Uncapped #7 | Garry Tan from Y Combinator

[00:00] If you can get Keith Raboy to invest in your startup, you should do a fat startup. Yeah, exactly. And a few other of our friends, obviously. If a lot will do it. We sort of know all the people who can and will do it. And if they want you to do a fat startup, you should do a fat startup with them. All right, Gary, thank you so much for doing this. It's great to be here. I appreciate you making time for it. Jack, thanks a lot for having me. Yeah, I know you're super busy. And I'm really excited to have this conversation. You're now, I think, two years into running YC. That's about right. And you've really been running it like a founder. [00:30] from my perspective. And I kind of want to start by getting inside your own mentality. And what's the headspace that lets you [00:37] do that? Because you've made a lot of changes that I think have been really good that have broadly been received as really good, but that were not easy to do. I think you've done a lot of stuff that has required the confidence of a founder and you've acted like that. So can you talk a little bit about what headspace you came into when you started running YC? Definitely. I mean, the great thing about YC is that we need to go zero based accounting. So literally, if we were starting YC from scratch again, all the things that we would add, you [01:07] that moment, we're keeping those things. And that's a very freeing thing to actually [01:13] have the people who support you and like, are your board, you know, for them to say that is just, you just have, you know, sort of not totally carte blanche, but you have like as close to it as you could while not being like directly the owner of the thing. When you had that conversation and you're thinking zero based accounting for YC, like what is, what is, what is,

[01:33] order of business number one, like what must be true first order of business for you, for YC to thrive and be what you want it to be. I mean... [01:41] I guess... [01:42] From an abstract standpoint, because there are lots of specifics that I want to get into, but from the most abstract standpoint, like I view YC as this like tree of prosperity. And then, you know, like it or not, every organization in the world, no matter how dominant, could use a little bit of pruning like this is a garden. [02:12] coming out of your fruit trees, you've got to do all this pruning, you know, months or sometimes, you know, in the years in advance of that. Totally. And so, and all of that is basically really, really hard. Yeah. It's really hard to say no to things and to people. And, you know, I think basically [02:31] culture is everything. And, you know, when you really get into the weeds on that, it's like, well, who do you fire and who do you hire and who do you promote? And these are things that as a young founder, people tell you this. And then, you know, well, you ran, I mean, you created, you know, one of the defining SaaS companies in HR software. So, you know, you probably like totally immersed yourself in that and like spend a lot of time trying to help people figure this out. [03:01] How do you actually implement that into strategy? And, you know, how do you walk like sort of

[03:08] without a net. You're like, I'm just going to do this thing. And it might be a total disaster, or it might be the best thing we did. Yeah. I mean, one of the things as I'm looking back, I guess YC's been around for 20 years. And when Paul and Jessica and the early group started, it was this very small, very pure core focus on just funding early stage startups in this model that we all know is YC. And then looking back through the 2010s, there was all this expansionary [03:38] And I guess looking back, a lot of that was a big part of what, you know, has helped YC maybe blossom into what it is. But then, you know, there became this moment then kind of like you're saying of – [03:48] recentering to the core and it's now much bigger and more impactful than it ever was in the past. As you're thinking about that sort of evolution and that breathing, could you imagine a moment where you go back to some of those expansionary bets over time, you know, and 15 years later, there's another pruning cycle that happens? I don't know. That's life, right? Like you try a bunch of stuff, some things work, sometimes things go kind of awry. I will really, you know, it's [04:14] actually not a surprise to me at all that like subsequent to me coming back and seeing, you know, what Brian told me, which is, you know, zero based accounting, like he came to our board meetings with founder mode energy before we even knew that it was called founder mode energy, because he had gone through that moment in Airbnb's time where a lot of young founders go through that. I mean, pretty much all of them, actually, you know, if you're so lucky to get product market fit,

[04:44] in the investing world and they go on your board and then they say hey you need to hire the person who was the expert at this other company to do this and they come with this rolodex and this way of doing things and then sooner or later you know a few years into it you look down and you realize like well is this my company or is it my board's company or is it the shareholders company like what is it and uh you know [05:07] And [05:08] Brian's experience was that [05:10] not everyone gets that moment. COVID was that moment for him to reclaim and reset the culture of Airbnb. I think we were coming right off of that. He immediately decided [05:24] sort of infuse that into me and YC. So we're deeply thankful for that. Yeah. But, you know, I mean, never say never. And, um, [05:33] I guess the weirdest thing that I hope for YC is that if we do it right, [05:40] we can sort of regrow the tree of prosperity in a way that like it doesn't have to be pruned quite so much. Like it's much better to prune as you go to shape it into the tree that you want instead of let it grow completely wild and then have to cut back. And then it's already, you know, they're like entire branches that are grown in a way that, you know, might not be ideal, might not fruit. [06:10] of YC were eight companies, 12 companies, 15 companies twice a year. Now you have 150 or so

