Uncapped with Jack AltmanY Combinator in the Age of AI | Ep. 43
EVERY SPOKEN WORD
70 min read · 13,719 words- 0:00 – 0:18
Intro
- JAJack Altman
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.
- GTGarry Tan
For what it's worth, I'm a late bloomer. I did YC when I was twenty-seven, and-
- JAJack Altman
I was twenty-six.
- GTGarry Tan
Yeah. So, hey, late bloomers, high five. [laughing]
- JAJack Altman
[laughing] The old guys. [on-hold music] All right, guys, I'm really excited to be here with you. Thanks for, thanks for
- 0:18 – 5:05
The YC product
- JAJack Altman
all doing this with me. So I guess just to start, when did you all first go through YC as founders?
- JFJared Friedman
I think I did it first. I was summer two thousand and six, so the third batch ever.
- SPSpeaker
I did winter two thousand and seven, so six months later.
- GTGarry Tan
And then summer '08.
- JAJack Altman
Okay. So a long time.
- GTGarry Tan
Yeah.
- JAJack Altman
It's, like, pretty close to the beginning.
- GTGarry Tan
Yeah.
- JAJack Altman
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?
- GTGarry Tan
Yeah, what was it like in '06?
- JFJared Friedman
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."
- JAJack Altman
[chuckles]
- JFJared Friedman
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.
- JAJack Altman
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?
- JFJared Friedman
So we recently worked on a redesign of the Y Combinator website. Actually, Garry had it.
- GTGarry Tan
Garry Tan.
- JFJared Friedman
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.
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... one on there, and it's, like-
- JAJack Altman
First batch
- GTGarry Tan
... him with the double pop collar.
- JAJack Altman
Yeah.
- GTGarry Tan
And then-
- JAJack Altman
We'll pop that up on the screen.
- GTGarry Tan
[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-
- JAJack Altman
Yeah
- GTGarry Tan
... 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.
- JAJack Altman
Mm.
- GTGarry Tan
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.
- 5:05 – 13:01
AI and the new builder
- JAJack Altman
it's crazy.
- GTGarry Tan
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.
- JAJack Altman
Yeah.
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... 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.
- JAJack Altman
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-
- SPSpeaker
What's, what is that now? Is that different?
- GTGarry Tan
It's prompt and-
- SPSpeaker
Yeah
- GTGarry Tan
... prompt to users. [chuckles]
- SPSpeaker
Yeah. But like there's a lot less time prompting, I guess, right?
- GTGarry Tan
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.
- SPSpeaker
Yeah.
- GTGarry Tan
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.
- SPSpeaker
Mm-hmm.
- GTGarry Tan
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.
- SPSpeaker
Right. And there's not exactly like a GitHub for prompting, I guess.
- GTGarry Tan
Yeah.
- SPSpeaker
'Cause that's what you're asking people for.
- GTGarry Tan
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.
- SPSpeaker
Hmm.
- GTGarry Tan
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?
- SPSpeaker
Yeah.
- GTGarry Tan
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?
- SPSpeaker
This is how you spotted Arpit with Instacart, right?
- GTGarry Tan
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.
- SPSpeaker
Hmm.
- GTGarry Tan
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.
- SPSpeaker
Yeah.
- 13:01 – 22:26
Pivots and upcoming trends
- JFJared Friedman
keeps going up and up.
- JAJack Altman
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-
- JFJared Friedman
Hmm.
- JFJared Friedman
Yeah
- JAJack Altman
... companies ought to be able to try stuff-
- JFJared Friedman
Yeah
- JAJack Altman
... 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?
- JFJared Friedman
Absolutely. I think we're seeing companies try many things during the batch.
- JAJack Altman
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.
- JFJared Friedman
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-
- JAJack Altman
Mm-hmm
- JFJared Friedman
... about. I don't know, what do you think?
- JFJared Friedman
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.
- JAJack Altman
Yeah.
