How to Get Into Silicon Valley’s $600 Billion Startup School | The Circuit with Emily Chang

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great to see you good to see you I hear

this is a special coffee shop yeah this

is just where so much stuff happened

especially for ycee over really 10 years

YC short for y combinator is one of the

most storied startup accelerators in

Silicon Valley where Airbnb coinbase and

Reddit all got their start it's like an

elite club for chosen Founders to get

access to Top Shelf mentors and if

they're lucky raise top dollars Gary tan

is the new leader of white combinator

succeeding a short line of big names

including Sam Altman and Paul Graham

which makes tan now perhaps the ultimate

startup King maker I've ever done a deal

here or anything like that

you know like YC is interesting because

the deal is pretty straightforward

because we just meet them for 10 minutes

and then decide yes or no yeah that's

right so that's 10 minutes and then yes

or no yeah that's right wow how do you

know in 10 minutes well

I think you can look at you know what

the founders are capable of their skills

I think we're up to 40 000 applications

Ever every year every year yeah and you

pick like a few hundred that's right

it's a very it's the lowest acceptance

rate uh you know more more selective

than you know pretty much any selective

School in the world I feel like a lot of

this stuff all started here

you know back in really 2005 this idea

that you could give very small amounts

of money to just a few teams and have

those teams go on to become sort of the

the Reddit and the airbnbs of the world

all right thank you

oh thank you thank you very much

yeah let's go

where people meet their First Investors

this is where they meet their co-founder

for the first time sometimes this is an

important part of Silicon Valley and you

actually we're in YC yourself oh yeah I

lived five blocks down that way and YC

is about five blocks down this way

when were you accepted to YC 2008 2008

so just at the start of the financial

crisis yeah for sure we raised our Angel

around Preposterous the day Lehman died

and nobody else in our batch managed to

raise any money and you're a Bay Area

guy that's right you were born and

raised here yeah I grew up right here in

Fremont right across the bay and Tech

gave me everything I have honestly you

know child of Chinese immigrants you

know we were sometimes food insecure but

I just remember Tech was here and we

grew up in the shadow of all this

greatness all this technology being

built from nothing I knew that I wanted

to learn to code and you know I cold

called the internet section until I got

a job and we were living in one or two

bedroom apartments and for my parents to

you know sometimes struggle with English

the cultural barrier you know my dad was

forming in a machine shop my mom was a

nurse assistant at a convalescent home

for dinner we would sort of have the

expired bread that someone would drop

off to sort of help out my mom who was

you know working sometimes two shifts

just to keep the family going

and so

I think that's one of the really

important things to me that I realized

like Tech is this thing that can bring

people out of whatever situation they're

in and often into prosperity and that's

what I want for everyone you're sort of

like an engineered designer by

background how does that inform your

perspective this is why ycee really

attracted me in 2008 was that here was

the one place that wasn't about the

flash it wasn't about you know whether

you had an MBA or you know you went to

some school or whatever it was just

purely hey can you build something great

you have this picture it's 2008 I

believe you're sitting on the ground and

you can see Paul Graham

in the background and Mark Zuckerberg

what's going on in that moment at that

point I knew I wanted to start a company

and what I see through this event that

was a free event called startup school

and it was all sort of like the

luminaries you know I believe that year

Jeff Bezos came and he actually launched

AWS at that startup School in 2008 at

the auditorium at Stanford I was sitting

on the ground photography was one of my

loves and I was actually thinking about

you know either starting a company or

becoming a hip-hop editorial

photographer very different proposition

yeah you went on to become a partner at

YC yourself how did you make the

transition from entrepreneur to investor

you know we were doing dead simple blogs

by email posterous and then didn't you

sell that to Twitter much later actually

I mean Instagram came out and that

flatlined our growth and this is one of

the interesting things about being an

investor you know I think we were very

much in the running to be sort of one of

the major social networks but that was

because as there were no really great

iPhone apps yet for uploading photos

until Instagram and now I realize it's

actually the role of the investor we

need to be helping them understand the

historical context like what you know

what is actually happening in the market

and what are what are the brass rings

that are going to be enduring meaningful

businesses that could be worth billions

of dollars so obviously you worked at YC

for about you went on to start your own

fund yep initialize absolutely you made

some pretty smart bets early on you

invested in coinbase for example what

did you learn from that experience that

gave you sort of The Bona fides to be an

investor this is actually a business

that requires you to see enough and YC

was just such a concentrated form of all

of Tech happening and it remains that

that I think you just end up learning

