Garry Tan on the Past, Present, and Future of YC
Gary Tan is the President and CEO of Y Combinator.
YC is the startup accelerator behind companies like Airbnb, Stripe, Coinbase, Reddit, Twitch, and thousands more. According to Garry, they’ve invested in 20% of all startups worth $5B or more started since 2012.
Gary has lived every side of the YC ecosystem. He went through YC as a founder, later became a partner, started Initialized Capital where he backed companies like Coinbase and Instacart, and then returned to lead YC.
We walk through the different “eras” of YC, from the early Paul Graham and Jessica Livingston days in Cambridge, to scaling in San Francisco, to today’s push back toward in person community and what Gary calls “founder mode” for the organization itself.
We also talk about why the Bay Area still matters so much for startups, what’s happening with California taxes and policy, and why Gary has gotten more involved in local politics to keep it the best place for founders to build companies.
Then we go deep on the parts of startups people don’t talk about enough. Co-founder conflict, rage quitting, therapy and coaching, and why companies inevitably take on the personality and emotional patterns of their founders.
We also cover what YC looks for in applications, how the 13 week batch is structured, how Demo Day really works, how to choose the right investors, and what Gary thinks the next phase of YC looks like, including helping founders even after Series A.
At the end, Gary shares his personal AI workflow, including meta prompting, comparing outputs across models, and the tools he uses every day to think and build faster.
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Timestamps:
(0:05) Moving from Winnipeg to California as a kid
(1:35) How YC interviews work
(2:55) The first batch in 2005
(6:46) Why YC moved from Boston to SF
(8:17) California’s Billionaire Tax
(11:00) Tech should care about public policies
(17:01) Going direct to your audience
(20:28) The 2nd Era of YC
(24:01) Rage quitting Palantir, learning to understand himself
(32:41) Co-founder conflict kills most startups
(35:15) Joining YC as a group partner
(37:22) Initialized Fund 1 (55x DPI)
(39:44) Why Garry went back to lead YC
(42:44) YC funds 20% of all $5B+ companies
(44:30) Lessons from Brian Chesky
(48:01) Garry’s thoughts on YC rejection
(51:41) How to get into YC
(58:03) What it’s like inside a 13-week YC batch
(1:02:23) 20% of YC is hard tech
(1:05:55) YC's 3rd era: founder mode, re-batching
(1:07:56) Escaping the matrix
(1:11:26) Garry's personal AI stack
(1:20:25) Tech optimism
Referenced
Y Combinator: https://www.ycombinator.com/
Initialized Capital: https://initialized.com/
Torch: https://torch.io/
Perplexity: https://www.perplexity.ai/
Anthropic: https://www.anthropic.com/
OpenAI: https://openai.com/
Airbnb: https://www.airbnb.com/
Kyle Vogt on his new startup: https://www.youtube.com/watch?v=XQoFbvyWEy8
Follow Aaron Levie on X: https://x.com/levie
Follow Gary
Twitter: https://x.com/garytan
LinkedIn: https://www.linkedin.com/in/garytan/
Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak
Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/
Y Combinator CEO Shares How They Pick Winners, Advice For Founders + Lessons From Paul Graham | Garry Tan Interview
Episode 642: Sam Parr ( https://x.com/theSamParr ) and Shaan Puri ( https://x.com/ShaanVP ) talk to Garry Tan ( https://x.com/garrytan ), CEO of Y Combinator, about the sauce that makes YC outperform the rest of Silicon Valley plus lessons from Paul Graham, Peter Thiel and Garry’s first million.
