How YC Was Created With Jessica Livingston

Host 0:00 That first batch, which is kind of magical in terms of the group of people and the outcomes, what did it feel like?

Jessica Livingston 0:07 It was like one of the most fun times in my life, because everyone really wanted to be there and really wanted to start a startup. That's when it felt like, "Hey, we're onto something here." Y Combinator is on a whole new level now with, again, all of the knowledge and all of the connections and its brand and everything. But it is true that the core of it is the same, and I just think that's so cool.

Host 0:31 (laughs)

Jessica Livingston 0:31 Don't change it if it ain't broke, right?

Host 0:39 (laughs)

Garry Tan 0:40 Welcome back to another episode of The Light Cone. I'm Gary. This is Jared, Harj, and Diana. And collectively, we funded hundreds of billions of dollars worth of startups right when they were just one or two people. And today, we have

Garry Tan 0:55 a very special treat. We're sitting down with Jessica Livingston, one of the co-founders of Y Combinator, who actually funded all of us right at the beginning of our careers as founders. Jessica, welcome.

Jessica Livingston 1:08 Thanks. I'm so excited to be here.

Garry Tan 1:10 So we're sitting down with, uh, none other than the Social Radar herself.

Host 1:17 (laughs)

Jessica Livingston 1:18 (laughs)

Garry Tan 1:18 Why do we call you the Social Radar, actually?

Jessica Livingston 1:20 Gosh. I mean, it's a l- it's a little embarrassing, but I have embraced it. Obviously, it's the name of, uh, my podcast. But it all started years and years ago, because Paul used to call me the Social Radar. Because he was always interested in technical elements of founders, and I just dug right in to more personal sides of things, more of their personality, and then it just stuck, and it grew. So I finally have just leaned into it. (laughs)

Garry Tan 1:48 So

Garry Tan 1:49 one of the things that really attracted me to YC very early was how different it felt than all the other people who could possibly fund you at the earliest possible stage. It didn't feel like working with a VC or even talking to a VC.

Jessica Livingston 2:04 Well, Gary, that's what it was meant to do. (laughs)

Host 2:09 (laughs)

Garry Tan 2:09 Yeah. (laughs)

Jessica Livingston 2:09 I mean, I'm- I'm making a joke, but we really did start it because there was nothing else like that at the time. And at the time, there were really just... And we were in Boston, which was even more different than Silicon Valley. So there were venture capitalists who wanted to invest millions of dollars in yo- in you, and you needed to have a business plan and an even an idea that was a little bit tested and all of that, or there were random angels. And back then, in 2005, there weren't as many angels at all as there are now. There were no real small seed funds or anything, so we said, "There needs to be a very early stage company that's just gonna write a small check just so a founder can sort of quit their job, pay the rent, and test out if their idea even works before they then go on to raise venture capital money."

Garry Tan 2:59 Kind of fitting that the reason why you started YC was because, uh, you had tr- You were talking with a VC in Boston, but then they did the classic VC thing, which is they totally ghosted. (laughs)

Host 3:12 (laughs)

Jessica Livingston 3:12 (laughs) I think it just took them a long time. It was, you know, three weeks ge- would go by. "Oh, can you come in and meet with this person?" And then y- two weeks would go by. "Can you come back in and meet..." So it was just taking a long time. And fortunately for Y Combinator, during this long period of time, I mean, I look back, and I- must have been over a month, maybe a month and a half or two, and every night, Paul would- and I would go out to dinner. And we'd be talking, and he'd say, "Oh, if you go and work at this VC, you know what you should do..."

Garry Tan 3:48 (laughs)

Jessica Livingston 3:48 I mean, you've all been there when he wags his finger at you and say, "You know what you should do..." And we just, every night at dinner, would talk about all these cool ideas, and some of them were things like, "Make sure you don't get on the board of every company. Just fund a lot more, help them get started, have events." I mean, that was a big component, like have a lot events- of events to encourage more people to start startups. I mean, that- VCs were not in the business of encouraging more people to start startups, and we saw that. And so finally, um, Paul said, "You know what? Let's just start our own thing," because it was taking so long, and I said, "Great." And when we first were gonna get started, though, just I know you guys all know this, but we were going to fund companies asynch- asynchronously, just like investors, and we were gonna have a little office in Harvard Square, and so we were gonna sort of be that way in terms of a regular investor. We didn't have the batch idea yet. That came later.

Host 4:50 And it had a different name initially, right?

Jessica Livingston 4:52 Yes. It was called Cambridge Seed, because we were, of course, in Cambridge.

Garry Tan 4:57 (laughs)

Jessica Livingston 4:57 Um, and that did not last long. I did buy the domain, but it didn't last long because, uh, we knew, even then, when, when it was just an idea, we knew, well, maybe we want- we don't want to be, you know, focused in Boston. Maybe we want to have people from Silicon Valley apply. We won't- don't want to limit ourself geographically. So that's when Paul came up with the idea of the name Y Combinator.

Harj Taggar 5:20 You mentioned events, and like events have always been, like, the core part of YC.

Jessica Livingston 5:25 Mm-hmm.

Harj Taggar 5:26 Sometimes internally we joke that we're basically an events company that figured out-

Jessica Livingston 5:29 Yeah.

Harj Taggar 5:29 ... a way to, like, monetize events really well. (laughs)

Host 5:32 (laughs)

Jessica Livingston 5:32 (laughs)

Harj Taggar 5:32 (laughs)

Jessica Livingston 5:33 It's true.

Harj Taggar 5:34 Um, w- why is that? I'm just curious. Like w- how did you and Paul know early on that events were such an important piece of this? 'Cause it- it's not intuitive. Like most investors don't think, "Oh, we need to have really good events." Like that usually just an afterthought.

Jessica Livingston 5:48 Yeah. Well, let's see. So, uh, you're right. Events have always been a really important part of YC. And events, I mean, I would call the weekly dinners an event.

Harj Taggar 5:58 Yeah, yeah. That's exactly what I mean.

Jessica Livingston 5:58 Um, just everything. The interviews were an event, and someone had to pl- I- I- someone. I had to-

Harj Taggar 6:04 (laughs)

Jessica Livingston 6:04 ... plan them and get food and make sure everything was running the way-

Harj Taggar 6:09 (laughs)

Jessica Livingston 6:09 ... it should, and everything was an event. So I had an event planning background, so I- it was very easy for me to do this. And as fun- funny as it seems, like Paul, Robert, and Trevor could never have-... planned a dinner.

Harj Taggar 6:21 (laughs)

Host 6:21 (laughs)

Jessica Livingston 6:22 You know? But I, I, I am joking about Paul because he actually did have some experience in events. He hosted, um, this an- uh, spa- Anti-Spam Conference, um, that was kind of a model for Y Combinator's early events in that, um, they were very scrappy and cheap. Um, we had stick-on name tags.

Harj Taggar 6:46 (laughs)

Jessica Livingston 6:46 And we just got really good speakers on, on subjects to come and he invited a lot of people who are interested in spam. (laughs)

Harj Taggar 6:54 (laughs)

Jessica Livingston 6:54 You know? There's always an audience for whatever you want to do. And so we sort of saw the value of people coming together, meeting who might not have otherwise met, sharing ideas, and as we funded more and more batches and got more and more alumni, we then realized, whoa, this is a comm- starting to be a community. This isn't just eight startups in the Septem- you know, in the summer 2005 batch. It's starting to become a community and community is obviously an i- really important part of YC's DNA, and events are the best way to optimize the relationships within that community. Um, and so any kind of event that you do, whether it's a ten-person dinner on a specific topic, whether it's, you know, inter-batch random events, alumni, demo days, demo days, like any, anytime you can bring people together with an event, good things always happen.

Harj Taggar 7:52 Why do you think... I'm cur- I think I have my answer to it, but why do you think other VCs or just traditional investors just didn't understand how important this piece of investing is and that you and Paul kind of had it baked in from the start?

Jessica Livingston 8:05 I'd honestly have... I'd be curious to, to find out your, your thoughts. But I think, you know, VCs were very traditional in what they did and they had, you know, assistance planning. They were sort of very separate from the events.

Harj Taggar 8:21 Yeah.

Jessica Livingston 8:21 They had assistants all planning them and thinking, "Oh, this is just a nice-to-have dinner." And I think that because, you know, I was a founder and planning the events and it was so easy for me, we just baked it into what we did, and we had weekly dinners. Like VCs don't have weekly dinners with their investments and we did. So, we were sort of non-traditional in that way always. VCs didn't have demo days. You know, they had their annual holiday party or maybe their summer, you know, event for their portfolio companies. They'd just do one or two events a year and then they'd go to their board meetings.

