Why This Is The Perfect Time To Start A Startup

1. 0:00 – 1:25

   The Lightcone Podcast

   1. DHDiana Hu0:00

      Okay. So, we're gonna be doing the Light Cone podcast on stage at Startup School East. What do you guys want to talk about?

   2. JFJared Friedman0:06

      I'm just kind of imagining what these founders want. Like, they traveled here on a bus for hours. Like, the headline topic is why this is the perfect time in your life to start a startup.

   3. DHDiana Hu0:17

      Why this is different than just starting a company at any other time, but now. There's something special now.

   4. HTHarj Taggar0:23

      If you work really hard, like, you can arguably be an AI expert.

   5. JFJared Friedman0:27

      This is why. It's because, like, we're looking at the data and, like, this is the moment in time for young founders to start a startup.

   6. GTGarry Tan0:34

      What do you think, like, the, uh, conclusion is?

   7. HTHarj Taggar0:36

      I'm just trying to think of what's edgy. And, like, what's edgy is, like... (dial-up modem sounds)

   8. JFJared Friedman0:42

      Oh. That's a great client. I love that.

   9. HTHarj Taggar0:45

      Sorry, guy. Sorry (laughs) .

   10. GTGarry Tan0:47

       No, it's great. We just can't use it for YouTube.

   11. HTHarj Taggar0:51

       Yeah. It's all right (laughs) .

   12. GTGarry Tan0:55

       (instrumental music)

   13. HTHarj Taggar1:23

       I was just, like, having a little think there about

2. 1:25 – 4:17

   Intro

   1. HTHarj Taggar1:25

      which phone to put it in. (laughs) .

   2. GTGarry Tan1:34

      (crowd cheering) Hello. Hello, Boston. Welcome to YC Startup School East. It's been more than 10 years since we've actually done any event like this. So with that, I wanna invite up to the stage my fellow group partners of the Light Cone podcast. (crowd cheering) So, this is Harj, Diana, and Jared. And, uh, collectively, we've funded companies worth 100s of billions of dollars. And we've been basically on the frontline of what's going on with, um, AI and working with people just like you doing it. Harj, what are we, uh, gonna dive into today?

   3. HTHarj Taggar2:45

      All right. So, at YC, we fund more founders per year than any other investor in the world, which means we work with people all different shapes and sizes, right? And we get to see, like, what are some of the advantages and disadvantages of being different types of founders? And so what we thought we'd talk about here today is what advantages do young founders, especially founders in college or who just graduated college, have when it comes to startups? Because that feels relevant to you all, right? The one thing that we hear a lot of when we talk to college students or younger founders is, "Ah, but, like, don't I need to get some work experience? Like, shouldn't I have some, like, business experience or work experience before I go and start one of these companies? And that's what's holding me back?"

   4. JFJared Friedman3:32

      I wanna hear from Gary and from Diana, because they both worked at companies before they did their startup. What was that like, guys?

   5. GTGarry Tan3:40

      Well, so, uh, it turns out that working for Microsoft cost me $200 million.

   6. HTHarj Taggar3:44

      (laughs)

   7. JFJared Friedman3:45

      (laughs)

   8. GTGarry Tan3:45

      I was, like, graduating from Stanford. I studied computer engineering. Uh, child of immigrants, like, we didn't grow up with very much money. So, it was really important to me, uh, to my family that, like, you know, my- my parents were proud that I had health insurance. And so I was about a year into my time as a level 59 PM. Like, apparently the lowest of the low for, uh, you know, college graduates working at the time. Even the whole idea of being slotted into an, uh, level, uh, a level 59, where there are, like, 59 levels,

3. 4:17 – 5:15

   Advantages of young founder in college

   1. GTGarry Tan4:17

      and it, like, goes up to, like, 70 or something. How terrible is that? But, uh, the reason why it cost me $200 million is friends of mine, uh, I was 22 years old, I spent a year in Seattle, and, um, friends of mine were starting a company with, uh, Peter Thiel. Now, he wasn't... Peter wasn't sort of the, like, demigod, you know, billionaire that he is known as today. He actually had just sold PayPal. Uh, I, you know, I knew who he was, but I, you know, sort of didn't understand anything about startups. And, uh, I said, "Well, you know, my friends, you know, they're graduating, but they don't have a real job. I have a real job. I might get promoted to level 60 next year. Peter, do you understand?" And, uh, we were over dinner and he said, "Gary, you're wasting your time. I'm gonna make this a zero-risk opportunity for you." And he said he was gonna write a $70,000 check for me.