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Show Notes:
(0:00) Winning the game
(3:16) Being the Harvard of startups
(7:31) How YC outperforms most Silicon Valley investors
(9:36) Spotting extreme winners
(14:14) Capital-as-a-service
(16:34) How Garry hustled at 14 to get his into financial security
(23:04) Turning down Peter Thiel's offer to start Palantir
(32:20) Garry's first million
(44:57) Early days at YC
(51:31) The edge of startups with a 2-pizza team
(54:36) Advice for founders in AI
(1:05:57) The spoon-bending story
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Links:
• YC - https://www.ycombinator.com/
• Founding Sales - https://www.foundingsales.com/
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Check Out Shaan's Stuff:
Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd
—
Check Out Sam's Stuff:
• Hampton - https://www.joinhampton.com/
• Ideation Bootcamp - https://www.ideationbootcamp.co/
• Copy That - https://copythat.com
• Hampton Wealth Survey - https://joinhampton.com/wealth
• Sam’s List - http://samslist.co/
My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano
How YC fosters AI Innovation with Garry Tan
Garry Tan is a notorious founder-turned-investor who is now running one of the most prestigious accelerators in the world, Y Combinator. As the president and CEO of YC, Garry has been credited with reinvigorating the program. On this week’s episode of No Priors, Sarah, Elad, and Garry discuss the shifting demographics of YC founders and how AI is encouraging younger founders to launch companies, predicting which early stage startups will have longevity, and making YC a beacon for innovation in AI companies. They also discussed the importance of building companies in person and if San Francisco is, in fact, back.
Sign up for new podcasts every week. Email feedback to show@no-priors.com
Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil | @garrytan
Show Notes:
(0:00) Introduction
(0:53) Transitioning from founder to investing
(5:10) Early social media startups
(7:50) Trend predicting at YC
(10:03) Selecting YC founders
(12:06) AI trends emerging in YC batch
(18:34) Motivating culture at YC
(20:39) Choosing the startups with longevity
(24:01) Shifting YC found demographics
(29:24) Building in San Francisco
(31:01) Making YC a beacon for creators
(33:17) Garry Tan is bringing San Francisco back
Garry Tan - Unwrapping the Gift - [Invest Like the Best, EP. 267]
My guest today is Garry Tan, founder and managing partner of early-stage venture firm, Initialized Capital. Before starting Initialized, Garry was a partner at Y Combinator, employee number 10 at Palantir, and co-founder of YC backed blog platform Posterous. Our discussion covers what’s missing in the investment world, how to best systematize venture investments, and what he learned from Paul Graham. Please enjoy my conversation with Garry Tan.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.
Follow us on Twitter: @patrick_oshag | @JoinColossus
Show Notes
[00:02:45] - [First question] - Why he’s interested by software and the global brain
[00:06:23] - How the shift from global to local manifests in his investing and company activities
[00:11:42] - Ways to increase throughput that would benefit everybody in the investing world
[00:17:13] - What software he would build if there were no limitations and what happens at the systems level of securing deals at Initialize
[00:23:33] - Why there is no objective application process for early-stage capital and how much human judgment we can remove from approving funding
[00:26:49] - Shared characteristics amongst new inventions he finds favorable
[00:31:49] - Whether he’s able to evaluate an idea without a prototype
[00:33:33] - Why travel planning software was the worst idea of 2012 and what he sees as the bad idea of today
[00:36:06] - The most common reasons for failure in these types of businesses
[00:39:07] - Is big enabling technology shifts what manifests in successful outcomes?
[00:40:37] - The role of media and how it intersects with investing
[00:44:29] - What he attributes to the success of his firm and thriving in chaos
[00:48:11] - Would he press a button that would have made his childhood easy, and whether he’s met founders who haven’t come across adversity in their lives
[00:50:00] - His thoughts on the world today via the lens of his portfolio
[00:53:12] - The kindest thing anyone has ever done for him
Owning Your Own Media Stream (from Collison Conf with Garry Tan)
Ben interviewed Initialized Capital founder and friend of the show, Garry Tan at Collision Conf last month. Garry is of course also a YouTuber, Clubhouse'r, and master of content creation. The good people at Collision Conf gave us the thumbs up to share this interview on the value of owning your own media stream with all of you.
Sponsors:
Sierra: https://bit.ly/acquiredsierra
Garry Tan on lessons from past startup failures, power of community funnels, Alexis Ohanian’s departure & more | Angel S5 E8
Check out Initialized: https://initialized.com
FOLLOW Garry: https://twitter.com/garrytan
FOLLOW Jason: https://linktr.ee/calacanis
(Bonus) Office Hours With Garry Tan
This is Garry's YouTube channel.
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Or, watch the full video on YouTube Here.
