tag:blog.samaltman.com,2013:/posts Sam Altman 2017-01-21T22:52:19Z Sam Altman tag:blog.samaltman.com,2013:Post/1122934 2017-01-13T17:27:57Z 2017-01-21T19:00:29Z 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 2017-01-20T23:46:26Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/1093706 2016-09-26T17:07:56Z 2016-11-03T16:23:35Z $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!
Sam Altman
tag:blog.samaltman.com,2013:Post/1083546 2016-08-23T20:55:16Z 2017-01-12T22:47:54Z 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.
Sam Altman
tag:blog.samaltman.com,2013:Post/1065381 2016-06-20T19:36:08Z 2017-01-16T00:16:57Z 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 :(

Sam Altman
tag:blog.samaltman.com,2013:Post/1063515 2016-06-15T01:19:58Z 2017-01-11T16:22:50Z '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. 

Sam Altman
tag:blog.samaltman.com,2013:Post/1021785 2016-03-30T15:08:42Z 2017-01-19T11:48:50Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/1011879 2016-03-11T16:19:09Z 2017-01-11T22:06:20Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/971634 2016-01-15T18:23:06Z 2017-01-21T22:52:19Z 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.

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.

Sam Altman
tag:blog.samaltman.com,2013:Post/910577 2015-09-28T17:22:39Z 2017-01-04T17:29:19Z 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 2017-01-08T11:18:34Z 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.

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.

Sam Altman
tag:blog.samaltman.com,2013:Post/895887 2015-08-20T16:47:06Z 2016-11-23T10:49:52Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/893679 2015-08-14T15:59:37Z 2016-10-28T04:04:03Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/893016 2015-08-12T16:09:39Z 2017-01-04T17:38:38Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/875293 2015-06-29T20:00:19Z 2016-10-12T11:14:32Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/848362 2015-04-28T18:57:11Z 2017-01-20T07:17:40Z 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.

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.

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)

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.


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.

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.


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.

Sam Altman
tag:blog.samaltman.com,2013:Post/813790 2015-02-20T18:45:37Z 2016-11-23T11:35:28Z 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.

Sam Altman
tag:blog.samaltman.com,2013:Post/812358 2015-02-16T17:31:32Z 2016-09-18T05:52:30Z The Software Revolution

In human history, there have been three great technological revolutions and many smaller ones.  The three great ones are the agricultural revolution, the industrial revolution, and the one we are now in the middle of—the software revolution. [1]

The great technological revolutions have affected what most people do every day and how society is structured.  The previous one, the industrial revolution, created lots of jobs because the new technology required huge numbers of humans to run it.  But this is not the normal course of technology; it was an anomaly in that sense.  And it makes people think, perhaps subconsciously, that technological revolutions are always good for most people’s personal economic status.

It appears that the software revolution will do what technology usually does—create wealth but destroy jobs.  Of course, we will probably find new things to do to satisfy limitless human demand.  But we should stop pretending that the software revolution, by itself, is going to be good for median wages.

Technology provides leverage on ability and luck, and in the process concentrates wealth and drives inequality.  I think that drastic wealth inequality is likely to be one of the biggest social problems of the next 20 years. [2] We can—and we will—redistribute wealth, but it still doesn’t solve the real problem of people needing something fulfilling to do.

Trying to hold on to worthless jobs is a terrible but popular idea.  Trying to find new jobs for billions of people is a good idea but obviously very hard because whatever the new jobs are, they will probably be so fundamentally different from anything that exists today that meaningful planning is almost impossible.  But the current strategy—“let’s just pretend that Travis is kidding when he talks about self-driving cars and that Uber really is going to create millions of jobs forever”—is not the right answer.

The second major challenge of the software revolution is the concentration of power in small groups.  This also happens with most technological revolutions, but the last truly terrifying technology (the atomic bomb) taught us bad lessons in a similar way to the industrial revolution and job growth.

