Building Y Combinator with Garry Tan: What It Really Takes to Build a Successful Startup

Summary

Building Y Combinator with Garry Tan: What It Really Takes to Build a Successful Startup

Podcast: Building One with Tomer Cohen
Host: Tomer Cohen, LinkedIn's Chief Product Officer
Guest: Garry Tan, President and CEO of Y Combinator
Release Date: June 3, 2025

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1. Introduction

In the episode titled "Building Y Combinator with Garry Tan: What It Really Takes to Build a Successful Startup," host Tomer Cohen engages in an insightful conversation with Garry Tan, the influential President and CEO of Y Combinator (YC). The discussion delves deep into the essence of building successful startups, drawing from Garry's extensive experience both as a YC alumnus and as the current head of the most renowned startup accelerator globally.

2. Garry Tan’s Journey and Y Combinator’s Evolution

Garry Tan recounts his early days in Silicon Valley, highlighting how Y Combinator (YC) stood out even when accelerators were not a new concept. He states, “When I came to Silicon Valley in 2008, Y Combinator was somewhat of a hidden gem, a new type of accelerator with a big promise to supercharge the potential of your startup” (00:57). Garry emphasizes YC's unique positioning that has led to the success of numerous companies like Airbnb, Coinbase, Stripe, and DoorDash, solidifying YC as potentially the most successful startup accelerator of all time.

3. Key Lessons on Building Startups

a. Focus Over Optics

One of the core lessons Garry imparts is the importance of obsessive focus on users and products over chasing public relations or being merely visible. He explains, “What you spend your time on is indicative of whether you’re building something real or just playing startup house” (50:39). This distinction is crucial in determining the authenticity and potential success of a startup.

b. Importance of Honest Data Evaluation

Garry highlights the necessity of relying on genuine user data rather than subjective feedback. He warns against the pitfalls of self-deception and emphasizes, “The logs don't lie, the analytics don't lie” (09:35). Founders must dig deeper beyond what users verbally express during interviews and focus on actual usage metrics to gauge their product’s true performance.

4. The Importance of User Focus

Using Airbnb as a prime example, Garry illustrates how YC mentors founders to immerse themselves in understanding their users’ needs. Initially struggling with growth, the Airbnb founders were advised to concentrate on their existing user base in New York City instead of dispersing their focus. This led them to enhance their platform by investing in professional photography for their listings, resulting in a significant growth spike. Garry notes, “They went and spent time with the hosts, asked them, like, why are you using Airbnb? What’s the experience been?” (19:04).

5. The Role of Co-Founders

Garry underscores the critical role of co-founders in a startup's success. He asserts, “Having co-founders who are truly your equal, who complement each other, changes the outcome of companies far more” (26:01). A balanced founding team, often comprising a hacker, a hustler, and a designer, brings diverse strengths and resilience, enabling the team to face challenges collectively and effectively.

6. Navigating Challenges: The Valley of Despair

Garry introduces the concept of the “Valley of Despair,” a phase where a startup’s product is viable but not gaining the expected traction. He advises founders to distinguish between motion and progress, urging them to be brutally honest about what they can control and to focus on actionable areas like product features, pricing, and team dynamics. “Don’t mistake motion for progress. Just because it’s not broken, it doesn’t mean it’s working” (50:39).

7. Agency and Taste in the Age of AI

Discussing the future of entrepreneurship, Garry emphasizes the twin pillars of agency and taste. He explains that while agency—the ability to act and make decisions—can be cultivated through programs like YC, taste—judgment about what to build and understanding user resonance—requires time and experience. In the context of AI advancements, Garry believes that how founders think and their ability to evaluate and apply data meaningfully will be paramount.

8. YC’s Transformative Environment

Garry attributes YC’s success to its intense and immersive environment that fosters rapid transformation in founders. He likens being part of YC to being in a “sprint of your life,” where founders are constantly pushed to prioritize effectively and make swift, informed decisions. This environment is designed to shock the system and redefine founders’ realities, ensuring they emerge more formidable and capable of steering their startups toward success.

9. Conclusion

The episode concludes with Garry Tan reiterating the significance of authentic leadership, user-centric development, and resilient founding teams. He acknowledges that while many startups embark on their journey with determination, only a fraction navigate the complexities successfully. Garry's insights serve as a beacon for aspiring entrepreneurs, emphasizing that true success lies in relentless user focus, strategic iteration, and the strength of the founding team.

Notable Quotes:

• “It just takes a while to build that trust.” – Tomer Cohen (00:11)
• “The problem that I was trying to solve, it was all I was thinking about.” – Paul Graham (00:16)
• “When you get sort of lost in the trappings of success, that's the difference between playing house and actually doing it.” – Paul Graham (09:29)
• “One of the most emotionally difficult phases in the journey of the builder is when your product is good but not good enough.” – Gary Tan (50:39)

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This comprehensive discussion with Garry Tan offers invaluable perspectives for both new and seasoned entrepreneurs, shedding light on the nuanced realities of building and scaling successful startups. By emphasizing authenticity, user-centricity, and the importance of strong co-founding teams, the episode serves as a motivational and educational resource for those navigating the intricate landscape of product development and entrepreneurship.

Transcript

[Tomer Cohen]

LinkedIn news.

[Jessi Hempel]

Innovation ultimately is solving problems.

[Gary Tan]

It came back to my own personal pain point.

[Tomer Cohen]

It just takes a while to build that trust.

[Paul Graham]

The problem that I was trying to solve, it was all I was thinking about.

[Gary Tan]

You have to be obsessed with the human condition. I'm Tomer Coyne, Chief product officer of.

[Tomer Cohen]

LinkedIn and this is building one.

[Paul Graham]

It turns out most of the customers were in New York City.

[Leah Smart]

Most of the hosts were in New York City. Most of the bookings were in New York City.

[Paul Graham]

And Paul said, well, what are you.

[Leah Smart]

Doing here in Mountain View?

[Gary Tan]

That's Gary Tan, the CEO of startup accelerator Y Combinator. He's sharing the story about how the founders of Airbnb got back on track by leaving behind distractions and focusing on their users. We're going to get into that and so much more. So stick around.

[Leah Smart]

From LinkedIn News, I'm Leah Smart, host of Everyday Better, an award winning podcast dedicated to personal development. Join me every week for captivating stories and research to find more fulfillment in your work and personal life. Listen to Everyday better on the LinkedIn podcast network, Apple Podcasts, or wherever you get your podcasts from.

[Jessi Hempel]

LinkedIn News. I'm Jessi Hempel, host of the hello Monday Podcast. Start your week with the hello Monday Podcast. We'll navigate career pivots. We'll learn where happiness fits in. Listen to hello Monday with me, me Jesse Hempel on the LinkedIn podcast network or wherever you get your podcasts.