way more about what's doable what's

possible so coming back to YC as CEO is

that like a dream job yeah I mean the

ability to help people basically achieve

their dreams you know that's what YC did

for me and I'm you know a steward here

I'm trying to figure out what can we do

to help more Innovation happen in the

world

oh

I love the wall of photos oh yeah

so this was very very early days

Alexis Ohanian Steve there's Sam element

on the left oh there's Sam yep that's

Emmett Shear of twitch oh my gosh Justin

Khan Steve Huffman and Alexis of Reddit

there's a lot of lore in this one photo

that's right my gosh everyone looks like

babies yeah I mean they really are

though too like just out of college like

and that's the thing to emphasize here

is there's sort of the next Brian chesky

out there maybe watching this right now

I walked right by this oh yeah what do

we have here well this is sort of uh the

experience of every startup right you

know you launch and then things sort of

fall out and then you have a crash trap

of Sorrow yep everything's horrible yep

obviously you always hear about this

story but we're here to sort of try to

lift people up right at that moment

right at the crash of ineptical yeah

that's right ups and downs are always a

part of it

this is uh actually the photo from my YC

interview actually this is the stripe

office right in Palo Alto

I think that's Greg Brockman of open AI

right there

yeah so this is from 2009

that's me over here

and uh Sam's right there yeah James

Lindenbaum from Heroku so this is this

looks like the Last Supper yeah Airbnb

stripe instacart Dropbox coinbase Cruise

so who am I forgetting oh gosh there I

mean there's so many right the most

crazy thing to me is that the next ones

are still coming this is a community

that is refreshing itself with the next

billion dollar startups literally right

now so I have to call you out about

something here sure of course there are

a lot of dudes in these pictures

absolutely where are all the women yeah

I mean that's something that we're gonna

continue to work on and uh I mean

there's not a single woman in this

picture yep two I mean 2009 was a time

that it was easily a problem and that's

something that we're continuing to work

on

is there something about the orange this

room is very Orange it's very orange I

think it was the hex code for the color

was a FF

ff6600 okay so it was very simple color

that you could write in code and it

turned out to be a very bright one we

read online that orange also can

symbolize optimism and energy so I

thought maybe that was the reason but of

course it's probably more wonky than

that and the name Y combinator is

actually algorithm that writes other

algorithms so YC was meant to be a

startup that helped start other startups

well I never knew that so many companies

have come through these doors

talk to me a little bit about the

process for those who don't understand

what exactly does a startup accelerator

do well YC Works kind of as a 10-12 week

program

anyone can apply online all they have to

do is you'll ideally have an idea and

have a demo sometimes and what we do is

we try to figure out who are the

smartest best people who are capable

what are the things that they're trying

to do and are those things viable and we

Whittle it down to about 250 to give

half a half a million dollars to right

which is great because when I first

started I think YC only gave me twelve

thousand dollars what is the newest

class of Founders look like and what

problems are they trying to solve a good

deal of them are focused on AI bringing

in large language models that's a really

exciting time for just software period

demo day is sort of like a rite of

passage oh definitely right what happens

on demo day it's a thousand and

investors VCS Angel Investors people who

have been there and they often raise

millions of dollars and so that's a

really powerful moment because that big

bump at the time at the top of uh you

know that graph that we saw yeah you

know that's when that's a moment of

euphoria and then hey guys it's back to

work like we're going to be in that

trough of Sorrow for a while but we're

going to make it to the promised land

what do you say to the folks who are out

there thinking how do I get in well the

big thing is I think we really like

people who are earnest what we really

care about is are you solving a real

problem uh can you show us the quality

of your work you know can you access a

market that nobody else can actually

access so in 10 minutes you decide with

whether to give someone a golden ticket

that's right are you making all the

right decisions well we hope so and

that's why demo day exists you know

those thousand investors come back year

after year after year because you'll

never find Congregation of hundreds of

startups

in which you know a dozen of them will

probably go on to be worth a billion

dollars or more the hard part is it's

not really about what happens in that 10

minutes it's about the 10 000 hours that

goes in beforehand the best CEOs in the

world are sort of Jack of all trades but

master of one or two and that isn't

something that is in that 10 minutes or

in those 12 questions that's something

in someone's life are you really looking

for people from around the world or do

people who are here have an advantage

lots of people come here just for the

batch they raise money they build their

community and then they go back and

become the best company in Mumbai the

best company in London so you know I

think that this is a story that is San

Francisco Bay Area based but also one

that radiates out into the entire world

