Tan 43:43 ... stopped building, right?

Jack Altman 43:45 Yeah.

Garry Tan 43:45 And we've been in this sort of, you know, we can't build high-speed rail. It's insane.

Jack Altman 43:48 Yeah.

Garry Tan 43:49 Like, why? Because-

Jack Altman 43:50 Totally

Garry Tan 43:50 ... like, basically we're totally a litigious culture that cannot, like, get out of its way.

Jack Altman 43:55 Yeah. I saw some Peter Thiel talk about, like, we built all this stuff till the '70s, and then for like 50 years nothing happened except computers more or less.

Garry Tan 44:01 Yeah.

Guest 44:02 Yeah.

Jack Altman 44:02 And even right now, most of the revolution is in computers, which is great that it's better than nothing. And obviously other stuff is happening too, but it is... You know, you look at, you know, what China does, like standing up a city in no time, and it's like, uh, look like they're really good at robotics. Like, what are we doing? On this sort of just, like, societal topic, obviously, you guys are very engaged with, like, the city and the state and things like that. What do you-

Garry Tan 44:27 Some more than others. [laughs]

Jack Altman 44:28 Some more than others. [laughs]

Guest 44:29 [laughs]

Jack Altman 44:29 Yeah. Maybe like my one question on this is like, what do you think is the posture that San Francisco and California need to be take... Like, what's the most important thing posturally that we need to be taking?

Guest 44:42 I mean, this is Garry's area. Garry, how do we fix California politics?

Jack Altman 44:45 Garry has a plan.

Guest 44:46 Like, I'm, like, I'm, I'm kidding, but, like, actually he does. Yeah.

Garry Tan 44:48 I mean, uh, Matt Mahan just, uh, you know, announced his, uh, race for the governor. I think that he is the perfect example of someone who is not virtue signaling. He's a- You know, he built more than 1,400 homes in San Jose. The year before that, he hadn't passed all of the legislation he wanted, so zero market rate-

Jack Altman 45:07 Mm

Garry Tan 45:07 ... housing was built in San Jose in 2024.

Guest 45:10 Mm.

Garry Tan 45:10 Uh, when he came into office, he reduced homelessness by 20%. Like, more than 1,000 people came inside and got treatment and recovery because he actually supports treatment and recovery. I didn't want to be involved in politics, but when I saw that my, you know, Asian American grandpas and grandmas, like, couldn't walk down the street with being, without being assaulted and killed, when I saw, like, people like me when I was, you know, 16, 18, like, you know, I wanted to participate in tech. I knew I wanted to be an engineer. I didn't know that I would get into Stanford. Like, you know, I wouldn't have been able to do that if I didn't have algebra in, like, middle school, public middle school. Like, uh, my kids, my, you know, my kids go to private school, but I went to public school, you know? And we should have a government that, like, doesn't require you to be rich to become-

Jack Altman 45:58 Good at math

Garry Tan 45:58 ... a startup founder or good at math even. Like, I mean, is this, like, how did we get this bad?

Jack Altman 46:03 Yeah.

Garry Tan 46:03 So, I mean-

Jack Altman 46:03 Well, I'm glad you're fighting for it. It's very important, and it's not pleasant, and I see you fighting on Twitter in a way that I would not have the stomach for-

Garry Tan 46:10 [laughs]

Jack Altman 46:10 ... and I'm glad you're doing it.

Guest 46:11 [laughs]

Garry Tan 46:11 Yeah.

Jack Altman 46:12 Yeah.

Garry Tan 46:12 I appreciate it.

Jack Altman 46:13 Yeah.

Garry Tan 46:13 Yeah, no, I mean, I think for people watching, it's like, look, I'm not gonna get all the takes right, and, like, I wanna hear when I don't get it right. But on the flip side, it's also-

Jack Altman 46:20 Yeah

Garry Tan 46:20 ... like, have the debate.

Jack Altman 46:21 Yeah.

Garry Tan 46:21 Like, let's actually talk about it.

Jack Altman 46:22 Yeah, no, and you have the courage to like... It takes a lot of courage to say stuff that you think and you know you might be wrong about, and you might get, you know, a big blowback on and, like... Or even if you have it right-

Garry Tan 46:31 No

Jack Altman 46:31 ... people are gonna get mad.

Garry Tan 46:32 San Francisco and California got this bad because the people who, uh, you know... I mean, they run businesses. They have jobs. Like, they, you know, are trying to raise their families in California. It's like all of it was so big and so scary that we stopped paying attention.

Jack Altman 46:48 Mm-hmm.