[Gary Tan]

When I came to Silicon Valley in 2008, Y Combinator was somewhat of a hidden gem, a new type of accelerator with a big promise to supercharge the potential of your startup. Back then, the concept of an accelerator was not novel, but YC positioned itself as very different. There were many skeptics back in the day, but fast forward to today, the evidence is clear. With many successful YC companies as examples. From known consumer brands like Airbnb and Coinbase and Doordash to very successful B2B companies like Stripe and Gusto and Brex, YC has positioned itself not only as potentially the most successful startup accelerator of all times, but also as the platform for building great products and companies. That's why for the final episode of the season, I'm excited to bring in a special guest, Gary Tan, President and CEO of yc, to help uncover what makes the platform so uniquely powerful. Like many of the people running yc, Gary went through the program himself. He's walked the walk and he can share with us some of the key lessons about successfully building a startup. In this episode we'll learn many things from Gary's experience, including the difference between playing startup and actually building one, the importance of finding the right community and culture as a founder, why he views co founders as keys to startup success, and what you can do to avoid the startup valley of despair, and so much more.

[Tomer Cohen]

So let's dive in. Gary, it's a pleasure to have you on the show. Thank you so much for joining me today.

[Paul Graham]

Thanks so much for having me.

[Tomer Cohen]

So you've been building from a very young age. You've been a coder, a designer, a pm. I read it as a kid you used to visit technical stores, bookstores with your dad. What drew you into building early on? Was it the technology? Problem solving? Was it the environment at home?

[Paul Graham]

Yeah, my dad was an engineer. He still is. And he just really taught me that, you know, almost anything that is technical.

[Leah Smart]

That people have figured out before you.

[Paul Graham]

You yourself can figure out. And I think that that one concept has turned out to be not just a little bit true. There's like sort of a through line through everything.

[Leah Smart]

My entire career and my entire life thus far around that.

[Paul Graham]

So, you know, my dad being an engineer, I'm very thankful for because that introduced me to this idea that, you know, human beings can take understanding and.

[Leah Smart]

Basically the breadcrumbs of knowledge from other.

[Paul Graham]

People from lots of different disciplines. And one of the biggest gifts is to weave all of that into a product or service that solves problems for people. Not only that, that, you know, you yourself can do it in, like, almost.

[Leah Smart]

Any walk of life.

[Paul Graham]

Like, it doesn't matter where you're from. You should be able to weave that.

[Leah Smart]

Together and solve problems for each other.

[Tomer Cohen]

In going through your throughline, it was quite unique for you. You went to Microsoft early on, after school, that was a couple of years. But then you made a pretty big leap. You went into entrepreneurship, you joined Palantir early, then you started multiple companies, and now you're heading yc, which is the largest but the most famous accelerator that exists out there.

[Paul Graham]

I think it's largest and best.

[Tomer Cohen]

Largest and best. Okay, great. How has your career turned out differently than what you expected?

[Paul Graham]

I guess if you told me that I would be doing what I'm doing now, I would tell you I didn't believe you. You're lying. Couldn't possibly be true. You know, just feel very lucky that.

[Leah Smart]

Things turned out the way they did.

[Tomer Cohen]

Entrepreneurship was there for you from the beginning. Or was that something you had to kind of build passion and courage to do? In a way?

[Paul Graham]

Yeah. I mean, Peter Thiel's sort of famous.

[Leah Smart]

For being really into the philosophical works of Rene Girard. And what he says is all desire is mimetic.

[Paul Graham]

You know, the things that we want, we sort of learn from living, looking.

[Leah Smart]

At our society or other people.

[Paul Graham]

And then, you know, I wanted to be a founder and to start a company and to do all of that.

[Leah Smart]

Because of growing up in the Bay.

[Paul Graham]

Area, you know, watching Steve Jobs come up, watching Bill Gates create something from nothing.

[Leah Smart]

Those are sort of the heroes, boyhood.

[Paul Graham]

Heroes that you grow up with. And actually now we're in the business of let's find all the next Bill.

[Leah Smart]

Gates, let's find all the next Steve.

[Tomer Cohen]

Jobs' this resonates a lot. When I came to the Valley from Israel 2008, I chose coming to the Valley for school because I wanted the environment to push me to go and do something new. And I felt this was a pretty unique place to do it. I wanted the environment to be conducive to, if you're passionate about something, go build it. So this highly resonates. You shifted from being a builder operator who is at the driver's seat leading one company, and now you're a builder investor and you're in many ways at the backseat of many, many companies. Curious, as an investor right now, what's an insight about building products that really glean from watching multiple companies succeed or fail, that founders might not actually appreciate when they're building one company or they're doing one thing?

[Paul Graham]

Yeah, it's kind of funny how obvious it is when a team is focused.

[Leah Smart]

On real customers and users and their.

[Paul Graham]

Problems versus, like, focused on all the other things.

[Leah Smart]

It sounds stupid, simple, but 99 times out of a hundred, if you look.

[Paul Graham]

At startups that succeed versus fail almost, you know, to a T in all the cases where there's success, there's an obsessive focus on users, products and specifically like, problems that are being solved and.

[Leah Smart]

Everything else is just sort of lip service.

[Paul Graham]

So, you know, being famous on X, being at like trade shows or, I don't know, being famous, like, all these other things are just like trappings of.

[Leah Smart]

Things that seem to be correlated with.

[Paul Graham]

Building something people want. And I think that work, life, school life, society at large, celebrity culture, all these other things teach us to desire the trappings of like, making something people.

[Leah Smart]

Want and building things.

[Paul Graham]

And then there's just basically no substitute for it.

[Leah Smart]

Right.

[Paul Graham]

Like, there are lots of people who go out and raise a lot of money and brag about who they raised money from, or, I mean, it's sort of the equivalent of when I graduated from Stanford. My father took me aside and he.

[Leah Smart]

Said, hey, listen, we are proud of.

[Paul Graham]

You, but the worst mistake you could make is have that be the only interesting thing about you.

[Leah Smart]

And so I think that that's the.

[Paul Graham]

Same deal with all the trappings of.

[Leah Smart]

Success in startup land.

[Paul Graham]

Like, there's just a lot of things that feel like success but aren't. Like the real success of building products is actually, it sort of resembles being a gardener. Like, the result is the garden, the result is the outcome.

[Tomer Cohen]

In one way, like, you're saying it's so straightforward, but then obviously you're seeing people doing it wrong. So I'm sure people coming into I see or whatever, you see them, they all talk to talk, right? They're like, oh, empathy. And like, you know, walk into the shoes of the customer, really understand the pain point, go deep. But then they steer away. And to your point, they're not, they're like not really focused on it. Like, what's an example when you're like, you know, they're saying the right things, but when I look at them, they're obviously not doing it.

[Paul Graham]

But I mean, the part that's like most obvious is like how people spend their time. I think when you get sort of lost in the trappings of success, that's the difference between playing house and actually doing it, right?

[Leah Smart]

Like, we don't want people to play startup house.

[Paul Graham]

We want them to actually go talk to their customers and users.

[Leah Smart]

The super counterintuitive part is like, there.

[Paul Graham]

Are so many parts of that that feel like work. Um, and then also people will lie to you. Like when you're doing user research and you're showing mock up, you know, when you're in the meeting, like, people like to be liked.