Harj Taggar 9:00 Yeah.

Jessica Livingston 9:01 Um, and so I don't, I don't know. I think it was just the way YC funded companies. We funded so many that we were always trying to get them together. Our, our weekly dinners and the batches were all around events. The interviews were all ev- round events. I just think it was just baked into the way we did things.

Harj Taggar 9:19 I always felt like, um, it was just clear that you and Paul just really enjoyed the event. Like you just enjoyed hanging out with the founders.

Jessica Livingston 9:26 Yeah.

Harj Taggar 9:26 And I think ... (laughs) Like you were-

Jessica Livingston 9:28 Yeah.

Harj Taggar 9:28 It just felt like you were doing the things that you wanted to do that would be, like, fun for you.

Host 9:32 Yeah, even now, even like 20 years later, I've noticed that whenever you guys come to a YC batch event, Paul is always the last person to leave.

Harj Taggar 9:41 Yeah.

Host 9:41 Even if it's like-

Jessica Livingston 9:43 (laughs)

Host 9:43 ... midnight. He will stay until midnight-

Jessica Livingston 9:45 Yes.

Host 9:45 ... hanging out with the founders. It's almost like he can't help himself. (laughs)

Jessica Livingston 9:48 He can't help himself.

Harj Taggar 9:49 (laughs)

Jessica Livingston 9:49 I mean, he just alwa- he, he... We love talking to founders. We love startups. We're startup nerds, I mean, just like you guys are. And I think that sort of sets us apart from some venture capitalists. I mean, we genuinely are so optimistic about startups, want to help startups. It's not about the returns, it's about the founders themselves. I mean, when... In the very first batches it was always, "Put the founders first." And we love founders. And I think Paul is extra excited because we don't get a lot of that stimulation in England.

Harj Taggar 10:23 (laughs)

Host 10:23 (laughs)

Jessica Livingston 10:23 He comes back and all of a sudden it's this like fire hose of startups and new ideas and all the AI stuff I think he just can't get enough of, of learning about it because he's genuinely curious.

Harj Taggar 10:34 I, I think you and Paul are specifically always very excited to meet like founders before they've made it. And I think most investors do do events but they prefer to hang out with either other investors or like their best founders or like famous founders. I think that's why doing an event every week to meet with all of your founders inclu- like by definition most of them are going to be struggling and like in a hard time-

Jessica Livingston 10:58 (laughs)

Harj Taggar 10:58 ... is actually not what most investors think is a good time.

Jessica Livingston 11:01 No, that is very different about what we do. I mean, always, always we had a group of founders and some were doing pretty well, some were in the middle and some were clearly on the struggle bus.

Harj Taggar 11:14 (laughs) Yeah.

Jessica Livingston 11:15 You know? (laughs) And we had to help those founders no matter what. You couldn't pick your favorites and ignore the ones that were hopeless. And in fact, Paul has this unique level of energy that even the most hopeless ones, he's going to fight with them-

Harj Taggar 11:30 (laughs) Yeah.

Jessica Livingston 11:30 ... until they're down and cannot get up again. I mean, that's just the way we do things and, and in a lot of cases we've turned, um, startups around that were on their way to death and they came up with a new idea or changed something. Um, and so we're always helping whatever founder, and I love meeting the founders before they're super successful 'cause I get to remember what they were like.

Host 11:55 I think that's the very special thing because it's very humbling. I mean, to Harjit's point, I was thinking about that too. Regular VCs will like to do the more high-ta- status thing, they kind of meet with the fancy people that kind of made it because it's more fun. But there's something to be said about in the early days where you really believe in people inherently. And that's just so special because, uh, I do remember that's kind of the thing that was special about YC. It's like, "Wow, people believing in me and I haven't done anything yet." (laughs)

Diana Hu 12:25 Well, I bet you-

Jessica Livingston 12:25 ... and, that you had done something.

Diana Hu 12:27 Something.

Jessica Livingston 12:27 So, you recognized that something.

Diana Hu 12:30 But the cool thing is, um, then it becomes a bit of self-fulfilling thing that all these founders, we all hear YC believe in them. Maybe they don't know it yet, or kind of know them a bit, but become more confident.

Jessica Livingston 12:42 Yeah. Oh, confidence is a huge thing that YC brings to the table and continues to. I mean, you need someone in your corner. You need someone saying, "Yeah, that idea does seem promising. You should try this and come back and let me know how that goes." The four of you know how lonely it is doing a startup. And if you have no one who believes in you, gosh, it's sort of depressing and demoralizing.

Diana Hu 13:06 Mm-hmm.

Jessica Livingston 13:06 So, we were always there believing, um, in the startups early on. You have to.

Diana Hu 13:11 Especially when sometimes the ideas early on are kind of dubious? (laughs)

Jessica Livingston 13:15 Very.

Diana Hu 13:15 Right?

Jessica Livingston 13:16 Very. I mean, remember Airbnb? (laughs)

Host 13:19 (laughs)

Diana Hu 13:20 (laughs)

Jessica Livingston 13:20 No, ideas always seem... if they haven't been done yet, they all seem sort of silly and it's- it's not till they get to, uh, l- much later stage that people say, "Oh, well, I always saw that, you know, renting your house out would be a big, you know, big idea."

Host 13:38 So, Jessica,

Host 13:39 you wanted to talk about the DNA of YC.

Diana Hu 13:41 Mm-hmm.

Host 13:42 What was the DNA of YC? How did, how did it get started?

Jessica Livingston 13:46 The DNA of YC pretty much started with Paul. Um, and, uh, you know, I was there talking to him all about it, but he had a very clear idea that what we were doing at YC was applying, like, mass production techniques to startups. We wanted to make it easy for young technical people to start a startup. Because if you're building something, if you're a programmer or you're technical and you're building something, that's not very far away from being a founder, is it? You just need someone to say, "Here's how you incorporate, here's how you do this." Uh, I mean, tho- that's sort of the easy stuff. The hard stuff is building something people want. So, at the time, and this was sort of... this was all percolating in, you know, early 2005, probably late 2004, um, we saw, you know, it was getting a lot cheaper to s- to start a startup, cheaper to host things. You just needed a laptop. Um, programming languages were more robust. It was just getting easier too, so people really didn't need tons of money. Um, and Paul just thought, "You know, it should be easier for people to start a startup, so let's help them." And he looked back to his experience at Viaweb and remembered the most daunting part of what he did was the legal paperwork.

Diana Hu 15:10 (laughs)

Jessica Livingston 15:10 Like, the incorporating of the company. And his first investor, in fact, was a lawyer, um, and the l- he got the best deal ever. He, you know, he invested $10,000 and did all of their legal paperwork. And by the way, Paul, Robert, and Trevor thought that was an equally great deal-

Host 15:28 (laughs)

Jessica Livingston 15:28 ... um, because they would never have been able to incorporate. They wouldn't have probably been able to find a lawyer. And then there's all the- the paperwork that you have to do to make the investment. So, we thought, "Let's just standardize this. Let's just make it simple and easy." Um, and at the time, that was unheard of. You couldn't just have, you know, fill in the blanks. So, we had our lawyers create all of the- the incorporation paperwork, and you just fill in the blanks. And you know, you, it was pretty simple. Um, and then you had to file it in Delaware, but we- we worked it out so, and saved them so much money. Um, and then we had our own paperwork, which was our investment paperwork, which we sent to all the people who applied, and we said, "Here's the paperwork. Have whoever you want review it so there's no questions." Like, the only thing that's gonna change is, like, the names.

Diana Hu 16:23 (laughs)

Jessica Livingston 16:23 It's a standard deal. And we just thought a standard deal just takes so much complexity out of the equation, and you don't have to go back and forth and have lawyers representing you. It's just a standard deal. So, we wanted to standardize all of this.

Host 16:36 That was unprecedented at the time.

Jessica Livingston 16:38 Unprecedented, yes. Unprecedented. And then we thought the reason we did the batches was because we wanted to sort of learn how to be angel investors. So, we thought let's do... it's coming up on summer, let's do a summer program. We'll get a bunch of grad students, um, and we'll- we'll just learn about how to be angel investors, so we'll do this all at once. And so we posted this online. Paul stayed up all night one night writing, like, the Y Combinator website, so it looked legit. Um, but you have to remember, all that we had was, like, sort of their reputation as Viaweb founders, um, and then Paul's essays. And he, at that time, hadn't written that many.

Host 17:18 And your book.

Jessica Livingston 17:19 That wasn't out yet.

Host 17:20 Oh, it wasn't out yet?

Jessica Livingston 17:20 It was not out yet.

Diana Hu 17:22 Ah.

Jessica Livingston 17:22 So, I was working-

Host 17:24 When did the book come out?

