Why YC went to DC
ycombinator.com
ycombinator.com
* Software R&D Amortization - taxes on make-believe profits
* Patent law - protect small businesses from patent trolls
* Automate government-driven compliance standards - enable small businesses to sell into large companies/government entities, automatic certification when using pre-approved cloud solutions.
* Healthcare insurance - employees of SMBs automatically get access to medicare
Notice the analysis of big companies and their tax bills. Author notes that Google only expensed software development expenses until the software met some qualification threshold. After that, it’s not research anymore.
What am I missing?
Specifically, check out example three in this section. I would be very careful about sweeping all my expenses in this category, but my familiarity with this part of the law is not deep.
I’d love a 174 practitioner to jump in here but that might be asking a lot.
https://www.law.cornell.edu/uscode/text/26/174
Section 174(c)(3)
``` (3) Software development
For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.
```
That being said... it's complicated: https://www.thomsonreuters.com/en-us/posts/tax-and-accountin...
We've heard a mix of advice from various tax professionals on what should be classified as R&D or not. The messaging gets expecially mixed since the R&D tax credit is often handled by a 3rd party that specializes in it. The company specializing in the tax credit may be incentivized to classify as much of your activity as R&D as they can, since they are usually paid a percentage of the total credits they are able to claim for your company.
It certainly complicates running a software company. My cofounder and I need to look at the amortization schedule before making any engineering hire as we basically need to consider their salary nearly 100% R&D. I imagine it's even more complicated for founders with overseas teams.
It would certainly be easier for us to do business if Section 174 was revised :)
See e.g. https://www.jamesoncpa.com/learning-center/irs-finally-issue...
Caveat, I've been out of the small lab SBIR world for 13-14 years
As to software “development,” when you finish your software and publish it and get customer installs, then what happens? More software development? Or is ongoing operation/bug fixes still R&D under (c)(3)? I think your average software person has a strong belief about the answer to this question but having read some of the code® in the area, I share your opinion that this section needs more detail.
I don't see how this will end well. I appreciate the reasoning behind it, but this is not a good solution.
I'd prefer to see more "startup friendly" compliance frameworks that don't require tens to hundreds of thousands of dollars and make both the startup and their customers satisfied with the outcome. Something like a SOC2-lite that isn't so onerous but still provides a decent snapshot of their current situation from a third party's perspective.
Most of these compliance just seem like barber licenses. A way for existing entities entrench themselves.
What happens when Vanta/Drata are compromised?
A mass-exploit of their customers?
Edit: Their software should really check and refuse to work if someone does that but obviously Vanta doesn't care. They can begin scanning and billing.
Thanks for the feedback. What we should probably do is take the credential, start scanning, and then nag them with a failing test about overly-permissive roles. Our own role is an easy check because we know what to expect, but there's other best practices here we can check for (and in some cases do, though not 100% comprehensively across all clouds.)
The people running these programs rarely understand the security space well enough to even tell you what a lot of the hits even mean, which ramps up disdain and division between the groups. This is arguably more detrimental to security as the scanners give execs/management a false sense of security while the noise makes it incredibly difficult to run a holistic security strategy.
ETA: like I told my kids, if we don't police each other, the LLMs will never learn. ;)
IMO, nothing. It's not redeemable at all. Since you asked though, here is some thoughts:
Be more like FDA process where software is extensively reviewed, rollback procedures established, and you launch specific version with compliance. So basically two releases, maybe 4 a year.
Disallowing risk mitigation because IMO, that's result of most of problems. Oh yea, we are doing "Terrible Security thing but since fixing is too expensive, here is a bunch of lies about how we have mitigated it."
There is also option to make a government audit with criminal liability for falsifying/misleading auditors. This third-party system where auditors are getting paid results in problems. I've seen plenty of audits where bosses write up auditor requests is extremely specific ways that creatively leave out thing that should never be approved. I've also seen auditors be made aware of problem, then people backtrack, and auditors accept it because "They are also our customer and we need repeat business."
Bootstrapping a tech company in a post Section 174 world doesn’t even seem feasible. I can’t believe this issue isn’t being taken more seriously.
Does it even impact these type of companies? 90% of the time at this stage you'll have very little income compared to expenses.
Why do you speculate that number? With $1M in revenue and $1.2k in profit, there must have been $998.8k in expenses. I assume "pay yourself" was part of the $998.8k. But I don't know the answer to the other part of your question: I don't know if the $90k in taxes are included in the $998.8k expenses.
I'm not convinced that this wasn't the intent of the change in the first place.
When combined with:
- Pressure to make use of office spaces again, away from remote work
- The AI bubble
- The layoffs that started before section 174 that demonstrated how headcounts had inflated
- The collapse of Silicon Valley Bank last year
... it is not looking good for software engineers in the US.
(Better for the US engineers, not for the Guatemalan, who is probably a competent engineer himself. But the topic is the outlook for US engineers).
Except you don't have $800k. You have $0k.
This puts you in the same company of abusing the system as Walmart, the nation's biggest welfare queen.
Employers should just have to give health benefits. You want workers, you pay benefits. Period. Maybe then you all will get on board for a single payer system. Its what you want, but only in fits and starts. quit fucking around already.
COBRA is a joke, as if most could afford multi-thousand dollar a month bill when unemployed.
What that communicates to me is that those in power, both of the gov and of businesses, are primarily concerned with forcing productivity to make line go up than they are with incentivizing treating people humanely. But really I don't think that's so surprising considering the timeline we find ourselves in.
To be fair I hadn't looked closely at what all my workplace plan covered, but I was doing physical therapy when I switched that wasn't covered (had to reach high deductible) on my workplace plan and was covered on my marketplace plan!
(I'm in Illinois)
Sometimes even more frequently than once per year if an acquisition takes place.
One of the big scary talking points when politicians start talking about changing our insurance system is that people like their current plans and doctors and are scared to change things.
I just think this is silly since my plan has changed roughly annually since I've been in the workforce due to a combination of employers shopping plans, employers changing ownership and moving to the new company's plans, and switching jobs.
An in-between step to single payer would be to let me pick a marketplace plan and then let my employer reimburse it directly, provider a voucher, or something like that. At least that way I have the freedom to switch jobs without entering a whole new health insurance world, and which health plan I pick is none of my employer's business.
This is something the market can solve. You can't lobby it into existence.
So startups tend to have real garbage insurance. As someone older with kids startups are getting more and more prohibitive because I need that Healthcare. Maybe startups should be a young man's game. Maybe not.
No. Anybody of any age should be able to take part in labor, otherwise you're arguing for ageism.
With “health” “insurance,” neither side has price sensitivity. Patients ask whether it’s covered and if so, back the truck up to get as much as possible. Physicians see enormous pots of money in tax-favored plans and seek to scoop out as much as they can. The inevitable result of such an awful system — that traces back to workarounds on executive pay limits imposed during the FDR administration — is unbounded price increases. Politicians scream about getting spending under control, and regulators impose rationing. This is a terrible system, but it’s a self-inflicted wound.
In the U.S., at least, we’re seeing cash-only practices become more common. Their fees are affordable because their customers pay out of pocket and because they don’t have to hire entire departments just to deal with “insurance” providers.
No one but the US considers Swiss healthcare to be affordable, and prices are certainly not being driven down. And as insurance is legally mandated, “even without insurance” is not something that can be properly evaluated here.
I am not sure where you got this info but it is very wrong.
Insurance for an optional thing makes sense: You don't _have_ to drive (okay, I'm in NYC), but you can, and you need insurance if you do. And mainly its to cover damage _you_ do to others.