4. 5:15 – 8:44

   Experience working at a company

   1. GTGarry Tan5:15

      Uh, "You know, cash this check, quit your job, and we're gonna go change the world." And, uh, I said, "Thank you very much, Mr. Thiel, but I'ma- might get promoted." (laughs) Uh, "You know, I have a real... I have health insurance." And I got on a plane and I went back to Seattle. And it was a big mistake. It did actually literally cost me, uh, on the order of, in today's money, probably close to half a billion dollars. Um, and, you know, Palantir was, like, an idea on a napkin at that moment.

   2. HTHarj Taggar5:44

      Did anything about your experience at Microsoft, when you did then go and start a startup of your own, did anything of that experience, like, help you with getting Palantir off the ground?

   3. GTGarry Tan5:54

      Honestly, it just taught me how to be political.

   4. HTHarj Taggar5:57

      (laughs) Which-

   5. GTGarry Tan5:58

      Like, I wrote 20... Like, I'd- I'd made nothing of substance at Microso- I was on, on the Windows, uh...... Windows Mobile team for ActiveSync, which was-

   6. DHDiana Hu6:08

      What does that even mean?

   7. GTGarry Tan6:08

      Exactly. It doesn't even mean anything.

   8. DHDiana Hu6:09

      (laughs) Nobody knows what that is.

   9. HTHarj Taggar6:12

      Yeah, it's hard to play politics when it's, like, you and one co-founder. (laughs) It doesn't really help you. It's not a useful skill.

   10. DHDiana Hu6:18

       And this happened to me when I started working at Intel too, because you're kind of this new engineer. You come in and there's sort of, like, 10 levels between you and the CEO. And at that point, these companies are mega, mega big and they are already post-product market fit, and they already have market power. They don't need to figure things out. They get lazy. And you just become this pawn where people are just playing political games to, like, level up and whatever. I don't know, just get the fancy title, and you just do kind of very meaningless work. That's what I felt. There was all these lines of codes I was- I was writing, and it never shipped. And as an engineer, that's, like, terrible. You get this kind of shipping constipation.

   11. HTHarj Taggar6:59

       (laughs)

   12. DHDiana Hu7:00

       And it was, uh, mind-boggling, and things moved so slow. People just had endless meetings about the meetings, and there was so many, a meeting about the meeting.

   13. HTHarj Taggar7:09

       Whenever, um, people talk about going to work at a big company and getting work experience, I always think of Paul Buchheit. He's, uh, one of the YC partners, uh, and he created Gmail. It was very early at Google, and then he went and- and founded FriendFeed, which was acquired by Facebook. And Paul, what Paul would say is when he first moved to Silicon Valley after college, he really wanted to do a startup, but he felt that he needed to kind of get some experience, and so he got a job at Intel too, I think it was-

   14. DHDiana Hu7:35

       (laughs)

   15. HTHarj Taggar7:35

       ... actually. And the way he described it is he would go to his w- like, job in his cubicle at Intel, and just during the day, he noticed that he just felt constantly tired, that he just had no energy. And then he'd go home and start working on, like, his own side projects, and suddenly he'd have all this, like, energy. And he found this weird to the point where he started, like, leaving Intel during the day, (laughs) like, feeling tired, going home to work on his own projects. And just, like, the second he said he stepped into his house and got ready to code, he just had, like, all of this energy. And so I think that's, like, one of the other dangers people don't realize is if you get stuck in a big company for too long, your energy level just goes down. And, like, if you get used to that as the norm for, like, five, six, seven, eight years, it can take you a while to rip out of that and get kind of, like, the buzz you need to get one of these things off the ground.

   16. DHDiana Hu8:28

       Maybe the more controversial thing to say is that that kind of image brings this image of being a captive animal, where you have these boundaries of you going to work and you at some point internalize that this is what good work looks like. You kind of put in the time, come in

5. 8:44 – 11:04

   Energy level

   1. DHDiana Hu8:44

      and do that, and that kind of stuns a lot of you. This is actually a lot of the things that we need to do at YC with founders that get work experience, is almost to deprogram them because they don't think doing certain things is possible. They think it's gonna take... I had this office hour from this team before. To ship this product, they thought, "Oh, it's gonna take, like, six months. We're not gonna ship until after the batch." And we really challenged them. They were out in the industry for, like, 10 years, and we really had to push them. And a lot of the first office hours is to tell them, "No, you can do it and ship this within a week."

   2. GTGarry Tan9:18

      So that's a huge benefit to not even joining the, uh, the belly of the beast, is you don't learn any of the bad habits that you would learn in... I mean, Jared, you skipped it entirely, didn't you? Or-

   3. JFJared Friedman9:31

      Yeah, I've never had a real job in my entire life.

   4. HTHarj Taggar9:33

      Whoo. (laughs)

   5. JFJared Friedman9:34

      (laughs)

   6. GTGarry Tan9:35

      (laughs)

   7. HTHarj Taggar9:36

      (laughs) Yeah.