Jessica Livingston 17:24 The book didn't come out till winter 2007, and I actually started working on it in the winter of 2004.

Diana Hu 17:33 Oh.

Host 17:33 Ah, wow. I didn't realize it was three years. Wow.

Jessica Livingston 17:35 Yes, three years from-

Host 17:37 Books take a while. Yeah, and you have to interview a lot of people.

Jessica Livingston 17:39 Especially... You d- I had to interview... I was doing this sort of simultaneously. And I have to say, I put the book on the back burner-

Host 17:46 Yeah.

Jessica Livingston 17:46 ... a lot while we were starting YC-

Host 17:48 Yeah.

Diana Hu 17:48 (laughs)

Jessica Livingston 17:48 ... because as you can imagine, it was a lot, a lot of work getting it started.

Garry Tan 17:51 So, the book was Founders At Work, which you can still buy on Amazon.

Jessica Livingston 17:55 You can.

Garry Tan 17:55 Yeah, it's, uh, great.

Jessica Livingston 17:56 Evergreen.

Host 17:56 (laughs)

Garry Tan 17:56 It's very classic.

Jessica Livingston 17:58 (laughs)

Host 17:59 (laughs)

Diana Hu 17:59 (laughs)

Jessica Livingston 18:00 Old school founders. So,

Jessica Livingston 18:02 we posted this online, the application, and we... much to our delight, we got a whole bunch of people who wanted to come interview. And so we said, "This is great." And they were all basically Paul Graham followers. Like, and they-

Diana Hu 18:19 (laughs)

Jessica Livingston 18:19 ... um, they all read Slashdot, the Y Combinator's, like, application thing must have shown up on Slashdot. So, they're very technical people-

Diana Hu 18:26 Mm-hmm.

Jessica Livingston 18:26 ... in this first round. But we were delighted. And in that batch were Sam Altman-

Diana Hu 18:33 Hmm.

Jessica Livingston 18:33 ... uh, Steve Huffman and Alexis Ohanian of Reddit, uh, Justin Kan and Emmett Shear of Twitch, Aaron Swartz.

Host 18:42 Pretty dense group of...

Harj Taggar 18:44 ... talent right there.

Garry Tan 18:45 Three out of eight. Those are eight companies, right?

Jessica Livingston 18:47 Yeah, there were eight companies. (laughs)

Garry Tan 18:48 Yeah, pretty good.

Jessica Livingston 18:49 Pretty good. We didn't realize this at the time because, of course, you know, they didn't seem nearly as impressive as they do now. Um, but they were impressive in their own way. I think even applying, seeking out this new funding, uh, was impressive. And doing this, you know, I remember in, in my, in our interview on my podcast with Steve Huffman, he said that his mom was so skeptical.

Harj Taggar 19:16 (laughs)

Jessica Livingston 19:16 He was just graduating from UVA and instead of going to get a job somewhere at a legit company, he was taking $12,000 from this Y Combinator and that we were gonna trick him into doing this. (laughs)

Harj Taggar 19:29 (laughs)

Jessica Livingston 19:29 So, they were pretty brave to do this. And by the way, you had asked about Y Combinator's DNA, I mean, I think one thing that we had in common and the founders had in common, is that we're unconventional. You know, independent-minded.

Garry Tan 19:44 That first batch, which was kind of magical in terms of the group of people and the outcomes, what did it feel like?

Jessica Livingston 19:51 Going back, you don't really know, uh, you know, what it's gonna turn... Everything evolved very slowly over the years. But that first batch, it was such a, it was like one of the most fun times in my life, 'cause everyone really wanted to be there and really wanted to start a startup, and we wanted to help them. We did not know nearly what we all know now. And by the way, the collective wisdom of Y Combinator is like a million times better than we had back then. Um, but we helped them a little, and it just felt very magical. We'd come together every week. I mean, a lot was still the same as that happens now. We'd come together every, it was Tuesday nights, Paul would cook. I'd go to the grocery store, and he'd, he'd be frying up onions and cooking chili-

Harj Taggar 20:39 (laughs)

Jessica Livingston 20:39 ... in our Crockpots. That was real. And we'd just talk and we'd have guest speakers, and I, I laugh because the guest speakers, it was like anyone we knew in Boston who had accomplished anything related-

Harj Taggar 20:51 (laughs)

Jessica Livingston 20:52 ... to startups. We had like lawyers talking about patent law, which of course when you're early-stage startups, not the like most important thing. But we brought in these wonderful speakers who like, you know, loved coming and it was such a novel thing to come talk to a bunch of young startup founders in a group. I mean, I don't really think that happened much back then. Um, and it felt exciting, and, and by the way, these founders were making progress, and Reddit launched and that was legit very early on. That's when it felt like, "Hey, we're onto something here." And this batch thing is even more special because people became friends and people encouraged each other within it. And that's when Paul said, in like September, "Oh, we have to do this out in Silicon Valley."

Garry Tan 21:43 Mm-hmm.

Jessica Livingston 21:44 (laughs)

Harj Taggar 21:44 It's crazy. It's almost 20, almost 20 years ago now.

Jessica Livingston 21:48 Yeah.

Harj Taggar 21:48 It's only funny if you don't remember this-

Jessica Livingston 21:49 Mm-hmm.

Harj Taggar 21:49 ... but like just how... Do you remember what the night before the first dinner was like, or just like what were you expect...

Garry Tan 21:56 (laughs)

Harj Taggar 21:56 ... like what were you expecting, and then how did that night go?

Jessica Livingston 22:01 I don't... I'm trying to think. I don't remember. I don't think I, we felt nervous. I mean, the stakes were so low.

Harj Taggar 22:08 (laughs)

Garry Tan 22:09 (laughs)

Jessica Livingston 22:09 Honestly. You know, and the... No offense, but like the people in the program were like 21 years old.

Harj Taggar 22:15 Yeah.

Jessica Livingston 22:15 So we felt like, okay, let's, we're gonna deliver some things. I ha- I did have all the paperwork. I remember being like, "I hope I..." 'Cause I was in charge of meeting with all of them to help them incorporate. So we were always like, "I hope this goes okay." But we had our ducks sort of in a row. But the first dinner, I, it was just sort of happy. I just remember being happy, and I had, it was in these long tables and I had like sp- little candle holders.

Harj Taggar 22:42 (laughs)

Jessica Livingston 22:42 I had to light the candles and we had, um, cheese from Formaggio Kitchen. It was basically almost like hosting just a nice dinner party, and everyone showed up, and well, I just remember love, I loved like, "Oh, w- w- where did you come from? Where, where are you from? W- How was college? Oh my gosh, you just graduated. What's your idea gonna be?" Like it was just so much fun.

Harj Taggar 23:06 One

Harj Taggar 23:07 thing I remember from our first YC dinners in 2007-

Jessica Livingston 23:10 Mm-hmm.

Harj Taggar 23:11 ... is that dinners were actually quite stressful as a founder because-

Jessica Livingston 23:13 Really?

Harj Taggar 23:14 ... you would come in and people would just get their laptops out. They'd be showing each other what they'd built. I'd always feel quite insecure. I was nowhere near as good of a programmer as like pretty much everyone else in the batch. And so everyone else was just like able to get lots of stuff done, and you never wanted to come to the dinner and feel like you didn't have new stuff to show. Is that something that just like happened, or-

Jessica Livingston 23:35 That just happened. Yeah, that was just a natural thing, and I think it's a good thing.

Harj Taggar 23:40 Yeah.

Jessica Livingston 23:40 Sorry if it was stressful.

Harj Taggar 23:41 No, it's o-

Garry Tan 23:42 (laughs)

Harj Taggar 23:42 It was a good kind of stress.

Jessica Livingston 23:43 You know. It was good stress.

Harj Taggar 23:43 It meant that like it just made me work really hard during the week-

Jessica Livingston 23:46 Yeah.

Harj Taggar 23:46 ... 'cause you didn't want to turn up to a dinner and be like, "Oh yeah, like just chilled out this week."

Garry Tan 23:51 Well, th- that, that was part of the magic of founding companies in batches is you could see what your peers-

Harj Taggar 23:56 Yeah.

Garry Tan 23:57 ... were doing, and there was a, there was... It was possible for the first time for you to compare yourself to what other early-stage founders were doing.

Harj Taggar 24:05 It was huge for me 'cause I'd moved from London, and any startup event I'd been to in London was all just a bunch of people hanging around like talking about business plans or just like, the like, I-

Garry Tan 24:16 That's the default world. (laughs)

Harj Taggar 24:17 Yeah.

Jessica Livingston 24:18 Yeah. (laughs)

Harj Taggar 24:18 It was totally the new default-

Garry Tan 24:19 Business.