[06:17] four times a year. So, you know, and they're still amazing. So, you know, like clearly the whole market has not been captured. So maybe that brings me to another, you know, [06:25] question of mine is as you think about [06:27] growing YC, do you think about capturing more of the market making, maybe that's the wrong sort of language, but making YC a product that even more founders want to have? Is that one of the drivers as you think about what's next? Oh, definitely. I mean, I think [06:46] I think both, right? Like there's sort of the zero sum and there's also the abundance mindset, right? And the fun thing about it is like actually both are at play, right? There is a zero sum aspect of this and there are going to be people from central casting who are, you know, super cracked and have the right resume and they were like sort of shot out of a cannon. [07:16] you know, competing with some of the top VC names in the world. Sure. The top seed investors, like, you know, and that's okay. I don't know. It's not the end of the world. Like, you know, Jack, when you get a great, super cracked founder. I'm just like, you should also do YC. Yeah, exactly. Which would be great. Yeah. I mean, um. [07:33] So there's that. And then the really fun part, the part that I think is the most generative, sort of the thing that I think if you talk to the YC partners, like we're very excited about is that, you know, we're going to do that. But also like. [07:46] We want to create prosperity where in the past there wasn't. And that's sort of classically, that's what PG did. He said, very technical founders. This is sort of the mispriced asset. There are lots of things that are mispriced, but highly technical young founders are sort of the most mispriced.

[08:16] this young founder, it's always been for outsider founders breaking in. There have been like, I could name a set of archetypes that it's for. Do you think about any archetype founders that you think YC you want to grow in? [08:29] you know, your sort of footprint with, like, do you think in those terms or do you just think about better product growing brands will do better? Or do you think, OK, how do we improve our product for second time founders? You know, like it was great that Parker at Rippling came through YC again. But how do you think do you ever think, well, let's make sure we always get that to happen? Or what's inside the mind? Do you think about expanding the aperture of who YC appeals to? [08:51] Man, I mean, I think it's a hard question. I mean, the hardest question is like, what do you focus on? And if you focus on all of them, like, are you really focusing on any of them, actually? I think it's pretty clear that we're really focused on technical founders. But one of the things we need to work a lot harder to dispel is like, there's this concept now that, oh, it's for people who worked at certain companies or went to Harvard or Stanford or MIT. [09:21] Also, for people who went to Cornell, went to UIUC, went to like, you know, I don't know. The weirdest thing, I mean, in the political landscape today is realizing and, you know, you can open up your X feed and see it every single day. Like there are people who are absolutely brilliant, 150 IQ, great engineers who get rejected from 15 schools straight. Right. And, you know, that's not fair. I actually spent time talking to the guy who went viral with that tweet. Oh, yeah. Today. Yeah, yeah.

[09:51] He's like this brilliant guy who's like super hardworking. And it just like tells you that like they're not hitting all of it. And actually, to my mind, YC actually is really valuable to people who don't already have the brand and the network built in because you come in, you just like get like, you know, shot out of a rocket into Silicon Valley culture. So it's definitely good for that. Yeah. But I think, I mean, universities have this problem and universities themselves sort of treat it in a similar way. I mean, maybe that's what has been broken, right? [10:21] and Stanford was an awesome place to go. But, you know, I may be, you know, child of immigrants, like not, you know, came from a poor family, like we didn't necessarily belong. But like, the reason why Stanford was awesome was, you had all the people who were going to be successful in one place. And then that, you know, by sort of transference, or by me being in that place, like being a fraternity brother with Joe Lonsdale and Stephen Cohen, like brought me in touch with [10:51] And it's like, okay, there is something to be said for having places that have both diversity and merit in one place. Right? And society is having the worst debate ever about this right now. Somehow it's like, pick one or the other. Totally. [11:10] I don't know. The ideal is like [11:13] you have both in the same place. Yeah. And so that's embedded in your questions. Yes. Where should YC go? It's like we want to go where

