Transcription
If you can get Keith Ra boy to invest in your startup, you should do a fat startup. Exactly. You know, and a few other of our friends obviously like if Elad will do it, like if a lot, you know, there we 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.
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 um I'm really excited to have this conversation. Um you're now, I think, two years into running YC. Is that that that's about right? and you've really been running it like a founder uh from my perspective and I kind of want to start by getting inside your own mentality and what's the headsp space that's let you 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 um has required the confidence of a founder and you've acted like that. So can you talk a little bit about what headsp space you came into when you started running YC?
Definitely. I mean the great thing about YC is that um we need to go zerobased accounting. So literally uh if we were you know starting YC from scratch again all the things that we would add you know we would add in that moment like we're keeping those things. Um, and that's like a very freeing thing to actually 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 cart blanch, 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 zerobased accounting for YC, like what is what is 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, I guess from an abstract standpoint, um, because there are lots of specifics that I want to get into, but um, from the most abstract standpoint, like I view YC as this like tree of prosperity. And then, um, you know, like it or not, every organization in the world, uh, no matter how dominant, could use, uh, a little bit of pruning. Like this is a garden. And uh in order for you know if you have fruit trees in your backyard you know that uh in order to actually have a good bloom you know sort of a good crop 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. Um and so and all of that is basically really really hard. It's really hard to say no to things and to people and um I you know I think basically 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 you ran I mean you created a you know one of the defining SAS companies in uh HR software so you know you probably like toally immersed yourself in that and like spent a lot of time trying to help people figure this out. Totally. How do you what is culture and how do you actually implement that into strategy and you know how do you walk like sort of without without a net you're like I I'm just going to do this thing and you know 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 has been around for 20 years and you know when Paul and Jessica and you know the 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 as YC and then looking back through like the 2010s there was all this like expansionary stuff that happened totally 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 in this moment then kind of like you're saying of reentering 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 uh that's life, right? Like you try a bunch of stuff, some things work, sometimes sometimes things go kind of ary. Um I will really you know it's actually not a surprise to me at all that like subsequent to uh me coming back and seeing you know what Brian told me which is you know zerobased accounting like he came to our board meetings with uh 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, then you surround yourself with some of the smartest people uh 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 Brian's experience was that uh he you know not everyone gets that moment like co was that moment for him to sort of reclaim and sort of reset the culture of Airbnb and um I think we were just sort of coming right off of that and so he immediately uh sort of infused that into me and YC. So we're deeply thankful for that.
Yeah. Yeah. But, you know, I mean, never say never. And, um, I guess the weirdest thing that I hope for YC is that if we do it right, um, we can sort of regrow the the tree of prosperity in a way that like it doesn't have to be pruned quite so much, right? Like 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 there they're like entire branches that are grown in a a way that you know might not be ideal might not fruit right.
Yeah. I mean one of the other amazing things though as I'm looking back it's you know the early batches of YC were eight companies 12 companies 15 companies twice a year. Now you have what you know 150 or so four times a year. So you know the companies and they're still amazing. So you know like clearly the whole market has not been captured. So maybe that brings me to another um question of mine is as you think about growing YC do you think about um do you think about capturing more of sort of the market making and maybe that's the wrong sort of language but making YC a product that even more founders want to have like is that one of the drivers as you think about what's next?
Oh, definitely. I mean, um I think both, right? Like there's sort of the zero sum and there's also the abundance mindset, right? And uh the fun thing about it is like actually both are at play, right? There is a zero sum aspect of this and that um 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. Um and you know I think that YC actually makes sense for those people and you know we're going to get some of them and you know on that side we're you know competing with some of the top VC names in the world and 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 which would be great.