It is hard to make an atomic bomb not because the knowledge is restricted (though it is—if I, hypothetically, knew how to make an atomic bomb, it would be tremendously illegal for me to say anything about it) but because it takes huge amounts of energy to enrich Uranium.  One effectively needs the resources of nations to do it. [3]

Again, this is not the normal course for technology—it was an idiosyncrasy of nuclear development.  The software revolution is likely to do what technology usually does, and make more power available to small groups.

Two of the biggest risks I see emerging from the software revolution—AI and synthetic biology—may put tremendous capability to cause harm in the hands of small groups, or even individuals.  It is probably already possible to design and produce a terrible disease in a small lab; development of an AI that could end human life may only require a few hundred people in an office building anywhere in the world, with no equipment other than laptops. 

The new existential threats won’t require the resources of nations to produce.  A number of things that used to take the resources of nations—building a rocket, for example—are now doable by companies, at least partially enabled by software.  But a rocket can destroy anything on earth.

What can we do?  We can’t make the knowledge of these things illegal and hope it will work.  We can’t try to stop technological progress.

I think the best strategy is to try to legislate sensible safeguards but work very hard to make sure the edge we get from technology on the good side is stronger than the edge that bad actors get.  If we can synthesize new diseases, maybe we can synthesize vaccines.  If we can make a bad AI, maybe we can make a good AI that stops the bad one.

The current strategy is badly misguided.  It’s not going to be like the atomic bomb this time around, and the sooner we stop pretending otherwise, the better off we’ll be.  The fact that we don’t have serious efforts underway to combat threats from synthetic biology and AI development is astonishing.

To be clear, I’m a fan of the software revolution and I feel fortunate I was born when I was.  But I worry we learned the wrong lessons from recent examples, and these two issues—huge-scale destruction of jobs, and concentration of huge power—are getting lost.



[1] A lot of the smaller ones have been very important, like the hand axe (incidentally, the hand axe is the longest-serving piece of technology in human history), writing, cannons, the internal combustion engine, atomic bombs, fishing (many people believe that fishing is what allowed us to develop the brains that we have now), and many more. 

[2] It is true that life is better in an absolute sense than it was a hundred years ago even for very poor people.  Most of the stuff that people defending current levels of wealth inequality say is also true—highly paid people do indeed make inexpensive services for poor people.

However, ignoring quality of life relative to other people alive today feels like it ignores what make us human.  I think it’s a good thing when some people make thousands of times as much money as what other people make, but I also don’t resent paying my taxes and think we should do much more to help people that are actually poor.  The social safety net will have to trend up with the development of technology. 

[3] Or at least, one used to: http://en.wikipedia.org/wiki/Separation_of_isotopes_by_laser_excitation

Sam Altman
tag:blog.samaltman.com,2013:Post/810258 2015-02-11T18:44:21Z 2016-08-20T04:17:18Z China

The most important story of 2014 that most people ignored was the Chinese economy overtaking the US economy.  (This is using the purchasing power parity metric, which incorporates differences in the price of goods, but the Chinese economy will overtake on other metrics soon enough.)

This shouldn’t have caught anyone by surprise; US growth has stagnated while Chinese growth has continued to do pretty well (the chart below shows inflation-adjusted economic growth rates in China vs. the US since 1978).  The US has become less competitive globally—for example, other countries have surpassed our education system, and we have structural and demographic challenges other countries don’t and that create significant expenses.

The historical track record of the largest economy being overtaken by another is not good.  Sometimes it’s violent.  (For example, Germany and the UK in 1914.  Though neither were the largest in the world, the world was less globalized.  They were the largest in the region and very focused on each other.)  Sometimes it’s a long, slow slide of denial into stagnation and decreasing relevance.

It’s almost unthinkable for most people born in the US in the last 70 or so years for the US not to be the world’s superpower.  But on current trajectories, we’re about to find out what that looks like. [1] The current plan seems to be something like “managed decline”, or gradual acceptance of reduced importance.