[Leah Smart]

They want to like you, they want.

[Paul Graham]

To make you feel good. You're going to ask like, no, no, no, really, like, is this actually something that you would use? And they'll say, yeah, yeah, yeah, we'll definitely use it. Like, we'll definitely use it. And then the call ends and you.

[Leah Smart]

Send them the link and they never.

[Paul Graham]

Open the link and guess what? Like, they were lying to you.

[Leah Smart]

And basically the question for founders is.

[Paul Graham]

Like, do you want to lie or do you want to realize, like, oh.

[Leah Smart]

I cannot take at face value what.

[Paul Graham]

People say to my face or even like, maybe what bloggers say about me or what is out there. What I have to do is actually, you know, let me trust the stripe account, let me trust the P&L let.

[Leah Smart]

Me trust the logs.

[Paul Graham]

Like, the logs don't lie, the analytics don't lie. And so I don't know, basically, you know, to take that example further, I mean, there are people who like, they spend inordinate amounts of time interviewing like.

[Leah Smart]

Hundreds of people and like everyone tells them what they want to hear and.

[Paul Graham]

Like, you could fill your weeks doing that and then they send the link.

[Leah Smart]

For the stripe payment and like they.

[Paul Graham]

Don'T pay and they're like, okay, well if I just interview harder, like I'm going to figure this out.

[Leah Smart]

Right.

[Paul Graham]

You know, I don't think it's inauthenticity. Like, you know, in certain cases it is at some level it's like, you know, wanting to be lied to because.

[Leah Smart]

You know, the hard part about building products is you're going to fail and.

[Paul Graham]

You'Re going to fail over and over and over again. And then the important part, you know.

[Leah Smart]

Is actually the sense making apparatus.

[Paul Graham]

Like, you know, what did we make? What problem are we solving? And then, you know, diving into those five whys, the first why, you know, you get an answer and then, well, why is that? And you just keep going down that.

[Leah Smart]

Rabbit hole until you find the truth.

[Paul Graham]

And then you can change the product.

[Leah Smart]

And iterate and make it better.

[Paul Graham]

I think the mistake is like being in that sort of tree of like, you know, we made something, we're trying to figure out if it works and.

[Leah Smart]

Then believing it works and it doesn't.

[Paul Graham]

Actually that's like another failure that people sometimes never extricate themselves from. I mean, on the other hand, like the difficult and uncomfortable thing is like sometimes, you know, people might not be.

[Leah Smart]

Capable of building something that is good enough. Right. It's hard to make something that is truly great.

[Tomer Cohen]

Is that a filter for you when, when you, because this highly resonates and for me I'm always sometimes filtering as on the point of like you need to almost be your own user, you need to understand the pain internally. That's how I know there is a deep whether or not what you're building is right. But I know you're understanding, you know, if somebody's building an application for a blue collar worker who you know is needed of insurance, but they haven't walked in those shoes. Yeah, they can probably like run some studies and they can understand basic features, but I don't think the emotional part would ever resonate unless they have an incredible ability to connect.

[Paul Graham]

Yeah, that's right. And then I mean that those are just skills. Right.

[Leah Smart]

Like on the, on the flip side.

[Paul Graham]

Like that part can be developed, but you have to practice it and it's hard. And actually very few people do. Right.

[Leah Smart]

It's like amazing how often we're just.

[Paul Graham]

In this day to day cycle of.

[Leah Smart]

What are people thinking of me? What are people saying about me?

[Paul Graham]

It's me, me, me, me, me. And then the trick is like nobody's.

[Leah Smart]

Thinking about anything about you.

[Paul Graham]

Actually we're thinking about ourselves. And even when we allow a consciousness of other beings into our view, we're usually thinking about it in the context of what that means for me. I mean, that's like a central core loop, you know, can you step outside of that central core loop and then actually feel the pain of what other people are feeling? It's much easier to solve problems that you've had yourself, you've viscerally experienced yourself.

[Tomer Cohen]

I love that. So you're now the president of yc and in a way you're building the product or the platform that helps others build their product or platform. And you were both a YC founder, you were a YC partner, you're now the YC CEO. That gives you a really unique perspective into the journey of actually both the recipient of the program as well as the personnel leading the program. Do you think of YC as a product? Like when I look at the YC components, right, the expertise, the community, the capital, the social network, the launch prep. Is that how you're thinking of it?

[Paul Graham]

Yeah, we're trying to scale the unscalable in a lot of ways.

[Leah Smart]

Right.

[Paul Graham]

Like the YC product is actually the experience that we give founders, which I think nobody else really has replicated thus far. I want that fire to be ten.

[Leah Smart]

Or a hundred times hotter and stronger. This is the only place where you.

[Paul Graham]

Can start the program and then have a transformation happen that makes people move fast. Like to see through all of the things that we were talking about in the earlier segment.

[Leah Smart]

Right.

[Paul Graham]

We don't want people to get stuck.

[Leah Smart]

Chasing the wrong thing.

[Paul Graham]

I guess the funniest thing that happens at YC is people transform from normal, average everyday people who are like, you know, just thinking about their own core loop to I guess the best way to describe it.

[Leah Smart]

Paul Graham used to say, you know.

[Paul Graham]

People sort of become more and more like James Bond. It's like, you know, you might start off, oh, you get stuck in a situation, you don't know what to do next.

[Leah Smart]

And then a great founder in founder.

[Paul Graham]

Mode, maybe they don't know exactly what to do immediately, but they don't let that sit there. You know, they become like water. Like here, here are the obstacles.

[Leah Smart]

Very, very clear thinking about what's happening.

[Paul Graham]

About their users, about the market, what they need to do, their teams, they.

[Leah Smart]

Get around and solve problems.

[Paul Graham]

And I think the Airbnb story is.

[Leah Smart]

Probably the most powerful I've ever heard.

[Paul Graham]

You know, they put a graph of.

[Leah Smart]

10% week on week growth on their bathroom mirror and every day in the morning they stared at that and they work backwards from that.

[Paul Graham]

What are the things do I need to do to actually grow 10% week on week? And then that spawned a type of.

[Leah Smart]

Product market fit for that company that.

[Paul Graham]

Now, you know, it's one of the largest and most successful startups and marketplaces to ever exist.

[Leah Smart]

I think that that uniquely is what YC is about.

[Paul Graham]

And we do it through experiences and community and media and like one on one, like highly personalized, sitting down with.

[Leah Smart]

Founders who are just like us and.

[Paul Graham]

Trying to tell them, well, you know, this is.

[Leah Smart]

We don't know exactly what's happening, but here's how you would find out and.

[Paul Graham]

Here'S what we think is happening. You know, we're not there to be the boss.

[Leah Smart]

We're not there to tell them what to do.

[Paul Graham]

We're literally like, I think of it as like startup bodhisattvas. And it's like, all right, like we.

[Leah Smart]

Took our hard knocks startups, like knocked us around. Most of us did end up getting some form of product market fit.

[Paul Graham]

You know, you're in a different part of the idea maze.

[Leah Smart]

We're not going to know everything, but.