Garry Tan 46:49 And, like, San Francisco is on a better path because, uh, we started talking about it. Like, at dinners, we started talking about it. "Hey, did you hear about so-and-so? They got assaulted. Like, did the police actually show up? Like, what happened with the judge?" You know? Like, we're gonna try to unseat some judges in San Francisco for whom, like, you know, I was looking at the records. Like, there were 100 cases, and, like, 90% of the cases, this judge, she basically just, like, dropped it on the floor at an extreme rate. Like, I think it was, like, three or four times higher rate of just dropping cases on the floor-

Jack Altman 47:25 Hmm

Garry Tan 47:25 ... purely for ideology. It's, like, unbelievable. Like, how is it, how is this person serving the people? Like, they're not. And then the thing is, there's a reason why we elect these people. Like, there is an election coming, and, you know, we have to make sure that-

Jack Altman 47:40 Yeah

Garry Tan 47:40 ... we hold these leaders to account.

Jack Altman 47:42 Totally. No, it's great. I mean, it's super important, and it's, like, not easy work. So people gotta... Some- someone's gotta do it, and I'm glad you're doing it.

Garry Tan 47:48 I appreciate it.

Jack Altman 47:49 Yeah. Okay. Politics tangent aside-

Garry Tan 47:51 [laughs]

Jack Altman 47:52 ... although I could talk about that the whole day.

Garry Tan 47:53 I know, right?

Jack Altman 47:53 But, um-

Garry Tan 47:54 We'll do the politics episode some other time.

Jack Altman 47:55 We'll do it a little later.

Garry Tan 47:56 Yeah.

Jack Altman 47:56 Gonna get you and some politicians

Jack Altman 47:58 on here. One of the things that I'm curious about that has been an obvious topic for me on other episodes has been, like, mega influx of capital into venture. Is that a positive or a negative for you, and in what ways do you experience it as both?

Guest 48:14 I think it's mostly positive for us. YC at its best is not competing with other venture firms for deals. YC at its best is convincing people who didn't

Jack Altman 48:25 Seriously think about starting a startup-

Garry Tan 48:27 Mm-hmm

Jack Altman 48:27 ... to go for it, and then being their first believer. YC only works if there's a large pool of downstream capital that can then fund all the subsequent rounds for those companies. And so I think actually YC does best in those environments.

Garry Tan 48:38 Yeah. We're a managed marketplace, so we need, like, as many great investors as possible.

Jack Altman 48:42 Mm-hmm.

Garry Tan 48:42 And then... Actually, what's funny is, like, in that managed marketplace, if, uh, you know, the sort of supply goes up, like, we need to go out and find the best possible people, and then we're actually really good partners to-

Jack Altman 48:53 Yeah

Garry Tan 48:53 ... the rest of the industry. Like, VC can, you know, two x, five x, or ten x over the next ten years, and we will meet the demand [chuckles]

Jack Altman 49:02 With companies

Garry Tan 49:03 With really the smartest people of our generation, and if that happens-

Jack Altman 49:07 So you're saying you feel limited by the amount of capital still?

Garry Tan 49:09 How about this? I mean, capital from, uh, VCs like you or VCs like our friends.

Jack Altman 49:15 Stop. [chuckles]

Garry Tan 49:15 No, seriously. Like, I mean, you gotta do the work, show up, like, don't disappear, don't be a dick. Like, you know, do no harm, right? When I first came back to YC, uh, like, one of the most interesting evolutions of, like, how to deal with investors was that, like, uh, most investors are actually, what, Bs? Like B or B+? Like, you should be so lucky to have someone who, like, does not mess with you. That's really good. And then obviously, like-

Jack Altman 49:42 The Barsola.

Garry Tan 49:43 Yeah. I mean, basically, yeah

Jack Altman 49:44 Just don't damage the company.

Garry Tan 49:46 Right.

Jack Altman 49:46 [laughs]

Garry Tan 49:46 If there's someone who, you know, has a great network-

Jack Altman 49:49 Yeah

Garry Tan 49:50 ... or, you know, can make the Keynesian beauty contest-

Jack Altman 49:53 Mm

Garry Tan 49:53 ... happen for you and your company and your round, obviously they're A investors.

Jack Altman 49:57 Mm-hmm.

Garry Tan 49:57 And, you know, they're gonna catalyze something crazy for you. Sh- you know, you should work with it. Last time we were here, it was like, "Yeah, if you can get, like, Keith Rabois to-

Jack Altman 50:04 Yeah

Garry Tan 50:04 ... invest in your startup and-

Jack Altman 50:05 Yeah, yeah

Garry Tan 50:05 ... give you, like, twenty million dollars, you should probably take that money, man."

