Y Combinator CEO Shares How They Pick Winners, Advice For Founders + Lessons From Paul Graham

Garry Tan

I don't think people are prepared or even aware of what's about to happen right now. It's like super, super good news for anyone who's running a business.

Shaan Puri

Sam, have you seen? I feel like there's a new meme that got birthed, and I think Gary's involved with it now, which is the "learn to cook, loser." Have you seen this, Sam?

Sam Parr

What is that? What is that? Sorry, can you explain this one?

Garry Tan

I posted it. I don't even know what it was a reply to, but it seems to be going viral, so it's a good meme.

Shaan Puri

I think somebody, Paul Graham, was talking about cooking. He was giving his kid advice and he said, "You know, when you have a girlfriend or something like that, they love to come home to the smell of a meal being cooked." Then someone, immediately a random Twitter troll, is like...

Sam Parr

Why are you?

Shaan Puri

Raising a feminine man, like, you know, he should be masculine. He just doesn't need to learn to cook. Then I think Paul's reply was, "Learn to cook, loser." All the builders, like Amjad and others, basically the tech people, were like, "You know, this is actually good general advice. Learn to cook as a high-agency way of living." I think it's like the compressed idea of, you know, build things, actually make things, actually go do things in the world that are of value. Maybe I'm reading too much into it.

Garry Tan

It's the more succinct version of "make something people want."

Shaan Puri

Yeah, yeah, it's the punched-up version. Learn to click, loser.

Sam Parr

Is Paul Graham like the definition of success? He basically built one of the greatest companies of all time, Y Combinator. Then it started working well, and he just bails to Europe, where he's living in a... I don't actually know if this is true, but it appears he's living in the woods, writing, and being with his family. I'm like, did this guy just pull the ultimate move, and it worked out perfectly?

Garry Tan

I think so. I think he really did.

Shaan Puri

What's your version of that?

Garry Tan

I mean, more or less, Y Combinator (YC) as a concept is like kind of a miracle. There are very, very few places in the world where anything like YC ever happens. I just feel like I need to be like the watcher on the wall. It's like, okay, this thing is working, and it's working for relatively mysterious reasons that are almost too obvious. I mean, it's both a mystery and obvious at the same time. YC itself is pretty earnest. It's just "make something people want." You apply to this program, and we try to sincerely find the things we think could be really, really big. Then we just give you a bunch of money and throw you in a room with all the other people who are, you know, sort of the top 1% of people trying to do that thing. Somehow, some magic happens where 5 to 10% of those companies become worth $1 billion or more. YC takes some equity, but not that much—about 7%—specifically for people who often wouldn't have access to that capital or that network by default anywhere else. I mean, it's kind of cool. It's just that 1 + 1 equals 3 in a really unusual way. It sort of resembles a college in some ways, you know? Only instead of people paying tuition, we pay them.

Sam Parr

You know, when I think of good brands, a lot of people will just think of funny or cool things. But when you think of names like BlackRock or Goldman, some of these names are kind of like Harvard institutions. They're a little ominous and a little scary, but they're institutions. Do you ever purposely think, "How do we become an institution?" Or is this just all because you just said, "Let's have high standards"? Was it on purpose, or did it just happen because you had good values? How does that happen?

Garry Tan

I mean, I think a lot of it comes back to, you know, earlier we were talking about Paul Graham. The guy's just a very unusual, original thinker and a very clear communicator. The thing I learned from him in particular is that clear communication, and you know, just using basic logic, being able to explain your sort of A to B to C, and then you zoom out and there's a really big idea in there. That's, you know, in essence, what a really good pitch is. I think that that's where it came from. Paul was just very... you know, both frankly, Paul and Jessica Livingston, his wife and co-founder. The two of them basically created this thing that feels different. It didn't feel like another investor; it felt very welcoming. I mean, this sort of viral tweet I think PG has about Jessica is like, you know, "Jessica once cut a founder's fingernails before he went on stage at demo day" or something. Just because it's like, it's sort of, you know, at once very exacting. We have very high standards, but then it's at once also very sort of like almost family or homey, just welcoming. You know, sort of that mix of both very earnest and very formidable. Those two things combined created, I don't know, something that seems to create magic.

Shaan Puri

Isn't it wild, by the way? Just think about this. One of my companies has recently gone through an M&A process, and I talked to bankers. So, we go first and interview bankers, asking, "Why should I go with you? Why should I give you 4% of this transaction for 6 months of work here at the very end?" They're all about their differentiated process, how they do more and more, how they have the smartest people in the room, and all the things they brag about that make them successful. On paper, it makes sense, but it's kind of the midwit meme. If you look at Y Combinator, it's like, "Yeah, we invest in people before they even have an idea." A lot of the time, they have no traction.

Garry Tan

Often, they have to change ideas.

Shaan Puri

We don't negotiate every deal. We just take 7% for every single company. Same deal, that's it. The application? Yeah, it's like a one-page form you fill out online. The interview? Yeah, we talk to you for 10 minutes and we just give you a thumbs up or thumbs down from there. Like, all of the things... why she...

Sam Parr

Does this for you.

Garry Tan

Yeah, it's 10 minutes.

Sam Parr

Oh my god.

Garry Tan

Minutes, yeah.

Shaan Puri

And they're picking winners at a higher rate than anybody else. I think they're attracting winners at a higher rate than anyone, so it makes it easier to pick. But they're picking winners at a higher rate than every other investor, even though their process is simpler and less than what you would think you need in order to be the number one player in the space. I think I've read the stat; it's pretty insane. You guys basically, every time you run a batch, you print about $3,000,000,000 of market cap on average. I did some math and really looked at the batch values. So, something like 5% of all the companies become unicorns. If you just do that a couple of times a year—now you're doing it twice a year, now you're doing it four times a year—you're like, "Oh yeah, let's just print $3,000,000,000 of market cap 2 to 4 times a year." Wow, mind-blowing! That is so insane.

Garry Tan

Yeah, I mean, I think the craziest thing I’d ever heard was basically the Airbnb round where I think something like under $20,000 became $2,000,000,000 at the liquid IPO when Airbnb IPO'd. And, you know, Y Combinator (YC) didn’t even take the pro rata then. So, it’s pretty wild, honestly. Like, you know, they easily could have returned $5 to $7 billion with a good portfolio management strategy. But, you know, that’s the thing. I think simple things work, actually.

Shaan Puri

If YC was a company, because I think it's been around like 18 years, you said?

Garry Tan

18 years exactly.

Shaan Puri

In the last 18 years, you know, Y Combinator's gotta be up there in like the top 10 Silicon Valley companies. Things that got created that created so much value. Do you think about it that way, or do you have a good lens on it?

