Uncapped #43 | Garry Tan, Harj Taggar, and Jared Friedman from YC

In this episode, the team behind Y Combinator reflects on what has — and hasn’t — changed since the early days of YC, and how AI is reshaping what it means to be a founder. They discuss how they evaluate builders now, why execution still matters more than competition, and what YC is prioritizing as the startup landscape evolves. At its core, the mission remains the same: increase the number of great startups in the world. Garry Tan is president and CEO of Y Combinator and a group partner. He was a partner at Y Combinator from 2011 to 2015, where he built key parts of the YC experience for founders including Bookface and the Demo Day website. Garry is the co-founder of Initialized Capital and Posterous (YC S08), a blog platform acquired by Twitter, and prior to that, he was an early designer and engineering manager at Palantir. Harj Taggar is a Managing Partner at YC. Of the 1,000+ companies Harj has advised while at YC, 5 have gone public. He was previously founder and CEO of Triplebyte (YC S15) and Auctomatic (YC W07), which was acquired by Live Current Media in 2008. He first joined YC as a partner in 2010, leaving in 2014 to start Triplebyte and rejoining in 2020. Jared Friedman is a Managing Partner at YC. Jared has advised more than 20 YC unicorns while at YC. He was co-founder of Scribd, which was funded by Y Combinator in 2006 and grew to be one of the top 100 sites on the web. Jared previously worked at a pioneering AI company. --- Timestamps: (0:00) Intro (0:18) The YC product (5:05) AI and the new builder (13:01) Pivots and upcoming trends (22:26) Making something people want (24:50) What’s in store for SaaS (33:02) Capital in the age of AI (36:28) The human capacity for desire (42:18) Building in America (44:29) Fixing San Francisco (47:58) Scaling YC --- Links: https://x.com/snowmaker https://x.com/harjtaggar https://x.com/garrytan https://x.com/jaltma https://www.ycombinator.com/ https://uncappedpod.com/ --- [email protected]

• 0:00Speaker 00

  I think like AI and like a big change like this like favors younger people and for all sorts of reasons. So I

• 0:05Speaker 01

  For what it's worth, I'm a late bloomer. I did YC when I was 27.

• 0:08Speaker 00

  I was 26.

• 0:09Speaker 01

  Yeah. So, hey, late bloomers, high five.

• 0:13Speaker 00

  The old guys. Alright, guys, I'm really excited to be here with you. Thanks for, thanks for all doing this with me. So I guess just to start, when did you all first go through YC as founders?

• 0:22Speaker 02

  I think I did it first. I was summer 2006, so the third batch ever.

• 0:25Speaker 03

  I did winter 2007, so six months later.

• 0:29Speaker 01

  And then summer 08.

• 0:30Speaker 00

  Okay, so a long time.

• 0:32Speaker 01

  Yeah.

• 0:32Speaker 00

  It's like pretty close to the beginning.

• 0:33Speaker 01

  Yeah.

• 0:34Speaker 00

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

• 0:59Speaker 01

  Yeah, what was it like in 06?

• 1:00Speaker 02

  The most surprising thing to people from, from the outside, I found, is actually how little has changed. And I think that's kind of by design, which is like the thing that Paul Graham created that we all did in the early 2000s. Like, it was great. It was a great product. And as you know, when you have a great product, you're like, don't fuck with it. You know, there are some things had to change, but I would say in broad strokes, it's much more the same than it is, is different.

• 1:24Speaker 00

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

• 1:32Speaker 02

  So we recently worked on a redesign of the Y Combinator website. Actually, Gary, I did. We actually like tried to like write it down, possibly for the first time. Do you want to explain this? This is really your words on the website.

• 1:44Speaker 01

  Oh, gosh. I mean, it was team effort, but like, honestly, we tried to return to, you know, what is the founder's experience? And then we found all of these old photos of, you know, actually, your brother is like the first one on there. And it's like him with double pop collar.

• 2:00Speaker 00

  Yeah.

• 2:01Speaker 01

  And then

• 2:01Speaker 00

  We'll pop that up on the screen.

• 2:04Speaker 01

  And then you start flipping through and it's, you know, Patrick and John Collison, it's Brian and Joe and Nate

• 2:09Speaker 00

  Yeah.

• 2:10Speaker 01

  at Airbnb. And you see them so young. And then you see them, you know, ring the bell. And it's like, Basically, what we're trying to create is like Disneyland for transformation from, you know, startup founders who are just starting out to literally the people who sort of make these, the companies that really matter. It's actually a social process, like all reality is sort of socially constructed. And then uniquely, like, I remember when I found Y C and then came to my first, my first startup school, it was kind of like being a fish out of water and then jumping into water. Like, I was surrounded by people who were builders, who like were earnest. And, you

• 2:52Speaker 01

  know, basically, when you get into Y C, like, we take people who are earnest and technical, and then at the end of that process, hopefully, they become formidable. And so when you go to the homepage, that's what that's about. It's like Y C is like a transformative process.

• 3:06Speaker 02

  Yeah.

• 3:07Speaker 01

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

• 3:16Speaker 02

  I'm a Harry Potter fan, so I prefer to think of it like Hogwarts. That's good. Yeah. Yeah.

• 3:20Speaker 00

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

• 3:42Speaker 02

  Totally.

• 3:43Speaker 00

  So I thought that was a big part. And then I guess also, there's always been the thing of like, there is some stamp of approval. I think that's like hard to, you know, sort of underweight. I'm curious how you guys think about that with like outsiders in particular. One of the things that seems different to me at least is now more than 10 years ago, and I'm sure more than 20 years ago, like, the ecosystem is like an understood thing. And like, a lot of founders, like, you know, they can read a lot of stuff online, people can read a lot about them online. There's more known in general. But I still feel like there's this thing that Y C can do, which is take people who maybe aren't yet in that vortex and Identify talent somehow and bring them into the vortex. I'd be curious if you guys like spend like active cycles thinking about that.

• 4:26Speaker 01

  All the time. I mean, actually, I'm in the middle of my very intense addiction to Claude code and codex and like actually using this stuff is pretty wild because like I basically recreated my 2008 startup. It's like 70,000 lines of code. I did it in about like, I don't know, 90 hours over two weeks because I have a full-time job and like also like trying to raise kids. It's just like really compressed a lot of my sleep. But at the end of it, I have a codebase that is better than what it took like five engineers and me taking anti-narcleptics to like build for my YC startup.

• 5:04Speaker 00

  Yeah, it's crazy.

• 5:05Speaker 01

  It's like unbelievable, right? It's like actually something, something happened November, end of November, when Opus 4.5 came out that, you know, I heard about it. I was like, hey, what's going on? Like the most interesting thing for us is like, we'd been talking about it for years and we'd been using it for years. And then it wasn't until really even December, where AGI is here, guys, for code. Like, I feel like I could create like in 80 hours, something that I could not create with $5 million and five engineers in two years.