[11:22] really great builders are and they are like not a monolith like some of them do go to the top schools some of them do study computer science some of them don't yeah and then um if we're that community and we can select well then we will actually help make a lot more of them successful and then that will beget you know more people of all sorts like i think the the key idea that um paul i don't think this is what he set out to do per se but like intuitively this is what he figured [11:52] The world needs shelling points for builders, for talented people. And then their capital exists, their customers exist, their knowledge and support and the best friends of your life can come together. I just had... [12:10] a lot, Gil, on the podcast the other day. And this is one of the things he was talking about is that early in your career, you will meet, hopefully, you're going to meet a lot of people who over the next 20 years will do really impressive things. And finding those cohorts early on is like one of the best things about working at a company. And that's like, you know, for me, a bunch of my founder friends are YC founders, and it's like not random, that that's kind of how you end up going through it. And so some of it's just bringing those networks together. This may be, I actually want to come back to the politics thing [12:40] One last point here that I wanted to get to was... [12:44] Somebody recently made the point that YC's correct decision rate is very good. And obviously, there have been companies that have applied, not gotten in, that have gone on to do well. I can't remember the examples. I'm sure there's like a handful. And that's great. But compared to them all, but compared to like a regular compared to even like, I would guess compared to even like a Sequoia or like a really good investor. It seems like a like a hilariously good pick rate.

[13:11] And I was wondering, do you think that that is something to do with the process you have of selection? Or do you think that's something to do with what YC does to companies after they've gotten in? Do you have any explanation in your mind for why the pick rate seems as good as it is? I think it's not more complicated than game-recognized game, right? I think that if we have partners here who are great builders themselves, you just end up getting way more reps than anyone else, right? [13:41] uh you know a lot of we both probably run across a lot of 22 year olds who are like desperate to become associates at vc and it's like bro don't do that please do you think that's a bad idea generally speaking just like go start a company like great founders want to be around other people who have actually been there it's like that jay-z line everybody want to tell you how to do it they never did it and so it's just so obvious like don't [14:03] Rather than seek the trappings of this or play the ego status money game, it's like, go create things of great value. And then that's really just all of what I want YC to be. It's like, someone who has built stuff will sit down with you and you'll have personal one-on-one experience with them. And they're not going to say necessarily things that you want. They're not going to validate your bad decisions. They're going to say, this is what I think you should do.

[14:33] What is the nature of that role action? When you think about the YC partner, YC founder relationship, and I think back on mine, I was very lucky. I had Dalton Caldwell and Aaron Harris. Both were great. And I experienced them as like pretty direct, pretty honest. Like it wasn't like kid gloves or anything like that in a positive way. Is that like the, like when you think about as a partnership, talking about how you're showing up with the founders during the batch, are you like, you know, we're going to be. [15:01] What are the words you use when you think about [15:04] talking to your team about how everyone should show up. I mean, we should sort of be like... [15:08] benevolent, like bodhisattvas in a way. It's like, okay, here's, you're on this path. And like, the hard part is like, you know, bodhisattvas probably overstating it. Cause it's like, we don't know the path. Like we just know how not to die. Actually, that's the part that we can really help with. Whereas, [15:25] And I think that makes a really big difference, like losing your co-founder over dumb arguments, picking the wrong investor, messing things up in terms of your first hires, picking too many different things to focus on and not focusing on any one. There's like a billion ways to die. And as investors, the best thing we can do is say like, oh, yeah, we saw like [redacted address]. In fact, do you want to talk to one of them?

[15:55] drilled the fundamentals. It was like, don't get distracted. Just build product. Just talk to customers. Don't die. Don't break up with your co-founder. Don't run out of money. It was like very simple, but it was constant. Yeah. And it's hard to do because, you know, what happens is it's like that meme. No one who's ever tried to do it has, you know, made it, but it might work for us. It's like that whole meme is basically the thing that first-time founders in particular [16:25] a couple of the schools of thought that maybe are not exactly counter, but are different to YC. And I'd actually love to hear what you think about some of these. But one of them would be on this point would be like great companies are very unconventional and, you know, they look different. And when special things happen, they start in special ways and you can't follow the rules and blah, blah, blah. That's just people who haven't seen those things probably. Yeah. So you but you probably have a lot of founders who heard that somewhere. Right. And then they come into their partner meeting and they're saying something like that. And so what's the [16:55] common back and forth gets navigated, would you say? [16:58] I mean, some of it is like, it's not our, we're not the boss. And so, you know, there's this famous quote, even from PG, I think he was a [17:07] advising Jason Tan from SIF Science. It's in that book by Randall Strauss about YC. It was one of the batches I worked. And he said, you know what? [17:18] you guys do whatever you want. You're the reason why we fund 100 companies. Like, if you want to drive off the cliff, go right ahead. Which is like this hilarious quote in that, like, they didn't. It's like they ended up making a unicorn company. I don't even remember what the specific thing was. But some of the point was, like, we're not the boss. Like, we're here to just tell you what we think and to try to be benevolent and help you. And, you know,

