Sam Altman on Loving Community, Hating Coworking, and the Hunt for Talent – Conversations with Tyler

Check out the Conversations with Tyler Episode Page & Show Notes

Key Takeaways

  • The most expensive mistake you can make in life is to be a pessimist
  • What makes Sam who he is?
    • “I’ve met many people smarter than me, but I’ve only ever met a handful people that are more curious than me”
  • What makes a good founder?
    • It is VERY hard to be successful as a founder if you are not decisive
    • Being relentlessly resourceful
    • But the MOST IMPORTANT trait of a successful founder – Having a vision that someone feels compelled to make happen in the world
  • On artificial intelligence (AI):
    • “The upside of AI is UNBELIEVABLE. Real economic sustainable growth comes from technology, and I think this technology is going to generate more of it than the sum total that has ever been generated by technology in human history.”
  • Sam is a huge proponent of universal basic income (UBI)
  • There are two huge problems with coworking spaces:
    • They act as a band pass filter and kill off great ideas
    • The average level of ambition and willingness to work hard at a coworking space is incredibly low
      • The regression to the mean law then takes effect
  • “Nuclear energy is BY FAR the safest form of energy that humanity has ever created”
    • Sam believes we’ll get net gain nuclear fusion working in the next decade
  • What did Sam do wrong as a 19-year-old?
    • “I didn’t spend enough time thinking about what to work on. I just let myself get pulled along.”
  • Sam tries to always live his life aiming to never regret anything
    • So if he’s making a decision, and feels like he’s going to regret not doing something in the future, he goes for it
  • Most things in life are not as risky as they seem
  • “The best way to generate wealth is to own a significant piece of a startup”

Books and Resources Mentioned

  • Check out Bowling Alone – this book documents the decline of social capital in America
    • Social capital = shared norms, values, cultural understandings, and a sense of community
  • The best book Sam read last year – Mind of Napoleon
    • It’s a book of quotes about Napoleon’s views on nearly everything
    • “The thing that stuck with me the most was his incredible understanding of human psychology, and that is something we see with many of our best founders”
  • Check out the online videos from a class Sam taught at Stanford – How to Start a Startup

Intro

Venture Capital

  • What is a common misconception about venture capital?
    • “That venture capital is filled with smart visionaries who know exactly what’s going to happen in the world”
  • “The way you become really great at venture capital is to accept that the only way to figure out the future of the world is to identify incredibly talented, smart, creative, original thinkers, and back those people. You have to TRUST that will work out over time.”
  • “Almost every venture capital firm gives advice they never follow themselves”
    • “They don’t build differentiated products, they are not network affected businesses, they don’t try to build a brand and a community, and they don’t try to make something that gets better the bigger it gets”
    • Sam says this isn’t the case with Y Combinator –“We run Y Combinator the same way we tell our startups to run”
      • “The most important thing we [Y Combinator] do is to build a network and a network effect”

More on Y Combinator (YC)

  • Where did the name “Y Combinator” come from?
    • Sam’s predecessor, Paul Graham, chose it
    • “Really what that name means is, ‘A function that starts other functions,’ and we are a company that starts other companies”
  • “What’s different about us is that we like to start companies that, if we didn’t fund them, wouldn’t happen”
    • Other VC firms just look for companies that will be successful, whether they invest or not

The Lull of Innovation

  • We’ve had a string of great tech in a short period of time – the personal computer, the internet, the mobile phone…but now we’re “in a slight lull” according to Tyler 
    • No one is quite sure what the next big thing will be and when it will come
  • Sam has some thoughts:
    • “The most expensive investing mistake you can make is to be a pessimist” – (and in life as well)
    • “It’s true we’re in a lull, but it is absolutely categorically false that, unless the world gets destroyed, we will not soon have a bigger technological wave than we’ve ever had before”

“Growth Masks All Problems”

  • This is something Sam once said – he clarifies…“most of the time”
  • “A statement that I wouldn’t make is that – ‘Growth is always an inherent good'”

Why is being quick and decisive an important personality trait for a founder?

  • “I can say with a high degree of confidence that this correlation is true”
  • “Being a fast mover and being decisive – it is VERY hard to be successful not having those traits as a founder”
    • Sam isn’t quite sure why this is, but adds….
      • “I think it is has something to do with the fact that the biggest advantage startups have over large companies is agility, speed, the willingness to make large consensus concentrated bets, and incredible focus. THAT’S how you get to be the big company.”