Garry Tan

What I try to get people to understand is that this isn't just, you know, working at a company. I think we did the math on how much money per employee Y Combinator (YC) in theory should drive. I think we're something like $20 million per year per employee in terms of, you know, sort of market cap value created in the world. And that's just the carry; like, that's our take in terms of value created for our limited partners. Overall, I think it's close to $100 million per year per employee. So, it's pretty wild.

Shaan Puri

Who are the LPs? Is it like the pension fund types, just like a VC fund? Or is it...?

Garry Tan

It invests in VC. I mean, the wild thing about Y Combinator (YC) is that I think we're going to release a white paper on this pretty soon, but I haven't talked about this publicly before. We looked at a two-year period, from 2018 to 2020, of people who invested in at least three YC companies per batch for those two years. The top decile predictably was very good; it was like 16x. The top quartile was also very good; it was 8x. I mean, these are outrageous returns for such a short period of time in venture. The wild thing, though, is that the median was 5x, and then the bottom quartile was 3.3x. So it's really crazy because in venture, if you look at how VCs make money, it's all in the power law. There's only, you know, sort of the top 25% that make any money at all. Then the top quartile generally for any given year of VC is only 3x. So it's pretty wild what's happening.

Shaan Puri

You've read... I think I should read something. You've read 6,000 YC applications, so you've seen more of this than anybody else. You're the admissions officer. You've been in a lot of these interviews, and you've seen the companies grow. What do the extreme winners look like early on? Do they look any different than the average company?

Garry Tan

I mean, honestly, they're very similar. My two craziest wins: one was Brian Armstrong at Coinbase. He was a solo software engineer working at, you know, anti-fraud at Airbnb. He had never started a company before. A lot of the things we worked on with him very early were like sort of the basics. It's hard to believe now, on the other side of him having built Coinbase, that there was a time when Brian Armstrong didn't know how to do a product launch or even raise a single dime from investors. So I think it's basically been that same profile: highly technical people who are just sort of smart and earnest. That's mainly who we like to fund. I think it's unusually important today in 2024. I mean, large language models have basically opened everything up. Almost anything that a knowledge worker can do, anyone with a 130 IQ or below, I'm pretty sure that with workflow and evaluations, you could write software now that could do what almost any knowledge worker could do. And you could do it perfectly with no management headaches. I think it's a really profound moment for all entrepreneurs.

Shaan Puri

Hey, let's take a quick break to talk about AI. We all know AI is a big deal. You see demos all the time of people doing really cool things. But as a business owner, sometimes it's hard to figure out, "How do I actually use this? What do I actually do?" I've been trying to use it across all my businesses. You know, things like making little prototype websites without needing to hire a coder, or writing copy for our website. I give it a bunch of data and ask it to analyze it for me. It's been kind of amazing. But the thing I always need is inspiration. I know the tool can do a lot, but it can almost do so much that I'm not really sure what I should actually be doing with it. That's why I think it's great that HubSpot has created a report where they surveyed 2,000 global marketing leaders and asked them what's separating the high-growth and low-growth businesses, and what strategies they're using with AI in their business. You can grab these strategies and apply them to your own business for free. The link is in the description below. Yeah, I think Sam and I have both had "learn to code" on our to-do list for like 12 years. We bought the "Python the Hard Way" course on Udemy and did all that stuff. I think now we get to skip the "learn to" part; it's just code now. You don't have to do the "learn to" part.

Garry Tan

It's like you don't need to actually write it. I mean, it helps to be able to write a little bit yourself, but yeah, I mean, the wild thing from here is with the new developments in AI and code generation. I actually think it'll be more important that you're able to speak to virtual developers and instruct them on exactly what you want and all the different use cases. We're right at that moment where it's going from having to code it all yourself to being able to just sort of talk to this pretty smart entity that will, you know, do it mostly for you. It's not even about no code anymore.

Sam Parr

I was doing that the other day where I was talking to ChatGPT. I was explaining, "Here are the problems my business is having. Can you help me? Can you just be a therapist with me and help me come up with interesting solutions?" The answers were shockingly good, by the way. It was like it was pretty good at just brainstorming with me and being a sparring partner. I know that a lot of it comes down to making people what they want and things like this. To me, that's a bit of an art. You're more of an artist than a scientist. But is there a world where you could take their 6,000 applications and a bunch of other data that you have and kind of spreadsheet your way to the likelihood that we build a company? I think there's magic in creating these multi-deck unicorns or whatever. Is there a way where you could use your data and spreadsheet your way to say, "Well, here's the interesting opportunity. This is going to get to some type of traction and wealth creation with a high rate of certainty?"

Garry Tan

Conceivable. You know, some of it is like we think someone might do something like that, and it might totally work, actually. Then the trickiest thing is, how do you actually get really smart people to come and do that thing? You know, I mean, capital as a service has been an... I think like Chamath talked about that, and I thought it was very interesting.

Sam Parr

What did he say?

Garry Tan

That sounds conceivable. I mean, I think they experimented with this when he was still working on social capital. Instead of having a 10-minute interview, you know how it works at Y Combinator (YC). We actually have 14 equal group partners, including myself. So, we hand-read these applications. You're not talking to an AI during the 10-minute interview; it's literally just talking with us. Once we fund you, we're working with people day to day for those 10 to 12 weeks and then onwards into the future of the company. We own about 7% of the company, so we're like a big seed investor. We need to be around, and it's very high touch. You get an individual person. I think the capitalist service idea is really just about connecting your metrics. Connect your Stripe account, your bank account, your QuickBooks. I mean, it's actually pretty doable today. It's conceivable that someone should connect all those things up, and then an AI can just rank whether something's real or not, do the diligence, and if you hit a certain bar, boom! Here's money in your bank account.

Shaan Puri

Sam, did you ever see that when they did that for growth stage companies? I think they called it the "8 Ball." It was like you connect all your data, and then it would just tell you. They could take your raw data and put it into a format where they needed to analyze it. But then secondly, they benchmarked you. So they're like, "Oh wow, they have best-in-class retention for this category," or "They're below average, so don't invest."

Garry Tan

Were either looking at.

Sam Parr

The results were interesting, but maybe it was too early. Whereas this is interesting, do you remember when ChatGPT started getting popular? I think it was around two years ago. There was a guy on Twitter who had a really funny name; it was something like "Greenpoint." He told ChatGPT to "make me a content website that can rank high on search and monetize on ads." I think within three months, he got it to about $20,000 in monthly revenue. Do you remember that story?

Garry Tan

Oh yeah.

Shaan Puri

Like the normal way now is I prompt AI and I want AI to be an agent. What he did was the opposite. He's like, "You tell me what to do. I'll be your human agent." But you have the good ideas; you prompt me. I thought that was like kind of the great agent.