[17:43] That's what the soft advisor thing means, I think. At least my experience working with a great many companies, if I come in and just say, do this, do that, that was the whole reason why I started a company, to not have people come and order me around and tell me what to do. I don't think founders who are truly great even respond to that. I guess that's how I square the circle. The people who just come in, we would see this all the time. [18:13] in 2008. We were some of the people who PG would either give you like the best advice in the world or sometimes like really, really bad advice. And then if you talk to any alum, all the alums like sort of have some story usually around naming where it's like, oh, we're not going to do that. But like this other advice. [18:33] absolutely brilliant um what i realized was like most people in startup land you run across they will give you like very median advice like it's not gonna change your trajectory very much because it's like you know i read that on the internet there are five podcasts that already say that so you know [18:50] Did you need to have the conversation? Probably not. What's really valuable is to have people around who have seen enough and are intuitive enough about ideas and technology and teams that they can give you even spiky advice, sometimes the worst advice. But good founders are like, oh, that's bad advice. I'm just not going to do that. And I actually remember why I see there was also a meta narrative was don't take anybody's advice like carte blanche, including ours. And I'd rather get that and then a lot of advice that contained

[19:20] nothing. Yeah. Another one that I'm curious is the sort of lean startup versus fat startup sort of dichotomy. I don't know if this is exactly a fair characterization, especially as YC has gone into more hard tech companies. Totally. But there could be a characterization that there's the lean iterate sort of like raise as little capital as possible, keep your team as small as possible, and like find product market fit through your customers. And roughly speaking, that's YC. And then over on the far end of the spectrum, you have the fat startup where it's like you plan [19:50] movie, you hire out the whole team and you like you push something into the world. Totally. How do you think about that dichotomy? Is that an accurate representation? Do you disagree? Do you think it is based on some startups should be one, some startups? I mean, if you can get Keith Raboy to invest in your startup, you should do a fat startup. Yeah, exactly. You know, and a few other of our friends, obviously, like if a lot will do it, like if a lot, you know, we sort of know all the people who can and will do it. And like, if they want you to do a fat startup, you should do a fat startup with them because [20:20] network and investor dependent. Like if you have access directly to the node. Yeah. Yeah. You should do a fat startup. Like if, if he wants you to do one, like, [20:28] You've been blessed. And then for the great many millions or billions of the rest of us on the planet, not totally clear. You can believe that you will and maybe you could do it. But how would you even get to the point where you could be a fat startup? Well, you got to do it lean. Yes. [20:46] I love that. A couple more because I've got a couple more on founders and startups. These are good questions.

[20:53] Because you probably at the moment, you know, you go in and out, but you're right. You know, the last couple of years, you're probably seeing as many companies as possible, you know. And so I want to hear your current view of if you had to name the couple archetypes of a special founder and a couple things where, you know, you have most frequently recently been like that is amazing. [21:15] a source of greatness for a founder. What are the things on your mind right now that you think create those archetypes? [21:22] If you had to boil it down to a couple, [21:26] The founders that I've been lucky to run across, especially the last couple of years, they can just sit down with people who have a particular need and they're just yanking out the requirements right out of the customers. And then the interesting thing about... [21:43] being able to do that in the first few meetings is that after a while, when you're coming back with product and, you know, you're in market with them or you're like deployed with real customers, like, you know, basically that yanking turns into like they're pushing. And that's product market fit. So, yeah, I think of that as like commerciality. Like there's some people who just know this is where the problem is and I can just find it somehow. So, yeah, I mean, it's kind of [22:13] forceful, but like, this is actually a very like sort of opposite of forceful. You know what it's like? It's like how a great seller is like the best listener of all time. It's like that kind of. Yeah, totally. I think that's exactly how that works. Yeah. And then, so it's, it's odd because like the, the cargo cult around great founders is like, oh, let me listen less. And it's like, oh no, no, no. Actually you have to listen 10 times more than the other people who don't listen. How do you know that when you see it so early?

