Aug 30, 2016 · 36m · y-combinator
Jessica Livingston : How to Build the Future · Y Combinator
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In this 'How to Build the Future' conversation hosted by Sam Altman, Y Combinator co-founder Jessica Livingston explores the core principles of startup success, reflecting on early YC history, key founder attributes, and lessons from iconic companies like Airbnb and Stripe.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The partners as informed peer 3.8 Guest teaching 4.6 Guest disagreement 0.2 The partners pushing back 0.2
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 16:08 Rejecting elite credentials as a predictor of success
Jessica emphatically rejects YC's early hypothesis that elite Harvard and MIT hackers make the best founders, declaring it demonstrably false compared to determination.
Hardest push from the partners ▶ 26:23 Challenging the motivation behind moving to Silicon ValleySam pushes on Jessica's explanation for relocating to California, asking directly whether the rush was truly driven by fear of copycats.
Biggest teaching moment ▶ 9:06 Correcting the Airbnb timeline and macro contextJessica corrects Sam's date from 2009 to fall 2008, detailing the grim post-crash funding landscape that dictated their strict cockroach-mode investing criteria.
The partners hold their own ▶ 29:05 Benchmarking YC against 2,500 global acceleratorsSam demonstrates domain authority by citing industry data comparing YC's 11 unicorn exits against the thousands of competing accelerator programs worldwide.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| Core Focus of Successful Early Startups | 3 | 5 | 0 | 0 | Sam asks open-ended questions about how early startups succeed. Jessica shares foundational YC philosophy, explaining the danger of 'wolves in sheep's clothing' distractions like early PR and corporate development. | |
| Identifying Product Traction and Focus | 4 | 4 | 0 | 0 | Sam probes whether outlier founders had long-term strategic plans or focused strictly on user feedback. Jessica explains how founders like Brian Chesky and the Collisons balanced immediate product focus with ambitious long-term visions. | |
| Idea Evolution and Betting on Founders | 3 | 5 | 0 | 0 | Sam inquires about the importance of the initial idea versus founder adaptability. Jessica recounts how Airbnb transitioned from conference airbeds to entire apartments through serendipitous user encounters like Barry Manilow's drummer. | |
| The 2008 Airbnb YC Story and Presidential Cereal Boxes | 4 | 6 | 1 | 1 | Jessica gently corrects Sam on the timing of Airbnb's interview, noting it was the crash of fall 2008 rather than 2009. She gives the behind-the-scenes backstory of the founders glue-gunning presidential cereal boxes to survive. | |
| Funding Stripe and the Collison Brothers | 4 | 6 | 1 | 0 | Jessica corrects Sam's understanding of when they met the Collison brothers, detailing Patrick's early visit from Ireland. She passionately rejects the idea that academic pedigree predicts startup success over raw determination. | |
| The Origin Story of Y Combinator | 4 | 4 | 0 | 0 | Jessica narrates the founding of Y Combinator in Cambridge in 2005. Both share personal memories of Sam being an applicant in the very first batch. | |
| The Unglamorous Work of Building YC | 4 | 4 | 0 | 0 | Jessica highlights the unglamorous early work of running an accelerator, including delivering Home Depot air conditioners to founders during a heat wave. Sam connects this to founder tenacity. | |
| Co-Founder Relationships and Compatibility | 4 | 4 | 0 | 1 | Jessica explains why pre-existing co-founder trust is critical, likening it to a marriage. Sam pushes slightly on whether the move to Silicon Valley was truly motivated by fear of copycats, which Jessica confirms. | |
| Founder-Friendliness as YC's Secret Weapon | 5 | 4 | 0 | 0 | Sam cites industry metrics about YC's unparalleled track record among 2,500 global accelerators. Jessica attributes this success to a foundational commitment to founder-friendliness and benevolence over short-term deal optimization. | |
| Practical Preparation for Aspiring Young Founders | 3 | 4 | 0 | 0 | Sam asks for tactical advice for aspiring teenage and college founders. Jessica lays out a clear roadmap: learning to code, building collaborative side projects, and working at early-stage startups. |
Statements from this episode (27)
Altman: YC Funded 1,500 Startups Worth Over $70B Combined
“Y Combinator has funded 1500 startups, and they're worth more than seventy billion dollars in total. More than 10 of them are worth a billion dollars or more.”
Livingston: The Most Successful Founders Focus Exclusively on Product and Users
“The most successful founders, I've noticed, are totally focused on two things. Building their product and making something people want, which of course is our motto and talking to their users. And they do not let themselves get distracted by anything else.”
Livingston: PR and networking distract early-stage founders from building product
“Talking to big companies to try to form partnerships in an attempt to get better distribution or somehow You know, get more users. To do a lot of PR before you've nailed down the product to talk to corp dev people when you're not thinking about being acquired …”
Livingston: Top founders have grand plans but start much smaller
“I think that all of the most successful founders have ambitious plans and they certainly start a lot smaller. Like, they seem much less important when they're first getting started, but I think the founders do have a grand plan. I have to believe, though, that…”
Livingston: Stripe was built because payments were a personal pain point
“I'm specifically thinking of Stripe. I mean, they built that product because it was a pain in the ass for themselves. They were solving something for themselves.”