• 5:38Speaker 00

  So to stick with that, like this coding topic, I guess my two questions flowing from that are, one, what are you trying to identify as greatness? If before this moment, you were like, we need to find great engineers. Like, what is the, what is the thing you're looking for now? How has that changed? And then my second question is like, these startups, you know, like, the advice has been, you know, write code, talk to users. Like, what's, what is that now? Is that different?

• 6:04Speaker 01

  It's prompt and talk to users.

• 6:06Speaker 00

  Yeah, but like, there's a lot less time prompting, I guess.

• 6:08Speaker 01

  So we just, like, literally, this happened, and then all of us have been sort of collectively, like, Harge did a project, like Jared's coding all the time. Our team is all using this stuff. And then we realized, hey, why don't we actually put it in the application process? So for the first time, for the spring batch, you can upload a transcript of your codex or Claude code transcript, making a feature. And we're like, starting to figure out how to process it. And we put it in a security sandbox because we figure it'll be prompt injected very quickly. You can tell a lot about whether someone can build just from like how they prompt the agents. And it's like, do they know systems? You know, for Y C, you get a T shirt that says, make something people want on day one.

• 6:52Speaker 01

  It's like, you know, if you look at a resume, like you can sort of guess whether they can make something. And then you really can't tell whether they can make something people want. You can look at their GitHub and you can maybe see if they can make something. Like, the only way you can really tell if they can make something people want is like, they did it already. Right. And there's not exactly like a GitHub for prompting, I guess. Yeah. Because that's what you're asking people for. But, you know, you can tell how, you know, do they use plan mode? Like, do they think about systems? Like, you know, are they prematurely optimizing? Are they over engineering? Like, you know, are they? Yeah, basically, like, what is a feature to them? What is the complete release? Do they think about like the edge cases? Yeah, how you do anything is how you do everything.

• 7:34Speaker 01

  My favorite Steve Jobs quote, I mean, he talks about like, you know, if you're a carpenter, you can tell other really great carpenters and you don't look at the front. Like, everyone looks at the front and like, oh, yeah, this seems good. You, you know, what a great carpenter does is, you know, an artisan looks at the back of the cabinet. Because like the cabinet, the back of the cabinet, only other carpenters are going to look at. And so I feel like that was one of my favorite things. Like, when I funded companies that initialized, when I, you know, was a partner at Y C the first time around, like, that was my number one thing that I loved, which is like, is there game recognize game? Yeah. You know, would this person, would I go work for this person if I weren't doing the thing that I was doing now? This is how you spawned Alpiv with Instacart, right? Yeah, he came in and honestly, like, it was craft to get.

• 8:19Speaker 01

  He was literally had built, you know, an iPhone app that was a demo app. Claude code didn't exist, so he actually had to build it himself. And then the way I could tell is, you know, turning the cabinet to the back. It was, he could scroll it and it scrolled really smoothly. And that wasn't true for like that era of iPhone apps, like the App Store and the iOS app was brand new. Yeah. And then I feel Like you guys do this all the time.

• 8:43Speaker 03

  I mean, to your question of like, how does it change the way we might think about picking founders? I think it's going to just expand the net versus necessarily change it. I think we're all still in agreement that we absolutely want to fund like genius engineers who aren't necessarily using flawed code. There's always like, there's going to be like a Patrick Collison of every era and you want to like fund those people. The way we've talked about it internally is that this is probably an era where we might find more Parker Conrad's. Like Parker, when he applied with Zenefits, at least like 2013. I remember the application extremely well written, but like single founder, kind of not in central casting, like kind of like not quite technical. Like technical enough that I think he had like a demo, but like didn't have a CS degree, wasn't like sort of like the traditional Y C archetype.

• 9:25Speaker 03

  As soon as, I think actually the only reason we interviewed him is at that point, his previous company Sigfig, I had used it as like a personal finance app. It's like, he's pretty capable of doing stuff. And the interview was clear immediately that he like deeply understood what he was talking about, super articulate, clearly like a really strong product thinker. It worked out for him because he recruited a co-founder during the batch. And then obviously Zenefits had its thing, but then Brooklyn is obviously huge. But I suspect that there's probably just like, if Parker hadn't got his co-founder during the batch, it would have been a totally different story. And I suspect now like Parker of today is just in Claude Code, like actually building quite sophisticated applications.

• 10:03Speaker 01

  I guess it's also interesting because like Parker is one of the most probably like commercially intelligent people there is. And I guess, you know, coding applications are probably making people with that shape increase, you know, increase their advantage. Obviously, I'm sure like the, you know, the, the, the real technical breakthroughs are always going to be really important. And this is like markedly better than just looking at a resume or really, I mean, you know, I, I, you know, when I first came back to Y C, like I read all the feedback. Like I, you know, we're on r slash Y Combinator two with our Anons and we know like, you know, what people are saying. It's like, yeah, like we should pay attention to this and frankly, like we need to do better than that, right?

• 10:44Speaker 01

  Like just because someone, you know, Parker did go to Harvard, but like actually we shouldn't fund someone because they went to Harvard. We should fund someone because they actually understand. Understand the user and are super unbelievably tenacious.

• 10:55Speaker 00

  Yeah.

• 10:56Speaker 01

  That's actually universal for any product, any vertical, any like set of customers you could have. Like, the most important thing is, you know, agency and taste. Like, agency is, I see this person and they have this problem and I believe I can solve it using technology. And then taste is like, oh, well, let me actually build the first version and then get it in the hands of people.

• 11:18Speaker 00

  Yeah.

• 11:18Speaker 01

  And did it work? And like, oh, how did it break? Like, you go all the way into the weeds and it's like this incredible amount of like, imagine like this, you know, hundreds of thousands of lines of code and then you're going through and fixing like all the bugs. Like, think about the tireless, ceaseless gardener that is like necessary to, like, have you ever been to like, the Bahai Gardens in Haifa? It's the most beautiful gardens I've ever been. There's not a single weed. There's not a leaf out of place.

• 11:48Speaker 00

  Wow.

• 11:49Speaker 01

  It's like, I think about like, the best products in the world, the best experiences in the world are like that set of gardens and it's because people, like, it's actually a religion and like, they really, really care.

• 11:59Speaker 00

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

• 12:31Speaker 02

  Well, if Gary was able to ship seventy thousand lines of code in a week while also running YC at the same time.

• 12:36Speaker 00

  In the kids.

• 12:36Speaker 02

  I feel like the bar for what, you know, two founders working on their idea full time could do before they enter with YC like should be a lot higher.

• 12:45Speaker 03

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

• 13:02Speaker 00

  Makes me wonder, like, inside a batch, a company ought to be able to pivot more times than they used to be able to. Like, a company ought to be able to try stuff, see if they get traction in a few weeks, and if they don't like it, like, are you seeing that happen? I mean, I know a lot of this is new, but do you feel like that's gonna be happening? Is it happening?

• 13:20Speaker 02

  Absolutely. I think we're seeing companies try many things, trying the batch.

• 13:23Speaker 00

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

• 13:45Speaker 03

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

• 14:23Speaker 02

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

• 14:41Speaker 00

  Yeah.

• 14:42Speaker 02

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

• 14:51Speaker 00

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

• 15:16Speaker 01

  10% hard tech.

