I’m Binge Watching Interviews with Sam Altman…

…so you don’t have to… and here are my takeaways. (Article 13)

12 min readApr 9, 2023

This is a continuation from an article series found HERE.

2015-John Lilly (Former CEO of Mozilla) Interviews Sam Altman about Blitzscaling

Context:

YCombinator is a start up accelerator (typically the first investor in a start up, an org that offers resources and an extended network for founders).

Sam Altman got involved with YC around 2011. Sam says he has always been friends with Paul Graham, a cofounder of YC.

Sam was the president of YC during this interview.

John Lilly is the interviewer. John is an entrepreneur and former CEO of Mozilla.

This is a long interview (more than one hour) so I will break it up in two articles. This is part two.

All quotes below are from Sam Altman.

“Diversity is not as hard as everyone says it is. Less than half our partnership is white guys. Great! That means we fund really diverse people.”

Editor’s Note: Eyeroll. This feels like a virtue signal. They’d later joke that they are both white guys (Sam and John). It doesn’t seems genuine to me that a non-racist and optimal approach to viewing this is by looking around, counting the number of white vs. non-white people, say “this is bad” and end it there. And many interventions I’ve seen are not ideal and risk preaching a victim mentality.

Sam on VC investing: “If you think that what you’re looking for is undervalued assets, then it makes sense that you want the really good ones that look bad to most people. The ideas that look really good, everyone is already going after.”

“The good ideas that look really bad is what has led to outsized growth in startups.”

“It’s harder to do than you’d think. Because we are all really influenced by trends and what others think.” But Sam says that the more you go against the grain and invest in the ideas that look bad but can actually be good, the less you care about people saying your idea is stupid.

Editor’s Note: Two consistent themes here from other interviews. One is that other people will call your idea stupid, and you can’t care. And the second is that Sam has mentioned that he and Peter Thiel believe that most good start up ideas “sound bad, but are actually good.”

“I like to think of myself as an independent thinker. And I still find the temptation in just liking something because others like it.”

“You don’t want to be the investor investing in the thing that is just the derivative to the thing that was just really big.” Sam says that there was a long history, after Facebook, of people trying to invest in “the next Facebook.”

Editor’s Note: To Sam’s last point, this can hard to do. We can get into theory about why “autistic traits” tend to do well in the Silicon Valley / Tech world. One such theory is that these traits align with being less influenced by social pressures and social norms. It becomes easier for you to ignore trends and the like.

“In 2009–2010, the two companies that mattered to invest in as a venture investor was Uber and AirBnB. These looked nothing like Facebook.”

Sam says that now everyone is trying to make the “Uber of” some industry, like the Uber of dog walking. Sam says you should ignore all of these ideas.

Sam recommends looking at: “What has shifted in the world to enable a giant new company… and it’s going to look bad, so you have to have conviction, because everyone is going to tell you to (just create the next Uber).”

Editor’s Note: Seems like great all around investing advice.

“Once you can grow, and prove that people love your product, the less you care about what haters say.” Sam says that the faster the launch, the better you’ll feel.

Editor’s Note: As Sam is talking, I’m realizing that there is another benefit for Venture backed start ups: They want you to succeed, and will pull levers that you wouldn’t otherwise have available to you to market you and play up your success. Uber is very far from the most successful business of the past decade. But it has the benefit of hype and VC promoting it almost as if it were.

“If the reason you have conviction is a shift in the world that people who have been doing the same for 20 or more years have missed — and you can identify precisely what that was… Example: For Uber, this idea that everyone had an internet connected device in their pocket, and nobody did three years ago, unless you were really paying attention you could have missed how important that was.”

Sam says to look for conviction in a recent change in the world and why that sets up your idea for success.

“A company has to get 10% better at something every week in the early days.”

“I think Silicon Valley really gets the pivot thing wrong. I try not to go to start up parties.”