24:19 Out there. Business land.

Harj Taggar 24:21 It was just lots of mentors around who had never actually like started a startup either, but just s- like-

Jessica Livingston 24:26 Right.

Harj Taggar 24:26 ... liked to like talk to young people about them. And so-

Garry Tan 24:29 And they had really nice degrees or worked at really fancy places.

Harj Taggar 24:33 And so I had a feeling, a- and I didn't really know.... that much about Y Com- like, I had Googled, I had stumbled across a PGSA, then clicked through and read about this thing called Kiko, Justin and Emmett's thing-

Jessica Livingston 24:46 (laughs) Yes.

Harj Taggar 24:46 ... that got sold on eBay. (laughs) And so-

Jessica Livingston 24:48 Yeah, for $280,000, which was our biggest outcome at the time.

Harj Taggar 24:52 (laughs)

Jessica Livingston 24:52 (laughs)

Harj Taggar 24:53 So I was like, uh, it definitely seemed like, okay, this seems different to, like, your regular investor, but I didn't know what to expect, like, on the first night, um-

Jessica Livingston 25:02 What was the first night like, in your memory? And this was in 2007? Summer, 2007?

Harj Taggar 25:08 Yeah, this was 2007. Okay, well, I, I... It, it involves Jared's co-founder, Trip, um-

Jared Friedman 25:14 Okay.

Harj Taggar 25:15 (laughs)

Jared Friedman 25:15 I haven't heard this story.

Jessica Livingston 25:17 Oh, I'm excited.

Harj Taggar 25:17 All right, well, we got off the Cal Train, uh, and we just w- walk over to Pioneer Way. Uh, first time in Mountain View, uh, and it's just that it gets... The more you walk towards YC from Cal Train, the quieter it gets, and so we're a little bit like, "A ha, is it definitely this street?" Like, as in-

Jessica Livingston 25:33 (laughs)

Harj Taggar 25:33 ... know what to expect, and then-

Jessica Livingston 25:34 Yeah.

Harj Taggar 25:35 ... we walk in, and just the f- we turned the corner and the first person just happened to be Trip, um, and he... Trip's just, "So what are you working on?" And we tell him, at that time, we were a student marketplace. He's like, "Hmm. What are your daily active users? Like, how much are you grow..." like, he just started interrogating us, um-

Jessica Livingston 25:51 Oh, Trip.

Harj Taggar 25:52 But like... (laughs)

Jessica Livingston 25:53 (laughs)

Jared Friedman 25:53 (laughs)

Harj Taggar 25:54 But he was, he was just like... I mean, that's just like what this person... Like, he's just like in an... Uh, it was like a level of intensity I wasn't actually, like, used to.

Jared Friedman 26:00 Well, he probably had internalized it from Paul.

Harj Taggar 26:01 Yeah, I-

Jared Friedman 26:01 Because that's what Paul would do.

Harj Taggar 26:02 Yeah, well, that's what happened-

Jessica Livingston 26:03 Yeah.

Harj Taggar 26:03 ... is then we went to see Paul, who basically asked the same set of questions. (laughs)

Jared Friedman 26:07 (laughs)

Jessica Livingston 26:07 (laughs)

Harj Taggar 26:07 And so, that's what I mean by, like, it wasn't... Any startup event I'd been to was just a bunch of people, like, talking about nothing, really, and so just it felt like the second we walked in, you could just tell that this was, like, a group of very, like, intense people.

Jessica Livingston 26:23 Serious and determined.

Harj Taggar 26:24 Yeah.

Jessica Livingston 26:25 Well, yeah, they were intense about their startup because Demo Day was at the end-

Harj Taggar 26:28 Yeah.

Jessica Livingston 26:28 ... of the batch, and by that point in 2007, we had definitely realized the significance of Demo Day and there was a good crowd coming. Who was the speaker on your first night? Was it just-

Harj Taggar 26:39 No. No.

Jessica Livingston 26:39 Paul and-

Harj Taggar 26:39 It was an alumni panel, actually.

Jessica Livingston 26:41 Oh, that's why Trip was there.

Harj Taggar 26:42 Yup. Yup, yup, yup, that's it.

Jessica Livingston 26:43 Yes, okay.

Harj Taggar 26:44 Sam. So, yeah, actually the way it worked was we all hung out, we... Talking, um. And by the way, people were intense in different ways. Like, I remember Wayne Crosby was in our batch. Um, he started a company called Zenter. Wayne's, like, the nicest person ever, but when he was demoing the, what they'd built of Zenter at the moment, which was like PowerPoint in the web browser-

Jessica Livingston 27:02 Yeah.

Harj Taggar 27:02 ... in 2007, it was incredible to see that, so it was just, like, off the bat, like, uh, uh, the nicest person ever, but this is clearly a, like, intensely strong technical team. And so it was just that kind of vibe with everyone you spoke to.

Jessica Livingston 27:15 Yeah.

Jared Friedman 27:15 And that project ended up becoming Google Slides, which everyone uses now. And, uh, his co-founder is now, I think, one of the heads of AI at Apple.

Jessica Livingston 27:23 Yeah.

Jared Friedman 27:23 Which is-

Jessica Livingston 27:23 Robby Walker.

Jared Friedman 27:24 ... pretty wild. Which is another example of just sort of the incredible talent density of those early batches.

Jessica Livingston 27:30 Yeah. It is incredible how talented they all are, and what they've all gone to, on to accomplish.

Harj Taggar 27:36 And that they all wanted to pay it forward. Like, I think that first dinner, the group that was there was almost everyone who was in the first batch. Sam Altman was there, Steve Huffman, Justin, Emmett. And I re- I remember for some reason, I have this image in my head, I don't know if it's completely accurate, but we were almost, like, standing in a circle, um, and it was just, like, Sam and Steve and Justin just all, like, giving advice, and it just felt like they really cared.

Jessica Livingston 28:00 Well, that, this is the thing that goes back to the community and the essence of Y Combinator. I mean, again, very early, we realized, okay, we have to get the alumni to help the new people, 'cause by the way, we didn't have tons and tons of contacts at that point. Our best contacts were our alumni. So every single batch, they'd come back to talk and help, and they'd always be there to ad- help advise.

Harj Taggar 28:24 Mm-hmm.

Jessica Livingston 28:25 And I think it was a really powerful part of Y Combinator, and continues to be a really powerful part.

Harj Taggar 28:30 I also just remember the alumni would always, um, be mind-blown at how big the batch was.

Jessica Livingston 28:35 (laughs)

Jared Friedman 28:37 (laughs)

Harj Taggar 28:37 (laughs) 'Cause our batch-

Jared Friedman 28:38 "15 companies, 20 companies, can you believe it?"

Harj Taggar 28:41 They were like, our batch was like 15 and their batch was like nine or something, they were like, "Oh my God." Like, "We can't believe this works when you go from nine to 15."

Jessica Livingston 28:48 (laughs)

Harj Taggar 28:48 It's crazy. (laughs)

Jessica Livingston 28:50 It's true. It's true.

Diana Hu 28:50 That comment is prescient. (laughs)

Harj Taggar 28:52 Yeah. (laughs) basically just the perennial thing is, "Ah, the batches are, like, so big."

Jessica Livingston 28:56 Yeah.

Jared Friedman 28:57 So since I was in the third batch of Y Combinator, one of the most common questions I get when I talk to founders is like, "Well," like, "how is it different from when you did YC back in, you know, back in the third batch?" And the remarkable thing is how little it's changed, really from the first batch. I mean, around the edges, we've made incremental upgrades to some of the details, but like, the core structure of YC in summer '24 is exactly the same as the original summer 2005 batch. It's, like, pretty remarkable to ship a product whose V1 just, like, stays unchanged for such a long time.

Jessica Livingston 29:34 It is pretty remarkable. I think about that a lot actually, and obviously, Y Combinator is on a whole new level now with, again, all of the knowledge and all of the connections and its brand and everything, but it is true that, that the, the core of it is the same, and I just think that's so cool. Don't change it if-

Jared Friedman 29:55 (laughs)

Harj Taggar 29:55 (laughs)

Jessica Livingston 29:55 ... it ain't broke, right?

Jared Friedman 29:56 Agreed. Well, Jessica,

Jared Friedman 29:57 one of the things that I'm really curious to ask you is, you know, we're talking about early days, '05, '06, '07. At some point, maybe '09, '10, '11, '12, YC went from, like, the underdog, where there was-

Jessica Livingston 30:12 Mm-hmm.

Jared Friedman 30:12 ... the Y Combinator effect. You'd bring in a speaker and they would be s- they would, they would come in, I think you said it was sort of like speaking to a, a Boy Scout troop-

Jessica Livingston 30:21 Yeah.

