Y Combinator CEO on Founder Psychology in the Age of AI

Key Takeaway

Today, choose one recurring task you perform—customer research, meeting preparation, QA, or reporting—and turn it into a reusable AI skill. First do the task manually with an agent, record the instructions, code, and quality checks in a markdown file, then run it again and fix every failure. The goal is not a one-off productivity boost: build a repeatable asset that improves with each correction and frees you for higher-leverage judgment.

Episode Overview

YC CEO Gary Tan discusses founder psychology, arguing that builders should follow firsthand knowledge and genuine curiosity rather than status, market narratives, or what appears "hot." He explores how AI agents can turn individuals and small teams into far more capable operators by converting business processes into reusable skills, while also emphasizing community, local civic action, and the slow pace of institutional change.

Full Transcript

Transcript of Y Combinator CEO on Founder Psychology in the Age of AI from A16Z. Auto-generated from episode audio; may contain minor errors.

We may never achieve a utopia, but it is worthy and worth it to attempt. But everything that's awesome in my life is kind of a cult. We had to go over to the Windows team. They wouldn't reply to our emails. They wouldn't fix our bugs. And we had to go over there with a baseball bat. An org like Microsoft can't. Yes, but a startup can. Yes, and every startup must. Gary, Gary, so good to have you, brother. Thank you so much for joining us today. Thanks for having me.

having me. having me. Amazing, dude. Well, we're going to cover a bunch of the basics, then we're going to get into the advanced topics to make sure that we kind of match the curiosity and ambition of our audience. That sounds great. Does that work? Awesome. Well, dude, maybe talk to me a bit about the beginning of your journey 2003. You know, it feels like what's under discussed is founder psychology and then sort of Silicon Valley culture and how the two are connected. What did it feel like when you first got in the game back in 2003 coming out of Stanford?

I guess I wanted to work at startups, but uh 2003 was funny in that like web 1.0 had just ended. Like the you know, Nasdaq had just crashed and uh actually there were no jobs that I could even find in the Bay Area other than, you know, working at Gap IT. And so the two job offers I had were uh Microsoft for Windows Mobile, which I was pretty excited about, or Expedia. Okay. Okay. Okay. Yeah, I you know, I had student loans and I you know, while I wanted to start a company, I just you know, felt like I needed to get a job and then actually there were no jobs in the Bay.

So, it's like kind of hard to believe actually uh that moment was so bleak. And then right before web 2.0, it felt like it might have been the end of tech, huh? Right, a little bit. Yeah, that's what that was the vibe. And then you know, at the end of the day like that's the boom, that's the bust. Like these things sort of happen over and over again. over again. over again. So, at the time did it feel high status to work in tech or on startups?

Not at all. I mean, you know, it sort of lost to the sands of time, but um um um I was still excited about tech though. Um Um Um you know, I had done a lot of web programming and then one of my regrets actually was um I was sort of chasing what was hot instead of what was clearly the thing I knew. Mark Zuckerberg was probably doing Facemash um around then around 2003 and then Facebook didn't even exist yet um and I was getting out of web programming at exactly the wrong time.

Because it felt like that was the smart thing to do. Yeah, it was smart and you know, I mean this is true now. Um you know, in in front of all these people at Startup School, uh you know, I sort of started this don't LARP Right. Right. Right. um meme. um meme. um meme. I saw that. Uh but I think like that's that's embedded in this idea that like you should just be earnest Yeah. Yeah. Yeah. and then you shouldn't follow what the crowd is saying, right?

Like at that moment people said the web was dead, but that was sort of the perfect time to work on web and social and things like that. Um and you know, I didn't do it. I I ran off and said like "Oh, well, the next hot thing will be mobile." So I wanted to work at Windows Mobile, which was true, but um why I give up like the thing that could have been the next thing. What I love about what you're saying though is often when we hear earnest, we think naive, but actually what it sounds like you're saying is there's like earnestness is a sort of result of maturity and courage.

Courage is actually I think the right thing. Yes. Yes. Yes. Like if you know something that's sort of if someone just like comes and contradicts you or even if like a blog post or like someone on Twitter uh contradicts you, Yeah. Yeah. Yeah. you're like, well, I I don't I don't agree with that because I believe my own direct experience. direct experience. direct experience. Yes. Yes. Yes. I know that I'm not a time traveler because if I was a time traveler, I would have sent a message would have I would have sent a message back to myself and said, "Just stay on working on web stuff." Like you literally have literally have literally have um 5 years of experience on top of everyone else.

Like you could do an end run around everyone. Like you could have built like any kind of social software. Yes. Yes. Yes. But instead I was, um, you know, I was 22. So I was like being whipped around by, uh, whatever I could read in The Wall Street Journal. And, you know, I the the classic question I'm sure you get that, you know, all investors get all the time is, "What's hot and what should I work on?" Right. Right. Right. And that's the wrong question to ask.

Like the right question is like, "What are you interested in? What do you know uniquely?" And so I was that's like, you know, one of a great many mistakes I made in my career. I feel like I'm a little bit, uh, doomed to be the first principle storyteller of, uh, all the mistakes that I made Well, I think that it's it's very inspiring for founders to hear your own journey and your own mistakes. And then not feel so bad about the ones that we've all made along the way.

I mean, maybe talk about the culture of Silicon Valley today. You know, on one hand maybe it was despondent 20 years ago. It's crazy to think that was just 23 years ago that you're talking about. Um, now you think we would all be incredibly elated, yet there's this undercurrent. Maybe it's the LARPing thing that you mentioned. You know, it's being outside of the light cone, the permanent underclass. Where does that come from? Do you think there's any truth in it? Talk through that. I mean, I get it.

Like there's just more competition than ever. And then, um, I think maybe it's just that we're spending too much time in distribution. I think Chris Dixon talks about this all the time where, um, you know, you're in the idea maze, but you know, the cool parts of the idea maze are like the weird fringe parts, actually. It's always like, uh, what is a toy? Like and that's the pattern in Silicon Valley over and over again that bears repeating, right? Yes. Yes. Yes. Like the idea that you could have a computer on every desk in every home.

