A Conversation with Sam Altman | Hacker News Reader

A Conversation with Sam Altman

techcrunch.com

74 pointssethbannon30 comments

There doesn't seem to be much gain in comparing yourself to someone else. Invent a new way of doing things and focus on being the best at it.

Maybe YC is just doing it 10x or 100x better, and everyone else is doing it wrong and doesn't know why. This is not really that unusual of a pattern in other areas.. think about how Google compared to every other search engine back in the day, or how iPhone compared to every other phone when it was introduced.

YC seems to focus on things that just make good sense, and keeping it simple: make things people love, (really) help each other, be determined, keep burn rate very low, solve one problem at a time, and keep quality high in order to increase the value of the network. The fact that YC is surprisingly successful seems to be a natural outcome of basic principles.

It might be even simpler than that. Be excellent to each other. Looking at their terms on their websites, most accelerators fail at even that.

If Sam and Paul are honest part of the magic of YC is their because they did the first "successful" accelerator they have a positive feedback loop. Sort of like how Harvard attracts the best because its the best. The best founders want the YC brand and so apply. YC gets the best applications compared to other lower tier accelerators.

They are the incumbent now, others would have to innovate hugely to surpass YC.

Are you saying they could just cancel office hours, and all their events, and just coast from here on out? Cranking out successful companies on inertia alone?

I don't think he's saying that.

He's just observing that if after the initial successes YC had coasted and another not-YC accelerator had coasted, YC would still continue to be more successful as a result of the brand & network effect.

If he'd actually read the article he'd know that Sam directly admits they have a positive feedback loop

> A lot of the best entrepreneurs in the world want to join YC.

There's a ton of evidence (for example, many founder testimonials) that YC has a great deal of authentic value add. So his comment comes across as uninformed sour grapes to me and I stand by my question.

I, personally, would love to hear more about the hundreds of lower tier accelerators, and insight as to why they're doing so terribly. In many of the cases I've seen, the people running the accelerators just lay 100% of the blame on the entrepreneurs.

It's really sad, tens of thousands of founders wasting years of their career on the low-tier net-value-negative accelerators.

How bad could they be? Far worse than you'd imagine, as I've personally seen.

What problems did you see, and in retrospect, were there any warning signs?

Perhaps the accelerator model just isn't naturally very valuable to startups, and YC are just a statistical abberation?

It just seems more likely that one company has made an aberrant success out of a bad market than almost every other company has fumbled a good market.

I haven't been through an accelerator, happy to be shown where I'm wrong.

You're right that accelerators are bound to fail, you're wrong to call YC an accelerator. That's what distinguishes YC, it's not an accelerator it's a company that funds lots of startups at once. Accelerator implies that you're going to artificially speed up growth, presumably in order to get the company an outside investment. YC doesn't accelerate growth and Sam in particular boasts (in a good way) about being a patient investor.

Also, don't underestimate HackerNews. How many other "accelerators" have a content hub that engages their customer base daily. You can't underestimate what that does for their brand.

A YC founder once told me: "YC doesn't make a company and definitely won't fix a company... they invest in companies that are already working. That's their secret."

Granted, these companies aren't soaring into the stratosphere yet. "Already working" can simply mean a few early customers, a functional and polished prototype, or even just a really good idea and a (very) proven team. The point is that YC, like any investor, tries to minimize risk as much as possible, even though they're in the riskiest layer of professional startup investing.

I used to agonize over the fact that I never worked at a big name-brand company and that I haven't been able to hobnob with apex talent who might co-found a startup with me as I figured that was the only way to get into YC or TS. This one bit of advice (i.e. traction is everything) washed away that anxiety like night and day. The ability to succeed is in the founders' hands, not YC's magic wand.

Doubly so... because do you really want to take investment (even from YC) in an idea that doesn't have traction and isn't working?

when you read about other accelerators , you realize that they are more region specific. For ex there are tons in the philly - pittsburgh area that continuously talk about being the best in that particular region as opposed to a massive global force. I've realized by inference that they prioritize their community goals (create more jobs , attract smart people) over founder priorities as Sam mentions here. I think what differentiates YC is that they understand that the community goals are a by-product of supporting great founder driven missionary companies and not vice-versa.

The Pittsburgh area accelerators also require that the company stays headquartered in Pittsburgh. I love my hometown, but it's not exactly the best place to grow a company, especially a startup (in general, I think in some verticals there may be a fair amount of potential). The governor talks about bringing in more venture capital to the area, but that's not really something you can legislate. There's a low cost of living and really smart people out here, but one of the biggest hurdles (IMHO) that no one is mentioning is that it's difficult to access capital to get going, and the small size of the business community here and lack of affordable transportation to other areas make it a bit daunting to start. Better to move out to SF and start something while couchsurfing--there's a higher ceiling elsewhere with their accelerator communities.

i agree that there is a small business community but i've noticed that most of the companies that are successful in that region are sold to bigger companies. I'm not sure what stops them from going all the way and achieve world domination. They have excellent ingredients for success (lower costs , incredibly driven smart people)but is it a lack of vision or lack of good advice as talked here?