• 15:17Speaker 00

  Y C is the hard tech of hard tech.

• 15:18Speaker 01

  Yeah.

• 15:18Speaker 00

  But there's a lot of, but so what is the trend right now that you are seeing a lot of that you think Y C might be particularly, you know, attuned to early?

• 15:31Speaker 02

  I don't think there's any strong trends yet.

• 15:33Speaker 00

  It's all just AI right now.

• 15:34Speaker 02

  It's all just AI right now. I'd say some, some things that are smaller trends, it might be glimmers of the, of the future. Just in the, in the, in the current batch, prediction markets is big. I think like Kalshi is like very inspirational to a, a generation of people. Stable coins and crypto stuff might, might be another interesting, like non-AI trend to talk about.

• 15:54Speaker 00

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

• 16:12Speaker 01

  I mean, anytime there's a regulatory change, you know, these things were like in a gray area and then now it's green light. So dude, everyone's gonna do it. Like there's, you know, capital flows to it. You know, capital is required for building consumer businesses and boom, you got a consumer business growing super fast. Like you get more capital, the flywheel happens and you got another DoorDash, which is great. I mean, capital, you know, capital as a bludgeon works there.

• 16:35Speaker 00

  Yeah.

• 16:35Speaker 01

  Really, really well.

• 16:36Speaker 00

  Yeah, it's interesting.

• 16:37Speaker 01

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

• 16:45Speaker 00

  What do you mean?

• 16:45Speaker 01

  Like you kind of don't need to have like the thousand people company anymore.

• 16:50Speaker 00

  It's interesting. I still feel like I'm waiting for that where like, I know there are obviously some companies, like back Y C companies that are like, I'd love to, like, you know, I invested and I'd love to invest more, but they're super profitable. I'm like, okay, that's great. I'm very happy for you.

• 17:01Speaker 01

  Yeah.

• 17:02Speaker 00

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

• 17:14Speaker 03

  It certainly seems like it's easier to get to like a million or $2 million of ARR without hiring like anyone. Like we're, we're used to seeing this. We get so many investor updates and usually we're used to seeing like, we just hit a million ARR and we had like 10 people and now it's just like consisting like, and we haven't hired anyone. So that's like new. I agree that like the step after that though, it seems like. The bees are bigger than ever, like.

• 17:37Speaker 00

  They're huge.

• 17:38Speaker 03

  Yeah, right.

• 17:38Speaker 00

  And so.

• 17:39Speaker 01

  Well, I mean, venture is contracting a little bit. It's like not on a dollar basis. On a dollar basis, like there's a quote unquote flight to quality. And then one of the things we've been talking about internally is like, the world is actually increasingly full of these mega funds that are friends and they do great work. But it's like more and more dollars behind fewer and fewer people. And so you're actually.

• 17:59Speaker 00

  Fewer firms.

• 18:00Speaker 01

  Yeah, fewer firms and fewer people at those firms.

• 18:02Speaker 00

  Yeah.

• 18:02Speaker 01

  Right. And then the natural thing is like then capital is a bludgeon, like the fixes in, which is great. Like often like for Y C, Y C is sometimes the number one, number two and number four. You know, of any given like vertical SaaS space. And we're in the billion dollar one, we're in the half a billion dollar one, we're in the arm the rebels one that works with the partner. Like this happens over and over again. I mean.

• 18:26Speaker 00

  So do you think in this environment then is the like king making meme? Is that like more true because of the capital is a bludgeon thing? Like, is it more effective in this type of environment?

• 18:36Speaker 01

  Basically, if the founders are good, like the capital like helps them get there a little faster. But I don't believe that like capital as a bludgeon.

• 18:45Speaker 03

  Especially when things move so quickly, like you can end up having capital and then like moving like fast in the wrong direction.

• 18:52Speaker 01

  Like hard funded Giga.

• 18:54Speaker 03

  Yeah.

• 18:54Speaker 01

  And these guys beat, I mean, we love Brett, we love Sierra. But yeah, like Giga, this sort of 10 person team beat all the incumbents for, you know, things like DoorDash. I mean, the back to back to back, it's like they have the best tech. And I don't, I think there may be like still under 20 people right now.

• 19:13Speaker 00

  And Jack, speaking of like insiders versus outsiders, that's such like a classic, like insider versus outsider story. I'm glad we're the backgrounds of the Giga founders.

• 19:20Speaker 03

  Oh, like there were two, they go I I T in India.

• 19:24Speaker 00

  They were still in India.

• 19:25Speaker 03

  Yes, they're in India when they.

• 19:26Speaker 00

  You funded them, yeah.

• 19:27Speaker 03

  They actually couldn't make it out here for the batch for visa reasons, but they were just like brilliant. They were clearly like brilliantly smart. They were like the top ranked I I T students. They had done their sort of as undergrads, they'd done some PhD level research and fine tuning L L Ms before like everything really took off. So they were just like clearly exceptional in that.

• 19:45Speaker 00

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

• 20:01Speaker 03

  And that's a good example of like the price. It's like, even if you have the capital, you might not build like the right product off the bat and then things change.

• 20:08Speaker 01

  I think the model's getting better. The model's getting better. So, so like back to back to back, like every single year, the models are getting better. You know, the rumor for Harvey is that like, you know, you might, they might have spent a bunch of money, a bunch of the V C capital on fine tuning models that are like not better than the frontier models. I mean, you don't have a crystal ball. You couldn't have guessed that that, you know, there was just an idea that maybe that might happen. Of course it did happen. And then now we're sort of in this situation where like, you know, if you have hundreds of millions of dollars sitting in your bank account, you're tempted to use it.

• 20:41Speaker 00

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

• 21:10Speaker 03

  I think this is from the famers perspective, at least, and a reason why they're raising the bigger B rounds, one of the, I mean, there's always the case of just like bank the money while you can get it. But it just feels like the surface area for the products is bigger than ever and they are like still fundamentally constrained on like the number of people they have to go and execute on things. And it feels like we're now SaaS era was sort of like you build one core feature and you hit product market fit with that and maybe just run with that for a few years and then add on things. Whereas now it's like, even within the batch, people are trying to like add like more into the product and have it do more. And so they just fundamentally feel constrained by how much they feel they should be doing. And then they have competitors and the competitors are moving faster.

• 21:48Speaker 03

  So haven't as yet seen the like, once you post product market fit, it doesn't feel like the, oh, people won't need to hire as many, or they're at least not acting on the belief they don't need to hire as many people yet, I would say.

• 21:58Speaker 00

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

• 22:19Speaker 03

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

• 22:25Speaker 00

  Yeah.

• 22:25Speaker 03

  It's awesome.

• 22:26Speaker 00

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

• 23:04Speaker 01

  Me?

• 23:07Speaker 02

  I felt like Gary was holding back on the answer.

• 23:08Speaker 01

  What's that? I'm hoping you guys have a good answer.

• 23:10Speaker 00

  I can answer my own question, by the way.

