tag:blog.samaltman.com,2013:/posts Sam Altman 2017-03-25T09:20:33Z Sam Altman tag:blog.samaltman.com,2013:Post/1138712 2017-03-14T18:36:03Z 2017-03-25T09:20:33Z Keep the Internet Open

The FCC has announced plans to roll back policies on net neutrality, and its new head has indicated he has no plan to stop soon.

The internet is a public good, and I believe access should be a basic right.  We've seen such great innovation in software because the internet has been a level playing field.  People have been able to succeed by merit, not the regulatory weight of incumbency. 

It seems best to keep it regulated like a common carrier. [1] Doing this allows the government to ensure a level playing field, impose privacy regulations, and subsidize access for people who can't afford it.

But this idea is under attack, and I'm surprised the tech community isn't speaking out more forcefully.  Although many leading tech companies are now the incumbents, I hope we'll all remember that openness helped them achieve their great success.  It could be disastrous for future startups if this were to change--openness is what made the recent wave of innovation happen.

We need to make our voices heard.  We won this fight once before, and we can win it again.  I really hope an activist or tech leader will step up and organize this fight (and I'm happy to help!).  It's important for our future.



[1] There's an argument that Internet Service Providers should be able to charge a metered rate based on usage.  I'm not sure whether I agree with this, but in principle it seems ok.  That's how we pay for public utilities. 

What's clearly not OK is taking it further--charging different services different rates based on their relationships with ISPs.  You wouldn't accept your electric company charging you different rates depending on the manufacturer of each of your appliances.






Emailed comment from Alan Kay:

Yes -- in fact, the original notion about all this was to be in the same spirit as the 1936 Electrical and Telephone Federal Act which was specifically aimed at rural areas that the utilities didn't want to spend money to reach, so the fed mandated "power and phone" as a kind of universal right. This has also been a theme of the EFF. The basic impulse was also one of the drivers behind Carnegie's huge support of the free library system in the US (the whole story there is interesting, including some of the high minded stipulations in the Carnegie bequests, which I've on occasion tried to get the Internet communities to buy off on).

Every Carnegie library had to have two special rooms -- one just for children, and the other where people could be taught to read. Part of the Carnegie money for the libraries supported the reading teachers and sessions. Carnegie was an immigrant and child laborer who could read a little. One of his earliest bosses would open his home library to his workers on Saturdays. Carnegie used this to raise himself up, and never forgot how it happened. (He was also one of the few truly rich people ever who said he was going to give it all away to benefit the civilization around him, and actually did it.)

P.S. I wanted to put the above comment on your blog but there was no button to allow this ...
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Sam Altman
tag:blog.samaltman.com,2013:Post/1136625 2017-03-07T16:01:27Z 2017-03-19T22:24:25Z Greg

A lot of people ask me what the ideal cofounder looks like.  I now have an answer: Greg Brockman.

Every successful startup I know has at least one person who provides the force of will to make the startup happen.  I’d thought a lot about this in the abstract while advising YC startups, but until OpenAI I hadn’t observed up close someone else drive the formation of a startup.

OpenAI wouldn’t have happened without Greg.  He commits quickly and fully to things.  I organized a group dinner early on to talk about what such an organization might look like, and drove him home afterwards.  Greg asked me questions for the first half of the drive back to San Francisco, then declared he was in, and started planning logistics for the rest of the drive.

From then on he was fully in, with an average email response time of about 5 minutes to anything.  Elon and I were both busy with day jobs, but Greg kept everything moving forward with imperfect information and a very high-latency connection.

He recruited the founding team.  Greg is a world-class recruiter (he plans every detail of interviews, heavily researches candidate’s backgrounds, sends thoughtful and persistent followups, and so on), and I now believe even more strongly that someone on the founding team has to be an amazing recruiter.

He’s incredibly open to feedback.  Large or small, he’s always willing to hear it, never gets offended, and processes it very quickly.  I once suggested to him that he wasn't communicating a bold enough vision for the organization, and the next time I heard him talk about it (and every time since) it was a perfectly calibrated explanation of how we were going to succeed at something that really mattered.  Even on non-traditional ideas, like when I suggested he co-lead the organization with Ilya, he was always open-minded and thoughtful.

Greg also played the role of ‘non-technical cofounder’, which is a misnomer because most people who know him will say something like “Greg is the most productive engineer I know”.  But he took on all the non-technical roles at the beginning, defining the culture, making offers, organizing offsites, letting everyone work out of his apartment, ordering supplies, cleaning up after meals, etc.  It's important to have someone great in this role at a small startup—many people gloss over it.

Without someone dedicated to finding a solution to all problems, no matter how difficult, eventually a large problem will come along and kill you while you’re still weak.  Founding teams need a Chief Optimist to rally everyone to press on despite the difficulties, and it’s always hard on that person because they can’t really lean on anyone else in the hardest times.

You for sure need great technical talent on a founding team, but make sure you also have someone like Greg.  If they’re the same person, then you’ve hit the jackpot.

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Sam Altman
tag:blog.samaltman.com,2013:Post/1133150 2017-02-21T18:03:17Z 2017-03-24T13:24:27Z What I Heard From Trump Supporters

After the election, I decided to talk to 100 Trump voters from around the country.  I went to the middle of the country, the middle of the state, and talked to many online.

This was a surprisingly interesting and helpful experience—I highly recommend it.  With three exceptions, I found something to like about everyone I talked to (though I strongly disagreed with many of the things they said).  Although it shouldn’t have surprised me given the voting data, I was definitely surprised by the diversity of the people I spoke to—I did not expect to talk to so many Muslims, Mexicans, Black people, and women in the course of this project.

Almost everyone I asked was willing to talk to me, but almost none of them wanted me to use their names—even people from very red states were worried about getting “targeted by those people in Silicon Valley if they knew I voted for him”.  One person in Silicon Valley even asked me to sign a confidentiality agreement before she would talk to me, as she worried she’d lose her job if people at her company knew she was a strong Trump supporter. 

I wanted to understand what Trump voters liked and didn’t like about the president, what they were nervous about, what they thought about the left’s response so far, and most importantly, what would convince them not to vote for him in the future. 

Obviously, this is not a poll, and not ‘data’.  But I think narratives are really important.

Here’s what I heard.

The TL;DR quote is this:

“You all can defeat Trump next time, but not if you keep mocking us, refusing to listen to us, and cutting us out.  It’s Republicans, not Democrats, who will take Trump down.”

 

What do you like about Trump?

“He is not politically correct.” Note: This sentiment came up a lot, probably in at least a third of the conversations I had.

“He says true but unpopular things.  If you can’t talk about problems, you can’t fix them.”

I'm a Jewish libertarian who's [sic] grandparents were Holocaust survivors.  Over the last few years the mainstream left has resorted to name-calling and character assassination, instead of debate, any time their positions are questioned.  This atmosphere became extremely oppressive and threatening to people, like myself, who disagreed with many of Obama's policies over the past several years.  Intelligent debate has become rare.”

“It's a lot like political discussion was in Soviet Union, actually.  I think the inability to acknowledge obvious truths, and the ever-increasing scope of these restrictions makes it particularly frustrating.  And personally, for whatever reason, I find inability to have more subtle discussion very frustrating--things are not white or black, but you can't talk about greys since the politically correct answer is white.”

“He is anti-abortion.” Note: This sentiment came up a lot.  A number of people I spoke to said they didn’t care about anything else he did and would always vote for whichever candidate was more anti-abortion.

“I like that he puts the interests of Americans first.  American policy needs to be made from a position of how Americans benefit from it, as that is the role of government.”

“He is anti-immigration.” Note: This sentiment came up a lot.  The most surprising takeaway for me how little it seemed to be driven by economic concerns, and how much it was driven by fears about “losing our culture”, “safety”, “community”, and a general Us-vs.-Them mentality. 

“He will preserve our culture.  Preservation of culture is considered good in most cases.  What’s wrong with preserving the good parts of American culture?”

“He’s not Hillary Clinton.”

“I’m Mexican.  I support the wall.  The people who have stayed have destroyed Mexico, and now they want to get out and cause damage here.  We need to protect our borders, but now any policy is like that is called racist.  Trump was the first person willing to say that out loud.”

“I am socially very liberal.  I am fiscally very conservative.  I don't feel I have a party--never have.  I grew up in a more socially conservative time and picked the "lesser of two evils" during elections.  Now, the more socially liberal side supports bigger governments, more aid and support and that money has to come from somewhere.  I see what's deducted from my check each week.  I'm OK with never being rich but I'd like more security and that doesn't come from more government spending.”

“We need borders at every level of our society.”

“I’m willing to postpone some further social justice progress, which doesn’t really result in loss of life, in favor of less foreign policy involvement, the opposite of which does." 

“Brown people are always the out-crowd.  I think subconsciously, part of the reason I supported him was a way to be in the in-crowd for once.”

 

What don’t you like about him? 

“The way he talks about women is despicable.”

“Everything about his style.  We only voted for him because this election was too important to worry about style.”

“I don’t like most things about him.  The way it worked is we got to choose one of two terrible options.”

“I think our nation needs Trumpism to survive long term, and to me that supersedes almost every other reservation I have.  My issue is with Trump himself--I think he's the wrong vessel for his movement, but he's all we've got so I'm behind him.” 

“I think the rollout of the immigration executive order is emblematic of a clusterfuck, to be completely frank.”

“I now believe the Muslim ban actually makes us less safe.”

“Isolationism and protectionism at this point is insane. We've done that before.”

“I, too, worry about the dishonesty.  His relationship with Russia, his relationship with women.  His relationship with questionable financial matters.  These all worry me and were they to continue I would lose all respect.”

“He continually plays into a character that he has created to rile his fan base. Accepting anti-semitism, white nationalism, or hate emanating unnecessarily, creates a vacuum of fear on social media, on television, and around the dinner table.  Even though the policies may be similar to that of any recent Republican President, the behavior to act so immaturely sets a bad example for children and undercuts many cultural norms, which more than anything causes disruption to our sociological foundations.”

“I hate that he discredits the press all the time.  That seems to forebode great evil.”

 

What are you nervous about with Trump as president?

“The thing I’m most worried about is war, and that he could destroy the whole world.  I think I may have underestimated that risk, because he is more of an alpha strongman that I realized when I voted for him.  Otherwise I still like him.” Note: Most people weren’t that worried about war.  More frequent comments were along these lines: 

“I know he’s taking strong positions on certain foreign issues, but I feel in negotiations you need to do things to move the needle and when a whole country is watching its hard to keep a poker face, but at least his business track record overall gives us reason to believe ultimately stability will prevail.”

and

“He’s crazy, but it’s a tactic to get other nations not to mess with us.”

“I worry he will drive us apart as a nation.  I believed him when he said that would stop with the campaign, but I haven’t seen signs of it so far.”

“I am nervous that his mental health is actually bad.”

“I worry he is actually going to roll back social change we’ve fought so hard for.  But I hope not.”


What do you think about the left’s response so far? 

“You need to give us an opportunity to admit we may have been wrong without saying we’re bad people.  I am already thinking I made a mistake, but I feel ostracized from my community.” 

“The left is more intolerant than the right.”  Note: This concept came up a lot, with real animosity in otherwise pleasant conversations.

“Stop calling us racists.  Stop calling us idiots.  We aren’t.  Listen to us when we try to tell you why we aren’t.  Oh, and stop making fun of us.” 