The US gets huge advantages from being the world’s largest economy (as mentioned earlier, other countries wanting this sometimes leads to major conflict).  For example, our currency is the most important currency in the world, and we can do things like run a trillion dollar deficit without anyone getting too concerned.  People generally have to buy energy (oil) in our currency, which adds a great deal of support (though we’ve already seen the very beginnings of the PetroYuan).  Also, we get to have the world’s most powerful army.

The current business model of the US requires the dollar to be the world reserve currency, though the Chinese currency is rapidly becoming a viable alternative. At some point, China will relax its currency controls, allowing trade and offshore investment to grow rapidly.  The Renminbi (RMB) will probably rise in value (though some people think the opposite will happen in the short term) and China will become an important financial center.

The most critical question, speaking as a hopeful US citizen, is whether or not it’s possible for one country to remain as powerful as another with four times less people.  The US has never been the world’s largest country by population, but it has been the largest economy, and so it’s clearly possible for at least some period of time.

How has the US done this?  One important way has been our excellence in innovation and developing new technology.  A remarkable number of the major technological developments—far in excess of our share of the world’s population—have come from the US in the last century.

The secret to this is not genetics or something in our drinking water.  We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work [2], and radical thinking, and minimizes impediments to doing new things.  Unfortunately we’ve moved somewhat away from this.  Our best hope, by far, is to find a way to return to it quickly.   Although the changes required to become more competitive will likely be painful, and probably even produce a short-term economic headwind, they are critical to make.

The US should try very hard to find a way to grow faster.  [3] I’ve written about this in the past.  Even if there weren’t a competitor in the picture, countries historically don’t do well with declining growth, and so it’s in our interest to try to continue to keep growth up.  It’s our standard advice to startups, and it works for organizations at all levels.  Things are either growing or dying.

The other thing to try to do is figure out a way to coexist with China.  Absent some major surprise, China and the US are going to be the world superpowers for some time.  The world is now so interconnected that totally separate governments playing by different rules are not going to work (for example, if people can manufacture goods in China without regard for environmental regulations, they’ll be cheaper than US goods, but they’ll harm the environment for people in the US eventually).  Instead of the normal historical path of increasing two-way animosity until it erupts in conflict, maybe we can find a way to both work on what we’re really good at and have governments that at least partially cooperate.

Thanks to Patrick Collison, Matt Danzeisen (especially to Matt, who provided major help), Paul Graham, and Alfred Lin for reading drafts of this.

[1] As a related sidenote, “exceptionalism” in the US has become almost a bad word—it’s bad to talk about an individual being exceptionally good, and certainly bad to talk about the country as a whole being exceptional.  On my last visit to China, the contrast here was remarkable—people loved talking about how amazing certain entrepreneurs were, and the work the country as a whole was doing to make itself the best in the world.

The other stark contrast is how much harder people in China seem to work than people here, and how working hard is considered a good thing, not a bad thing.

[2] One thing that I’ve found puzzling over the last ten or so years is the anger directed towards people who choose to work hard.  This is almost never from actually poor people who work two minimum wage jobs (who work harder than all the rest of us, pretty much) but from middle class people.  It’s often somewhat subtle—“It’s so stupid that these people play the startup lottery.  What idiots.  They should just consult.” or “Startups need to stop glorifying young workers that can work all day and night”—but the message is clear.  My explanation is that this is simply what happens in a low-growth, zero-sum environment.

[3] A significant and relevant headwind for US growth is that current US policy often encourages investment and job growth outside the US; domestic companies can borrow at low rates because of 0% Fed lending, build factories (and create jobs) in other countries, and then hold/reinvest those profits offshore rather than pay high taxes repatriating their funds.]]>
Sam Altman
tag:blog.samaltman.com,2013:Post/809914 2015-02-10T22:22:06Z 2016-07-25T12:51:32Z FarmLogs

I recently got to be a guest at a FarmLogs board meeting.  I was struck by how much of an impact the company was having on the world, and how just a couple of years ago it seemed like they were doing something so small.