For health insurance. Everyone in the world will need healthcare. Period. The only exception is if you're super healthy and then get your head suddenly cut off and are dead instantly. Other than this one case, you will need health care. The problem is that in america, breaking your arm, or getting alcohol poisoning may bankrupt you. And as any doctor will tell you: An ounce of prevention is worth 2 in cure. Let people get treated before things get bad, and they can stay productive members of society. As John Oliver said "the national anthem should be people holding out their medical bills and complaining in unison, because it is the only experience that ever single american has in common"
> the system crashed in late 2018 and was inoperable for about 10 months; another 10-month outage occurred in 2021. While the system was down, bonuses had to be filed through a complicated manual process, creating a backlog that states are still trying to fix. (2023 story) [1]
> Two adjutants general, top commanders in their respective states, described discovering their staff tracking enlistment bonuses on dry-erase boards or through email traffic and handwritten notes. [1]
Sorry, your bonus is goin around on somebody's handwritten note somewhere. Also, see if you can maybe do something about that VA medical data system. Heard they still hate it last reference.
[1] https://www.military.com/daily-news/2023/10/27/soldiers-unpa...
Perhaps better decouple healthcare insurance from employment status? (Perhaps remove the tax dodge where companies can buy health insurance cheaper than individuals can?)
> [...] history shows that once we assign power to governments, they're loathe to subsequently give that power back to the people. Policy is a ratchet and things tend to accrete over time. That means whatever power we assign governments today represents the floor of their power in the future - so we should be extremely cautious in assigning them power because I guarantee we will not be able to take it back.
Healthy relationships include negotiating when potential boundaries are in question, or if things change that require re-aligning boundaries.
It's reasonable to give more to the other party from time-to-time, and reasonable to discuss with the other party if it becomes a point where it feels unfair.
Instead we (Americans) take an unnecessarily adversarial stance against what our government could do, ensuring it is perpetually unprepared.
In reality, the vast majority of relationships aren’t actually healthy in this way. Most people get that only from their parent and family, if that. So parent’s advice is important.
The vast majority? I'd love to see data backing that claim up.
I don’t agree with the last comment, maybe I am a cynic.
Rather, I’d like to see what positive oversight would look like, but that has not been put forth by any of these organizations thus far. It all comes down to “trust us” which is also hard to stomach
[0]: most often but not exclusively held by Americans (of which i am one). We collectively fail to imagine government being a positive force and what that would look like.
I mean, the early phases of this era are a half-century old at this point, but it’s not like it’s a law of nature that at least half the population of the US and about half the politicians must regard government as rarely-useful. It didn’t used to be that way. It’s not an American trait in some holistic historical sense.
In the wake of the civil rights movement, lots of government civil service exams became presumptively illegal. The pay bands are also pretty trash.
If we wanted a competent government, we should have far fewer people paid a lot more and hired in a more aggressively merit-based process. Our current government is from an era without computerization where you needed lots of grunts to process things like SS claims, etc. That is simply not this era.
This.
IMHO, the military's regular reassignment also solves a lot of bureaucracy-at-scale problems (even if it creates different ones around competency and long-duration projects).
Preventing people from becoming entrenched in a single role/office is important to ensuring a healthy overall system and providing space for new ideas.
The smartest people I've met either have plum book positions, military officers, or work as prosecutors.
>it is also not terrible at hiring very competent/smart people through their commission system
I suspect you would get a very different perspective if you talked to enlisted servicemembers (or subordinate officers). I would argue the commissioning system is better than the previous aristocratic commissioning system, but still relatively poor at mating skills to positions.
I think churn is a couple of problems for a couple of different potential reasons:
1) constantly moving positions tends to leave the more complicated problems unsolved. For one, it's difficult to truly understand the dynamics of a complicated system in a short period. Secondly, if someone is concerned with promotion, attacking small problems tends to get you a win during your tenure, while it's unlikely you'll make much headway on a really difficult or complicated problem. Even worse is the commander who has all kinds of great ideas they want implemented even before they really understand the problem (ie the 'good idea fairy' dilemma)
2) military churn can bias toward giving people responsibility beyond their capability, simply because they need someone to fill that role. This is especially with younger organizations (and the military definitely biases young). Meaning you tend to people with a lot of power/responsibility before their frontal lobe is even fully developed.
Now I do think the military does a pretty good job at accountability, which can mitigate some of those factors. But if that's the case, we should be trying to optimize for "accountability" and not "churn".
The better military organizations seem to have "churn" in the uniformed services in charge but a steady cadre of professional civilian staff supporting them.
That's not to say there aren't other ills, but that's a pretty major one of large bureaucracies and causes serious effectiveness issues downstream.
On the whole, I think it's still a net positive. The drag of unmotivated, apathetic, and/or inflexible employees is incredibly high, and then there's the additional efficiency drag of the systems that must put in place to ensure they meet minimum performance (i.e. filling out make-work forms to track performance).
Better to simply create a system by which they're weeded out.
Which I guess dovetails with the military "up or out" process.
From a giant organization perspective, there's a lot to admire in militaries. They're the worst systems, except for all the other ways organizations as large as them could be organized...
I agree with this. It's really just another way to say there should be mechanisms to hold people accountable.
>Which I guess dovetails with the military "up or out" process.
I don't think the military does a great job of this. From what I could see, it only forces out the absolute absymal performers (e.g., those who can't pass a PFT or have multiple DUIs etc.) I would argue it takes far too long (often only implemented once they've been in a decade or more and haven't made SNCO). This does a disservice to both the organization (the person is still around for a decade) and also the service member (they have now dedicated over a decade to a career that is a dead end, and usually over halfway to retirement).
On the officer side, especially in certain specialties, it's very much musical chairs... with an ever-decreasing number of chairs.
(Which admittedly creates a lot of its own issues by setting up zero-sum, don't-help-your-competition scenarios and politics at the higher ranks)
I think it heavily depends on the branch and what is considered “competence”. I remember meeting Airmen who could cite all the stats about weapons systems because that was on their test, but the couldn’t shoot. And Marines where it was the opposite. It’s also generally possible to get promoted by just hanging out, keeping out of trouble, and having reasonable fitness tests
It has side-benefits particular to the military mostly related to how adaptable the organization is when lots of its members are being killed and disabled at a high rate.
I don’t think you’d find a lot of takers for a rotating-post offer in the broader public sector, without far higher wages. I think most of the folks willing to do that for low wages are already in the military or the foreign service.
https://openai.com/index/better-language-models/ See "Policy Implications" and down.
If I think of the last thirty years of policy in most of Europe and the US I'm thinking of a strong trend of deregulation and giving more powers to markets, removing international trade barriers and so on.
That seems to be a dynamic opposite to the one the quoted article is suggesting.
Regulations are kind of like security practices. When done well they are often taken for granted, but poor ones get a lot of negative attention. I'm glad that I don't have to wonder if the cereal I buy at a store is filled with rat poison. I'm fine if the government never relinquishes the power to oversee that.
Unfortunately the current leaders in the latest AI craze have not inspired much confidence that they will act responsibly in the future. Maybe if different people were running these companies it would make sense for the government to keep out of it, but in this world we're going to need some reasonable regulation.
That's been the PR spin, but it's not actually true. It's a smoke screen to help governments avoid actual accountability.
For example, the crash of 2008 was blamed on too much market and not enough regulation, but in fact it was the opposite: regulatory thumbs on the scale, for example the US government wanting to encourage home ownership and skewing the mortage market and the money supply and requiring lenders to accept more default risk, and governments implicitly giving a "too big to fail" guarantee to large financial institutions and then being extremely arbitrary in when that implicit guarantee was broken. A true free market would never have produced such a thing.
> removing international trade barriers and so on.
Globalization of trade has been going on for much longer than the last 30 years. If anything, the last 30 years have seen more of things like trade wars (for example between the US and China) and other disruptions to smooth international trade.
Are there economists who share your view on this? I don’t see how the issue of repackaging CDS and related products by a financial rating agency has anything to go with the government.