“I’d love to see one-tenth of the outrage about the state of our lives out here that you have for Muslims from another country.   You have no idea what our lives are like.”

“I’m so tired of hearing about white privilege.  I’m white, but way less privileged than a black person from your world.  I have no hope my life will ever get any better.”

I am tired of feeling silenced and demonized.  We have mostly the same goals, and different opinions about how to get there.  Maybe I’m wrong, maybe you’re wrong.  But enough with calling all of us the devil for wanting to try Trump.  I hate Hillary and think she wants to destroy the country of us but I don’t demonize her supporters.” 

“I’m angry that they’re so outraged now, but were never outraged over an existing terrible system.”

“The attacks against Trump have taught me something about myself. I have defended him and said things I really didn't believe or support because I was put in a defensive position. Protesters may have pushed many people in this direction BUT it is ultimately our responsibility and must stop.”

“I'd like to also add that the demonization of Trump by calling him and his supporters: Nazis, KKK, white supremacists, fascists, etc. works very well in entrenching Trump supporters on his side.  These attacks are counter-factual and in my opinion very helpful to Trump.” 

“So far his election has driven our nation apart.  So far I see most of the divisiveness coming from the left.  Shame on them.  I don't see it quite as bad as during Nixon's era but we are truly headed in that direction.  I could not speak with my parents during that time because political division would intrude.  This Thanksgiving and holiday season were as close as I've felt to that in 40 years.  We are increasingly polarized.  It doesn't seem to be strictly generational, though that exists.  There is an east coast-west coast, rural vs. urban, racial, and gender division forming now.  It has the potential to be devastating.” 

“The amount of violent attacks and economic attacks perpetrated by the left are troublesome.  My wife and I recently moved to the Bay Area.  I was expecting a place which was a welcoming meritocracy of ideas.  Instead, I found a place where everyone constantly watches everyone else for any thoughtcrime.” 

“Silicon Valley is incredibly unwelcoming to alternative points of view.  Your curiosity, if it is sincere, is the very rare exception to the rule.”

“There is something hypocritical about the left saying the are uniters not dividers, they are inclusive and then excluding half the population with comments on intelligence and irrelevance in the modern world.”

 

What would convince you not to vote for him again?

“War would be unforgivable.”

“If the Russia thing were true, I’d turn against him.  Why don’t y’all focus on that instead of his tweets?”

“Give us a better option, and we’ll be happy.  But it needs to be a moderate—Sanders won’t win.”

“I’ll happily vote for someone else.  There’s a lot I hate about Trump.  But our lives are basically destroyed, and he was the first person to talk about fixing that.”

“Generally hard to say.  Extreme corruption would do it.”

Second person in the same conversation: “I don’t care if he’s corrupt.  Y’all voted for Hillary and she was the most corrupt candidate of all time.”

“Another worry is an escalation of overreaches between him and the left that culminates in the breakdown of our system of law.  I'd hold him responsible for that.”

“If he were to get the US involved in a major military conflict (I think the odds of this have actually decreased versus Hillary, but I'm willing to be proven wrong). If he were to substantially increase the cost of doing business (by increasing regulation or taxes for instance).”

“I'm socially very liberal. If he were to do something like restart a war on drugs, try to restrict rights of LGBT, or make first trimester abortions difficult or dangerous, I'd rethink my position.  I think these type of things are extremely unlikely though, especially with an election a few years away the country as a whole becoming more socially liberal.”

“I think if 2008 happened again (further into Trump's tenure, so that causation can be shown, hypothetically), the base would evaporate.” 

“Based on Trump's history before politics I don't believe he is racist, sexist, homophobic or bigoted.  If that were true it would supersede everything else since it would be even worse for individual liberty and freedom than any freedom of speech restrictions or increases in government size proposed by the Democratic Party.”

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Sam Altman
tag:blog.samaltman.com,2013:Post/1131900 2017-02-16T17:37:01Z 2017-03-24T13:24:59Z 2017 YC Annual Letter

Dear YC Community:

In response to a comment on Hacker News, I’m going to try writing an annual letter to the YC community with an update on our progress.

Our mission is to enable the most innovation of any company in the world in order to make the future great for everyone.  We believe new technology, economic growth, and new ideas about how our society might function are more important than ever before.

As of January 1, 2017, YC has funded over 3,200 founders and 1,470 companies.  This year, assuming there is not a macroeconomic meltdown, we expect the total valuation of companies that have gone through our program to surpass $100 billion.  We have also funded more than 30 non-profits.

As always, most of the credit goes to our founders—they, and the astonishingly strong and helpful community they create, are what make YC special.  The second-most credit goes to our team—I am incredibly thankful to work with such a talented and driven group of people.

YC Companies & Investments

We invested about $27 million in the Winter and Summer 2016 batches, and so far we have invested about $187 million in later-stage investments from our first Continuity fund.

We are excited to fund companies in any space that we believe is good for the world and can eventually sustain a very large company.  Some of the many areas we’re interested in are noted in our Requests for Startups.

Our largest exit of 2016 was Cruise, a self-driving car company.  We expect to fund many more machine learning-driven companies in the future (I will generally avoid calling out trends in these letters, because I’ve noticed doing that produced unintended consequences, but this one is so obvious and so important that I’m happy to mention it).

Helion, Oklo, and Bright are all working toward inexpensive clean energy, an area of great interest to us.  LendUp and Coinbase are two examples of YC companies innovating in financial services technology.  Boom and Relativity Space are pursuing strategies in aerospace that most companies haven’t pursued seriously in a long time, or ever.

Gingko Bioworks is learning how to design new organisms, and Science Exchange is making it easier to get new experiments done.  FarmLogs is making it easier and more efficient to grow food, and Gobble, Instacart and Doordash are making it easier to eat it.  Reddit and 9Gag continue to make me waste enormous amounts of time, but I love every minute I waste.  

Docker, PlanGrid, Checkr, Flexport, Gusto are just a few of the enterprise companies we’ve seen begin to thrive.  Machine Zone has become one of the largest gaming companies in the world.  Rappi, Wave, and Strikingly are some of the many YC companies succeeding on other continents.

In addition to the three companies we are currently best known for—Airbnb, Dropbox and Stripe—more than 50 of our companies are worth more than $100 million each.

We’ve funded a lot of other companies, but in the spirit of not exhausting your patience, I’ll stop listing them here.

Hyperscale

There’s one more trend I want to mention, though it’s not about a specific market.  I think we’re now in the era of hyperscale technology companies.  If you believe Metcalfe’s law, it stands to reason that network-effected technology companies are now far more powerful than ever before, simply because the number of people connected to the internet keeps getting bigger, and n^2 gets big really fast.

Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages that are still not fully understood by most founders and investors.  I expect that they will continue to do a lot of things well, have significant data and computation advantages, be able to attract a large percentage of the most talented engineers, and aggressively buy companies that get off to promising starts.  This trend is unlikely to reverse without antitrust action, and I suggest people carefully consider its implications for startups.  There will of course be areas where these companies are naturally weaker, and these are good areas to start companies.

Diversity & Inclusion

In 2016, we funded 68 female founders at 52 companies. About 22.3% of the companies we funded had a woman on the founding team, and about 12.5% of the founders we funded were women.  In 2016, we funded 52 Black and Latino founders at 29 companies.  11.6% of the founders we funded were Black or Latino.

The percentage of women who apply to YC is roughly the same as the percentage of women who get funded.  The same is true for Black and Latino founders.

From the data we have available, it seems that the percentage of women and people of color applying to YC is higher than the overall percentage of women and people of color starting startups.  This is encouraging, but we continue to want to understand and address the barriers that prevent more founders from underrepresented groups from starting startups and applying to YC.  We still have a long way to go.

While we remain committed to helping more underrepresented founders get started, we believe that’s only part of the solution.  We still see significant dropoffs at the stages after YC (e.g. raising late-stage capital).  The larger startup community needs to consider how little the unicorn-founder demographics resemble the early-stage demographics.

There’s clearly a lot more work to do here, and we’re committed to help do it.  We’re hosting our fourth annual Female Founders Conference this year in June, continuing our Open Office Hours with underrepresented communities and bringing in unconscious bias experts to train our team.  We’re always open to hearing how we can do a better job, so if you’ve come across practices or programs that work well to support diverse founders, please let us know.

YC Organization

Y Combinator is currently made up of 5 groups.  I’ll talk a little about each of them here.  We expect to add several more over the next few years, and in general you should expect us to try a lot of stuff (though of course not all of it will work).  You should also expect us to continue to grow the number of companies we fund.

YC (our flagship program)

In October of 2016, Michael Seibel took over responsibility for our main program as CEO of YC.  He’s doing an outstanding job, and I expect the program to significantly strengthen over the course of 2017 and beyond.

In 2016 (and the first part of 2017), we added three remarkable partners to the flagship group: Tim Brady, Adora Cheung and Daniel Gross.

One of my partners that I’d like to especially thank is Dalton Caldwell.  Dalton has been a YC partner since 2013, and now runs our admissions team, which is perhaps the most important function we have.  Dalton has taken a process that used to be stressful and deeply imperfect and improved it by a huge amount.  Though I’m sure we’ll still make mistakes, I sleep better at night thinking that we’re making far fewer in this area than we used to.

While I’m on the topic of recognizing partners, I’d also like to thank the three partners at YC that get some of the least public recognition.  Kirsty Nathoo is our CFO, and Jon and Carolynn Levy are our General Counsels.  They are full partners at YC but since they don’t advise our companies (as much) on business as the other partners, they are less well-known.  However, they work incredibly hard and thoughtfully, and they are one of the secrets to our success.  In fact, one of our most successful founders recently said to me “I tell every startup I meet they should do YC, and the reason is Jon Levy.  I don’t get how he managed to take my calls at all hours of the day, because the other founders in my batch said he did the same for them, but he solved more problems for us than I can count, and also just listened to me when I had a bad day.”

Finally, I’d like to thank our entire software team, lead by my partner Jared Friedman.  We’ve had an incredible improvement in our software over the past year, and someday when the history of YC is written, I expect that people will talk about software as one of our secret weapons.  This shouldn’t be so secret—one might reasonably expect technology investors to understand the importance of great software for themselves—but it is generally not the case.

We give companies in this program $120k for 7% ownership in their company, and work with them intensively for 3 months and then less intensively for the rest of the company’s life.  We run this program twice a year, and currently fund about 125 companies per batch. While at YC, founders get access to a range of resources, advice, connections, and special deals.

Anyone can apply on our website, and all sorts of people do (here are some common misconceptions about who YC accepts).

Companies often ask us how we decide who gets into YC.  There are four questions I consider:

1) Will this company build something lots of people really love?

If so, and if ‘lots’ is sufficiently large, the company has the chance to produce substantial earnings.

2) Will this company be easy to copy?

The most successful companies I’ve worked with have a significant competitive advantage—network effect, proprietary technology, complex coordination, or barrier to entry of some other sort.  I understand in theory it’s possible to build a very successful commodity company, but I don’t know how to do it.

3) Will these founders develop into “forces of nature”?

As most people say, it’s hard to make money unless you invest in great founders.  Defining what that means is usually left as an exercise to the reader.  Here are some questions I ask myself: Are these founders relentlessly determined?  Are they original thinkers?  Are they smart, and especially do they have new insights I haven’t heard before?  Are they good communicators (and so will they be able to hire, sell, raise money, talk to the press, etc)?  Are they focused and intense?  Do they always seem to find a way around obstacles?  Would I work for them?