Garry Tan

Work extra well now with the new reasoning model.

Shaan Puri

Gary, can I ask you a question? Today, you probably think about the future and billion-dollar ideas. But when you were 14, I read that you kind of had your own hustle. You were cold calling companies in the Yellow Pages trying to get work. You made enough money to actually help your family out, like moving from an apartment to a house.

Sam Parr

Can you?

Shaan Puri

Tell that story. I've never heard that before.

Garry Tan

Yeah, of course. I mean, let's see. My parents, we grew up sometimes food insecure. My dad was a foreman in a machine shop, and my mom was a home health aide and certified nursing assistant at convalescent homes. She worked two jobs, and my brother and I lived in apartments in Fremont, in the Bay Area, sort of in the shadow of Silicon Valley. I guess one of the weirder things is that my dad's actually an engineer, but he just didn't have the emotional intelligence to really hold on to jobs. He also struggled with alcoholism, so he was always losing his job. We just never had money around. The thing was, he really did invest in computers. Our first computer was an IBM PC XT. So, we were sort of reality poor but rich in access to computers, which was really powerful for me. I just realized, oh yeah, like I'm 14, but I know how to make web pages. I started winning some awards for web design as a kid in junior high. I started an underground newspaper with my junior high friends, and we learned how to make a website for that underground newspaper. We called it an online zine. The funniest thing was that we had thousands of people finding it off of Usenet newsgroups and things. We wrote articles that I don't think people knew we were 14. When you're on the internet, one thing we learned is that nobody knows you're a dog, I guess. People would just write letters to the editor as if we were a legitimate publication, and I just got really addicted to that.

Sam Parr

Like an early Vice.com.

Garry Tan

Yeah, basically, I think we wrote... you know, my buddy wrote an editorial about how the three strikes law was bad for California. We were like 12 years old; what did we know about any of that stuff? But, you know, on the internet, nobody can tell. I think we wrote it in pretty clear English; people couldn't tell that we were that young. Then, I feel like I got really addicted to the internet and thought, "Well, maybe I can make money." Back then, there was this thing called the Yellow Pages that they'd throw on your doorstep, and that's how you would find businesses. I thought, "Okay, the Yellow Pages is probably my link to making money somehow." If they have a business and they have a little ad in the Yellow Pages, literally in the print section... this was not so early that the internet had eaten the Yellow Pages yet, but it was late enough that there was an internet section. So, I just started cold calling, seeing, "Hey, I know how to make web pages. Will anyone hire me?" Sure enough, I ended up getting a job and riding my bike to the local web design firm that made city websites for places like Pleasanton, Fremont, and San Jose. They paid me $10 of a $7.10 an hour to work on... I mean, I learned how to do graphic design; I learned HTML.

Sam Parr

What is that? What's that phone script? Oh, God.

Shaan Puri

Yeah, first you have to deepen your voice, right? You can't be 14 on the call.

Garry Tan

That's right, and it's like, "Oh, I'm an award-winning web designer," and you know, but I'm 14.

Sam Parr

So, did you say that?

Garry Tan

Yeah, I think so. I mean, it's funny. I remember my first boss; this was sort of his side hustle.

Sam Parr

So, by the way, is "award-winning designer" in your LinkedIn now?

Garry Tan

Oh yeah, I don't know if it is. I imagine.

Sam Parr

That's a miss.

Garry Tan

We'll add it back.

Sam Parr

Yeah, that's a miss.

Garry Tan

It's funny. I mean, I remember there was this company called Infoline. They had basically one conference room, an engineer den, and a little reception desk. That was the whole office. I think there was one really technical, sort of neckbeard Unix guy. The funny thing was, the CEO was also a regional bank manager at Fremont Bank. So, you know, the tech guy walked into the local Fremont Bank, and the internet was happening. This bank manager was like, "I'm going to invest my own money." He became the co-founder of this web design firm in 1993 or 1994. So, it was pretty wild to think about. I mean, that's just how you started a business back then. You didn't go on the internet and apply on a form or something. You literally walked into a bank, and banks were supposed to loan you money to start companies, which, you know, I think to some extent still happens. But it's just funny to think about how that's evolved since then.

Shaan Puri

And at some point, did you just make enough where you were like, "Mom, Dad, here, I can help"? Or what happened?

Garry Tan

Yeah, I mean, I always lived in apartments growing up. I had a little brother who was 8 years younger, and you know, I wanted us to live the American dream. I still remember helping cook the turkey at Thanksgiving in the new house that our family bought. I helped my parents with the down payment, and my parents still live in that home in Fremont. So, I'm helping them remodel it right now.

Shaan Puri

That's amazing! By the way, I looked up your old blog. I think back in 2001, you wrote the following, which I think is pretty accurate: "You know, blogs are all over the place." This was back in 2001, so over 20 years ago. "Pretty soon, we'll all just be writing a blog. We won't really talk to friends. I have to catch up anymore. Human interaction will just boil down to clicking on someone's name on your favorite website, and that'll be it. No more tedious 'how do you do' over a nice matcha frappuccino at some pretentious café. Just read my blog if you want to know what's up." Oh my god, you nailed it and predicted social media! It wasn't exactly blogging, but yeah, that's Instagram stories, that's Facebook, that's the news feed. Exactly! I think you nailed it, for better and for worse.

Garry Tan

That's funny, man. I wish the one thing I could do is go back in time and tell myself, "Don't sell your time. Don't work for a consulting firm or get paid $10 an hour. Go make products."

Sam Parr

But did you ever do that? I thought you were pretty young when you first started getting involved with YC.

Garry Tan

Oh, I was 27, so I was much later, honestly. I mean my...

Sam Parr

You look very young in the photos.

Shaan Puri

Like, you actually didn't need to come from the future because I think I've heard the story that you were working somewhere, Microsoft or something like that.

Garry Tan

Oh yeah.

Shaan Puri

Peter Thiel was like, "Hey, quit your job. In fact, I'll pay your whole salary to quit your job and come co-found this new company, this little company we got called Palantir."

Garry Tan

**Yeah, it's like a $95 billion market cap company today.**

Shaan Puri

And you turned them down. Could you... what the...?

Garry Tan

Hello there.

Shaan Puri

You’re thinking, “Could you just embarrass yourself here?”