If you’re saying that the government forced buyers to abandon due diligence… I think we will have to disagree about the facts of the GFC
The financial rating agencies are creatures of government regulation.
> If you’re saying that the government forced buyers to abandon due diligence
I said no such thing. I said that government regulations forced lenders to accept more default risk--meaning they were forced to lend to people they would not otherwise have lent to because the risk of default was too high. That's what "subprime mortgages" means, and those were a huge contributor to the crash.
The ratings agencies are free to rate things as they wish - unless maybe you’re saying there’s a government directive to misrate things?
Also, please clarify how the government is compelling lenders to make loans that don’t pass the lender’s underwriting criteria… this is news to me
A source from the other side of this equation: https://www.cbsnews.com/news/heres-what-really-caused-housin...
In reality, there were a lot more sub-prime loans but only one of those lenders was actually expected to take on sub-prime loans. That's to say, taking on more sub-prime loans was a choice reflected in an ecosystem of incentives where profits were falling because a few lenders started a campaign to lower borrowing standards and the rest of the herd followed to stay afloat. What also happened was that lenders were essentially over weighting sub-prime loans into these packages and then using their relationships with the privately controlled ratings agencies to rate them the way that would be if they were filled with primes. If you read between the lines lenders found the solution to their profit problem and were trying to justify its stability post-hoc through package ratings. The reality is that sub-primes are highly profitable when they work out because they have high interest rates. When they don't they're not that expensive because generally the property is offloaded but this only works up to a magical threshold depending on a lot of risk variables. Once you go beyond that threshold and the dominos begin to fall, they all fall spectacularly. Risk traditionally should be leveled by packaging them with less risky loans.
It didn't. Instead it required the lenders, by law, to change their underwriting criteria so that loans which the lenders would previously have chosen not to make, because they were not within their underwriting criteria, were now within their underwriting criteria. It also passed laws forbidding lenders from refusing loans to people who met their underwriting criteria. This was all done on the theory that encouraging home ownership was a good thing and that lenders had been arbitrarily refusing loans to people and needed to be stopped from doing that.
Experience.
It is true that sometimes you learn something at time T2 that invalidates something you learned at time T1 (T2 > T1), and thus you do need a de-ratcheting system of some sort.
But what actually drives the ratchet is experience with current policy (or lack thereof). "Oh, we had no plans to deal with X, and we got screwed, so lets add policy for X".
The ratcheting aspect of policy reflects the ratcheting aspect of societal experience accumulation.
> First, let’s prioritize open source models and more tailored AI applications to shape the competitive landscape and create real opportunities for startups.
How does YC square this statement with the fact that their ex-president closed their models with the explicit intention of slowing down competitors [1]? Or is the argument "we want politicians to discourage people like us from doing what we did"?
[1] https://www.theverge.com/2023/3/15/23640180/openai-gpt-4-lau...
I cannot say whether YC changed their mind because I don't know what their mind is. Therefore I commented with the hope of an official answer.
They still have strong connections to OpenAI.
I’m likewise a little wary given some of the history, so maybe a little “wait and see” is in order, but this sounds like a really positive thing to be doing.
Why would they need to square anything there? There's nothing contradictory about a former exec not matching the current values of a company.
And more importantly, doing one thing while advocating a policy prohibit the exact thing isn't necessarily wrong. If the tax rate is 20%, and I advocate a 25% tax while not paying the extra 5% until the law is passed, I would say there isn't any contradiction in my actions.
The only way out of this long term, is to take money out of politics, repeal citizens united, revolving doors and other methods of lining politicians' pockets.
So you think it should be illegal to make documentaries critical of Hillary Clinton? Because that's what Citizens United was about, but most people who are against Citizens United don't seem to understand what the case was actually about.
Reconciliation: Companies aren't human entities.
Non-human entities aren't entitled to 1st amendment protections.
Campaign finance is equally simple: run your campaign on public funding. Give all candidates who meet a threshold equal amounts of money.
I have yet to hear a convincing argument about what benefit a democracy receives from campaigns having different amounts of funding. That feels like the tail wagging the dog (your supporters fund you, so you can spend that money to buy more supporters).
Even the small film maker or newspaper is usually going to be organized as an LLC, even if it is just a single person trying to submit their film to a festival or something. These should be subject to governmental regulation if they touch on political topics? I think this is significantly thornier than you're making it out to be.
> Campaign finance is equally simple: run your campaign on public funding. Give all candidates who meet a threshold equal amounts of money.
Right, where it gets tricky is with unaffiliated individuals and what counts as a campaign expense versus speech or normal business.
If you mandate that non-human entities have an 1st amendment right, you cannot have meaningful campaign finance limits.
Ergo, because it's worth having campaign finance limits, in the interest of allowing the best candidate / idea to win, I think it's worth threshing through stripping 1st amendment rights from non-human entities.
Regarding how one weighs what sort of speech would then be allowed and disallowed is a difficult problem, but the above needs to happen before it can even be started on.
Now, we have a frankensystem where reality (unlimited finance) and policy (limited finance) differ, which is never a healthy state.
Human individuals would still have a right to speak whatever they feel.
And arguably, I'd extend that onto platforms above a certain size that can verify human identity (ideally anonymized after verification).
IMHO, newspapers/printmakers/movies do need to be regulated.
They deserve rights, but those rights should look very different than individual 1st amendment right.
Which seems reasonable -- nobody would ever confuse Alphabet-the-company with me-the-individual-person in terms of capability and capital.
I guess that's where we disagree.
To me, democracy starts from elections with equality of opportunity.
Anything shy of that corrupts the very foundations, and we've been trending shyer for a long time.
Is it any surprise we get increasingly concentrated wealth (world wars aside) with a set of policies that allow spending unlimited money to buy votes?
The vast majority of speech that needs to remain protected for speech to remain meaningfully free happens through non-human entities. Removing that protection is an absolutely insane step.
What we have now is the worst of both worlds:
- Individual speech is censored at whim by non-government platforms that are unavoidable.
- While giant companies are empowered to speak anything they want (speaking as the company).
That doesn't seem ass-backwards?
We should be prioritizing individual speech / power, and disempowering corporate speech.
If limited liability is a concern... we can just create that for individuals.
I'm not convinced that Meta also needs the right to do whatever it wants, for the sake of aspiring indie filmmakers.
LLC et al. liability didn't just exist in a tablet given to humanity from god.
It was designed for a purpose, and we could design the same thing for people if we wanted, instead of granting legal corporations individuals' rights.
> laughs in lawyer
In other words, it seems impossible to run for president without breaking the law.
This is not okay. One of the issues here is that by making candidates break a law, you basically now have some kind of weird leverage over them. You can make threats to prosecute or fine further and thus have them by the proverbial balls. You also naturally push away people who would be wanting to follow the law, which I argue is sorely needed in Washington DC.
This opens the door to a lot of bad bad bad blackmail opportunities.
If no party and no candidate is able to stage a presidential campaign without being fined, ranging from Trump's chaotic, high energy campaigns to Clinton's 'proper' campaign with lots of decorum to Biden's bring-back-normal campaign, then I think something is seriously the matter with campaign finance laws.
Ideally, fines are a rare occurrence.
Sources:
1. https://www.cnn.com/2022/03/30/politics/clinton-dnc-steele-d...
2. https://www.politico.com/story/2013/01/obama-2008-campaign-f...
3. https://www.cnn.com/2010/POLITICS/07/17/biden.campaign.fine/... (Biden's 2010 campaign... 2020 campaigns seem to be under investigation)
3. Of course, everyone knows about Trump
> There are many reasons to be optimistic about AI
Without a modicum of awareness.
Paul G [0] and Sam Altman both have recognized the potential dangers.[1]
For one, it absolutely will stifle innovation if one or a few companies can control the market. Just look at what Google has done with their money printing monopoly money over the past decade.