This is the often the hardest factor for me to evaluate, because you have to make a judgment about trajectory—you are trying to predict where someone will be in five years.

4) Does this company have a clear and important mission?

Without this, I usually get bored.  More importantly, companies that don’t have this usually have a hard time recruiting enough great people to work with them, and thus struggle to become very large.

We especially like founders who have some sort of non-traditional background; we are somewhat suspicious of founders with extremely “tracked” lives.  Startups are not a resume item, and we don’t like founders who view YC as a stop on the way to B-school.  Although in many ways it’s a good problem to have, the increase in the value of YC’s brand means we have to work harder to find people doing a startup for the right reason: to bring an idea they’re obsessed with to life, and willing to do something unreasonable to see it happen.

We have had great success funding “unknown” people, and we will keep doing this—it’s one of our two or three best secrets.  Please help us spread the message: you don’t need to be experienced, well-known, or have an impressive resume to get into YC.  We fund smart, ambitious people with a great idea and evidence that they can build things.

If you know a founder who should apply to YC, you can recommend them to us. That said, companies don’t need a recommendation or introduction, and most companies we fund don’t have one.

As I mentioned before, I think the strength and quality of our community is one of the most important things we have to offer.  As with any community, this emerges from a complex set of factors, but I’ll mention three here.

One of the most important cultural values PG and Jessica put in place was to do the right thing for founders, even when it is not in our own short-term interest.  When I was going through YC, it was the thing that most stuck out to me as different from other investors.

Another cultural value they created is to try to fund only good people (in the sense of doing the right thing, though separately we evaluate for effectiveness).  We sometimes get this very wrong, and dealing with the repercussions is the most unpleasant part of our job.  However, we manage to get it right a lot.

Thirdly, we have a ‘pay-it-forward’ mentality.  Startups in the batch know they can ask any alumni for help, well beyond normal Silicon Valley expectations.  Later, when they’re successful alumni, they help new companies without us ever asking.

YC Continuity

YC Continuity is our growth-stage fund.  We started it in 2015, and it’s run by Ali Rowghani.  Last year, Anu Hariharan joined as our second YC Continuity partner.

We do this to provide a source of friendly growth-stage capital to companies and founders that go through the YC program, especially to companies that other investors may not fully understand.  We also hope to be a force for good in the growth-stage investing market.

YC Continuity will begin to experiment with programs to provide more advice and resources to growth-stage companies in 2017.

YC Research

YC Research is a non-profit research division of YC.  Although we think startups are a good structure to align people to solve a problem, they are clearly not the best solution for everything.  For some important problems, a non-profit research lab is a good approach.

We sometimes fund and run internal groups, and sometimes fund external organizations.

So far there are 5 groups: Basic Income, OpenAI, HARC, New Cities, and Universal Healthcare.

Basic Income is studying the effects of giving people unconditional monthly cash.  We are currently in our pilot phase in Oakland.  We are continuing to learn and make changes, and work with various public agencies and governments to enable the full-scale study.  We are planning to run a larger study than we originally intended, and we hope to start fundraising for it soon.

OpenAI is trying to develop artificial intelligence for the benefit of humanity.  In our first year, we released Gym, Universe, and a number of new ideas that were at the limits of my understanding but that I enjoyed reading about.  In 2017, we hope to achieve significant new milestones that are not possible with current AI technology.

HARC is a group headed by Alan Kay inventing new ways for humans to learn and understand more.  My visit to Bret Victor’s lab last year, which is a sort of computerized interactive room, remains one of the new technologies I think most about.

New Cities is still in the exploration phase, but we hope to have more to share over the course of this year.

Universal Healthcare is a project on which we are partnering with Watsi to study how we can use technology to make healthcare both better and more affordable.

We grew a little faster than we were expecting, so we are trying to take a breather on further growth at YCR.  But we may still add one more group in 2017.

Startup School

Startup School is our new MOOC (which we will supplement with our existing series of conferences).  It will be open to anyone (unless we get absolutely overwhelmed with interest) and is free.  We will stream talks like the ones that happen during YC dinners, provide advice to startups, and help them connect to other startups in the program and other people that may be helpful.

Although we clearly stand to gain from this, we are doing it because we believe spreading the message about entrepreneurship and making the necessary information, community, and connections freely accessible to everyone who might want to start a company is important.

This year, I’ll be teaching it.

If this goes well, we hope to offer it every year.  In future years, we also hope to explore how something like ‘financial aid’ might work for people that need a small amount of capital to help get their startup going.

Hacker News

Hacker News (HN) is an internet forum, created by Paul Graham shortly after YC got started and now run by Daniel Gackle.  Its original purpose was to try out the programming language PG was developing—a dialect of Lisp called Arc, that HN still proudly uses today—and to be a place to find interesting things to read.

HN’s initial users were fans of the essays PG had been publishing about startups, programming, and a lot of other things.  Soon it became a hub for everyone interested in YC and startups YC was funding.  YC and HN grew up together, and many YC founders started as HN users.

HN remains focused on startups, programming, and lots of other things—anything intellectually interesting goes.  The HN community has developed many unique features over the years, such as the "Show HN" format, where users share something they've made, and monthly "Who Is Hiring" threads that have helped many community members find jobs.

Hacker News has 3.4 million users per month and 350,000 users per day, with 4 million pageviews a day.  There are just under 1 million registered accounts, with several hundred added each day.  Users post around 1,000 articles and 6,000 comments to the site per day.

These numbers are all growing, but relatively slowly, and we like it that way.  Internet forums are notorious for degrading over time--one of the ways PG described HN was as an experiment in seeing how long a forum could stay good before it deteriorated.  We've mostly managed to stave that off, for 10 years now, but we're always mindful of this risk.

HN has grown into the leading community for tech and startups on the internet, known for its emphasis on civil, substantive discussion—at least in theory!  Our team affectionately refers to HN as "the worst internet forum, except for all the others".


-----


We are only about 30 years into the age of software, about 20 years into the age of the internet, and about 2 years into the age of artificial intelligence.  Each of these by themselves is a technology revolution that I believe we will look back on as being extremely significant; taken together, I believe they will represent the most significant technology revolution in human history—I believe we are likely to have less in common with whatever we call the most intelligent species on the planet in 600 years than we did with humans 60,000 years ago.

It’s an exciting time to do what we do.



Sam Altman

President, YC Group

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Sam Altman
tag:blog.samaltman.com,2013:Post/1126849 2017-01-28T18:48:17Z 2017-03-22T12:20:24Z Time to Take a Stand

It is time for tech companies to start speaking up about some of the actions taken by President Trump’s administration.

There are many actions from his first week that are objectionable.  In repeatedly invoking unsubstantiated conspiracy theories (like the 3 million illegal votes), he's delegitimizing his opponents and continuing to damage our society.  So much objectionable action makes it hard to know where and when to focus, and outrage fatigue is an effective strategy.

But the executive order from yesterday titled “Protecting the Nation From Foreign Terrorist Entry Into the United States” is tantamount to a Muslim ban and requires objection.  I am obviously in favor of safety and rules, but broad-strokes actions targeted at a specific religious group is the wrong solution, and a first step toward a further reduction in rights.

In addition, the precedent of invalidating already-issued visas and green cards should be extremely troubling for immigrants of any country or for anyone who thinks their contributions to the US are important.  This is not just a Muslim ban.  This is a breach of America's contract with all the immigrants in the nation.

This administration has already shown that they are not particularly impressed by the first amendment, and that they are interested in other anti-immigrant action.  So we must object, or our inaction will send a message that the administration can continue to take away our rights.  

In doing so, we should not demonize Trump voters—most of them voted for him for reasons other than the promise of a Muslim ban.  We need their eventual support in resisting actions like these, and we will not get it if we further isolate them. 

The tech community is powerful.  Large tech companies in particular have enormous power and are held in high regard.  We need to hear from the CEOs clearly and unequivocally.  Although there is some business risk in doing so, there is strength in numbers—if everyone does it early this coming week, we will all make each other stronger.

Tech companies go to extraordinary lengths to recruit and retain employees; those employees have a lot of leverage.  If employees push companies to do something, I believe they’ll have to.  

At a minimum, companies should take a public stance.  But talking is only somewhat effective, and employees should push their companies to figure out what actions they can take.  I wish I had better ideas here, but we’re going to have a meeting on Friday at Y Combinator to discuss.  I’d love to see other tech companies do the same. 

If this action has not crossed a line for you, I suggest you think now about what your own line in the sand is.  It’s easy, with gradual escalation, for the definition of ‘acceptable’ to get moved.  So think now about what action President Trump might take that you would consider crossing a line, and write it down.  

Almost every member of the GOP I have spoken to knows that these actions are wrong.  Paul Ryan, Mike Pence, Kevin McCarthy and James Mattis said so themselves when Trump first proposed his Muslim ban.  We need to remind anyone involved in this administration that, for the rest of their lives, they will have to explain why they were complicit in this. 

In my first post on Trump last June, I said it would be a good time for all of us to start speaking up.  We are now at the stage where something is starting that is going to be taught in history classes, and not in a good way.  This morning, Kellyanne Conway posted on Twitter that Trump is "a man of action" who is "just getting started".  I believe her.  We must now start speaking up.

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Sam Altman
tag:blog.samaltman.com,2013:Post/1122934 2017-01-13T17:27:57Z 2017-03-18T13:11:35Z Affordable Care

The Affordable Care Act is far from perfect–for one thing, I think health insurance should be entirely separate from employment–but I hate the thought of losing it without a replacement for people who will lose insurance. If Congress ends up repealing it, I hope they earnestly try to preserve the best parts, and put in place something better.

One thing the ACA definitely did was help a lot of founders start their companies--without it, being a founder would make sense for less people. The Department of Health and Human Services released a lot of new data yesterday showing how the ACA helped support entrepreneurs, and in light of that, I thought it would be good to collect and share stories of how the ACA helped some Y Combinator founders get started.

Here they are in the founders’ own words:

Dan Carroll, Clever, S12

March 3, 2012: I'm holed up in a hotel room in San Francisco with two of my best friends, wildly excited about the idea that will become Clever. We've packed the day with difficult conversations – Where will the company be founded? Do we have enough savings? Who will be CEO? – but the only topic that I'm truly afraid of is health. I've been living with Crohn's Disease for nearly ten years, and I know that without health care, I'd die, and without health insurance, I'd go broke. But some quick research tells me that, thanks to the ACA, I can join my parents' healthcare plan until I turn 26 the following January. Risk mitigated, I make the commitment to my cofounders - I'm in.


Ethan Perlstein, Perlara, W16

I left academia on Jan 1, 2013 as unemployed former postdoc. I would not have been able to move across the country to start my company, and my wife wouldn't have given up her employer-sponsored health insurance, if not for Obamacare. Also, some of the first employees at Perlara depended on the ACA for insurance.


Randall Bennett, VidPresso, W14

There's a good chance that without the aca my startup wouldn't exist... or I'd be dead. When launching my startup we couldn't get health insurance because one insurer denied us because I once had a sleep study for sleep apnea. Once you get one rejection, all the others reject you.

Then, last year I had a brain tumor. I had moved off to a more normal health plan... but with the last set of rules chances are it'd have been unlikely I could have gotten any insurance, let alone a somewhat reasonable plan.