[22:43] a lot of people struggle with, I certainly struggle with it, is it's hard to see it. Because you're trying to call that about a founder before you've seen them do it. So how do you do that? I mean, sometimes you just hear their other stories. And spiky people are just spiky in all sorts of weird ways. Like Serena Gay from Data Curve is one of my favorite recent founders from the last year. They dropped out of Waterloo at, I think, age 19 or 20. [23:13] And she had already built like one of the number one rock climbing apps in the app store at like 16 or something. So you're like, oh, yeah, these people have very like they're like, you know, sort of a mile like they're an inch wide and like a mile deep on very specific things. Like unusual people do unusual stuff. Oh, yeah. Starting early. Yeah, yeah. I like that. That's one of the YC app questions, isn't it? Like something that you that's like a core question. I feel like around this. [23:43] there's sort of this strain of like are people a little bit naughty which is interesting and it's kind of related I think maybe but a little different what else I agree with that bucket completely obviously is there any other thread that's equivalent to that that you're looking for that you're trying to smell out in somebody [24:02] I mean, the world is like really, really full of systems. So... [24:07] It might just be the same side of that other coin. Basically, if you're very much a systems thinker, basically all the world is like

[24:18] somewhat rational it is not perfectly rational but like when you think about all the people in your life or all the people you'll ever meet like they're you know there's some sort of core thing going on and then can you understand it and i mean maybe yeah that that is actually me i you know i'm cheating by saying the same thing but like i feel like that's really really important like [24:40] Can you sit down with a person from any walk of life and then understand what are their motivations? How do they get promoted? What's their ideology? There's just sort of this whole thing. It's a good single answer because this is also what predicts. Are they going to be able to recruit? Are they going to sell customers? Are they going to fundraise? All these things kind of come from a version of this, which is not quite the ability to sell even though it looks like it. It's like ability to see a genuine interaction that will be valuable to everybody or something. Yeah, I mean… [25:10] Basically, if you're going to program the world, you sort of have to, you know, reverse engineer the world first. Yes. Yeah, that's well said. [25:18] The recent sort of like AI... [25:21] boom has led to, I think, you know, [25:23] amazing things for our industry, obviously. And, uh, most YC companies now I would say are using AI to some extent. Can you talk a little bit about what you're seeing, um, [25:34] for them and their experience. And so like, you know, a couple of things that are coming to mind for me lately are I'm seeing like buyers in old industries that never would have wanted to even buy, that were like struggling to even adopt cloud or all of a sudden like super hungry for AI. Like, you know, you see this in education and healthcare and legal. And so you see like, that's an interesting dynamic. There's more competition than probably ever before. So anytime there's like a good idea, there's like 19 people going after the same good idea. There's new considerations

[26:04] a startup is probably the same, but like some of the rules have clearly changed. So like as you're navigating this and now as most of your companies are using AI to some extent, like what are the big rule changes that you're experiencing or observing? [26:16] Thank you. [26:18] I guess the wild thing is... [26:20] people seem to really need a good claim. [26:24] There's a great medical billing company. I mean, there are many... [26:28] really great medical billing companies. There's one recently that I met who they now make the claim that [26:35] If you are running one of these like 10 or 15 person clinics, it might be in all kinds of places, dermatology or wherever. I mean, it doesn't even have to be human. It could be a veterinary. Um... [26:46] With their software, you can have... [26:50] One... [26:51] back office person. So you can have mainly clinicians and one back office person per clinic. And so, I mean, the type of claims that you can make and make good on with large language models today is kind of astonishing. And that I don't think was true. I mean, I think... And people believe you, which is what's crazy. Well, you chose on the demo. And then you have five other customers who are already doing it. So I think that we're going to see, you know, [27:21] 10,000 flowers bloom in vertical AI software. Um, [27:26] And then I guess we'll see, like the difficulty will be, you know, will there be roll ups? Like what will happen? Will there be a thousand for the next year or two? And then from a thousand, will it like get whittled down to a hundred? You know, as the models get smarter and smarter, what's going to happen? Do you think it will change anything? Like, you know, historically, it's like a market has like a one, two, three. And the one's a lot bigger than two, who's a lot bigger than three. Is there any reason why you think it might be different in this cycle? Or do you think that's the natural destination here?

[27:56] Amen. [27:59] I think short of believing that AGI will happen and, uh, or ASI will happen and, you know, none, no software will exist again. Yeah. Um, [28:09] I think all the standard rules still apply. Like, you know, it's same. That's what I would say to a regulator, too. It's like, you know what? This is just really, really good software. That's what I think. Very, very accessible right now. Yeah. And so all the rules that we already came up with to govern day to day life already apply. Yeah. [28:30] And so... [28:31] Thank you. [28:31] And then on the business side, the moats are all the same, right? For sure. Switching costs, data that you have access to that nobody else has, brand network effects. I mean, there's just, what, like five? Yeah, there's not that many. So if we're in this moment where like... [28:48] software just became incredibly sick and these markets are in some ways wide open. Flowers are blooming everywhere. Does that mean that once you've got like a hook, you should actually go like complete blitz scale mode right now? Like, is that is that a natural conclusion from the setup? I think those are that. [29:06] Basically, every founder has to make up their mind for themselves right now. We're starting to see some evidence that you don't have to. There's an alternative that's sort of brewing where maybe you can get to $50, $100 million ARR and sustain it with less than 20 people. Yeah. Linear is like a good example of that type of company. Totally. Yeah. I mean, that's brand and marketing.

