The Exchanges

Q people that ran the show there and applying that to our industry now. Founders really are everything to what we do. Having said that, I had Frederick at Okta on the show the other day, and he said to me, Harry, it's 70% market, 20% team, and 10% product. Would you agree with that weighting, and how would you assess your own weighting when it comes to those three components?

A Well, I guess we'll have to agree to disagree, because my weighting is far more on the team at the stage in which I choose companies for angel investments, in which YC chooses companies to fund. I will always Pick a great team. Assume they'll figure it out, or they know something I don't know, rather than a slam dunk idea. Because at the earliest stages, there's no such thing as an idea that in of itself will build a great company. I shouldn't say there's no such thing, but it's always ambiguous. You know, today's a good day to talk about that, right? Because Uber went public this morning. Not doing great. But the interesting story about Uber is, in retrospect, slam dunk. Obvious, right? But Many people passed on Uber because it was about black cars, and there weren't enough black cars, and these taxes seemed to work just fine, and how big a market was that really, and how disruptible. But it turned out there was a market need there that just wasn't so obvious. I'll give another example that we always give, which is Airbnb. Look at that idea in the beginning. Who is going to invest in a company that says, well, we're going to have airbeds that will handle overflows from hotels at like conferences and things like that. If you have an awesome team that gives you that idea, you might say, well, gosh, you know, maybe there's some adjacent market that might be fantastic, and Paul Gr…

AI assessment note: “we'll have to agree to disagree, because my weighting is far more on the team”

Q sure. I do have to ask one that I'm always super interested by. I'm very cognizant that I've never seen a boom and bust in the working environment. So I guess my question to you is, you're at Yahoo for the boom and the bust of the dot com, and then saw it again in 2008. Can I ask, how did seeing the macro downfalls and volatility affect your mindset?

A I look at those two as such different things. The 2000 internet crash felt inevitable. It felt normal. It felt almost clarifying and purifying and good because there was so much garbage going on and it didn't feel like it mattered in the sense that all of the great services that were being built kept on growing and doing great. It's just that all the cruft went away. I don't mean to minimize the pain that was involved in it, In that retraction, because it was real, but there was irrational exuberance. There was silliness. There was craziness. There was companies like Tripod, which was this silly webpage business that went public and was on the cover of all these magazines, and there was really nothing there. Obviously, as insiders, we knew what was real and what wasn't. What was real is that we had millions of people signing up and using our services and getting great value out of it. What wasn't real was to say every single service on the internet Everything with a dot com must be worth many billions of dollars. So that was okay, and in fact, things kept growing even after 2000, and there was great recovery across the board, and the great brands and companies from before the crash were there afterwards and survived and thrived. Still, in 2008, that was different for me. It didn't feel in 2000 like anything that was secular, that mattered, was impacted by the crash. It felt lik…

AI assessment note: “I look at those two as such different things. The 2000 internet crash felt inevitable.”

Q of the ability to dream and instilling that. In terms of that turning into reality, we see it every year with different YC companies where there's breakouts who achieve definite product market fit would be one. In terms of product market fit, that's just such a coin term. How do you think about product market fit? How does YC think about product market fit? What, what is it to you?

A We have all these cliches now in our industry that like any cliche start to lose their meaning, right? Do you have your MVP? Your minimum viable product. Do you have product market fit? For me, actually, there is a strikingly simple test for whether you have product market fit, and that is, are you growing? Are you growing with no effort at all? Does it just grow because the product solves such an obvious key need that it happens with no effort at all? This is a little naive because across industries, it's, there's different dynamics. I understand that, but it is almost never the case that Especially in today's world where information travels at such low cost that if you've done something amazing, you won't grow. And it doesn't matter. You know, one of my favorite examples of this is Class Dojo, which was not actually a YC company. It was an Imagine K-II company from our very first batch, the summer of 2011. And it was a product for elementary school teachers, and it spread like wildfire. You don't actually think about that in elementary schools. We used to put up a map of the United States Where a pinpoint of light would shine every time over the course of a year that Class Dojo started to be used in a school, and it was like the whole country lit up. So cool, right? I'll just say one more thing. I think that during our last startup school last year, which I ran, we invited Us…

AI assessment note: “there is a strikingly simple test for whether you have product market fit”

Q Listen, I think that's a brilliantly concise way of putting it, and I totally agree with you in terms of the binary nature there. I do have to ask in terms of the structure, there's often a lot said about conversables, obviously something that kind of YC pioneered. Why in your mind do they exist, and I guess who are they ultimately good and bad for?