Competition will be doubly important if modern AI can fullfill much of the current hype. That kind of power in the hands of a sophisticated used car salesman like Sam Altman will be bad in so many ways.
So, what this means: that in 2024, if you want to get VC capital, your startup must be related to AI.
I was looking for a job in the summer of 2018 and that's what all the ads were for. Ended up working for an ISP though, which was nice.
[0] https://www.ycombinator.com/companies?tags=Crypto%20%2F%20We...
[1] https://x.com/ycombinator/status/1517556338750074881?lang=en
AI will.
Yes, but...
I agree that every company becoming an "AI company" is not in the cards. However, I think there is going to be a slow ramp where every startup just throws a few annoying problems at a LLM instead of hiring ML people.
And kinda like the internet it's just a tool that you use when appropriate, but the things where it's appropriate will continue to expand.
But machine learning has been used for years behind the scenes in things like recommendations and clarification. And LLMs specifically, even in their current infancy, have shown immediate value in some cases (e.g. coding assistants) and obvious potential across a vast number of domains.
"Apple Computer CEO Steve Jobs, who got a sneak preview, said Kamen's creation was as big a deal as the PC, and that it would change the ways cities were designed. Renowned Silicon Valley venture capitalist John Doerr said it might be "bigger than the Internet" and invested millions in it."I mean, small LiPo vehicles did take over the world, it’s just that they’re flying cameras instead. They even have some that can carry humans, so the jury’s still out on this one being false I think.
Now most VCs are actually somewhat cautious about AI largely because they over-invested in companies at ridiculous high valuations and aren't seeing the ROI. Especially with many companies simply not seeing the promised benefits from deploying AI.
YC is actually the one that is out of touch with reality.
If anything, the enormous amount of social media attention on AI has made it easier to raise VC in other trending areas because all of the low-quality "me too" startups have gotten pulled into the fashionable AI orbit. This has significantly improved the signal-to-noise ratio in these non-AI areas because the legions of trend-jumping founders are all doing AI, the startups that remain tend to be founded by people with substantial investment and expertise in their domain without regard for fashion. This is good for VCs and for founders.
You are trying to say "adding IA to the pitch won't improve a founder's chances", but what you are saying is "granting money to founders that didn't add AI to their pitch improves a smart VC's chances".
2020 was remote work, 2021 was web3, now we have the big LLM boom.
Honestly it seems there’s a lot of advantages to “riding a wave” and a lot of advantages to being contrarian. But if raising money is your priority I do think you should ride the wave. Being contrarian sounds romantic, but don’t expect funding from people who disagree with you.
The most charitable thing I’d say about YCs AI focus is it’s hard to think of a startup idea that couldn’t benefit from AI in some way.
Let’s find those people and put their names into a non-permutable distributed blockchain database in the cloud with public access!
unfortunately Michael is no longer running things and it shows in the lack of long-term vision vs. hypecasting
Garry has had this rep for a long time-disappointing to see this changing of guard
AI though, will be very useful, at least a good one. Theoretically, AI can swim in a good ocean of company documentations and save time searching. They can help doctors diagnose a ct scan faster (if not already).
Basically starting with the technology and then finding problems.
The very opposite of what YC has been promoting all these years.
The collective man hours wasted on appe every year for what is essentially a lottery is insane.
It's not really a lottery, more like a messy matching algorithm for supply and demand. They give everyone a shot since they look at everything, but getting in is not evenly distributed :)
Rejection isn't hard either. If you're a founder, you'll be rejected by VCs all the time, and many early stage investors offer far lower amounts and far worse advice. You'll be rejected by your product - MVPs often have to be reworked and pivoted. And then you'll face some more rejection when doing sales and product interviews.
I think it's important to be transparent about the rate though, but also important to make it clear that the low rate doesn't mean they're trying to push people away.
My only complaint is that keeping everyone hanging on until May 29, ready to clear our plates in June, and then giving absolutely zero feedback for the rejection, was the sort of blatantly self-interested and founder-unfriendly move that, I suppose, it’s good to remember happens a lot in VC Land.
e.g. Entrepreneur First ( especially their EU and UK offering), Founders Factory, Haatch, Seqouia Surge, ...
AI Grant investment is probably going to give you way better access and actual tangible assistance:
There are others but these are the things that really stood out. We will go directly to investors too, hopefully someone in our network sees the potential and is willing to throw us some pre-seed to get it started.
I don't think the YC Standard Deal is bad, and I might try again next time, but there are things about the program that I think are not worth the time/money, and I'm not at all sure "access to their network" is any better than (even as good as) the same access from a different set of VCs.
My guess would be: 90% of applicants are foreigners, maybe a fair bit of spam.
The rest 10% are domestic, and of those that were chosen, there's a lot of Stanford alma mater.
I've seen this mindset among people promoting open positions at desirable companies that don't hire often. In most cases, applying is a waste of time because the company already made its decision to fill the position with an internal candidate.
I feel like open models do virtually nothing for transparency, collaboration, or innovation, and are only modifiable in that they can be fine-tuned. It's "open source" training processes and data that will lead to "transparency, collaboration, and innovation", and I'm unaware of any large company that does this.
Am I wrong?
Your "source" is not open nor is it transparent if training code, original dataset, model architecture details, and training methodology are not all there.
The entire point of having transparency is around building those foundations so they don’t inherit the biases of humans, for starters. Right now, we have zero introspection into this and no ability to improve upon it with the widely deployed models being used today, and that has already created problematic situations, let alone situations that are problematic and not known yet.
Transparency around this is a very good thing to prevent AI from inheriting negative human ideas and biases, and broadens access to improve training data that benefits everyone
Yes, these open models could stand to be more open and I hope that we'll see that in the future. But at the same time I'm extremely grateful to the companies who have released their weights under reasonable terms. Them doing so has undeniably led to an enormous amount of innovation and collaboration that would not have been possible without the weights.
If we constantly downplay and disparage the real efforts that companies make to release IP to the world because they don't go as far as we'd like, we're setting ourselves up for a world where companies don't release anything at all.
The most operative word here is hope. Which means we may not see more get open sourced over time. Especially, if there is no pressure for companies to do so.
>If we constantly downplay and disparage the real efforts that companies make to release IP to the world because they don't go as far as we'd like, we're setting ourselves up for a world where companies don't release anything at all.
I don't mean anything as disparagement or downplay, but companies aren't releasing this stuff because it makes everyone feel good. Its a tactic. They're only open sourcing something because they expect to get something out of it. That's fine, I'm all for that. That's a valid reason, and often it can be a 2 way street.
What it isn't though, is an attempt at any company saying "we are open sourcing this today because we want to encourage more transparency and auditability as AI takes on more critical roles in society, to ensure in the domains its being applied, to the best of our ability and the ability of our community, that it does not inherit negative human biases"
It's a tactic, but one of the primary reasons to expect it to be effective is building goodwill in the community. If the goodwill dries up then most of the reason to open anything up is gone.
I care about all that in the abstract but what I can download and use on my computer is more concrete and immediate.
Where do you go under that link to get it?
E.g. https://the-eye.eu/public/AI/pile/readme.txt says it’s gone (and "old news"? I disagree).
1: https://web.archive.org/web/20230820001113/https://academict...
1: https://academictorrents.com/details/0d366035664fdf51cfbe9f7...
(Seeing "sillysaurusx" appear in print on official court documents was pretty amusing out of context, though.)
YOU need to be out there beating the drum for a major exception to this. With out laws to ban raiding (and we dont have those on the federal level) this is a bad policy. It means that google doesn't have to aquire-hire your team, they can just poach all of them wholesale.