[Paul Graham]

We do know, like how to get.

[Leah Smart]

You out of a jam. Let's get you out of that.

[Paul Graham]

And you know, you get stuck next week with something else, but you know, your partners will be there and then.

[Leah Smart]

Also like the community will be there.

[Paul Graham]

I mean, there's 15,000 alumni now. And everyone, if you get an email from someone who's a YC alum, because.

[Leah Smart]

So many people helped you when you.

[Paul Graham]

Were starting your company, you're going to give it an extra look. The weird thing about secret knowledge and.

[Leah Smart]

About being able to build these things.

[Paul Graham]

Is it does take a village. And I think YC is sort of uniquely that village.

[Tomer Cohen]

It's not necessarily the idea accelerator as much as the founder accelerator.

[Paul Graham]

Yeah, because the idea can change. Yeah, exactly. I mean, the idea often radically changes.

[Tomer Cohen]

Yeah, something you said. Just if I can go back to it for a second. You mentioned the Airbnb example of like, hey, that 10% week over week and how do we kind of walk backwards from that? Can you connect me from that with that empathy point you just talked about? So obviously is for you is like they already have to come with the empathy for the customer. So like that's a given. I'm not going to bring anybody in. But once they do, now they need to understand how to translate that empathy into a high growth business.

[Paul Graham]

Yeah, I mean, where the rubber hit the road for them was, you know.

[Leah Smart]

I think they were coming into YC.

[Paul Graham]

Dinners in Mountain View and you know, Paul Graham, the founder of YC said, you know, well, where are your customers actually? And it turns out most of the.

[Leah Smart]

Customers were in New York City. Most of the hosts were in New York City, most of the bookings were in New York City.

[Paul Graham]

And Paul said, well, what are you doing here in Mountain View? And so, you know, that night they booked a flight back to New York City to basically spend all of their.

[Leah Smart]

Time with their hosts.

[Paul Graham]

And you know, again, I think it's.

[Leah Smart]

Like the process of the five whys.

[Paul Graham]

They went and spent time with the.

[Leah Smart]

Hosts, asked them, like, why are you using Airbnb? What's the experience been?

[Paul Graham]

Like, what concerns you? What's important to you? And the hosts said, well, like I.

[Leah Smart]

Listed my bedroom, but it's been empty for a while. Like, can you help me with that?

[Paul Graham]

And they sort of kept asking questions and looked at the data and realized.

[Leah Smart]

The best hosts that had, you know, consistent bookings, they had amazing photos.

[Paul Graham]

Like I think probably there was one.

[Leah Smart]

Of the hosts who was a, you.

[Paul Graham]

Know, photographer and took great photography themselves.

[Leah Smart]

And I think Joe and Brian are designers from Rhode Island School of Design.

[Paul Graham]

And they basically went to the local.

[Leah Smart]

Camera shop and rented a professional camera.

[Paul Graham]

And a wide angle prime lens and.

[Leah Smart]

You know, knocked on hosts doors and said, hey, I'm a pro photographer from Airbnb. They neglected to say that they were.

[Paul Graham]

Also the co founders.

[Leah Smart]

And they came in and took really.

[Paul Graham]

Great photos of every, you know, sort of property in New York and then that caused the growth to happen. So it's funny, like these are basically things that are lying in plain sight.

[Leah Smart]

That are true about your business or product. It's not like Airbnb didn't have competition. It's not like couch surfing didn't exist.

[Paul Graham]

It was more that the more insights like that you can accumulate and then react to and you know, sort of take advantage of, then that is actually.

[Leah Smart]

Like the mechanical way that you can both grow and beat all of your competitors.

[Paul Graham]

It's like, you know, you basically take empathy for sitting with people who are trying to do something Your host wants to do something. You know, it's interesting because I think that orientation even does carry through even to today in that, you know, I think Airbnb is quite aware that the.

[Leah Smart]

Guests are a part of. They are also customers.

[Paul Graham]

But, you know, the hosts, they're the ones who are opening their homes, and.

[Leah Smart]

They are like, sort of customer number one, which is very interesting.

[Paul Graham]

And that, you know, that comes from.

[Leah Smart]

Right at the beginning. And there are just so many examples.

[Paul Graham]

Of people who go from, it's not.

[Leah Smart]

Growing, it's not working.

[Paul Graham]

You know, people aren't clicking, you know, the logs are empty, the Stripe account is empty. To like, well, why is that? And so it sounds stupid simple. You know, if you were going to treat your business strategy and tactics as.

[Leah Smart]

An AI prompting loop, like, the prompt.

[Paul Graham]

Is basically, you know, how can we grow? And you know, why aren't we? And, you know, just sort of continuing to pursue that. And then, you know, deep down, there are things that you can change.

[Leah Smart]

You can change your product, you can change your marketing, you can change your approach, you can change your team.

[Paul Graham]

Like, there are all these things you can change. You know, it isn't totally in your control either.

[Leah Smart]

Like, you can't control what competitors do, you can't control what regulation does, you.

[Paul Graham]

Can'T control what investors do. You know, you can influence it. So it's, you know, in aggregate, like, there is a core loop, a core.

[Leah Smart]

Way of thinking for going from zero to one, from nothing to product market.

[Paul Graham]

Fit that requires, you know, essentially founder mode, right?

[Leah Smart]

Like, that's the original founder mode. Do things that don't scale and then scale them later.

[Tomer Cohen]

As you talk about this, I'm wondering, you know, part of the power of YC could be just that accountability coaching mode. You know, as a former startup entrepreneur, when you're. It's a very lonely experience, right? And there's so many times you can ask yourself why something is not happening, and sometimes you lie to yourself. And having this external person in a way that holds me accountable, that I have a weekly meeting with or a daily meeting with, and they're asking me deeper questions, they're kind of forcing me to go deep. Sometimes just that cycle of somebody pushing deeper on me could kind of not just push me, but kind of almost like in many ways open the door for me to think differently about things.

[Paul Graham]

That's exactly correct. If it's one dynamic that makes YC work, it is actually that when you're alone in a room, your thoughts will spin. You, like, sort of get lost on Tangents. The funny thing is, I mean this would be the equivalent of like a.

[Leah Smart]

Large language model constructing a very elaborate palace that then doesn't touch reality. And then you end up quickly with.

[Paul Graham]

A model that doesn't actually, you know.

[Leah Smart]

Resemble something that is usable in like out there in real life.

[Paul Graham]

And that's where other people come into play, right?

[Tomer Cohen]

Yeah.

[Leah Smart]

You know, there is something alienating about modern capitalist organizations, right?

[Paul Graham]

Like especially as CEOs and leaders like.

[Leah Smart]

You, you know, you're the leader, you.

[Paul Graham]

Can'T show any failure, you can't, you.

[Leah Smart]

Know, discuss really what's going on because.

[Paul Graham]

Well, you own 50%, 80% of the business and like that's, that's what the equity is for. The equity is to be the owner.

[Leah Smart]

And the steward and to put the.