FarmLogs is a great example of a company that started out with a seemingly boring idea--a way for farmers to store their data in the cloud--and has developed into a way for farmers to run their entire farm, gather all the data about a particular piece of farmland, and optimize production.  The company is now used by 20% of US row crop farms, and those farms are all more productive than they were without the software.

Eventually, FarmLogs can become the operating system for efficient, semi-autonomous farms.

Technology is about doing more with less.  This is important in a lot of areas, but few as important as natural resources.

We need technology like this to meet the resource challenges that the planet will continue to face as the population grows and standards of living continue to increase.  In fact, we need another hundred companies like this. 

The good news is that it’s doable.  FarmLogs is only three years old (YC Winter 2012).  The company has used less than $3 million of capital so far, and with it they have already helped farmers gain hundreds of millions of dollars in efficiency.  The software revolution is making it possible to create world-changing companies relatively quickly and with relatively modest resources.

And importantly, they started out doing something that any two programmers (with domain expertise in their market) could have done.

Sam Altman
tag:blog.samaltman.com,2013:Post/795987 2015-01-14T17:04:36Z 2016-09-18T05:23:46Z Policy for Growth and Innovation

I get asked fairly often now by people in the US government what policy changes I would make to “fix innovation and drive economic growth” [1][2] (for some reason, it’s almost always that exact phrase).

Innovation is obviously important—the US has long been the world’s best exporter of new ideas, and it’d be disastrously bad if that were no longer the case.  Also, I don’t think our society will work very well without economic growth, and innovation is what will drive growth from where we are now.  While it’s true that people are better off in absolute sense than they were a few hundred years ago, most of us are more sensitive to our wealth increasing over short time-scales (i.e. life getting better every year) than how fortunate we are relative to people who lived a long time ago. [3]  Democracy works well in a society with lots of growth, but not a no-growth (i.e. zero-sum) society.  Very low growth and a democracy are a very bad combination.

So here is my answer:

1) Fix education.  We have to fix education in this country.  Yes, it will take a long time to have an effect on output, but that’s not an excuse for continuing not to take serious action.  We currently spend about 4% of the federal budget on education.  The problems with education are well-documented—teachers make far too little, it’s too difficult to fire bad teachers, some cultures don’t value education, etc.  Many of these are easy to fix—pay teachers a lot more in exchange for a change in the tenure rules, for example—and some issues (like cultural ones) are probably going to be very difficult to fix.

Without good education (including continuing education and re-training for older people), we will never have equality of opportunity.  And we will never have enough innovators.

I think it’s most important to fix the broken parts of the current system, but also to decide we need to spend more money on education.

One bright spot is that most of the world now has Internet access at least some of the time and there are truly remarkable resources available online to learn pretty much anything anyone could want.  It amazes me that I can become relatively proficient on any subject I want, for free, from a $50 smartphone nearly anywhere in the world.  There is probably a way to combine online education with real-world mentorship, activity, and group interaction in a way that makes the cost of quality education far lower than it is today.

Spending money on education, unlike most government spending, actually has an ROI—every dollar we spend on it ought to return more dollars in the future.  This is the sort of budget item that people should be able to agree on.  As I wrote in the above-linked post, we will likely need both entitlement spending reductions and revenue increases to make the budget work.

2) Invest in basic research and development.  Government spending on R&D keeps decreasing.  There are certain things that companies are really good at doing; basic research is usually not one of them.  If the government wants more innovation, then it should stop cutting the amount of money it spends producing it.  I think current policy is off by something like an order of magnitude here.

Like education, this is in the category of an “investment”, not an “expense”.

3) Reform immigration.  If talented people want to come start companies or develop new technologies in the US, we should let them.  Turning them away—willfully sending promising new companies to other countries—seems terribly shortsighted.  This will have an immediate positive effect on innovation and GDP growth.  Aside from the obvious and well-documented economic benefits (for high-skilled workers especially, but for immigration more generally), it’s a matter of justice—I don’t think I deserve special rights because I happened to be born here, and I think it’s unfair to discriminate on country of birth.  Other than Native Americans, all of our families are fairly recent immigrants.