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How YC Rewrote the Seed Playbook with Garry Tan
We're joined by Posterous co-founder, former YC partner and current Managing Partner of Initialized Capital Garry Tan to go deep on how YC changed the game for company creation and seed investing, how they thought about building the "cult" of startups, and what lies ahead as the early-stage world continues to globalize and evolve more quickly than ever.
Sponsors:
Sierra: https://bit.ly/acquiredsierra
Topics Covered (among others):
How the recruiting challenge for early-stage startups led to outside-the-box thinking Peter Thiel’s “crazy” (but not actually crazy) offer to Garry to join Palantir
Leveraging “cult” startup culture into a magnet for specific types of people
Y Combinator’s path from fringe to mainstream Insight that those same cult recruiting techniques could be applied at a meta-level to recruiting company founders themselves
Initial strong reactions to YC, and knowing they were on to something
The beginning of “influencer investing” with Paul Graham’s essays + Hacker News
The blooming of Seed as an asset class alongside and around YC The landmark deal with SV Angel and DST / Yuri Milner to “auto-fund” every YC company starting in 2011
YC scaling from ~10-12 companies per batch to 70-80 and now 200+ per batch
Starting Initialized Capital within YC, and then spinning it out into one of the largest independent seed funds
Influencer investing and startup evangelism going mainstream The impact of The Social Network movie
Exporting the ~”YC message” to the entire world: you can start a startup
The power of direct, bi-directional access to people via the internet
Links:
Paul Graham’s Essays: http://www.paulgraham.com/articles.html
Hackers and Painters: https://www.amazon.com/Hackers-Painters-Big-Ideas-Computer/dp/1449389554/
Hacker News: https://news.ycombinator.com
Garry's (great) YouTube Channel: https://www.youtube.com/channel/UCIBgYfDjtWlbJhg--Z4sOgQ
E1067: Garry Tan, Managing Partner & Co-Founder of Initialized Capital, on dealing with downstream investors as a Seed-stage firm, software companies acting as governments, possibility of building IPO-level companies while fully-distributed & much more!
1:03 Jason intros Garry Tan and checks in on how his quarantine has been going
4:39 How does Garry look at Initialized's portfolio companies? What are his 3 groups of companies dealing with COVID?
8:04 How will VCs react to the crisis? Why does Initialized specifically focus on Seed-stage companies?
11:13 How does Initialized contact downstream investors about their companies, and how has that changed during COVID?
14:12 Thoughts on Posterous, data-storage singularity & more
18:04 Losing thousands of photos after getting banned from Flickr and how that plays into software as the new government, becoming a super-router
22:32 How Spotify's access to public capital gives them an acquisition advantage, collab concepts
24:51 How does Initialized size their follow-on investments?
29:11 For how long is Initialized planning on operating fully remote? Thoughts on going back to work
35:56 What skills has Garry had to improve during his investing career?
43:33 How downstream investors try and take advantage of early-stage investors
47:51 Thoughts on Clubhouse investment, how/if they can scale their exclusivity
56:27 Thoughts on founders selling secondary shares, and how Chris Sacca helped Garry Tan at Posterous
1:02:09 Structural inequality leading to rich-bashing, how Fiat currency impacts welfare inequality
1:07:09 Thoughts on UBI, Instacart, potential profitability of food-delivery companies
1:11:31 Perception of Tech in the Bay Area, commercial real-estate in SF, Facebook's game-theory remote pay scale
1:18:27 Could today's tech giants (Google, Facebook, Uber) have grown to the heights they did as fully remote companies? Can IPO-level companies be consistently built while remote?
1:24:49 Do the best founders appear ageless? New Twitter features: good or bad?
SaaStr 332: Initialized Capital Co-Founder and Managing Partner Garry Tan on The New Normal
Prepare for the worst, hope for the best. Hear from Garry Tan, co-founder and managing partner at Initialized Capital, about how to protect your business during a crisis. He'll cover remote work, team management, sales, marketing, product development and more.
This podcast is an excerpt from Garry's session at SaaStr Summit. You can watch the full video on our YouTube channel: https://youtu.be/lIZDFQscwQM
E1013: Decade Wrap-Up Roundtable! Garry Tan, Initialized Capital & Zach Coelius, Coelius Capital on the biggest hits & misses of the past decade: Trump, Theranos, Streaming, Mindfulness, Crypto, Tesla, WeWork, Amazon Prime, Vaping & more!
