Mentor was julian robertson he’s a billionaire wall street investor who created one of the world’s first hedge funds and grew one of wall street’s most impactful funds tiger management as a young 20 year old student at college having the insights from julian helped inform my career decisions what i should learn and what i was going to do next and for our crimson students you can now access insights from people like julian.
through unfiltered with his extensive long-form interview on our platform i encourage you to look through the unfiltered library and use this as a way to find insights from some of the world’s most prolific business people and pull out those inspirational gems that could spark a curiosity or insight for you that could help you find the career you’re going to commit yourself to for the next several years we hope you take advantage of this content to have more informed discussions with your strategists.
and the crimson team about your own future career ambitions and university goals take advantage of it and dive in today i’m very honored to be here in downtown san francisco at y combinator with the president sam altman sam founded his first startup looped when he was 19 years old which was later acquired for 43 million dollars as an and as an investor and many very successful companies many of which are multi-billion dollar companies including airbnb zenfit stripe reddit and uh and so many other companies.
through y combinator as well the combined valuation of y combinated companies is today over 65 billion dollars sam is also the co-chairman of open ai alongside elon musk in this exclusive interview today we’re going to be discussing sam’s amazing story including how he got started as a founder dropping out from stanford and starting his first company we’re going to be discussing uh investing and generally just the world of startups and sam’s advice for you as business leaders.
so martin great to meet you great to meet you yeah thanks so much for making time for us thank you for coming in so you know 400 500 meeting requests a week how do you filter through those uh a very good team of people that work with me uh and a very good judgment right and um what would your advice be to an entrepreneur wanting to get in the door and kind of have a one-on-one with you how should they go about that well there are 16 partners at yc and we have a process to be able to meet a lot of people every year.
so i’d say apply on our website uh and you know we meet we meet a lot of teams in person every year right okay and for you personally what’s kind of the most transformative business experience that you’ve ever been through that’s probably taught you the most about business in your life um well there are a lot of these but i’ll pick one i think is illustrative.
uh i think you know the one of the concepts that i really come to believe is that persistence and determination are some of the most important uh characteristics to look for in entrepreneurs that we fund and so one of the things i have learned is not to take the first no if something’s really important there was one time when uh a competitor of ours had won a deal and it was this super critical deal.
and i thought about just sort of giving up and shutting down the company whatever instead uh we stayed up all night you know writing a version of the software that we knew that the the partner would really like we flew down at six in the morning to la or orange county and we just sat in that company’s office until they agreed to meet with us i stayed there for weeks.
and we eventually when the other company faltered got it turned around but it was uh that was an extreme of not not giving up and persistence pain absolutely and uh the persistence is so important what would you say some of the main lessons you learned from being a founder yourself at luke that have allowed you to become such a successful investor.
as well um one of the things i think is very important for anyone to get good at is learning how to hire and manage great people uh and i think that actually is very helpful when you’re trying to select people to fund as well as an investor you know learning what to look for the elements of greatness in someone okay and what about um obsession you know where there’s this thing that this person just thinks about all the time.
and they want to do that’s how you get great at something is you have to just be obsessed and think about it think about in the shower think about it all day um love of what they’re doing really being able to understand the details you know just like keep drilling down level by level by level why did you decide this why do you think this why is that going to work and you want someone that has thought.
through every possible branch on that tree as an employee or someone that you’re going to invest in someone that you really just like being around um you know like you you want that no matter what but especially for a founder you need people who are magnetic personalities you need people who are great communicators this is so important.
uh if you aren’t a great computer communicator you will struggle to struggle to hire to raise money to sell to talk to the press everything so those are those are some of them okay and after exiting luke why did you decide to become an investor rather than start another company yourself and you know try and do it much bigger the next time well.
um i actually i did two things after looped i i sort of retired for a year and just sort of traveled and flew airplanes and raced cars and all that stuff and i also was an investor i ran a venture fund called hydrazine um and that was actually how i decided i didn’t want to be an investor i didn’t like that very much um the thing i like about the job at yc is my job today is much more like running.
a company than being an investor and the part of it that is like an investor is very different than my experience of being a venture capitalist we the thing i didn’t like about being that kind of an investor was you were so much of this competing for investments and trying to invest your money in these companies that are already going to be foregone conclusion successes.
and the fun part for me for me about running a company is creating something otherwise wouldn’t exist and at the stage we operate at we help create these companies that otherwise wouldn’t exist and that’s fun okay and do you think you ever go back into the full startup life yourself uh you should follow me.
around for a few days here that’s kind of what i i think i the job is near enough running a startup to make me happy right okay and to talk a bit more about your story you know your first computer at eight stan stanford dropout as we briefly talked about off camera founder and then now president here so where did this kind of insane interest and passion for business come from for you say i’m more interested in technology than business.
um i don’t know like i grew up like a nerdy kid that like computers and i think that’s probably like somewhat hardwired into my genetics okay and looking back now you know you dropped out of stanford obviously if you were an 18 year old getting started today in business would you go to university would you get straight into it um actually i think the path that i did which was like a little bit of school.