Ben Maitland-Lewis, Pretty Instant, W15

We aren't yet at a stage where we can offer healthcare to our employees but thanks to the ACA we are all individually insured. This has been instrumental in helping us grow the business while keeping costs low. I hope the next administration doesn't repeal our access to individualized affordable healthcare as it would have a direct effect on the company at this stage.


Ravi Parikh, Heap, W13

The provision in ACA that allows young adults to remain on their parents' health insurance until they're 26 has helped me multiple times. In 2011, I was self-employed as a musician, which would have been much more difficult to pursue if I weren't able to take advantage of my parents' health insurance. Later, my co-founder Matin left his job at Facebook in 2012. He and I worked on a number of side projects, one of which eventually became Heap. Both him and I remained on our parents' insurance until Heap had enough funding and traction to offer health plans to employees. Again, without being able to remain on our parents' insurance, this would have been much more difficult.


Mike Romano, Lendsnap, S16

The ACA has been a blessing for me and my family, and without it, I could not pursue my entrepreneurial dreams. I began my new career within days of the birth of my son, and the fact he arrived five weeks early only complicated plans further. My wife is a graphic designer and usually only finds contract work without benefits. The ACA allows me to follow my passion of transforming the mortgage industry while ensuring our son gets the crucial care he needs during his early life.


Brian Merritt, Seed, W15

For me, the ACA was life changing. Prior to the ACA I was only able to obtain insurance either through an established group plan, or via Medical/Medicaid “last resort” insurance. This was because I have a pre-existing condition that made me ineligible to buy an individual insurance plan. Due to having a chronic condition that needs to be managed carefully, having a quality insurance plan was not an option, but a requirement. So my only option was to work for a large employer with an established health plan that would provide me with the appropriate benefits to support my situation. After the ACA made it so that pre-existing conditions don’t disqualify applicants, I was able to purchase an individual insurance plan outside of my employer, and as as a result I was able to start a company and work on it for almost two years before we were able to put our own group plan together.


Mick Johnson, Whereoscope, S10

The ACA was essential when starting my new business - I founded the company, was pre-funding for 9 months, and the only employee, so was unable to get small group coverage. I have a wife, a child, and another child on the way so health insurance was essential. Without the ACA I could never have left a regular job to found this new company, which has now raised funding and employs 7 people.


Kevin Law, Cambly, W14

I had to apply for individual health care twice while starting Cambly before the ACA exchanges launched at the end of 2013. It was incredibly difficult and expensive, because I had to keep paying for expensive COBRA coverage from my previous employer while repeatedly applying, appealing, and getting rejected by insurers for individual plans. I was still on a group plan during the ACA debates and assumed that the only people getting rejected were the chronically ill. I learned through my experience that nearly anyone who had past health care expenses would often be rejected when applying for individual plans (as was my case).

An especially ironic moment occurred when I was on a Blue Cross group plan via COBRA and appealing a rejection for a Blue Cross individual plan. I got a physical, so my doctor could write a letter saying I was in good health for the appeal. I simultaneously received a rejection letter for my individual plan appeal citing pasts health costs AND a letter from my group plan asking if the physical was related to a workplace incident (presumably so they could sue someone to get reimbursed for the costs).

The exchanges finally went live at the end of 2013, and I quickly got insurance coverage. No extensive health history paperwork. No rejections or appeals. It launched right around when we got into YC, so it was great to focus on building and growing our business rather than trying to obtain health insurance.


Tristan Tao, Leada, S15

I'm currently 24 years old (going on 25). I am fortunately covered under my parent's health insurance under ACA (until I'm 26). This was critical in reducing my personal burn. I would not go without health insurance; this meant I'd have to either join a larger company to gain coverage, or purchase them out of pocket. Either way it would've significantly hindered the 22 yrs old me to start a company as a Senior in College.

I strongly hope that the successor of Obamacare will include a clause that makes it cheaper for recent graduates to get coverage (or retain the current policy of enabling people younger than 26 to stay on their parents' coverage).

Looking back, the largest hindrance to starting a company would've been debt (which I didn't have any), and personal burn (insurance being a huge part).


Ram Jayaraman, PlateIQ, S15

5 out of 7 members of the initial team at Plate IQ were on ACA. Without ACA in the early days we would have to spend large amounts on employer health insurance and since the team was small we would not have gotten much discounts either. Since the team just needed something basic until we raise decent venture money, they were all able to find very affordable options with good networks like Kaiser.

In thinking of an ACA successor: very few plans are coupled with HSA accounts and HSA withdrawals are penalized. For startups with young teams I would ideally like to continue getting plans with large deductibles and large co-pays and instead contribute to an HSA account. Avoiding the 20% penalty for the HSA withdrawal would definitely encourage more participation.


Ben Thompson, Gitprime, W16

I have a family of 5. Had it not been for the affordable care act, it would have been incredibly difficult to take the leap to become a co-founder. Because of the ACA, I was able to take a calculated career risk without having to sacrifice health coverage for my family as part of that decision. Two years later, we’ve built a company that provides benefits for all of our employees and their dependents.


Brendan Lim, Kicksend, S11

In 2009 my wife was in a life threatening car accident. After her recovery, she was unable to get reasonably priced coverage due to her new "pre-existing conditions". During this time, my co-founder and I had quit our jobs and started working on Kicksend (S11) and were living off of our savings. As a result, we were unable to afford reasonable insurance. The ACA removed the "pre-existing conditions" and gave us peace of mind since my wife was finally able to get covered.


Vishal Joshi, Joy, S16

When we started Joy, we had insurance as dependents and did not need to create company healthcare offer for a bit.  But soon we had a new employee very eager to join Joy but needed health insurance.  We agreed to start the process but it so happens that the entire ordeal to get company healthcare setup takes a couple of months.  If not for ACA, Joy would had lost a really good employee who is still with us and actually helped us build our website.  She was able to keep afloat using ACA while we got our company policy setup.


Jason Chen, Verge Genomics, S15

The Affordable Care Act makes it easy for us to purchase and manage health insurance plans – all of our employees are covered rapidly with no medical underwriting. However, we pay high premiums, incur rising deductibles, and plans are bloated with benefits we cannot use. We have also had to pay for "retroactive coverage" for some employees to avoid penalties from the individual mandate, even though no services were used. Future patient-centered health reform should facilitate access to coverage for small business and individuals while allowing greater customization of benefits.


Zachary Garbow, SocialBrowse, W08

When I began working on my startup full time, my wife and I wanted to start a family. At that time, when trying to purchase private insurance being pregnant was considered a pre-existing condition. My wife also had undertaken some preventative procedures years earlier, which made it difficult to obtain coverage. As a result, we were stressed and anxious about not being able to get coverage, and fearful that we'd not be covered for our pregnancy and I'd have to quit my startup to find a corporate job with health insurance. Luckily, the ACA passed just in time to provide us the peace of mind to both start our family and continue building my startup. We now have 2 kids and a thriving, growing business.


Varun Aroroa, OpenCurriculum, W14

ACA has allowed me to have health insurance. Before I got on Obamacare, I had no insurance and had stopped all physical activity beyond basic exercise for years, being too scared to hurt myself. Living below the adjusted poverty line, I just can't afford normal plans. It is amazing how much mental comfort and freedom it can bring in life.


Mike Knoop, Zapier, S12

Thanks to the ACA and my parents, the provision to cover dependents through the age of 26 enabled me to take more risk starting Zapier. Specifically, I did not have to worry about healthcare coverage when the company was small and could not afford health benefits. Now, Zapier provides health benefit coverage to our 50+ US employees.


Zachariah Reitano, Shout, S14

I had heart surgery when I was 18. I was virtually uninsurable. I now have health insurance. Why we need the ACA is no more complicated than that.]]>
Sam Altman
tag:blog.samaltman.com,2013:Post/1099541 2016-10-17T19:09:02Z 2017-03-24T13:23:48Z 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.

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Sam Altman
tag:blog.samaltman.com,2013:Post/1093706 2016-09-26T17:07:56Z 2017-03-20T12:51:33Z $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!
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Sam Altman
tag:blog.samaltman.com,2013:Post/1083546 2016-08-23T20:55:16Z 2017-03-16T18:37:41Z 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.
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Sam Altman
tag:blog.samaltman.com,2013:Post/1065381 2016-06-20T19:36:08Z 2017-03-07T04:34:23Z 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 :(

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Sam Altman
tag:blog.samaltman.com,2013:Post/1063515 2016-06-15T01:19:58Z 2017-03-09T01:41:15Z '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.]]>
Sam Altman
tag:blog.samaltman.com,2013:Post/1055897 2016-05-26T00:42:18Z 2017-01-12T03:49:57Z 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.]]>
Sam Altman
tag:blog.samaltman.com,2013:Post/1032619 2016-04-13T17:21:10Z 2017-01-11T19:39:19Z 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. 

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Sam Altman
tag:blog.samaltman.com,2013:Post/1021785 2016-03-30T15:08:42Z 2017-03-21T21:33:46Z 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.

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Sam Altman
tag:blog.samaltman.com,2013:Post/1011879 2016-03-11T16:19:09Z 2017-03-18T03:26:12Z 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.

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Sam Altman
tag:blog.samaltman.com,2013:Post/971634 2016-01-15T18:23:06Z 2017-02-23T02:55:37Z 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.

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Sam Altman
tag:blog.samaltman.com,2013:Post/926362 2015-11-02T21:26:17Z 2016-11-30T14:24:31Z The Tech Bust of 2015

Maybe instead of a tech bubble, we’re in a tech bust.  No one seems to fervently believe tech valuations are cheap, so it’d be somewhat surprising if we were in a bubble.  In many parts of the market, valuations seem too cheap.  In the part where they seem too high, maybe they aren’t really valuations at all, because the deal structure has changed to become more like debt.

Many of the small cap public tech companies have taken a beating this year.  Companies like Yelp are trading at less than 4 times trailing revenue.

The tech mega-caps are monopolies and have deservedly high valuations.  But even then, I would not be willing to short a single one of Apple, Google, Amazon, or Facebook against the S&P.  Apple in particular trades at a single-digit ex-cash forward P/E.

2015 has seen the lowest level of tech IPOs as a percentage of all IPOs in seven years.  The S&P Tech P/E is lower than the overall S&P P/E.  Neither of these facts seems suggestive of a tech bubble.

On the private side, people complain all the time about early-stage valuations (and to be fair, they’ve felt high to me for four years).  But if you invested in every single YC company over the past three years at their Demo Day valuation (average Demo Day valuations haven’t moved much in the past three years) you’d be very happy, even though investors complain that YC is the worst example of overpriced companies.

The mid-stages also seem generally reasonable, though of course there are notable exceptions.  These exceptions get all the attention—not the hundreds of companies doing remarkably well, but that handful that have raised money at high valuations and are struggling or dead. 

On the whole, it seems harder than any time in the past four years to raise mid-stage rounds.  This is also not suggestive of a bubble. 

So where is the problem?  Late-stage private valuations.  But perhaps the answer is that these “investments” aren’t really equity—they’re much more like debt. [1] I saw terms recently that had a 2x liquidation preference (i.e. the investors got the first 2x their money out of the company when it exited) and a 3x liquidation cap (i.e. after they made 3x their money, they didn’t get any more of the proceeds).