   8. JFJared Friedman9:36

      And- and the thing that I think of when I think of some of the best founders that YC has funded, people like Patrick and John Collison, who founded Stripe, people like Drew Houston and Arash, who are MIT grads, who- who, uh, who- who started Dropbox, is they've literally done nothing but startups since they were, like, 20-ish years old. And so in their brain, they're like special purpose weapons designed to build billion-dollar companies, and that's why they're the best in the world at it. They didn't have to unlearn any habits. They didn't start seven years behind the people who did that. They started when they had the most energy, the most optimism in their entire life, and they went all in, and they've been doing it ever since. And that's how you start, like, a really world-changing company.

   9. HTHarj Taggar10:21

      And, you know, people like Patrick, they have, like, they set their own bar of excellence, and that bar is, like, very, very, very high.

   10. JFJared Friedman10:29

       It's much higher than the bar of excellence that you'll get as an employee at any now big tech company 'cause, like, if you join Google now, it's not like it was when Paul Buchheit worked there.

   11. HTHarj Taggar10:38

       And the thing is, when you start a company and you have that kind of bar of excellence you've defined yourself, you can bring in other people who meet it, and if anything, push it higher. But to Garry's point about politics, like, if you're in a big company, if you go in with your own internal bar of excellence being, like, this high, there are all of these forces that want to drag it down because they don't necessarily want you to get ahead and succeed and win. Like, you've got to, like,

6. 11:04 – 14:34

   Set high bar and avoid bad habits

   1. HTHarj Taggar11:04

      you want to avoid contaminating yourself almost with these forces that are gonna, like, bring your own level down.

   2. GTGarry Tan11:09

      I think there's something very subtle and kind of crazy to really think about, which is when you're at some place that has zero... You know, a lot of critics of startups are like, "Well, most of these startups are zeros." But the difference between working on your own startup that might be zero right now and working on things that don't matter inside a 10-layer memetic war of people knifing each other to get promoted and making decisions about things that will never ship or won't ever actually make a difference to the bottom line is that while most startups might not have figured something out yet, they are exactly one decision away from going from zero to one. Uh, going back to what PB was saying, like, working at Intel. Like, for me, working at Microsoft, I was not actually having an impact on the world that I knew that I could through technology. Like, I- I deeply believe that we're at the sort of moment in time, even then, that, like, software was gonna change all of society and that, you know...... through, not a stroke of a pen or holding a gun, but sitting at a keyboard, I could affect a billion people. And that's, that's actually the feeling that you get when you're actually a founder. Or even, I mean, some of you, I was talking to you earlier, like, you're not trying to start a startup, you're actually just trying to make a thing that other people want. And that's literally on the T-shirt that we give to you guys-

   3. JFJared Friedman12:35

      (laughs)

   4. GTGarry Tan12:35

      ... when you get into YC. Like, that's, like, don't try to start a startup. Try to make something people want. I'm wondering, what advice do you guys have for the people in this room right now? Because again, this is your moment and y- there might be, you might meet your co-founder here, like, you might hear the idea that turns into your life's work today. What are things that people should be looking at?

   5. DHDiana Hu13:01

      I think one of the big things is really, this is a long game. I think we talked about s- couple of you, maybe one of you here will start the next trillion dollar company. And guess what? Time is at your advantage. There's a lot of this aspect of building something over a long time, it compounds. Compounding, exponentials, power law, are incredible. I mean, imagine if you do compound, by VC standards, like a 3X and 3X growth per year is pretty, like, average or a bit low, but if you do that over, like, 24 years, you suddenly end up making $200 billion company, that revenue. So this aspect of you figuring things out and really having time to really get your growth and also learning to compound exponentially is something special that you can take that decision now.

   6. HTHarj Taggar13:51

      Yeah, this is the advice for, like, if you set your goals crazy high, like, you can start a good or even a great company when you're older, but if you wanna start, like, one of the companies that literally runs, like, part of the world, you have to start now. Like, it's not a coincidence that, like, Apple, Meta, Google, these companies were all, like, started by people who are your age, like, they're at this stage exactly. And there's just, like, no way you can get there unless you start now.

   7. JFJared Friedman14:21

      It just takes too long. You have to do it and make it your life's work.

   8. HTHarj Taggar14:24

      Yeah. And you have to catch multiple waves. That's the other thing with, like, these really, like, extreme outlying companies, is that they last long enough to catch multiple, like,

7. 14:34 – 16:41

   Long game and crazy goals

   1. HTHarj Taggar14:34

      lucky breaks and then, like, when you compound that over, like, 30 years, you end up with, like, trillion dollar companies.