Jack Altman 50:08 Yeah, yeah.

Garry Tan 50:08 Like, you know, do it, right?

Jack Altman 50:09 Yeah.

Garry Tan 50:10 But for everyone else, it's like, you gotta, you know, find people who des-

Jack Altman 50:14 Yeah

Garry Tan 50:14 ... sometimes you gotta do B+ capital. It's okay.

Jack Altman 50:16 Yeah.

Garry Tan 50:16 You know?

Jack Altman 50:17 Well, it's sort of interesting 'cause, you know, you made the point which I agree with, which is that there's... despite the total volume of dollars going up, there's, like, in some ways a consolidation of the number of venture firms or players or things like that. I don't know if it's, like, more companies getting funded or if it's just a lot more dollars going to just, like, a couple breakout successes. I guess both of those help.

Garry Tan 50:35 I mean, we actively think about we need more A and A+, uh, you know, investors. Um-

Jack Altman 50:40 Like humans doing the work.

Garry Tan 50:41 Exactly. Um, we ne- I mean, and I think they're all gonna be YC alums, like you. I mean-

Jack Altman 50:45 Mm-hmm

Garry Tan 50:45 ... I think you're great. Uh, Iliya Sukhar is incredible. Dan Levine at Accel, like, you know-

Jack Altman 50:51 Yuri Sakharov

Garry Tan 50:52 ... Yuri Sakharov now, uh-

Jack Altman 50:53 Yeah

Garry Tan 50:53 ... runs the seed program at GC, and he's incredible. Like, I, you know, I fully hope and expect, like, the top, like, eighty out of the hundred spots of the Midas List in the next ten, 20 years will be all YC alums.

Jack Altman 51:05 That's funny, you're, like, funding VCs, like, just on the ten-year delay kind of thing.

Garry Tan 51:08 Yeah. I mean, Liz.

Jack Altman 51:09 Yeah.

Garry Tan 51:09 Liz at First Round is-

Jack Altman 51:10 She's great

Garry Tan 51:10 ... killing it. She's incredible.

Jack Altman 51:11 Yeah.

Garry Tan 51:11 Right? So, uh, I think that's, like, you know, scratching the surface. Like, I think we're gonna have, like, dozens of the most legendary people, and they're all gonna be YC alums who, like, deploy all the world's capital.

Speaker 51:22 Increasing the number of good startups in the world is, like, I would argue just, like, the core founding principle of YC. Like, when I came... When I first started working at YC in 2010, it was, like, the first thing, um, PG said to me. And it wasn't actually clear why he wanted to hire anyone. Like, what, like, this seems like it's a nice, like, family business. Two of you working on it seems great. Um, and his whole point was that there's, like, the conventional wisdom in the VC industry, it all comes out of Andy Rachleff's research. Like, there's, like, only gonna be ten companies per year that will go on to reach, like, $100 million in revenue and be significant and IPO at some point, and you just have to be in one of those ten companies every year, otherwise you may as well just have, like, stayed at home. And PG was like, "Well, I don't wanna, like... I'm not, like, a VC. I don't wanna, like, go out and, like, fight for those ten companies. I'd just like-"

Garry Tan 52:06 We're gonna make more of them.

Speaker 52:07 Yeah, he's like, "Let's make more of them. Let's see if we can make, like, two of them. Like, why is it ten? It's just, like, such an arbitrary number." And I think, like, clearly over the last fifteen years, that's proven to be true.

Jack Altman 52:15 Mm.

Speaker 52:15 And I just feel like everything we do here is driven by we want that number to go up. What are the bottlenecks?

Jack Altman 52:21 Yeah.

Speaker 52:21 Are the bottlenecks, like, more founders? Let's go find more founders.

Jack Altman 52:23 Yeah, and you went to four batches. That was great.

Speaker 52:25 Yeah, f- yeah.

Jack Altman 52:25 That was awesome.

Speaker 52:25 That was exactly a good example of it.

Jack Altman 52:27 Yeah.

Speaker 52:27 It's like, that was a bottleneck. Like, you shouldn't have to wait six months to do a YC batch.

Jack Altman 52:30 What needed to be true for you guys to go from two to four? Like, what was hard about that? What did you have to, like, change, if anything? Was it just you didn't get as much time between to, like, source new companies? Or...

Speaker 52:40 Maybe this is in the weeds, but, like, one of the structural changes we made at YC since Gary came back is to sort of decentralize YC, I would argue. Like, it was pre-Gary coming back a lot more centralized. There was sort of, like, a team that sort of ran the batch and sort of things were more top-down.