Yeah. I mean um 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 uh you know we're going to do that but also like you know we want to create uh prosperity where you know in the past there wasn't and that's like sort of classically that's what PG did. He said very technical founders like this is sort of the um mispriced asset like you know lot there are lots of things that are mispriced but uh highly technical young founders are sort of the most mispriced right um when you think like that in terms of maybe founder archetypes or parts of the market that you're like okay we know YC YC has always been for this young founder it's always been for outsider founders breaking in there have been like a 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 you know your sort of footprint with like do you think in those terms or do you just think about better product growing brand will do better or do you think okay 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 what's inside the mind you think about expanding the aperture of who I see appeals to
man I mean I think it's a hard question I mean the the hardest question is like what do you focus on and if you focus on all of them like are you you know really uh focusing on any of them actually um I think it's pretty clear that we're really focused on technical founders but um one of the things we I 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 and it's like some of it is like yes it's like for them but it's also for people who went to Cornell went to UI you see went to like you know I don't know you the weirdest thing I mean in the political landscape today is realizing and you know you can open up your ex feed and see it every single day like there are people who are absolutely brilliant 150 IQ great engineers who get rejected from totally 15 schools straight right and you know that's not fair I actually spent time talking to the guy who went uh viral with that tweet oh yeah uh today and I got to hang out with him last week and just like this brilliant I 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 cuz you come in you just like get like you know shot out of a rocket into you know Silicon Valley culture. So it's definitely good for that.
Yeah. But I think I mean universities have this problem and uh universities themselves sort of treat it in a similar way. I mean maybe that's what has been broken, right? like historic like I got to go to Stanford and Stanford was an awesome place to go but you know I maybe 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 Londale and Stephan Cohen and like brought me in touch with Peter Teal, right? And it's like, okay, there is something to be said for uh having places that have both diversity and merit in one place, right? Like, and that's, you know, we're society is having the worst debate ever about this right now. Somehow it's like pick one or the other. And um I don't know. I the ideal is like, you know, you have both in the same place. And so that's embedded in your question. It's like where you know where should YC go? It's like we want to go where 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. 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 be get 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 out. The world needs shelling points for um for builders for talented people and then their capital exists, their customers exist, their like knowledge and support and you know the best friends of your life you know can come together. I just had um Allah 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 it's like you know for me a bunch of my founder friends are YC founders and it's like not random um that that's kind of how you end up going through it and so some of it's just bringing those networks together
this maybe I actually want to come back to the politics a bit cuz I'm super interested on that. But one last point here that I wanted to get to was um somebody recently made the point that um YC's um 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 catch them all. Can't catch them all. compared to a like a regular compared to even like a 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. And I was wondering um do you think that that is something to do with um 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? Like do you have any explanation in your mind for why the pick rate seems as good as it is?
I I think it's not more complicated than game recognized game, right? I think that um if we have partners here who are great builders themselves, uh you just end up getting way more reps than anyone else, right? Like think about being 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, 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, you know, rather than seek the trappings of this or like play the, you know, ego status money game. It's like go create things of great value and then that that's really just all what I want YC to be. It's like someone's going to who has built stuff will sit down with you and you'll have like personal one-on-one experience with them and they're not going to say like necessarily things that you want. like they're not gonna like validate your bad decisions. They're gonna say like this is what I think you should do, but it's like a soft advisor thing, right?
Uh what is the nature of that relation that when you think about the YC partner, YC founder relationship? Um and I think back on mine, I was very lucky. I had Dalton Caldwell and Aaron Harris. Both were great. And um 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 e 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 what what are the words you use when you think about you know talking to your team about how everyone should show up?
I mean we should sort of be like benevolent like bodhic sappas in a way. It's like okay here you're on this path and like the hard part is like you know bodhic safa is probably overstating it cuz 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. Um whereas you know and I think that makes a really big difference like you know uh losing your co-founder over dumb arguments uh you know picking the wrong investor like messing things up in terms of your first hires like uh having you know picking too many different things to focus on and not focusing on any one like there's like a billion ways to die. Yeah. And if you know as investors the best thing we can do is say like oh yeah we saw like 50 people die that way. In fact you want to talk to one of them.