> Second, we need to prioritize forceful remedies to foster competition
If history does show us something its that outside a pure monopoly (ATT) these business have a shelf life. Roll the clock back 60 years, US Steel had the same market share as apple. ATT was a thing (and as a monopoly got smacked). But no one talks about GE or IBM or RCA as major players in tech... and they were tech giants of their day.
I am all for restrictions on these sorts of enterprises. But the bigger major step we can take is taxing them appropriately, not letting them all get the pass they have. Shift the tax burden to the largest players and you make room at the bottom and solve a host of other issues.
As for the rest of these proposals, it sounds like a lot of bureaucracy. I feel like we need to revisit our history and re-read our Orwell desperately, were literally repeating the mistakes of the past.
Exemptions and carve out will be used for (and politically paid for, with the mind bending official bribery system the USA runs in politics) by the powerful to consolidate their power. Small firms have a lot of power over their employees.
Small firms have to give their employees a reason to work for them, money is part of the picture, and small companies have to be well capitalised to pay competitive salaries. But small companies need to be places people want to work.
Giving employees the power to contract an employee into not quitting is a recipe for very bad behaviour.
In my experience the best and the worst employers are small firms. We need more of the best and fewer of the worst, laws that incentivise being bad do not help
https://www.squirepattonboggs.com/-/media/files/insights/pub...
Raiding is something they frown on there. They go so far as to call it anticompetitive.
It's called a free market, pay up
Imagine a skilled worker taking a new job that pays better. What a nightmare scenario.
Let's say tomorrow that you find a better way to do search. It's going to crush google, and MS.
You hire a team, smart people the VC's throw money at you. Everyone is happy. Your growing and the next darling of tech.
Google comes in and offers to buy you out. You decline cause you know that they are blockbuster and your Netflix.
In retaliation google hires all your staff, and sends them to the roof to rest and vest.
Thats great for the dozen people who got a great deal from google. It's bad for the rest of the world.
If you know for certain that "they are BlockBuster, you are Netflix", then why are you not cutting them a deal to make it worth them staying?
This is absolutely about workers -- specifically, companies not wanting to pay workers anything close to what they are worth.
When apple uses its dominant position to tax everyone 30 percent apple benefits, and the market does not.
When apple uses its dominant position to pay your team 30 percent more and stifle the free market by driving competitors out of business. you benefit, Apple benefits more and the market does not.
Is apple being a giant market dominating force a good thing or a bad thing? Your getting the high salary does not reflect your value, or the market value of your skill. It reflects apples desire to put your former employer out of business.
It’s a fair question. Workers absolutely deserve a fair cut of the pie in that scenario. Non-competes have been pretty ridiculous lately, and companies had to provide little to no justification.
But the incentives of workers might not be entirely aligned with the “Netflix” or even their coworkers. Blockbuster wouldn’t hire the whole team unless they had to: one or two people who understood the core algorithm is enough, and for 10x their old salary it would be hard to resist. That leaves the startup and everyone else who works there out in the cold.
The second thing is that people aren’t rational expected value maximizers. You can’t pay rent with equity, and a startup may not have the cash to compete on salary.
Finally, it’s possible that allowing the larger incumbent to hire all of a competitor’s employees is actually not in their best interest. After strangling/eliminating the competition, an incumbent has no further need for those employees it poached.
And even if the do, it isnt at the inflated pay rate.
The big incumbent crushed the little guy.
An exit for Employee < 50 at a netflix-to be will be in the hundreds of millions.
Unfortunately, these things aren’t certain and are contingent on many things including those that have nothing to do with technology.
It’s unfortunate because people have a bias towards guaranteed present value (cash) over expected future value (equity) which gives incumbents a natural advantage.
That's the choice of your staff and the reality you have to deal with, isn't it? I'm sure you as worker would prefer to have such an option.
What percentage of the company did you share with your workers? What is their upside if you really are a blockbuster?
If the workers really had an upside, then they might stick with you.
Hiring all the staff at an inflated rate to put a competitor out of business is good for the staff that got hired.
Without competition the dominant player makes more, without other places to work dominant player pays less.
> It’s not for the greater good.
Your not getting paid because your valuable your getting paid out because its anti-competitive. Paying you more to bankrupt a competitor is no different than dumping product to put them out of business ... Secure your market position and then jack up the prices and lower the salary.
That world sucks.
You would need to ban them from working ENTIRELY, and no sane person would accept that.
Alternatively, you might realize that NDAs and IP ownership is still a thing, Google can't just copy/paste your code, and if these people are truly irreplaceable, they should either be your cofounders or founding engineers with a significant equity stake.
Not slaves.
Doesn't California already ban non competes? The industry has seemingly thrived there and I've never heard of it being a problem.
"California law protects employers from raiding by competitors. An employee or competitor may not take a large proportion of your employees with the intent of driving you out of business. You must prove the employee or competitor had bad intent. Evidence of intent includes emails, texts, and witness testimony about what the bad employee or competitor did or said when soliciting your employees."
From: https://www.hg.org/legal-articles/stealing-employees-in-cali....
But other than that I'm not sure I see a problem. If a company "can just poach all of [your team] wholesale" then they were probably being under-compensated to begin with and are better off at their new company. After all, the primary point of banning noncompetes is to protect employees from employers who use noncompetes to suppress their wages. The increased competition is a nice ancillary benefit, not the primary motivation.
People and small companies kicking that addiction will be painful, yes, but important to everyone having a healthier life.
"At will" employment explicitly allows raiding.
"If you liked it then you should have put a ring on it." (IOW otherwise use an employment contract.)
Then the expense of the electricity itself.
Big Cloud companies, who are also AI companies, with huge wallets have a huge advantage to start with.
The regular answer is of course go to the cloud, which is by far the easiest approach. I would think the cost of intense "AI compute" over a long timespan in the cloud is really expensive as well. And you are paying your competitors for your work.
If any of that is correct, which it might not be, then building the initial models would cost more than a startup couldl afford.
You can also go to the cloud and used "AI APIs" usually proprietary in one way or another to the cloud vendors themselves and limiting the scope of what can be accomplished. (Plus paying the competing in order to compete)
My read on this is YC believes that small companies will (are?) be locked out of the AI arms race, and are pushing for legal action to hold the door open for them.
Pushing disruptive technologies has made YC insane hoards of wealth- the fact that they feel like they need government intervention for this to continue is scary. It feels like a canary in the coal mine in regards to who is in control of AI's future.
Locked out maybe, but more about 'not closing the door' vs 'keeping the door open'.
Don't get me wrong, I kind of fear what laws and legislation a tech voting bloc would pass, but I'm also optimistic that we could push forward some genuinely progressive legislation as well. Maybe we could pass laws that encourage more housing development. Perhaps some bureaucratic reforms similar to the ones that occurred in Estonia, the kind that result in major cost reductions without any loss in quality of service. Universal healthcare? Those slightly strange policy ideas we like to talk about that are clearly progressive, even "socialist", but are also palatable to libertarians?
Mixed feelings about lobby for open source AI, but nonetheless, glad it happened. Hope to see more of it.
Thought experiment, if YC had not allowed for or jump started OpenAI would they even have to be lobbying now for openness and “little tech” (at least for AI side of things)?
Is this the appropriate saying now https://en.wikipedia.org/wiki/Hoist_with_his_own_petard
Cure this, and the rest will follow. Two companies gating access to the app market is what is destroying competition at its core.
It's hard to tell what, exactly, the position on "open source AI" was. It's presented here in glittering generalities. Given the many conversations I've had on-theme with not-public-tech-co people, I don't think it's fair to say all of "little tech" has one view or position, when you really get down to details. I rather doubt the whole YC-o-Verse sees it all one way, either, given its burgeoning size.