Sam says that there is a culture in Silicon Valley of celebrating pivoting (to a new idea). He says the attitude should be more of a culture of saying “oh, that stinks, I’m sorry to hear that.”

“Failure is still bad. It is important that it’s accepted. It’s important that it is not held against you. But it is important that it is not celebrate.”

“The only kinds of pivots that I’ve seen work are: It’s what the founder wanted to build all along anyway, or it’s something the founders discovered while they were building the first thing that didn’t work.”

Sam gives the example of the AirBnB founders (his favorite example to give). The founders pivoted to AirBnB, but it wasn’t the initial idea.

“The normal class of pivot is that founders see that their start up isn’t working, so they go to a whiteboard and create a new idea. I’ve never seen that work.”

“Unless you have one of those main pivots I just described: Shut the company down, return what you can to investors, travel the world, and discover your new idea.”

Editor’s Note: This is fascinating. It resonates, and I’ve had similar observation. But as with many of these, interesting to hear Sam say / frame it.

“If you’re going to go join a company, go join the most successful company going as quickly as possible as you can find. The lessons from seeing a really successful company scale — that is the only pre-startup training that is valuable.”

Sam repeats what he’s said in other interviews: Every successful start up focuses on finding a small number of users who can’t live without your product.

Editor’s Note: I’ve reconciled this idea with the common VC model, which is that you need a substantial sized market to go after. Both are true: Make a product a small number of people can’t live without, and make sure there is room, somehow, someway, to grow it to significant size. VCs define adequate size as $100mm annual revenue within 5–7 years. Recurring revenue is better than one-time sale.

Sam reiterates going quickly, again. But that going so fast causes lots of operational inefficiency. He says that many founders stop growth completely to fix these operational problems. And that this doesn’t work.

“As soon as you stop growing, you get a lot more problems.”

Editor’s Note: I have noticed this with people in general!

“When you’re a founder, you never stop thinking about your company… That’s really hard to sign up for.”

Sam says to think about the type of stuff that would make “for good TV” and do none of those things when building a start up. He seems to allude to the TV show Silicon Valley and says it’s “horrible.”

Editor’s Note: Silicon Valley is hilarious, and scarily accurate.

“No company has ever become great because they are great at fundraising.”

Sam says that getting addicted to press and getting attention is bad as a founder. He also seems to suggest that networking events make you feel like you are doing things, but that they are not in fact helpful most of the time. At the end of the day doing work is the most important thing.

Editor’s Note: I have definitely observed firsthand both of these things.

Sam says that the biggest problem with being a founder is waiting too long to fire not useful people. He also says there’s no way to learn how to do this without just going through it and knowing.

Sam says that you hurt the employee more by keeping them when they are not excelling.

“Someone will someday discover the algorithm of actual human intelligence and creativity. And that’s going to go one of two ways.”

Editor’s Note: Remember this interview was from 2015. ChatGPT became popular in early 2023.

“A lot of people are trying to develop the first superhuman General Intelligence… I do think people should work on that.”

Editor’s Note: Sam seems to show a pretty bad misunderstanding of what Bitcoin is. Just as one of the many analogies thrown around, if we were to compare it to gold, it’s a store of value / investment. But Sam says he doesn’t like it because people are spending it daily to buy things.

“I hate being on boards. I try not to do that.” Sam, referring to board of directors.

“I think if you could pick one thing that would help the poorest half of the world tomorrow, you would pick friendly artificial human intelligence… The second thing that you could do would be really cheap, safe energy.”

Sam says that the quality of life and the cost of energy correlate (negatively) closely.

Sam says that he made a list of things that he cares about, and their underlying issues (such as health, economics, war). And that his optimistic view of the future includes good cheap energy.

Sam says that there are enough people working on solar energy, and “almost nobody” working on nuclear. So he’s decided to work on nuclear.

Sam says that there are only about 20 years of your life where you can maintain the intensity that you need as a startup CEO. “If you believe that, you sort of have a limited number of shots on goal.”