and then straight into it was really good but i think any of these paths can work i think you could skip college entirely and you could finish all of college i think you could do what i did and do a little bit of college um i loved stanford i learned incredibly helpful stuff there i met some of my closest friends.
and my co-founders and uh that was all great okay and what’s the most valuable thing an entrepreneur can get out of college um the network of people you can meet what has been that was hugely valuable for me um i became a good programmer and that was hugely valuable for me um i also learned a lot of other stuff that at the time was not obvious how important.
it was going to be but has turned out to be really valuable so you know i took one creative writing class i really wish i had taken more you know a lot of my job now involves writing i took a lot of biology and physics which has been a very helpful background and part of the without that it would have been harder for yc to move into areas.
like nuclear energy and synthetic biology and so just having that basic grounding in having a wide but narrow set of knowledge has been really helpful okay fantastic so we’ll just move on and talk a little bit more about startups now you know your advice and mistakes people make and so on um what industries at the moment are you most excited about man everything.
i think the thing that is so cool right now about startups is that it has become so inexpensive to start a startup and the tools are so good that you can move so quickly that uh it’s hard at this point to say there’s an industry that would not make sense for a startup to tackle okay and we continuously hear about these industries like ai biotique aerospace etc all.
which are quite scientifically heavy what’s your advice to someone who wants to get into that that isn’t scientific at all how can an entrepreneur just straight out of school with no scientific they can get into one of these industries um there’s more free knowledge available than there ever has been in human history uh i don’t think that was ever a particularly good excuse but you can learn anything you want today on a 20 android phone.
and an internet connection and that is that is awesome okay fantastic and in the early days of a startup when you’re trying to get that product market fit right you know y combinator investment it’s very early stage businesses um what are the biggest mistakes entrepreneurs make in that stage um well basically focusing on anything but that you know sometimes there is no market for a product and no matter how hard you work to evolve.
it there’s just nothing there but often if you work hard enough you can figure out how to evolve it figure out where the adjacencies are and eventually figure out how to create a product that people really do love but it takes a huge amount of effort and time and the made a mistake people make is focusing on everything else okay what’s the best way to approach that market research.
it’s actually it all sounds so simple but go out and talk to your users and ask them how to make the product better and see how they use it watch how they use it figure out what they want even if they can’t quite articulate it okay fantastic and and one of the things entrepreneurs often struggle with is when to exit and um how they should go about that.
and so on what’s your advice around the exit strategy should you have that sorted before you go on uh no the best finders never have that when they’re gone ever okay so when does it become the right time to exit maybe never um i think if you look at the most iconic companies that have changed the world the most they never sold google facebook microsoft okay intel russia.
absolutely and just finally on startups in 2014 you you taught the class at stanford how to start startups from going through that process yourself what’s something you learned then that you hadn’t really known beforehand what was the biggest breakthrough for you personally for me watching the class yeah yeah that’s a good question.
um i think this is not necessarily the most important lesson but it is the one that i took the most from listening to brian chesky talk about culture and just how he builds a culture uh has been helpful to my own thinking right okay and building a culture what’s the best thing you’ve learned around there a little bit of the vaccine uh i don’t actually want to try to distill that into one piece of advice.
because i think that whole lecture is so important i would just incorporate the whole thing by reference and say go watch it okay awesome awesome so let’s move before we head into our rapid fire questions to finish you want to touch briefly on investment now you obviously see hundreds of pictures a year people are coming to you all..
the time when these entrepreneurs are pitching what are the biggest sort of common mistakes that you see just time and time again the most important thing in a pitch is to just make sure the other person clearly understands what you’re building that needs to happen in the first 20 or 30 seconds of a pitch and most founders screw that up they want to make.
it sound bigger or they want to use more impressive sounding words or talk about how they’re disrupting this theme or whatever and the mistake is to do anything but start with saying this is exactly what we do right and what’s the biggest red flag for you when you’re looking at investing in something um if i think the founders aren’t actually obsessed with it and are doing it for some other reason.
that’s a huge red flag right and what’s the best business book in the entrepreneurship rate on raising capital do you think uh zero to one by peter thiel it’s not directly about raising capital but the ideas and there are the critical ones to raising capital awesome and how big does an idea have to be for you should personally look at it i think the best ideas actually start off looking pretty small.
they get very quickly right okay and you’ve said before obviously that and and the way y combinator works is it’s sort of high high risk high reward and the way that quite often it’s such early stage in terms of when you’re looking at investing in something so as an investor you know what what are those fundamentals.
if you’re going to break them down into what you’re looking for since it is such an early stage you know that could help other entrepreneurs who are wanting to get into this program what would you say um i think the first thing we look for is just have you built a product that some small number of users love gosh okay and has your investment strategy changed over.
time from when you did your first deal through now hopefully it hasn’t changed that much i think the fundamental idea that you want to find incredibly talented people that are determined to really build something that their users love so much they tell their friends about it and where they have ambitions to eventually grow from something small into something that transforms.
the world in a way that those founders believe is the most important thing they could work on that has actually been the successful investment thesis not just for me but for everybody all the way through okay fantastic and just a couple of questions on your advice for other investors if someone else was wanting to get started as an investor today.
