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On Monday at Shoreditch Town Hall in East London, Mosaic Ventures hosted a free event in which their partners Toby Coppel and Simon Levene were joined on stage by none other than Sam Altman, the President of the worlds leading accelerator program Y Combinator or as it is affectionately known by Tech Startup Geeks like myself around the world, YC.
Y Combinators mission to “enable the most innovation of any company in the world, in order to make the future great for everyone”. Over the last decade YC has funded over 3,200 founders and 1470 companies, including big tech successes Airbnb, Cruise, Docker, Reddit and Stripe — in total all approaching a combined market cap of $100Bn.
— Henry Joseph-Grant (@speirin) March 27, 2017
Now when a globally recognised guy like Sam Altman is in town, at a free event, you arrive early or you may miss out, thankfully I did and had a ringside seat for the fascinating talk on stage. Others weren’t quite as lucky as the queue was huge outside and some couldn’t get in due to the huge interest in the event meaning that the venue was packed to the rafters, which made for an electric atmosphere as around 700 of London’s startup eco system watched and listened to the talk, and unfortunately as the event was so popular some were unable to get in.
— Alexander Potter (@alexpotterVC) March 27, 2017
Thank you to Simon, Toby and the team at Mosaic Ventures for organising a fantastic event and thank you to Sam Altman for making time to share his experience, learnings and vision with those of us in London on Monday and lucky enough to be in the building.
The most important characteristic of great founders
Mosaic co-founder and partner Toby Coppel (Who I had never before now had realised was also from Northern Ireland like I am) kicked off proceedings by asking Sam, what he felt a great founder looks like and the types of people that he loves to join YC, Sam explained that YC gets 50k applications every year from around the world, which means they spend a lot of their time trying to optimise for great founders. If they get it right then their job is very fun and if they don’t its incredibly painful. The thing they have noticed is determination is the most important characteristic of great founders, more important than intelligence, vision or anything else. YC only want founders that are relentlessly determined to achieve their goal and YC have had to tune their application process to evaluate that. They feel it is easier to build a hard company than it is an easy company, if you are building the 10 thousandth photo sharing app, then it is very hard to get people to come and join your mission. If you are trying to build a supersonic aeroplane or payments for the entire internet, then people are excited and want to be part of that and investors and the press will be also interested. So being determined with a clear but huge vision is essential. They also like people who are good communicators and are nice to be around.
Sam also explained that what he thinks is magical about Silicon Valley and he hasn’t seen to the same degree anywhere else in the world, is the ability for people to have a vision of the future that they believe in and aren’t mocked for it. He said that in most parts of the world if you have a huge vision, people to your face or behind you back will make fun of you, but in silicon valley they have learned their lesson. He says more than anything else this the secret to Silicon Valleys out performance for innovation and scaling of big ideas. So YC looks for people with that spirit.
— Henry Joseph-Grant (@speirin) March 28, 2017
Sam said that as startups have become more popular and fashionable it has now become a resume item and YC in particular, people view their lives is determined by names such Harvard and then Y Combinator and they are the founders they run from, they instead want people who are kept awake at night because they know what they are doing is so great and that is not a resume item, or a step to something else, you do it because its the last thing you want to work on, Sam explained that if YC was the last thing he worked on and he did it for the next 50 years, he would be happy with that. YC has never had success funding founders doing a startup as a resume item and they have built up various defences to try and detect that. He feels that one of the distinguishing problems with application processes is that by their design, they are in effect designed to be hacked, by stating what people need to be successful, in any system like that, will get hacked, so YC have intentionally designed their application process to be as un-hackable as possible. YC make all of their returns from the most successful startup from each cohort, so they put the founders interests of all before anyone else, they don’t think in terms of failure rates, they think in terms of the value of the most valuable company, many of YC’s most successful exits have come from founders on their second or third time with Y Combinator. He gave the example of self driving startup Cruise, who was their biggest exit of last year when GM bought it. The founder was on his second time with YC, the first time not as successful and if YC hadn’t of treated him right at the end of that, they wouldn’t have got to invest in YC. Most investors try to win even in non-successful investments but YC sees the long term strategy they have as more sensible.
Simon Levene asked Sam about if failure isn’t a stigma that it was 10 or 20 years ago, especially in YC cohorts given that YC is seen as a badge of honour or right of passage.
Sam explained that failure is still bad and the odd thing about Silicon Valley is that people brag about failure and he feels failure sucks, he said that like anyone else he has done some things that have worked really well and plenty of things that haven’t and its much more fun when things work well. He feels Silicon Valley doesn’t view failure as a black mark, but they get that right because people are not afraid to try things because they know if they fail it isn’t the end of the world, which has been a great asset to Silicon Valley. Y Combinator did a survey and asked all founders who had failed if they were happy with their experience and all but one said they were and they learned more during that time than they would have elsewhere, they obviously wish they had succeeded but they had brushed that off their shoulder and positively moved forwards.