A I can talk to you for an entire podcast on conversationalism. Like, in fact, you might know that I created a tool called AngelCalc that actually a fair number of people use to model how convertibles actually work. So if you read Paul's original essay about the founding of Y Combinator, which you can Google and find, talked about this, which was how can we fund a whole bunch of properties at the same time with standard documents? Because before YC, every time you raised money, you had to do a few things. First of all, you had to collect all of these investors all at once because you closed all at once. You had to find a lead investor to set the terms that everyone else would agree to. So you had to have everyone agree that there was this lead. You had to get a lawyer and have them have a lawyer. You have to pay thousands, sometimes as much as 50,000 dollars in legal fees in order to write hundreds of pages of documents, which seems to need to be rewritten every time. And it would take Weeks or months to get this thing done. That was certainly not optimal for anyone except for maybe the legal industry. The great thing about convertibles is it said, you know, forget all that. We're just going to do something super simple. It'll be a three page document. You won't really need a lawyer at all. Cause we're going to standardize in the document. It doesn't need to get rewritten every t…

AI assessment note: “how can we fund a whole bunch of properties at the same time with standard documents”

Q people that ran the show there and applying that to our industry now. Founders really are everything to what we do. Having said that, I had Frederick at Okta on the show the other day, and he said to me, Harry, it's 70% market, 20% team, and 10% product. Would you agree with that weighting, and how would you assess your own weighting when it comes to those three components?

A Well, I guess we'll have to agree to disagree, because my weighting is far more on the team at the stage in which I choose companies for angel investments, in which YC chooses companies to fund. I will always Pick a great team. Assume they'll figure it out, or they know something I don't know, rather than a slam dunk idea. Because at the earliest stages, there's no such thing as an idea that in of itself will build a great company. I shouldn't say there's no such thing, but it's always ambiguous. You know, today's a good day to talk about that, right? Because Uber went public this morning. Not doing great. But the interesting story about Uber is, in retrospect, slam dunk. Obvious, right? But Many people passed on Uber because it was about black cars, and there weren't enough black cars, and these taxes seemed to work just fine, and how big a market was that really, and how disruptible. But it turned out there was a market need there that just wasn't so obvious. I'll give another example that we always give, which is Airbnb. Look at that idea in the beginning. Who is going to invest in a company that says, well, we're going to have airbeds that will handle overflows from hotels at like conferences and things like that. If you have an awesome team that gives you that idea, you might say, well, gosh, you know, maybe there's some adjacent market that might be fantastic, and Paul Gr…

AI assessment note: “Well, I guess we'll have to agree to disagree, because my weighting is far more”

Q What's the highlight of the entire YC journey for you?

A I guess it is the people I've gotten to know. Extraordinary, amazing, incredible people from Paul and Trevor and Robert and Jessica, the founders, to Sam, the Collisons, the incredible founders of incredible YC companies, Drew Houston, Brian Chesky's, the incredible founders of newer companies like Brex, which is one of our fastest to a billion dollars. The guys from Rappi, just amazing, amazing people all the way. The people who have a passion to change the world. And, you know, again, that's what I think all of us at YC are there because we want to change the world in a positive way. And we think that entrepreneurship innovation is a great way, a really powerful way to do that. So, yeah, I guess I'll, I'll lean on the people.

AI assessment note: “I guess it is the people I've gotten to know.”

Q point. I do have to also, when you think about meeting with those people and interacting with these incredible founders, I know YC's ten-minute decision. I've been told by Gary to ask about this. So on the ten-minute decision, absolutely on the characteristics and real traits of those people, as we said there, but I How can you tell in 10 minutes? And what does that process look like, Jeff?