More broadly, I'd expect positioning off as "little tech" to flop. Policy players know how to follow the money. They know "Big Tech" brings the money that buys startups—they've read about it in exec summaries of the committee reports. They're also plenty aware that startups get founded by, and recruit from, a lot of the same pools of people. They've been lobbied by various policy groups speaking for smaller tech companies, often funded by the bigger tech companies, for years. If they dig just a little bit, they'll see the barriers to entry, and resulting big-co dependencies, for small-cos doing AI work.
There's bipartisan support for "going after Big Tech" competition-wise. I don't think the pols need a tech-co splinter group as reinforcement there. Unless and until IPO becomes the main path of successful ascent again—perpetually private isn't popular—I don't have great arguments against generalizing startups to Big Tech Farm League. There are plenty of gripes up from startups against the Great Houses, especially from investors. But that's feudalism for you.
Compare, say, DHH's lobbying. 37signals had the Bezos investment, but it was an unusual deal, not within the usual system. Speaking from a different place.
> It’s also built on the idea of equal opportunity
Anybody else get “out of touch” vibes from this post?
Have very little confidence this is going to do anything. But I really hope I’m wrong and we get it right, this time.
Who would say that country that sprang from the metropolises of the east were built on individualism?
This kind of capital-C conservative appeal to the past is a political signal to light a fire under the Dems and court Republicans.
Not that you’d expect such a statement to turn into a truth telling commission or a treatise on the evolution of the United States but it’s interesting it was brought up.
Wishful thinking. Linked is the more common reason (lobbying), but I'm looking forward to more institutions recognizing the talent we have in the DC region.
The YC SFBA thing is about network effects from companies working in close proximity, and about the investor market (1) believing the same thing and (2) having themselves an even more significant network effect that keeps them all in the same area.
I work for a large-ish all-remote YC company in which none of the founders live in the Bay Area (or in the same city, for that matter). People have some odd ideas of how YC actually works.
Most of startups in the area are catering to the government. There are already VC/PE/Startup accelerators more equipped for the unique market.
There's also a hugely educated workforce, many of whom don't love their daily grind (hiring opportunity). There's a creative community in DC and even more so if you include the greater DMV or mid-Atlantic. A ton of compute and infrastructure (including us-east-1) is based here, which has its own benefits for businesses.
In my opinion, one of the things that would benefit the region is a less conservative (read: more risk-tolerant) investment community. YC isn't the only way to get that done, but I think it would be a helpful catalyst.
i took a brief look at that "Tech Titans" list and frankly it is not that impressive, compared to an actual hub like SF, NYC, Seattle or even compared to tier 2 hubs like Boston or LA.
i mean they're counting "Vox Media" as a tech startup... which is very DC, I guess. many of the others also are due to regulatory reasons, like Revature or Wirewheel.
i lived in DC for 20 years.
As for "not actual tech talent," I don't agree. There's talent from Richmond to Baltimore. But something is missing, which was the point of my original post in this thread... a mindset shift could be impactful.
For the tech titans, it's not a complete list, but I used it as a shortcut. There are companies on there you may have overlooked (Rocket Money, Optoro, Alarm.com)
Maryland has companies across edtech, health tech, bio/pharma, hospitality, and cyber (not enumerating since many aren't household names, though Marriott is).
NoVa has regional/global HQs for Amazon, Capital One, CustomInk, E-Trade, Google, Iridium (and several other satellite companies), Mars (the candy people), Microsoft, Nestle, Rolls-Royce, USA Today (and Gannett), and Volkswagen.
DC itself is largely focused on gov and gov-adjacent companies, but the community is rebuilding. There are still people pushing tech forward here.
I'm not affiliated with either but DC Tech has a meetup Wednesday, and TEDXMidAtlantic happens Saturday. Sounds like you might not live here anymore but, if you're at either, I'd love to say hi and continue the conversation.
Others may have private sector customers but do huge amount of business with government. Appian, looking at you.
Yes, almost all my work in DC area was with companies nowhere near the government but it was very difficult and I stayed with jobs longer than I wanted. Also, hiring was very very difficult. We would churn through tech resumes and interviews because either inflated salary due to clearance or just people who wanted to push button and get paid well for it. It was always very frustrating.
Also, why do people seem to think there is tech hubs around big cloud datacenter? When did people start caring about being close to their workloads?
Rocket Money (nee True Bill; Silver Spring) is fintech. Optoro (Bethesda) is retail supply chain. Alarm.com (Tysons) is home security. FrameBridge (also Tysons) is home goods. (Beyond that, you've got companies like Mapbox, ID.me, Opower, Motley Fool, and Capitol One.)
Cvent - agreed on causation, but don't agree that it's government focused. The US Government spending is something like 1/3 of GDP. It has massive ability to influence policy and national investment. It makes sense that non-profits, associations, and others would congregate in the DC region. It's why we have at least 2 nuclear fusion companies based here (one of which has a freaking rail gun in Chantilly).
I should really do the math, but it feels like a significant portion of the Fortune 500 have "more than just lobbying" footprints within ~25 miles of DC.
On hiring I agree that it can be hard, but I do still see cool small companies in the "#DCTech" scene. I think there's talent out there that could be moved to companies doing interesting impactful work.
As for data centers, I'll concede that point. I almost omitted it originally because I couldn't connect the dots either.... I should have.
As for talent moving to companies doing interesting impactful work, I'm not sure I see it. Tech people moving into area seemed to be drawn by government work so they are gone. Home grown tech workers are mixed bag of which I'm one. Some followed their parents and join the ranks of government employees/contractors. Others did find private employment. Really good ones seemed to depart the area. I wasn't really good one, I just moved for my partner.
Both seem to be targeting B2G investments.
[1] https://finance.yahoo.com/news/dc-tech-lobbying-shop-raising... [2] https://www.bizjournals.com/washington/news/2024/05/22/andre... (sorry about the paywall, but it's the original reporting)
https://missionlocal.org/2024/01/garry-tan-death-wish-sf-sup...
https://missionlocal.org/2024/01/y-combinator-ceo-garry-tans...
https://www.sfchronicle.com/sf/article/sf-garry-tan-x-threat...
I am curious to know which States in the US still do not have any companies in YC.
Without published open source data, it will be hard to call those models open source.
It is absurd to pretend that YC is on the side of "little tech". YC is only interested in companies that will grow large and deliver an enormous return. PG loves people like Zuckerberg and basically stated he wished all founders were similarly sociopathic^Wambitious.
"Lifestyle" software/web companies that stay small can be a good thing. Perhaps they could deliver much better than "Big Tech" if they had the chance; thanks to Silicon Valley VC greed and "Big Tech" anti-competitive practices we are prevented from knowing. YC is after "unicorns" not lifestyle or other small companies. The "success stories" YC pitches are companies like Dropbox and AirBnB. This is the furthest thing from "little tech".
You open a permanent office, meet with people on the Hill regularly, and spread campaign contributions around liberally. DC is crawling with people whose life it is to help you do that. Just drive around Chevy Chase and see all the luxury shops catering to those people.
Is that slimy and disgusting? You bet it is.
"Empirically" how?
in SV, the idea is that you can hire people to do almost anything a growing company needs. That's true in DC as well, but it's also that the important people who can decide your future are there and continually meeting with your enemies.
"If you're not at the table, you're on the menu." they like to say.
Now they want to lobby for less regulation of their own industry in favor of the little guy? Personally, I'm a more principled libertarian-leaning type than "government for me, free market for thee."
From a communication strategy standpoint, I'm just curious what the thinking was to go with 'Little Tech' to refer to new tech startups? I understand the purpose is to succinctly stand in contrast to 'Big Tech', but the word 'Little' somehow feels a bit more cutesy or infantilizing to me than saying 'Small Tech.'
Big tech don't like to admit the regulatory powers they exist at the grace of.