He feels that for most people starting a startup is not a good life choice given its incredible hardness to succeed. especially given the public perception and glamour of being a founder is much easier than it in reality is. On the upside, Sam explained that the thing he enjoyed most about being a founder is that as a founder you get to do every job, whereas anyone else in the company ends up focussed on one vertical area, now I do agree with this but from my own experience, especially when I was at JUST EAT, early employees do get to do way more than their job entails, this of course does change as you scale up, but in the early days or in a new market of a startup, everyone has to chip in above and beyond the call of duty stated on their job spec, that is why it is so important as Sam about founders being determined, that your early team shares that passion and commitment and has a shared sense of value and mission.
Simon Levene asked Sam, what is the best composition of founding teams, one or more people and what does YC’s data point to. Sam replied that their most successful companies had two or three founders, but they are willing to fund solo founders, they keep an open mind as they feel the moment you start cutting off potential companies with rules about number of founders, thats when one will come along that breaks the rule. (London VC’s and wannabe YC’s take note on that one, because to my knowledge they all have rules about founders). Sam said that there is one company each year that is responsible for 2/3 of their returns then they can’t risk turning away great opportunities and will consider anything. He also said that it is infinitely worse to have a bad pairing or match of founders than having a solo founder, but if people have a good opportunity for a great cofounder they should do that.
Sam explained that the reason why things have gone wrong in the world such as Brexit, Trump etc is because we no longer have the economic growth that we had for several decades. People are much more sensitive to relevant quality of life, than absolute quality of life, they want their life to get better every year. In a world where the entire pie keeps growing then everyone’s happy as everyones life gets better and democracy functions (I agree with his point, but as the vast majority lives in poverty or subject to inequality then I am not so sure everyone has ever been happy) He continued “In a world where the pie stays the same size and we have sub 2% real GDP growth, then we fight, because for your life to get better you, mine has to get worse, we’re trying to allocate the pie, instead of growing the pie, which is the few great threats to the systems and values we care about” he continued “So it is really important to get economic growth back and the thing that is most likely to deliver that, is innovation and startups, we want to spread this message around the world, because new startups around the world is really good for the world to function well”
I agree with this so much, it is why I have created www.peacetech.co.uk as I had numerous entrepreneurs reach out to me from Northern Ireland, a place which I was born and in my opinion is still so distracted by the legacy of its conflict, that it doesn’t function well, when you take away the tribalism and religion, people are not that different, they want to work for a good life for themselves and their families and need the opportunities to make this happen, with traditional industry such as manufacture and agriculture in decline, there needs to be a lot done to make the new opportunities happen, but with the distractions of the past and the present with things such as Brexit and Political rivalry, I cant see this happening, nor can many entrepreneurs based in NI, dozens reached out to me to ask for help, I realised I couldn’t help everyone myself so founded PEACE TECH to help build the eco system. I believe that if we can give and connect the entrepreneurs access to the knowledge, skills, resources, advisers, Investment and talent they need then it will be possible to grow a global success based in NI, if we do help to create global success then it will in turn create a strong self sufficient eco system. My goal is to prove to the world that conflict and unity is more profitable than conflict and division. If that hypothesis can be proven with data to governments, lobby groups, hedge and private equity funds, you can imagine how great a world to live in that would be. So Sam if you’re reading this PEACE TECH would love to partner with YC and or Startup School.
Anyway back to Startup school, Sam explained that as they can only fund a few hundred startups a year, they want to instead help tens of thousands and rebuild in software as much of the YC program as they could, so the dinners, talks, community and advice has been built and will be broadcast online with Y Combinator alumni mentoring online, so there will be a program thats free for everyone around the world, with guest lectures and advisors to replicate a significant level of the YC Program. It will be available weekly in a sequence and the startups will do weekly things just like YC program, with something similar to demo day at the end where startups can present what they have built online.
Toby asked Sam about YC’s AI Track and why they are so passionate about it. Sam commented “I studied AI as an undergrad and I had an inclination that things were about to go very fast and now with the benefit of hindsight I knew I wasn’t optimistic enough. The progress we are seeing with machine learning, continues to astound me and anyone not paying attention is about to miss the biggest technological shift of this generation” Sam is also cofounder of OpenAI alongside Mr Marmite himself, Elon Musk.
As a not for profit OpenAI are building a way to use AI for the benefit of humanity, it is a pure research none profit not to align with activity for shareholders. They realise in the shorter term that Machine learning is about to reshape every vertical and we are already seeing this with self driving cars, in radiology etc. Sam thinks that we have all the tech today to do all repetitive work, which is probably 75% of all the work we do, but we haven’t figured out creativity or curiosity, although Sam believes that Open AI will do that at some point.