- JFJared Friedman
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.
- JAJack Altman
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.
- JFJared Friedman
Ten percent hard tech.
- JAJack Altman
YC is the hard tech of hard tech.
- JFJared Friedman
Yeah. [laughs]
- JAJack Altman
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?
- JFJared Friedman
I don't think there's any strong trends yet.
- JAJack Altman
It's all just AI right now.
- JFJared Friedman
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-
- JAJack Altman
Mm-hmm
- JFJared Friedman
... might, might be an-another interesting, like, non-AI trend to talk about.
- JAJack Altman
Yeah.
- JFJared Friedman
Harj is very involved with-
- JAJack Altman
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?
- JFJared Friedman
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.
- JAJack Altman
Mm-hmm.
- 22:26 – 24:50
Making something people want
- SPSpeaker
awesome.
- JAJack Altman
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?
- GTGarry Tan
Me? [laughing]
- JAJack Altman
I felt like Garry was holding back an answer.
- GTGarry Tan
What's that? I'm hoping you guys have a good answer. Not gonna answer my own question, by the way. [laughing]
- SPSpeaker
I guess the reason maybe why we're pausing on it is just again, just the YC like getting things off the ground.
- JAJack Altman
Mm-hmm.
- SPSpeaker
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-
- JAJack Altman
Is there a glimmer of product market fit or not?
- SPSpeaker
Yeah. Is it anything? So-
- JAJack Altman
And that doesn't really have to do with competition-
- SPSpeaker
Yeah
- JAJack Altman
... 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-
- SPSpeaker
Yeah
- JAJack Altman
... had like not launched Legora because they had looked at Harvey-
- SPSpeaker
Yeah
- JAJack Altman
... and been like, "Oh, it's over."
- SPSpeaker
You're right.
- JAJack Altman
That's what we see 100 times a batch-
- SPSpeaker
You're right
- JAJack Altman
... is, is, is that story. And so it's just, just being like, "Don't worry about it. Like just out execute them."
- GTGarry Tan
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-
- JAJack Altman
Make something people want
- GTGarry Tan
... do a market map.
- JAJack Altman
Yeah. [laughing]
- GTGarry Tan
Yeah. Based, based on what-
- JAJack Altman
Yeah
- GTGarry Tan
... you know, Perplexity tells you about the market.
- JAJack Altman
You could add that. You could say make a market map and then make something people want within it.
- GTGarry Tan
That'd be... We should make a April Fools T-shirt-
- 24:50 – 33:02
What’s in store for SaaS
- JAJack Altman
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?
- SPSpeaker
Is SaaS dead?
- JAJack Altman
Is SaaS dead?
- GTGarry Tan
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?
- JAJack Altman
Wow.
- GTGarry Tan
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-
- JAJack Altman
Yeah.
- GTGarry Tan
-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-
- JAJack Altman
Mm-hmm.
- GTGarry Tan
-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-
- JAJack Altman
Yeah.
- GTGarry Tan
-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-
- JAJack Altman
Mm.
- GTGarry Tan
-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-"
- JAJack Altman
We'll run some math. We'll put the math up on the screen, on the screen.
- GTGarry Tan
I know, right?
- SPSpeaker
Yeah.
- GTGarry Tan
It's in the billions I think.
- SPSpeaker
Just find a mountain [laughs] .
- GTGarry Tan
It's, uh-
- JAJack Altman
That's a thumbnail.
- GTGarry Tan
Yeah.
- JAJack Altman
That's perfect.
- GTGarry Tan
Yeah. I mean, basically I wanted ninety-seven percent of the company that I started, right?
- JAJack Altman
Yeah.
- GTGarry Tan
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?
- JAJack Altman
Totally.
- GTGarry Tan
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.
- JAJack Altman
Now it's barely a seed.
- GTGarry Tan
Yeah. Yeah, yeah. I was like, oh, that's kind of a small seed. It's like, are you serious?