Email

  • Sam wrote a program a while back to examine how quickly YC’s best founders (the ones that run billion dollar companies) answer emails compared to the “bad founders”
    • “The data was mind-blowingly different”
      • Sam says the best founders tended to answer emails in minutes, while it typically took the “bad founders” days

What makes a great founder?

  • On being smart:
    • “I would characterize myself as pretty smart, but not a super-genius by any means”
      • “I’ve met many people smarter than me, but I’ve only ever met a handful people that are obviously more curious than me”
    • “You do have to be pretty smart to be a successful founder, but that’s not where I look for people to be true outliers”
  • “If you look at most successful founders, they are pretty smart upper-middle-class people. They are very rarely the children of super successful people, they are very rarely born in real poverty, and they are never dumb. They are pretty smart upper-middle-class people that have grit, drive, creativity, a vision, edge and a different way of thinking about the world.”
  • Being relentlessly resourceful – “I think it’s one of the most important traits in a founder”
    • What does this mean?
      • This is the mindset of – “That thing is so important to me, and I’m going to figure out how to get it done, whatever it takes, whatever I need to learn, and whoever I need to convince”
  • But THE MOST IMPORTANT TRAIT of a successful founder – “Having a vision that someone feels compelled to make happen in the world”
  • A successful founder also needs to be a great communicator
    • You’ll have to convince LOTS of people of your vision – “Your job as a founder ends up becoming the chief evangelist for the company”

How do people who perform extreme physical feats differ from good founders?

  • They don’t so much – “That’s something that I’ve learned to look for”
    • Sam says that a surprising number of YC’s best founders are also into an extreme physical sport
  • “I think one thing that is a really important thing to strive for is being internally driven, being driven to compete with yourself, not with other people. If you compete with other people, you end up in this mimetic trap, and you sort of play this tournament, and if you win, you lose.”
    • “If you’re competing with yourself, and doing things for your own satisfaction…being the best possible version of yourself that you can….there is no limit to how far that can drive someone to perform”
    • “Even though it looks like athletes are competing against each other, when you talk to a top athlete, it’s their own time they’re going against”

Why James Bond Would Be a Good Founder

  • As a founder, a LOT of things will go wrong – you need to be able to never lose your cool
    • Bad things will always be happening – you need to be able to survive and figure things out with whatever resources you have in front of you

OpenAI

  • Sam says he spends most of his time nowadays working on OpenAI related things
  • “I think building true superhuman artificial intelligence and figuring out how we as a collective humanity decide what the world is going to look like on the other side of that, and making sure that it’s safe and that we retain autonomy and a governance system we like, AND that the benefits of that are equitably distributed in the world….that is the most important thing to work on”
  • “The upside of AI is UNBELIEVABLE. Real economic sustainable growth comes from technology, and I think this technology is going to generate more of it than the sum total that has ever been generated by technology in human history.”
  • “I think eventually we’ll learn that we humans just aren’t that smart” (compared to the potential of AI)

Universal Basic Income (UBI)

  • The argument against UBI that Sam is most sympathetic to – that it’s going to lower immigration
    • Why would this happen? – U.S. citizens aren’t too fond of immigrants just getting free money
    • “I think increasing high skill immigration into the U.S. is one of the most important policy things we can do”
    • “But I think the positives of UBI are so high, that I would take the trade, although I’d work as hard as I can to increase the level of high skill immigration”
    • A very high percentage of successful tech companies in the US have a first or second generation immigrant founder

The Anti Coworking Space Rant

  • “One thing that cities do to encourage startups to go there, which is predictably awful, is open coworking spaces”
    • “I’m VERY anti coworking spaces”
  • Y Combinator purposely does not offer free coworking space
    • “I think the single thing that has differentiated YC more than any other decision we’ve made is that we do not have a coworking space”
    • They bring their companies together 1x a week, but that’s it
  • The problems with coworking spaces:
    • They act as a band pass filter and kill great ideas
      • “Great ideas are fragile. They’re easy to kill.”
      • “All the best ideas, when I first heard them, sounded bad”
        • Everyone is much more affected by what other people think of our ideas than we’d like to admit
    • The average level of ambition and willingness to work hard at a coworking space is incredibly low
      • The regression to the mean law then takes effect

Nuclear Energy – Why is it so unpopular?

  • “I think it’s because most people are very bad at estimating risk. They will happily breathe in coal smoke all day and then someday die of cancer, and not connect that together. But if there’s a nuclear meltdown and 3 people die, they will march against nuclear energy forever.”
  • “Nuclear energy is BY FAR the safest form of energy that humanity has ever created”
    • (Even safer than solar panels, because people don’t die falling off roofs)
  • “People are more convinced by imagery than facts”
  • “I believe we’ll get net gain nuclear fusion working in the next decade”
    • For more on nuclear fusion, check out these Podcast Notes from Scott Adams Periscope Session with Naval Ravikant

Why has the tech world found education so hard to crack?