Jared Friedman 30:21 ... or expecting that, and then coming away, realizing, "Oh, these are actually really serious builders."

Jessica Livingston 30:26 Yeah, that happened all the time. People would w- come in thinking like, "Oh, I'll go in and talk to these little founders."

Jared Friedman 30:33 (laughs)

Jessica Livingston 30:33 And then they'd walk away being like, "Whoa. Well, actually, there might be some I'd like to invest in," or, "This is pretty serious." Yeah.

Jared Friedman 30:39 And then that changed at some point, maybe around 2011 when companies started getting $150,000 uncapped-

Jessica Livingston 30:46 (laughs)

Garry Tan 30:47 It used to be, you know, $10,000 or $20,000. I think when I got into YC, my boss at the time said, "Oh, uh, you're quitting to go do this thing for how much? Like $15,000? Gary, do you have money problems?"

Jessica Livingston 31:00 (laughs)

Harj Taggar 31:01 (laughs)

Garry Tan 31:01 But then it changed, like, pretty dramatically. You know, it went from sort of the underdog that people didn't really believe in to suddenly something that people were sort of seeking out.

Jessica Livingston 31:10 Yeah.

Garry Tan 31:11 Like, were there things that... Did you guys have lots of discussions, like, really in that moment, going from the underdog to now we're sort of the thing?

Jessica Livingston 31:20 No. B- I mean, we had lots of discussions, but it, it really did happen slowly, in hindsight. And there are all these little data points that changed and little contributors that I don't know which is the most important. I think probably the most important is that the companies (laughs) that we funded became well-known. You know, I remember when Dropbox started doing really well and everyone was using it. That added so much legitimacy to Y Combinator. Like, "Oh, Dropbox was funded by Y Combinator," and Reddit, of course, um, and then, you know, Airbnb. I'm th- I'm, I'm sure I'm forgetting other, other companies. Justin.tv. Um, s- people started taking us more seriously because of that. Then we'd get, you know, more press articles here and there. That sort of grew and added some legitimacy. I mean, at the beginning, it was like, I felt like it was a couple of years before anyone ever wrote about us. And then, of course, we'd always be inviting people to speak, and as the speakers became more eminent, they'd leave the dinner and think, "Wow, that was actually really impressive." So it was a lot of word of mouth. So I don't, I don't really know what the main change was. It was very organic.

Harj Taggar 32:32 H- how about the challenges? How about the challenges of running YC? Like, how did they change once YC went from-

Jessica Livingston 32:38 Oh.

Harj Taggar 32:38 ... underdog that no one took very seriously to, like, you know, the preeminent place to start a company?

Garry Tan 32:45 Were there suddenly a lot of scenesters?

Jessica Livingston 32:47 Uh.

Garry Tan 32:47 Like, there were probably always scenesters-

Jessica Livingston 32:49 Yeah.

Garry Tan 32:49 ... and at Social Radar, you probably had to keep those out.

Jessica Livingston 32:52 I'm wondering if you're referring to applicants, investors, who? Like-

Garry Tan 32:56 Maybe all of the above, right? I mean-

Jessica Livingston 32:56 ... 'cause there were scenesters. All of the above. Actually, one of the other bizarre data points was... Do you remember the movie The Social Network?

Garry Tan 33:03 Oh, yeah.

Jessica Livingston 33:04 Yeah. That came out, and I swear, I have no proof, but I swear that sort of legitimized the idea of doing a startup in the eyes of- Oh, it did.

Harj Taggar 33:13 You can, you can see-

Jessica Livingston 33:14 ... people.

Harj Taggar 33:14 ... when the movie was-

Garry Tan 33:15 Yeah.

Harj Taggar 33:15 ... releifed, l- was released in the graph of the number of applications per batch. There's a very remarkable jump-

Jessica Livingston 33:22 Okay.

Harj Taggar 33:22 ... right after the movie came out.

Jessica Livingston 33:23 Okay, good. All right.

Harj Taggar 33:24 Yes.

Jessica Livingston 33:25 So I do have data. The early days of YC were, like, the happiest because we could just work without any distractions. There were no, there was no Twitter. Remember the days before Twitter, okay?

Harj Taggar 33:37 Happy, peaceful time. (laughs)

Jessica Livingston 33:40 Happiest- happiest, most peaceful time.

Harj Taggar 33:40 Society was civilized. We were all getting along great.

Jessica Livingston 33:43 Yes, and so we were just doing our thing, working really hard. Founders were working really hard. We had enough investors that we knew. They were getting funded. Like, everything was chugging along. Then, all of a sudden, we do become more well-known, and you get under the microscope. Just like... A- this happens to startups. They, they get well-known, and then all of a sudden, the haters come out of the woodwork. And the people who wanna get publicity for themselves have to do something to, like, hate on Y Combinator so that they get their own publicity. And for me, being a very sensitive person, like, that was very distracting and annoying, and I'd take it really personally. Now I'd, of course, like, laugh it off. But back then, you know, we felt, "Oh, I have to, like, talk to this person and explain why this isn't a bad thing and why we're not taking advantage of people or whatever." Um, but there was all these, like, buzzing distractions once we became well-known. And then you will remember this, Harj.

Harj Taggar 34:40 (laughs)

Garry Tan 34:41 (laughs)

Jessica Livingston 34:41 Um, because Harj was our first associate, or what, what did we even call it?

Harj Taggar 34:46 Venture partner.

Jessica Livingston 34:47 Venture partner. We used to have a lot of people asking to sort of grab coffee and get to know how we can work more closely with Y Combinator. Well, if you said those words to PG, he'd, like-

Harj Taggar 34:58 (laughs)

Jessica Livingston 34:58 ... shrivel up and die.

Garry Tan 35:00 (coughs)

Jessica Livingston 35:00 I was no better. I didn't want to meet with people. So Harj came on-

Garry Tan 35:04 Just grab drinks. (laughs)

Jessica Livingston 35:04 ... and Harj had to-

Garry Tan 35:05 Constantly grab drinks.

Jessica Livingston 35:05 ... grab coffee with people and learn-

Garry Tan 35:07 Yeah.

Jessica Livingston 35:07 ... how they could work more closely together. And so that started happening. There was tons of people who wanted more of our attention. And none of it... Like, 1% might have been a valuable meeting, and the rest was just useless, w- time-wasting. And we were always trying to be focused and not be bureaucratic and not act like a big company. I feel like that's one of the core parts of the DNA that makes us so special because other organizations could have gotten that spotlight, and we seen them. They just start kind of taking all these m- coffee meetings and trying to make too much, and at some point- Yeah. ... they implode. But- Oh, yeah. ... you were very focused. You said no (laughs) to a lot of it.

Harj Taggar 35:44 (laughs)

Jessica Livingston 35:44 Except there was one, Diana, one very important meeting that Harj took on our behalf.

Harj Taggar 35:49 (laughs)

Jessica Livingston 35:49 Um, do you remember that one?

Harj Taggar 35:50 Is this the Yuri Milner one? (laughs)

Jessica Livingston 35:52 Yes, it is. (laughs)

Harj Taggar 35:52 Yeah. (laughs)

Jessica Livingston 35:52 Can we tell that story? (laughs)

Harj Taggar 35:55 Yeah. (laughs)

Jessica Livingston 35:55 'Cause it was very unexpected.

Harj Taggar 35:57 Yuri Milner, uh, sort of the famous Russian billionaire investor, investor in Facebook, he... I think he was introduced to us through Ron, actually, through SV Angel.

Jessica Livingston 36:07 Okay.

Harj Taggar 36:07 We're like, "Uh, hey, this person wants to meet Y Combinator to talk about ways to do things together."

Garry Tan 36:13 Silicon Valley godfather, Ron Conway.

Harj Taggar 36:16 (laughs)

Garry Tan 36:18 (laughs)

Harj Taggar 36:18 We should all take a moment.

Garry Tan 36:19 (laughs)

Harj Taggar 36:20 (laughs) Um, and PG forwarded me the email saying, "I don't wanna meet this person. Can you meet them?" And I was like, "Sure." And so then they met at the YC, we met at the YC office, and, uh, Yuri comes in with his, uh, associate or par- or partner, Felix. And he just... I'm like, "Hey, so what, what would you, you know, how could I help? What, what could we do?" He just immediately says, "I want to fund all the startups." (laughs)

Garry Tan 36:46 With his, like, thick Russian accent, right?

Harj Taggar 36:46 Yeah, thick Russian accent.

