The 2016 Election

I am endorsing Hillary Clinton for president.  I've never endorsed a presidential candidate before, but I'm making an exception this year, because this election is exceptional.  Donald Trump represents an unprecedented threat to America, and voting for Hillary is the best way to defend our country against it.

A Trump presidency would be a disaster for the American economy.  He has no real plan to restore economic growth.

His racist, isolationist policies would divide our country, and American innovation would suffer.  But the man himself is even more dangerous than his policies.  He's erratic, abusive, and prone to fits of rage.

He represents a real threat to the safety of women, minorities, and immigrants, and I believe this reason alone more than disqualifies him to be president.  My godson’s father, who is Mexican by birth and fears being deported or worse, is who convinced me to spend a significant amount of time working on this election at the beginning of this year, when Trump still seemed like an unlikely possibility.

Trump shows little respect for the Constitution, the Republic, or for human decency, and I fear for national security if he becomes our president.

The only two vocal Trump supporters I am close to are Peter Thiel and my grandma.  Peter is a part-time partner at YC, meaning he spends a small fraction of his time advising YC companies, does not have a vote in how YC is run, and in his case waives the equity part-time partners normally get.

This has been a strain on my relationship with both of them—I think they are completely wrong in their support of this man.  Though I don’t ascribe all positions of a politician to his or her supporters, I do not understand how one continues to support someone who brags about sexual assault, calls for a total and complete shutdown of Muslims entering the US, or any number or other disqualifying statements.  I will continue to try to change both of their minds.

Some have said that YC should terminate its relationship with Peter over this.  But as repugnant as Trump is to many of us, we are not going to fire someone over his or her support of a political candidate.  As far as we know, that would be unprecedented for supporting a major party nominee, and a dangerous path to start down (of course, if Peter said some of the things Trump says himself, he would no longer be part of Y Combinator).  

The way we got into a situation with Trump as a major party nominee in the first place was by not talking to people who are very different than we are.  The polarization of the country into two parallel political realities is not good for any of us.  We should listen to each other more, not less.

We should all feel a duty to try to understand the roughly half of the country that thinks we are severely misguided.  I don’t understand how 43% of the country supports Trump.  But I’d like to find out, because we have to include everyone in our path forward.  If our best ideas are to stop talking to or fire anyone who disagrees with us, we’ll be facing this whole situation again in 2020.

That kind of diversity is painful and unpopular, but it is critical to health of a democratic and pluralistic society.  We shouldn’t start purging people for supporting the wrong political candidate.  That's not how things are done in this country.

$1 Million VotePlz Sweepstakes

The 2016 US Presidential election feels like the most important one so far in my lifetime.  No one able to vote in the US should be sitting this one out—we have a major choice to make.

With some friends, I helped start VotePlz to make it easier for young people to participate—technology has moved forward but registration has not (for example, young people generally don’t have printers or stamps, and many states still don’t have online registration).

A lot of people are working hard to get their friends registered to vote, and we wanted to do something for them. 

So today, we’re announcing a VotePlz sweepstakes with a million dollars in prizes.

Some of the prizes are $50,000 in student loan payoffs or scholarship.

After you check your registration, you get a referral link. For each person you get to check their registration, you’ll get one entry into the sweepstakes (up to 25).

You can see how you’re doing here and how your school is doing here.

Also we just launched an iOS app that lets you register just by taking a photo of your Driver’s License, and easily share VotePlz with your contacts.

We need your help.  Please check your registration (https://plz.vote) and share this with your friends and family!

Don't Read The Comments

I sent this email to the current YC batch this morning:


I've talked to some of you who are really bummed about negative press coverage or online comments about your company.  Often this takes the general form of "ugh, all these new startups suck, everything good has already been started."

It sucks to have haters, but every founder who now runs a huge company faced this for a long time.  Please don't let it get you down (some criticism is useful, and that you should pay attention to, but that's not normally what gets people down).  The sooner you can develop a thick skin for this, the better.

Unless the world ends soon, the most valuable company the world will ever see has not yet been started.

Most startups will fail, so you can say everything sucks and be right most of the time.  Although you never lose money with that strategy, you never make any either.

The best startups take a long time to be recognized as good.  Go read the things people wrote about Google, Facebook, Airbnb, Uber, etc in their first few years of existence.  Overnight success usually takes a decade of uphill work.

YC itself faced this for a long time.  We turned out to do ok.

A friend of mine likes to say "there are two kinds of people in the world--the people that build the future, and the people who write posts on the internet about why they'll fail".  Keep trying to be in former category.

The people who have said there is nothing new left to do in the world have been wrong every time.  Don't let their lack of imagination hold you back.

Trump

I'm going to say something very unpopular in my world: Trump is right about some big things.