[Paul Graham]

Business on your back. And you know what, how these structures work, you know, if you're an employee actually, you know, you want a paycheck, you want a good place to work, but you know, it's not on you.

[Leah Smart]

You know, you can care about it.

[Paul Graham]

You definitely have influence over it. But people don't sign up to go work at startups to like bear the full brunt of potential like soul crushing failure. You know, ownership is actually you are accountable, there is stewardship involved in that. And then you know, like it or.

[Leah Smart]

Not, there's like a lot of emotional labor when done right, like because you care about the outcome.

[Paul Graham]

Like you know, when the Golden State warriors don't win, like you know, is.

[Leah Smart]

The player's fault, like maybe, but maybe not, right? Like it's actually all the decisions that.

[Paul Graham]

Went into the management and the ownership.

[Leah Smart]

Of that place, that's the stewardship, that's.

[Paul Graham]

What a founder has to do and you know, how could it not be lonely? And then that's where things like I.

[Leah Smart]

Think YC helps help people a lot.

[Paul Graham]

You know, I have lots of friends in ypo for instance and it's like, yeah, like the stories that come back from things like that, you know, you.

[Leah Smart]

Actually cannot do these things alone.

[Paul Graham]

You do actually need game recognized game.

[Leah Smart]

Other people around you and you need.

[Paul Graham]

Trust and you know that's actually in.

[Leah Smart]

Very, very short supply these days. You know, it's not like startups lack community.

[Paul Graham]

There is actually maybe too much community.

[Leah Smart]

Of the WR sort.

[Paul Graham]

You know, you could go to a.

[Leah Smart]

TechCrunch Disrupt conference and you know, you will be surrounded by very smart people who are in the technology field.

[Paul Graham]

But most, many of the people who.

[Leah Smart]

Sit next to you are not going to be founders. And of those founders Very, very few.

[Paul Graham]

Like 1% of them will actually have.

[Leah Smart]

Any shot at actually being successful.

[Paul Graham]

So that's the wrong room. You know, you can go there to be like immersed in some sort of culture, but you won't be surrounded by people who are your peers.

[Leah Smart]

When you have people who are actually.

[Paul Graham]

Deeply focused on product market fit, yeah.

[Leah Smart]

It changes your whole mentality. You don't get stuck in the same.

[Paul Graham]

Ruts and you have people who can.

[Leah Smart]

Pick you up when you're down.

[Paul Graham]

One of the more controversial things at Y Combinator that we've learned over and.

[Leah Smart]

Over again over 20 years is that it takes co founders.

[Paul Graham]

And I think there are plenty of solo founders who have been successful, have made it. It certainly isn't the only way to do it. But if there's a high order, bit like having a co founder who is.

[Leah Smart]

Truly your equal, who is as bought.

[Paul Graham]

In it changes the outcome of companies far more. So, you know, the people who can do it as solos are really, truly.

[Leah Smart]

That much more remarkable.

[Gary Tan]

We're going to take a quick break. When we come back, Gary's going to tell us why Y Combinator values strong co founders more than strong ideas.

[Paul Graham]

Friends like people who have known each other for a long time, you know, who have been on camping trips that have gone wrong together, you know.

[Leah Smart]

From LinkedIn News. I'm Leah Smart, host of Everyday Better, an award winning weekly podcast dedicated to personal development. Whether you're looking for ways to shift your mindset or seeking more fulfillment in your life, we've got you covered.

[Paul Graham]

You can build internal resources.

[Gary Tan]

That's what the study of psychology is about.

[Paul Graham]

Building internal resources.

[Leah Smart]

Turning towards is one of the most.

[Paul Graham]

Important elements of successful relationships, no matter what kind of relationship it is. The thing that underpins all of this productivity stuff is finding a way to make the journey itself enjoyable. The journey is the destination.

[Gary Tan]

The beauty of uncertainty is infinite possibility. When you don't know what's next, you don't know what's next. And thus anything can be next.

[Leah Smart]

Join me as we dive into captivating stories and research backed ideas that have empowered me and others to lead lives with more clarity and intention. Everyday making growth an everyday practice. Listen to Everyday better on the LinkedIn podcast network, Apple Podcasts or wherever you get your podcasts.

[Gary Tan]

Okay, we're back and I'm speaking with Gary Tan, CEO of Y Combinator.

[Tomer Cohen]

You mentioned co founders. I know in your process you're looking for resilience in many way. Like you're looking at kind of the personality of the founders, even if they're co founders. What's the personality of them? What is your prerequisite list? Knowing that it's not perfect, but it's the one that gives you most shots at the goal in a way.

[Paul Graham]

Internally we talk about this where sometimes you have people who are brilliant technically but do not have the empathy or product side and we call them Wozes or Wozniaks. And like, the reality is like Apple wouldn't be Apple without Steve Wozniak. So they're necessary, but they're not sufficient. Like you also, you know, truly do need someone in the weeds. Understanding how products work and the user.

[Leah Smart]

Both of these things are incredibly important. Really.

[Paul Graham]

That's how we look at it. Like we really want founders who have complete teams. One of the more funny ones that.

[Leah Smart]

Is very intuitive if you really think.

[Paul Graham]

About it, but seems odd on its surface is it's actually really powerful when.

[Leah Smart]

Friends like people who have known each.

[Paul Graham]

Other for a long time, who have.

[Leah Smart]

Been on camping trips that have gone wrong together.

[Paul Graham]

What is starting a startup if not.

[Leah Smart]

Loading up a boat and going off to the middle of the sea and saying, we're going to find something really great out there. You got to find land.

[Paul Graham]

And so having really good friends who are complimentary start off companies together, that's amazingly important actually. And you want people to be complimentary. The classic thing is you need a hacker, a hustler and a designer and.

[Leah Smart]

The more of those things in as.

[Paul Graham]

Few people as possible is good like.

[Leah Smart]

And so, you know, I think this is also the age of the polymath.

[Paul Graham]

You know, some of the best founders in the world that we've run across, they don't have boundaries, they contain multitudes.

[Leah Smart]

And that those multitudes allow them to.

[Paul Graham]

Be really like not just systems thinkers.

[Leah Smart]

But, you know, thinkers across many systems, perhaps all the systems.

[Paul Graham]

That's what like the best CEOs in the world are like.

[Tomer Cohen]

I'm on the board of Gusta, which is a YC company and just thinking of the three co founders and they're the best, you know, for them. In your point, it's exactly what you're saying. One, there's an amazing resilience and bond and two, they're highly complementary of each other.

[Paul Graham]

Yeah. And that's what it takes because you need to be able to like be back to back to back, you know, like against the world and you know, when you have that like nobody can beat you.

[Tomer Cohen]

Exactly. You know, in many ways, timing could be everything in startups. It could be timing for market, it could be timing for, you know, when you launch, it could be timing for when you have your break and you have the opportunity come along and you're able to take advantage of it. But do you think it's overplayed timing? Do you filter for timing? Do you think this is a good idea? But market is not ready for it, so maybe come back in a few years. How do you think of timing?