- 33:02 – 36:28
Capital in the age of AI
- JAJack Altman
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?
- SPSpeaker
We would like to back every single type of company [laughs] of all time if we could. Um-
- JAJack Altman
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?
- GTGarry Tan
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-
- JAJack Altman
Mm
- GTGarry Tan
... 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-
- JAJack Altman
Yeah
- GTGarry Tan
... '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.
- JAJack Altman
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?
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... the internet, right?
- JAJack Altman
Yeah. You can't just wait for apps to come in.
- GTGarry Tan
So I mean, Jared led this. Like, you basically c- you know, got us to, like, how many college campuses last year?
- SPSpeaker
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-
- JAJack Altman
Mm
- SPSpeaker
... age, like more like mid and late 20s.
- JAJack Altman
Yeah, I will say that, like, in a good way, like they're unbelievably impressive, but YC founders are young. Like-
- SPSpeaker
Yeah. Yeah
- JAJack Altman
... and they seem like it's, like, in recent batches, have trended even younger potentially.
- SPSpeaker
They have, yeah. And, and-
- JAJack Altman
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.
- GTGarry Tan
For what it's worth, I'm a late bloomer. I did YC when I was 27, and-
- JAJack Altman
I was 26.
- GTGarry Tan
Yeah. So-Hey, late bloomers, high five. [laughing]
- JAJack Altman
[laughing] The old guys.
- GTGarry Tan
I mean, yeah.
- JAJack Altman
But that's the old guys for us.
- SPSpeaker
Many of, like, the biggest YC companies were started by founders in sort of like mid to late twenties. DoorDash, Airbnb-
- JAJack Altman
Oh, that's old.
- 36:28 – 42:18
The human capacity for desire
- GTGarry Tan
we started with, uh, going back to colleges, and-
- JAJack Altman
Mm-hmm
- GTGarry Tan
... 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-
- JAJack Altman
Mm-hmm
- GTGarry Tan
... this is the last time to participate in capitalism.
- JAJack Altman
Mm.
- GTGarry Tan
Which I definitely think not, but it's like a powerful idea.
- JAJack Altman
No, I, I think a lot of people feel that way.
- GTGarry Tan
Yeah.
- JAJack Altman
Yeah.
- GTGarry Tan
Why is that?
- JAJack Altman
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."
- GTGarry Tan
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."
- JAJack Altman
Uh-huh.
- GTGarry Tan
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-
- JAJack Altman
You can just do things
- GTGarry Tan
... why not? Like, I mean, maybe not boil the ocean, but let's boil a few lakes.
- JAJack Altman
[chuckles]
- GTGarry Tan
Why not?
- JAJack Altman
Yeah.
- GTGarry Tan
Right? Like, actually, this is sort of the moment. Like-
- JAJack Altman
Yeah
- GTGarry Tan
... 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.
- JAJack Altman
Totally.
- GTGarry Tan
Your competitor is gonna say, "You know what? We have AI now. I want fifty percent net IRR."
- JAJack Altman
That's the thing I have not understood about, like, "Oh, we won't need capital."
- GTGarry Tan
Right.
- JAJack Altman
Because I'm like, why would you only want five engineers if your competitor has fifty?
- GTGarry Tan
Yeah.
- JAJack Altman
Doesn't make-- Unless they can't do anything productive with all the agents, it doesn't make any sense to me.
- 42:18 – 44:29
Building in America
- GTGarry Tan
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.
- JAJack Altman
Mm-hmm.
- GTGarry Tan
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.
- JAJack Altman
Yeah.
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... we've become a litigious culture. I'm sure you've read this book Breakneck-
- JAJack Altman
Mm-hmm
- GTGarry Tan
... about like China versus the US.
- JAJack Altman
Yeah. No, but I want to.
- GTGarry Tan
It's Dan Wang's book.
- JAJack Altman
Yeah. Yeah.
- GTGarry Tan
It's incredible.