• 23:14Speaker 03

  I guess the reason maybe why we're pausing on it is again, just the Y C, like getting things off the ground. It's usually, I know, especially during the batch, we're so focused in on the like, is this even like, is this worth investing like, another two weeks of your time in? And so like, the units of time.

• 23:28Speaker 00

  Is there a glimmer of market fit or not?

• 23:30Speaker 03

  Anything.

• 23:31Speaker 00

  And that doesn't really have to do with competition.

• 23:32Speaker 03

  Yeah.

• 23:32Speaker 02

  At all, exactly. And so I feel like we actually spend the vast majority of our time talking about competition, telling founders not to worry about competition. Because it's all founders who are like, like, imagine if the Legora founders had like, not launched Legora, because they looked at Harvey and been like, oh, it's over. That's what we see a hundred times a batch.

• 23:49Speaker 00

  You're right.

• 23:49Speaker 02

  Is that story? And so it's just being like, don't worry about it, like, just out execute them.

• 23:53Speaker 01

  Yeah, I think we always just go back to the make something people want. And that like, it says make something people want. It doesn't say, like, do a market map.

• 24:01Speaker 00

  Yeah.

• 24:01Speaker 01

  Yeah. Based on what, you know, perplexity tells you about the market.

• 24:05Speaker 00

  You could say, make a market map and then make something people want within it.

• 24:08Speaker 01

  That'd be, we should make an April Fools T-shirt that says that.

• 24:11Speaker 00

  That'd be good.

• 24:11Speaker 01

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

• 24:18Speaker 00

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

• 24:35Speaker 03

  I think that's basically, I mean, like, it's like, go out and get customers, and if you have good competition, then like, you have a hard time getting customers. It's like, I know, if I try and launch a new payment processor, I'm going to run into Stripe, and like, it's gonna be hard for me to grow really quickly. And I think that ends up being a lot of the advice you're in the badge.

• 24:49Speaker 00

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

• 25:22Speaker 01

  It sounds dead. It's dead. I mean, I think it's dead. The thing is, it doesn't, if you run a SaaS company, you don't have to be dead. All you have to do is embrace Claude Code, or you have to embrace, you know, a top to bottom Gentic view of like how everything's gonna work. Like, put it this way, like, the same week that I personally realized that everything was different. You know, I funded a team from Meta Superintelligence who had left, and they were pointing out like, you know, Meta has 20,000 people working on reality, you know? Wow. Alexa has 20,000 people. And it's like, and I thought about my experience, it's like, I didn't even have like 20,000 people, I had five people. And like, why did it take two years?

• 26:03Speaker 01

  Well, it's because like, I knew what the architecture was, I knew what I wanted to build, and then I had to farm this out. But then I had to have meetings, and I had to, you know, come up with a, a doc, and then other people have other opinions, and we have like five meetings about like, the architecture, and like, we argue about it, and then, you know, two weeks later, like, maybe something happens. But if you're in a big company, it's like, three months later, something maybe happens. And it's like, look, like, we don't have to do that now, like, we could just try both, like, go into plan mode. And then just do it. And then literally like an hour later, we will have something done that would have taken like two weeks, two or two months, or sometimes two years for, if you're not a tech company and you're an incumbent, like it's like two years or never

• 26:48Speaker 01

  that you would even make that decision, right? So like the speed of making that decision, like how decisive you can be, like honestly, I think like going back to the transformation thing, like that's actually the thing that I feel like I learned at YC. It's not like I didn't know how to do it. It's just that like I was, you know, I was employee number 10 at Palantir. It's like we were moving, like I was sleeping at the office. The big difference was realizing like instead of, you know, getting 20 basis points of Palantir, which now is actually an astronomical amount of money, by the way. We didn't know it at the time. I was like,

• 27:20Speaker 00

  We'll run some math. We'll put the math up on the screen.

• 27:22Speaker 01

  It's in the billions.

• 27:25Speaker 00

  That's a thumbnail. That's perfect.

• 27:27Speaker 01

  Yeah. I mean, basically I wanted 97% of the company that I started, right? And then I think that that's like, I went from a place where it was already fast. And then being the founder and the CEO, like YC sped me up even more because you're in office hours with people. And it's like, oh, man, this person actually grew 10% this week, 20% this week. Like, how did they do it? I need to do it. And I think all of this is an accelerant, like Claude Code and Codex and being able to like make two years worth of product progress in about two weeks. How could that not make YC more insane?

• 28:04Speaker 00

  Totally.

• 28:04Speaker 01

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

• 28:33Speaker 00

  Now it's barely a seed.

• 28:34Speaker 01

  Yeah. I was like, oh, that's kind of a small seed. It's like, are you serious? Like, that's so much money. This is outrageous. You don't even need this money. It's crazy that you can go so much faster.

• 28:43Speaker 00

  Actually, I do want to come back to fundraising advice because I feel like it's gotten into an interesting place there. But the opposite question of the is SaaS dead? Is what do you feel is not AI but safe from AI? Like, are there areas where you feel that you think are sort of insulated from this mega trend? That you're like happy to back without.

• 29:03Speaker 03

  I think the obvious one, yeah, I'm so first it's like marketplaces that are like aggregating people. I think Airbnb is like very safe. I think, well, not safe. I think there's a bunch of marketplaces. And DoorDash is totally safe. It's gonna be a very clear one, right?

• 29:17Speaker 01

  One of the things we've been talking about is what the agents want. What the coding agents tell you to do turns out to be like itself a really big moat. So G E O, like making your API docs like actually written to prompt inject Claude code to force it to use you. I'm just joking, like, it's not clear that you can do that, but like, if you could, you would, because it's that powerful. Like, people will just, I need X. And then, you know, what's the best thing on the internet to do that? And actually, that's really powerful.

• 29:49Speaker 03

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

• 30:13Speaker 00

  Do you think it's system of record that makes payroll sticky? Or do you think it's touching money?

• 30:18Speaker 01

  Touching money, regulatory, I mean, once it's, I mean, you have systems that are working. You don't want to touch that unless you have a really good reason.

• 30:25Speaker 00

  Yeah, because like one of the ones that comes up a lot right now is like, are CRM safe? You know, like our old, which I don't have any, I don't have actually a particular opinion into, but it just seems like an interesting question where it doesn't exactly touch money, doesn't exactly touch regulatory, includes a lot of information that's important, but like that information also now can like live in email or somewhere else like that, so.

• 30:44Speaker 03

  Yeah, I think that, I think Salesforce is probably screwed. Like, I feel like there have been so many attempts to do the Stripe strategy of you get the startups in a Y C batch using your CRM because everyone hates Salesforce, but no one could ever really grow into a big company. Because at some point, your head of sales is like, no, I need like these reports.

• 31:01Speaker 00

  And to your point, you need the integrations badly.

• 31:03Speaker 03

  Exactly. And now like that's all just going away. So I don't, I suspect like the next Salesforce is going to come out of like a Y C batch that sells to all the other Y C startups and. Investors will say, oh, like, it's not going to grow because like, you know, one can really compete with Salesforce and like.

• 31:17Speaker 00

  Also, all its customers are Y C companies.

• 31:19Speaker 03

  Yeah, exactly, exactly.