we talked about the pictures on the wall

and you said hey you got me we don't

have enough women we haven't had enough

women for

couple of decades now what are you

seeing in the numbers now I think

representation matters a lot at the end

of the day you know the types of

problems that people solve kind of come

out of their own stories it is important

to us it's important to me you know at

YC we have more than 850 women Founders

who have gone through the program and

you're right that's not enough what are

you doing to to make

to change the ratio I mean I think I

look at the process and we want the

process to be something that is as open

and inclusive as possible there's a lot

to be done and you know we're not done

we're seeing tens of thousands of people

getting laid off from tech companies how

does this play out I think a lot of

large companies started treating their

employee base almost as a place to park

resources and almost as a competitive

moat versus the other Giants and when I

think the about the amount of talent

that was sort of locked up in cushy jobs

that you know could have been actually

out there in the market making new

technology pushing things forward I'm

hoping a lot of them actually come over

to startups and they realize oh this is

what it's like to run fast again what's

your advice for these workers who are

getting laid off it does sound a little

trite to just say it's time to build

right it sure does I mean I think some

of it is like it takes stock right like

getting much more connected to the

problems out there I think lead to just

a lot more direct access to

I mean building Equity Building

businesses that really matter well

speaking of equity for years Tech

workers have been paid in stock and that

was sort of you know the ticket you're

taking a risk on this company it could

be worth zero or it could you know be

worth millions that's right we're seeing

kind of the dark side of

rsus are getting paid in stock now

do you think that's still the way it

should work in Silicon Valley I mean

that's some of the magic of startups I

think this is about Labor being able to

access your actual capital and this is

like one of the most direct and most

awesome versions of it some of the bad

behavior we saw from startup Founders

was trying to reach for that billion

dollar valuation because they wanted the

headline out there saying that they're a

unicorn now but that comes at a cost

right the focus on valuation and getting

that next Notch of valuation above all

else that comes at both a great personal

cost to the founders themselves but also

to the employees so what do you think

needs to change I think some of it is

already happening right you know the

revaluation of startups right now is

starting and it will continue people are

going to be a lot more mindful about you

know do I really need to do that 50 to

200 million dollar raise so

you're a few months into this job as CEO

of Y combinator and Silicon Valley Bank

collapses what is your level of panic in

that moment well I remember uh you know

I'm dropping my seven-year-old off uh

Friday morning at 9 00 a.m and then

immediately I start getting texts and

phone calls from Founders saying uh that

was my only bank account what do I do

because it wasn't clear to me that

people were going to give a bank called

Silicon Valley Bank the benefit of any

doubt at all simply because of its name

this is not big Tech getting neat in in

an hour of need this is a moment of

little Tech this whole svb thing is made

clear a lot of people look at Silicon

Valley and see Elites

are they wrong anytime you have power

that is accumulated in the hands of the

few that's something we should be

worried about little Tech is competition

and competition is the way that we have

actually vibrant markets that give

consumers new choice and that is

actually a very important thing to

protect how long do you think

the garden does this get

I guess it's so hard to tell and you

know I'm not a macro Economist some

people like to play that on Twitter

though so I underestimated to what

degree interest rates rule everything

around us it affects valuations it

affected the svb crisis you know if you

work in crypto you better pay attention

I mean all of these things matter

because the price of money is sort of

Shifting radically YC branched out into

a lot of things like a lot of funds did

to be honest over the course of the last

10 years you're now ending the later

stage investing does that make it harder

for a lot of the YC companies to then do

follow-on rounds does that sort of clip

their wings before they can even fly

well I don't think so just because the

best thing we can do is take our own

advice and especially in times of sort

of re-centering uh you know a reset in

what's happening out there in VC what

are the things that make you truly

unique and really focus on those things

so that was a painful decision to make

but it was ultimately the right one for

YC when you look at Venture Capital

culture and the way it operates do you

see things that are broken

yeah I mean I think the hardest part is

often there's not alignment right you

know if you're a junior VC you're coming

in you might only be able to do one or

two deals three or four deals period and

in those three or four deals one better

be a unicorn and we see people bend over

backwards sort of put their own

interests ahead of that of the founder

and sometimes that's systemic do you

think it's gonna be harder for startups

to raise money for the next 10 years

it's been a fruitful time

is this just the new normal well I think

today we're you know in the midst of

this large language model explosion and