   2. DHDiana Hu14:41

      An example of that is, uh, Alex from Scale was in your shoes. He dropped out of MIT and he caught multiple waves. The first one he caught was getting, building a lot of the labeling for data sets for self-driving cars. And right now, he is catching the LM and generative AI one, so you got, like, two headwinds. Imagine, I imagine he'll get another one and build this monster of a company. He's already on the path for that.

   3. HTHarj Taggar15:06

      I got another thing I wanna say, but I'm worried (microphone rustles) it's gonna end up on Twitter and screw me.

   4. GTGarry Tan15:12

      Ha!

   5. JFJared Friedman15:12

      Mm. Say it, say it, say it, say it!

   6. HTHarj Taggar15:14

      Should I say it? Should I say it? I don't know. All right, all right. Basically, like, if you actually want to win at startups, work/life balance is complete bullshit.

   7. SPSpeaker15:23

      (laughs)

   8. HTHarj Taggar15:24

      Like, it's not how you win. Like, you don't win by having, like, work/life balance and being, like, well-rounded individuals. Like, you actually win by being, like, extremely unbalanced and having all of your identity wrapped up in winning at your company. And, like, the reason young founders have a very obvious advantage with this is you all have no lives. It's great. (laughs) Like, you can just, like, start companies and just, like, work on your companies all the time, and that gets, like, much harder when you're older to do. And so this is, like, th- like, if you want ... And again, this is, like, not advice to everyone. Like, this is not the advice if you even wanna start, like, a good company. This is the advice if you wanna start one of, like, the real huge outliers.

   9. JFJared Friedman16:06

      And this was, I think, the argument that made us wanna start our company, which is like, your 20s is the decade in your life to work really hard. Hard work compounds if you do it early in life. So your 20s is the decade when you wanna work the hardest, so you can enjoy the fruits afterwards. Should we end on, on the, the stat that Garry started with, which is, two years ago only 10% of the YC batch was college students, and now it's 30%. What's changed in the last two years? Why, why did we triple the number of college students? Why, why is this happening now? Harj, do

8. 16:41 – 17:57

   Work life balance

   1. JFJared Friedman16:41

      you wanna take this?

   2. HTHarj Taggar16:41

      The cl- the clear thing is AI. Like, the moment is now because, like, AI has completely changed everything and, like, one of the ways it advantages everyone here is, like, there are just more ideas to work on than ever. And so one thing we often find is, like, younger founders come to us and, like, you haven't quite figured out the right idea yet, and we spend a lot of time during a YC batch helping you find the right idea. And what we've just found is that there's so many good AI ideas right now that we can help you find good ones. And so it's just, like, a disproportionately good time as a college student to start a company.

   3. GTGarry Tan17:17

      In our group of startups, I was talking to someone about this crazy idea called the idea maze, and it's very useful because you're at the beginning, you are trying, you're staring at a maze that you don't even, you don't even know what's going on inside of it. When you start your company, you're gonna start shipping features and, like, sort of exploring that maze, and at the end of the maze what you're trying to do is find that pot of gold, like the product market fit. And the tricky thing is most startups end up in a dead end that piles up a whole lot of dead bodies. Now, most people out there who have not been around startups might say, "Because there are so many dead bodies, you shouldn't even start. It's ri- it's a rigged game."

9. 17:57 – 19:49

   YC Stats

   1. GTGarry Tan17:57

      And so what's happening right now is that someone took all the walls in the maze and moved them around.

   2. HTHarj Taggar18:04

      Mm-hmm.

   3. DHDiana Hu18:04

      Mm-hmm.

   4. HTHarj Taggar18:04

      And you could be the first person to find out there's no wall there now, and we're gonna stroll right through. And someone in this audience is gonna do it. Dan, I wanna wrap up. What happened last time we gave a talk to a bunch of college students?

   5. DHDiana Hu18:18

      So some of you might be in the audience when Jared and I came here about a year ago.

   6. JFJared Friedman18:22

      In September.

   7. DHDiana Hu18:23

      In September. It was so incredible to see that we ended up funding 10% of all the attendees in that room three months later.

   8. JFJared Friedman18:32

      They just finished the Winter '24 batch.

   9. DHDiana Hu18:34

      Yeah.

   10. JFJared Friedman18:34

       10% of the students who were in the room, and so that talk went so well, and this is such a perfect moment for college students to be starting startups. Like, a true once in a lifetime, once in a two decade moment that we decided to come back and bring the whole partnership out here because we wanna do it again.

   11. SPSpeaker18:51

       (applause)

   12. GTGarry Tan18:51

       So, that's it for the Light Cone this time, but we'll catch you on YouTube.

Episode duration: 19:10