He's right that many Americans are getting screwed by the system.  He’s right that the economy is not growing nearly fast enough.  He's right that we're drowning in political correctness, and that broken campaign finance laws have bred a class of ineffective career politicians.  He may even be right that free trade is not the best policy.  Trump supporters are not dumb.

But Trump is wrong about the more important part: how to fix these problems.  Many of his proposals, such as they are, are so wrong they’re difficult to even respond to.

Even more dangerous, though, is the way he's wrong.  He is not merely irresponsible.  He is irresponsible in the way dictators are.

Trump's casual racism, misogyny, and conspiracy theories are without precedent among major presidential nominees.  He has said that a judge of Mexican descent isn't treating him fairly because of his heritage and that we should ban Muslims from entering the country.

When his supporters beat up a homeless Hispanic man and cited Trump, he called them “very passionate”.  He has accused Obama of somehow being responsible for the recent shooting in Orlando.

To anyone familiar with the history of Germany in the 1930s, it's chilling to watch Trump in action.  Though I know intellectually it’s easy in hard economic times to rile people up with a hatred of outsiders, it's still surprising to watch this happen right in front of us.

It's hard to tell, as it often is with demagogues, how much is calculation and how much is genuine belief.  But it's a real and terrifying possibility that Trump actually believes much of what he says.  In any case, when he says it, it signals to other people that it’s ok to believe.

Demagogic hate-mongers lead down terrible paths.  It would be particularly embarrassing for us to fall for this—we are a nation of immigrants, and we know that immigrants built this country (and Trump, of course, is the grandson of immigrants and married to an immigrant).

Hitler taught us about the Big Lie—the lie so big, and so often repeated, that people end up believing it.

Trump’s Big Lie is hiding in plain sight.  His Big Lie is that he’s going to Make America Great by keeping us safe from outsiders.

But he has no serious plan for how to restore economic growth, which is what we actually need.  Without it, we’ll be in a zero-sum game and face continued infighting.  And without it, we’ll lose our position as the most powerful country in the world.

He distracts us with hate of outsiders in the hopes that we don’t notice he has no plan for the inside.  He has failed to put forward a serious plan for major investments in research and technology that we so desperately need.  Instead, he tries to distract us with fear of Them.

At least Trump is willing to talk about the fact that the US is not on an acceptable growth trajectory.  The Big Truth in Trump’s slogan is “Again”—we do need a fundamental change to get back to where we were.  Clinton’s dangerously bad Big Lie is that there’s no big problem here at all.

Trump is right about the problem, but horribly wrong about the solution.

I take some risk by writing this (even though I’ve supported some Republicans in the past), and I’ll feel bad if I end up hurting Y Combinator by doing so.  I understand why other people in the technology industry aren’t saying much.  In an ordinary election it's reasonable for people in the business world to remain publicly neutral.  But this is not an ordinary election.

In the words of Edmund Burke, "The only thing necessary for the triumph of evil is for good men to do nothing."  This would be a good time for us all—even Republicans, especially Republican politicians who previously endorsed Trump—to start speaking up.


Note: Anyone is welcome to republish this.

Note 2: Apparently the Burke quote was not definitively said by him :(

'We're in a Bubble'

A lot of people have been saying we’re in a tech bubble for quite some time. Someday they’ll be right, but in the meantime, I thought it'd be fun to look back at some articles from the last 10 years:

2007, Coding Horror -- Welcome to Dot-Com Bubble 2.0. “You might argue that the new bubble has been in effect since mid-2006, but the signs are absolutely unmistakable now.”

2008, Gigaom -- Is Linkedin worth $1B? “The valuation of $1 billion – not as insane as the [$15 billion] valuation placed by Microsoft on Facebook – was jaw dropping.”

2009, Wall Street Journal -- The Bursting of the Silicon Valley Bubble (2009 Edition). “Some think that this round of Silicon Valley blowups might be more damaging than the last.”

2010, Daily Beast -- Facebook's $56 Billion Valuation and More Signs of the Tech Apocalypse.  “One analyst predicts Facebook will easily be worth $200 billion by 2015. Right on! And by 2020 it could be the first company with a $1 zillion market value, so buy-buy-buy, everybody!”

and, famously, Signal v. Noise, Facebook is not worth $33,000,000,000. "But the bullshit monopoly-money valuation merry-go-round has to stop."

2011, The Economist -- The New Tech Bubble (cover story). “Some time after the dotcom boom turned into a spectacular bust in 2000, bumper stickers began appearing in Silicon Valley imploring: ‘Please God, just one more bubble.’ That wish has now been granted.”

2012, The Guardian --  Facebook’s IPO and the new tech bubble. “So yes, the collapse is beginning even as the bubble is filling. Some of us call this fun.”