Yeah. Yeah. Yeah. Uh, today is like, of course, like that's what's come to pass. But the people who created that thing, they were fringe weirdo punks, actually. Yes. Yes. Yes. Uh Uh Uh They were outsiders. I mean, Homebrew Computer Club was not where you were getting laid. getting laid. getting laid. Yeah. That's right. You You just were like following this weird obsession that, you know, actually I want my own computer. And I think Chris has said this, too. I think a good measure of how interesting the thing is is can you find the edge?

Mhm. Mhm. Mhm. And for the most interesting things, you typically can't. Even if you find the edge of the conversation, you can't find the intellectual edge. Which I think is a very good sign. I mean, I had this growing up in the '80s, maybe you had this, too. There was sort of one way to be cool in grade school, and probably in high school, and maybe when you got to college, you kind of found your people. And now I think one of the miracles of being internet native generation is that people find their people much sooner.

You find your people on Reddit, you find your people on, you know, X or Insta or whatever your network is. Oh, yeah. Oh, yeah. Oh, yeah. I mean, that's the coolest thing today. Like, there's probably a subreddit, there's probably um a part of X, like, you know, some part of teapot that is uh you know, this part of Twitter that um is just your set of super weird, but like really, really into that thing. Yeah. Yeah. Yeah. And you can find your tribe more or less instantly.

instantly. instantly. Yeah. Yeah. Yeah. Yeah, can you talk a bit about the culture of Silicon Valley? It felt like 10 years ago it was sort of, you know, it was lower status to work on something like Palantir, either because people were nervous about doing things that were too much in the national interest, or because it was was sort of dismissed as a services business. Now, it's clearly one of the most important companies in the world with one of the most compelling CEOs. You were early there.

What did it feel like? Why did you do it? Yeah. I mean, uh I have a worse story than that. I have another mistake story. Okay. Okay. Okay. Where um Where um Where um uh Joe Lonsdale and Stephen Cohen uh were my fraternity brothers at Stanford, Phi Psi. Phi Psi. Phi Psi. Uh Uh Uh and then I had a job, and they were like interns at Peter Thiel's hedge fund. Okay. Okay. Okay. And uh Peter has this thing where you're supposed to like, you know, when you start a thing, you write down on a piece of paper all the smartest people who you need to go and hire and like get to join you.

And so they said, "Oh, both of them were like, oh, let's go get Gary. He's up in Seattle." Like they flew me down to have dinner with him. And he said, you know, Peter said, "I'm so sure this is the right thing for you. Like here's a check for 70 grand." That was how much I made at Microsoft at the time. time. time. Yeah. Yeah. Yeah. And I said, "Thank you very much, Mr. Thiel, but I might get promoted to level 60 this year." Oh, no.

Oh, no. Oh, no. Which I did. But I think it's That was like a $2 billion to $4 billion mistake at this point. point. point. Oh, no. Oh, no. Oh, no. And I think about it all the time. Like basically, I did the same thing again. It was like the same thing that got me to go work on Windows Mobile instead of Yeah. Yeah. Yeah. um just staying on the thing that I knew and loved. and loved. and loved. Yeah. Yeah. Yeah. Uh it happened again.

I was like, well, I don't know, you know, I was working backwards from the map instead of looking down at the territory and saying like, oh, well, these are the smartest people I know. Like Joe and Stefan were among the smartest people I'd ever met. Yeah. Yeah. Yeah. Um and you know, if not them, like who was I going to, you know, be a co-founder with? Like it just, you know, the universe was saying like this is the thing you need to do. But all I cared about was what was cool, what was hot, what would a really good investor say?

Um Um Um And the thing is like they're like going off of uh a map. Yeah. Yeah. Yeah. And like you can see, you can look down, you can look around, you can like have first principles knowledge of what's going on. going on. going on. Yeah. Yeah. Yeah. Um and you know, what they were doing is like they were going to governments and three-letter agencies. And it was clear that um the things that really good computer scientists in Palo Alto could do and create Yes. Yes.

Yes. uh DC did not have access to that. And you know, it's funny how much that thing that they had identified like Peter and Joe and Stefan and later Alex Karp identified. Karp identified. Karp identified. Yeah. Yeah. Yeah. Um Um Um that like runs through almost everything that we do in Silicon Valley. It's just like uh the future is already here. It's not evenly distributed. And then that's where like first principles knowledge or like just viewing the world as a scientist is actually very useful. Yes.

Yes. Yes. Um and what a scientist does is, you know, sure there's published papers, but you go and you examine all the truths. And what you find is that once you go down into the experiment or you go down and talk to the first party people who are experiencing a thing experiencing a thing. thing. thing. Yes. Yes. Yes. Um Um Um then you learn secret knowledge. Then you have gnosis. And so, uh you know, from Palantir I definitely learned that everything that's awesome in my life is kind of a cult.

Yeah. Yeah. Yeah. That starts with some sort of truth or belief that flies in the face of an orthodoxy, which is very punk actually. Yes. Yes. Totally dude, that's very Rick Rubin would approve. Yeah. Yeah. Yeah. Yeah, well, actually what I love about you're saying is that there's a beautiful truth in the fact that you've talked through some of these maybe tragic misses, but you know, the lessons are courage, the lessons are earnestness, right? The lessons are when your instincts are pulling you to work with a set of people.

So so maybe talk a little bit about, you know, we talk a lot about how Silicon Valley and the magic is it takes outsiders and turns them into insiders. And I feel like YC is the ultimate distillation of that. You know, you go from being two founders perhaps from a foreign country to two people with YC on their LinkedIn and everybody now knows what that means. Totally. Totally. Totally. So talk about how that happens. Is it a process? Is it a mindset? And how has it changed over the years?