Garry Tan 36:48 (laughs)

Harj Taggar 36:48 I'm like, "What exactly do you mean?" He's like, "I want to fund all your startups."... now. (laughs)

Jessica Livingston 36:57 (laughs)

Garry Tan 36:57 (laughs)

Harj Taggar 36:57 (laughs) And I got a few more words out of him, and I realized he genuinely wanted to just invest in all of the companies in the batch on the spot. And so, PG, who'd been trying to avoid the sp- I could see PG doing office hours out in the, um-

Jessica Livingston 37:09 Oh, he was there?

Harj Taggar 37:10 ... he was there doing office hours. And he was just, like, trying to avoid having to come into the room. I could see him sort of wandering around. And then I came out, I was like, "PG, you have to come in." He's like, "I'm not taking, I'm not, like, I'm not gonna meet," like, "I don't do meetings." (laughs) And I was like, "No, you really have to come in for this one." And PG comes in and realizes that Yuri is actually very serious about wanting to fund all of the startups. And so then I think that weekend, we basically just came up with all the paperwork. Carolyn Levy came in and just got it done to announce to the companies in that batch that they were all gonna get $150,000, like, uncapped, safer.

Garry Tan 37:46 But you kept it a secret. So I remember I was a-

Jessica Livingston 37:48 Yes. Yes.

Garry Tan 37:48 ... designer in residence at the time, and so I got the same email that the founders got. And the founders, they were all speculating, like, "What is this?" It was, I think, a Friday night, and-

Jessica Livingston 37:58 Oh, yes, we had a special one-off dinner.

Harj Taggar 38:00 Yeah.

Garry Tan 38:00 It was a special meeting that you had to be at.

Jessica Livingston 38:01 That's right.

Garry Tan 38:01 And it was very mysterious, and it said you had to be there. And the batch thought, like, "What? Is Obama coming to speak? What's going on?"

Harj Taggar 38:08 There were all sorts of rumors. There was Obama, Oprah, Steve Jobs. Like, everyone (laughs) was just like-

Jessica Livingston 38:13 I would have been psyched.

Garry Tan 38:14 Any of those would have been pretty amazing.

Jessica Livingston 38:17 And I remember we said, "We have a really special announcement tonight," and he came out. And then Ron Conway was on the, like, rolling robot.

Garry Tan 38:28 Oh, Yuri was.

Harj Taggar 38:28 No, Yuri was. Yeah.

Jessica Livingston 38:30 Oh.

Garry Tan 38:30 Ron was there.

Harj Taggar 38:31 Yu- Yuri couldn't make it in person, so then he came out on this, um, telepresence robot.

Garry Tan 38:36 On Trevor's, yeah, on Trevor's iBot.

Harj Taggar 38:37 Like a iPad on wheels, basically. Just really adding to the whole-

Jessica Livingston 38:40 (laughs)

Harj Taggar 38:40 ... bond villain vibe. (laughs)

Jessica Livingston 38:43 It was Yuri that was on the robot. And then we said, I remember we said, "We are gonna, they, they are gonna be giving you, all of you, every person in this room, you know, every startup in the room $150,000 right now." And the room just erupted.

Harj Taggar 38:59 Yeah.

Jessica Livingston 38:59 And actually, I was one of the ones erupting because that kind of money was such a big deal back then to have that-

Harj Taggar 39:06 It gave everyone instant confidence.

Jessica Livingston 39:08 ... and runway. Just a little bit of, like, relief. Like, they could go into Demo Day, and if they didn't raise a ton of money at Demo Day, Demo Day, they still would have enough money to survive for a little bit longer.

Garry Tan 39:19 I guess the wild thing is that YC people get half a million dollars now, and so-

Jessica Livingston 39:23 That's pretty wild.

Garry Tan 39:24 ... you know, people-

Jessica Livingston 39:24 (laughs)

Garry Tan 39:24 ... the old-timers like us can really go to new batch people and be like, "Back in our day."

Harj Taggar 39:30 (laughs)

Jessica Livingston 39:30 (laughs) Yeah.

Garry Tan 39:31 That really was-

Jessica Livingston 39:31 That was a whole Demo Day r- fundraising round, actually.

Garry Tan 39:34 Yeah.

Jessica Livingston 39:34 Half a million.

Garry Tan 39:34 That's right. Yeah, if you raised half a million dollars at Demo Day, you were doing really, really well back, back then.

Jessica Livingston 39:38 Oh, super well. Yeah.

Garry Tan 39:40 Yeah.

Harj Taggar 39:40 I remember the, the, it's the YC increasing its deal this time around had some of the same thinking as, like, the original. I remember when we were talking about the original Start Fund deal, and you're like, "Well, if, even if it just gives a few of the companies that little bit more confidence to just, like, keep going and not get dejected by investors rejecting them, that it should work out, like, it will work out." That was definitely true for the Start Fund investors themselves. Like, they got to invest in Coinbase and DoorDash and Instacart, like, good companies.

Jessica Livingston 40:08 Good companies. Yeah.

Harj Taggar 40:10 Um, uh, and I do actually think for sort of, I think for Coinbase in particular, Coinbase struggled to raise funding. And I think the, having, like, an extra few 100K was probably a big benefit to pro- Like, he lost his co-founder during the batch. He had, like, a whole bunch of things going on where I think it probably meaningfully made a difference.

Jessica Livingston 40:26 And hats off to Yuri Milner for coming forward with this idea. Like, we knew lots of investors before him and no one else ever did that. They always just wanted to invest in whoever we thought was the best startup in the batch.

Harj Taggar 40:39 (laughs)

Jessica Livingston 40:39 'Cause that's the way it worked.

Garry Tan 40:41 I mean, flash forward to today, it's actually a, really quite a winning strategy. I mean, looking at the numbers, if you funded all of the companies in the batch, you would actually create a VC fund that was better than pretty much most of the VC funds' returns period historically. (laughs)

Jessica Livingston 41:00 (laughs)

Garry Tan 41:00 So, so, and then if you can pick even better than that, then you can actually have a 10X fund, which is sort of what we did at Initialized actually. (laughs) So, so I, you know, YC has been just this crazy prosperity engine. It's like the tree of prosperity, literally. It's just growing Silicon Valley so much. It's, it's really crazy.

Jessica Livingston 41:18 Well see, the, that is exciting to me because again, the whole reason we did this was to try to cause, try to help young startups, but cause there to be more startups to be created. And I think we've done that.

Garry Tan 41:33 Do you wanna talk about the very first Startup School? How you guys came up with the idea of Startup School? We actually just hosted one-

Jessica Livingston 41:39 (gasps)

Garry Tan 41:39 ... here, like, two months ago. But I always think about the Startup School event as, like, such a perfect example of how you wanted to just get more people to start startups-

Jessica Livingston 41:48 Yeah.

Garry Tan 41:48 ... whether you funded them or not.

Jessica Livingston 41:50 Yes, yes. I would love to talk about. Startup School, if you've ever listened to my podcast, is a recurring theme because it, it was one of the highlights of my year, but it was also the most stressful.

Garry Tan 42:01 (laughs)

Jessica Livingston 42:01 There was always something that went wrong. Um-

Garry Tan 42:03 Sounds familiar to me.

Jessica Livingston 42:05 (laughs)

Garry Tan 42:06 (laughs)

Jessica Livingston 42:06 And yeah, you were, we met you at Startup School because you were taking-

Garry Tan 42:09 Yeah, 2008.

Jessica Livingston 42:10 2008. You were taking photos for us.

Garry Tan 42:11 Yeah. That's right.

Jessica Livingston 42:12 And I was like, "Great. Some guy down there who I've never met is taking photos. I'm gonna get in touch with him, and hopefully he can give them to me for free."

Garry Tan 42:19 Yep.

Jessica Livingston 42:19 Which you did.

Garry Tan 42:19 I sure did.

Jessica Livingston 42:20 (laughs)

Garry Tan 42:20 I just wanted you to fund my startup postures, which you did.

Harj Taggar 42:24 (laughs)

Jessica Livingston 42:24 (laughs)

Garry Tan 42:24 (laughs)

Jessica Livingston 42:25 So the first Startup School definitely was based on Paul's spam conference. Again, the stick-on labels, the, um, sort of very inexpensive venue, which was Harvard University. So you probably... Did you come to the first Startup School?

Harj Taggar 42:43 I was there.

Jessica Livingston 42:43 Okay, you were there. And we partnered with the, you know, undergraduate group of programmers.

Garry Tan 42:49 Yeah.

Jessica Livingston 42:49 And they got the venue. So we didn't have to pay for this 'cause the whole thing was we don't have a lot of money to pay for things. And then it was like, "Okay, we have a venue. We have some people who want to come." It will be open to not just Harvard students, but we'll just post it online and anyone who wants to come can apply, but with three questions. You know, it was like there was enough space for most people. And we just invited people. And...... we got Steve Wozniak.