Y um that's one of the things I loved is I feel like YC just 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 run out of money. It was like very simple but it was constant. Yeah. And it's hard to do because uh you know what what happens is um it's like that meme. You no one who's ever tried to do it has you know made it. but it might work for us. It's like that that whole meme is basically the uh the thing that first-time founders in particular really get hung up on. Right.
Well, it's hard cuz they're there. So, maybe I'll channel 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 um 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 that 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 what is the way that that you know common back and forth gets navigated? Would you say?
I mean, some of it is like it's not our we're not the boss. And so, uh, you know, there's this famous quote even from PG, uh, I think he was, uh, advising, uh, Jason Tan from CIF Science. Um, it's in that book by Randall St about YC as one of the batches I worked and he said, you know what, you 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. Wow. uh 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 that's that's what the soft advisor thing means. I think um and at least my experience working with a great many companies like if I come in and just say like do this do that like that was the whole reason why I started a company to not have people come and order me around and tell me you know what to do. So uh you know I don't think founders who are truly great even respond to that. So, I don't know. I guess that's how I square the circle. It's like the people who just come in. I mean, we would see this all the time. Like I remember even during my YC batch in 2008, uh 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. Uh and then if you talk to any alum all you know 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 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 going to 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 did you need to have the conversation like probably not what's really valuable is to have people around who have seen enough and are intuitive enough about like ideas and technology and teams that they can give you even spiky advice advice, right? Sometimes like 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 YC there was also a meta narrative was don't take anybody's advice like Cart Blanch, including ours, and I'd rather get that. And then a lot of advice that contained extremes rather than just a bunch of nothing.
Yeah. Um, another one that I'm curious is the sort of lean startup versus fat startup sort of dichotomy. I I don't know if this is exactly a fair characterization especially as YC has gone into more hard tech companies but there there you know there there would 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 why I see and then over on the far end of the spectrum you have the fat startup where it's like you plan the whole movie you hire out the whole team and you like comp you you push something into the world totally um how do you think about that dich economy. Is that an accurate representation? Do you disagree? Do you think it is based on some startups should be one, some startups should be?
I mean, if you can get Keith Ra boy to invest in your startup, you should do a fat startup. Exactly. You know, and a few other of our friends obviously like if Elad will do it like if a lot, you know, there we 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. Um because they're, you know, I mean, I think that's like network and investor dependent, right? Like if you have access directly to Venode Yeah. Yeah. you should do a fat startup. Like if if he wants you to do one, like you've been blessed, right? And then for the great many, you know, millions or billions of the rest of us on the planet, like not totally clear. Like 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.
I love that. Um, a couple more cuz I've got a couple more on founders and startups. These are good questions. Um cuz you probably at the moment you know we're if you you go in and out but you you right you know the last couple 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 the couple things where you know you have most frequently recently been like that is you know a source of greatness for a founder. What are the things on your mind right now that you think create those archetypes? If you had to boil it down to a couple,
I mean, the founders that I've been able I've I've been lucky to run across, especially the last couple years, um, they can just sit down with people who have a particular need and it's like they're just like yanking out like the requirements right out of the customers. And then the interesting thing about like being able to do that in the first few meetings is that uh 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 their c with real customers like you know basically that yanking turns into like they're pushing like and that's product market fit. So uh 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 counterintuitive in that I think a lot of people think of founders as like forceful, but like this is actually a very like sort of opposite of forceful perceptive. It's like how a great seller is like the best listener of all time. It's like that kind of Yeah. 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." 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? Cuz I think this is one of the things that I think a lot of people struggle with. I certainly struggle with it is it's hard to see it like cuz you're you know you're see you're trying to call that about a founder before you've seen them do it. Yeah. So how do you do that?