Jack Altman 52:57 You're talking decentralizing decisions, batch operations-

Speaker 53:00 Yeah, but yeah

Jack Altman 53:01 ... or all, all of it?

Speaker 53:01 Just basically... Maybe if I start from the bottom, it's like now each YC partner is essentially picking their own companies, and then we club together to form a group that runs a batch, but we're just, like, more nimble. Like, we can just sort of do things in a way that wasn't as easy before.

Garry Tan 53:15 Yeah. And plus, we have fifteen people now. This is, like, the most number of partners we've ever had. We have fifteen visiting partners right now, so there's actually, like, something like thirty, thirty-one-

Jack Altman 53:23 Wow

Garry Tan 53:24 ... uh-

Jack Altman 53:24 Is there-

Garry Tan 53:25 ... partners total right now

Jack Altman 53:26 ... is, do you feel that there's a limit to those numbers, or do you think you could... Could you double the number of YC partners and therefore double the number of companies? Like, what, what do you think if you're imagining a world where you're funding four times more companies than you are today? What would you need to overcome still? Well, a cool thing about the way YC is structured now, I think, I think this is something that's, like, often misunderstood from, from the outside. I think when w- how most people hear that a, a YC batch is two hundred companies, but they imagine the batch experiences is, like, a room full of, like, four hundred founders showing up every day.

Garry Tan 53:58 It's actually four batches of fifty.

Jack Altman 53:59 Picture hall. Right. But it's, it, it's actually more like each partner is running their own, like-

Garry Tan 54:04 Mm-hmm

Jack Altman 54:04 ... autonomous mini-

Garry Tan 54:05 Yeah

Jack Altman 54:06 ... YC. And it's, you know, thirty-ish companies. Um, we call them pods. I mean, I had my whole pod over to my house for dinner last night because, like, the... And it's, you know, n- approximately the same size as YC was when Gary went.

Garry Tan 54:17 Yeah.

Jack Altman 54:17 W- w- and-

Garry Tan 54:17 We basically run, like, seven or eight simultaneous-

Jack Altman 54:20 Yeah

Garry Tan 54:21 ... uh, two thousand and eight batches with PG. [chuckles]

Jack Altman 54:24 Mm-hmm.

Garry Tan 54:24 And we have fifteen PGs now.

Jared Friedman 54:26 Yeah. And so, like, with that kind of structure, there's no inherent change that has to happen if you go from fifteen to thirty of them, it-- because it's, like, fully paralyzed already.

Jack Altman 54:34 Yeah. I mean, one of the ways I've perceived YC change, you know, over the last s-several years or something was there were, there was this period, I guess, when, like, my brother was here, where there were, like, a bunch of new projects, and then I felt you guys kind of, you s- you clearly went back to the core and then did more of it. Like, I could feel that very clearly, that it was like, "This is our thing and we're gonna refocus on that, but we're gonna make it more and bigger." And I think that's been super successful, and you guys have, like, clearly throughput more companies. The companies are awesome. You know, I'm saying that as a biased person who invests-

Jared Friedman 55:06 [laughs]

Jack Altman 55:06 ... in a lot of them, but it feels that way to me. Are there initiatives outside of that core that you are interested in with the new market moment, or are you like, "We're gonna just do more and more of this distilled core"? Or does it depend on the day?

Jared Friedman 55:18 [laughs] Well, first of all, I think that's a good overall description of, like, how YC has changed, especially since Garry came back, is, like, refocusing on the core. That's been sort of like the high level of the last three years. But yeah, we do have some big projects in the works. I'm not sure which ones we can talk about.

Garry Tan 55:33 I know. There's so many, and they're all-

Jack Altman 55:34 Just talk about them all

Garry Tan 55:35 ... like, in the works.

Jared Friedman 55:36 [laughs] Yeah.

Garry Tan 55:36 We're thinking it in anyways.

Jack Altman 55:37 Come on. Let... Yeah.

Speaker 55:38 I don't know. I don't-- It's not like we have, like, new initiatives that don't feel core. I still think it all falls under the umbrella of, like, the core thing is how do we-

Jack Altman 55:47 Mm-hmm

Speaker 55:47 ... create more good startups-

Jack Altman 55:48 Yeah

Speaker 55:49 ... and, like, keep pushing down on that. And as Jared mentioned, like, Fellows is just an example of something we just launched last year, which is like, what's another bottleneck is more founders. We wanna meet the founders earlier, like, college students before they're ready to do startups. And so we've started offering just, like, grants and, like, community to, like, exceptional college students that we feel like, eh, maybe they're not ready to do a startup right now, but they might be in a year or two.