Garry Tan

Of course! I mean, I went to Stanford for Computer Engineering. It changed my life, obviously. My fraternity brothers, Joe Lonsdale and Stefan Cohen, and I went to high school together. We grew up together and tried to start a bunch of companies together. You know, I was a year out of school. It was 2004, and I thought, "Oh, look at me! I have health insurance; I have a real job." Then my old fraternity brothers, who were a couple of years behind me at Stanford, couldn't get a real job, so they decided to start a company. I don't know, it's really funny to think about in retrospect. One of the things that was always really smart about the Peter Thiel world is that when you start something, you always need the smartest people around you. I was lucky enough to make Joe and Stefan's list when that happened. Peter was just running the playbook that worked for him when he sold PayPal. This is something that people at Palantir do all the time now: when you start a thing, you take an 8.5 by 11 sheet of paper and write down all the smartest people you know. Then you go take them out to dinner and lunch and just sit on their doorstep until they quit their jobs to come join you. I guess it was pretty wild. I mean, Peter was not a billionaire yet. I think the funniest thing about PayPal and the PayPal Mafia is that they basically fought a land war in Asia against eBay. When you have to work on other people's distribution and platforms, you end up becoming the most vicious, hardcore builder-fighter types to gut it out and build a business on someone else's platform. The exit for PayPal was just not big enough to make people able to take lots of risks, but not so much that they lost all energy and will to fight.

Sam Parr

Well, there was a bunch of them too, so that got divvied up a bunch.

Garry Tan

Yeah, it's wild.

Sam Parr

How much was Peter Thiel worth, do you think, at that conversation? Because, like, let's say you made $80,000. That's like a big deal, right? To be out to dinner with somebody. "I'll give you $80 right now just to quit." Yeah, totally.

Garry Tan

To get a co-founder or a co-founding engineer, I could see myself doing that today. I mean, I think Peter was probably worth at least a couple hundred million, or at least $100,000,000 at that moment.

Sam Parr

More than enough to be able to say something outlandish like that.

Garry Tan

Yeah, I mean, I think it's a fair trade. Today, I would definitely trade my gold Rolex for a first co-founding engineer of a company that I think could be worth $100 billion in the future. That is a fair trade.

Shaan Puri

Did he make a compelling pitch about the company, or was he just like, "I don't know, this is just like a bet"? Did he see the future in that sense of what it became?

Garry Tan

Yeah, absolutely. I mean, I think the thing I really learned from that moment... I was 22, and I didn't know how the world worked at all. We had dinner at his French restaurant, Frison. I think that's one of the things you do when you, you know, make a descent to millionaires. You do something stupid like open a restaurant. And I mean, the restaurant was terrible. The seafood was really bad.

Sam Parr

And I

Shaan Puri

He lost like $1,000,000 on that restaurant, right?

Garry Tan

I think so. I mean, today it's this really nice steakhouse, but yeah, it was bad. And you know what I should have done? I was so lacking in social graces. They did the whole pitch, and then I think I said no, like, before the soup came out even. So we were just awkwardly sitting there for the rest of the dinner. Yeah, and he had actually reaped. He was like, "Here, here's a check for $70,000. You know how much a year do you make at Microsoft? Here's $70,000 cash." I didn't really understand it in the moment. In retrospect, the number one thing that I didn't understand, but I do now, is that I have to tell everyone, "This is how it works." I didn't join at the time because I thought that the world was sort of told to you or narrated to you, I guess. I thought, "Oh, the Wall Street Journal isn't writing about enterprise software. This isn't a hot space." That was fundamentally the backward way of thinking. The world doesn't just happen to you. If you are actually a prime mover in the world, like Peter Thiel or my friends, you go out and you discover something about the world. You actually talk to people, you talk to your users, and you gather primary, first-source information on how the world works. What they had done was realize that the world's biggest companies and the world's biggest governments had no access to software engineers. Back then, people said big data or data mining was like... you know, today we say AI. But either way, these were just buzzwords for concepts that are actually pretty real. I think they went into the security apparatus of the three-letter agencies in D.C. and realized that all the people they talked to, you know, even at the CIA and NSA, the people who we expect to have the world's best technology, they really don't.

Sam Parr

And Peter knew that because he somehow got a tip from the CIA, NSA, or whatever. When PayPal was running, they were like, "You guys want to have a conversation?" Or, you know, how does a Silicon Valley kind of outcast get a CIA tip?

Garry Tan

Yeah, I mean, my interest... I don't know specifically how they described it to me. I think it was like they learned a lot about how the world works through the anti-fraud part of PayPal. The core idea was that they could find these fraud rings just using a graph database. Just literally, you know, people make a bunch of fake identities and send money from one fake identity to another. If you're just using SQL or a row-based method, you just couldn't figure it out. But the second you grafted it out, you would find this ring. What they found was that the three-letter agencies didn't have access to that technology. So, what I needed to do was, instead of taking my worldview from the media or, you know, today from social media or from what reporters were distilling for me, I needed to listen to people who had actually lived direct experiences in doing something unusual and strange that might not make sense to people.

Sam Parr

That's simple, but that's still really hard to make.

Garry Tan

Oh yeah, well, it would smack me in the face and I...

Shaan Puri

I didn't have an LC at all. Promotion waiting on you, right?

Garry Tan

It might... yeah, I was trying to make it to level 60. Level 60 is like hardly else; it's like level 3 or something. It's brutal.

Sam Parr

And by the way, Palantir... I've got friends that are there, and I've learned a little bit about it. Reading, like, it did not... Peter Thiel, I think it's easy for me to say Peter Thiel back then seemed like an obvious winner. But the Palantir idea didn't... like, it seemed like it didn't work for like 2 years or something like that. It definitely seems like it had this normal startup trajectory where it's like, "It's not working, maybe it's working, it's definitely not working." Alright, now it actually has legs. You know, the YC Trophosaro thing... it seemed like it had those normal, normal issues, except for like maybe 5 years.

Garry Tan

Yeah, it took many, many years before it started driving revenue and became real. The trickiest thing is that Y Combinator (YC) companies always come to me and ask, "What could I learn from the Palantir experience?" And I'm like, "Are you Peter Thiel? Are you willing to put tens of millions of dollars of your own money into it and sort of wait? Are you willing to be incredibly patient and ignore all the signs that you're not getting revenue and that it's not actually working for so long?" Then, suddenly, it started absolutely working—working like ten times better than you thought it would. That's just not something that people are really capable of doing, especially with their first million dollars. Palantir is sort of like the most amazing version of the second or third startup that people do. With your first startup, you have to just gut it out sometimes. It's like, how do you get to your first million dollars, right?

Shaan Puri

Well, that is the name of the podcast indeed. I'm curious, what's your advice or take on that? How did you do it? How did you think about it? And knowing what you know now, how would you go about making your first million?