We need reasonable limits, of course, but our current limits are not the answer.  On our current path, in the not-very-distant future, we will be begging the people we are currently turning away to come and create value in the US. 

Many people say we don’t need immigration reform because people can work remotely.  While remote working works well for a lot of companies, and I expect it to continue to work better as time goes on, it doesn’t work well for all companies (for example, it would not work for YC), and it shouldn’t be the only option.  It also sends money and competency out of our economy.  The common answer of “let the US companies open overseas offices” always sounds to me like “further slow US economic growth and long-term viability”.

Companies in the Bay Area already largely hire from elsewhere in country—companies are desperate for talented people, and there aren’t enough here to go around.  Even with this, tech wages keep going up, and good people who already live in the Bay Area keep getting jobs.

4) Cheaper housing.  This is not a problem everywhere in the US, but it is in a lot of places.  The cost of housing in SF and the Bay Area in general is horrific.  There just isn’t enough housing here, and so it’s really expensive (obviously, many people make the rational decision not to live here).  Expensive housing drives up the cost of everything else, and a lower cost of living gives people more flexibility (which will hopefully lead to more innovation) and more disposable income (which will hopefully stimulate economic growth).

Homeowners generally vote and want to preserve their property value; non-homeowners generally vote less often.  So efforts to build more housing, or make housing less attractive as an investment, usually fail when they go to a vote.  For example, a recent proposal to allow more house building in SF failed with an atrociously low voter turnout.

In general, I think policy should discourage speculation on real estate and encourage housing to be as inexpensive as possible.  I think most people would do better owning assets that drive growth anyway.

In the Bay Area specifically, I think policy should target an aggressive increase in the housing supply in the next 5 years and undo many of the regulations currently preventing this.

5) Reduce regulation.  I think some regulation is a good thing.  In certain areas (like development of AI) I’d like to see a lot more of it.  But I think it often goes too far—for example, an average of $2.5B and 10 years to bring a new drug to market strikes me as problematic.

Many of the companies I know that are innovating in the physical world struggle with regulatory challenges.  And they’re starting to leave.  The biggest problem, usually, is that they just can’t get clarity out of the massive and slow government bureaucracy.  In 2014, 4 companies that I work with chose to at least partially leave the US for more friendly regulatory environments (3 for regulatory violation or uncertainty, and 1 for concern about export restrictions).  Many more kept their headquarters here but chose somewhere else as their initial market (including, for example, nearly all medical device companies, but also drone companies, nuclear fission companies, pharmaceutical companies, bitcoin companies, etc etc etc).

This is not good.  We live in a global society now, and not all countries are as backward about immigration as we are.  If our best and brightest want to go start companies elsewhere, they will do so. [4] 

I think one interesting way to solve this would be with incentives.  Right now, as I understand it, regulators mostly get “career advancement” by saying “no” to things.  Though it would take a lot of careful thought, it might produce good results if regulators were compensated with some version of equity in what they regulate.

Again, I think some regulation is definitely good.  But the current situation is stifling innovation.

6) Make being a public company not be so terrible.  This point is related to the one above.  I’d hate to run a public company.  Public companies end up with a bunch of short-term stockholders who simultaneously criticize you for missing earnings by a penny this quarter and not making enough long-term investments.

Most companies stop innovating when they go public, because they need very predictable revenue and expenses.

In an ideal world, CEOs would ignore this sort of pressure and make long-term bets.  But the inanity on CNBC is distracting in all sorts of ways—for example, it’s always surprising to me how much employees react to what they hear about their company on the news.

I’ve seen CEOs do the wrong thing because they were scared of how “the market might react” if they do the right thing.  It’s a rare CEO (such as Zuckerberg, Page, Cook, and Bezos) who can stand up to public market investors and make the sort of bets that will produce long term innovation and growth at the expense of short term profits.