[29:30] I mean... [29:31] I mean, that might be brand, actually. I mean, you're like, in theory, there could be network effects. I mean... [29:38] Um, [29:39] Yeah, certainly some within a company. Right. Yeah. But in general, when I'm thinking about these vertical AI companies and, you know, you look at legal or accounting or finance or healthcare, pick your vertical. If there's a really good new idea happening and nine people, you know, got a clutch in the wall at the same time, it might, I guess I wonder, you know, does it lead to, and you're working with a bunch of these, do you then say scramble up the wall as fast as possible? Oh, yeah, definitely. I mean, to the extent you can. And then the difference now is... [30:09] Do you hire a giant team of people or do you just automate internal to yourself? And like increasingly, like pretty much everyone we're seeing, they're making they're choosing to automate using their own agents internally. Yeah. Do you think that there's like a there's definitely a rise in the number of companies I think that could choose not to raise? And, you know, you'll see that kind of perspective a lot of times, you know, people saying there's going to be all these companies that don't need cash [30:39] and blah, blah, blah. And then [30:42] Parker put out a thoughtful tweet about how actually that is not how it's going to work because competition means that the team that hires two teams, everything's the same, but one team hires 100 sales reps. Who's going to win? Yeah. Yeah. [30:53] Well, I think it's going to be a race. [30:56] Basically, like you can... [30:58] The people who are blitzscaling will have the benefit of lots of, you know, some of it is like at that point, it has to be blitzscaling with, you know, 150 IQ people. And so the question is, like, how many Silicon Valley companies really are able to draw that level of talent? Hiring at 50 people, 100 people, 200 people, 500 people, 1,000 people. Parker Conrad is amazing.

[31:21] almost certainly with Matt McGinnis. And like, he has like the all star team, and he's able to, you know, sort of acquihire 150 IQP people into him and then integrate it and go from like, zero to 10 million ARR for like all these other lines, lines of businesses. It's like, you know, I actually think that the compound startup is possible if you can do that, if you can get that talent, but that's an if and like, very few people are really, really capable of doing that. Actually, that's another good story. There's so many things here. [31:51] another one where I'm seeing more frequently, I'm hearing the advice or even founders just wanting to organically say, software's easier than ever to build. I'm going compound mega early, which is sort of the opposite of focus and be great and pure at one thing, which was always the advice I got in 2016. I think it's the barrels versus bullets thing. Something like that. Yeah. Well, you need barrels. That person can do it if they can show that they can consistently hire and build that. I mean, you could say that the ramp guys [32:21] a great job right yeah it's actually a good reframe of the whole problem which is of course it's better to be as multi-product as early as possible as you can if you can right but it kind of it's kind of the same um it's kind of the same ethos as what you said around the fat startup it's like yeah great if you can raise 100 and have keith on your board do it man do it why wouldn't you like but otherwise here's a here's a way to do it the other way yeah yeah um so yeah i mean i think basically that rather than have dogma the better thing for any smart founder who's a system

[32:51] you and me on a podcast being like, oh, they said this. A true systems thinker will actually just make up their own mind. Yeah. Okay. Outside of AI, there's a lot of interest going into hard tech, broadly speaking, right now, and I think, which is amazing. Obviously, we've got like SpaceX and Anderle, but like there's also another new crop of companies coming up that are leading it. And so then you have a lot of the big VC firms putting a lot into it. And I've seen, you know, you've said YC, you know, people will be like, oh, this is the [33:21] tech and you're like, we're the YC of hard tech. So yeah, talk to me about like hard tech. And I know it's grown for you. I've seen a bunch of really cool companies in recent batches doing it, but like, what's, what's on your mind there? Yeah. I, you know, the great thing about YC is like, I think ultimately, you know, [33:35] Every startup founder should be thinking about how can I build a shelling point? And then having a shelling point is awesome because that's what YC has. If we can get really smart people, whether it's hardware or software, to come together. [33:48] do this thing like uh demo day we have more than a billion dollars i think it's going on 1.2 billion dollars a year and like you know relatively like it's not totally captive i don't have like contracts over it but like you know consistently every single year this number goes up the amount of money that comes into yc demo days and so and i don't know i want that number to be 2 billion i want that billion number to be two and a half billion uh over the next five ten years like