Um I mean, I have to credit Paul Graham and Jessica Livingston and the original founders including Trevor Blackwell and Robert Morris. I mean, uh what Paul and Jessica figured out was that there are lots and lots of really smart people who do not get access um to Silicon Valley. I mean, I think in the past you had to like go to the right schools, you had to know the right people sort of and if you didn't you'd come to Silicon Valley and you'd try to get invited to the right parties.

There was like a social network that you had to crack. Um and then uh that YC we have a pejorative for that whole scene which it's like we call them scenester's actually. Uh which is I mean it's sort of a nod to like what you used to have to do. Um and some people still believe that's like how you do it. All they did was say, you know what? Like here's a here's a website, here's 12 questions, later we added like a 1-minute video. And uh people on the other end who are builders are going to try to give you a fair shake.

And so today we have uh you know, 16 equal partners including myself and all of us like went through YC and had successful outcomes and um I think there's something valuable to that. They just, you know, welcome to welcome to Silicon Valley. We just um celebrated uh 7,000 people coming to San Francisco. The majority of them the very first time they came it's, you know, our startup school every single year. So incredible. So incredible. So incredible. We kind of call it like uh birthright but for tech.

It looked like the Roman Colosseum, dude. dude. dude. Yeah. Yeah. Yeah. It was amazing. Yeah. So I you know, I think that that's the coolest thing about Silicon Valley. Like you sort of it sort of doesn't matter where you're from or who you are. It just actually matters what your ideas are and can you execute. The only other thing that I'd say like YC people get that a lot of people don't get is um a community of people who you can be super real with. It's like if you go to a TechCrunch event, you look to the left, you look to the right and it's like are Are really going to be able to tell them anything real?

Like you're going to hold your cards pretty close and uh you know, you're going to say how you're doing and they're going to say killing it and then they're going to ask back and like oh, I'm also killing it. I mean, honestly founders founders founders really need that. Like it's very solitary. It's um you know, on the day that you lose your best customer, on the day that your best engineer quits, like who you going to call? And if you have no one like The day your co-founder loses hope and you're not allowed to.

Right. Right. Right. That's a tough day, you know? Yeah. Yeah. Yeah. Talk about the historical upside sort of surprises of like founder types, business types, and the downside surprises. What have you learned through YC? YC? YC? I mean, what's we're sort of in the middle of a big transformation now, I think. think. think. Okay. Okay. Okay. Um for the longest time we really really believed that you needed co-founders and I think that everything else being equal, having co-founders is net really really good. really good. really good.

Totally. Totally. Totally. Um I think some of this is like the beginning of a cult. Yeah. Yeah. Yeah. Like you know, a cult where there's only one person and that person can't convince anyone else to join them is like you know, worse than a cult. It's just like a crazy person actually. Right, right, right. Um I think this is like an old Derek Sivers TED Talk, right? Where it's like uh yeah, one person dancing in a field is a crazy person. Yes. Yes. Yes. But um But um But um you know, it's really the second person who like gets up That's right.

That's right. That's right. and joins that person like then you just what you find is you know, suddenly 10 people are all dancing. Then it's a party. Yeah, that's literally the TED Talk. Talk. Talk. Love it. Love it. Love it. And um And um And um I think there's something to that, but you know, I think what's happening right now with vibe coding and agentic coding Yeah. Yeah. Yeah. um literally any given person could be 400 of that person like from two years like even like nine months ago um you can be a multiple of yourself.

It's amazing. It's amazing. It's amazing. yeah, and so think founders are more ambitious than they've ever been? They should be. Yes. Yes. Yes. Um if anything, like that's the number one thing that people should do is realize that like don't chase your success or my success. Like that was, you know, when we were coming up. Like right. right. right. the game done changed. You know, like you actually you can't just do a SaaS thing. Like I you know, I was just doing an analysis on my pure SaaS and I was like, oh shoot, like you know, you know, you know, a pure like per seat SaaS thing, like not totally clear it will exist in another 5 or 10 years.

Like it's perfectly fine as a wedge, but if you're doing that now in 2026, like you better hope that that's like a leap to some sort of moat around data or network effects or something else, right? Um and that's like you know, if you if we would time travel to like even 2 years ago, it's like SaaS was God, you know, like the 10 20X like next 12 months uh revenue multiple was like, you know, iron law. And like it's hard to believe it was like, oh yeah, no, that's not true at all now.

all now. all now. Well, all this is you know, it's a related thing that I love is that code is no longer precious. Mhm. Mhm. Mhm. My god. My god. My god. That's like That's like That's like the things that we had to go through to get something shipped. And that's why you had to have this like sense that what you were making was important with a capital I. Oh, yeah. Oh, yeah. Oh, yeah. And that actually flies against the kind of beautiful truth we were just talking about because often earnestness isn't obviously important with a capital I.

So you pursue things that seem important when most of the most important things actually start out seeming actually unimportant. unimportant. unimportant. I know you've been all over this with G stack and G brain and you know, when you started out to build those things, with the intention to like contribute to the community or just explore your interests? interests? interests? Oh, I was just messing around. Like, you know, uh what was it? I think Boris Cherny came on Light Cone podcast and I just felt like the urge to you know, and a bunch of our mutual friends, like all of them uh basically just started coding again and I was like, oh something's happening.

I better start. And then initially it was just messing around. It's like, "Oh, I mean, what would it be like to do and like make an office hours?" office hours?" office hours?" Yeah. Yeah. Yeah. Um and then the craziest thing there was like we had just started um like recording all of our office hours, actually. And then I could I had like a few months of data, and there were like very clear things that um the YC partners used as like rhetorical devices or ways to like draw out like a step function in your ambition.