[Leah Smart]

I think Series A investors in particular do this extremely well. But I think at Precede and Seed, you have to go by the founders and what they're saying.

[Paul Graham]

Certainly the idea that they're pursuing is.

[Leah Smart]

A marker for the quality of thinking.

[Paul Graham]

That they're capable of. So, you know, idea matters, how people.

[Leah Smart]

Are approaching things matter.

[Paul Graham]

But I think like when you're writing a 20 year, $50 million check, it matters a lot more that stuff. I mean, you can sort of see this in the way late stage PE and pre IPO stage investors are, you.

[Leah Smart]

Know, very much about the market and the P and L. Whereas like when.

[Paul Graham]

You'Re early, you know, if you look.

[Leah Smart]

At any of the graphs of revenue.

[Paul Graham]

For any startup, you know, even leading up to the Series A, like these days, you maybe you million to $2.

[Leah Smart]

Million a year in revenue, and that's a lot of revenue.

[Paul Graham]

But if you look at it on.

[Leah Smart]

A graph, compared to like the kind of revenue you need when you ipo.

[Paul Graham]

It'S like it's the thin edge.

[Leah Smart]

It's like the thinnest of edges. Like 99.9% of the work is ahead.

[Paul Graham]

When you are like just starting out.

[Leah Smart]

Even when you get to $2 million.

[Paul Graham]

A year in revenue. So, you know, the wild thing is, how do you actually go from 0 to 1?

[Tomer Cohen]

I want to talk about the craft you teach at Weiss. You talked a lot about the experience, the support, the teachings of being bold, going after your targets. This podcast, I created it kind of in many ways to show that there's no one way to build. If people could listen to the YC story and saying, okay, so I come in, you give me all these skills, you accelerate me, and then I'm coming out with best practices. But really it's not just best practices I'm assuming you're giving them, but also in a way to index somebody what makes them unique. So I'm curious if you have examples of how that process comes to life and how do you see that in the founders that's come along?

[Leah Smart]

Honestly, I think we just give away.

[Paul Graham]

All the best practices on the website, like, you know, YC Startup Library, like we have a YouTube channel. And we have a special show on there called Startup School that is just, you know, all tactical, all best practices. This is what works, this is what doesn't, and we give it all away for free. So I actually, I mean, we're in.

[Leah Smart]

The age of LLMs now.

[Paul Graham]

Like the how to does not matter. I think how to think and how to have that core loop that turns.

[Leah Smart]

You into James Bond, I guess is.

[Paul Graham]

Like, you know, in order to actually change. Like I, you know, when I was.

[Leah Smart]

Running initialized capital, it was, I had.

[Paul Graham]

Left as a partner of yc, I left to start my own venture capital firm.

[Leah Smart]

I was doing my own pre seed investing.

[Paul Graham]

And I too thought like, you know.

[Leah Smart]

If I just meet them every week, like if they work out of my.

[Paul Graham]

Office, like I'll just change them. I'll be able to help people speed up. And that was never true, like, no.

[Leah Smart]

Matter how hard I tried.

[Paul Graham]

But when I sent them to yc, they became different people. Like they, they became more formidable. They asked questions in a better, deeper way.

[Leah Smart]

They understood what was going on.

[Paul Graham]

They sort of were less likely to.

[Leah Smart]

Delude themselves or lie to themselves about things.

[Paul Graham]

And so, I mean, some of the.

[Leah Smart]

More wild examples, you know, I always.

[Paul Graham]

Think about Brian Armstrong of Coinbase. I mean the interesting thing for him was, you know, he had start, he.

[Leah Smart]

Had started other companies before. He started a tutoring business.

[Paul Graham]

He, you know, did marketplaces, he worked at Airbnb.

[Leah Smart]

So he saw the inside of that.

[Paul Graham]

When he first started Coinbase, the idea was not that baked. I think he initially started a Android.

[Leah Smart]

Client for the Bitcoin client. And then after a while he realized, oh, it's going to take too long.

[Paul Graham]

To actually sync the, the, the blockchain. So he said, you know, what, what could I do? I mean, again, it goes back to.

[Leah Smart]

Empathy and understanding of the user.

[Paul Graham]

Like it's requires a little bit of empathy to realize like, well, technically speaking it's a feat to have a bitcoin.

[Leah Smart]

Client working on an Android phone, but when you actually use it and you.

[Paul Graham]

Actually like watch how your users use it, it's like no one's going to.

[Leah Smart]

Leave their phone unlocked overnight to like sync up to the blockchain every night. So, okay, that's a problem. What do I do? And so the most obvious thing is like, okay, well I need to now.

[Paul Graham]

Put it, you know, web hosted the way Git, you know, is hosted by.

[Leah Smart]

GitHub as a hosted website.

[Paul Graham]

So that was like the next iteration of Coinbase. But, you know, he came and did.

[Leah Smart]

YC he was giving away a bitcoin to anyone he would meet, which was wild.

[Paul Graham]

I, you know, I think a lot of people kept that and are pretty happy about it. But you know, even then nobody used it. Like, you know, they signed on and.

[Leah Smart]

They never clicked anything else.

[Paul Graham]

And you know, the majority of people.

[Leah Smart]

Signed on, opened account and then did nothing with it.

[Paul Graham]

And you know, you do some more introspection.

[Leah Smart]

You try to understand, like, let me sit down with users, ask them what's going on. I mean, it sounds very simple to.

[Paul Graham]

Do, but like the sheer fact that.

[Leah Smart]

He did it, like it led him.

[Paul Graham]

To these simple observations that were like.

[Leah Smart]

Very actionable and totally the correct thing.

[Paul Graham]

Thing.

[Leah Smart]

He realized getting bitcoin is hard.

[Paul Graham]

You know, you had to go to.

[Leah Smart]

Another website called Magic the Gathering Online.

[Paul Graham]

Exchange and Western Union some money to.

[Leah Smart]

Japan and you'd get a bitcoin. And he realized no normal person, like weirdos who are really into this very obscure thing are going to do that.

[Paul Graham]

Because it's interesting and cool, but normal.

[Leah Smart]

People are never going to do that. And so that's how they actually unlocked.

[Paul Graham]

Like, you know, what is one of the core pieces of the business today. It's, you know, making it easy to be fiat to crypto rail, right?

[Leah Smart]

Make it easy to get bitcoin and whatever crypto you need to get.

[Paul Graham]

It's just I feel embarrassed to, you know, even explain these things in that.

[Leah Smart]

They sound very simple.

[Paul Graham]

But you know, the implications when you're right are very, very profound because these.

[Leah Smart]

Things do end up changing the way people use technology. It changes commerce, it changes the way people live it. You know, ideally does solve very fundamental problems.

[Paul Graham]

If you can do it.

[Leah Smart]

That's the hope.

[Paul Graham]

That's the thing we want to like, see increase in the world.