what advice would you pass on to them um i think to be a really great startup investor you have to be willing to really roll up your sleeps and help you have to love working with founders love supporting founders i think you have to get good at identifying the things about an individual.
that make him or her really well to start a company and i think you have to be good at spotting markets that are growing to grow quickly okay and how would you go about learning as much about investment as possible in a short space of time doing a lot of it and just accepting that on your first few investments you’re likely going to lose some money right.
so should every you know vc be a founder themselves in previous life hard to say every but i think it’s really helpful i would generally recommend it i think you know a big part of being successful as an investor is having the founders of the best company choose to work with you and at least today in 2016 most founders want investors that were former founders okay.
fantastic and just finally on um finally on investing is there anything that other investors often overlook when they’re looking at investing and stuff but for you personally it’s just like a peeve or something you hate and you take really seriously um well this one thing that i mentioned i think most investors talk about one in a big market and what i actually want is a small market.
that is going to be a big market in 10 years i think it’s the best thing for doing really well as an investor the other thing i would say what you want as a the best investments if you think of a venn diagram are the ones that the intersection of uh is a good idea looks like a bad idea gosh and you want that very small sliver where those two things interact intersect and i don’t think most founders look hard.
enough for that okay awesome and when when people come through this program they get to the end of it i know you launched a fun last year october 2015 700 million dollar growth stage equity fund y yc continuously so what do the entrepreneurs need to do in the first few months to get funding from that you know what how does it change um that fund doesn’t invest.
until they’re a much later stage intentionally so we don’t want them to be distracted by thinking about getting more money from us sooner so that fund doesn’t start making elective decisions until they go beyond a 300 million evaluation and so intentionally it doesn’t change anything okay great so just into the rapid five questions to finish off you.
mentioned zero to one peter two or great book to read what are your other books you’d recommend entrepreneurs read uh you know i think in general the best books to read are not books about entrepreneurship uh but books about great previous companies and individuals and i think you’d do just as well to go read like the biography of robert oppenheimer.
as you would to go read the average book on startups okay fantastic and what’s the best bit of advice you’ve ever given in by home um i think that it’s probably still it’s the slogan of yc makes something people want by paul graham right okay and what investors in the world do you look up to the most of mine.
uh personally um pg my predecessor here and peter thiel are i think the two investors i’ve learned the most from okay and what would be the greatest lesson you learned from say pay the tail um man a lot that’s a hard one i think the monopoly theory of investing sort of the central thesis of zero to one yep you know he i met him a long time ago and he’s sort of talking about.
it even then and it’s in the intervening years and sort of hundreds of conversations it’s been fleshed out a lot and there’s a lot of nuance to it but that’s the central idea awesome and what would the 16 year old boy you where i think of the man you become today the 16 year old me uh i don’t know i don’t feel that different i’m still sort of interested in the same kind of things.
i still hang out with the same people i still dress the same i i don’t yeah if you’re looking at it i don’t think he would be too surprised right okay if you’re looking at him and giving him one bit of advice what would you say to your 16 year old self um that most things in life are just not as risky.
as they seem and that people do a lot of things because they don’t do a lot of things because they worry about the risks and humans always sort of miscalibrate for that okay and what quality of mind or state of mind do you think is best served you and your success uh being willing and able to learn things quickly awesome and uh we mentioned zero to one.
a couple of times it’s going to chuck a question at you from there what’s something you believe to be true that not many people agree everyone uh there are a lot of answers to that but none that i want to say to an audience of how many millions of people watch this on your show okay awesome awesome.
and uh just just finally you know from having exited loot for over 40 million dollars to having built an amazing team and had some awesome success as an investor as well what are you most proud of when you look back over your your life so far i’m not at the stage where i’m looking back yet you know like i know 20 years maybe i can answer that but at this point i i hopefully the answer to what i’ll be most proud of is still way far
in the future okay awesome and what’s um something you’ve you’ve learned not about business but about life in general what’s kind of your secret to happiness right now that you that you follow don’t think this is such a secret i think most people realize this but i think like the people that you spend your time with uh and that you work with and that you hang out with and your family like that ends up.
being mostly responsible for happiness i think if you have if you’re around great people and you get to do fulfilling work uh i think that’s like other things that are controllable for happiness biology aside those are probably really important okay fantastic and um yes again thanks so much for making time thank you excited about what you’ve done that feels like you’re just getting started so it’s going to be cool to follow your journey.
so to finish off um just before we handshake usually the last question we ask is what is your million dollar advice for the world of business entrepreneurship and making things happen but for you that seems like a bit of an insult so i’m gonna rephrase what’s your billion dollar advice for the world of business entrepreneurship.
and making things happen if you can look down this camera here and tell our audience to be great yeah i think the only way to build billion dollar companies is to make a product that users love i think all the other growth hacking if you’re trying to build a business that big will eventually fail and if you think about the hundred billion dollar companies.
in technology today um you probably started using their products because some friend of yours told you how great they were and so if you don’t get that right i don’t think you can ever build these truly massive companies you need that and you need a really strong network effect or monopoly so that you maintain price and power over a long period of time great same omen thank you so much thanks for having me