Mhm. Mhm. Mhm. [clears throat] [clears throat] [clears throat] Um and then what's funny is I have this markdown file that is basically like the perfect script on how to advise founders to like increase their ambition. Yeah. Yeah. Yeah. And then I actually had to go into Claude, and I said, "Reduce this by 90%. Reduce the strength and intensity of this prompt by 90%." And then I open-sourced that. open-sourced that. open-sourced that. Cuz some of it is like you got to come and you know do YC stuff.

course. course. course. It's well we'll take your favorite five. Okay, thank you. Yeah. We can't give away the crown jewels like for free. This just a taste. The first one's free, you know? you know? you know? Well dude, Kevin caught this. I think it was a G stacker G brain where deep in the open source you'd said, "Please apply to YC." Yeah, yeah, yeah. But only if you're a top 10% user of Claude code. Incredible. Incredible. Incredible. Like based on whether you're um thinking about users, like thoughtful about your product and your design.

Like it's not Not everyone gets that message, actually. actually. actually. Yes. Yes. Well dude, I love that you're doing it, and I love that you're doing it so publicly because I think this comes back to the earnestness point, which is the whole thing about building intuition at this moment is just using the technology. Oh yeah. You know, and I think that there's this feeling like, "Oh, how can I possibly catch up?" Or there's so much seriousness around it. It's like, "No. Just use every model and build completely trivial things for no other reason to have a chassis with which to learn the new technology.

I think the most exciting thing is like you can just have ideas. And then in the past it's like, "Oh, well I had to be the PM. Let me write the spec. Like let me make sure I have, you know, one or two engineers. Like oh, how are we going to do QA? Like there's just all this stuff that you used to have to worry about. And then now it's like no, slash QA. Like it's done. Like, you know, yeah, we tested it. It's good. Like we have unit tests.

Like 90% test coverage, you know? Totally. You know, it's like arranging your Zen rock garden. It's just fun to do it and the like the output doesn't matter that much, which is why everybody talks about coding agents, but very few people are showing their work. Oh, yeah. Cuz a lot of it is sort of low stakes work and I think that's beautiful and okay. okay. okay. Yeah. Yeah. Yeah. No, I mean and then I think it's crazy to what degree like suddenly agency and taste taste taste like off the charts important now.

And then the hard part is like helping people realize like just by the act of doing it and exercising it, like that's how you get better. It's I don't actually think that like those things are in innate or inborn. Like some people have more of it coming out of the womb per se, but Sure. Sure. Sure. you know, it's you just practice. You know? know? know? Well, let me challenge you on this cuz Nikita said this a couple of maybe a year ago and I thought it was interesting, which is hey, we were told that the like highest form of art and business was, you know, film and software.

And now anyone can make films and anybody can make software, yet the same 20% who were originally doing it are still the ones who are doing it. Is there kind of this like is agency something that you can, you know, embrace or are there just people that are naturally high agency and many that are not? are not? are not? Mhm. I mean, if I look at my own career, like I would easily say that I'm a late bloomer. And, you know, I had to make these like ridiculous mistakes, like saying no to Palantir or like leaving web programming to like learn.

And so, I feel like my life is somewhat like a testament to no, no, like I can make mistakes and then I can introspect. I can reason about them and then make different choices. different choices. different choices. Amazing. Amazing. Amazing. That's the hope anyway. Yeah, that is hope. Talk a little bit about loops. I think they're a kind of coding loops, um, which are well discussed. And now the graphs thing, which is sort of, you know, both funny and and also real. But it feels like the most interesting loops are business loops.

Oh, yeah. Oh, yeah. Oh, yeah. Like how can you actually have a loop where the output is changing the way the business itself operates? I know that Tom gave this great talk about how to organize your company in that way. Talk about how YC is organizing around loops and how you're advising your companies to. companies to. companies to. Yeah, absolutely. I mean, I messed around with Open Claw. I created G Brain, which is kind of like Soda Retrieval. Um, Retrieval. Um, Retrieval. Um, I basically distill I earlier this year I created Garyslist.org, which is sort of like actually an agentic newsroom.

And then I had to create like really, really good rag around like, you know, uh, personal deep research just to be able to put together some of those articles. articles. articles. Mhm. Mhm. Mhm. Uh, and then all I did was like I had Open Claw look at that repo, extract out like the agentic rag part, especially around like, um, like after-the-fact uh, graph generation. generation. generation. Mhm. Mhm. Mhm. Um, and then it just ended up being Soda even against like Memory Palace and a bunch of other open source.

Edible. Edible. Edible. Uh, and then what I realized is that just allows the agent to know what million tokens to keep in its head for any given task. Yes. Yes. Yes. And so, um, what's interesting is like I think there are a couple things at work right now, like, um, the frontier model labs that are, you you know, letting you use ChatGPT or Claw, I think that they're still pretty constrained on constrained on constrained on and pretty constrained on, um, amount of compute they want to give you.

And so, if you really want to token max, you actually have to use something like Hermes Agent or Open Claw. Mhm. Mhm. Mhm. Um, and then you have to like tune it all the way up. Like you're just like, give me like let me load a million tokens or 800,000 tokens in Yeah. Yeah. Yeah. to any given request and like have that be in your like soul.md. Yeah. But when you do that, like I think that you basically get to live in 2028. Like, you know, it costs, I don't know, 50 or 100,000 dollars a year to like use the agents at full strength, like full 150 IQ on every request.

But you'll feel it more or less immediately. immediately. immediately. It just costs like a crazy amount. But for a CEO or for a founder, it actually makes a lot of sense to do that and you have to give yourself permission to token max in that way. Um, Um, Um, but you know, and then what you get is like I get you get to live in 2028 today. today. today. Amazing. Amazing. Amazing. Um, but I think like going back to what founders can do, um, um, um, if you live that way, not only do you want to do that task, you want to like skillify it.

Like you you do some like feat of strength and then you turn it into a markdown file plus code plus tests that can be reused and like put into a cron job. Yes. Yes. Yes. And so, uh, I think we're just seeing like across the board, um, a markdown file is an employee. Yeah. Yeah. Yeah. And it's an employee that, uh, will do the job perfectly every single time and it will do it like as many times as you want. want. want. Yeah. Yeah. Yeah. And then, you know, at that point all you're doing is like take any business process that you need in your company and you just do it once perfectly.