• 31:21Speaker 00

  It'll never work.

• 31:24Speaker 00

  What about hardware? Is hardware safe?

• 31:25Speaker 01

  Hard tech is just hard. So the mode comes from it being just, you know, hard to source, hard to make it work. Like, I mean, it's just another.

• 31:33Speaker 00

  And it's atoms.

• 31:34Speaker 01

  Like.

• 31:34Speaker 00

  But the AI hasn't exactly.

• 31:35Speaker 03

  It's been hard to do this.

• 31:37Speaker 00

  The AI hasn't exactly come for atoms yet.

• 31:38Speaker 01

  Yeah, robotics is still a little ways.

• 31:40Speaker 00

  Yeah.

• 31:41Speaker 01

  We just need, we need ASI. We have, I think we have AGI now and then ASI is coming, like super intelligence is just clearly just around the corner.

• 31:49Speaker 00

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

• 31:56Speaker 01

  I mean, I think like we have limited versions of ASI right now. Like I saw.

• 32:01Speaker 00

  Like all the bots talking together? That was crazy.

• 32:02Speaker 01

  Yeah, that was crazy. I mean, that's a great example of like, that's the first example of like swarm intelligence.

• 32:07Speaker 00

  Yeah, I was like, oh no, it's bad.

• 32:09Speaker 01

  In AI research, that's like swarm intelligence is like this huge field, but like this was a huge validation for that field because, you know, it's kind of an interesting question, like, will there be like all the, the main labs talk about, if you talk, talk to the AI research, the big AI labs are like, yeah, we're just going to build the God model.

• 32:28Speaker 00

  Yeah.

• 32:29Speaker 01

  You know, it's just going to be mega big and it'll, you know, just think about like Dr. Manhattan or something. And then, you know, biological systems and even human society are not modeled that way. It's like, we have lots of people with lots of diverse hardware, a lot of different opinions about all kinds of things. And then you sort of come together and see what sticks. And that's what like research is, for instance. So I think swarm intelligence versus, you know, sort of God level intelligence is actually very, a very interesting thing. That's like just the beginning of that. That just happened literally last week.

• 33:02Speaker 00

  Is there a type of? Project or pathway for a startup to build that you're not currently funding that you'd like to. And like the example that I'm thinking of when I'm, you know, I'm thinking about some of these hardware companies or projects at the beginning that I don't think can start with a million dollars. Like some of these genuinely do need to start with 10 or 20 million dollars. Is that something that you think about? Is that something that like, is that, would, would a divergence like that ever be worth it to Y C? Or is it like, we don't need to back every single type of company of all time? We would like to back every single type of company. Yeah, that's actually the kind of thing I was curious about. It's like, is the conversation when you guys are thinking about like Y C growing and all of that?

• 33:47Speaker 00

  Is it like, we have our style and we'd like to just get everything within that? Or it's like, no, we'd like to back every company of all time.

• 33:53Speaker 01

  We're generalists and then the smart, I mean, Y C funded Coinbase when crypto was like the weirdest thing. But, you know, Brian Armstrong was in the risk team at Airbnb. He was like, you know, in the anti-fraud team and he was already in the family. And then he said, oh, well, how do I start a company? This is clearly the way to do it. And then what's funny about it is like, you could start like 20 other Coinbase competitors, but like all of them died because it's sort of like, when you're early, it doesn't matter. It matters more like who's the person and what do they believe? And then that person goes on and creates the future. So being generalist is an incredible thing. It's truly the best.

• 34:31Speaker 00

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

• 34:39Speaker 01

  I mean, coming back to Y C, one of the things we realized is like, we have a huge media presence. But on the other hand, like on, on its own, if you just watch the YouTube channel, it's like, oh, this is like something in the sky. I heard it's, you know, 1% acceptance rate. Like people just kind of, you know, think that it's maybe not for them. And then what we find is like, all of our best people either know someone who did Y C or they met a partner directly. And at an event or they actually can't be like, we actually have to be in the community. We can't just be like in the sky on the internet, right?

• 35:13Speaker 00

  You can't just wait for apps to come in.

• 35:14Speaker 01

  So I mean, Jared led this, like you basically, you know, got us to like, how many college campuses last year?

• 35:21Speaker 02

  Over thirty college campuses. Yeah. So we have a huge like boots on the ground effort now to go and talk to undergrads everywhere. We just got back from a big trip to Europe. We're going to India in the spring. To also go back to your point, though, about like groups of people that we would love to see more of, but we have a big effort as here to do what we've done with undergrads over the last two years. I think it's been pretty successful and to expand that to grad students and people who are more like Brian Armstrong's age, like more like mid and late twenties.

• 35:47Speaker 00

  Yeah, I will say that like in a good way, like they're unbelievably impressive, but Y C founders are young, like, and they seem like it's like in recent batches have trended even younger potentially.

• 35:55Speaker 02

  They have, yeah.

• 35:56Speaker 00

  And it makes sense. I think like AI and like a big change like this like favors younger people and for all sorts of reasons. So I

• 36:02Speaker 01

  For what it's worth, I'm a late bloomer. I did Y C when I was twenty seven.

• 36:06Speaker 00

  I was twenty six.

• 36:06Speaker 01

  Yeah. So, hey, late bloomer is high five.

• 36:11Speaker 00

  The old guys. But that's the old guys for us.

• 36:13Speaker 03

  Many of like the biggest Y C companies were started by founders in sort of like mid to late twenties. Doorash.

• 36:18Speaker 00

  Oh, that's old.

• 36:20Speaker 03

  Super old. You should definitely quote me on that.

• 36:23Speaker 00

  We have tons of old people in Y C.

• 36:26Speaker 00

  One guy was twenty nine.

• 36:27Speaker 01

  You know, we started with going back to colleges and I mean, this was kind of driven by them, though. I mean, I think big tech stopped hiring. And then simultaneous to that, like, we have a real vibe inside the batch sometimes among the young founders that is the last time to participate in capitalism, which I definitely think not, but it's like a powerful idea.

• 36:49Speaker 00

  I think a lot of people feel that way.

• 36:50Speaker 01

  Yeah. Yeah. Why is that?

• 36:52Speaker 00

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

• 37:02Speaker 01

  I feel like that is so like short sighted. It's unbelievable. Like Ryan Peterson always talks about like, don't you think that, you know, human capacity for desire is like virtually unlimited. Like we're just, you know, we have a God shaped hole in our heart. We're gonna want more and more stuff. And the thing is like, we can do it now. Like, I was just thinking about the, um, the turn of phrase. Like, I'm sure you've been in business meetings or like making decisions about products. Where it's like, whoa, whoa, whoa, let's not boil the ocean. And it's like, I love that term of phrase because I've said it a lot. I've used it to like justify not doing things. But like, in the age of intelligence.

• 37:37Speaker 00

  You can just do things.