- JAJack Altman
Yeah. It's really good. Mm.
- GTGarry Tan
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-
- JAJack Altman
Right
- GTGarry Tan
... stopped building, right?
- JAJack Altman
Yeah.
- GTGarry Tan
And we've been in this sort of, you know, we can't build high-speed rail. It's insane.
- JAJack Altman
Yeah.
- GTGarry Tan
Like, why? Because-
- JAJack Altman
Totally
- GTGarry Tan
... like, basically we're totally a litigious culture that cannot, like, get out of its way.
- JAJack Altman
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.
- GTGarry Tan
Yeah.
- SPSpeaker
Yeah.
- JAJack Altman
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-
- GTGarry Tan
Some more than others. [laughs]
- JAJack Altman
Some more than others. [laughs]
- 44:29 – 47:58
Fixing San Francisco
- SPSpeaker
[laughs]
- JAJack Altman
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?
- SPSpeaker
I mean, this is Garry's area. Garry, how do we fix California politics?
- JAJack Altman
Garry has a plan.
- SPSpeaker
Like, I'm, like, I'm, I'm kidding, but, like, actually he does. Yeah.
- GTGarry Tan
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-
- JAJack Altman
Mm
- GTGarry Tan
... housing was built in San Jose in 2024.
- SPSpeaker
Mm.
- GTGarry Tan
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-
- JAJack Altman
Good at math
- GTGarry Tan
... a startup founder or good at math even. Like, I mean, is this, like, how did we get this bad?
- JAJack Altman
Yeah.
- GTGarry Tan
So, I mean-
- JAJack Altman
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-
- GTGarry Tan
[laughs]
- JAJack Altman
... and I'm glad you're doing it.
- SPSpeaker
[laughs]
- GTGarry Tan
Yeah.
- JAJack Altman
Yeah.
- GTGarry Tan
I appreciate it.
- JAJack Altman
Yeah.
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... like, have the debate.
- JAJack Altman
Yeah.
- GTGarry Tan
Like, let's actually talk about it.
- JAJack Altman
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-
- GTGarry Tan
No
- JAJack Altman
... people are gonna get mad.
- 47:58 – 59:06
Scaling YC
- JAJack Altman
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?
- SPSpeaker
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
- JAJack Altman
Seriously think about starting a startup-
- GTGarry Tan
Mm-hmm
- JAJack Altman
... 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.
- GTGarry Tan
Yeah. We're a managed marketplace, so we need, like, as many great investors as possible.
- JAJack Altman
Mm-hmm.
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... 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]
- JAJack Altman
With companies
- GTGarry Tan
With really the smartest people of our generation, and if that happens-
- JAJack Altman
So you're saying you feel limited by the amount of capital still?
- GTGarry Tan
How about this? I mean, capital from, uh, VCs like you or VCs like our friends.
- JAJack Altman
Stop. [chuckles]
- GTGarry Tan
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-
- JAJack Altman
The Barsola.
- GTGarry Tan
Yeah. I mean, basically, yeah
- JAJack Altman
Just don't damage the company.
- GTGarry Tan
Right.
- JAJack Altman
[laughs]
- GTGarry Tan
If there's someone who, you know, has a great network-
- JAJack Altman
Yeah
- GTGarry Tan
... or, you know, can make the Keynesian beauty contest-
- JAJack Altman
Mm
- GTGarry Tan
... happen for you and your company and your round, obviously they're A investors.
- JAJack Altman
Mm-hmm.
- GTGarry Tan
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-
- JAJack Altman
Yeah
- GTGarry Tan
... invest in your startup and-
Episode duration: 59:06
Install uListen for AI-powered chat & search across the full episode — Get Full Transcript
Transcript of episode s830OB11pqw
Get more out of YouTube videos.
High quality summaries for YouTube videos. Accurate transcripts to search & find moments. Powered by ChatGPT & Claude AI.
Add to Chrome