And the first time you try to do it, it's going to be bad. Expensive. Yeah, yes, many iterations. Yeah. But then at the end you can you as long as you can tell very, very quickly and in in very simple ways, like, "Hey agent, fix this, fix that. Like this was wrong." Um, Um, Um, you know, the actual trace and the actual, uh, history out of, um, that agent, uh, working with you, Mhm. Mhm. Mhm. it'll actually turn that into a skill file that's perfect, actually.

And anytime it screws up in like a future case, it's just a bug fix, and then it's there forever. there forever. there forever. And this loop you would apply to sales, to marketing, to customer support, to everything. everything. everything. Yeah, to everything. Really interesting. Really interesting. Really interesting. I mean, G stack was basically that for engineering, right? It's like there's a QA loop. I had to build something that works with browsers to go and cuz that's what I found like early with G stack, I found myself um, you know, automating how I thought about PM, and then uh, you know, I had a engineering skill that was like an engine manager that made sure that there was a unit test and end-to-end test coverage.

coverage. coverage. Yep. Yep. Yep. Um, but then in the end, I found myself like like like uh, I automated all the other things so much that all I was doing at the end was black box testing to to verify. And it was like, "Oh, no, no, okay, like even that part." Like it's interesting like uh, building these agentic systems today, I think that's all you're doing is you're seeing where the bottlenecks are, and then, you know, almost every single time it's like, "How do I just instruct the agent to create a piece of software or a markdown file that blows away that roadblock." And then, when you take a step back and you've done that for the whole task, it's like, I mean, we we there are companies now today that, you know, we were we were talking about earlier that's like literally you can go from zero to 15 mil ARR in about 4 months with like two or three people and like hundreds of agent like, you know, a few hundred skill files.

It's amazing. So, there's this like recursive self-improvement and there's this hill climbing that happens. Like Like Like at what point does it start to fall over? Is there like do you need error correction? Do the errors compound? Does it get constrained by exception handling, human relationships? Cuz otherwise, these companies should just be able to grow and run forever. Yeah. I mean, I guess my experience once you get a lot of markdown files or yeah, anytime you have like some large amount of data, um, that's where like provenance matters.

That's where um conflict management sort of you know when you have two facts if you have provenance then you're like well this is the more recent one like this is the one that wins. You need a cron job that's sort of sweeping through that and making sure that things are accurate and from the right places. Um but these are things that I think as you use the systems um um um you just know that you need to build these things. Like anyone who's I mean this is actually one of the interesting things I think is an advantage for founders in their 30s and 40s now.

Yeah. Yeah. Yeah. Um like Um like Um like I mean I think that there going to be as many Patrick Collisons as ever. Yeah. Yeah. Yeah. Um but one mega trend that we're seeing is like a 35 40 45 year old founder who like been around the block. Yeah yeah yeah. Built a lot of companies. I mean I think uh yeah Peter Steinberger is like a perfect example of that. Where it's like he's been around the block like he knows what to build. Yes. Yes. Yes.

Um and then if you take that person like suddenly there's 400 of those people like you can outperform an entire department of like any mag seven. I also think that if you've had some experience in the enterprise there are these dynamics that you know you can seek to kind of mirror and explore. So one of the things I'm really interested in is conflict. Right? Most people at an enterprise would say conflict is a bad thing but I actually think that there's this sort of productive constructive conflict that at its best is the search for truth.

for truth. for truth. Yeah. Yeah. Yeah. These systems allow us to do things like explore conflicting approaches and totally unbundle it from the human emotion. And I think that's actually very important because this is why the sort of the decentralization in an organization or an economy works well because every idea gets tried. You know? Yeah uh do you know Pedro from Brex is like the most aggressive person I've met who does this with his exact team? No. No. No. So which is cool like he uses Like, he actually was one of the people who like really got me into OpenClaw.

Okay. Okay. Okay. Um because he just came in and, you know, he had lunch with us at YC. Yeah. Yeah. Yeah. And he just walked us through um you know, the the vibe around OpenClaw was that it was too unsafe and dangerous and like delete your whole computer and stuff like that. Uh what he ended up doing was like building an entire open-source layer, which he actually has open-source called Craptrack. Okay. Okay. Okay. But it's like an agent that watches all the network traffic and all the things that uh OpenClaw does.

Nice. Nice. Nice. And then that's how he squares the circle. Like, Brex is one of the most regulated, you know, fintech. Of course. Of course. Um And then the upshot of what he got is that um he has his agent look at the meeting transcripts from like all of his direct reports. And he like can see that like two levels down. Yeah. And then the thing that really jumped out at me is like he can use uh meetings that he's not in now to figure out like what's broken, what's in conflict, like who's who's in conflict with who.

with who. with who. Yes. Yes. Yes. Uh and then sometimes he can show up at a meeting. He has perfect context from like the last 3 weeks of like that one compliance team. compliance team. compliance team. Yes. Yes. Yes. And then he can walk in and he's like, "Actually, you're right. We're doing it your way." And then he can leave. That's so badass. Yeah. And it's like, can you imagine like that is actually one of the defining reasons why um startups or businesses fail. businesses fail.

businesses fail. Yes. Yes. Yes. It's like it's actually like a a management challenge. Like, the business becomes too big to fit in one person's head. And then this is like the most profound form of you have you have agents, you have memory, you have retrieval. Um you like zap the rocks more, the rocks give you like raw intelligence about like what's happening. And it can actually introspect not just on the opinion of like someone two levels down in your organization, but it can actually look at the ground truth from the data, right?

And it's like that, you know, that's clairvoyance, right? Like Yes. Yes. Yes. You I mean if you once you have that in your brain, like actually every business in the world is available for you to take their business. business. business. Yes. Yes. Yes. like the world is basically built on things that are built around human beings and human beings can only keep seven plus or minus two things in their head at any given time. And you know, guess what? You plus an agent can keep basically three Harry Potter books in your head.