Garry Tan

Yeah, I mean, what's funny is that in the end, Palantir ended up being huge. But it didn't really IPO until many, many years later. It's like, I designed the logo in 2000. I joined as employee number 10. We would do these ridiculous things, like go to Stanford and give out pizza. There were only about 10 to 15 people working there, but the pizza boxes would have our Palantir logo that I designed. We would say, "Join the next Google," and people would eat the pizza and give us dirty looks, like, "How dare you? What the heck is wrong with you guys?" Let's see, my first win... I mean, the Palantir shares did turn out to be something, but it did not seem like it was going to for a really long time. I think my first actual $1,000,000 was selling a few million dollars' worth of Twitter stock at IPO. So it was actually really late, like 2013. For me, I started working in tech when I was 14, so around 1996 or '95. It literally took like 18 years of working as an engineer without having money and having about $50,000 in credit card debt coming out of college. I think that might have even been one of the reasons why I didn't quit to join Palantir. In 2004, I still had like $30,000 to $40,000 in credit card debt and maybe $50,000 in student loans. I was like, "Well, $70,000 is a lot, but how am I going to actually... I don't know if this job will even exist in 6 or 9 months." I could be a lifer at Microsoft, and of course, in retrospect, being a lifer at Microsoft would be sort of like a life of torture at some level. So yeah, my first million was actually from Twitter stock. I started a company in 2008 called Posturist; it was a blog platform.

Shaan Puri

I used to use it. I love Posturist.

Garry Tan

Yeah, it was dead simple. Blogs by email. You just emailed [email protected]. You didn't have to log in or learn how to use software. Then we would just reply back with, "Here's your blog; here's your website." You could send it to your friends, and it was sort of like an email list too. A lot of people used it to share photos with their family. It grew 10x year on year for two years in a row until Instagram came out. I remember when Instagram launched. Posturist was actually one of the little check marks lost to the sands of time. I think it was like Posturist, Tumblr, Foursquare, Twitter, and that sharing page. I remember Chris Sacca, one of our investors, emailed us about it and was like, "Hey, what do you think about Instagram?" Before I could reply, my co-founder replied, "It sucks." I was like... and we got a one-line reply from Sacca saying, "I'm very disappointed in you guys." I was sleep-deprived and thought about it again. I think about that all the time now because, you know, when you're working on a startup, we didn't actually even totally understand why we were growing that fast. In retrospect, it was actually because the iPhone was new, and people were taking lots of photos. There were no apps that made it easy to upload. Then Instagram was sort of the first free app that created a network that also had a little bit of utility with their filters, and it was all free. Basically, we got run over by the eventual winner, and I think that's one of the big dangers for founders.

Garry Tan

Is when we launched in 2008. You know, Michael Arrington at TechCrunch wrote about it, and he framed us off the bat. He was like, "Posturis is, you know, way easier to use than Tumblr." So we sort of made a mistake and took that competition and then made it our identity. It's something that I have to advise founders all the time now, which is: we weren't competing against Tumblr; we were competing against how people were getting photos off of their phone, actually. But, you know, when you're not careful, you sort of allow media or other people to frame your reality, and then you just play the wrong game. Like, Tumblr didn't even want to be Tumblr. That ended up having zero enterprise value. I think that's also one of the cool things about Silicon Valley: you can even sort of screw it up. If I really introspect on what I wish had happened, you know, we had about a million users who were super dedicated to Posturis. We easily could have charged $5 or $10 a month for it. We were a team of about 12 people; we easily would have been profitable. I remember because we were hanging out with our friends at Weebly, like David Rusenko and Dan Veltri, who were amazing. I mean, they only ever raised a tiny amount of money out of demo day and never raised a Series A.

Sam Parr

And what did they eventually sell for? Like $300 million to $400 million?

Garry Tan

Yeah, to Square, like sort of, I think pre-IPO. And then Square, of course, went on its crazy runs. So these guys made, you know, a hundred times more money than me and my co-founder, Imposterous. Like, you know, rightly so. They did it not through continuing to raise venture dollars, but by being profitable, cash flowing, by compounding, by focusing on their users, and by playing their own game instead of playing the game that was sort of chosen for you by either your investors, social media, or by reporters in the tech press. You know, just play your own game. Make up your own mind. So, you know, if I did it again, we easily could have done that. Instead, I think we ended up pivoting out of that Imposterous idea. We were just wanting to continue to chase this idea that we could be the free social network. I distinctly remember meeting Peter Fenton at Benchmark. He passed on our Series A because we didn't have a good answer for this. He asked, "Are you a platform or are you a network?" and we said both. Because, you know, that's what founders who don't have strong opinions end up saying, I think.

Shaan Puri

It's a multiple choice test. You just circled A and B. Yeah, you can't be wrong that way.

Garry Tan

But I don't know, this is all, you know, 20/20 hindsight. I mean, I use these stories all the time to try to help founders get on the right path to real enterprise value. Alright, so, you know, it's not just about making something people want and raising a Series A and B to look like a successful startup. It's actually about making something people want, and that's the end in itself. If you do that, you're going to make money. Hopefully, you can compound that and, you know, create real enterprise value for yourself. And that's sort of the game.

Sam Parr

I'll be... we want to ask you a bunch of questions about different stories because you probably have a lot of stories. What's interesting about that story is you left Palantir, which is a very... I don't know if it felt that way then, but now it's a very serious company. They prevent terrorist attacks at times, so it's a very serious product. What you are working on after that could be seen as less serious. Someone could say, "Well, that's just a blogging platform," or "That's just this," which feels less serious. Did you ever... I mean, I guess I'm self-projecting because I feel this way sometimes, where I'm like, "I'm doing something that's not serious." But you've kind of done both, and now you're back to a relatively serious thing. Y Combinator is a multibillion-dollar company. How do you balance working on something that seems fun and cool versus a serious big thing?

Garry Tan

I mean, I think that goes back to what we were saying a little bit earlier, which is just like, **be careful what frame you accept**. It's all made up, but you get to make it up. Then, you know, for *Postureaus* and blogging, they said the same thing about Facebook. I remember spending time with Boz and a bunch of our friends who were early Facebookers. They never accepted the frame that Facebook was not a serious and important thing. Their narrative was very clear; they had a very strong cult. The cult was just clearly, once every few decades, I think very explicitly Zach would say this: once every few decades, everything would change. Media would totally change. And like they were right; this social layer came up. This is sort of the reason why I feel like if you're running a business today, you kind of have to be a creator. Because if you're not a creator, you gotta buy eyeballs somehow. And guess who's got the monopoly on eyeballs? You know, Larry and Sergey and Mark Zuckerberg. You gotta go pay... you gotta pay the toll to, you know, go across the bridge. Like, you know, the second-price auction mechanism in the ad networks for like all incremental attention is so valuable that these are like the most durable, powerful network effects businesses that cannot be disrupted.

Sam Parr

So, wait, are you telling all YC founders to go and build an audience online?