  • There are a lot of things tech can’t do – “I don’t think the biggest problem with our education system is a technology one, it’s a human one”
  • One of the things Sam is excited about with AI – every child in the world having the chance to get their own personal teacher/tutor -someone who will fully care about that kid, and make them the best person they can be

What’s the best case scenario for crypto?

  • “I can imagine a crypto system where you see something more powerful than any government on earth and you actually figure out a way to give every person on earth a coin, and then you make this gigantic network that everyone believes in. This would allow you to do redistribution outside the control of any government.”
    • “That would be the most powerful network effect the world’s ever seen economically”

What are we going to do with all the empty big box stores?

  • Perhaps turn them into really cheap housing
    • As a side note – “If you could pick one national policy that would help with redistributing economic opportunity, it would be to provide cheap housing near high-quality jobs”

Rapid Fire Questions

  • What did Sam do wrong as a 19-year-old?
    • “I didn’t spend enough time thinking about what to work on. I just let myself get pulled along.”
  • On poker:
    • Sam played a lot of poker in college
    • “I think I learned more about life and business from that than I did from college”
      • What specifically? – Getting good at quickly evaluating risk
  • Is regret rational?
    • Yes
    • Sam tries to always live his life aiming to never regret anything
      • So if he’s making a decision, and feels like he’s going to regret not doing something in the future, he goes for it
  • What is a source of beauty in Sam’s life that he wants to cultivate more of?
    • “For the first time since I was a kid, I’ve really been able to A, do nothing with people I love, and B, marvel at everything in life and figure out how to look at things for the first time again”
  • On innovation:
    • “The hardest thing to do business is be an organization that produces repeated innovation and success because loss aversion is so high. Resistance to change is very high when you have something that’s working. Putting in the risk to make it work better is not a bet that ever feels comfortable.”
      • “You need to internalize that most things in life are not as risky as they seem. Most things in life are two-way-doors – you can come back.”
  • What advice would Sam give to a 19-year-old hoping to be like him?
    • “Don’t ever try to be like someone else or take too much inspiration from someone else’s life path”
    • “Don’t shoot for something someone else has already done. Shoot for something no one has done yet.”

Audience Q&A

  • Overrated or underrated
    • Antarctica – Underrated
      • Sam visited and says – “It felt like being on another planet”
      • “Having no internet, no other humans around, or plants or animals, being extremely cold, and having nothing to look at but white and rock, man was that a mental reset.”
  • What is the most curable quality of a bad founder?
    • Arrogance – “You want to be confident, but not arrogant”
  • On traveling:
    • “I don’t do this as much as I used to, but I used to make it a point to travel 12-16 weeks a year, and just observe the world way outside the United States. I think that gave me a broadness of perspective that was super valuable, and it’s something most people don’t do.”
  • “The best way to generate wealth is to own a significant piece of a startup”
  • An audience member asked a question about the book Bowling Alone which documents the decline of social capital in America – has this decline continued through to the present day?
    • Social capital = shared norms, values, cultural understandings, and a sense of community
    • “There’s all this data that what makes people happy is a sense of community and belonging…and that has declined for sure, badly. Even in my own life I’ve watched that decline.”
    • “San Francisco is such an awful city for a sense of community”
      • Why?
        • “Cities that become dominated by a single industry and cities that reward financial success over a sense of shared humanity and community have a very hard time preserving that fabric of social capital/community.”
        • “Where I grew up, no one would EVER walk by a person collapsed on the side of the street on their way to work and not do something about it.”

Random

  • Sam recalls that when he was a kid, Washington University sequenced a person’s genome for $1 billion
    • You can now do this for ~$100
  • There was recently an article in the Jerusalem Post; someone credible claiming cancer has been cured
    • Sam didn’t read the article but says – “I will say, having talked to many biologists working in the field, there is a surprising amount of optimism that we are a decade or two of that being true”
  • The best book Sam read last year – Mind of Napoleon
    • It’s a book of quotes about Napoleon’s views on nearly everything
    • “The thing that stuck with me the most was his incredible understanding of human psychology, and that is something we see with many of our best founders”
  • Check out the online videos from a class Sam taught at Stanford – How to Start a Startup

These notes were edited by RoRoPa Editing Services

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