You can like rifle shot rifle shot rifle shot come. come. come. Yeah, I mean and more to come, right? Like this is as bad there's Like this is as bad there's so many cryptoisms that like applied like 10 times more to AI which is like this is the worst it will ever be actually. actually. actually. Yes. Yes. Yes. Um and so the whole world, like all business, all things that people rely on, government especially, uh is basically still built on a world that is predicated by human beings, limited human beings that can only keep seven plus or minus two things in their head.

Yes. Yes. Yes. And it's not ready. Like it's not ready for the world where agents can think at the speed of light. Like you have unlimited amounts of it, like unlimited amounts of data. Um and then, you know, my hope is that like basically products are going to be 10 or 100 times better. Like they should be a thousand times better. better. better. Yes. Yes. Yes. Like services should be a thousand times better, right? Like Yes. Yes. Yes. you know, the invisible hand of capitalism at that point lies properly done, it's not about lowering the cost of something.

It should actually be um creating these like sort of magical things that they I was like on Wall Street Journal podcast recently and the reporter like kept trying to like gotcha me. He kept saying like, are you you know, you guys in tech, are you trying to make a utopia? And I was like this is a trap. Like I don't I I would not go so far to say, you know, but as I went through like a bunch of examples from like a bunch of the startups that you and I have like worked on and funded and things like that.

I was like, actually like maybe, right? Like right? Like right? Like you know, we may never achieve a utopia, but it is worthy and worth it to attempt, right? And that, you know, I I would not say that Silicon Valley or tech will achieve a utopia. I will very earnestly say that we are trying to bring about a better world. Maybe another way to say this is just this is the least happy you'll ever be. Yeah. Yeah. Yeah. You know, because I think it like one of the other implications of what you're describing is just the ergonomics of the sort of white-collar job today.

You know, you think about every You've worked at big companies. Like you think of just the kind of morass that you have to get through. Torture. Torture. Torture. You think of how lossy the communication is. Like the entire management science sort of managerial class. Like maybe that was a 100-year distraction from what was founder mode, you know, in the in the Industrial Revolution all the way through Henry Ford, all the way through some of the early Silicon Valley founders, and then everybody just kind of hit this tidal wave of management.

Oh, yeah. Oh, yeah. Oh, yeah. Now we have this new model that can lead to dramatic productivity improvements like 3 days a week of really intentional work. Maybe 1 day. Yeah. Yeah. Yeah. And the other days you're touching grass. And I think the time that you do spend is just so much less burdened by this stuff this stuff this stuff that you always felt like you had to wade through. wade through. wade through. Yeah, that's right. I mean, if you look at the typical Mag 7 day-to-day, it's insane.

Like I remember when I was 22 working on Windows Mobile. Uh we're working on you know, these crazy devices that were like years before the iPhone. And um we needed integration for instance from the Windows team, which was like, you know, on the other side of the highway in Redmond. in Redmond. in Redmond. Right. Right. Right. And then I remember, you know, me and my sort of PM mentor, uh we had to go over to the to the Windows team and like they wouldn't reply to our emails.

They wouldn't fix our bugs. They wouldn't even like mark it as won't fix. They just ignored us. And we had to go over there with a baseball bat. Like I don't know why he brought one. Like it wasn't like he was going to like rough anyone up. It was just like this vague threat or something. something. something. It was actually hilarious and I think about that all the time. It's like what kind of like bureau cratic hell is it where like two perfectly smart people who are making like good tech money, Yeah.

Yeah. Yeah. you know, are put into a situation where like there's a fiefdom over here. Like literally there's like seven levels between us and that person. Yes. Yes. Yes. And this person doesn't even know that we spent like four hours trying to get like a P3 bug fix that was like a blocker for a thousand of our users or something. It's like And how much humanity is just wasted? Yeah. Yeah. Yeah. How many 2:00 a.m. sort of anxious wake-ups were there Yeah. Yeah. Yeah. because somebody wanted to not have a hard conversation.

Like it's, you know, it's it's a really it's a waste of the way we should be spending our time in working. working. working. Yeah. Yeah. Yeah. And that's a profound version of like the seven plus or minus two. Like I don't think that like the, you know, product unit manager or whatever the heck their, you know, their title was. Like I don't think that they wanted us to waste our time like that. I think it's just that, you know, your day like you just don't have enough hours in the day and we're like incredibly limited human beings, but you know, know, know, I yeah, it's funny.

Like I think that you know, I think about my time at Microsoft and it's like I remember getting an iPod and like doing competitive research for like Windows Mobile versus the iPod. I can imagine today at Microsoft you can imagine a markdown file and a skill Yeah. Yeah. Yeah. that is run on a cron. Yes. Yes. Yes. And it's like how are how are all the people working on this team? Like, are they blocked? Who are they blocked by? What are the external dependencies? Like suddenly there is a graph, there's a loop, and then suddenly like, you know, the products can actually just move that like, you could release something in a day or two that would have taken like 6 months.

It's incredible. And if you could like multiply that out across like, the thing is like probably an org like Microsoft can't. Yes. Yes. Yes. But like a startup can. Yes. Yes. Yes. And every startup must. Yes, they must be organized as well. I also love what you said, it's almost like the mid-level of bureaucracy should be agents. Cuz I actually think that, you know, being in charge is somewhat overstated. Like I love to actually have at least the mid-level organize the work, you know, resolve the conflicts that it can somewhat programmatically, probabilistically programmatically.

Of course, the executive team maybe sets direction, the individual sort of decides on execution, but just the whole organization layer, which a lot of product managers historically did, should not be human. I mean, the great thing is um it doesn't have to be Do you know how uh Venkatesh Rao has this thing where it's like, you need to be above the API line? Like if Uber came out, like if you're an Uber driver, you're below the API line. Like you should be fighting to be above the API line.