Garry Tan

Oh, if you're doing consumer, you basically have to, right?

Sam Parr

What about the... sometimes even?

Garry Tan

With your dev tools, like you...

Sam Parr

But yeah, wouldn't you say the same thing if you're a B2B [business-to-business]? Isn't it even more valuable because you need a smaller, more targeted audience?

Garry Tan

Oh yeah, that'd be great. It's harder to target.

Sam Parr

That's a pretty interesting thing. You didn't say this, I'm putting words in your mouth, but if you are saying to all the... oh yeah, yeah.

Garry Tan

We have Mark Tinkus coming to speak at our mini-conference later today. You know, we're going to talk about how to actually get incremental customers. Distribution really matters for consumer businesses, but that's also why we've had a dearth of breakout consumer businesses for the last 10 years. I think this will change. I mean, with AI, things are changing. I don't think it's broken the distribution advantage. The big tech companies have a total stranglehold on the incremental user, and you still have to pay them. It's just purely a market dynamic. We're selling Widget X, Game X, or Dating Site X, or whatever it is. Our buddy from college or someone from halfway around the world in Eastern Europe can take what we've done and do the exact same thing. They can go to our supplier in China and get the same drop shipping relationship. At that point, the second-price auction means, "Well, I want that customer." "No, I want that customer." "No, I want that customer." Guess what? It's an auction. Every incremental dollar that is gross margin, Google or Facebook will just extract because it's a perfect marketplace. That's just the world we live in right now. I think the purest form of alpha that exists still is saying interesting, valuable things. The YouTube algorithm, the X algorithm, and to a lesser extent, Instagram. I mean, I think TikTok is actually pretty wild; they're just giving away distribution over there, especially for brand new creators. I think Meta is probably really dropping the ball on how they're thinking about creators. It seems like they only want to satisfy the people who are already big, which is not that helpful for those trying to do new things. That's the regime we live in. For B2B, what we see at YC is that probably 70 to 80% of companies are B2B. Our most well-attended mini-conference every batch is actually the sales mini-conference. You know, Pete Kizzanji, founder of Sales, wrote that book. We give a copy of that to literally every founder. A lot of it is about a mindset shift. Most people have never been rejected 95 out of 100 times. It's just so soul-crushing to know that many times in your life. But for 80 to 90% of businesses today, you better get good.

Shaan Puri

If your website conversion rate is 5%, you're doing phenomenal. You go out and knock on 100 doors and get 95 noes. You feel like you're the biggest failure in the world.

Garry Tan

It's the same conversion rate because you have 5 enterprise contracts paying you $10,000 to $100,000 a year. You're the biggest winner in the world. That's how this stuff works.

Shaan Puri

We gotta ask you about some of the people that you've been able to meet. I'll tell you what I want, and I hope that you give it to us. I don't know if you will or you won't, but me and Sam kind of are in what I'll call "the way that most people live their life." You wake up every day, you got your project, your business. It doesn't matter if you're doing $10,000 a month, $100,000, or $10,000,000 a month. It doesn't really matter. You can wake up every day, and we all look for kind of like this entertainment and inspiration thing. We get a lot of it from Twitter and from podcasts. One of the best things is when you hear about the way that some of the people you admire operate, or the way that they handle things, or the way that they dealt with a situation, or something about their personality. Of course, it's sort of a caricature; it's not a perfect picture. And, you know, whatever, they're not perfect people. But it is badass to hear those stories. We hear them about Elon, but you run in a really amazing circle where you know Paul Graham, Sam Altman, and all of the Y Combinator network. These are people you've been around before they were, you know, big, and since then. I would love if you could tell us a couple of either personality traits or stories that stand out for some of the people. So I'm curious. It's a long-winded way of saying, can you tell me some cool stories about some of them?

Garry Tan

These characters that you're writing are absolutely the funniest. I remember a story from working with Paul Graham in the office. I mean, he gave me my first shot as an investor and as an advisor to startups. I was burnt out from impostor syndrome. My co-founder and I had a falling out. He wanted to become Google Groups, and I was like, "Dude, I don't even think that Google wants to be running Google Groups. We should just charge money." But yeah, Paul really did... Paul and Jessica basically did all the admissions and worked with all the companies. It was like 2011. Even the whole Y Combinator campus was not a campus; it was like a warehouse with some carpet and some very cheap custom furniture. I mean, it was just tables and benches. The benches were so rickety that if you sat on one side and the other person on the other side stood up, you'd fall over. There were just a bunch of funny things about Y Combinator early on. It was this tiny thing. To paint a picture, when I said I was going to work at Y Combinator as a designer in residence, my friends in venture or startups would say, "Oh, that's nice." It sounded like I was going to volunteer at a high school camp or something, like a high school basketball camp. I was like, "Oh, that's nice. That's so... you know, I hope you enjoy that. You're doing community service. Good for you."

Sam Parr

Good for you.

Garry Tan

Exactly. You know, Dropbox had happened as a company and it had become a $1,000,000,000 company. But Airbnb, I think, was just about to become a $1,000,000,000 company as well. I think this is lost to the sands of time, but I remember Sarah Lacy had created a book called "One Year Lucky, Two Year Good." So, you know, 2011 was the "One Year Lucky, Two Year Good" moment for Y Combinator (YC), where people realized, "Oh, this isn't like some fringe thing. It's actually starting to churn out basically the most dominant startups that exist." It's like a very concentrated form of Silicon Valley. About that time, there was literally one person who did all the books, all the finances, all the audits, all the CFO stuff. She needed a copy machine, so she got one of those waist-height copy machines that looked corporate. It had these little stickers on it. I remember Paul Graham came in and said, "What is this? Why is this here?" It was like this totem of corporateness. He said, "I remember seeing these at Yahoo, and I hated them." He started scraping off the sticker that had the phone number of the little company that would maintain the copy machine. I guess it just jumps out at me as a very interesting quirk of Paul that was absolutely right. I sort of stay up at night thinking about how to make sure that YC never feels corporate. PG would show up in shorts and Birkenstocks all day. I think he wore khaki pants to my wedding, and my mother, my sister-in-law, was like, "Excuse me, sir, this is a private wedding." I said, "No, no, no, that's my boss." What I learned from Paul was that there is an insidious nature to formality and corporateness. Just having to wear a suit or follow convention... I think there's incredible value in being very unconventional. Whenever there is prestige or convention, you should be wary of that thing because there are probably some other weird, soul-sucking things associated with it. No one would choose to have a dress code by default. What are some other examples of this? You should be aware of your own formality and try to fight against it. Just try to be super matter-of-fact. I think that's one of the things that makes companies bad. I wonder, as people who run your own businesses, do you ever think about that? You go into a meeting and think, "Was that meeting... if I were not me running this place, would I want to be in that meeting?"