A Human beings are pattern matching machines. It's what we do. And the fact is, our brains are so tuned for this that we do it almost instantly, unconsciously. And it turns out 10 minutes is usually, not that we don't get it wrong, we're not perfect, but 10 minutes is usually more than enough time. Usually we know our guts tell us more quickly than even 10 minutes. You can get a read on people and on teams and how the teams interact really quickly. Now, this is why we do our interviews the way we do them. They have to be in person. I don't know that we have ever accepted anyone to Y Combinator without an in-person interview. So we get a feel for that person and for their team and how the team interacts. We look hard at how they describe themselves, their business. We look hard at how they react to difficult, quick questions. We get a sense for how smart they are, how insightful they are. How resourceful they are. And yeah, 10 minutes is plenty of time for that, usually. By the way, this isn't a top secret or anything. We sometimes interview people twice, because we can't quite get it in 10 minutes. It's not always, again, this is way more art than science, and sometimes we want another group of people to talk to them. Mostly we do it in 10 minutes, but not always.

AI assessment note: “We look hard at how they react to difficult, quick questions.”

Q of the ability to dream and instilling that. In terms of that turning into reality, we see it every year with different YC companies where there's breakouts who achieve definite product market fit would be one. In terms of product market fit, that's just such a coin term. How do you think about product market fit? How does YC think about product market fit? What, what is it to you?

A We have all these cliches now in our industry that like any cliche start to lose their meaning, right? Do you have your MVP? Your minimum viable product. Do you have product market fit? For me, actually, there is a strikingly simple test for whether you have product market fit, and that is, are you growing? Are you growing with no effort at all? Does it just grow because the product solves such an obvious key need that it happens with no effort at all? This is a little naive because across industries, it's, there's different dynamics. I understand that, but it is almost never the case that Especially in today's world where information travels at such low cost that if you've done something amazing, you won't grow. And it doesn't matter. You know, one of my favorite examples of this is Class Dojo, which was not actually a YC company. It was an Imagine K-II company from our very first batch, the summer of 2011. And it was a product for elementary school teachers, and it spread like wildfire. You don't actually think about that in elementary schools. We used to put up a map of the United States Where a pinpoint of light would shine every time over the course of a year that Class Dojo started to be used in a school, and it was like the whole country lit up. So cool, right? I'll just say one more thing. I think that during our last startup school last year, which I ran, we invited Us…

AI assessment note: “are you growing? Are you growing with no effort at all?”

Q Penultimate one here, Jeff. What would you most like to change in the world of tech and Silicon Valley?

A I'll say two things. We have been historically kind of a closed world, a world into ourselves, and I think that has been a great thing for us or for the world, and because of that, in certain places, the tech world has gotten a bad reputation. It's mostly undeserved, but partially deserved, and I think we need to fix that. I think we need to do what we can to be way more open, way more diverse, Way more inclusive than we have been. We do a lot at YC, and we can always do more, I think, to promote this and to make this happen, and I really hope that the future of Silicon Valley in tech looks way different than it does now.

AI assessment note: “we need to do what we can to be way more open, way more diverse”

Q sure. I do have to ask one that I'm always super interested by. I'm very cognizant that I've never seen a boom and bust in the working environment. So I guess my question to you is, you're at Yahoo for the boom and the bust of the dot com, and then saw it again in 2008. Can I ask, how did seeing the macro downfalls and volatility affect your mindset?

A I look at those two as such different things. The 2000 internet crash felt inevitable. It felt normal. It felt almost clarifying and purifying and good because there was so much garbage going on and it didn't feel like it mattered in the sense that all of the great services that were being built kept on growing and doing great. It's just that all the cruft went away. I don't mean to minimize the pain that was involved in it, In that retraction, because it was real, but there was irrational exuberance. There was silliness. There was craziness. There was companies like Tripod, which was this silly webpage business that went public and was on the cover of all these magazines, and there was really nothing there. Obviously, as insiders, we knew what was real and what wasn't. What was real is that we had millions of people signing up and using our services and getting great value out of it. What wasn't real was to say every single service on the internet Everything with a dot com must be worth many billions of dollars. So that was okay, and in fact, things kept growing even after 2000, and there was great recovery across the board, and the great brands and companies from before the crash were there afterwards and survived and thrived. Still, in 2008, that was different for me. It didn't feel in 2000 like anything that was secular, that mattered, was impacted by the crash. It felt lik…

AI assessment note: “In 2008, it felt like the very platform on which we built our financial lives”

Q obviously, on the show, and they say, oh, I really like to be there as the founder's counselor, the voice that they go to when they need help. First, when you think about yourself and self-reflect on how you most like to work with founders and your angel investments, how do you most like to engage with founders, and what do you think your superpower is in that founder-investor engagement?