I actually think AI erases the API line. Um like one of the funniest things I saw recently is uh there's a API company um that we funded called Kolabtree, Kolabtree, Kolabtree, and they released a um a bug report endpoint that is not for humans to use, it's for agents who use their software to use. And there's an LLM where it's like if there's a bug in the software, the software, the software, um um um it like the bug report goes, but then it replies real time.

Yeah. Yeah. Yeah. And it's like, actually like, that's a good bug, we filed it, we're going to fix it next week, but also like try this workaround. workaround. workaround. Wow. Wow. Wow. And then like, I can't get that out of my head because you could imagine um that could be how companies work, right? Um Um Um like instead of being below the API line and having to do what like, I don't know, the API tells you to do. Mhm. Mhm. Mhm. Like this can be a back and forth Mhm.

Mhm. Mhm. actually. And then I always think about um you the reason why cars in the '80s got so good in Japan Mhm. Mhm. Mhm. was uh it was actually a management technique. Like they realized the Toyota production system production system production system That's right. That's right. That's right. meant that like if you are the person doing the work on the line, you should be allowed to change the line because you are the person with the most amount of contacts of contacts of contacts Yes. Yes.

Yes. to be able to improve your own working situation. And that's why American cars really started sucking and why Japanese cars became absolutely incredible. It's like this very subtle simple way that actually empowers the worker. And so there's a sort of like mix that I think is interesting. is interesting. is interesting. interesting cuz what's traditionally seen as a hierarchical society came up with this very bottom-up way of working which led to like arguably a 40-year generational run because of process power. power. power. Yeah. Yeah. Yeah.

Which is beautiful. How How many As you think about kind of our evolution towards this vision, how many of these problems do you think are intelligence-bound? intelligence-bound? intelligence-bound? Like we need smarter models versus there will be other attributes of models that will unlock success. I mean, honestly, it's all human Uh Uh Uh humans are the ones who are going to like slow this down. And then And then And then Um Um Um actually I'm realizing this might be a white pill. white pill. white pill. Okay.

Okay. Okay. So if you look at like the tenor of what's going on just broadly in the discourse about AI, it's all like this sort of doom and gloom like all white-collar jobs are going to go away. There's going to be a permanent underclass. underclass. underclass. Yes. Yes. Yes. And then And then And then uh uh uh funny enough what I think is Um Um Um all of the bureaucracy and the slowness and the seven plus or minus two Uh Uh Uh of like every company, every institution, every organization, all the middle managers in the world.

Yeah. Yeah. Yeah. That is actually the white pill. 100%. 100%. 100%. So So So you know you know you know these things are going to be slower than you think. you think. you think. Yes. Yes. Yes. Right? Uh I looked at you know, we had 7,000 people. Most of them were 18 to 22 years old. years old. years old. Amazing. Amazing. Amazing. And I looked in their faces and like they're all AI native. Like they were born more or less like, you know, they became adults in the time of ChatGPT.

Yes. Yes. Yes. Uh and it's going to you know, and for us it's like now we, you know, run which is nice. That's great, right? But, you know, imagine us like 20 years ago. Like, you know, we were the ones who were native to the web. We were the ones who were native to mobile. Um and then now we run so then all of society runs on the things that we expected from when we were 18 to 22. So, I think that, you know, the white pill to me is like it's going to be 20 years and that's not a bad thing.

That's actually a good thing. Yes. Yes. Yes. Um like society is way slower than you think. Government is way slower than you think. Every company in the world is way slower than you think. Yeah. Yeah. Yeah. Um and there are real motes to these things. Like there are structural reasons why a Microsoft isn't going anywhere. anywhere. anywhere. Yes. Yes. Yes. Um and then I guess this is sort of a little antithetical to what most, you know, most people in Silicon Valley would say like, "I want to start up to replace all of them." Yeah.

Yeah. Yeah. Uh and the reality is like they won't, you know? you know? you know? They won't. I love it. Okay, I have two more questions for you. Um you know, one on this kind of sort of trying to envision the near future, what do you think the next computer looks like? What does a new computer look like? Oh, man. Oh, man. Oh, man. I think in the short term it'll probably keep looking like the way it is, but it seems inconceivable that um it'll stay that form factor.

Like it's pretty clearly going to be voice. Yes. Yes. Yes. I think there's a lot around memory. Um it's going to take a while to you know, to we're we're at this moment where everyone's sort of happy with ChatGPT or Claude Co-work or whatever it is. Yeah. Yeah. Yeah. Um Um Um but I don't think they will be in the long term. Like, um I think you're going to want a lot more context, and you're going to want like all watched over by machines of living grace.

Like, you're going to want this thing that uh is benevolent, knows about like your hopes, fears, and desires, and then is sort of like relentlessly searching to help you in that way. And that's actually going to be really exciting. And you know, the path through that will probably be like computer use, memory, like uh diarization, like ingestion, like um Yeah, I mean I think there's going to be a lot there. And uh you know, the cool thing is it's actually going to take longer. Like, this isn't a Like, I don't think people are even talking about this now.

My guess is like next year, 2027, will be like the harness wars. Yes. Yes. Yes. You know, and then uh but it's really a cost thing. Like, it's just too expensive right now, Yes. Yes. Yes. you know? Um but it won't be it Like, there will be a war for a billion consumers Yes. Yes. Yes. uh right when like the frontier pure model compute of today Yeah. Yeah. Yeah. will be like maybe 50 or 100 bucks in like two or three years. Yeah. Yeah. Yeah. And then that will be when like the most few the browser wars will be back on.

Yes. Yes. Well, we're already seeing it like the price per token of frontier is going to infinity. Like, my thesis is infinity dollars a token, you can't have it. And the price per token of the model that was frontier a week ago is collapsing to zero. And I actually think to me that is a huge white pill for a lot of reasons. You know, one of the most important of which is just we need more consumer AI software. And in a world where most consumer products are free to try, you just can't do that when you have really high costs of incremental distribution.