AI Robot factories and taxing robots
Sam is passionate about products which have a quality of life impact, such as clean energy, he believes that we are not far from being able to cure many different kinds of disease and he feels that AI is a wave that is about to crash over every industry and humanity.
Sam expects that within the next ten years every job in a factory will be replaced with robots in the next ten years. There are mega consequences to this with huge job elimination, but he takes the view that tech disruptors have the duty to retrain those whose jobs the disruption displaces, putting their talents to better uses, which in Sam’s opinion will be a net win.
Simon asked Sam about his opinion on taxing AI and robots, Sam said “The taxing robots thing sounds good, but is a silly thing when you think through the consequences of that, however in terms of taxing wealth and redistributing it, we need to do a lot more of that and that is going to be the future, technology is a leveller of ability and a concentrator of wealth, you get more total wealth but concentrated in fewer hands, we are not that far away from being able to eliminate poverty and offer universal healthcare, which will be basic human rights with enough food to eat and a place to live, I am confident we will do that but to do this it will take a change in how we think about redistribution, it’s going to be uncomfortable for people, in that its nothing like socialism but it is going to feel like it” Sam feels that the society will be a combination of a floor and no ceiling, there will be Trillionaires, but they will pay a ton of tax and there will be no poverty, it will still feel unfair in the huge delta of people being able to get really rich but nobody is really poor. Sam thinks there will be some version of a global basic income, and he is running tests to see how this can be done where people are still passionate and they get the fulfilment and sense of purpose from what they do and people are incentivised to do new things.
The merger of humans and AI
Sam said he feels the most likely version of the future is some merger between humanity and AI as he feels that if you have humans and AI and they are trying to enslave the other and want dominance, that will be a recipe for conflict, as history shows us that when two groups want one thing which there is only one of the result is always conflict. Sam feels that this fight is the basis for most sci-fi novels, man vs machine and he thinks we need to try to avoid that he said “Some version of a merge anywhere from pugging electrodes to our brain or uploading our brain to a machine or every person has a chat bot that becomes an extension of their will, in the same way that our more complex brains are in service of our lower brains. Sam feels we need something like that so we are one thing and it is not us vs AI.
— Henry Joseph-Grant (@speirin) March 27, 2017
The huge importance of Energy
Sam explained he has studied the history of technology more than he has studied any other area of history and he said that one of the things that become apparent is quality of life correlates with cost of energy and every major break through we have in terms of cost of energy leads to peoples lives becoming a whole lot better, he believes that if we can make energy x10 cheaper, you can make everyones lives a lot better, the other side is the impact on the environment, the cause of wars and he feels the coming needs for powering AI super computers, he thinks the two things that will get us there are nuclear and solar + storage and we should pursue both.
Toby asked about the potential for wars over water in the coming years and Sam explained that he still sees that as an energy issue in that if you address the energy problems then you can do things like sea water salinisation cheaply and solve all food and water problems.
Toby asked Sam about synthetic biology and his views for the future, Sam said he doesn’t think most people don’t realise we can edit DNA, he doesn’t know the consequences of that but he knows they will be big ones and hopefully edit organisms to make molecules to edit life, which is something that went from science fiction to reality quicker than regulation can react and he thinks there is huge upsides to that but there will be downsides and he feels that is one area the startup community don’t pay enough attention to, well Sam if you are reading this check out Helixworks here an Irish company paying that area, a lot of attention.
Donald Trump was a protest vote
Toby asked Sam about his views on the challenges in the world of US politics, the muslim visa ban and GovTech initiatives. Sam explained he has never been more politically motivated as he does now, he said “What is happening in the US scares me a lot, I understand some of the reasons why now” he then joked “I have to say I’ve been to many countries who make fun to me about US politics, but I didn’t expect that from Brits” which resulted in laughter an applause. He feels that tech has enormous influence in our lives and the merge of tech and humans even such as phones, although they aren’t part of us they feel like they are and tech companies have to think about that, in that the things that make graphs go up to the right, are not always the best things for society, such as fake news, filter bubble etc, he feels that tech needs to figure out quickly how to build tech that unites us and win, not just economically but have an actual say in the future.
Sam feels Donald Trump was a protest vote and he hopes is a short black mark on our history that we learn from and we move forwards to make a better future.
There are many good reasons to vote for Trump or Brexit, but we lose site of the fact that people sometimes do unpopular things for the greater good. Sam said “I will work with everyone to do good and no one to do evil, people who work with Trump to do good have a stronger stomach than I do, but they exist and I am glad Elon musk is working with Trump” Sam appreciates people support Trump but he constantly reviews why they do and it helps him to have balance with his own world view, but also when he tries to ban Muslims he will go and protest. He doesn’t believe that all Trump voters are bad people.
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