Uncapped with Jack Altman
· Jared Friedman, Jack Altman, Harj Taggar
[00:00:00] S1: Absolutely. We’re seeing companies try many things during the batch. [00:00:00] S0: Do you advise in that direction? I felt like historically there was a YC school of thought. I interpret it as: ship fast, iterate, see where you’re at, go from there. I’ve interpreted in contrast the Keith Rabois school of thought as: you’re a movie producer, dream your movie and then ensure it happens, and don’t let anybody say no. [00:00:00] S2: I feel like the YC job is so much more, almost on the psychology therapist end of the spectrum on this stuff. At least for me, a lot of it is going off the vibe of the founder. I don’t really have a blanket view on whether you should pivot quickly and give up on this idea or stick with it for a long time. Usually when you’re meeting with founders, you can just tell if someone’s been working on something and they just never seem excited about it, and two weeks in, they’re still not very excited about it. It’s hard to tell them, “you just need to persevere and keep going.” It’s usually better for them to find the thing they have the spark about. What do you think?
· Harj Taggar, Jared Friedman
[00:00:00] S2: I feel like the YC job is so much more, almost on the psychology therapist end of the spectrum on this stuff. At least for me, a lot of it is going off the vibe of the founder. I don’t really have a blanket view on whether you should pivot quickly and give up on this idea or stick with it for a long time. Usually when you’re meeting with founders, you can just tell if someone’s been working on something and they just never seem excited about it, and two weeks in, they’re still not very excited about it. It’s hard to tell them, “you just need to persevere and keep going.” It’s usually better for them to find the thing they have the spark about. What do you think? [00:00:00] S1: Yeah, I agree. An anti-pattern for founders who are pivoting is that they have no existing prior on what a good idea is. They’re hoping the outside world will tell them what a good idea is. So they launch five totally different things for five totally different groups of users hoping that one takes off. They usually don’t. What I’ll typically try to do is dig deeper with them to find an idea they actually care about and then see how we can turn that into a startup idea.
· Jared Friedman, Jack Altman, Garry Tan
[00:00:00] S1: Yeah, I agree. An anti-pattern for founders who are pivoting is that they have no existing prior on what a good idea is. They’re hoping the outside world will tell them what a good idea is. So they launch five totally different things for five totally different groups of users hoping that one takes off. They usually don’t. What I’ll typically try to do is dig deeper with them to find an idea they actually care about and then see how we can turn that into a startup idea. [00:00:00] S0: One of the things that I’ve noticed — and a lot of people have noticed this, it’s not some big insight — is that the median startup in YC batches is a good indicator of upcoming trends. I noticed a couple of years ago, before AI was really everywhere, there was one batch where all of a sudden like half the companies were AI companies. Then the next batch. it was like 75%. And then it was basically all AI companies, except for hard tech. You’ve got hard tech too. [00:00:00] S3: 10% hard tech. [00:00:00] S0: YC is the hard tech of hard tech. What is the trend right now that you’re seeing a lot of, that you think YC might be particularly attuned to early? [00:00:00] S1: I don’t think there are any strong trends yet. [00:00:00] S0: It’s all just AI right now. [00:00:00] S1: It’s all just AI right now. Some things that are smaller trends might be glimmers of the future. Just in the current batch, prediction markets are big. Kalshi is really inspirational to a generation of people. Stablecoins and crypto stuff might be another interesting non-AI trend to talk about.
· Jared Friedman, Jack Altman, Garry Tan
[00:00:00] S1: It’s all just AI right now. Some things that are smaller trends might be glimmers of the future. Just in the current batch, prediction markets are big. Kalshi is really inspirational to a generation of people. Stablecoins and crypto stuff might be another interesting non-AI trend to talk about. [00:00:00] S0: Do you have a sense for why? Why are these the companies? Because I agree they have captured something. What is that, do you think? I feel like there is clearly a generation that has been really motivated and interested in this and it’s clearly taking off. [00:00:00] S3: Any time there’s a regulatory change… These things were in a gray area and now it’s green lights. Everyone’s going to do it. Capital flows to it. Capital is required for building consumer businesses. Boom, you’ve got a consumer business growing super fast. You get more capital, the flywheel happens, and you’ve got another DoorDash, which is great. Capital as a bludgeon works really well there. But what’s funny is it’s not clear to me that capital as a bludgeon works as well with AI companies anymore. [00:00:00] S0: What do you mean? [00:00:00] S3: You don’t need to have a thousand-person company anymore.
· Garry Tan, Jack Altman, Harj Taggar
[00:00:00] S3: You don’t need to have a thousand-person company anymore. [00:00:00] S0: It’s interesting. I still feel like I’m waiting for that. There are obviously some companies. I’ve backed YC companies that I’d love to invest more in, but they’re super profitable and I’m like, “Okay, that’s great, I’m very happy for you.” But there are also companies raising bigger rounds than ever and consuming crazy amounts of capital. In some ways it looks even more capital-consumptive than ever before, and I don’t feel like I have a good mental model to square exactly why that’s happening. [00:00:00] S2: It certainly seems like it’s easier to get to $1-2 million of ARR without hiring anyone. We get so many investor updates. We’re used to seeing “we just hit a million ARR and we had ten people”. But now it’s more like “...and we haven’t hired anyone.” So that’s genuinely new. I agree about the step after that though. The Series B rounds seem bigger than ever. [00:00:00] S3: Venture is contracting a little bit, not on a dollar basis. On a dollar basis, there’s a “flight to quality”. One thing we’re talking about internally is that the world is increasingly full of these mega funds. They are friends and they do great work, but it’s more and more dollars behind fewer and fewer people. [00:00:00] S0: Fewer firms.
· Jack Altman, Garry Tan, Harj Taggar, Jared Friedman
[00:00:00] S0: Fewer firms. [00:00:00] S3: Yeah, fewer firms and fewer people at those firms. The natural thing then is capital as a bludgeon. The fix is in, which is great. Often for YC, we’re sometimes the number one, number two, and number four in any given vertical SaaS space. We’re in the billion-dollar one, we’re in the half-billion-dollar one, we’re in the “arm the rebels” one that works with the partner. This happens over and over again. [00:00:00] S0: So do you think in this environment the king-making meme is more true because of the capital-as-a-bludgeon thing? Is it more effective in this type of environment? [00:00:00] S3: Basically, if the founders are good, the capital helps them get there a little faster. But I don’t believe capital as a bludgeon… [00:00:00] S2: Especially when things move so quickly. You can end up having capital and then moving fast in the wrong direction. [00:00:00] S3: Harj funded Giga. Those guys beat — I mean we love Bret, we love Sierra — but Giga, this sort of ten-person team, beat all the incumbents for things like DoorDash. It’s back to back to back. They have the best tech and I think they’re maybe still under 20 people right now. [00:00:00] S1: And Jack, speaking of insiders versus outsiders, that’s such a classic insider versus outsider story. What were the backgrounds of the Giga founders? [00:00:00] S2: They were two IIT guys in India. [00:00:00] S1: They were still in India when you funded them?