Garry Tan 43:16 (laughs)

Jessica Livingston 43:16 And to this day, I should, I really should ask Paul, like, "How did we land Woz?"

Garry Tan 43:20 (laughs)

Jessica Livingston 43:21 'Cause I don't know, I don't remember what was so compelling to him. Maybe it was that it was a startup conference and there weren't that many and we said, "Look, it's a whole bunch of sort of would-be founders who are all programmers." And that probably appealed to Woz. But he actually came, so that helped. Um, but there was, Chris Sacca was the runaway speaker.

Garry Tan 43:42 (laughs)

Jessica Livingston 43:43 Um, but his talk was so mesmerizing and so captivating. He had the whole audience, like, around him. And I think, from there, his just career in startups and investing took off. And it was free. We always made it free. That was one thing that was so different. Every other person putting on an event charged. You can't charge students-

Garry Tan 44:05 Yeah.

Jessica Livingston 44:05 ... to come. They, or startup founders. They don't have any money. (laughs)

Garry Tan 44:08 (laughs)

Jessica Livingston 44:08 So we made it free. And then-

Garry Tan 44:10 And you didn't have sponsors.

Jessica Livingston 44:11 Correct.

Diana Hu 44:12 Yeah.

Jessica Livingston 44:13 Because-

Garry Tan 44:13 Like, who did, who would-

Jessica Livingston 44:14 Yeah.

Garry Tan 44:14 ... put on a conference that doesn't charge and that doesn't have sponsors?

44:18 Yeah.

44:18 That's just a recipe for losing money. So nobody does that.

Jessica Livingston 44:21 Right. And I'll tell you-

Garry Tan 44:22 We make money other ways.

Jessica Livingston 44:23 ... Paul and I just have an allergic reaction to sponsors. And you want to know why? One of the reasons is because you have to get up and say, "Welcome to Startup School. Let me first take five minutes and tell you about how great this big company is." And like, it is such a waste of time. And so again, that's just against Paul and I moral values. So (laughs) we couldn't do that. So we put it on ourself. But as a result, it was (laughs) super cheap. We had the stick-on labels. I was working the registration desk. Like, it was Paul and I running the whole event. Um, and maybe we ordered some pizzas. That was it.

Garry Tan 44:58 But-

Jessica Livingston 44:58 But it was fun, right?

Garry Tan 44:59 That's what hackers want. Like, we don't want-

Jessica Livingston 45:01 Yeah.

Garry Tan 45:01 ... something that's really fancy or has lots of social levels, and how do I climb from here to here or whatever. I just want a good time, very informal. I just want to be with smart people, and that's it. And then you guys captured that perfectly.

45:15 From the very beginning, it just felt so different from any other startup event 'cause it was so earnest.

Jessica Livingston 45:21 Yeah.

Garry Tan 45:21 And it was so devoid of any pretension. It had the best speakers and the best talks, and an audience of, like, serious builders. Not pretenders, not scenesters. Just, like, serious tactical people who j- who were actually there to learn how to start a startup, not to, like, network with people.

Jessica Livingston 45:40 Well, two things that y- you just reminded me of. This was, again, before Twitter. So, the people that gave talks just gave up the goods, and they weren't, there was no real press there. And so they just told us things that were, were mind-blowing that you kind of couldn't really say now, or people on Twitter might be all over you. But second, listen to just how you described that event, like earnest and not pretentious. That's in YC's DNA. That's the way the whole company is. And, like, I hope we never change from that.

Harj Taggar 46:11 How was it for

Harj Taggar 46:12 you, Diana? Come, do you remember where you heard about YC the first time and then just, like, your... 'Cause you traveled the furthest, I think (laughs) -

Jessica Livingston 46:19 Yeah.

Harj Taggar 46:19 ... um, to get here?

Diana Hu 46:21 Yeah, because I grew up in Chile. I came to study in the US, engineering, and I happy to get, happened to get lucky to get surrounded by a bunch of nerds in, uh, CMU in, in computer science. Used to hang out in the computer labs. And everyone was really into Paul Graham's essay, particularly started more from his thoughts and around functional programming and Lisp, because it's just very elegant for anyone that's into programming. And then you play the links clicking and you just read through the, his whole page. That's kinda what I did. And I was like, "Wow, this is so cool. I didn't know that you could start a company and then learn about Y Combinator and all of this." And that's kinda what got me into it. And I think what stood out to me as well, coming into some events for YC later on, was this aspect of, uh, as you describe it, very earnest. Because there were so many of these other events that I've been to that are very pretentious.

Jessica Livingston 47:19 Yeah.

Diana Hu 47:19 That there's a, I don't know, people are saying a lot, but without content. Or these are the names.

Jessica Livingston 47:24 That sounds familiar. (laughs)

Garry Tan 47:26 (laughs)

Diana Hu 47:26 Yeah. (laughs) Or people just want to know, and if you don't have certain stature, they just skip and don't talk to you. But there's a genuine aspect of people are curious about what you have to say. And it was just cool. And I think to this day, we get a lot of attendees, even at Startup School, and hearing this, "Wow, this is, like, one of the best events." We hear a lot of things that are not said anywhere else. And it's just very humble.

Jessica Livingston 47:52 Yup, I mean, I'd say everyone there, all the partners there are just super, they're nerds, and they're super startup fans, and they're genuinely interested in you and your idea. And it doesn't matter what your background is or where you went to school. And I'm glad to hear that you felt like that, even in 2018.

Diana Hu 48:11 Yeah, it still lived on. I think it's so special that that spirit's still there. And that was what felt special about YC, is like the first place that I felt that I kinda belonged, because I've been always the weird kid, kinda like sheltered, didn't get along with anyone because everyone was, I don't know, into sports or something. (laughs)

Garry Tan 48:29 (laughs)

Jessica Livingston 48:29 You know, it's so great that you say that, Diana, because I feel like that's one of the sort of last things I wanted to mention about Y Combinator's DNA, that it is a special place that all these people who might've felt like they were different or outsiders or somehow unconventional come to YC and they think, "Wow, I've found my people. Like, I can do my thing here."

Garry Tan 48:53 That was exactly how I felt. Yeah.

48:55 Yeah, me too.

Harj Taggar 48:55 I, I think people don't appreciate just how difficult that was to make happen, because I, I remember actually when I was first thinking about joining, or actually joining YC sort of officially full-time as a partner, I, I spoke to a bunch of people like, "Should I do this or not?" Um, and a lot of the advice I, a lot of the conventional wisdom, this is like 2010, was that, "Oh, like, YC's great, but it's never gonna produce, like, the really outlying companies, because the really outlying founders don't want to be a part of a community. They just like, they're too oddball, they're too out there." Like, they have to be, like, um, outsiders, like, by nature. Um-... and so you just won't get, like, a Steve Jobs doing YC. And this is, like, a bunch of people told me this.

Jessica Livingston 49:35 I feel like Steve Jobs might have done YC.

Garry Tan 49:37 Yeah. Like, I, I think that-

Jessica Livingston 49:39 I really do.

Garry Tan 49:39 Yeah. I-

Jessica Livingston 49:40 If only for the money. (laughs) You know? I don't know.

Garry Tan 49:42 (laughs)

Jessica Livingston 49:42 Like, easy money.

Harj Taggar 49:43 Not if the events had sponsors or a whole bunch of other things.

Garry Tan 49:46 Right, yeah.

Jessica Livingston 49:46 But, like, that, that to the point is, like, it's actually a really hard product to build, something that's, like, a community for people. Like, I do think there is a grain of truth to it.

Garry Tan 49:54 I do think it's true that most of... those people don't want to be part of most communities.

Harj Taggar 49:57 Yeah.

Jessica Livingston 49:58 Yeah.

Garry Tan 49:58 You have to create a very unique-

Harj Taggar 50:00 Yeah.

Garry Tan 50:00 ... community that they would actually want to be a part of.

Jessica Livingston 50:03 How about an earnest community of builders?

Harj Taggar 50:06 Yeah.

Garry Tan 50:07 (laughs)

Harj Taggar 50:07 Yeah.

Garry Tan 50:07 Is

Garry Tan 50:08 it possible that you have interviewed, in the course of your career, more founders than anyone else? Between interviewing all the founders for your book, interviewing founders at startup school, doing the batch talks, and now running your podcast, where you interview successful founders, you've interviewed so many of the most successful founders, and you've also met so many of the most successful founders back when they were teenagers, before anybody knew them.

Jessica Livingston 50:33 Yeah.

Garry Tan 50:34 And so, I think it'd be super interesting for everyone to hear what you've learnt from getting to know all of these founders.

Jessica Livingston 50:41 Gosh.