Agreed--if the exit strategy for a startup is to simply be bought up by another company, well then come on down!! :-)

I think that's actually a very interesting question. It's certainly possible that the accelerators here encourage exits instead of world domination, because it's 'safer' to exit if you have the opportunity (i.e. why soldier on for an IPO when you can be acquired, the accelerator makes its money back, you make some money, and everyone in the region can say 'oh well startup x was sold, look at the success!'). Continuing on represents risk...the company may not IPO, or may not continue to grow at a rate that supports the valuation, etc.

I've not gone through an accelerator here in Pittsburgh (or anywhere else for that matter), but I would strongly suspect a large part of it is the cultural mindset here--an exit is a win, because compared to their peers, that's enough, just like how our high school football teams view winning the local championship as more important than winning states. Not saying that an exit isn't a win (it certainly is), but you don't see anyone around here swinging for the fences and taking that continued risk. My $.02.

Not been in an accelerator either. Although I did spend some time in Pittsburgh. If i were to start something they would not be on top of my list(the weather is palatable for a few)and most of the imp people there are very old for me to relate to , Or even to start a meaningful conversation with. I feel obligated to be respectful over honest because of my culture bias. I met this individual who taught an innovation in practice course and didn't know what " acqui-hiring" was. As someone who visited the country to study and learn how to innovate it was a slight shock

For several years I've had a pet theory about "what made YC different". In MBA speak, you'ld stuff it in the company culture box, but I think it's more like the industry culture upon which YC adopted to frame its B2B relationships grafted onto the startup work ethic.

Before ViaWeb, PG wrote books [he wrote one afterwards too], and to me, YC has always been loosely modelled on how I imagine good book publishers work: experienced editors helping promising authors write interesting works on one side and a sausage factory facilitating printing and distribution on the other. Instead of books, YC publishes companies, but the structure of the founder-partner relationship seems grounded in the founder being the expert in their company and an acknowledgement of fallibility on the part of YC staff...there seems to be a belief in treating companies as a creative works [-1].

My impression from both distant and near contact is other accelerators [0] are missing that layer of abstraction [1]. There are many that get the startup industry mechanics, but few that seem to go through the really hard and non-obvious work of creating better policies. Part of the reason that I think YC was able to create a place with generative policies is that it started when its first partners felt ready. It could because it was early if not first. Other accelerators have been reactive...they raced to get into a fast moving industry and consequently tend to use the policies traditionally associated with the mechanism [2] at best and with small business in the middle case and flat out scams at worst.

If there's one last piece of the puzzle, it's that YC's early partners have tended to eschew celebrity to a reasonable degree...if not giving TED talks every year when you could is some measure of reasonableness. It might be called the "Robert Morris effect."

[-1]: PG's before YC was Hackers and Painters. In my mind not uncoincidentally.

[0]: Sorry, but that's the name of the industry you YC folks created

[1]: and some appear to miss the whole startup idea that taking a cut of each startup's funding as a fee reduces returns over the long run. Their policies are more akin to those of real-estate development where there can be underlying assets at liquidation or businesses where ROI comes from dividends and companies can be optimized around income tax as LLC's and S-corps.

[2]: The other day I wondered how Marc Andreesen would evaluate a company with a Netscapesque equity split among founders, these days.

It's too easy to diss the smaller, less effective accelerators, but they have many forces working against them to improve. They don't just attract lower quality applicants, but lower quality mentors, operators, etc. Most people that can make it to the big leagues leave Pittsburgh, making it harder to invest in the ecosystem there.

Those startups need to work their way up, and naturally many of them don't make it.

have they done terribly? is Techstars or 500 startups doing terribly?

I am actually curious. There are a lot of companies that do not reach Uber or AirBnB stardom levels, but nevertheless generate profitable exits, while offering useful services. I would love to see some comparisons between YC returns on capital vs Techstars or 500 startups

I think they are now so famous among potential founders, that their first-draw advantage is the main deciding factor. For some accelerator to take over two things have to happen: a) They start not picking huge potential winners. b) Somebody else picks up those they failed to recognize as huge potential winners.

It should really take only 1 (Google-size) instance of this happening to totally shift momentum to "Somebody".

Do these sorts of articles just scream worshipping false idols, and I say that as a skeptic of religion who keeps seeing human groups behave in dumb ways warned against in ancient times? Seriously. Find your own way? Stop worshipping YC or we all stagnate?

I collected many of Sam's interviews here: http://newslines.org/sam-altman/

What's kind of frustrating is lack of data in the VC space. YC is not purely for profit, from the point of view that at least some of it is actually designed to genuinely help founders. But, from the point of view of return on capital, is it actually twice as good as 500 startups or some other seed funds?

Sam says it right in the interview: the YC community is their #1 advantage/value.

It's also the reason Techstars is #2. Brad Feld has done an amazing job of community building.

Network effects take time.

Reply on news.ycombinator.com