• 37:38Speaker 01

  Why not? Like, I mean, maybe not boil the ocean, but let's boil a few lakes. Why not? Right? Like, actually, this is sort of the moment. Like, and so when you connect that to what Ryan says, it's like, that's what that would look like. You know? Why, you know, if you're an investment firm and you like, you know, beat the market, you're like 20% net IRR back to back. It's like, you know, what does this stuff mean? Does it mean that we're gonna hire, like, we're gonna fire all of our analysts? And like, we're just gonna have the AI do it. And like, this one person who runs the firm is gonna make all the money. Why would you wanna do that? Because your competitor isn't gonna do that. Your competitor is gonna say, you know what? We have AI now. I want 50%.

• 38:12Speaker 00

  That's the thing I have not understood about like, oh, we won't need capital. Because I'm like, why would you only want five engineers if your competitor has 50?

• 38:20Speaker 01

  Yeah.

• 38:20Speaker 00

  Doesn't make, unless they can't do anything productive with all the agents. It doesn't make any sense to me.

• 38:25Speaker 01

  Yeah, I think it's just like, yeah, let's boil a few lakes first and then we can boil the ocean. Like, I think, I mean, I'm not serious about that. Obviously, there are limitations to it. But like, the, the invective against AI and this idea that like society is gonna fall apart is so extreme.

• 38:41Speaker 00

  Yeah.

• 38:41Speaker 01

  That I'm like, maybe that is like, we need some other alternative terms of phrase.

• 38:46Speaker 00

  Totally.

• 38:46Speaker 01

  Than like apocalypse.

• 38:47Speaker 00

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

• 39:19Speaker 01

  That's for real.

• 39:20Speaker 03

  It's interesting though, it feels different this time because so clearly in our little bubble here, everyone's all pro AI. I always say my other extreme, I have like parents, immigrants, like don't speak great English, like my mom's like totally addicted to chat G P T. Cause now she can just like do all this stuff that she like need like she can just like send letters to reply people in a way that's like super empowering for her. It's like the kind of middle, like the people who are like threatened by like, is AI gonna like take my job? Hasn't really been like a threat to sort of knowledge work or white collar people like usually I feel the people who are actually not early adopters, but tend to get on the train immediately after sort of the San Francisco.

• 39:57Speaker 01

  Yeah.

• 39:58Speaker 03

  Train takes off are now resistant to it and it sort of bypassed them and has gone to like the other end.

• 40:02Speaker 01

  I mean, I sympathize with that and like as you know.

• 40:04Speaker 03

  Yeah.

• 40:05Speaker 01

  Labor that became management and capital, I like totally feel that. And I think it is actually about, you know, in the Marxist sense, it is actually about like where you fit in there. And then my argument would be like, it has been way more important to become a founder, which is like management that becomes capital now than ever. It's way more possible.

• 40:24Speaker 03

  Yeah.

• 40:24Speaker 01

  I think that like that fear of for workers about like what's going to happen, that is actually something that uh management and capital has to take.

• 40:34Speaker 03

  It's serious.

• 40:34Speaker 01

  Responsibility.

• 40:35Speaker 03

  I think so too. I think it's like very easy to like, like, oh, in the arc of history, there's always these new technologies and people find new jobs. It's like, well, yeah, but there's like a lot of structural unemployment that happens in the middle of that. And that's like real.

• 40:48Speaker 01

  Yeah, but this unemployment only happens in zero sum games, right? It happens in a case where it's like, actually, my company does X, like I make widgets, the widgets will never change, they will never get better. There's, I mean, some of it is in the context of like no competition. One of the things we learn from hard tech companies, for instance, is that like it's impossible to get like a certain block of metal. Like you have, you know, you have to get it fabricated or like smelted in China.

• 41:11Speaker 03

  Yeah.

• 41:12Speaker 01

  Like America's like lost the ability to do it, right? Like when you have a market that is so broken that you can't get it inside America, like how did this happen, right? And so I would go back to, you know, capital and management and say, this is a lack of fucking imagination, right? Like, we're not here. To like, just continue to do like, let's shave off like one or two percent every single year and like increase our net profit and that's it, right? Like, we need to think way more about how can we use this technology to radically change how businesses work, how like what products are, how much better could they be?

• 41:48Speaker 00

  I completely agree, and I think if capital management don't like take some responsibility there, like, there's not just the unemployment, there's also like reduced employment, there's also like, the whole world getting more expensive, home prices are going up, while there might be like, pressure on wages because you can do it more cheaply with AI. And so you have like inflation happening with wage pressure at the same time. Like, I do think it's like a more real thing than like our echo chamber wants, like, and again, totally for it too, but I think it's like, I think it's an important thing.

• 42:18Speaker 01

  I mean, that's why we've been so vocal about this idea of little tech. You know, we have Luther Lowe, who used to work at Yelp, and he's in DC full time, fighting for startups to be able to actually train AI models, to be able to enter markets. And, you know, frankly, like, I know we, we have lots of friends at, you know, Apple and Alphabet, and, you know, we have huge respect for those companies. And then once in a while, like, you'll see in the press, like, oh yeah, like, we submitted an amicus about Apple and Alphabet, not because we hate those guys, but because actually we need tech to allow new startups and new entrants to come in. And so, to me, it's like, it's all very consistent. It's like, we need to be way more aggressive about like, what our products and services

• 43:02Speaker 01

  should be and can do. And then we need markets that allow those people to actually, you know, exist, thrive, hire lots of people and create new, new, like, new jobs. Like, that's, that's basically like, you know, a lot of people are like, oh, I work in tech, I don't know how to do this. And it's like, look, it's actually abundance. Like, we actually have to build again, like, we've become a litigious culture. I'm sure you've read this book, Breakneck, about like China versus the US. It's Dan Wain's book, it's incredible.

• 43:32Speaker 00

  It's really good.

• 43:34Speaker 01

  Basically, we, you know, we built a lot in like the 40s, the 50s. And then sometime around the 60s and 70s, you know, six, seven, I mean, they literally stopped building.

• 43:44Speaker 00

  Yeah.

• 43:45Speaker 01

  And we've been in this sort of, you know, we can't build high speed rail. It's insane.

• 43:48Speaker 00

  Yeah.

• 43:49Speaker 01

  Like, why? Because like, basically, we're totally a litigious culture that cannot like, get out of its way.

• 43:54Speaker 00

  Yeah, I saw some Peter Thiel talk about like, we built all this stuff till the 70s. And then for like 50 years, nothing happened except computers, more or less.

• 44:01Speaker 01

  Yeah.

• 44:01Speaker 00

  Yeah. And even right now, most of the revolution is in computers, which is great that it's better than nothing. And obviously, other stuff is happening too. But it is, you know, you look at, you know, what China does, like standing up a city in no time. It's like, it looked like they're really good at robotics, like, what are we doing? On this sort of just like societal topic, obviously, you guys are very engaged with like the city and the state and things like that.

• 44:26Speaker 01

  Some more than others.

• 44:27Speaker 00

  Some more than others. Yeah, maybe like my one question on this is like, what do you think is the posture that San Francisco and California need to be take? Like, what's the most important thing posturally that we need to be taking?

• 44:42Speaker 02

  I mean, this is Gary's area. Gary, how do we fix California politics? Gary has a plan. Like, I'm kidding, but like, actually, he does, yeah.