This is hardly an equity instrument at all. [2] The example here is an extreme case, but not wildly so.  Investors are buying debt but dressing it up close enough to equity to maintain their venture capital fund exemption status.  In a world of 0 percent interest rates, people become pretty focused on finding new sources for fixed income.

There is a massive disconnect in late-stage preferred stock, because if you’re using it to synthesize debt it doesn’t matter what the price is.  The closer the rounds get to common stock (a less-than-1x liquidation preference, for example), the more I think the valuation means something.  Unsurprisingly, the best companies usually have the most common-stock-like terms (and “the best companies” are never the ones that seem overpriced for long anyway).

Some of this debt is poorly underwritten.  Some unicorns will surely die (and those are the ones everyone will talk about).  That doesn’t make it a tech bubble.  It’d be more accurate to say it’s a tech bubble if no unicorns die in the next couple of years. 

To summarize: there does not appear to be a tech bubble in the public markets.  There does not appear to be a bubble in early or mid stages of the private markets.  There does appear to be a bubble in the late-stage private companies, but that’s because people are misunderstanding these financial instruments as equity.  If you reclassify those rounds as debt, then it gets hard to say where exactly the bubble is.

At some point, I expect LPs to realize that buying debt in late-stage tech companies is not what they signed up for, and then prices in late-stage private companies will appear to correct.  And I think that the entire public market is likely to go down—perhaps substantially—when interest rates materially move up, though that may be a long time away.  But I expect public tech companies are likely to trade with the rest of the market and not underperform. 

But no matter what happens in the short- and medium-term, I continue to believe technology is the future, and I still can’t think of an asset I’d rather own and not think about for a decade or two than a basket of public or private tech stocks.

 

 

Thanks to Jack Altman, Patrick Collison, Paul Graham, Aaron Levie, Geoff Ralston, and Ali Rowghani for reading draft of this. 

[1] There are real problems with these distorted "valuations".  Employees these companies hire often think of them as real valuations.  It also often makes the company think of itself as much bigger than it is, and do the wrong things for its actual stage.  Finally, too much cheap money lets companies operate with bad unit economics and cover up all sorts of internal problems.  So I think many companies are hurting themselves with access to easy capital.

[2] Even before the shift to debt-like rounds, the disconnect between how much people will pay for 5% of a company in preferred stock vs. 100% of a company in common stock was massive (and for good reason--the downside protection alone with preferred stock makes it much different than common stock).  As this delta has accentuated, the public/private disconnect has gotten worse, and caused a number of problems for companies accustomed to valuations always going up.

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Sam Altman
tag:blog.samaltman.com,2013:Post/910577 2015-09-28T17:22:39Z 2017-02-05T20:18:12Z Airbnb and San Francisco

Airbnb has recently been attacked by San Francisco politicians for driving up the price of housing in the city.  San Francisco has tried, and will continue to try, to ban Airbnb in various ways.  Last week, this excellent post was published on Prop F—“the Airbnb law”. 

I recently reached out to Brian Chesky, the CEO of Airbnb, to learn more about this. I am decidedly a non-expert on this topic, but here are some thoughts from a layperson.

I met Brian in 2008, when he started Airbedandbreakfast as…an affordable housing company.  He couldn’t afford to pay his rent in 10 days and his credit cards were maxed out.  He looked around and realized that he did have one asset he could monetize—his extra space.  And eventually, Airbnb was born and the sharing economy began.

Unfortunately, a lot of other people have problems paying their rent or mortgage.  75% of Airbnb hosts in San Francisco say that their income from Airbnb helps them stay in their homes, and 60% of the Airbnb income goes to rent/mortgage and other housing expenses. Making it harder to use Airbnb in San Francisco may make it impossible for some of these hosts to afford to stay in their homes and in this city.

In 2014 (the most recent year with available data) there were about 387,000 housing units in SF.  About 38% were owner-occupied, and the remaining 62% or 240,000 were rental units.  About 33,000 of these were vacant, generally as a side effect of rent control laws.  (I don’t honestly know if rent control is a net good or bad thing—I assume more good than bad—but it certainly keeps units off the market.) [1]

In the past year, only about 340 units in SF were rented on Airbnb more than 211 nights, which is what Airbnb has calculated as the break-even point compared to long-term rental.  This is less than one out of every thousand units of housing in SF.  Looking at it another way, it’s just over 1.1% of all unoccupied units.  

There have been about 10,700 SF units that have rented on Airbnb in the last year (obviously a much lower number of units are actively listed at any particular time).  The median number of trips per unit was 5, and mean was 13.3.  The mean revenue per host was about $13,000 per year.  More than 90 percent of Airbnb hosts in SF are listing their primary residence, and making money with an extra room or their entire place when they are out of town.

The whole magic of the sharing economy is better asset utilization and thus lower prices for everyone.  Home sharing makes better utilization out of a fixed asset, and by more optimally filling space it means the same number of people can use less supply.  In fact, Airbnb worked with economist Tom Davidoff of the University of British Columbia and found that Airbnb has affected the price of housing in SF by less than 1% either up or down.

But in the last 5 years, the cost of housing in the city has about doubled.  The reason for this is a lot more people want to live in SF than we have housing for, and the city has been slow to approve new construction.  Who is to blame for this?  The same politicians that are trying to distract you with Airbnb’s 340 “professionally rented” units.

What should the politicians actually be doing about the housing crunch?  The obvious answer would be to support building more housing and fixing the supply side of the equation.  But instead they’re doing the opposite (e.g. a moratorium on new construction in the Mission) and trying to turn Airbnb into a scapegoat.

I love San Francisco. I wish housing here were much cheaper.  This is a special city and more people are going to want to live here, and more are going to want to come visit and do business with people here. Instead of trying to ban the future, we should be making it easier for middle class families to stay in the city.  We can do this by building more units to push the market price of housing down and by making it easier for San Franciscans to share their homes.


[1] Selected Housing Characteristics, 2014 American Community Survey 1-Year Estimates

Disclosure: I own a significant amount of Airbnb stock.]]>
Sam Altman
tag:blog.samaltman.com,2013:Post/907877 2015-09-21T18:22:13Z 2017-03-18T23:19:26Z Unit Economics

Commentators are looking hard for what’s wrong with startups in Silicon Valley.  First they talked about valuations being too high.  Then they talked about valuations not really meaning anything.  Then they talked about companies staying private too long.  Then they talked about burn rates.

But something does feel off, though it’s been hard to precisely identify.

I think the answer is unit economics.  One of the jokes that came out of the 2000 bubble was “we lose a little money on every customer, but we make it up on volume”.  This was then out of fashion for a long time as Google and Facebook hit their stride.

There are now more businesses than I ever remember before that struggle to explain how their unit economics are ever going to make sense.  It usually requires an explanation on the order of infinite retention (“yes, our sales and marketing costs are really high and our annual profit margins per user are thin, but we’re going to keep the customer forever”), a massive reduction in costs (“we’re going to replace all our human labor with robots”), a claim that eventually the company can stop buying users (“we acquire users for more than they’re worth for now just to get the flywheel spinning”), or something even less plausible.

This is particularly common in startups that don’t pass the Peter Thiel monopoly test—these startups seem to have to spend every available dollar on user acquisition, and if they raise prices, customers defect to a similar service.

Most great companies historically have had good unit economics soon after they began monetizing, even if the company as a whole lost money for a long period of time.

Silicon Valley has always been willing to invest in money-losing companies that may eventually make lots of money.  That’s great.  I have never seen Silicon Valley so willing to invest in companies that have well-understood financials showing they will probably always lose money.  Low-margin businesses have never been more fashionable here than they are right now.

Companies that have raised lots of money are at particular risk.  It’s so tempting to paper over a problem with the business by spending more money instead of fixing the product or service.

Burn rates by themselves are not scary.  Burn rates are scary when you scale the business up and the model doesn’t look any better.  Burn rates are also scary when runway is short (i.e., burning $2M a month with $100M in the bank is fine; burning $1M a month with $3M in the bank is really bad) even if the unit economics look great.

The good news is that if you’re aware of this you can avoid the trap.  If there’s no other way to operate in your space, maybe it’s a bad business.  The low-margin, hyper-competitive world is not the only place to be.  Companies always have an explanation about how they’re going to fix unit economics, so you really have to go out of your way not to delude yourself.

If you hold yourself to the standard of making a product that is so good people spontaneously recommend it to their friends, and you have an easy-to-understand business model where you make more than you spend on each user, and it gets better not worse as you get bigger, you may not look like some of hottest companies of today, but you’ll look a lot like Google and Facebook.

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Sam Altman
tag:blog.samaltman.com,2013:Post/896315 2015-08-21T16:25:44Z 2016-06-22T01:42:57Z Financial Misstatements

First-time startup CEOs make a lot of mistakes, mostly due to ignorance.

One particularly bad one is misunderstanding or misusing basic financial terms.  I started noticing this in Y Combinator applicants a couple of years ago, but see it now in startups at all stages (including some YC companies). 

It is very important to make accurate financial statements to investors, and it is well worth the time it takes to learn the difference between concepts like “revenue” and “GMV” (gross merchandise volume) and revenue from a “contract” or “LOI” (letter of intent).  Most terms have very specific definitions, and it’s well worth a little bit of time learning what these are.  When in doubt, you will never get in trouble for defining the way you’re using a financial term too precisely.

I’ve seen people use GMV for revenue or refer to an LOI as a contract many times in the past year when talking to investors.  This is a felony.

Although investors should be doing more diligence than is currently in fashion, this issue is on the founders to fix.

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Sam Altman
tag:blog.samaltman.com,2013:Post/895887 2015-08-20T16:47:06Z 2017-03-05T17:51:41Z The Post-YC Slump

At the end of a YC batch, the general consensus among the partners is that about 25% of the companies are on a trajectory that could lead to a multi-billion dollar company.  Of course, only a handful of them do.  Most go on to be decent or bad.

These companies have a beautifully exponential growth curve during YC, and then a few months after YC is over, it essentially flatlines.  Because it would be so much better for us if this did not happen, we wonder a lot about why.

The main problem is that companies stop doing what they were doing during YC—instead of relentlessly focusing on building a great product and growing, they focus on everything else.  They also work less hard and less effectively—the peer pressure during YC is a powerful force.

The startups justify this to themselves in all sorts of ways—“We’re doing some longer-term strategic work.  You wouldn’t understand.” “We’re cleaning up our technical debt.” “We’re building out the organization.” “We’re focusing on PR for this month.  I’m going to speak at 6 conferences and writing two thought leadership pieces.” “We are different; growth isn’t our most important thing.” We’ve heard all of these from startups that have gone on to disappoint.

In general, startups get distracted by fake work.  Fake work is both easier and more fun than real work for many founders.  Two particularly bad cases are raising money and getting personal press; we’ve seen many promising founders fall in love with one or (usually) both of these, which nearly always ends badly.  But the list of fake work is long.

I tell founders to consider how directly a task relates to growing.  Obviously, building and selling are the best.  Things like hiring are also very high on the list—you will need to hire to sustain your growth rate at some point.  Interviewing lots of lawyers has got to be near the bottom.

During YC, we are ruthless about reminding startups that fake work does not count and will still get you a failed startup no matter how intensely you do it.  We are also ruthless about asking for your progress, and being honest with you if things aren’t working.  After YC, we have less contact with startups—you can go dark on us if you want.  This, by itself, is almost always a sign that a startup is doing badly.