The magic of software is zero cost incremental distribution. distribution. distribution. We have these magical primitives. Like, we have computers that are emotive and have emotional texture for the first time in 40 or 50 years. What a tragedy that we haven't built more ambitious consumer products yet. Yeah. Yeah. Yeah. So, I'm really excited for this sort of changing economics of models to unlock these new categories. I mean and we're so early. Like I was convinced that convinced that convinced that like being becoming a convert to open claw made me very very convinced that it was going to happen right away and then at this point I'm like that's not correct at all.

Like Yeah. Well, you should try the new chat GPT desktop app actually has got a voice mode and it's sort of it's an operator or a concierge that can see all your threads. threads. threads. Oh, cool. Oh, cool. Oh, cool. And you can access it from your phone. It's very open claw-ish and I'm sure Peter had his hands all over it. To me it's the closest thing we've seen yet to a true consumer assistant. Oh, I can see it's awesome. Yeah, yeah. Chat GPT always had like basically the best memory.

So I got to try it again. They've done a great job. Yeah. Yeah. Yeah. Okay, last question you know, we talked a lot about kind of utopian visions for the world and problems that are maybe intelligence bound. You've also put a lot of energy into sort of local politics and doing things I think are very pro-social, but it seems like more of those problems are human coordination bound. Oh, definitely. Oh, definitely. Oh, definitely. Yeah, how do you get energy to do that work? You know, is there a white pill for that aspect of our society?

Maybe talk a bit about that. I mean the white pill is just believing that America still has rule of law and that that that people in government are trying to help and like somewhat earnest. Like it's not perfect. perfect. perfect. I think that the white pill for me recently was even just doing jury duty in San Francisco and to see like this orderly process of really a cross-section of San Francisco. One thing I realized was like actually we are a big part of the city. Like we're we're we're 10 20% of the people are like directly working in tech.

Yeah. Yeah. Yeah. And so um to see something that was I mean the judge was really good. I mean it was a horrible case, but like you know, government is not here to like ruin people. Like Yeah. Yeah. Yeah. And so and then at that point um we can vote. vote. vote. Yes. Yes. Yes. Like we actually have a say and then I think everything is downstream of media at that point. Like I think the San Francisco moment that got me very engaged was realizing you know Asian Americans are 25% of the voting populace about 30% of the population but during COVID like we had a district attorney who was turning a blind eye to some of the most heinous crimes against our elders and simultaneous to that we had a school board that was openly hostile against Asian American kids who just wanted to learn algebra in public middle school which hit me because I was that public school kid in Fremont in the East Bay.

Like if I couldn't have taken algebra in middle school, I couldn't take calculus by senior year. I wouldn't have been able to study engineering at Stanford and I wouldn't be here doing any of the things I get to do today and I'm like oh okay now now they've made it personal and like let me understand and it turned out to be like sort of all the same people the same people who want to destroy all the data same people who don't want to build any housing in anywhere in California or the world.

Like it's sort of Nimbys who want to virtue signal who sort of have these ideologies that like don't square with mine. I mean as a builder you like well you know words have meaning like supply and demand exists markets exist like incentives exist and then you know I think that government is what you know when people like us don't speak up up up when we don't like pay attention and like hold our media accountable not just the government the government the government then things get very deranged and that's what San Francisco was I think around COVID and then just by sheer organization like this is I think that like the Chinese of the West Side organizing around algebra and you know you know you know the deaths of our elders going to farmers markets and like literally physically like telling each other they're killing us and they're killing us right um ABC News ABC News ABC News you know literally the meat the mainstream media mainstream media mainstream media TV channel of San Francisco and the Bay Area would not cover anti-Chinese and anti-Asian crime.

And And And you know you know you know I I it's like unconscionable right like our institutions failed us and the great thing is like when the system becomes so odious you've got to put your body on it. I think that was Mario Savio. And it's kind of I mean it's ironic almost to like say that but on the other hand like that's what I believe like they can't do this to us and we're going to stop it. And even at like personal peril even at you know reputational cost like we should be willing to take that cost because that's our covenant with our fellow man and our fellow citizen you know and if we don't do it who's going to do it like nobody does it and I'm super proud of what we're doing in San Francisco because we have beat back that ideological ideological ideological set of people who like created this mess and you know it's not perfect in San Francisco but it's getting better.

It's amazing right now. I mean I think I saw that Lori might be the most popular mayor or politician in the entire country. Yeah. Things have gotten so much better. Everybody sees it feels it in the vibe. Some people say I wonder why but I think for those of us who know we see that your sort of stewardship not just of the industry of the startup community of sort of technology but also of the community is one of the big catalysts. So thank you for doing that work.

Thank you so much. Yeah. So and I think San Francisco should be the beacon for pushing this back in every blue city in America as you know I that's what Gary's list.org is basically like how do we take the lessons that we learned here and like LA needs this, New York needs this, Minneapolis needs this, Seattle needs this. needs this. needs this. Well, and also let's find you know to connect the two that sort of you know culture society and technology like let's find very local ways for the ambition that this technology unlocks to show up.

You know, I was in London last week and you were talking a little bit what's possible. It's like hey, you don't have to have an American vision for how AI impacts your society. If you want the NHS to be incredible then like you can do that with this technology. So the kind of the opportunity for ambition to be very localized in our communities. I think is something really interesting. Yeah, and so yeah, act local like take care of the people right next to you like you know, I I think it's funny uh uh uh so many people get very very obsessed with national.

I mean we want to look at national generally right now. It's like you know what? Like I care about San Francisco, I care about housing, I care about crime, I care about uh you know, treatment and recovery Yeah. Yeah. Yeah. and if we do that like we can have the society we want to live in and then you know, if we fix local like state and national will fix itself cuz like on a five or 10 year basis like the people who win up there like they they will come up through a system that's functional and about saying no to things that don't make sense, about saying yes to the things that are awesome for the people.

people. people. I love it. All right, Gary. First of many. Thanks, brother. Thanks, bro. Thanks, bro. Thanks, bro. This is great. Cool. Yeah.