A I think that my superpower is that I help founders by asking the right questions. We're asking them to ask the right questions. Here's one thing that's incredibly important for advisors to understand, and that most don't. In almost every case, you will know far less about whatever business you're talking about than the founders who's in it every day and fighting the fight every day. You're not going to help them by knowing more about their business than they do, but what you can help them do is get a different perspective on it. And by the way, one of the most important perspectives you can Give to a founder is why they can dream big. Why there's an incredible opportunity in front of them. It's sometimes hard for founders to see that or to continuously see that because they're head down trying to survive. But in the end, if you're going to survive as a founder, especially of an early stage company, you have to be able to dream and helping founders dream. Well, that was actually Paul's superpower. And if I can channel any of that at all, then I've been successful.

AI assessment note: “I think that my superpower is that I help founders by asking the right questions.”

Q Now, I, I do totally agree with you, especially with those analogies. I do have to also, if we kind of dig in then on those founders, so to speak, are there profiles that resonate with you more than others?

A I don't tend to think in terms of profiles. I think you lose as an investor if you fall back on stereotypes, which is different, I think, from falling back on intuitions. I like to look back to what I call Paul Graham's original epiphany when he started Y Combinator in 2005. After, interestingly, he gave a talk to the Harvard Computing Society, a bunch of geeks, right? A bunch of nerds, a bunch of hackers, a bunch of software people, a bunch of technologists on how to start a startup. His epiphany in his terms was, oh, I'm going to fund a whole bunch of companies at the same time. No one does that. And I'm going to do it with standard docs, but it wasn't just a bunch of company. It was founders who knew technology, which was going to be at the center of value creation henceforth. So why wouldn't you put the people who know it best, the people who can build? So yeah, I look for people who can build. I don't know if that's a profile. I just think that I have to believe that they're going to be able to create things. I think Paul, Paul Graham has written more and thought more clearly and, uh, Brilliantly about startups than anyone else in the world. He wrote an essay called relentlessly resourceful. I like to think of the founders that I want to fund as resourceful and determined. I want founders who I can look at and imagine in my mind at the helm of a billion dollar company in t…

AI assessment note: “I don't tend to think in terms of profiles.”

Q point. I do have to also, when you think about meeting with those people and interacting with these incredible founders, I know YC's ten-minute decision. I've been told by Gary to ask about this. So on the ten-minute decision, absolutely on the characteristics and real traits of those people, as we said there, but I How can you tell in 10 minutes? And what does that process look like, Jeff?

A Human beings are pattern matching machines. It's what we do. And the fact is, our brains are so tuned for this that we do it almost instantly, unconsciously. And it turns out 10 minutes is usually, not that we don't get it wrong, we're not perfect, but 10 minutes is usually more than enough time. Usually we know our guts tell us more quickly than even 10 minutes. You can get a read on people and on teams and how the teams interact really quickly. Now, this is why we do our interviews the way we do them. They have to be in person. I don't know that we have ever accepted anyone to Y Combinator without an in-person interview. So we get a feel for that person and for their team and how the team interacts. We look hard at how they describe themselves, their business. We look hard at how they react to difficult, quick questions. We get a sense for how smart they are, how insightful they are. How resourceful they are. And yeah, 10 minutes is plenty of time for that, usually. By the way, this isn't a top secret or anything. We sometimes interview people twice, because we can't quite get it in 10 minutes. It's not always, again, this is way more art than science, and sometimes we want another group of people to talk to them. Mostly we do it in 10 minutes, but not always.

AI assessment note: “Human beings are pattern matching machines... 10 minutes is usually more than enough time.”

Q obviously, on the show, and they say, oh, I really like to be there as the founder's counselor, the voice that they go to when they need help. First, when you think about yourself and self-reflect on how you most like to work with founders and your angel investments, how do you most like to engage with founders, and what do you think your superpower is in that founder-investor engagement?