I think that that might be the next

platform and those platforms will

actually give rise to new platforms that

we don't even know about yet so you know

if you ask on a 10-year time frame like

will there be more technology or less I

think there's going to be more and you

know if it's a one or two year time

frame like you know we got to ask Uncle

Jerome between Microsoft and openai and

Google and Facebook and apple and Amazon

is there enough room for startups to run

when it comes to to AI do they have room

to really compete I think so and yeah

some of it is like we actually don't

even know the physics of this market yet

it took many years of the search engine

world and the search engine War before

we figured out that Google and AdWords

were going to be the winner and uh I

think we're right there right again I

would never count out uh you know the

little startup who figures out a way to

uh you know fight against unbelievable

amounts of capital or unbelievable

amounts of Market power that's how we

combat this idea that big is you know

too powerful like guess who's going to

fight against them it's startups what's

going to define the Gary tan era of YC

what I hope is that a thousand flowers

bloom at the end of the day you know I

also experienced this

crazy place that gave me prosperity and

ultimately all I care about is that that

story continues how much are you working

here versus home in San Francisco oh

well we're San Francisco based and work

from home culture means that I'm in San

Francisco pretty much all the time

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the pandemic and I got in touch with him

on clubhouse and he gave me advice on

thumbnail title and you know

click-through rates and all that good

stuff welcome to the YouTube Studio I

love it okay what do we got going on

here well you know the number one thing

that I give people advice about is get a

really big soft box so you get like the

really nice cinematic look everyone

needs a nice cinematic look that's right

it's important I mean it's sort of like

wearing a suit to a nice meeting like

having a good zoom setup is I think you

know increasingly important what have

you found really resonates like what

takes off the number one thing for me is

just actually talking about the things I

messed up like actually saying hey you

know this is why my startup failed or

the time I messed up my pitch to series

a investors or my co-founder disputes

like those all were real things that

became a problem for me and then being

real about that helps people understand

like hey this is again the long trough

of sorrow and uh here's how you get

through it so it's being human yeah

being authentic and actually I feel like

a some folks in Tech and I won't name

names have trouble admitting when

they're wrong that's fair that's one of

the Salient features of going on Twitter

sometimes

this is my favorite part wow

you've got quite a view going on here

you walk down the streets of San

Francisco you have to admit it's

different postcovid the streets are

different but right down the street is

what they call cerebral Valley which is

sort of turning into the new Silicon

Valley what is your role in San

Francisco politics I know you're doing a

lot of tweeting oh yeah somehow Twitter

gets me in trouble all the time but my

Twitter in addition to being about

startups has accidentally also become

really about what is the future of San

Francisco and how do we make this a

place for immigrants and immigrant

families to actually come and do their

thing like for them to find their

American Dream here I mean it is

expensive it absolutely is there was

this huge push to raise payroll taxes in

San Francisco That was supposed to help

the Homeless Problem a lot of companies

left San Francisco as a result stripe a

y combinator company for example so now

the city's taking in less taxes because

the companies aren't here and the

homeless problem it doesn't seem like

it's been solved like what do you think

about that I'm never about hey we should

lower taxes I don't think that's the

issue when we have prosperity in Tech we

should be able to share that because we

want abundance and we need policies to

actually get us there I just want things

to work can we meet in the middle can we

find uh Common Sense things to do common

sense policies that work can we find

politicians that represent us that are

not at the extremes but finding ways to

work together and that's what I want

people look at you like this Rich Tech

bro who wants to turn San Francisco into

a Utopia is that not the case I think a

Utopia is just another form of extremism

we have to look at what's possible we

have to look at the resources and you

know I think that Tech probably should

pay its fair share how do you keep the

soul of San Francisco but also make it

more attractive to everyone else for the

longest time the status quo is let's

prevent people from building let's stop

people from coming here let's make it

unpalatable for people to move to San

Francisco and maybe that will make it

okay and I think that that's just the

wrong Solution that's not a solution at

all that's putting your head in the

ground we should absolutely be making

space for everyone that's really what

America is for me that's what America

has been for my family and that's what I

want for everyone in the world San

Francisco for life you know it this is

The Shining Jewel that I go everywhere

in the world and the number one thing

they want to hear about is how do we

bring Tech to our city like this is a

gift and this is just getting started

thank you

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