There are a lot of changes I’d make to improve the situation.  One easy one is that I’d pay public company directors in all stock and not let them sell it for 5 years.  That will produce a focus on real growth (in the current situation, making $200k a year for four days of work leads to directors focusing on preserving their own jobs).

Another is that I’d encourage exchanges that don’t trade every millisecond.  Liquidity is a good thing; I personally don’t see the value in the level of “fluidity” that we have.  It’s distracting to the companies and sucks up an enormous amount of human attention (one of the things I like about investing in startups is that I only have to think about the price once every 18 months or so).  If I had to take a company public, I’d love to only have my shares priced and traded once every month of quarter.

A third change would be something to incent people to hold shares for long periods of time.  One way to do this would be charge a decent-sized fee on every share traded (and have the fee go to the company); another would be a graduated tax rate that goes from something like 80% for day trades down to 10% for shares held for 5 years. 

Another thing the government could do is just make it much easier to stay private for a long time, though this would have undesirable side effects (especially around increasing wealth inequality).

7) Target a real GDP growth rate.  You build what you measure.  If the government wants more growth, set a target and focus everyone on hitting it.

GDP is not a perfect metric, especially as the software revolution drives cost of goods gets driven lower and lower.  What we really need is a measurement of “total quality of life”.  This will be tough to figure out, but it’s probably worth the time to invent some framework and then measure ourselves against it

There are obviously a lot of other policy changes I think we should make, but on the topics of growth and innovation, these 7 points are what I think are most important.  And I’m confident that if we don’t take action here, we are going to regret it.

[1] Incidentally, innovation does not always drive job growth, even when it drives GDP growth.  The industrial revolution was something of an anomaly in this regard.  I’ll write more about what this means later.

[2] There are a bunch of other policy changes I would make—for example, I’d increase the minimum wage to something like $15 an hour—that are important and somewhat related to this goal but not directly related enough to include here.

[3] While access to knowledge, healthcare, food, water, etc. for people in developed countries is far better now than any time in history, extreme inequality still feels unfair (I’ll save my social rant for another time, but I think the level of extreme poverty that still exists in the world is absolutely atrocious.  Traveling around the developing world is an incredible wake-up call.) 

[4] Sometimes the government people ask “Would you ever move YC out of the US?” with nervous laughter?  I really like it here and I sure hope we don’t, but never say never.

Sam Altman
tag:blog.samaltman.com,2013:Post/769330 2014-11-13T20:27:29Z 2015-11-29T05:28:00Z A new team at reddit

Last week, Yishan Wong resigned from reddit.

The reason was a disagreement with the board about a new office (location and amount of money to spend on a lease).  To be clear, though, we didn’t ask or suggest that he resign—he decided to when we didn’t approve the new office plan.

We wish him the best and we’re thankful for the work he’s done to grow reddit more than 5x.

I am delighted to announce the new team we have in place.  Ellen Pao will be stepping up to be interim CEO.  Because of her combination of vision, execution, and leadership, I expect that she’ll do an incredible job.

Alexis Ohanian, who cofounded reddit nine and a half years ago, is returning as full-time executive chairman (he will transition to a part-time partner role at Y Combinator).  He will be responsible for marketing, communications, strategy, and community.

There is a long history of founders returning to companies and doing great things.  Alexis probably knows the reddit community better than anyone else on the planet.  He had the original product vision for the company and I’m excited he’ll get to finish the job.  Founders are able to set the vision for their companies with an authority no one else can.

Dan McComas will become SVP Product.  Dan founded redditgifts, where in addition to building a great product he built a great culture, and has already been an integral part of the reddit team—I look forward to seeing him impact the company more broadly.

Although my 8 days as the CEO of reddit have been sort of fun, I am happy they are coming to a close and I am sure the new team will do a far better job and take reddit to great heights.  It’s interesting to note that during my very brief tenure, reddit added more users than Hacker News has in total.

Sam Altman