A I think that my superpower is that I help founders by asking the right questions. We're asking them to ask the right questions. Here's one thing that's incredibly important for advisors to understand, and that most don't. In almost every case, you will know far less about whatever business you're talking about than the founders who's in it every day and fighting the fight every day. You're not going to help them by knowing more about their business than they do, but what you can help them do is get a different perspective on it. And by the way, one of the most important perspectives you can Give to a founder is why they can dream big. Why there's an incredible opportunity in front of them. It's sometimes hard for founders to see that or to continuously see that because they're head down trying to survive. But in the end, if you're going to survive as a founder, especially of an early stage company, you have to be able to dream and helping founders dream. Well, that was actually Paul's superpower. And if I can channel any of that at all, then I've been successful.

AI assessment note: “I think that my superpower is that I help founders by asking the right questions.”

Q guess the question that YC companies ask, and early stage founders ask, in those early signs of real movement and traction, is how far along do I need to be to raise, and when is that right Time for the first raise. It's difficult asking across industry, but when you get asked that, what is your response, and how do you advise founders on the timing of the first raise?

A This is a hard question to answer, Harry, because I don't know what the first raise necessarily means. So there's a generic answer that I give as to when you should raise, and that answer is when you can. Now, I know that almost sounds tautological or unhelpful, but it's actually meant to focus entrepreneurs' minds as they're moving along through their company's life cycle and And they're looking at their capital needs, which by the way, sounds like obvious as a task for the, say the CEO of a company to do. But the problem with a startup is you always have a million things to do and you're trying to build product and sell and paying attention to your cashflow and then modeling it out and mapping it out is not always the first thing on their mind. So sometimes entrepreneurs will wake up in the middle of the night and think to themselves, wait, I have six months of cash. Damn. Am I going to reach a milestone where I can raise? So Raising money when you can raise money, and you see that often in our space, right? You hear about a company raising and then raising again, because they can, because they can raise at a higher valuation, because that gives them the buffer they need to take chances to have multiple bites at whatever apple they need to bite at. The question again was for the first round, the earliest round. Well, the earliest round you should raise when you can make a per…

AI assessment note: “earliest round you should raise when you can make a persuasive case”

Q Listen, I think that's a brilliantly concise way of putting it, and I totally agree with you in terms of the binary nature there. I do have to ask in terms of the structure, there's often a lot said about conversables, obviously something that kind of YC pioneered. Why in your mind do they exist, and I guess who are they ultimately good and bad for?

A I can talk to you for an entire podcast on conversationalism. Like, in fact, you might know that I created a tool called AngelCalc that actually a fair number of people use to model how convertibles actually work. So if you read Paul's original essay about the founding of Y Combinator, which you can Google and find, talked about this, which was how can we fund a whole bunch of properties at the same time with standard documents? Because before YC, every time you raised money, you had to do a few things. First of all, you had to collect all of these investors all at once because you closed all at once. You had to find a lead investor to set the terms that everyone else would agree to. So you had to have everyone agree that there was this lead. You had to get a lawyer and have them have a lawyer. You have to pay thousands, sometimes as much as 50,000 dollars in legal fees in order to write hundreds of pages of documents, which seems to need to be rewritten every time. And it would take Weeks or months to get this thing done. That was certainly not optimal for anyone except for maybe the legal industry. The great thing about convertibles is it said, you know, forget all that. We're just going to do something super simple. It'll be a three page document. You won't really need a lawyer at all. Cause we're going to standardize in the document. It doesn't need to get rewritten every t…

AI assessment note: “how can we fund a whole bunch of properties at the same time with standard documents”

Q Okay, so I'm flying to the West Coast and I need a book for the flight. What's your favorite and why?

A If you want, uh, non-fiction, I'm still saying if you haven't read Sapiens or Homo Deus by Yuval Harari, read it. I'm also reading Titan by Ron Chernow right now, which is awesome. And I will say, by the way, if you like science fiction, and this is kind of an old book, but it's still like, I think it's one of the best written, most exciting books. They just made it a mini series. Read the Altered Carbon series by Richard K. Morgan. Or if you're really interested in AI, the future of humanity, there's a really cool book, which is a little, has a weird name called We Are Legion, We Are Bob by Dennis Taylor. I love that book too.

AI assessment note: “if you haven't read Sapiens or Homo Deus by Yuval Harari, read it”

Q Okay, so I'm flying to the West Coast and I need a book for the flight. What's your favorite and why?