Garry Tan 50:42 What are your takeaways?

Jessica Livingston 50:43 Oh, that's such a heavy question. (laughs)

Garry Tan 50:44 (laughs)

Harj Taggar 50:45 I, I'd say as a, a narrow thing I'm interested in is just, if you think of some of the now really successful founders that you met when they were teenagers, essentially, what changed about them as they became really successful? And what stayed the same?

Jessica Livingston 50:58 I'll do narrow first, and then I'll go, I'll work up to going broad. So obviously, I've met a lot of, uh, founders, YC founders and non-YC founders-

Harj Taggar 51:09 Yeah.

Jessica Livingston 51:09 ... who we'd invite as speakers, or that I interviewed at Founders at Work, like, for example, Evan Williams was in Founders at Work, talking about blogger.com.

Harj Taggar 51:19 (laughs)

Jessica Livingston 51:19 I mean, this was even-

Harj Taggar 51:20 Yeah.

Jessica Livingston 51:20 ... before Twitter was a twinkle in his eye. So I, I did know a lot of founders back in the day. They were all very smart, very curious, very independent minded. I mean, I just can't reiterate that enough, how you, you cannot be conventional minded to s- start a startup with a brand new idea, um, 'cause you're going against the norm and you're going against people saying, "Well, I don't think that that's a really good idea." Um, they're all very determined. Um, they're all, like, willing to, um, hustle if they need to get something, even if other people say, "No, that's not gonna work." Um, so that was always the same. But as they get more successful, I think they become more confident, and I'm not saying, like, (laughs) these founders were, like, basket case, insecure basket cases before, but they weren't confident. They're, you know, teenagers in some cases. Um, but they had a certain level of confidence in what they were doing. Do you know what I mean? And that's different from being confident in the world.

Garry Tan 52:26 Yeah.

Jessica Livingston 52:26 But they felt like, "I'm building this thing that is good, and here's why I think it needs to exist." You know? They had that kind of level of confidence. But then, as they get much more successful, I don't think they change that much. I mean, maybe their lifestyle changes, certainly, but I think that they're true to themselves, I think, 'cause it's all about the idea. Um, and I, I think you get, like, let's just say movie stars in Hollywood, I bet they change a lot-

Garry Tan 52:56 (laughs)

Jessica Livingston 52:56 ... as they get more successful, but I feel like startup founders, some of 'em are celebrity levels, um, and some do change, you know, in their, their outlook. But I think a lot don't change that fundamentally, um, just that they have more confidence. They have a lot more people who are saying yes to them-

Harj Taggar 53:16 (laughs)

Jessica Livingston 53:16 ... uh, for sure. It's harder to get what you need and get, you know, meet people and things when no one knows who you are. And as you were saying, you sort of get written off 'cause you don't have the, um, the pedigree. Um, but they don't change, I don't think, that much.

Diana Hu 53:32 Could you tell, uh, early on, uh, some stories of these very successful founders now? What, what do you see in them when they were in early 20s, teens?

Garry Tan 53:42 Yeah. You know, you, you, you knew Sam Altman, the founders of Reddit, the founders of Stripe when they were teenagers.

Jessica Livingston 53:49 Yeah. Yeah.

Garry Tan 53:49 What were they like as teenagers-

Jessica Livingston 53:51 Sam was a teenager.

Garry Tan 53:51 ... at the very beginning of their career?

Jessica Livingston 53:53 I gotta say this without offending anyone-

Garry Tan 53:55 (laughs)

Diana Hu 53:56 (laughs)

Jessica Livingston 53:56 ... because I remember, like, Steve and Alexis of Reddit, I mean, they were, like, graduating from college, so I presume they were 21 or 22. You know, they were young and youthful, and they did stupid stuff-

Garry Tan 54:09 (laughs)

Jessica Livingston 54:10 ... and didn't work as hard as they should have-

Garry Tan 54:11 (laughs)

Jessica Livingston 54:12 ... on their startup at all time. I remember we always yelled at them. They were, like, off in Cancun for their senior week when, like, Digg was launching or something.

Garry Tan 54:20 (laughs)

Diana Hu 54:20 (laughs)

Harj Taggar 54:20 (laughs)

Jessica Livingston 54:20 You know? So they were normal, you know? They really were (laughs) like the way I might have been at that age. They wanted to build something that hadn't existed, and I think they're, special people do that. Other people get jobs, you know, that pay well and that have some prestige and have medical benefits, like I did out of college. But these people weren't. Why weren't they? Because they were a little bit different, and they didn't wanna take the traditional route. Um, and by the way, I think now that route is a lot more traditional. A lot of people say, "Well, I can go to grad school. I can get a traditional job, or I can start my own business." And, but back then in 2005, that was not the traditional route at all. So they were definitely unique. Sam Altman was impressive at age 19. I remember, I sort of tell this story a lot, but it really was indicative of his personality. Um, he had s- he said, "Well, I'm pitching at, at a Stanford pitch contest, so I can only interview on Saturday and not Sunday." He was emailing Paul about when he was invited to come interview for the very first batch, and Paul said, "Oh gosh, you know, you know, Sam, you're only a freshman."... this is not your only chance. Why don't you come next year?" And Sam wrote back, literally, like, one sentence, "I'm a sophomore and I'm coming."

Garry Tan 55:42 (laughs)

Diana Hu 55:42 (laughs)

Jessica Livingston 55:43 And that's Sam. He was coming. And then, Sam, um, we funded him, and w- even in the interview, we were like, "Oh, yeah. No-brainer." We did not even have to talk about him 'cause he had a l- interesting ideas, the geolocation sort of a few years too early, but he had an interesting idea. He was super technical, but he was impressive at 19. And I remember I always would joke that he'd be going off, he'd arranged to meet with, like, a carrier company CEO in the middle of America, and he was too young to even rent a car.

Garry Tan 56:17 (laughs)

Diana Hu 56:17 (laughs)

Jessica Livingston 56:17 And that was the, that was the barrier for him, like, "How do I rent a car to get there?" Not like, "How do I get a meeting with this person?"

Garry Tan 56:24 (laughs)

Diana Hu 56:25 (laughs)

Jessica Livingston 56:25 And that was just so different than anyone I had known at that point. And Emmett and Justin, they were, you know, certainly not as impressive as they are now, um, at all. They were just sort of semi-irresponsible 'cause I think of, like, my own 15-year-old who would do dumb, just as dumb, idiotic boy things.

Garry Tan 56:45 (laughs)

Jessica Livingston 56:45 And, but, uh, they were still really good and they were building this, this, you know, interesting product that we thought could, you know, be the way everyone uses a calendar. And then Google came out with Google Calendars. But it was really sophisticated. So I guess, it's like they all were independent-minded, they were all smart, and they were all sort of sophisticated about what they were building and had a level of confidence in what they were building, but overall, still were young and, you know, not super confident as a h- human being.

Diana Hu 57:22 But I think the cool thing is maybe you could trace this back even to when you started working on your book because I was reading it, and you had the realization that a lot of these big companies started as different ideas. You mentioned-

Jessica Livingston 57:33 Yeah.

Diana Hu 57:33 ... PayPal, right?

Jessica Livingston 57:35 Yeah.

Diana Hu 57:35 Started as a encryption tool for Palm phone.

Jessica Livingston 57:38 Yeah, PalmPilots and, like, sharing money between PalmPilots.

Diana Hu 57:42 Yes. We talked to Max Levchin and then it kind of pivoted into payments. (laughs)

Jessica Livingston 57:46 Because the users basically begged them for it. They were all using this, like, janky website to transfer money, and finally they woke up and said, "Oh, this is the idea that people want." Yes, yes, yes, founders change their ideas. Startups, uh, d- ideas evolve. It's about the founders and not the idea.

Garry Tan 58:04 Jessica,

Garry Tan 58:05 thank you so much for coming and telling us all the old war stories of building YC and weaving the DNA that has turned into this sort of tree of prosperity. It's really crazy to have you back here, and thank you. Thank you for building this.

Jessica Livingston 58:21 You're so welcome. It was, like, the pleasure of a lifetime. And I love being here this morning and chatting with you all, like, I love to chat about old stories. So-

Garry Tan 58:32 (laughs)

Jessica Livingston 58:33 ... thank you for giving me the opportunity to do that.

Garry Tan 58:35 Thanks so much for coming.

Diana Hu 58:36 Yeah, thanks.

Jessica Livingston 58:36 Thanks, you guys.

Garry Tan 58:37 So if you like this, go check out her podcast with Caroline Levy called The Social Radars, and we'll see you next time.

Diana Hu 58:44 It's really good.

Garry Tan 58:46 Check it out. (instrumental music)