I mean sometimes you just hear their other stories and you know spiky people are just spiky in all sorts of weird ways. Um like Serena uh Gay from um data curve is like one of my favorite recent founders from the last year. Uh you know they dropped out of water at I think age 19 or 20 and then she had already built like one of the number one uh 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 an, you know, sort of a m like they're an inch wide and like a mile deep on very specific things." Like unusual people do unusual stuff starting early. Yeah. Yeah. I like uh that's one of the YC app questions, isn't it? Like something that you've that's like a core question I feel like around this. Well, the big one is um you know, what are some uh human non like some hacks? What are you know there's there's sort of this strain of like are people a little bit naughty? Yeah. Yeah. which is interesting. Yes. And it's kind of related, I think, maybe, but a little different. What else if that's 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?
I mean, the world is like really really full of systems. So, you know, it it might just be like the same side of like that other coin. Like basically if you're very very much a systems thinker and you think you know basically all the world is like 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 there 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 you know I'm cheating by saying the same thing but like I I feel like that's really really important like you know can you sit down with a person from any walk of life and then understand what are their motivations how do they get promoted like you know what's their ideology like there's just sort of this 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 fund raise 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 like see genuine like you know a genuine interaction that'll be valuable to everybody or something. Yeah. I mean basically if you're going to uh program the world you sort of have to you know reverse engineer the world first. Yes. Yeah. That's well said.
Um, the recent sort of like AI boom has led to I think you know 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 for them and their experience? And so like you know a couple 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 are 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. or so anytime there's like a good idea there's like 19 people going after the same good idea there's new considerations around margin like I think like most of building 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
I guess the wild thing is um people seem to really need a good claim like there's a a great uh medical billing Uh I mean there are many uh really great medical billing companies. There's one recently that I met who they now make the claim that um if you are running one of these like 10 or 15 person clinics it might be in you know all kinds of places dermatology or wherever I mean it doesn't even have to be human it could be a veterinary um you just with their their software you can uh have one back office person like so you can have mainly clinicians and like one back office person per clinic and so I mean the the type of claims that you can make and make good on with large language models today is kind of astonishing. Yeah. And uh that that I don't think was true. I mean I think um and people believe you which is what's crazy. You show them the demo. It's like and then you have five other customers who are already doing it. So uh I think that we're going to see you know 10,000 flowers bloom in vertical AI software. Um and then I guess we'll see like the difficulty will be you know will there be rollups 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 100 you know as the models get smarter and smarter
what's going to happen do you think it will change any 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 do you is there any reason why you think it might be different in this cycle or do you think that's the natural destination here.
I mean 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 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 very very accessible right now. Um, and so all the rules that we already came up with to govern day-to-day life already apply. Um, and so that you know, and then on the business side, the moes are all the same, right? Like switching cost, data that like, you know, you have access to that nobody else has. Uh, brand network effects. I mean, there's just what, like five, there's not that many. So,
If we're in this moment where like 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 blit scale mode right now? Like is that is that a natural conclusion from the setup?
I think those are that basically every founder uh has to make up their mind for themselves right now. Um I 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 hundred million dollars ARR or and sustain it with less than 20 people. Yep. Linear is like a good example of that type of company I guess. Totally. Yeah. I mean that that's brand and I mean I mean that that might be brand actually. I mean you're like in theory there could be network effects. I mean um yeah certainly some within a company, right? Yeah. Um, 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 do you hire a giant team of people or do you just automate um 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.
Do you think that um 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 because AI and blah blah blah and then 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.
Um, well I think it's going to be a race. Um basically like you the people who are blit scaling will have the benefit of lots of you know some of it is like at that point it has to be blit scaling 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 uh hiring at 50 people 100 people 200 people 500 people a thousand people. Parker Conrad is almost certainly with Matt McInness and like he has like the all-star team and he's able to, you know, sort of aqua hire 150 IQP people into him and then integrate it and go from like zero to 10 million ARR for like all these other line 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 Sorry, there's so many things here. The the compound startup is another one where I'm seeing more frequently. I'm hearing the advice or even founders just wanting to organically say software is 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, you know, I got in 2016. I think it's the barrels versus bullets thing, something like that. Yeah.