A If you want, uh, non-fiction, I'm still saying if you haven't read Sapiens or Homo Deus by Yuval Harari, read it. I'm also reading Titan by Ron Chernow right now, which is awesome. And I will say, by the way, if you like science fiction, and this is kind of an old book, but it's still like, I think it's one of the best written, most exciting books. They just made it a mini series. Read the Altered Carbon series by Richard K. Morgan. Or if you're really interested in AI, the future of humanity, there's a really cool book, which is a little, has a weird name called We Are Legion, We Are Bob by Dennis Taylor. I love that book too.

AI assessment note: “If you want, uh, non-fiction, I'm still saying if you haven't read Sapiens”

Q it was very different to the initial product. I guess I'm kind of taking the next logical step. Once we have brilliant people, how do you know when you have the right idea? And how do you respond to founders in this situation when they ask, you know, Jeff, this is what I'm thinking. And you know, they're brilliant, but how do they know when they have the right idea?

A Danny Gross is great. And I was a personal investor in what was originally Greplin and then Q. And the idea sounded kind of cool, a meta search engine, but I invested because I thought, He was awesome. Back to our original point. How do you know when you have the right idea? I guess this is sort of the ultimate question. One way to answer it is, and this is maybe the only way that matters mostly from an entrepreneur's perspective, from a founder's perspective is when do you have an idea that you care enough to live and die for, for five to 10 years? I just talked to an old colleague of mine, and he just sold his company that he founded. They did remarkably well. They grew from zero to 150 people. They were the hot startup in their own local area, and it was awesome, but his comment was, it's been 10 years. Who knew that I'd be selling enterprise software for 10 years? So if you're gonna start an enterprise software company, it'd be good if you really cared about the problem you're solving, and you really have passion. I remember hearing Michael Moritz say, have an obsession for solving the problem that your company's going to solve. Don't have that? Then it's probably not the right idea.

AI assessment note: “when do you have an idea that you care enough to live and die for”

Q Well, that is very, very kind, and I so appreciate that, but I would love to get the ball rolling today, Jeff, with a little bit on you. So tell me, how did you make your way, I guess, first into the world of startups? But then really come to be a partner of the globally renowned Y Combinator.

A So startups were on my mind a little, I guess, ironically, when I first came out to Silicon Valley in the early eighties to work for a company that was anything but a startup Hewlett Packard, but everyone thought about startups and HP was really a place where so many startups were born, at least in people's minds. And it really became sort of the garden for Silicon Valley. Everyone started in HP and started companies. And so every Friday afternoon, we would, afternoon, not evening, because, you know, it was HP, we would go and have drinks at PJ Mulligan's and talk about the startups we were going to start. But I guess those ideas stayed mostly dreams for a long time. And it took me a while to actually realize that dream. I went back to school a couple of times. I went and lived abroad for five years. Actually, when I lived abroad, I went to a business school in, in Europe, and the courses on entrepreneurship were enthralling to me, and I just knew that even though it was later than I thought I was going to do it, and when I came back to the States in the early nineties, I sort of ran headlong into the internet, and as soon as that happened, as soon as I saw Mosaic, which was Marc Andreessen's first browser that incorporated, and I know this is ancient history, incorporated both Text and images in the same stream, in the same page. That sounds like ludicrously boring right now, …

AI assessment note: “I quit my job and I started several companies in the internet space all at once.”

Q Well, that is very, very kind, and I so appreciate that, but I would love to get the ball rolling today, Jeff, with a little bit on you. So tell me, how did you make your way, I guess, first into the world of startups? But then really come to be a partner of the globally renowned Y Combinator.

A So startups were on my mind a little, I guess, ironically, when I first came out to Silicon Valley in the early eighties to work for a company that was anything but a startup Hewlett Packard, but everyone thought about startups and HP was really a place where so many startups were born, at least in people's minds. And it really became sort of the garden for Silicon Valley. Everyone started in HP and started companies. And so every Friday afternoon, we would, afternoon, not evening, because, you know, it was HP, we would go and have drinks at PJ Mulligan's and talk about the startups we were going to start. But I guess those ideas stayed mostly dreams for a long time. And it took me a while to actually realize that dream. I went back to school a couple of times. I went and lived abroad for five years. Actually, when I lived abroad, I went to a business school in, in Europe, and the courses on entrepreneurship were enthralling to me, and I just knew that even though it was later than I thought I was going to do it, and when I came back to the States in the early nineties, I sort of ran headlong into the internet, and as soon as that happened, as soon as I saw Mosaic, which was Marc Andreessen's first browser that incorporated, and I know this is ancient history, incorporated both Text and images in the same stream, in the same page. That sounds like ludicrously boring right now, …

AI assessment note: “I quit my job and I started several companies in the internet space”

Q Now, I, I do totally agree with you, especially with those analogies. I do have to also, if we kind of dig in then on those founders, so to speak, are there profiles that resonate with you more than others?