Momentum is everything in a startup.  If you have momentum, you can survive most other problems.  If you do not have momentum, nothing except getting momentum will solve your problems.  Founders internalize this during YC; many seem to forget in the few years after YC.  Burnout seems to almost always affect founders whose startups are not doing well, and then becomes a downward spiral.  In fact, one of my top few startup commandments is “never let the company lose momentum”.

There are a few other common problems.  One is a feeling of “we made it” that comes after a big financing round and a reduction in intensity.  A related problem is that after you’ve raised a lot of money or become somewhat well-known, it’s harder to admit that things aren’t working and you need to change direction.  Also, very small startups can grow by sheer force of will, even with a bad product.  This stops working after a few months as the numbers get larger, and if you haven’t built something people love, you will not be able to continue growing.

So how can startups avoid this slump?  Work on real work.  Stay focused on building a product your users love and hitting your growth targets.  Try to have a board and peers who will make you hold yourself accountable—don’t lose the urgency that you developed during YC.  Keep sending updates on your traction to your investors and anyone else who will read them (in fact, we’re building some new software at YC to automate this for our startups in the hope that it prevent some of them from going off the rails).  Make the mistake of focusing too much on what matters most, not too little, and relentlessly protect your time from everything else.  Don’t ever let yourself feel like you’ve won before you have.  I still don’t think the Airbnb founders feel like they’ve won.  You have to keep up a high level of intensity for many, many years.

Many YC startups learns these lessons after a year or two in the wilderness, but for some it’s too late and for all it’s a waste of time.

The best startups we fund keep on doing exactly what they did during YC.  This sounds so simple and so obvious, but in practice so few founders do it.

The good news is it’s doable with deliberate effort.  If every founder (YC and otherwise) did it, the number of successful startups would probably double.

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Sam Altman
tag:blog.samaltman.com,2013:Post/893679 2015-08-14T15:59:37Z 2017-02-28T00:22:35Z The U.S. Digital Service

A lot of us complain about how the government is not very good at technology.  The U.S. Digital Service is actually trying to do something about it, by applying the way startups build products to make government services work better for veterans, immigrants, students, seniors, and the American public as a whole.

This is clearly a good idea.  (See U.S. Digital Service Playbook for more details.)

Inspired by the successful rescue of HealthCare.gov, small teams get deployed inside government agencies to improve critical government software. 

It seems to be working.  To use HealthCare.gov again as an example, the Digital Service effort helped replace a $200 million login system that cost $70 million per year to operate (I know…) with one that cost $4 million to build and less than $4 million per year to operate, and worked better in every way.  In another example, at U.S. Citizenship and Immigration Services, a Digital Service team has been instrumental in enabling green cards to be renewed online for the first time and a growing number of other improvements to the immigrant experience.

The Digital Service attracted talent on par with the best Silicon Valley startups, including talented veterans from Amazon, Google, Facebook, Twitter, Twilio, YC, and more – engineers, designers, and product managers who have committed to do tours of duty serving the country.

As an American, I am grateful to these men and women for doing this.  Because of their work, the government will work better.

I often get asked about what people can do for a year or two to make a big impact between projects.  Here is a good answer.  Consider joining the ranks.  I think it’d be great if it became a new tradition that people from the tech world do a tour of duty serving our country at some point in their careers.  We need better technology in government.

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Sam Altman
tag:blog.samaltman.com,2013:Post/893016 2015-08-12T16:09:39Z 2017-03-19T06:08:26Z Projects and Companies

In the early days of my startup, I used to get slightly offended when people would refer to it as a “project”.  “How’s your project going?” seemed like the asker didn't take us seriously, even though everything felt serious to us.  I remember assuming this would stop after we announced a $5 million Series A; it didn’t.  I kept feeling like we’d know we made it when people started referring to us a company.

I now have the opposite belief.  It’s far better to be thought of—and to think of yourself—as a project than a company for as long as possible.

Companies sound serious.  When you start thinking of yourself as a company, you start acting like one.  You worry more about pretend work involving things like lawyers, conferences, and finance stuff, and less about building product, because that’s what people who run companies are supposed to do.  This is, of course, the kiss of death for promising ideas.

Projects have very low expectations, which is great.  Projects also usually mean less people and less money, so you get the good parts of both flexibility and focus.  Companies have high expectations—and the more money out of the gate and the more press, the worse off they are (think Color and Clinkle, for example).

Worst of all, you won’t work on slightly crazy ideas—this is a company, not a hobby, and you need to do something that sounds like a good, respectable idea.  There is a limit to what most people are willing to work on for something called a company that does not exist if it’s just a project.  The risk of seeming stupid when something is just a project is almost zero, and no one cares if you fail.  So you’re much more likely to work on something good, instead of derivative but plausible-sounding crap.

When you’re working on a project, you can experiment with ideas for a long time.  When you have a company, the clock is ticking and people expect results.  This gets to the danger with projects—a lot of people use them as an excuse to not work very hard.  If you don’t have the self-discipline to work hard without external pressure, projects can be a license to slack off.

The best companies start out with ideas that don’t sound very good.  They start out as projects, and in fact sometimes they sound so inconsequential the founders wouldn't let themselves work on them if they had to defend them as a company.  Google and Yahoo started as grad students’ projects.  Facebook was a project Zuckerberg built while he was a sophomore in college.  Twitter was a side project that started with a single engineer inside a company doing something totally different.  Airbnb was a side project to make some money to afford rent.  They all became companies later.

All of these were ideas that seemed bad but turned out to be good, and this is the magic formula for major success.  But in the rush to claim a company, they could have been lost.  The pressure  from external (and internal) expectations is constant and subtle, and it often kills the magic ideas.  Great companies often start as projects.

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Sam Altman
tag:blog.samaltman.com,2013:Post/875293 2015-06-29T20:00:19Z 2017-01-25T02:47:01Z Energy

I think a lot about how important cheap, safe, and abundant energy is to our future.  A lot of problems—economic, environmental, war, poverty, food and water availability, bad side effects of globalization, etc.—are deeply related to the energy problem. 

I believe that if you could choose one single technological development to help the most people in the world, radically better energy generation is probably it.  Throughout history, quality of life has gone up as the cost of energy has gone down. 

The 20th century was the century of carbon-based energy.  I am confident the 22nd century is going to be the century of atomic energy (i.e. terrestrial atomic generation and energy relatively directly from the sun’s fusion). [1] I am unsure how the majority of the 21st century will be powered, but I’d like to help get things moving.

Although a lot of people are working on solar, I don’t think enough people are working on terrestrial-based atomic energy, which has major advantages when it comes to cost, density, and predictability.

Given the potential importance, I’m making an exception to my normal policy of not joining YC boards for Helion Energy and UPower.  Both of these companies went through YC about a year ago.  Helion is working on fusion and UPower is working on fission; I’ve looked at many companies working on both and think these are the two best.  I’ll be the chairman of both companies and I’m also investing in the seed/A rounds for both companies. [2] 

Both companies hope to have a test reactor operating in a few years, and both companies are hiring.  If you’re interested in working on this, please get in touch.




 



[1] I’m unsure of is what the split between sun-generated (I’m just going to call it solar but I use it to include wind and biofuels) and terrestrial-generated will be.  There will only be one cheapest source of energy, and history suggests whatever that is will be fairly dominant.  So it will probably be 80/20 one way or the other.

[2] I will save my thoughts about traditional technology investors being afraid to touch expensive, long-term, high-risk high-reward projects for another time.  A lot of people talk about the need to try new things that are hard but could have huge impact; it’s important to not just talk about them but to act.  I think it’s easier for individual investors to do this than for venture funds, at least given how they are currently structured.

I don’t think investors are doing nearly enough to fund atomic energy.  With the exception of China, new fission development has effectively stopped and very few plants have been built in recent memory.  Fission has been a remarkably safe and effective power source while generating 11% of the world’s electricity—the first time I saw the data on the safety data of fission energy relative to other power sources, I thought there was an error. 

On the fusion side, only about four US fusion companies have raised venture capital in the past few decades.  The big government projects, like NIF and ITER, unfortunately have the feel of peacetime big government projects.

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Sam Altman
tag:blog.samaltman.com,2013:Post/848362 2015-04-28T18:57:11Z 2017-03-20T18:20:43Z The days are long but the decades are short

I turned 30 last week and a friend asked me if I'd figured out any life advice in the past decade worth passing on.  I'm somewhat hesitant to publish this because I think these lists usually seem hollow, but here is a cleaned up version of my answer:


1) Never put your family, friends, or significant other low on your priority list.  Prefer a handful of truly close friends to a hundred acquaintances.  Don’t lose touch with old friends.  Occasionally stay up until the sun rises talking to people.  Have parties.

2) Life is not a dress rehearsal—this is probably it.  Make it count.  Time is extremely limited and goes by fast.  Do what makes you happy and fulfilled—few people get remembered hundreds of years after they die anyway.  Don’t do stuff that doesn’t make you happy (this happens most often when other people want you to do something).  Don’t spend time trying to maintain relationships with people you don’t like, and cut negative people out of your life.  Negativity is really bad.  Don’t let yourself make excuses for not doing the things you want to do.

3) How to succeed: pick the right thing to do (this is critical and usually ignored), focus, believe in yourself (especially when others tell you it’s not going to work), develop personal connections with people that will help you, learn to identify talented people, and work hard.  It’s hard to identify what to work on because original thought is hard.

4) On work: it’s difficult to do a great job on work you don’t care about.  And it’s hard to be totally happy/fulfilled in life if you don’t like what you do for your work.  Work very hard—a surprising number of people will be offended that you choose to work hard—but not so hard that the rest of your life passes you by.  Aim to be the best in the world at whatever you do professionally.  Even if you miss, you’ll probably end up in a pretty good place.  Figure out your own productivity system—don’t waste time being unorganized, working at suboptimal times, etc.  Don’t be afraid to take some career risks, especially early on.  Most people pick their career fairly randomly—really think hard about what you like, what fields are going to be successful, and try to talk to people in those fields.

5) On money: Whether or not money can buy happiness, it can buy freedom, and that’s a big deal.  Also, lack of money is very stressful.  In almost all ways, having enough money so that you don’t stress about paying rent does more to change your wellbeing than having enough money to buy your own jet.  Making money is often more fun than spending it, though I personally have never regretted money I’ve spent on friends, new experiences, saving time, travel, and causes I believe in.

6) Talk to people more.  Read more long content and less tweets.  Watch less TV.  Spend less time on the Internet.

7) Don’t waste time.  Most people waste most of their time, especially in business.

8) Don’t let yourself get pushed around.  As Paul Graham once said to me, “People can become formidable, but it’s hard to predict who”.  (There is a big difference between confident and arrogant.  Aim for the former, obviously.)

9) Have clear goals for yourself every day, every year, and every decade. 

10) However, as valuable as planning is, if a great opportunity comes along you should take it.  Don’t be afraid to do something slightly reckless.  One of the benefits of working hard is that good opportunities will come along, but it’s still up to you to jump on them when they do.

11) Go out of your way to be around smart, interesting, ambitious people.  Work for them and hire them (in fact, one of the most satisfying parts of work is forging deep relationships with really good people).  Try to spend time with people who are either among the best in the world at what they do or extremely promising but totally unknown.  It really is true that you become an average of the people you spend the most time with.