LINKS to brackets: https://drive.google.com/open?id=1zqc-2vDRl7e86USf4okiX8DRcXPzX1HW
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0:29 Jason intros Garry & Zach
3:02 Jason goes over the bracket-style breakdown
3:15 Best of the decade: Ride-Sharing vs. AI/ML
8:32 Best: Amazon Prime vs. 4G LTE
10:07 Best: Tesla M3 vs. Disney buying Marvel + Star Wars IP
14:15 Best: Streaming vs. Mindfulness
17:01 Garry's Best: AI/ML vs. 4G LTE
20:20 Jason's Best: Model 3 vs. Mindfulness
24:05 Zach's Best: Ride-Sharing vs. Streaming
25:12 Jason & Guests pick their biggest win from the last decade
29:20 Jason tees up worst of the decade bracket
29:45 Worst of the decade: 2016 Election Fiasco vs. City San Francisco/Amazon Eating the World/Snowflake Culture
38:01 Worst: ICO Madness vs. Zuckerberg
40:34 Worst: WeWork vs. Vaping
44:13 Worst: Juicero vs. Theranos
44:48 Zach's Worst: 2016 Election vs. ICO Madness
45:09 Garry's Worst: Amazon Eating the World vs. ICO Madness
45:56 Jason's Worst: 2016 Election vs. Zuckerberg
49:52 Jason's Worst: WeWork vs. Theranos
51:56 Garry's Worst: Amazon Eating the World vs. Theranos
53:47 At what stage does Garry & Zach like to invest in companies?
55:52 Championship round
Jason: Mindfulness vs. Zuckerberg
Garry: Mindfulness vs. Theranos
Zach: Streaming vs. 2016 Election Fiasco
59:52 What topics will define the 2020's?
20VC: Initialized's Garry Tan on The Most Important Thing A Seed Investor Can Do For Founders, How Ownership Requirements Change With Evolution of Funds & Why There Is Not Too Much Capital Chasing Too Few Deals
Garry Tan is the Co-Founder and Managing Partner @ Initialized Capital, one of the West Coast's leading early-stage funds with a portfolio including the likes of Coinbase, Instacart, Cruise, Flexport and Opendoor, just to name a few. As for Garry, before co-founding Initialized, he was a partner at Y Combinator for nearly five years where he advised and funded over 600 companies. He was also co-founder of YC-backed blog platform Posterous (acquired by Twitter in 2012). Before that he was employee #10 at Palantir, where he was a founding member of the engineering team for Palantir's financial analysis product, and also fun fact, Garry designed Palantir's logo.
In Today's Episode You Will Learn:
1.) How Garry made his way from Founder and YC Partner to managing over $500m AUM today with his leading of Initialized? How did Garry's investment mindset change with the transition from angel to an institutional investor?
2.) What does Garry believe is the one thing pre-seed and seed investors must do that is more important than anything else? What relationship to the very best founders have with failure? How do they think about and approach it? How has Garry seen his own conviction building process in founders change over time? How does Garry approach the turning down of opportunities? What is the right way to deliver that feedback?
3.) Ownership: Initialized's funds have scaled from Fund I being $7m to Fund 4 being $225m, how have their ownership requirements changed with the evolution of their fund size? How does Garry think about collaboration and co-opetition with others funds as a result? What are the core challenges here?
4.) Price Sensitivity: With the larger fund and slightly more flexibility, how does Garry evaluate his own price sensitivity? What deal has Garry passed on due to price and it has stuck with him and taught him a valuable lesson? On pricing, how does Garry and Initialized approach reserve allocation?
5.) Investment Decision-Making: Garry has previously said "decision-making is a differentiator", what do Initialized do to ensure the highest quality of internal discussion and decision-making? How do they approach unanimous vs single partner decision-making? How does Initialized approach internal attribution with this in mind?