So, well, you need barrels. like that person can do it if they can show that they can consistently hire and build that. I mean, yeah, you could say that uh the ramp guys did it did a great job, right? 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 and kind of go 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 a hundred and have Keith on your board, do it, man. Do it. Why wouldn't you? Like, but otherwise, here's here's a way to do it the other way. Yeah. Yeah. Um, so, yeah. I mean I think at basically that rather than have dogma the better thing for any smart founder who's a system thinker is I mean a systems thinker coming in here is not going to watch you and me on a podcast being like oh they said this a true systems think yeah
Okay outside of why outside of AI um 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 and 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 like 10% now this is the YC of hard and you're like we're the YC of hard so yeah talk to me about like hard and I 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 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 It's like if we can get really smart people no you know whether it's hardware or software to come do this thing like uh demo day we have more than a billion dollars I think it's going on $1.2 few billion dollars a year in like cap 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 two billion I want that billion number to be 2 and a half billion uh over the next 5 10 years like we're going to keep growing that and then in particular hard tech is such an interesting like sort of purple cow especially at demo day So um you know the average or sorry the median YC startup will end up raising you know a million to a million and a half bucks at demo day. But um you know 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, 10, like 20, you know, I it's like entirely possible to raise the amount of money you need to have a truly successful heart tech company uh just by coming to do YC for 3 months because in why it's because we have this captive set of you know more than a billion dollars a year just focused on YC companies and the heart tech stuff is very compelling and we're you know we're seeing real success like solen early uh Astronis they're boom There are so many examples.
When you think about the hard tech segment, do you think of it as 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 a slightly different set of advice or slight different mindset with, you know, a satellite company versus with a AI for law company.
Well, the great thing is uh all you know every single partner at YC uh does do hard tech and um we're starting to do more specialized programming around it. I mean um Andy Lapsa from Stoke Space came back and did a hard tech uh 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 um you know 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 you know really good builders and um you know 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 8 years into your career, like, you know, the last time you wrote real code or like designed a real mechanical thing might be 8 years ago. And you know, what is that partner really going to do? You know, the the YC is not too different in that respect. But what YC does have is uh just this you know failance 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 I so needed help fundraising like you know James Lindenbomb from Heroku came and helped me and like you know Sino de Berseract our seed round and then about nine months later after we raised the seed uh he was running uh you know a Ruby on Rails hosting platform and they were worried about not being able to support like some of the biggest Rails sites on the web and I happen to run one of the biggest rail sites on the web. So he said, "Gary, can you give us your source code?" And I said, "For you?" Yes. That's like the kind of stuff that you would do for a fellow YC batchmate that like there's just no way you would do it for anyone else. Totally. Yeah. The the trust in there is just so valuable.
Yeah. Um, there uh maybe in our in our last little segment, I want to talk about sort of your involvement in um politics and local government and the community outside YC. There's 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. Um hopefully by the time this is posted it's either died down or it's gone hyperbolic in the other direction. But um a lot of that I think is a result of you taking on a lot of causes um that you know it's like ah I really want that solved but 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 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 DC 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 YC? Um, I guess what I realize is like, uh, because of my childhood, which was relatively difficult, I actually am just wired differently and, uh, I need like conflict in my life. I didn't really realize this until I actually need my 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, uh, being on edge in order to like feel normal. So, I, I did not realize this, but that's not the answer I thought you were going to say.