12) Minimize your own cognitive load from distracting things that don’t really matter.  It’s hard to overstate how important this is, and how bad most people are at it.  Get rid of distractions in your life.  Develop very strong ways to avoid letting crap you don’t like doing pile up and take your mental cycles, especially in your work life.

13) Keep your personal burn rate low.  This alone will give you a lot of opportunities in life.

14) Summers are the best.

15) Don’t worry so much.  Things in life are rarely as risky as they seem.  Most people are too risk-averse, and so most advice is biased too much towards conservative paths.

16) Ask for what you want.  

17) If you think you’re going to regret not doing something, you should probably do it.  Regret is the worst, and most people regret far more things they didn’t do than things they did do.  When in doubt, kiss the boy/girl.

18) Exercise.  Eat well.  Sleep.  Get out into nature with some regularity.

19) Go out of your way to help people.  Few things in life are as satisfying.  Be nice to strangers.  Be nice even when it doesn’t matter.

20) Youth is a really great thing.  Don’t waste it.  In fact, in your 20s, I think it’s ok to take a “Give me financial discipline, but not just yet” attitude.  All the money in the world will never get back time that passed you by.

21) Tell your parents you love them more often.  Go home and visit as often as you can.

22) This too shall pass.

23) Learn voraciously. 

24) Do new things often.  This seems to be really important.  Not only does doing new things seem to slow down the perception of time, increase happiness, and keep life interesting, but it seems to prevent people from calcifying in the ways that they think.  Aim to do something big, new, and risky every year in your personal and professional life.

25) Remember how intensely you loved your boyfriend/girlfriend when you were a teenager?  Love him/her that intensely now.  Remember how excited and happy you got about stuff as a kid?  Get that excited and happy now.

26) Don’t screw people and don’t burn bridges.  Pick your battles carefully.

27) Forgive people. 

28) Don’t chase status.  Status without substance doesn’t work for long and is unfulfilling.

29) Most things are ok in moderation.  Almost nothing is ok in extreme amounts.

30) Existential angst is part of life.  It is particularly noticeable around major life events or just after major career milestones.  It seems to particularly affect smart, ambitious people.  I think one of the reasons some people work so hard is so they don’t have to spend too much time thinking about this.  Nothing is wrong with you for feeling this way; you are not alone.

31) Be grateful and keep problems in perspective.  Don’t complain too much.  Don’t hate other people’s success (but remember that some people will hate your success, and you have to learn to ignore it). 

32) Be a doer, not a talker.

33) Given enough time, it is possible to adjust to almost anything, good or bad.  Humans are remarkable at this.

34) Think for a few seconds before you act.  Think for a few minutes if you’re angry.

35) Don’t judge other people too quickly.  You never know their whole story and why they did or didn’t do something.  Be empathetic.

36) The days are long but the decades are short.

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Sam Altman
tag:blog.samaltman.com,2013:Post/829699 2015-03-24T19:17:31Z 2016-10-04T19:57:09Z Bubble talk

I’m tired of reading about investors and journalists claiming there’s a bubble in tech.  I understand that it’s fun to do and easy press, but it’s boring reading.  I also understand that it might scare newer investors away and bring down valuations, but there’s got to be a better way to win than that. 

I would much rather read about what companies are doing than the state of the markets.  The gleeful anticipation of a correction by investors and pundits is not helping the world get better in any meaningful way.

Investors that think companies are overpriced are always free not to invest.  Eventually, the market will find its clearing price.

I am pretty paranoid about bubbles, but things still feel grounded in reason (the thing that feels least reasonable is some early-stage valuations, but it’s a small amount of capital and still nothing I would call a “bubble”).  Even my own recent comments were misinterpreted as claiming we’re in a bubble—that’s how much the press wants to write about this.

Although they cause a lot of handwringing, business cycles are short compared to the arc of innovation.  In October of 2008, Sequoia Capital—arguably the best-ever in the business—gave the famous “RIP Good Times” presentation (I was there).  A few months later, we funded Airbnb.  A few months after that, a company called UberCab got started.

Instead of just making statements, here is a bet looking 5 years out.  To win, I have to be right on all three propositions.

1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B.  I am leaving out Snapchat because I couldn’t get verification of its valuation.  Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. 

2) Stripe, Zenefits, Instacart, Mixpanel, Teespring, Optimizely, Coinbase, Docker, and Weebly are a selection of mid-stage YC companies currently worth less than $9B in aggregate.  Proposition 2: On January 1st, 2020, they will be worth at least $27B in aggregate.

3) Proposition 3: The current YC Winter 2015 batch—currently worth something that rounds down to $0—will be worth at least $3B on Jan 1st, 2020.

Acquisitions at any point between now and the decision date are counted as their acquisition value.  Private companies are valued as of their last round that sold stock with at most a 1x liquidation preference or last secondary transaction of at least $100MM of stock.  Public companies are valued by their market capitalization.

There will be downward pressure on valuations as interest rates rise.  But I think it will be less than the upward pressure of the phenomenal innovation and earning power of these businesses.

Of course, there could be a macro collapse in 2018 or 2019, which wouldn’t have time to recover by 2020.  I think that’s the most likely way for me to lose.

This bet is open to the first VC who would like to take it (though it is not clear to me anyone who wants to take the other side should be investing in startups.)  The loser donates $100,000 to a charity of the winner’s choice.

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Sam Altman
tag:blog.samaltman.com,2013:Post/818278 2015-03-03T18:03:04Z 2016-05-29T17:48:09Z Technology predictions

Some of these are probably apocryphal, but making predictions about the limits of technology is really hard:


Space travel is utter bilge.

- Dr. Richard van der Reit Wooley, space advisor to the British government, 1956

Computers in the future may...perhaps only weigh 1.5 tons.

- Popular Mechanics, 1949

X-rays are a hoax.

- Lord Kelvin, ca. 1900

I confess that in 1901 I said to my brother Orville that man would not fly for fifty years. Two years later we ourselves made flights. This demonstration of my impotence as a prophet gave me such a shock that ever since I have distrusted myself and avoided all predictions.

- Wilbur Wright, 1908

To place a man in a multi-stage rocket and project him into the controlling gravitational field of the moon where the passengers can make scientific observations, perhaps land alive, and then return to earth--all that constitutes a wild dream worthy of Jules Verne. I am bold enough to say that such a man-made voyage will never occur regardless of all future advances.

- Lee deForest, inventor of the vacuum tube, 1957

There is not the slightest indication that [nuclear energy] will ever be obtainable. It would mean that the atom would have to be shattered at will.

-  Albert Einstein, 1932

That is the biggest fool thing we have ever done. The bomb will never go off, and I speak as an expert in explosives.

- Admiral William Leahy to President Truman 

Anyone who expects a source of power from the transformation of these atoms is talking moonshine.

- Ernest Rutherford, 1933 

The abolishment of pain in surgery is a chimera. It is absurd to go on seeking it... Knife and pain are two words in surgery that must forever be associated in the consciousness of the patient.

- Dr. Alfred Velpeaum, French surgeon, 1839

Bitcoin is definitely going to be trading at $10,000 or more and in wide use by the end of 2014.

- Many otherwise smart people, November of 2013

Superhuman machine intelligence is prima facie ridiculous.

- Many otherwise smart people, 2015


(Most of these from: https://www.lhup.edu/~dsimanek/neverwrk.htm)

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Sam Altman
tag:blog.samaltman.com,2013:Post/817790 2015-03-02T22:17:43Z 2016-12-10T14:32:01Z Machine intelligence, part 2

This is part two of a a two-part post—the first part is here.


THE NEED FOR REGULATION

Although there has been a lot of discussion about the dangers of machine intelligence recently, there hasn’t been much discussion about what we should try to do to mitigate the threat. 

Part of the reason is that many people are almost proud of how strongly they believe that the algorithms in their neurons will never be replicated in silicon, and so they don’t believe it’s a potential threat.  Another part of it is that figuring out what to do about it is just very hard, and the more one thinks about it the less possible it seems.  And another part is that superhuman machine intelligence (SMI) is probably still decades away [1], and we have very pressing problems now.

But we will face this threat at some point, and we have a lot of work to do before it gets here.  So here is a suggestion.

The US government, and all other governments, should regulate the development of SMI.  In an ideal world, regulation would slow down the bad guys and speed up the good guys—it seems like what happens with the first SMI to be developed will be very important.

Although my general belief is that technology is often over-regulated, I think some regulation is a good thing, and I’d hate to live in a world with no regulation at all.  And I think it’s definitely a good thing when the survival of humanity is in question.  (Incidentally, there is precedent for classification of privately-developed knowledge when it carries mass risk to human life.  SILEX is perhaps the best-known example.) 

To state the obvious, one of the biggest challenges is that the US has broken all trust with the tech community over the past couple of years.  We’d need a new agency to do this.

I am sure that Internet commentators will say that everything I’m about to propose is not nearly specific enough, which is definitely true.  I mean for this to be the beginning of a conversation, not the end of one.

The first serious dangers from SMI are likely to involve humans and SMI working together.  Regulation should address both the case of malevolent humans intentionally misusing machine intelligence to, for example, wreak havoc on worldwide financial markets or air traffic control systems, and the “accident” case of SMI being developed and then acting unpredictably.

Specifically, regulation should: 

1)   Provide a framework to observe progress.  This should happen in two ways.  The first is looking for places in the world where it seems like a group is either being aided by significant machine intelligence or training such an intelligence in some way. 

The second is observing companies working on SMI development.  The companies shouldn’t have to disclose how they’re doing what they’re doing (though when governments gets serious about SMI they are likely to out-resource any private company), but periodically showing regulators their current capabilities seems like a smart idea.

2)   Given how disastrous a bug could be, require development safeguards to reduce the risk of the accident case.  For example, beyond a certain checkpoint, we could require development happen only on airgapped computers, require that self-improving software require human intervention to move forward on each iteration, require that certain parts of the software be subject to third-party code reviews, etc.  I’m not very optimistic than any of this will work for anything except accidental errors—humans will always be the weak link in the strategy (see the AI-in-a-box thought experiments).  But it at least feels worth trying.

Being able to do this—if it is possible at all—will require a huge amount of technical research and development that we should start intensive work on now.  This work is almost entirely separate from the work that’s happening today to get piecemeal machine intelligence to work.

To state the obvious but important point, it’s important to write the regulations in such a way that they provide protection while producing minimal drag on innovation (though there will be some unavoidable cost).

3)   Require that the first SMI developed have as part of its operating rules that a) it can’t cause any direct or indirect harm to humanity (i.e. Asimov’s zeroeth law), b) it should detect other SMI being developed but take no action beyond detection, c) other than required for part b, have no effect on the world.

We currently don’t know how to implement any of this, so here too, we need significant technical research and development that we should start now. 

4)   Provide lots of funding for R+D for groups that comply with all of this, especially for groups doing safety research.

5)   Provide a longer-term framework for how we figure out a safe and happy future for coexisting with SMI—the most optimistic version seems like some version of “the human/machine merge”.  We don’t have to figure this out today.

Regulation would have an effect on SMI development via financing—most venture firms and large technology companies don’t want to break major laws.  Most venture-backed startups and large companies would presumably comply with the regulations.

Although it’s possible that a lone wolf in a garage will be the one to figure SMI out, it seems more likely that it will be a group of very smart people with a lot of resources.  It also seems likely, at least given the current work I’m aware of, it will involve US companies in some way (though, as I said above, I think every government in the world should enact similar regulations).