Sam Parr

Well, it's the same thing as what you said about the framing thing. You behave like you think you're supposed to behave versus what kind of makes sense. You start playing business a little bit. It's sort of like, you know, when you start a company, a lot of people play business by getting a business card before they get a customer. Then you kind of snap out of it and you're like, "No dude, I gotta make the damn thing." You start making the damn thing and you start getting some customers, and you kind of go back to playing business again. Yeah, which is definitely part of the Silicon Valley thing, you know? Like OKRs, measuring things quarterly. There is a bunch of lameness that I myself fall victim to, and you have to pull yourself out of that trap. But some of it is useful, I guess. If you're Airbnb and you have 6,000 employees, you do slow down. But it's hard to know what's truth versus what you should do versus what you have to do, that type of thing.

Garry Tan

I will say that I think it's possible for people to do insane business now with like **two pizza teams**. I think that we, you know, probably in your community or maybe you guys yourselves, will end up making these **$100,000,000 to $1,000,000,000 a year** businesses that are totally empowered by large language models. These businesses do not need more than **20 people** working at them. I think that this is literally the most exciting news that, you know, we're pretty sure is going to happen in the next few years, especially right now. That is the one thing that these giant companies, which have like thousands of people, are completely unprepared for. Corporate America is going to get run over by **1,000 startups** that are way more agile and aren't completely drowning in convention. They can just do the right thing for the customer, and the cost basis will come down a ton. The trickiest thing is that I'm not sure if it's inflationary or deflationary. What's going to happen here, right? Prices, in theory, should come down. Things should get a lot more competitive. On the flip side, the hope is that all of our products and services get a lot better, cheaper, and faster, real fast. This is the moment. We talk to people who are engineering managers, CTOs, and even engineering teams. I think that it's almost generational. It's like in the water for us right now because we spend all of our time with **22, 25, and 28-year-olds** who are like the me from, you know, 15 years ago. We're just helping the next generation right now. They were born on the internet; they were born with large language models. Then there's my generation of C-levels. I'm **43**, and I don't think people are prepared or even aware of what's about to happen right now. It's super, super good news for anyone who's running a business and is super agile. You don't have to be doomed to calling in the business process automation call center. You don't have to hire the team in the Philippines anymore. If anything, that's one of the more direct pieces of advice we give to people looking for startup ideas in the batch right now. If people are pivoting, we're like, "Okay, well, you're selling to, let's say, accounting firms, but you're having trouble with enterprise sales. What if you targeted people who already spend, you know, **$100 to $1,000** a year on a call center in the Philippines or Eastern Europe or anywhere else? Why don't you just reach out to people like that and replace what they rely on with large language models that have great evaluations and great workflow?" I think we will have many companies driving **tens to hundreds of millions of dollars** literally in the next **two years**. It's just like **100 of them, 1,000 of them** are going to pop up right now just doing that.

Sam Parr

That's so exciting!

Shaan Puri

What companies are you super excited about that we should watch out for or go check out? Because you live in the future. You're further in the future than we are.

Garry Tan

Obviously, the tooling for this is important. There's going to be a lot around helping people build this stuff. Your evaluations, in particular, like doing it test-driven, are important. You know, the danger for most founders right now is that it's very easy to make demo ware that you can use to raise money. Then, you're tempted to sort of, you know, "quote unquote" raw dog your prompts. You will just write code that has some prompts, and you won't write any tests. The funny thing that we're seeing right now, which I think is super true, is again, like going back to what we were saying earlier, it's important to build your worldview on how the world works directly from customers and their customer data. The sort of rinse and repeat thing that's maybe 80% of what Y Combinator (YC) companies are doing right now, that I think anyone could do, is to go and find real people who are running businesses. They're spending hundreds of thousands of dollars a year on giant teams of people doing rote, repeating knowledge work. Then, get access to their data. Get access to the flow of their work. Watch how they do it, and then literally write test cases using that. If there's hallucination or the large language models (LLMs) aren't actually able to consistently do the thing you want, you actually have to chop down the prompts. It's like you're asking the LLM to do too much. The LLMs are capable of maybe 120 IQ level work right now. If you're giving it too much in the context window and asking it to output too much, it's just like, do it in steps. This is literally what O1 and reasoning already does using chain of thoughts. The interesting thing, and the weird thing that I'm tracking right now, that I'm a little bit worried about, is that it is entirely possible that the next generation of large language models from Anthropic, OpenAI, and Meta are, you know, one and then two orders of magnitude in compute and number of parameters. Then we just get, you know, the Daru Amade scaling laws paper specifically says that these big large language model AI labs are going to spend $1 billion and then $10 billion on the next generations. If we get continued step function improvement, the trickiest thing is that all the stuff that even what we're doing as founders are doing, maybe the models will just do for themselves. My hope is that there's not enough agency in these things. What we hope, and what we think will happen, is that the people who establish brands, moats, and evaluations right now, when the next generation models happen, their cost structure just comes down by like 10x. Then they already have the revenue and the market captured in some way that they're sort of beating the software incumbents they're going up against. They themselves have tens to hundreds of millions of dollars in revenue. Basically, the standard moats apply. Look at Porter's Five Forces, and you're like, you know, you have way better access to data. Your systems are way smarter. It costs a lot of money to take a risk and switch off of those systems. You have a Salesforce that is way better and smarter. So if you take all that, that's sort of the gambit right now. If you do prompts and evaluations, you're pulling forward the future by a few years. You're trying to grab as much land as you possibly can right now. From there, hopefully, you can hold on and build the next Microsoft, the next Salesforce, or the next $10 billion to $100 billion company.

Sam Parr

Was it obvious when Sam Altman left Y Combinator to do this?

Garry Tan

I wish I was smart enough to predict that this was what was going to happen.

Sam Parr

Did you think that he was going to be the man he is now? You know, Paul Graham has that essay where he's like, "Here are 5 people I'd bet on," and one of them, the fifth one, was a 25-year-old Sam Altman. The other three were, you know, Bill Gates and Steve Jobs. Then he said, "This kid." So, were you like, "Whatever Sam does is going to be a generational company," or were you thinking, "It might be mildly successful?"

Garry Tan

I mean, I think it could. I bet in full transparency, like I'm going to be super honest. I was like, "Man, I don't quite get it." You know, when he was sitting in my shoes as president of YC, he'd come back and I remember sitting in the group partner room. He'd say, "Well, this is what Elon was talking about and this is what Larry was talking about." They were all talking about AI and they were sort of discussing these sci-fi scenarios. I'm like, "Man, I saw *Terminator 2* too, but that was a movie." I think that I'm changing my tune at this point. I wish that it was smart enough to be... you know, actually totally a believer. You know, I'm a believer now. Do I believe that we're going to end up in a doomsday scenario? I still don't really believe that there's that much agency in these things, which is so... but your judgment.