Oh my god. I don't know. I mean, I think, uh, I got, I started getting involved in it, um, mostly right after, right during COVID and after. Um, some of it was actually, there was this famous Clubhouse that maybe you were on with, uh, Mike Solana. And then we had Chesa Boudin who was DA at the time. Uh, and just hearing him lie through his teeth through Clubhouse, you know, and and maybe it was just like a, you know, COVID like just isolation plus like hearing someone who's supposed to be a civil servant, someone who is supposed to be protecting people in our in our society to come out and just lie to people like just very brazenly. Uh, I ended up meeting with Nancy Tong, who was a, uh, candidate who lost against him in the prior election. Went for a walk around in the Noe Valley. And then, I guess, uh, for me, like my systems thinking started going and trying to understand, well, you know, why is it like this? How did it get here? What's the story? There's no bench. There's no, you know, there's, um, you know, Gavin Newsom 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, you know, well, what do we do? Like, we have tech, we have tech money. Um, everyone's afraid to say anything. Like, do you remember what they would do to like, uh, you know, even the local press, like literally the Chronicle would, you know, borderline libel Ron Conway, who's a close friend of ours, and it's like unbelievable that they would do that. And so, um, you know, Nancy came to me and said, "You know what? Here's here's how it works." And then after that, you know, she got me involved in some people who were putting together the recall of Chesa Boudin.
This 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 self-righteous while sort of like, you know, annihilating 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? I mean, I hate to say it, but like the 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, uh, local San Francisco and in the Bay Area. Um, you know, Voice of San Francisco with Susan Reynolds is like, you know, 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. You want your kids to like learn regular stuff in school? I want them to learn algebra in middle school and I don't have to have, you know, private school for them to get a good education. Like these are like very anywhere in the country you could say that. And it's, you know what, like we just got upside down for a while. It's very upside down.
So, do you feel like we're now through that? Do you think there's still is there still a lot more work to do at the San Francisco level 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 has, you know, I think I feel really good about London Breed. I feel really good about the current, uh, Board of Supervisors. Um, and the interesting thing is even the unions that the, you know, public sector unions that supported this sort of, um, what they enforced was like perfect uniformity of, uh, ideology as a purity test because then they knew then they felt safe. They knew that like if someone said these things that were really out of whack with the public, uh, they knew that they would not be defunded for their interests would not be. It all comes back to money and power, right? That's that's sort of the classic system, right? And so I think it's changing. Uh, even the unions themselves are sort of realizing like, oh yeah, we're not going to push, uh, watering down the curriculums in schools quite as hard in SFUSD anymore. Um, and I think all, you know, nature's healing. I mean, my hope is that San Francisco in the next 10 years, you know, uh, 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, uh, a very reasonable thing to, you know, want, you know, San Francisco's beautiful town. It could be like a model for the Democrats like reclaiming like a a good moderate left position. Yeah. And it it seems like sometimes, uh, intractable, especially at this moment, but on the other hand, like like in startups and in politics, uh, we way overestimate what we can do in one year and we way underestimate what we can do in 10. So I 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, uh, both our city and our state, then we got the country, man. Yep.
So, um, I guess are there any other fights right now that are, you know, you talked about your limbic system. Like what what are the fights you care about the 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 as like the thing that you'd 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. Um, there's a a guy named David Crane, Governor for California, who, uh, I'm learning a lot about Sacramento, um, from him. And I think that we could potentially turn California. Like I think that, um, there's a big opportunity for someone at the governor level and at the AG level in the next, you know, five to 10 years. Turn it the way San Francisco is going. I think we can have, we can demand because there's stuff in LA and there's like a lot of other stuff still working. I think Rick Caruso coming out of LA could be a really, really great leader either for LA or, you know, in Sacramento. Um, I think, you know, Matt Mahan out of San Jose, incredible. Uh, Brooke, our own very own Brooke Jenkins is a district attorney now and I think that she would 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 Tinho, the DA out in Sacramento, or Rick Caruso, or any of these people make it all the way up there, uh, I think that we're looking at a resurgence and abundance in the Democratic party. Um, and so it is possible. Yeah.
And then I guess last is national, but I guess that's probably as a big fish. That's the final boss. Yeah, the final boss. Maybe that comes over time. Ask me in 20, 30 years. Yeah, that's awesome. Well, Carrie, thanks a ton for doing this. This was really fun. I enjoyed this as always, so I appreciate making time. We'll do it again. Great. Thanks, man.