Some people worry that regulation will slow down progress in the US and ensure that SMI gets developed somewhere else first.  I don’t think a little bit of regulation is likely to overcome the huge head start and density of talent that US companies currently have.

There is an obvious upside case to SMI —it could solve a lot of the serious problems facing humanity—but in my opinion it is not the default case.  The other big upside case is that machine intelligence could help us figure out how to upload ourselves, and we could live forever in computers.  Or maybe in some way, we can make SMI be a descendent of humanity.

Generally, the arc of technology has been about reducing randomness and increasing our control over the world.  At some point in the next century, we are going to have the most randomness ever injected into the system. 

In politics, we usually fight over small differences.  These differences pale in comparison to the difference between humans and aliens, which is what SMI will effectively be like.  We should be able to come together and figure out a regulatory strategy quickly.



Thanks to Dario Amodei (especially Dario), Paul Buchheit, Matt Bush, Patrick Collison, Holden Karnofsky, Luke Muehlhauser, and Geoff Ralston for reading drafts of this and the previous post. 

[1] If you want to try to guess when, the two things I’d think about are computational power and algorithmic development.  For the former, assume there are about 100 billion neurons and 100 trillion synapses in a human brain, and the average neuron fires 5 times per second, and then think about how long it will take on the current computing trajectory to get a machine with enough memory and flops to simulate that.

For the algorithms, neural networks and reinforcement learning have both performed better than I’ve expected for input and output respectively (e.g. captioning photos depicting complex scenes, beating humans at video games the software has never seen before with just the ability to look at the screen and access to the controls).  I am always surprised how unimpressed most people seem with these results.  Unsupervised learning has been a weaker point, and this is probably a critical part of replicating human intelligence.   But many researchers I’ve spoken to are optimistic about current work, and I have no reason to believe this is outside the scope of a Turing machine.

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Sam Altman
tag:blog.samaltman.com,2013:Post/815546 2015-02-25T18:03:22Z 2016-12-10T14:16:12Z Machine intelligence, part 1

This is going to be a two-part post—one on why machine intelligence is something we should be afraid of, and one on what we should do about it.  If you’re already afraid of machine intelligence, you can skip this one and read the second post tomorrow—I was planning to only write part 2, but when I asked a few people to read drafts it became clear I needed part 1.


WHY YOU SHOULD FEAR MACHINE INTELLIGENCE

Development of superhuman machine intelligence (SMI) [1] is probably the greatest threat to the continued existence of humanity.  There are other threats that I think are more certain to happen (for example, an engineered virus with a long incubation period and a high mortality rate) but are unlikely to destroy every human in the universe in the way that SMI could.  Also, most of these other big threats are already widely feared.

It is extremely hard to put a timeframe on when this will happen (more on this later), and it certainly feels to most people working in the field that it’s still many, many years away.  But it’s also extremely hard to believe that it isn’t very likely that it will happen at some point.

SMI does not have to be the inherently evil sci-fi version to kill us all.  A more probable scenario is that it simply doesn’t care about us much either way, but in an effort to accomplish some other goal (most goals, if you think about them long enough, could make use of resources currently being used by humans) wipes us out.  Certain goals, like self-preservation, could clearly benefit from no humans.  We wash our hands not because we actively wish ill towards the bacteria and viruses on them, but because we don’t want them to get in the way of our plans.

(Incidentally, Nick Bostrom’s excellent book “Superintelligence” is the best thing I’ve seen on this topic.  It is well worth a read.)

Most machine intelligence development involves a “fitness function”—something the program tries to optimize.  At some point, someone will probably try to give a program the fitness function of “survive and reproduce”.  Even if not, it will likely be a useful subgoal of many other fitness functions.  It worked well for biological life.  Unfortunately for us, one thing I learned when I was a student in the Stanford AI lab is that programs often achieve their fitness function in unpredicted ways.

Evolution will continue forward, and if humans are no longer the most-fit species, we may go away.  In some sense, this is the system working as designed.  But as a human programmed to survive and reproduce, I feel we should fight it.

How can we survive the development of SMI?  It may not be possible.  One of my top 4 favorite explanations for the Fermi paradox is that biological intelligence always eventually creates machine intelligence, which wipes out biological life and then for some reason decides to makes itself undetectable.

It’s very hard to know how close we are to machine intelligence surpassing human intelligence.  Progression of machine intelligence is a double exponential function; human-written programs and computing power are getting better at an exponential rate, and self-learning/self-improving software will improve itself at an exponential rate.  Development progress may look relatively slow and then all of a sudden go vertical—things could get out of control very quickly (it also may be more gradual and we may barely perceive it happening).

As mentioned earlier, it is probably still somewhat far away, especially in its ability to build killer robots with no help at all from humans.  But recursive self-improvement is a powerful force, and so it’s difficult to have strong opinions about machine intelligence being ten or one hundred years away.

We also have a bad habit of changing the definition of machine intelligence when a program gets really good to claim that the problem wasn’t really that hard in the first place (chess, Jeopardy, self-driving cars, etc.).  This makes it seems like we aren’t making any progress towards it.  Admittedly, narrow machine intelligence is very different than general-purpose machine intelligence, but I still think this is a potential blindspot.

It’s hard to look at the rate or improvement in the last 40 years and think that 40 years for now we’re not going to be somewhere crazy.  40 years ago we had Pong.  Today we have virtual reality so advanced that it’s difficult to be sure if it’s virtual or real, and computers that can beat humans in most games.

Though, to be fair, in the last 40 years we have made little progress on the parts of machine intelligence that seem really hard—learning, creativity, etc.  Basic search with a lot of compute power has just worked better than expected. 

One additional reason that progress towards SMI is difficult to quantify is that emergent behavior is always a challenge for intuition.  The above common criticism of current machine intelligence—that no one has produced anything close to human creativity, and that this is somehow inextricably linked with any sort of real intelligence—causes a lot of smart people to think that SMI must be very far away.

But it’s very possible that creativity and what we think of us as human intelligence are just an emergent property of a small number of algorithms operating with a lot of compute power (In fact, many respected neocortex researchers believe there is effectively one algorithm for all intelligence.  I distinctly remember my undergrad advisor saying the reason he was excited about machine intelligence again was that brain research made it seem possible there was only one algorithm computer scientists had to figure out.)

Because we don’t understand how human intelligence works in any meaningful way, it’s difficult to make strong statements about how close or far away from emulating it we really are.  We could be completely off track, or we could be one algorithm away.

Human brains don’t look all that different from chimp brains, and yet somehow produce wildly different capabilities.  We decry current machine intelligence as cheap tricks, but perhaps our own intelligence is just the emergent combination of a bunch of cheap tricks.

Many people seem to believe that SMI would be very dangerous if it were developed, but think that it’s either never going to happen or definitely very far off.   This is sloppy, dangerous thinking.



[1] I prefer calling it "machine intelligence" and not "artificial intelligence" because artificial seems to imply it's not real or not very good.  When it gets developed, there will be nothing artificial about it.

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Sam Altman
tag:blog.samaltman.com,2013:Post/813790 2015-02-20T18:45:37Z 2017-01-23T11:23:41Z Startup advice, briefly

This is a very short summary with lots left out—here is the long version: http://startupclass.samaltman.com


You should start with an idea, not a company.  When it’s just an idea or project, the stakes are lower and you’re more willing to entertain outlandish-sounding but potentially huge ideas.  The best way to start a company is to build interesting projects. 

On the other hand, when you have a “company” that you feel pressure to commit to an idea too quickly.  If it’s just a project, you can spend more time finding something great to work on, which is important—if the startup really works, you’ll probably be working on it for a very long time.

Have at least one technical founder on the team (i.e. someone who can build whatever the company is going to build).

In general, prefer a fast-growing market to a large but slow-growing one, especially if you have conviction the fast-growing market is going to be important but others dismiss it as unimportant.

The best startup ideas are the ones that seem like bad ideas but are good ideas.

Make something people want.  You can screw up most other things if you get this right; if you don’t, nothing else will save you.

Once you’ve shifted from “interesting project” to “company” mode, be decisive and act quickly.  Instead of thinking about making a decision over the course of week, think about making it in an hour, and getting it done in the next hour.

Become formidable.  Also become tough—the road ahead is going to be painful and make you doubt yourself many, many times.

Figure out a way to get your product in front of users.  Start manually (read this: http://www.paulgraham.com/ds.html)

Listen to what your users tell you, improve your product, and then listen again.  Keep doing this until you’ve made something some users love (one of the many brilliant Paul Buchheit observations is that it’s better to build something a small number of users love than something a lot of users like).  Don’t deceive yourself about whether or not your users actually love your product.

Keep your burn rate very low until you’re sure you’ve built something people love.  The easiest way to do this is hire slowly.

Have a strategy.  Most people don’t.  Occasionally take a little bit of time to think about how you’re executing against your strategy.  Specifically, remember that someday you need to have a monopoly (in the Peter Thiel sense).

Read this before you raise money: http://paulgraham.com/fr.html.

Learn to ask for what you want. 

Ignore what the press says about you, especially if it’s complimentary.

Generate revenue early in the life of your company.

Hire the best people you can.  However much time you’re spending on this, it’s probably not enough.  Give a lot of equity to your employees, and have very high expectations.  Smart, effective people are critical to success.  Read this: http://blog.samaltman.com/how-to-hire.

Fire people quickly when you make hiring mistakes.

Don’t work with people you don’t have a good feeling about—this goes for employees (and cofounders), partners, investors, etc.

Figure out a way to get users at scale (i.e. bite the bullet and learn how sales and marketing work).  Incidentally, while it is currently in fashion, spending more than the lifetime value of your users to acquire them is not an acceptable strategy.

Obsess about your growth rate, and never stop.   The company will build what the CEO measures.  If you ever catch yourself saying “we’re not really focused on growth right now”, think very carefully about the possibility you’re focused on the wrong thing.  Also, don’t let yourself be deceived by vanity metrics.

Eventually, the company needs to evolve to become a mission that everyone, but especially the founders, are exceptionally dedicated to.  The “missionaries vs. mercenaries” soundbite is overused but true.

Don’t waste your time on stuff that doesn’t matter (i.e. things other than building your product, talking to your users, growing, etc.).  In general, avoid the kind of stuff that might be in a movie about running a startup—meeting with lawyers and accountants, going to lots of conferences, grabbing coffee with people, sitting in lots of meetings, etc.  Become a Delaware C Corp (use Clerky or any well-known Silicon Valley law firm) and then get back to work on your product.

Focus intensely on the things that do matter.  Every day, figure out what the 2 or 3 most important things for you to do are.  Do those and ignore other distractions.  Be a relentless execution machine.

Do what it takes and don’t make up excuses.

Learn to manage people.  Make sure your employees are happy.  Don’t ignore this.

In addition to building a great product, if you want to be really successful, you also have to build a great company.  So think a lot about your culture.

Don’t underestimate the importance of personal connections.

Ignore acquisition interest until you are sure you want to sell.  Don’t “check the market”.  There is an alternate universe somewhere full of companies that would have been great if they could have just avoided this one mistake.  Unfortunately, in this universe, they’re all dead.

Work really hard.  Everyone wants a secret to success other than this; if it exists, I haven’t found it yet.

Keep doing this for 10 years.

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Sam Altman