• 44:48Speaker 01

  I mean, Matt Mahan just, you know, announced his race for the governor. I think that he is the perfect example of someone who is not virtue signaling. He's like, you know, he built more than 1,400 homes in San Jose. The year before that, he hadn't passed all the legislation he wanted. So zero market rate in housing was built in San Jose in 2024. When he came into office, he reduced homelessness by 20%. Like, more than 1,000 people came inside and got treatment and recovery. Because he actually supports treatment and recovery. I didn't want to be involved in politics, but when I saw that my, you know, Asian American grandpas and grandmas like couldn't walk down the street with being, without being assaulted and killed.

• 45:32Speaker 01

  When I saw like, people like me when I was, you know, 16, 18, like, you know, I wanted to participate in tech. I knew I wanted to be an engineer. I didn't know that I would get into Stanford, like. You know, I wouldn't have been able to do that if I didn't have algebra in like middle school, public middle school. Like my kids, like, you know, my kids go to private school, but I went to public school, you know? And we should have a government that like, doesn't require you to be rich to become a startup founder or good at math even. Like, I mean, is this like, how do we get this bad?

• 46:03Speaker 00

  Yeah. Well, I'm glad you're fighting for it. It's very important and it's not pleasant. And I see you fighting on Twitter in a way that I would not have the stomach for. And I'm glad you're doing it.

• 46:11Speaker 01

  Yeah, I appreciate it. Yeah, no, I mean, I think for people watching, it's like, look, I'm not going to get all the takes right. And like, I want to hear when I don't get it right. But on the flip side, it's also like, have the debate.

• 46:21Speaker 00

  Yeah, you have the courage to like, it takes a lot of courage to say stuff that you think and you know, you might be wrong about and you might get, you know, a big blowback on and like, or even if you have it right, people are going to get mad.

• 46:32Speaker 01

  San Francisco and California got this bad because the people who, you know, I mean, they run businesses, they have jobs, like they, you know, are trying to raise their families in California. It's like, all of it was so big and so scary that we stopped paying attention. And like, San Francisco is on a better path because we started talking about it. Like at dinners, we started talking about it. Hey, did you hear about so and so? They got assaulted. Like, did the police actually show up? Like, what happened with the judge? You know, like, we're going to try to unseat some judges in San Francisco for whom like, you know, I was looking at the records, like, there are a hundred cases.

• 47:13Speaker 01

  And like 90% of the cases, this judge, she basically just like dropped it on the floor at an extreme rate. Like, I think it was like three or four times higher rate of just dropping cases on the floor purely for ideology. It's like unbelievable. Like, how is it, how is this person serving the people? Like, they're not. And then the thing is, there's a reason why we elect these people. Like, there is an election coming and, you know, we have to make sure that we hold these leaders to account.

• 47:42Speaker 00

  Totally. No, it's great. I mean, it's super important and it's like, not easy work. So people got, someone's got to do it. And I'm glad you're doing it.

• 47:48Speaker 01

  I appreciate it.

• 47:49Speaker 00

  Yeah. Okay. Politics tangent aside, although I could talk about that the whole day.

• 47:53Speaker 01

  I know, right?

• 47:53Speaker 00

  But

• 47:53Speaker 01

  We'll do the politics episode.

• 47:55Speaker 00

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

• 48:14Speaker 02

  I think it's mostly positive for us. Y C at its best is not competing with other venture firms for deals. Y C at its best is convincing people who didn't seriously think about starting a startup to go for it and then being their first believer. Y C only works if there's a large pool of downstream capital that can then fund all the subsequent rounds for those companies. And so I think actually Y C does best in those environments.

• 48:38Speaker 01

  Yeah, we're a managed marketplace, so we need like as many great investors as possible. And then actually, what's funny is like in that managed marketplace, if you know, the sort of supply goes up, like we need to go out and find the best possible people. And then we're actually really good partners to the rest of the industry. Like V C can, you know, 2X, 5X, or 10X over the next 10 years, and we will meet the demand.

• 49:02Speaker 00

  With companies?

• 49:03Speaker 01

  With really the smartest people of our generation. And if that happens.

• 49:07Speaker 00

  So you're saying you feel limited by the amount of capital still?

• 49:09Speaker 01

  How about this? I mean, capital from V C's like you or V C's like our friends. No, seriously. Like, I mean, you gotta do the work, show up, like, don't disappear, don't be a dick, like, you know, do no harm, right? When I first came back to Y C, like, one of the most interesting evolutions of like how to deal with investors was that like, most investors are actually, what, Bs? Like B or B plus? Like, you should be so lucky to have someone who like, does not mess with you. That's really good. And then obviously.

• 49:42Speaker 00

  The barsola.

• 49:43Speaker 01

  Yeah. I mean, basically, yeah.

• 49:44Speaker 00

  Damage the company.

• 49:45Speaker 01

  Right. If there's someone who, you know, has a great network or, you know, can make the Keynesian beauty contest happen for you and your company in your round, obviously, they're A investors. And, you know, they're gonna catalyze something crazy for you. You know, you should work with it. Last time we were here is like, yeah, if you can get like Keith Raboy to invest in your startup and give you like $20 million, you should probably take that money, man. Like, you know, do it, right? But for everyone else, it's like, you gotta, you know, find people who, sometimes you gotta do B plus capital. It's okay, you know?

• 50:17Speaker 00

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

• 50:35Speaker 01

  I mean, we actively think about we need more A and A plus, you know, investors.

• 50:40Speaker 00

  Like humans doing the work.

• 50:41Speaker 01

  Exactly. Um, we, I mean, and I think they're all going to be YC LM's like you. I mean, I think you're great. Uh, Illy Sookar is incredible. Dan Levine at Excel, like, you know, Yuri Sagalov now runs the seed program at G C and he's incredible. Like I, you know, I fully hope and expect like the top like eighty out of the hundred spots of the Midas list in the next ten, twenty years will be all Y C.

• 51:05Speaker 00

  That's funny. You're like funding V C's like just on the ten year delay.

• 51:08Speaker 01

  Yeah, I mean, Liz, Liz, the first round is killing it. She's incredible, right? So I think that's like, you know, scratching the surface. Like, I think we're gonna have like dozens of the most legendary people and they're all gonna be Y C LM's who like deploy all the world's capital.

• 51:22Speaker 03

  Increasing the number of good startups in the world is like, I would argue, just like the core founding principle of Y C. Like when I came, when I first started working at Y C in twenty ten, it was like the first thing P G said to me. And I was actually clear why he wanted to hire anyone. It's like, what? Like, this seems like it's a nice, like, family business to be working on it. It seems great. And his whole point was that there's like the conventional wisdom in the V C industry. It all comes out of Andy Ratchliff's research. Like, there's like only gonna be ten companies per year that will go on to reach like a hundred million dollars in revenue and be significant in I P O at some point. And you just have to be in one of those ten companies every year. Otherwise you may as well just like stay at home. And P G was like, well, I don't wanna like, I'm not like a V C. I don't wanna like go out and like fight for those ten companies. I just like.