Tech bros, got to learn you some respec. Hahaha! :)
YC is not interested in fixing any of these problem despite their words and actions. Real solutions are bitter pills to this industry, poison pills to investors and venture capitalists.
The two universal solutions that work for every other industry:
* Liability
* Licensing
When I say liability and I mean both personal liability, as in suing the developer(s) for harms of the software, as well as business liability. When I say licensing I do not mean product licensing. I mean human professional licensing. There is an astonishing lack of professionalism and ethics in software. None of this is fixed with band-aids or wishful thinking. Go directly to the problem: the money funnel and the often absurd absence of competence.
Yes, this is scary. Get over it. You cannot both be an entitled child free from the harms of the world and simultaneously be absent from the harms that result. The upside, though, is that increased risk and liability, in financial and compensatory terms, means fewer people doing the work each owning a fair share of the rewards that otherwise just go to investors and not even as dividends.
Garry, I’m a bit confused. I totally agree with the sentiment, but isn’t YC part of the whole machine? Seed funding to VC to Wall Street IPO exit to big billion dollar corporation? Sam Altman is a product of YC culture, he ran the place, same as you do now.
I wanted to join YC in the past 12 years and applied multiple times. We never made it to the interview, but I have gotten an outsider’s perspective on the industry and the root causes of the problems you currently really want to solve with government. Instead what if I told you YC under YOUR leadership can solve them worldwide and far better? Hear me out…
Peter Thiel who invested the first $500K into Facebook famously taught that “competition is for losers, build a monopoly”, and I imagine the lessons to capture and extract maximum value from the ecosystem for shareholders has affected many founders, including Mark Z: https://www.wsj.com/articles/peter-thiel-competition-is-for-...
Mark Zuckerberg was an open source guy on the east coast. He open sourced Synapse instead of selling it to Microsoft. He wanted to make Wirehog, a peer to peer file sharing system, but Sean Parker and the VCs “put a bullet in that thing”. I was there at TC Disrupt in NY where Parker proudly told the story: https://techcrunch.com/2010/05/26/wirehog/
Sean Parker himself learned that lesson bitterly when his company disrupted a different but similar industry that was about owning and monetizing intellectual property - RIAA, MPAA, etc. After Napster was defeated he opened Plaxo and learned to play the “correct game”. He wanted to make sure Mark didn’t follow his open sensibilities too far, letting the public share stuff too freely, because shareholders need profit!
We are LUCKY that Mark Z still retains some of his original open source sensibilities because his company has been the only one giving away models trained for large amounts of money, to the community. Ok maybe Llama research edition leaked but they OWNED that thing, and became to openness what Apple is to privacy.
I mean when Silicon Valley Bank collapsed (set off by the same Peter Thiel), we found out that most VCs even banked at the same bank! There has been a LOT of centralization.
https://www.laweekly.com/restoring-healthy-communities/
This article goes into more depth than my post can, about how the incentives to enrich shareholders leads not just to enshittification of their own ecosystem but surveillance capitalism, and generally externalizing cost to society. Across the board! Teen girls have highest rates of depression. Adult men are on opiates and 20% of middle-aged women are on antidepressants. Elderly are in nursing homes and kids are in public schools (which pg once compared to prisons) and medicated for ADHD to sit still while their parents work long hours with less and less job certainty. Some even just do the gig economy, while Instacart ir Uber collects HALF of every driver’s fare for its shareholders!
Our society is perpetually angry now because algorithms select for more engagement, and it turns out clickbait and outrage maximizes it even more than sex. So the market selects for one sided stories that evoke outrage, and publishers pick an audience to pander to. While social network algorithms produce echo chambers and radicalization. And this is before we get to any AI bot swarms.
I believe there is ONE WEIRD TRICK that YC can do to help society at large A LOT over the next decade. I would like to see a way to transition shareholders organically to utility tokenholders before the public offering. Kind of like the differenc between Disney Dollars and shares of Disney Corp. Disney’s shareholders don’t live in Disneyworld and thus dont have the incentives that customers and workers do. They become an everpresent landlord class extracting rents forever, holding earnings calls even after the original investors had sold their shares. Same with other ecosystems.
The founders don’t need THAT machine necessarily, to be handsomely rewarded to the tune of billions of dollars and have the startups become worldwide movements that serve humanity. YC and VCs could still have their exits while preventing the parasitic rent extraction from getting out of control post-IPO. YC being upstream of most VCs could operate a HUGE lever, and like Archimedes, could move the world towards a better system, as you once did with SAFE notes! That’s would solve a lot of the incentive problems without the need for heavy-handed government regulation!
Two years ago, a different very ambitious and politically connected Sam — Sam Bankman Fried - also went around begging for his space to be regulated. But the incentives inherent in shareholder profits (instead of stakeholder accounting) and competition (instead of cooperation) are what leads to negative externalities, in many ways, and that includes pollution, ecosystem collapse, factory farms and much more. You guys can consider introducing that one SMALL change — transitioning shares to utility tokens gradually.
I would be very happy to come meet and explain more if it is of any interest. Just reply to my message and let me know how to reach out if you see potential here.
PS: In addition to utility tokens, open source and protocols help create maximum value for the world, through collaboration over competition. For decades, the US government wielded its mighty antitrust regulations over Ma Bell and the phone companies it split them into. And yet long distance calls were still $3 a minute. Then, VOIP open protocols democratized the pipes and turned the telcos into dumb replaceable infrastructure. It was open protocols that brought the cost of not just calls but video and broadcasting down to near-zero, something government couldn’t do. Wikipedia beat Britannica. The Web beat AOL and all closed systems. I could go on, but open and free beats closed in the end, AND each open platform (Linux, the Web, etc) leads to far more wealth creation than when gatekeepers extract rents. That’s another aspect. And meanwhile, since 2014 people have discovered that utility tokens can help to monetize open source and digital content including journalism, in healthier ways than ads and surveillance capitalism. As my VC friend Albert Wenger from Union Square ventures wrote a book along the same lines: https://worldaftercapital.org
"Quit fucking around" and institute a national, single-payer plan that covers everyone, like every other modern industrialized country.
Except we're not starting from a blank slate. So short of heavy-handed, dictatorial decisions how would you propose to get to a single-payer plan that covers everyone? You'll have to work with the existing hospital infrastructure, insurance companies, and citizens who don't want a single-payer system. They all get a say, too. People who act like its a straightforward solution don't really understand the problem. But to avoid sounding overly cynical, I'll throw out a couple of recommendations.
1) Expand the VA system to cover all vets, regardless of whether it's a service-connected health issue or not, without insurance. This is politically possibly the easiest step because its hard for a politician to stand up and say they aren't an advocate for better care for the troops. However, the VA is entwined with medical schools and you'd have ensure you expand the funding proportionately to avoid pissing off that constituency.
2) Gradually ratchet down the age for medicare, over decades.
(I'd also argue you'd have to get money out of politics first for any really change to have a chance)
Stroke of a pen I just fixed everything.
> existing hospital infrastructure
Hospitals already deal with medicare.
> insurance companies
Oh no the vultures in the system will go hungry whatever shall we do
> citizens who don't want a single-payer system
Buy premium insurance above and beyond the public option, same as every other modern industrialized country. If you don't like the offering for free, the market can cover whatever gap exists.
Considering Medicare/Medicaid are currently approaching $1T annually to serve less than 20% of the population how dues your stroke of the pen plan pay for the increase when everyone is enrolled?
Hospitals are forced to accept Medicare, but in many cases this is at a loss, subsidized by private charges elsewhere. So you’ll need to find out how to shore up that cost, too.
These types of naive solutions assume everyone else is very very stupid or very very corrupt (or else why didn’t such a simple solution get implemented already?)