Jack Altman 56:12 That's a good example of, like, widening the base even further.

Speaker 56:14 Yeah.

Jack Altman 56:14 'Cause like-

Jared Friedman 56:14 Yeah

Jack Altman 56:15 ... it was almost like you could, like, narrow the top and you could say, "You know what? We're gonna actually put a bunch of money into growth round." You know, like the F series did that. But, you know, the other way to go is you could widen the base, and you could say, "Actually, we're gonna try to, to have some engagement with ten thousand founders," or something like that.

Speaker 56:28 That's basically what we think a lot about.

Jared Friedman 56:29 Yes. Yeah. 'Cause amount of follow-on capital is not really the bottleneck right now. Really, the bottleneck for us now is getting more great founders to want to do-

Jack Altman 56:38 Yeah

Jared Friedman 56:38 ... startups and to do YC, which is what the bottleneck should be.

Jack Altman 56:40 Yeah.

Jared Friedman 56:40 Like, if the bottleneck is anything else, something is weird about, about, about the world. That's, that's, that's what the bottleneck sh-always should be. For a long time, YC was just struggling so much to just scale the operational side. We're here like a post product-market-fit company that, like, couldn't keep up with demand.

Jack Altman 56:55 Mm-hmm.

Jared Friedman 56:56 And so instead of, like, focusing on growth, how do we get m-more users, we were like YouTube when it was, like, scaling by, like, two X every month, and just everyone was just, like, trying to figure out, like, how to keep the site up. That was certainly the first few years of me at YC, was just us, like, trying to figure out, like, how to not fall over.

Jack Altman 57:10 Yeah.

Jared Friedman 57:10 Um, but now that we've, like, really got the operations down, we can go back to focusing on what we should be focusing on, which is like, how do we broaden the base? How do we get m-more great people into our ecosystem early? How do we inspire more people to start companies?

Garry Tan 57:22 I mean, one of the, uh, most fun things from... I mean, I pinch myself that, like, I get to h- you know... I had left YC, and then now I get to, you know, go hang out with PG and Jessica again and hang out with Brian Chesky, who's on the board. And then one of the directors from the board that's awesome is, um, "You need to make sure that we're having fun."

Jared Friedman 57:41 Mm.

Garry Tan 57:42 Like, and that was true, like, back in, uh, two thousand eleven, two thousand twelve.

Speaker 57:45 Laughter's... The laughter test.

Garry Tan 57:46 Yeah, yeah. Basically, like, that, you know, that's sort of the, the directive we got this year that's, like, not a directive at all. It's like, you know, awesome.

Jared Friedman 57:54 Mm-hmm.

Garry Tan 57:54 Actually. It's like if we're not having fun, then we're doing something wrong, actually.

Jared Friedman 57:58 Yeah.

Garry Tan 57:58 Like, and you know, I remember, like, just YC, being around YC and the partners and PG and PB and Jeff and all the... You know, it's like, it was just very, very hilarious all the time. It was, like, unbelievable how weird, you know, startups can be and, like, "Can you believe this thing happened?" And then I feel like our partner lunches are that again-

Jack Altman 58:18 Yeah

Garry Tan 58:18 ... which is really fun. It's like, it's hilarious.

Jack Altman 58:20 And that's so important, like, having, like, the partnership like that where everybody, like, trusts and enjoys each other and respects what people think. Like, that's just gotta make the whole experience so much better.

Speaker 58:29 It's why everyone's a former o- all the partners are former YC founders, so it's like s- it feels just like a little bit more than a job for everyone. Like, everyone's got sort of a pay it forward, YC changed their life in some way.

Jack Altman 58:39 Yeah.

Speaker 58:39 Like, uh, just adds to the good vibes, I think.

Jack Altman 58:42 Yeah. It is obviously an iconic and very important institution, and you guys are doing a great job running it. And so I'm sure it is both, like, it feels like a heavy responsibility, but I'm glad that you are... I'm glad you're having fun with it. You guys, this was really fun. Thanks for doing it. Really appreciate you making time.

Speaker 58:55 Thanks for having us.

Jared Friedman 58:56 Thanks.

Garry Tan 58:56 Thanks, Jack. [upbeat music] So when are you gonna be a YC partner? [laughs]

Speaker 59:01 [laughs]

Jack Altman 59:02 Again, yeah. So I'll just, uh, keep checking my inbox.

Garry Tan 59:06 [laughs]