Livingston: Airbnb pitched investors during YC as 'the eBay of space'
“I remember specifically during YC, Airbnb said to themselves and I think, ah, to investors, we plan to become the eBay of space. Like, they were nowhere near the eBay of space at that point, but they had that vision, and they were working toward that.”
Livingston: In Late 2008, YC Only Funded Startups Capable of Quick Profitability
“We went into interviews saying we're only going to choose companies that we think could make it to profitability really quickly on their own And then they can like live as a cockroach.”
Graham tried to change Airbnb's core idea in their YC interview
“During the interview, ah, Paul tried to change their idea. We thought this idea of, like, renting out airbeds was a little weird.”
Livingston: YC's Investment in Airbnb Was Primarily a Bet on the Founders
“I have to admit it was more of a bet on the three founders. They seemed really good. I did sort of like the idea of being able to stay in people's homes, but I have to admit I was not thinking it was going to be huge.”
Livingston: YC Met Patrick Collison at 16 Over Dinner Before Stripe
“Well, I have to admit, we met Patrick years earlier, when he was 16 or 17, still living in Ireland, because he looked up Paul, and we had him over for dinner. So, it wasn't like we first met them At a YC interview.”
Collison brothers convinced banking executives to partner when they were teenagers
“The head of a bank is going to take a nineteen-year-old startup founder seriously? It seems pretty implausible, right? But they were good enough that they were able to convince these banks to work with them.”
Livingston: Determination matters more than intelligence or school success for founders
“If I had to say the most important traits of the most successful founders, I've already mentioned determination. That is by far the most important quality. More than intelligence. More than previous success, you know, in school.”
Livingston: YC proved funding top MIT and Harvard hackers does not guarantee success
“Remember when we started Y Combinator, our hypothesis was, oh, we'll just fund all the best hackers from MIT and Harvard, and they'll turn out to be great startup founders. That is not true. That is absolutely not true.”
Livingston: A founder's whole world is convincing employees, investors, and partners
“Like, your whole world Is convincing people, and so you have to be able to communicate your idea and convince people why they should care about you more than any of the other hundreds of startups out there.”
Livingston: Pre-YC founders had no options beyond $5M VC rounds or rich connections
“You either had to go to a VC and get five million dollars, which is virtually impossible at that early stage, or you had to know someone who was rich and could give you money.”
Livingston: Early-stage investors never gave same-day decisions before YC
“And that never happened back before us. No one got a same day decision for the most part.”
Livingston: Batch funding works by teaching founders together and ending isolation
“We learned very, very quickly into the three months that funding startups in a batch was incredibly powerful, and it was powerful in that you could teach them all sort of the same things at once and they became colleagues, because starting a startup as one or …”
Livingston: YC bought and delivered 10 air conditioners during first batch
“We had eight startups in that batch, and they were all living scattered around the Harvard Square area, and there was a heat wave, and we were like, we can't have our founders not being able to work, so I went to Home Depot and I bought, like, 10 air condition…”
Altman: Justin Kan achieved a billion-dollar exit on his third YC startup
“It was Justin's third Y Combinator startup, I think, that ended up being a billion dollar exit. And YC funded him three times, and it worked out on the third.”
Livingston: Close-friend, technical 22-year-olds make the best early-stage bet
“They were college roommates and, like, best friends, or growing up, and so they had known each other for a long time and had this, like, great trust, and so when they wanted to build something, they were both excellent programmers, you know, and that's as good…”
Livingston: Blind dates and last-minute co-founder pairings rarely work out
“Rarely. I'm trying to think of an example, and off the top of my head, I can't think of an example. Wow. Of two people who were introduced, or sort of bolted on to each other at the last minute, ever working. I'm sure there are examples of it has, having work,…”
Livingston: YC moved to Silicon Valley to avoid being copied there
“We knew that people could easily copy us, and we didn't want someone else to be the Y Combinator of Silicon Valley. Like, we wanted to be the Y Combinator of Silicon Valley, and I remember Paul saying, we gotta go out there, and I remember thinking, like, ah, …”
Altman: Every billion-dollar accelerator alumni so far came from Y Combinator
“However, all, every billion plus dollar company so far ever to come out and accelerate, I think there's 11, have been part of YC.”
Livingston: The most successful founders are driven by purpose, not money
“You cannot be the most successful startup founder if you are driven by money. You have to be driven by a greater purpose.”
Livingston: Aspiring founders must learn to code to evaluate technical talent
“I would strongly recommend that everyone learn to code. Even if you're not great, you at least know how to do it, and it helps you sort of judge other programmers.”
Livingston: College is the best place to find startup co-founders
“Especially if you're in college, that is just the best place to meet potential co-founders”
Livingston: Female founders should tune out noise and focus solely on product
“You can't worry too much about what everyone's saying, and all the noise, and like, oh, it's so much harder as a woman. Yes, it's harder as a woman. I've been discriminated against, you know, it's, but I have always kept focused on my product, and You know, wh…”