Sam Parr

Now, it's questionable. You know, 1st Peter, 1st Palletier. Now, open a... you'll thank God that you've already made up so many other successful investments. I know that Gary's got good judgment and can predict the future a little bit because...

Garry Tan

I'll come around eventually. You know, I'm just a year off.

Shaan Puri

Yeah, he was a Palantir employee. After he said no to the codon, well, he ended up there, right? So I...

Garry Tan

We are full believers in large language models. However, I think the thing that's a little bit lost to the sands of time is that Sam was absolutely right about jumping on this thing that the smartest people in the world were already talking about, like 8 or 9 years ago. Then he built it. He invested the money and brought together the people. It was no small task to gather the smartest AI researchers in the world. Not only that, it was like a semi-miracle. You could ask, "Why didn't Meta do this before? Why didn't Google do this before? Why didn't Microsoft Research do this before?" All of those organizations had virtually limitless access to resources. To weave this back together, I think there is something really terrible and limiting about giant organizations that are not capable of evolving and making smart decisions. That's what big tech is like; they're sort of like big daycares for the most technically smart people in the world. It's like, "Here, do you know, play some volleyball. We'll cook you lunch. Here, you can do your laundry at work." It's as if they totally infantilize the smartest people in the world, and that's a waste of time. What needed to happen was the ability... One of the things that God explained to me was why it was OpenAI that came up and invested $1 million first, then tens of millions, and then hundreds of millions into the large language model and transformers for language. If you were at Google, you needed to work through this bureaucracy. It was highly political. You had hundreds of other researchers, all of whom were as smart as you, and you had a finite, limited set of compute resources. What you would find is that Google would do really breathtakingly amazing work, but then you'd have like 30 different authors. If you read the paper, there would be these strange things that seemed a little bit tacked on. But that's the only way you could get the compute resources to actually pull off a training run on the model that you wanted to do. You had to do some weird things to accommodate people who were going to commit their training resources for their random little projects. It's funny to see that human progress is more or less impeded by the bureaucracy, lack of governance, and lack of agency that large organizations impose on people. You don't have a choice.

Shaan Puri

Isn't it crazy that it was easier for them to invent and discover transformers and this large language model breakthrough than it was for them to navigate the bureaucracy to actually create a product out of this or do anything useful with it? That should tell you kind of everything you need to know.

Garry Tan

I mean, the wild thing is, like, even with OpenAI, they did everything right. Like, GPT-3 was very impressive, GPT-3.5 was even more so, and GPT-4 was incredible. But they were going to just put it behind an API. For many years, OpenAI was supposed to be a "research lab, not a product company." It took the relatively herculean efforts by product people inside OpenAI to even release ChatGPT, which turned out to be the greatest consumer launch—maybe the hit in the history of consumer launches, actually.

Sam Parr

Hey, you said... and I know we gotta wrap up in a second, but you mentioned this thing. It's pretty amazing talking to smart people. What are they discussing? You have access to more of those types of people than probably anyone on Earth. What's the conversation right now? Or is it all about AI still?

Garry Tan

Yeah, I mean ultimately that's sort of the number one thing that we're pretty excited about. I mean, a few people who are really smart can sit in a room and make a thing that literally does what humans do all day. I would make a pitch that often the best things that could be automated are actually very rote. They're sort of the knowledge worker equivalent of like hand looming a carpet or something. It's like all I do all day is look at an email box, see if someone paid their bill, and reconcile that against a ledger in QuickBooks. Can you imagine, you know, millions of people—like tens of millions of people on the planet—that's their 9 to 5? That is not a good use of a very smart human being, generally speaking. Those are sort of the things that are most easily replaced by really great prompting, great evaluations, and frankly, I think there are going to be 20-person software engineering-focused startups that basically turn $1,000,000,000 of dollars in payroll into $1,000,000,000 of dollars in software revenue. Hopefully, those people go on to do much smarter and much more interesting jobs than like passing butter all day.

Shaan Puri

That's amazing, Gary! If you have one minute, can you tell the spoon bending story? I think this is a very powerful story that you have—the spoon bending party. I don't know if you know this.

Garry Tan

Oh God, it's hilarious! I mean, I've been to Burning Man a few times. I love Burning Man; it's my favorite place to take a break from consensus reality and realize that it's all made up. But you get to make it up! You know, there's a lot of weird fringe stuff, a lot of sixties esoterica. You're just wandering around the desert on a bike with your buddies. I think we randomly walked into a spoon bending party where there was a huge group. I think it was almost like a magician at the front, sort of helping people. The shtick was that they were going to teach you how to bend a spoon with your mind. I was like, "Okay, that's cool! Let's go check it out." They passed out these spoons, and then it was like a magic trick. They said, "Okay, now bend your spoon. Look at your spoon and bend it with your mind." In between, they would say, "Okay, well sometimes you need to use your hands and warm up the spoon to bend it." Basically, I think what you're supposed to do is just bend the spoon with your hands. What's funny is that by the end of it, half of the people had bent spoons. I had a bent spoon because I was like, "Oh yeah, they said I should warm up the spoon with my hands and bend it with my hands."

Sam Parr

And then get it started. Half of the room just to get it started.

Garry Tan

Yeah, just to get it started, right? By the end, like half of the room had bent spoons and the other half didn't. The ones that didn't were like, "How did you do that? That's absolutely incredible!" I was like, "Guys, it's a bit... it's a bit like you have to, you know, first know that you can bend the spoon with your mind, but then you bend it with your hands." Guys, that's literally the shtick, actually. It's a little bit of an allegory for, you know, bias to action and what you're supposed to do in real life. Real life is sort of like this exercise. They say, "You can go change the world," and you can do it with your ideas. But, you know, that alone is not enough. You actually have to go with your hands, talk to users, and sit and build a thing. So, you know, don't forget the second half. The wildest thing is that more than half of the room could not do it. If you are the person who's able to bend the spoon with your mind, guess what? You also used your hands. You gotta do that. And, you know, actually, that's maybe the greatest gift. It's just like...

Sam Parr

Dude, Gary, you're the shit, man! You are the best. I love talking to you. You make me feel really great. You give me energy, and we're very, very, very thankful that you took the time to do this.

Garry Tan

Thank you guys so much for having me. It's always great to see you. Congrats on all the success! I'm excited to see where you and your community go. I mean, we're all building the future out here.

Sam Parr

Well, thank you for saying that.

Shaan Puri

Take care, Gary.