Hey, how's it going? This is Craig Cannon and you're listening to Y Combinator's podcast. Today we have an uncut interview from the Masters of Scale podcast and in it Reid Hoffman, the co-founder of LinkedIn, interviews Sam Altman. Alright, here we go.
I'm here with Sam Altman, President of Y Combinator, who is a good friend and has been involved in many scaling things. Let's start with your entrepreneurial. What got you in entrepreneurship, how you started Loopt, why you started Loopt?
First of all, thank you for having me here. I fell into it accidentally. I went to college to be a computer programmer. I knew that was what I wanted to do. And I started college after the dotcom bubble had bust so startups weren't on anyone's find. I remember one thing I was surprised by in college, as a freshman, was that I thought people would still be excited about startups and if you said you were working on a startup people just sort of laughed at you in not a nice way. And I actually didn't want to work on a startup.
I worked my summer of my freshman year in the Stanford CS department as a researcher and I loved that. Out of that grew a project, which eventually developed into Loopt, but it started as just a project that we worked on after class. It would not have been a startup if it were not for Y Combinator. It got to the point where we had worked on it during spring quarter and it was really fun. I'm very ashamed to say that I had been planning to go be an intern at Goldman Sachs that summer. I accepted a job offer
...and I realized I was having much more fun with all three of us working on this project. And we all kind of knew who Paul Graham was. We had followed him online and he posted this thing saying, "Hey, not excited about your summer job? Come hack on your project, make a startup." And that seemed like it would be more fun than being an investment banker so we applied to YC and flew out and interviewed and got funded. We were actually the first company ever funded by YC and then it just kept going.
Is there anything that even this the very beginning, is there anything from now, having done Loopt and a bunch of things we're going to get into that if you could call that younger self of yours going into YC, that you would tell yourself to do differently? Like key things.
One general thing that I didn't understand then and learned pretty quickly, but would have saved me quite a bit of heartache is about how to calibrate risk. Most people worry way too much about risk. When you're young and you have nothing to lose is absolutely the time to take risks and it's the time, unfortunately, that most people are the most risk averse in their lives. They want to work for a few years, build up savings then they're just going to start out. They're going to do what their parents want, whatever.
I ended up in the right place, but it could have gone either way and I was very, totally stupidly nervous about the risk so this idea that most things are not nearly as risky as they seem is a powerful one and one that I always try to tell people in that position. You're a poor college student with no money and a no reputation, if you do a startup and fail you're like two years older with no money and reputation it's fine. It's actually much harder to wait and let your life ramp up and then do it. That's one thing.
Another thing is why do you think I'm super easy to work with today, by I was like infamously difficult to work with when I was 18 or 19 and I would have put more effort into trying to be better about that.
What specifically would you have done to be easier to work with?
A lot of it is how you set and communicate expectations with others and also realizing that if you're the founder of the company and you wanted to work 100 hours a week and be super focused and productive that's cool, but most other people you hire, especially as you get bigger, have other lives and you need to understand that. Again, everyone learns this lesson quickly, but it would have saved some pain along the way if I had learned it earlier. The other thing that I think I got wrong and
19 year olds starting companies often get wrong is because they evolve fairly organically from projects, you never take the time to realize all of a sudden I'm running this company with 10 people and we're doing this and we've raised all this money and do I really believe that this is going to be a market that will support a giant company. There are several checkpoints along the way where people don't give that enough thought.
How do you think that they should make those checkpoints, because from other conversations I know that both you and I think this whole total addressable market, TAM, thing is frequently very illusory.
The most interesting companies start with a TAM of nearly zero and it's like the very bad investors are the one that's focused on the TAM of today. The good investors are focused on the TAM of 10 years from now. The thing that I have seen be most predictive for ... TAM is total addressable market. The thing that I have seen be most predictable for a large TAM down the road is how much the people that are using it today use it and love. One of the things that was obvious when people got iPhones.
Even though only a few million of the iPhones sold, the people that had them used them everyday and loved them. It became like their most precious item. I remember shortly after the iPhone came out I was in a developing world country. It was really quite poor and people had nothing, except they all had a smartphone and once they had one ... You read these statistics and people need to do some lightweight journalism about would you rather give up your smartphone or x, it doesn't really matter what x is,
they're going to keep the smartphone. You could have predicted with a lot of certainty, many people did, that this was going to be a large market. It was small in 2008, 2007; but it was guaranteed that it was going to grow very quickly, because of how much people loved it. The internet, in the early days, was the same thing. And I think a lot of other trends people jump on too early, because a lot of people dabble, but put it on the shelf. A lot of people have bought VR headsets and put them on the shelf....