[34:18] tech is such an interesting like sort of purple cow especially at demo day so um [34:23] The median YC startup will end up raising a million to a million and a half bucks on a demo day. [34:32] The harder tech companies that can show a lot of real commercial validation or technological breakthrough during those three or four months. I mean, they're raising three, five, ten, like 20. It's like entirely possible to raise the amount of money you need to have a truly successful hard tech company just by coming to do YC for three months. [35:02] and the hard tech stuff is very compelling. And we're seeing real success. Like SoluGen, Early, Astronus, Boom, there are so many examples. When you think about [35:14] the hard tech segment, do you think of it as... [35:18] the same whole process for YC? You recruit the companies the same way, you interview them the same way, you give them advice that's the same, you fund them the same, and it's just a different type of company? Or is there a bit or two that flips in a different way where you're like, actually, we take a slightly different set of advice or a slightly different mindset with, you know, a satellite company versus with an AI for law company? Well, the great thing is, you know, every single partner at YC does do hard tech. And, you know, [35:46] We're starting to do more specialized programming around it. I mean, Andy Lapsa from Stokespace came back and did a hard tech mini conference for this last batch. And we're going to keep doing that. I mean, the great thing about YC is like it's less about...

[36:01] um [36:02] sort of the specific services. It's a lot more about like the mindset and, you know, being alongside a cross section of all the other sort of good things. [36:12] you know, really good builders and, um, [36:15] You're just never alone in that respect. I mean, even look at any investor. It's like, once you make it to GP at a firm or something, like you're what, like eight years into your career, like, you know, the last time you wrote real code or like designed a real mechanical thing might be eight years ago. And, you know, what is that partner really going to do? You know, the YC is not too different in that respect. But what YC does have is a [36:43] just this, you know, phalanx of incredible hard tech companies who can be basically right there by your side. Like, um, my favorite thing is when I did YC, I, um, [36:55] Yes. [36:56] I so needed help fundraising. Like, you know, James Lindenbaum from Heroku came and helped me and like, you know, Sereno to Bergerac our seed round. And then about nine months later, after we raised the seed, he was running a Ruby on Rails hosting platform. And they were worried about not being able to support like some of the biggest rail sites on the web. And I happened to run one of the biggest rail sites on the web. So he said, Gary, can you give us your source code? [37:26] For you, yes. That's the kind of stuff that you would do for a fellow YC batch mate. There's no way you would do it for anyone else. Totally. The trust in there is just so valuable.

[37:38] So there may be in our last little segment, I want to talk about sort of your involvement in politics and local government and the community outside YC. There is like a current as of right now, there's a bit going about you saving, you know, the city. And there's these Batman calls at your name, which I think is very good. And I've done a couple myself. Hopefully by the time this is posted, it's either died down or it's gone hyperbolic in the other direction. But a lot of that, I think, is a result of you. [38:07] taking on a lot of causes. But, you know, it's like, ah, I really want that solved. I don't have the energy. And like, I'm glad that Gary's doing that. And like, I saw you doing this with, you know, [38:18] education. You've done it with sort of like, you know, having the city be clean and safe. You've done it with keeping tech companies in San Francisco. I know now you're spending time in D.C. and you're probably operating on a bunch of stuff at the national level that, you know, can't even talk about yet. But what is driving you to invest your time, which you don't have a lot of into all this stuff around you outside Y.C.? [38:40] Um [38:41] I guess what I realized is because of my childhood, which was relatively difficult, I actually am just wired differently. And I need conflict in my life. I didn't really realize this until I actually need my limbic system really needs stimulation. Like you grew up with conflict and so you need it to feel. Yeah. I just need a baseline radiation level of being on edge in order to feel normal. So I did not realize this. That's not the answer I thought you were going to say. Oh, my God.

[39:11] I don't know. I mean, I think I started getting involved in it... [39:15] Mostly right after right during COVID and after some of it was actually there was this famous clubhouse that maybe you were on with Mike Solana. And then we had Chesa Boudin, the sitting DA at the time and just hearing him lie through his teeth through clubhouse, you know, and maybe it was just like, you know, COVID like. [39:38] Just isolation plus like hearing someone who's supposed to be a civil servant, someone who is supposed to be protecting people in our society, just come out and just lie to people like just very brazenly. I ended up meeting with Nancy Tung, who was a candidate who lost against him in the prior election, went for a walk around in Noe Valley. [40:08] is it like this how did it get here what's the story there's no bench there's no yeah there's um you know gavin newsome went off to state uh ed lee died and then there was no sort of there was a vacuum there was a vacuum of really strong leadership that was sort of holding up the city yes um and so once i understood that it's like [40:30] Well, what do we do? We have tech, we have tech money, everyone's afraid to say anything. Do you remember what they would do? Even the local press, literally the Chronicle would borderline libel Ron Conway, who's a close friend of ours. It's unbelievable that they would do that.

