Uncapped with Jack Altman
· Harj Taggar, Garry Tan, Jack Altman
[00:00:00] S2: Increasing the number of great startups in the world is, I would argue, just the core founding principle of YC. When I first started working at YC in 2010, it was the first thing PG said to me. I wasn’t actually clear why he even wanted to hire anyone. I was like, “This seems like it’s a nice little family business, two of you working on it, seems great.” But his whole point was that conventional wisdom in the VC industry, which all comes out of Andy Rachleff’s research, is that there are only going to be about 10 companies per year that will go on to reach a hundred million dollars in revenue and be significant and IPO at some point. You just have to be in one of those 10 companies every year or otherwise you may as well have just stayed at home. PG was like, “I’m not a VC. I don’t want to go out and fight for those 10 companies. I’m going to—” [00:00:00] S3: “We’re going to make more of them.” [00:00:00] S2: “Yeah. Let’s make more of them. Let’s see if we can make two of them. Why is it 10? It’s such an arbitrary number.” Clearly over the last 15 years, that’s proven to be true. Everything we do is driven by how we want that number to go up. What are the bottlenecks? Are the bottlenecks more founders? Let’s go find more founders. [00:00:00] S0: You went to four batches. That was great. [00:00:00] S2: Yeah, that was exactly a good example of it. That was a bottleneck. You shouldn’t have to wait six months to do a YC batch.
· Harj Taggar, Jack Altman, Garry Tan
[00:00:00] S2: Yeah, that was exactly a good example of it. That was a bottleneck. You shouldn’t have to wait six months to do a YC batch. [00:00:00] S0: What needed to be true for you guys to go from two to four? What was hard about that? What did you have to change, if anything? Was it just that you didn’t get as much time between to source new companies? [00:00:00] S2: Maybe this is in the weeds, but one of the structural changes we made at YC since Garry came back is to decentralize it. I would argue that pre-Garry coming back, it was a lot more centralized. There was a team that sort of ran the batch, things were more top-down. [00:00:00] S0: Decentralizing decisions? Batch operations? [00:00:00] S2: Yeah. Maybe if I start at the bottom, now each YC partner is essentially picking their own companies and then we club together to form a group that runs a batch. We’re just more nimble. [00:00:00] S3: Plus we have 15 people now. That’s the most partners we’ve ever had. We have 15 visiting partners right now, so it’s actually something like 30, 31 partners total. [00:00:00] S0: Do you feel that there’s a limit to those numbers? Do you think you could double the number of YC partners and therefore double the number of companies? 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?
· Jack Altman, Jared Friedman, Garry Tan
[00:00:00] S0: Do you feel that there’s a limit to those numbers? Do you think you could double the number of YC partners and therefore double the number of companies? 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? [00:00:00] S1: A cool thing about the way YC is structured now… I think this is something that’s often misunderstood from the outside. When most people hear a YC batch is 200 companies, they imagine the batch experience is a room full of 400 founders showing up every day. [00:00:00] S0: It’s actually four batches of 50. [00:00:00] S1: Right. It’s actually more like each partner is running their own autonomous mini-YC of about 30-ish companies. We call them pods. I had my whole pod over to my house for dinner last night. That pod is approximately the same size as YC was when Garry went through it. [00:00:00] S3: We basically run seven or eight simultaneous “2008 batches with PG” and we have 15 PGs now. [00:00:00] S1: With that kind of structure, there’s no inherent change that has to happen if you go from 15 to 30, because it’s already fully parallelized.
· Jared Friedman, Jack Altman, Garry Tan
[00:00:00] S1: With that kind of structure, there’s no inherent change that has to happen if you go from 15 to 30, because it’s already fully parallelized. [00:00:00] S0: One of the ways I’ve perceived YC change over the last several years was that there was a period — I guess when my brother was there — where there were a bunch of new projects. I felt like you guys clearly went back to the core and did more of it. I could feel that very clearly, that “this is our thing, we’re going to refocus on that, and we’re going to make it more and bigger.” I think that’s been super successful. You’ve clearly throughput more companies. The companies are awesome. I’m saying that as a biased person who invests in a lot of them, but it feels that way to me. Are there initiatives outside of that core that you’re interested in with this new market moment, or are you going to just do more and more of this distilled core? Or does it depend on the day? [00:00:00] S1: First of all, I think that’s a good overall description of how YC has changed, especially since Garry came back: refocusing on the core. That’s been the high-level for 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. [00:00:00] S3: I know. There are so many, and they’re all in the works. [00:00:00] S0: Just talk about them all. Come on.
· Jack Altman, Harj Taggar
[00:00:00] S0: Just talk about them all. Come on. [00:00:00] S2: It’s not like we have new initiatives that don’t feel core. I still think it all falls under the umbrella of the core thing. How do you create more great startups? Keep pushing down on that. As Jared mentioned, Fellows is just an example of something we just launched last year. What’s another bottleneck? More founders. We want to meet founders earlier, college students before they’re ready to do startups. So we started offering grants and community to exceptional college students who we feel aren’t ready to start a startup right now, but they might be in a year or two. [00:00:00] S0: That’s a good example of widening the base even further. Because you could almost narrow the top and say, “we’re going to put a bunch of money into growth.” Obviously you did that. But the other way to go is you could widen the base and say, “we’re going to try to have some engagement with 10,000 founders.”
· Jack Altman, Jared Friedman
[00:00:00] S0: That’s a good example of widening the base even further. Because you could almost narrow the top and say, “we’re going to put a bunch of money into growth.” Obviously you did that. But the other way to go is you could widen the base and say, “we’re going to try to have some engagement with 10,000 founders.” [00:00:00] S1: That’s basically what we think about a lot. The amount of follow-on capital is not really the bottleneck right now. The bottleneck for us is really getting more great founders to want to do startups and to do YC. That’s what the bottleneck should be. If the bottleneck is anything else, something is weird about the world. That’s what the bottleneck always should be. For a long time, YC was struggling so much to just scale the operational side. We were like a post-product-market-fit company that couldn’t keep up with demand. So instead of focusing on growth, how do we get… We were like YouTube when it was scaling 2x every month. Everyone was just trying to figure out how to keep the site up. That was certainly the first few years of me at YC. We were just trying to figure out how to not fall over. But now that we’ve really got the operations down, we can go back to focusing on what we should be focusing on. 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?