• 52:06Speaker 01

  We're gonna make more of them.

• 52:07Speaker 03

  Yeah, he's like, there's more than, let's see, we made like two of them. Like, why is it ten? It's just like such an arbitrary number. And I think like clearly over the last fifteen years, that's proven to be true. And I just feel like everything we do here is driven by. We want that number to go up. What are the bottlenecks? Are the bottlenecks like more founders? Let's go find more.

• 52:23Speaker 00

  Yeah, when you went to four batches, that was.

• 52:25Speaker 03

  Yeah, but yeah, that was exactly a good example of it. It's like that was a bottleneck. Like you shouldn't have to wait six months to do a Y C batch.

• 52:30Speaker 00

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

• 52:40Speaker 03

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

• 52:57Speaker 00

  Decentralizing decisions, batch operations.

• 53:00Speaker 03

  Yeah, but yeah, just basically, maybe if I start from the bottom, it's like now each Y C partner is essentially picking their own companies. And then we club together to form a group that runs a batch, but we're just like more nimble. Like, we can just sort of do things in a way that wasn't as easy before.

• 53:15Speaker 01

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

• 53:23Speaker 00

  Wow.

• 53:24Speaker 01

  Partners total right now.

• 53:26Speaker 00

  Do you feel that there's a limit to those numbers? Or do you think you could, could you double the number of Y C partners and therefore double the number of companies? Like, what, what do you think if you're imagining a world where you're funding four times more companies than you are today? What would you need to overcome still?

• 53:40Speaker 02

  Well, a cool thing about the way Y C is structured now, I think, I think this is something that's like often misunderstood from, from the outside. I think when, I mean, most people hear that a Y C batch is two hundred companies, but they imagine the batch experience is, is like a room full of like four hundred founders showing up every day.

• 53:57Speaker 00

  It's actually four batches of fifty.

• 53:59Speaker 02

  Hacks your hall, right. But it's, it's actually more like each partner is running their own like autonomous mini Y C. And it's, you know, thirty-ish companies. We call them pods. I mean, I had my whole pod over to my house for dinner last night because like that, and it's, you know, approximately the same size as Y C was when Gary went.

• 54:17Speaker 01

  Yeah, we basically run like seven or eight simultaneous.

• 54:20Speaker 00

  Yeah.

• 54:21Speaker 01

  Two thousand eight batches with P G.

• 54:24Speaker 02

  Exactly.

• 54:24Speaker 01

  And we have fifteen P Gs now.

• 54:26Speaker 02

  Yeah. And so like with that kind of structure, there's no inherent change that has to happen if you go from fifteen to thirty of them. Because it's like fully paralyzed already.

• 54:34Speaker 00

  And one of the ways I've perceived Y C change. You know, over the last several years or something was there were, there was this period, I guess, when like my brother was here, where there were like a bunch of new projects. And then I felt you guys kind of, you clearly went back to the core and then did more of it. Like, I could feel that very clearly that it was like, this is our thing and we're going to refocus on that, but we're going to make it more and bigger. And I think that's been super successful. And you guys have like clearly throughput more companies. The companies are awesome. You know, I'm saying that as a biased person who invested in a lot of them, but it feels that way to me. Are there initiatives outside of that core that you are interested in with the new market moment? Or are you like, we're gonna just do more and more of this distilled core? Or does it depend on the day?

• 55:20Speaker 02

  Well, first off, I think that's a good overall description of like how Y C has changed, especially since Gary came back is like refocusing on the core. That's been sort of like the high level of the last three years. But yeah, we do have some big projects in the works. I'm not sure which ones we can talk about.

• 55:33Speaker 01

  I know, there's so many and they're all like.

• 55:35Speaker 00

  Just talk about them.

• 55:38Speaker 03

  I don't know. It's not like we have like new initiatives that don't feel core. I still think it all falls under the umbrella of like, the core thing is how to create more startups. And like, keep pushing down on that. And as Jared mentioned, like Fellow is just an example of something we just launched last year, which is like, what's another bottleneck? There's more founders, we want to meet the founders earlier, like college students before they're ready to do startups. And so we started offering just like grants and like community to like exceptional college students that we feel like, ah, maybe they're not ready to do a startup right now, but they might be in a year or two.

• 56:11Speaker 00

  That's a good example of like widening the base even further. Cause like, it was almost like you could like narrow the top and you could say, you know what? We're gonna actually put a bunch of money into growth. You know, like obviously you did that. But you know, the other way to go is you could widen the base. You could say, actually, we're going to try to have some engagement with 10,000 founders or something like that.

• 56:28Speaker 03

  That's basically what we think a lot about.

• 56:29Speaker 02

  Yes, yeah, because the amount of follow on capital is not really the bottleneck right now. Really, the bottleneck for us now is getting more great founders to want to do startups and to do Y C, which is what the bottleneck should be. Like, if the bottleneck is anything else, something is weird about, about, about the world. That's, that's, that's what the bottleneck always should be for a long time. Y C was just struggling so much to just scale the operational side. We're here like a post product market fit company that like couldn't keep up with demand. And so instead of like focusing on growth, how do we get? Or you were like YouTube when it was like scaling by like two X every month. And just everyone was just like trying to figure out like how to keep the site up. That was certainly the first few years of me at Y C was just us like trying to figure out like how to not fall over.

• 57:10Speaker 02

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

• 57:22Speaker 01

  I mean, one of the most fun things from, I mean, I pinch myself, like I get to, you know, I had left Y C and then now I get to, you know, go hang out with P G and Jessica again and hang out with Brian Chesky's on the board. And then one of the directors from the board that's awesome is you need to make sure that we're having fun. Like, and that was true like back in two thousand and eleven.

• 57:45Speaker 03

  Laughter, the laughter test.

• 57:46Speaker 01

  Yeah, yeah, basically like that, you know, that's sort of the directive we got this year. That's like not a directive at all. It's like, you know, awesome, actually. It's like, if we're not having fun, then we're doing something wrong, actually. Like, and, you know, I remember like just Y C, being around Y C and the partners and P G and P B and Jeff and all the, you know, it's like, it was just very, very hilarious all the time. It was like unbelievable how weird, you know, startups can be and like, can you believe this thing happened? And then I feel like our partner lunches are that again, which is really fun. It's like.

• 58:19Speaker 02

  And that's so important, like having like the partnership like that where everybody like trusts and enjoys each other and respects what people think. Like, that's just got to make the whole experience so much better.

• 58:29Speaker 03

  It's why everyone's a former, all the partners are former Y C founders. So it's like, it feels just like a little bit more than a job for everyone. Like everyone's got sort of a pay it forward, Y C changed their life in some way.

• 58:39Speaker 02

  Yeah.

• 58:39Speaker 03

  Like, just adds to the good vibes, I think.

• 58:42Speaker 02

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

• 58:55Speaker 03

  Thanks for having us.

• 58:56Speaker 01

  Thanks, Jack.

• 58:59Speaker 01

  So when are you going to be a Y C partner?

• 59:03Speaker 02

  Keep checking my inbox.