A I don't tend to think in terms of profiles. I think you lose as an investor if you fall back on stereotypes, which is different, I think, from falling back on intuitions. I like to look back to what I call Paul Graham's original epiphany when he started Y Combinator in 2005. After, interestingly, he gave a talk to the Harvard Computing Society, a bunch of geeks, right? A bunch of nerds, a bunch of hackers, a bunch of software people, a bunch of technologists on how to start a startup. His epiphany in his terms was, oh, I'm going to fund a whole bunch of companies at the same time. No one does that. And I'm going to do it with standard docs, but it wasn't just a bunch of company. It was founders who knew technology, which was going to be at the center of value creation henceforth. So why wouldn't you put the people who know it best, the people who can build? So yeah, I look for people who can build. I don't know if that's a profile. I just think that I have to believe that they're going to be able to create things. I think Paul, Paul Graham has written more and thought more clearly and, uh, Brilliantly about startups than anyone else in the world. He wrote an essay called relentlessly resourceful. I like to think of the founders that I want to fund as resourceful and determined. I want founders who I can look at and imagine in my mind at the helm of a billion dollar company in t…

AI assessment note: “I don't tend to think in terms of profiles.”

Q it was very different to the initial product. I guess I'm kind of taking the next logical step. Once we have brilliant people, how do you know when you have the right idea? And how do you respond to founders in this situation when they ask, you know, Jeff, this is what I'm thinking. And you know, they're brilliant, but how do they know when they have the right idea?

A Danny Gross is great. And I was a personal investor in what was originally Greplin and then Q. And the idea sounded kind of cool, a meta search engine, but I invested because I thought, He was awesome. Back to our original point. How do you know when you have the right idea? I guess this is sort of the ultimate question. One way to answer it is, and this is maybe the only way that matters mostly from an entrepreneur's perspective, from a founder's perspective is when do you have an idea that you care enough to live and die for, for five to 10 years? I just talked to an old colleague of mine, and he just sold his company that he founded. They did remarkably well. They grew from zero to 150 people. They were the hot startup in their own local area, and it was awesome, but his comment was, it's been 10 years. Who knew that I'd be selling enterprise software for 10 years? So if you're gonna start an enterprise software company, it'd be good if you really cared about the problem you're solving, and you really have passion. I remember hearing Michael Moritz say, have an obsession for solving the problem that your company's going to solve. Don't have that? Then it's probably not the right idea.

AI assessment note: “when do you have an idea that you care enough to live and die for”

Q guess the question that YC companies ask, and early stage founders ask, in those early signs of real movement and traction, is how far along do I need to be to raise, and when is that right Time for the first raise. It's difficult asking across industry, but when you get asked that, what is your response, and how do you advise founders on the timing of the first raise?

A This is a hard question to answer, Harry, because I don't know what the first raise necessarily means. So there's a generic answer that I give as to when you should raise, and that answer is when you can. Now, I know that almost sounds tautological or unhelpful, but it's actually meant to focus entrepreneurs' minds as they're moving along through their company's life cycle and And they're looking at their capital needs, which by the way, sounds like obvious as a task for the, say the CEO of a company to do. But the problem with a startup is you always have a million things to do and you're trying to build product and sell and paying attention to your cashflow and then modeling it out and mapping it out is not always the first thing on their mind. So sometimes entrepreneurs will wake up in the middle of the night and think to themselves, wait, I have six months of cash. Damn. Am I going to reach a milestone where I can raise? So Raising money when you can raise money, and you see that often in our space, right? You hear about a company raising and then raising again, because they can, because they can raise at a higher valuation, because that gives them the buffer they need to take chances to have multiple bites at whatever apple they need to bite at. The question again was for the first round, the earliest round. Well, the earliest round you should raise when you can make a per…

AI assessment note: “the earliest round you should raise when you can make a persuasive case”