[40:51] Nancy came to me and said, you know what, here's how it works. And then after that, she got me involved in some people who were putting together the recall of Chesa Boudin. This might be neither here nor there, but did you ever come up with a diagnosis for like, aside from the vacuum of power, like why there was this sort of posturing that was going on where people were sort of seeming so... [41:15] self-righteous while sort of like, you know, annihilating [41:18] what in my opinion, you know, destroying schools in the city and all this stuff. Like, do you ever get to what you thought was like the root of what was there that needed to sort of be gutted? [41:27] I mean, I hate to say it, but like the media angle was a big part of it. And we still have that problem there. You know, there is a little bit of a lack of truly independent and, you know, honest media in local San Francisco and in the Bay Area. You know, Voice of San Francisco with Susan Reynolds is like, you know. [41:47] one of the few people who they're like really willing to say something about you actually do the real investigative journalism about um really what is a moderate view right like there was no voice and when it became unsafe to say even moderate reasonable things like i want to be able to walk down the street and uh not be worried about being assaulted yeah and it's like you would be called a racist yeah and uh or like you want your kids to like learn regular stuff right school [42:17] and middle school. And I don't want to have to send them to a private school for them to get a good education. These are like very anywhere in the country, you could say that. And it's, you know what? We just got upside down for a while. It's very upside down. Do you feel like we're now through that? Is there still a lot more work to do at the San Francisco level?

[42:38] on this sentiment? Or do you think we're through what we needed there and now we can rebuild? I mean, my hope is that San Francisco, you know, I think I feel really good about Lurie. I feel really good about the current board of supervisors. And the interesting thing is even the unions that the public sector unions that supported this sort of what they enforced was like perfect uniformity of ideology as a purity test, because then they knew then they felt safe. They knew that, [43:08] things that were really out of whack with the public, they knew that they would not be defunded. For instance, their interests would not be. It all comes back to money and power. Yeah, that's that's sort of the classic system. Yeah. Yeah. So I think it's changing. Even the unions themselves are sort of realizing like, oh, yeah, we're not going to push watering down the curriculums in schools quite as hard and SFUSD anymore. And I think all, you know, nature's healing a bit. I mean, [43:38] next 10 years, you know, the coolest thing would be if someone says San Francisco Democrat. And like people don't think like, right, you know, sort of downtown is for drug users. And we don't want to teach kids math. They think, oh, like, that's, you know, a very reasonable thing to, you know, want the San Francisco's beautiful town. It could be like a model for the Democrats, like reclaiming like a good moderate left position. Yeah. And it seems like

[44:08] especially at this moment. But on the other hand, like in startups and in politics, we way overestimate what we can do in one year and we way underestimate what we can do in 10. So I am fairly certain this is going to come together. It'll come together in San Francisco. It's going to come together in California. And if we can fix both our city and our state, then we got the country man. Yeah. So I guess, are there any other fights right now that are, [44:38] most right now? Like when you think about this at the local, state, national level, like what's, what do you have your eyes on right now is like the thing that you really hope to see get improved over the next year, three, five, whatever. Oh, well, I mean, locally, I think everything's going really well. I think at the state level, I'm just like learning a lot more about it now. There's a guy named David Crane, governed for California, who I'm learning a lot about Sacramento [45:08] that there's a big opportunity for someone at the governor level and at the AG level in the next, you know, five to [redacted address] San Francisco is going. Yeah, I think we can have, we can demand. Because there's stuff in LA and there's like a lot of other stuff. Yeah, totally. I mean, I think Rick Caruso coming out of LA could be a really, really great leader, either for LA or, you know, in Sacramento. I think, you know, Matt Mahan out of San Jose, incredible. Our own,

[45:38] make incredible strides in sacramento and you know if you look at the past 20 years you know as california goes like those people end up becoming the leaders at a national level but i can tell you like if brooke jenkins or matt mahan or tin ho the da out in sacramento or rick crusoe or any of these people make it all the way up there uh [46:01] I think that we're looking at a resurgence and abundance in the Democratic Party. And so it is possible. [46:07] And then I guess last is national, but I guess that's probably a big picture. That's the final boss. Yeah, that's the final boss. Maybe that comes over time. Ask me in 20, 30 years. Yeah, that's awesome. Well, Kerry, thanks a ton for doing this. It was really fun. I enjoyed this as always, so I appreciate making time. We'll do it again. Great. Thanks, man.