[Tomer Cohen]

So for me, like when I, when I hear you talk, I'm like, hey, a lot of this know how is is out there, but it's in the shape of a theory and it's, it's the theory 1% if we give it credit to. That's the worth of that theory. But the application of it, it's almost like you go and you can't really learn product just by going to school. You have to build it. You have to spend time with customers, with yourself. You have to go through the hurdle. So I'm like, in my mind, I'm trying to do this AB test. There's Gary at initializecapital and then there's Gary at yc. And to your point, Gary, that was very hard to kind of you weren't able to kind of get them into that accelerator mode. You wanted to, but in YC you could. Is it because it was immersive? There just was no way out. It was like 24, seven. You're in that. So like you're. The transformation is almost like a given at level of intensity. Is it the intensity of the program?

[Paul Graham]

Yeah, I think the program is intense. And on the flip side, like, our realities are socially constructed. So, you know, when I was just meeting them, like, you know, you know, I like to think having a meeting with me is a big deal. But honestly, like, you know, 30 minutes an hour with me every, you know, I mean, on a relative basis. One way to look at that is like, you know, how long does it take to have true, like transformation with a human therapist? Meeting them one hour a week takes 10 years.

[Leah Smart]

Right.

[Paul Graham]

Whereas think of like the most intense experiences you've had.

[Leah Smart]

Like, you change everything.

[Paul Graham]

You, you move to San Francisco, you, you know, actually can't hang out and family. Like, you know, it sounds weird to say that, but like, you know, you actually shock the system. We actually somewhat explicitly say this. You know, now that you're in yc, you're in the sprint of your life. You know, demo day is 90 days out and this is your time.

[Leah Smart]

And so someone's going to ask you.

[Paul Graham]

To help them move this weekend and.

[Leah Smart]

It'S your best friend.

[Paul Graham]

And you know what, like last week you were going to do that, that. But this week you're going to say.

[Leah Smart]

I'm so sorry, I can't.

[Paul Graham]

And they're going to understand because you are in the sprint of your life. It's literally learning how to run fast.

[Leah Smart]

You know, our realities and our beliefs.

[Paul Graham]

Are socially constructed and you can't really rebuild your reality and your, you know, how you think about the world doing.

[Leah Smart]

The thing that you were doing before. This is another reason why we tell.

[Paul Graham]

People, like, please, please, you know, when you come here, work with your co.

[Leah Smart]

Founders and your team out of, you know, a live work loft or your.

[Paul Graham]

You know, two, three bedroom apartment or.

[Leah Smart]

A rented house, like create your own culture. You cannot create a new culture and speed up to the speed you need to and ask the right questions. If you're going to an office and there's a water cooler and there's a.

[Paul Graham]

Happy hour that night, you know, you.

[Leah Smart]

Have to actually be in a fundamentally.

[Paul Graham]

Different situation doing something that you've never.

[Leah Smart]

Done before and then you'll do it and then once you do it.

[Paul Graham]

But you get that first, you know.

[Leah Smart]

$100,000 a year revenue contract.

[Paul Graham]

You know, you raise your first seed money like you're, you know, doing it.

[Leah Smart]

You have to radically change everything about what you're doing in order to change your mindset. And then that mindset will forge you into a founder.

[Tomer Cohen]

This gives a great lens into the ethos of the program in many ways. So this one is slightly personal for me. So I call it the Valley of Despair question. You know, as a former startup founder, my angel investor today, like, one of. At least for me, one of the hardest parts I see in the startup journey is when your product is doing okay.

[Paul Graham]

Sounds familiar.

[Tomer Cohen]

Yeah, it's not doing really well and it's not tanking. Right. It's like people are using it. They're actually getting good feedback. Like, the graph look like, you know, it's moving up into the right, but very slowly, very gradually, and you don't have as much time and you feel like, you know, you're not, you're not sure, do I have it? Do I don't have it? And you iterate, but the graph is not moving there. And I remember, like, at one point I, I asked Bill Grosseff and I was building, and he was like, hey, how do you know? Should I fall? Do I continue? Like, this could take years. And his answer was like, you don't. I can give you examples of companies who persevered and they made it. And then some companies at the same time, the whole stupidity was filled with a very similar criteria.

[Paul Graham]

Yeah.

[Tomer Cohen]

What's your perspective on it? Because I feel like a lot of companies are in this stage of like, like slowly growing. People are using it.

[Gary Tan]

I have something.

[Tomer Cohen]

There is something there. Otherwise they won't use it. But it's not taking off and it's not flaking. It's like in the middle.

[Paul Graham]

I think some of it is like the serenity prayer.

[Leah Smart]

Right?

[Paul Graham]

There are things that I can change, there are things I can't. And, you know, please give me the.

[Leah Smart]

Serenity to know the difference.

[Paul Graham]

I think you have decent amount of control, but you do not have total control. Yeah, I agree with you. Like, I think the danger is to.

[Leah Smart]

Just keep doing it.

[Gary Tan]

It.

[Paul Graham]

I mean, I guess maybe it's just to what end? Right?

[Leah Smart]

You can always take the graphs that you're on.

[Paul Graham]

Like you're basically on sort of some sort of glide path. And then sometimes it's like, you know, what if we just keep doing this? You know, maybe we're not growing more.

[Leah Smart]

Than 2x a year or, you know.

[Paul Graham]

Growing 50% a year, for instance, is like pretty good. Like if you can get to scale, like maybe it takes, you know, it is still this sort of exponential. But you know, those early years, it might take you five years, eight years.

[Leah Smart]

Instead of two years.

[Paul Graham]

And that's quite common. Like, one of the things that is wild about YC is that about 50% of the companies that go through the.

[Leah Smart]

Program do end up raising a series.

[Paul Graham]

A, but about a quarter of them.

[Leah Smart]

Raise it in year five and six. So this is a very long road.

[Paul Graham]

And then if you can grow and.

[Leah Smart]

The dynamics make sense and you're down.

[Paul Graham]

For it, like, you know, hey, stick with it, right? The other thing is like, like I think that you can divine, you can use your senses and like, you can use logic and narrative to at least.

[Leah Smart]

Try to make sense of your situation.

[Paul Graham]

And there are just a lot of.

[Leah Smart]

Different things you can do. You can change your product, you can.

[Paul Graham]

Change the way you sell it, you.

[Leah Smart]

Can change the way you charge.

[Paul Graham]

All of these things are very connected to one another. They're more connected than not. I guess the concrete example for me.

[Leah Smart]

Was when we were working on Posterous. Our growth totally stalled out when Instagram came out. Posterous was a dead simple blogging tool.

[Paul Graham]

You could post any type of media, especially photos from your brand new iPhone.

[Leah Smart]

And for a While we grew 10x.

[Paul Graham]

Year on year to be one of the top, the biggest, like social sites.

[Leah Smart]

But we stopped growing the day Instagram.

[Paul Graham]

Came out because instead of emailing their.

[Leah Smart]

Photos to Posterous, they started posting to Instagram.

[Paul Graham]

And we had a choice there.

[Leah Smart]

You know, what my co founder ended up doing was turning it into a paid version of Google Groups. He ended up selling the company for 20 million. It was a great exit for really everyone involved. Not huge, but it could have been much bigger. Maybe a 50 or a 500x sort.