2013, Gawker / ValleyWag -- The $4 Billion Secret: Don’t Bother Making any Money. “[Pinterest and Snapchat] were both recently, insanely valued by investors at around $4 billion . . . how is this not a bubble, and why aren't more people saying this is crazy?”

2014, Wall Street Journal -- David Einhorn: ‘We Are Witnessing Our Second Tech Bubble in 15 Years’. “ ‘There is a clear consensus that we are witnessing our second tech bubble in 15 years,’ said Mr. Einhorn.”

2015, TechCrunch -- The Tech Industry is in Denial, but the Bubble is About to Burst. “The fact that we are in a tech bubble is in no doubt. . . The tech startup space at the moment resembles the story of the emperor with no clothes.”

2016 -- And now Trump thinks we’re in a tech bubble too, so maybe it’s true.

Housing in the Bay Area

Jerry Brown has proposed legislation that would allow a lot more housing to be built in the Bay Area, and hopefully significantly reduce the cost of housing here. More supply should lead to lower prices.

I believe that lowering the cost of housing is one of the most important things we can do to help people increase their quality of life and to reduce wealth inequality.

A huge part of the problem has been that building in the Bay Area is approved by discretion; even when developments comply with local zoning, they can still be vetoed or stalled by local planning commissions, lawsuits, or ballot measures.

This type of discretionary approval isn't common in most of the US, and Governor Brown's legislation helps align California with most states. His bill would make it so multi-family buildings are automatically approved by right as long as they comply with local zoning, and have 5-20% affordable units--the percentage depending on location and subsidy offered.

The bill is currently being debated in California's State Legislature as part of the upcoming annual budget, which will be voted on on June 15. If you'd like to help pass this bill, consider calling the members below, as well as the Governor, in support of the Budget Trailer Bill--it only takes a few minutes [1], and it will likely hinge on their support.



Assemblyman Phil Ting (SF): (916) 319-2019

Senator Mark Leno (SF): (916) 651-4011

Senator Kevin de León (Los Angeles): (916) 651-4024

Assemblyman Rendon (Los Angeles): (916) 319-2063

Governor Jerry Brown: (916) 445-2841


[1] Calling could actually make a difference -- when lawmakers are on the fence, legislative aides will tally how many pro-con calls they get for a bill. I've heard that some members have only received a few hundred 'con' calls so far, so there's real opportunity to make a powerful 'pro' impression.

Cruise

There is a long and sordid history of people coming out of the woodwork with bogus claims when huge amounts of money are on the line.  This has just happened to Cruise, which is run by my friend Kyle Vogt.  Cruise is a YC company, and I also personally invested in the company last year.

As detailed in a complaint filed by Kyle and Cruise, Jeremy Guillory collaborated with Kyle for a very short period early on in the life of Cruise.  I know that at least Kyle had been thinking about autonomous vehicles for quite some time, and I assume Jeremy had been too given all of the attention on the topic in the press about Google’s activities.  After a little over a month, Kyle and Jeremy parted ways.  This event happened more than two years ago, and well before the company had achieved much of anything. 

There is more detail in this footnote [1] if you’re curious, or you can read the complaint online here.

Jeremy is now claiming to Kyle that he should own a substantial amount of Cruise’s equity, and by doing so is interfering with the pending Cruise/GM merger.

Kyle made an extremely generous offer to settle this claim by offering to give Jeremy a lot of his own money. [2] In my opinion, Jeremy’s claim is completely baseless and opportunistic—it obviously comes at a bad time for the company with the merger still pending, and Kyle understandably wanted to avoid a protracted litigation.  Kyle has worked incredibly hard to settle this claim amicably, despite what I consider to be the obvious ridiculousness of it, and has done far more than I would have personally done under these circumstances.

Kyle and Cruise are now suing Jeremy for making a false equity claim.  It’s an incredible bummer these situations have to happen in the first place.  This is one of the least sensible professional situations I’ve ever been involved with, but unfortunately these situations are not uncommon.

I recognize that I place myself at risk talking about this, but it’s time that someone speaks publicly about situations like what is happening at Cruise.  And so I’ve decided to say something before the lawyers can stop me.  Even with this issue, both sides still expect the merger to close on schedule in Q2.


 

 

[1] Kyle and Jeremy applied to YC together but Jeremy left before the YC interview.  Neither took a salary, and Kyle was funding the company by himself at that point.

According to Kyle, Jeremy did not write any code or build any hardware during this exploratory period.  He did help find an office for the company.  At the point of Jeremy’s departure, neither he nor Kyle had signed employment agreements, stock agreements, or any documents of any sort with the company.  Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity.