We currently can almost get enough of those representatives in office to do it (and a president to sign it), if it weren't for things like the electoral college, gerrymandering, and grossly unequal representation in the Senate, things that currently give disproportionate power to the "team" that happens to oppose single-payer.
The US spends 2-3x what the rest of the OECD spends per-capita, with about the same outcomes. Our system is the least cost efficient system in the entire developed world. It’s hard to see how Medicare-for-all could manage to do worse.
However, they’re a saying in healthcare that you can optimize for quality, access, or cost but you only get two.
The US system is largely focused on optimizing for quality and access (although I admit the latter isn’t necessarily done well and generally relies on reactive care). So to open up access further, you’d probably need to address the other two levers, and I’m not seeing anyone discuss that. There’s also the disproportionate amount of R&D done by the US which effectively subsidizes the rest of the world to help keep their costs down. All that to say, none of the simple solutions bandied about really talk about those effects, let alone how to manage them.
Most countries manage on ~12% or less of GDP, the US takes ~17% of GDP to pay for healthcare [0]. For example, the UK manages to cover everyone for about 12% of GDP. If the US adopted a plan as ubiquitous as the UK, in the same manner as the UK, it'd be cheaper than the current system. Expense seems to be correlated more with the presence of insurance than with the ubiquity of healthcare.
For example, other countries get to keep drug costs low because the companies that make them get huge profits in the US. If the US charges the same, the profits and R&D also dry up unless you set up another system.
Also, the US tends to rely on extreme measures more often very late in life. I’ve heard (but can’t confirm) this drives a huge proportion of costs. This is rooted in cultural ideas of the sanctity of life. You can’t just pull the rug out unless you’re prepared for backlash about “death panels” and such.
There’s a lot of nuance and the “just do what other countries do” misses it completely.
> Seven of the 10 largest drugmakers by revenue in 2020 spent more money on selling and marketing existing drugs than on research and development for new drugs, according to an analysis published Oct. 27 by America's Health Insurance Plans.
> GlaxoSmithKline spent $15 billion on sales and marketing in 2020 compared with $7 billion on research and development. Bayer spent $18 billion on sales and marketing compared with $8 billion for research and development. Johnson & Johnson spent $22 billion on sales and marketing, compared with $12 billion on research and development.
https://www.beckershospitalreview.com/pharmacy/top-10-pharma...
Glib answers like "just do what other countries do" don't address any of that.
Singapore has an excellent system costing about half the proportion of GDP.
I very much doubt there are either large economies or diseconomies of scale in healthcare. Certainly no indication of it in spend western Europe I can see.
The UK has IMO created diseconomies of scale by having a monolithic system.
Would it outweigh the diseconomies of scale seen in the NHS? It is pretty clear that the less centralised systems in other western European countries are more efficient, nor can I see any evidence that smaller western European countries face consistently higher costs than larger ones.
Again, though, I think it’s an error to treat each country as if it’s interchangeable. In other words, we need to understand the systemic causes of those costs to understand the impact as it relates to other nations.
In the above example with Medicare, the cause is due to negotiating power through volume. So it’s pretty clear that scale matters there.
https://www.theguardian.com/society/2024/jan/11/uk-cancer-su...
Singapore has an authoritarian police state which prevents many of the chronic substance abuse problems that drive a significant fraction of US healthcare spending. I don't think Americans would be willing to accept that trade-off. Singapore is also nearly 100% urban which makes care delivery much more efficient.
The US healthcare system is a mess and needs reform. But we can't just copy other countries. We don't want to lose the best parts of our system or stifle innovation in (expensive) new drugs and medical devices.
I think their point is this would help solve the principal agent problem so consumers can shop for service.
The two (real, non-politicians are corrupt) downsides to contend with:
- countries do this by limiting what they will spend; in the US you have access to unlimited treatment. E.g. in the UK the NHS will spend £30k for each good year it buys you
- this one isn't fair, but the US is where health innovation happens. Companies sell into it to make money to survive. They then sell into the other countries to make much less margin, and if those countries were all they had as customers, they wouldn't exist. The US is why we have the advancements we have, and all us non-US countries have silly smug citizens who think our countries are better at negotiating deals. If the US didn't do what it did, we'd be a lot worse off.
This is a ludicrous claim.
People will occasionally travel to the states for drug/therapy trials not available in Canada, or for treatments that are not proven effective. These people will then loudly bitch about Canadian healthcare.
If you want the proof of it, remember that a huge majority of Canadians live close enough to drive to the US for health care, but don’t.
It varies by province, but Alberta will do n heart surgeries per year, and who gets them is by triage
You will find that triage is a fact of medical care in most places. I have waited hours in a private ER in the states multiple times. You have to wait months to see specialists in the states as well.
The US also has a triage system for care. First they filter by ability to pay, then they filter by doctor and facility availability like Canada does.
An American with no ability to pay will wait far longer than an Albertan for heart surgery.
Won't they be covered by Medicaid?
I don't understand this point. Obviously Canada offers healthcare, and what it offers is no doubt good. That doesn't mean that it offers everything that can possibly be done. People just won't be aware of what can be done, and/or don't have US health insurance to pay for what can be done.
If people were actually having to wait that long that their health was seriously threatened, they would likely be engaging in medical tourism on a much bigger scale. If you needed surgery or you were going to die/be permanently disabled and the Canadian system wasn't able to provide it, people would be driving across the border, flying to Mexico/Thailand/wherever, or doing whatever else they needed to not die or have their life impacted.
But that doesn't happen. What it tells you is that, as much as some Americans paint a false picture to slander single payer healthcare, and as much as some Canadians complain about waiting, the Canadian system is still better than any alternative available to the participants, despite the alternative being a quick drive away for most of us.
https://www.cbc.ca/news/canada/newfoundland-labrador/william...
https://www.usnews.com/news/best-countries/articles/2016-08-...
Might be worth a quick Google before posting.
What does this mean? It's not free as long as you can drive to it.
With Canada rapidly approaching third-world status, this is hardly surprising. Most Canadians cannot even afford to cross the border, much less pay American prices.
Also, Healthcare companies are wildly profitable. If they were negotiating prices in the USA just like they do everywhere else, they would only be profitable. Woe is me.
And why is “national” a criteria? California doesn’t get single payer unless Montana also gets it? Neither Californians nor Montanans want that. It’s just political games.
No it's not. Most European countries that run private health insurance keep pretty strong regulatory regime where pricing and coverage is tightly controlled. In America, there is some basic regulatory scheme but pricing, coverage, limits and such is extremely open.
You're correct too: these countries have strong regulations where pricing and coverage is tightly controlled, though they do use private health insurance.
--unless I am wrong in my belief that there is nothing California voters can do to prevent US citizens from moving to California.
https://www.heritage.org/social-security/report/assuring-aff...
But you’ve got a point, it’s probably fairer to say that the ACA and the Dutch and Swiss systems are all modeled on common ideas regarding managed competition: https://jacobin.com/2016/02/gaffney-single-payer-sanders-hea... (“The 2006 Dutch reforms were based in part on a school of health policy thought associated with the US economist Alain Enthoven, a man who got his start analyzing military strategy for the Pentagon before becoming the foremost proponent of competing private-sector health plans (so-called ‘managed competition’). Outside the Netherlands, Enthoven’s ideas have influenced health reform efforts in both his home country — first under Bill Clinton, then President Obama.”)
ROMNEY: Actually, Newt, we got the idea of an individual mandate from you.
GINGRICH: That's not true. You got it from the Heritage Foundation.
ROMNEY: Yes, we got it from you, and you got it from the Heritage Foundation and from you.
The Heritage report (1989), now disowned, antedates both the Dutch reforms and the Clinton Administration. Obama namechecked Heritage at the time.
Seriously, we lived through this. ObamaCare came from the Heritage Foundation.
We detached this subthread from https://news.ycombinator.com/item?id=40566761.