[Paul Graham]

Of outcome if we had charged money. And so, you know, all of these things make a difference.

[Leah Smart]

There were enough people who would probably.

[Paul Graham]

Be willing to pay, you know, on day one. Like, I think we would have been.

[Leah Smart]

Making at least a million, maybe $2 million a year that would have more than paid for payroll.

[Paul Graham]

And if we could have, you know.

[Leah Smart]

Taken the profits and reinvested into growth.

[Paul Graham]

Like, you know, we didn't have to.

[Leah Smart]

Stay on the venture path.

[Paul Graham]

We could have taken the off ramp in the moment. Like we made different choices, right? So, you know, I think smart iteration involves, you know, even just constructing a.

[Leah Smart]

Model in your brain of like, what are the dynamics of your business? Like, what are the inputs and outputs you Know what are the variables? Capital is one of them.

[Paul Graham]

I guess the funniest analogy is like.

[Leah Smart]

Think of your business as a star, a game of StarCraft. And so sometimes it's a resource problem. And then how do you overload that resource?

[Paul Graham]

What can you do?

[Leah Smart]

You sort of go down the list.

[Paul Graham]

And you can very logically diagnose what's going on and then also be very.

[Leah Smart]

Crisp about what are things we can do and what are things that are beyond our control.

[Paul Graham]

And then hyper laser focus on the.

[Leah Smart]

Things you do have control over.

[Paul Graham]

And that includes product, includes pricing, includes decisions about the team, includes what's your roadmap. Roadmap like which Personas are we going.

[Leah Smart]

To invest in versus not? Which Personas are most likely to yield fruit versus Not.

[Paul Graham]

I mean there's a lot in your control.

[Tomer Cohen]

I love that you have a very unique vantage point. And when you think of the future, both in terms of founders in the sense of, you know, I'm a big believer in idea of a full stack builder in the future, like as we start, you know, you have this ability to build a cross and you go back to do you have empathy, judgment, creativity, vision. And then you might not need all the other functions. You can get them all baked into you.

[Leah Smart]

Yeah.

[Tomer Cohen]

And then the other one is just like emerging needs or technologies. I know you guys pull out like a hypothesis every year or every batch. There's like, here's the stuff we were thinking about for the future.

[Paul Graham]

Yeah.

[Leah Smart]

Request for startup.

[Paul Graham]

Yep.

[Tomer Cohen]

So when you see both that idea of like the ultimate entrepreneur or both like the spaces to play in, give me a lens into how you're seeing the future play out for those.

[Paul Graham]

I mean, you know, the requests for startups are just really us, you know, hearing a lot about, you know, all.

[Leah Smart]

The YC founders are sort of in.

[Paul Graham]

The idea maze and then those are just sort of our, you know, semi educated guesses at what might be the next, next thing. The reality though is like, and this is true for any investor, like we're just guessing. Right. But also, you know, founders are guessing too. So the best thing is to, to guess well and be right and then give yourself as many shots as possible at being right in this new AI age. You know, I think the two things that are most important are agency and taste. And then agency, you know, can be stoked. I think that yc, the program, the.

[Leah Smart]

Experience, the community specifically is designed to increase the agency.

[Paul Graham]

And people, people go in low, agency, sort of powerless, somewhat hapless, you know, I mean that's Just the natural state of things is like, I don't think that any of our organizations where we raise our kids or, you know, the default path for anyone encourages or even allows agency. And then the, the harder part is actually the taste part.

[Leah Smart]

Like it's very hard for us to teach taste. Right?

[Paul Graham]

It's. But that's also important and it's just funny because. Because in the age of AI, the core loop is prompting and then evaluating the response. So prompts and evals and that maps exactly to like, I think what is happening across all of society now. Like, you can increase your agency, but man, taste, that takes a long time. And like, that's the part that, you know, often we're trying to find.

[Tomer Cohen]

This was wonderful. I've learned a lot. Thank you so, so much, Gary.

[Paul Graham]

Thanks so much for having me.

[Gary Tan]

This conversation was a treat. Let's jump right into my takeaways. First, the real signal of a great founder is how they spend their time. Gary draws a sharp line between what he calls playing startup house and actually building one. Playing startup is about chasing pr, being visible, investing in the appearance of success while doing a startup. Startup is obsessing over your users, sitting with real customers all the time and iterating on your product daily. This is one of YC's core filters. Founders who spend their time chasing optics versus chasing the truth. Second part of chasing truth is making sure you evaluate the quality of your data. Many founders lie to themselves. They get stuck in a delusion loop of positive signals that aren't real. As Gary said, people lie to you in your user interviews. It's not malicious. It may not even be inauthentic. But eventually you can only rely on user actions. The real data, the logs don't lie. The stripe account doesn't lie. If you're not seeing the results you're expecting, keep asking yourself why until you find the truth. Third, agency can be taught, but taste takes time. YC can help increase a founder's belief in their ability to act. But judgment and taste, what's worth building, what good looks like, those are much harder to teach. We live in an age when you can learn or teach yourself so many skills. But can you tease out the human meaning in the day data? Can you understand what will resonate with users? That takes time and experience. Fourth, having a co founder matters a lot. This is something that YC considers important when reviewing applicants. The bond and resiliency of the team is more important than the power of the startup idea itself. Not only that the diversity and capabilities matter. A lot in Gary's work. You need a hacker, a hustler and a designer. And if your founding team has that.

[Tomer Cohen]

That can really give you an edge.

[Gary Tan]

Lastly, one of the most emotionally difficult phases in the journey of the builder is when your product is good but not good enough. User growth exists, but it's very slow and not taking off. This is sometimes referred to as the value of despair There. It's the hardest phase to get out of or walk away from. So what do you do? Don't mistake motion for progress. Just because it's not broken, it doesn't mean it's working. Be brutally honest about what's in your control. You can change pricing, products, sales, motion, positioning. So focus there. Don't waste cycles hoping for luck. Know when to pivot versus persevere. Sometimes you can grind it out, you can iterate and you can hope for the growth curve to appear. But other times the market is just not there. Try to see the difference at the end of the day. For every successful founder at the top, there are thousands who persevered but were not successful. Sometimes you just have to have the combination of grace, luck and timing to seize the right opportunity when it comes up along. I'm Tomer Coyne. Thank you for listening. I learned a lot from this conversation and I hope you did as well. Don't want to wait around for season three? Check out some of my courses on LinkedIn learning. We've got some great lessons on product, AI and leadership.

[Max Miller]

Building one is a production of LinkedIn News. Our host is Tomer Cohen, LinkedIn's chief product officer. This episode was produced by Max Miller. Our associate producer is Rachel Karp. We're engineered and mixed by Esophage Drunk and we get additional production support from Alicia Mann at LinkedIn News. Sarah Storm is senior producer. Dave Pond is head of productions and creative operations. Maya Pope Chapelle is director of content and Audience development. Courtney Koop is head of original programming. Dan Roth is the editor in chief of LinkedIn. If you know a product leader we can all learn from, send us a link [e-mail].