Items Mentioned In Today's Show:
Garry's Fave Book: Peter Thiel's Zero To One, Paul Graham's Hackers and Painters
Garry's Most Recent Investment: Standard Cognition
As always you can follow Harry, The Twenty Minute VC and Garry on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
Megatrends in tech and missed opportunities with Garry Tan of Initialized Capital
Today I'm visiting Garry Tan at Initialized HQ, a multi-stage fund that he started with Alexis Ohanian, one of the co-founders of reddit. The fund has grown tremendously over the past six years with nearly $1B under management, a team of more than 10, and investments in a few companies you might be a customer of, including Coinbase, Instacart, Algolia, GOAT, Opendoor, and a bunch of others. They were also investors in Product Hunt.
In this episode we talk about:
Garry's early years working as a software engineer in tech, including some major missed opportunities (in hindsight). He recounts the story of Peter Thiel trying to hire him away from Microsoft to join what became the multi-billion dollar company, Palantir.
Initialized's decision-making framework for figuring out which companies to pass on and which companies to invest in, as well as their honey badger mascot.
Why an often overlooked skill for founders is managing conflict, even when the team is still small. Garry explains why he backed a company that aims to help create harmonious startup teams founded by his former therapist.
We also discuss some of the Initialized portfolio companies that Garry is most excited about and the “megatrends” that are creating opportunities for investors and founders in tech today.
We’ll be back next week so be sure to subscribe on Apple Podcasts, Google Podcasts, Spotify, Breaker, Overcast, or wherever you listen to your favorite podcasts. Also, big thanks to our sponsors, GE Ventures, Rally Rd, and AngelList for their support. 😸
Quotes from This Episode
“The hard part about being a founder is you have this fog of war: you have no idea why you’re growing and a lot of times you also have no idea why you’ve stopped growing.” — Garry
“Peter looked at me and said, 'you’re a great engineer, why are you doing that?' Come join us, we are going to change the world. How much do you make at Microsoft? He got out his check book and started writing and said, 'here’s a personal check from me to you; you can cash this and this is a risk-free opportunity for you...' So I said, 'thank you very much Mr. Thiel, but I might get promoted next year at Microsoft' and I didn’t take the check. Opportunity knocked and I said no, and that company turned out to be Palantir.” — Garry
“Basically everyone has a plan until you get punched in the face, and as a startup you're going to get your face punched in. The important thing is 'what do you do next?'” — Garry
Companies and Products Mentioned in This Episode
LogDNA — Instantly collect and analyze logs real-time on any platform.
Standard Cognition— AI-powered checkout.
Torch.io — Leadership growth driven by data, powered by people.
Check out www.initialized.com for a shot of Initialized's honey badger mascot.
20VC: Garry Tan on The Biggest Takeaways From Advising 700 Companies @ Y Combinator & Why Now Is The Golden Age For The Early Stage?
Garry Tan is a Co-Founder and Managing Partner @ Initialized Capital, one of Silicon Valleys leading early stage seed funds. Prior to founding Initialized, Garry was a Partner at Y Combinator where he invested in and directly worked with over 700 companies in 5 years from the earliest possible stage, often just an idea. Garry's portfolio includes the likes of previous guests Tilt, Eero, Flexport, LendUp and many more incredible companies. Before being at YC, Garry Co-Founded Posterous and helped build it to a world-class website used by millions, ultimately acquired by Twitter. Garry also co-founded the engineering team for Palantir Technology's quant finance analysis platform.
In Today's Episode You Will Learn:
1.) How Garry made the transition from Founder @ PostHaven to YC Partner to Initialized GP?
2.) What were Garry's biggest takeaways from advising 700 startups at YC that he has taken with him to Initialized?
3.) Why does Garry believe now is the golden age for early stage investing? What opportunity does the mass of late stage capital provide the early stage?
4.) How does Garry approach desired ownership? What level of ownership provides incentive for a VC to work whilst also allowing collaboration with other VCs in a round?
5.) What are Garry's thoughts on the rise of thematic investing? Why does he not believe it to be optimal at the seed stage?
Items Mentioned In Today's Show:
Garry's Fave Blog: SaaStr
Garry's Fave Book: Chaos Monkeys
As always you can follow Harry, The Twenty Minute VC and Garry on Twitter here!
Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC.
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