Kyle told me that Jeremy would occasionally reach out to congratulate him on press about Cruise (for example, he reached out to congratulate Kyle on Cruise’s Series A), but he never asked for anything—until now, when, in my opinion, he saw an opportunity to make a ton of money.

[2] I was personally involved all day on Friday last week to try to help settle this claim.  Given the time pressure because of the pending merger, we had to set a Friday at 5 pm deadline for Kyle’s offer, which Jeremy let expire. 

Asana

I’m delighted to finally be investing in Asana, which I’ve wanted to do for a long time.

One of the things I’ve learned about companies is that 1) clear tasks and goals, 2) clearly communicated, and 3) with clear and frequent measurement are very important to success.  Most companies fail at all 3 of these, and they become more important as companies get bigger.  Asana is the best way to excel in these 3 areas.

“You make what you measure” is really true, and most companies don’t measure well at all.  I spend a lot of time talking to people who work at startups, and most employees feel like they don’t have a good sense of what specifically the company needs to get done and how all the tasks are going.  Better work tracking leads to better collaboration and better decision-making.

Another thing I’ve learned investing in startups is how important it is to have some users that really love a product (instead of liking it pretty much).  Asana has the level of product love that all great companies have in common.  As a small example, their recurring revenue has been incredibly sticky and more than doubled every year.

Asana is the kind of lever that could someday massively increase the productivity of hundreds of millions of people around the world.  There’s not only an opportunity for Asana to be a huge company, but also for Asana to materially increase the output for the planet—somewhat amazingly, software has not yet eaten this important part of the world. 

Finally, Asana has an incredible team that, as far as I can tell as an outsider, really believes in the mission and loves the work environment (the Glassdoor reviews, something I check before every late-stage investment, are among the best I’ve ever seen). 

These are all the ingredients that go into the development of an incredibly impactful and valuable company.  I’m very happy to be along for the ride.

Hard Tech is Back

First of all, congrats to Kyle, Dan, and the rest of the Cruise team.  You all have made amazing progress and we look forward to seeing more in the future. 

A popular criticism of Silicon Valley, usually levied by people not building anything at all themselves, is that no one is working on or funding “hard technology”.  While we disagree with this premise—many of the most important companies start out looking trivial—we want to be clear that we’re actively looking to fund more hard tech companies, and would love to see more get started.

At YC, we started funding these sorts of companies in earnest in 2014, to widespread commentary that this was a silly waste of time.  Cruise, which we funded that winter, is getting acquired by GM.  From the Summer 2014 batch, 3 of the 4 companies who have raised the most money since graduating YC are “hard tech” companies.

We expect many more big wins.  The YC model works much better for these sorts of companies than most people, including ourselves, thought.

So, if you’re thinking about starting one, we’d like to talk.  And we think we can help. (You’ll probably find a lot of other people willing to help too, although unfortunately you’ll still face major fundraising challenges.  But in many ways, it’s easier to start a hard company than an easy company—more people want to join the mission.)

Leave the Medium thought pieces about when the stock market is going to crash and the effect it’s going to have on the fundraising environment to other people—it’s boring, and history will forget those people anyway.   There has never been a better time to take a long-term view and use technology to solve major problems, and we’ve never needed the solutions more than we do right now.

Different YC partners have different interests, but I’m particularly excited about AI (both general AI and narrow AI applied to specific industries, which seems like the most obvious win in all of startups right now), biotech, and energy. 

We hope to hear from you.

Before Growth

We tell startups all the time that they have to grow quickly.  That’s true, and very good advice, but I think the current fashion of Silicon Valley startups has taken this to an unhealthy extreme—startups have a weekly growth goal before they really have any strong idea about what they want to build.

In the first few weeks of a startup’s life, the founders really need to figure out what they’re doing and why.  Then they need to build a product some users really love.  Only after that they should focus on growth above all else.

A startup that prematurely targets a growth goal often ends up making a nebulous product that some users sort of like and papering over this with ‘growth hacking’.  That sort of works—at least, it will fool investors for awhile until they start digging into retention numbers—but eventually the music stops.

I think the right initial metric is “do any users love our product so much they spontaneously tell other people to use it?”  Until that’s a “yes”, founders are generally better off focusing on this instead of a growth target.

The very best technology companies sometimes take awhile to figure out exactly what they’re doing, but when they do, they usually pass that binary test before turning all their energy to growth.  It’s the critical ingredient for companies that do really well [1], and if you don’t figure it out, no amount of growth hacking will make you into a great company. 

As a side note, startups that don’t first figure out a product some users love also seem to rarely develop the sense of mission that the best companies have.



[1] The other thing that these companies have, and that also usually gets figured out early, is some sort of a monopoly.