Editor’s Note: It’s a good way to frame these things. He doesn’t suggest it has to be age 20–40. He’s saying that whenever you do start (say, age 30), that you only have 20 years before you burn out. Maybe 30 years if you’re good. Strategically it could make sense to spend some easy years thinking of what ideas you want to pursue and then go after them with full intensity once you start.

On how to fire people: “Put yourself in other peoples’ shoes, and do everything you possibly can to make it look like a win for them.”

“Every person I’ve ever fired, I’ve found them a job before I fired them.”

Sam says that if he hired the person, then he screwed up, if they didn’t work out. Sam says that in most cases, nobody did anything unethical. He says “Years from now I’m sure we will be close friends again and we will laugh about this.” And that most of the time the other person also agrees that things aren’t working.

Sam says he is always super generous with severance, helps them find a job, and is very respectful.

Editor’s Note: This is great advice. I do not think most leaders follow Sam’s lead, here.

“The advice in management books is that you have termination documents ready… If you do that, it’s usually terrible. It’s what the lawyers tell you! And what the lawyers tell you is usually bad advice.”

Sam says that you should go into a conversation to fire someone to have a conversation about how you both can work together to position this best for the story the person you are firing wants to tell the market.

“The best founders are generalists all the way through.”

“When you transition from building a product to building a company, you have to transition to generalizing and never look back.” Sam says this about the job of the Founder / CEO.

“I think the best way to do these things is just to go off and do them.”

On when he’d encourage someone to build a start up:

“I wouldn’t recommend starting a start up for the sake of starting a start up. If you have an idea that you’d really like to develop, and you think a start up is the best way to get that idea out into the world, which I think it often is, then you can start a start up.”

Sam says that starting a start up for the sake of starting one “usually ends in heartache.”

Sam says that the expected value of joining a company that you really believe in and can contribute to is probably higher than starting a start up.

Sam suggests Dustin Moskowitz’s framework to think through this tradeoff.

Editor’s Note: Here is that framework:

Does Sam see any difference in founders who spend more time in school?

Sam does not think it makes a difference. He’s seen everything from high school dropout to PhDs. And Sam thinks that some school gave him what he needed.

Editor’s Note: I’ve long battled between “starting a startup” and going for additional schooling. For me, I’ve always felt that focusing on starting a startup was the way to go. I thought that budgeting two years and $40-$80k (simple tuition estimate) to build a business would give valuable education.

My Biggest Takeaway from this Interview

“You don’t want to be the investor investing in the thing that is just the derivative to the thing that was just really big.” Sam says that there was a long history, after Facebook, of people trying to invest in “the next Facebook.”

To Sam’s last point, this can hard to do. We can get into theory about why “autistic traits” tend to do well in the Silicon Valley / Tech world. One such theory is that these traits align with being less influenced by social pressures and social norms. It becomes easier for you to ignore trends and the like.

Sam recommends looking at:

“What has shifted in the world to enable a giant new company?”

Seems like great all around investing advice.

Sam says that there is a culture in Silicon Valley of celebrating pivoting (to a new idea). He says the attitude should be more of a culture of saying “oh, that stinks, I’m sorry to hear that.”

“Failure is still bad. It is important that it’s accepted. It’s important that it is not held against you. But it is important that it is not celebrated.”

On pivoting your startup idea:

“The only kinds of pivots that I’ve seen work are: It’s what the founder wanted to build all along anyway, or it’s something the founders discovered while they were building the first thing that didn’t work.
Unless you have one of those main pivots I just described: Shut the company down, return what you can to investors, travel the world, and discover your new idea.”

In this interview, Sam repeats again (as in other interviews): Every successful start up focuses on finding a small number of users who can’t live without your product.

I’ve reconciled this idea with the common VC model, which is that you need a substantial sized market to go after. Both are true: Make a product a small number of people can’t live without, and make sure there is room, somehow, someway, to grow it to significant size. VCs define adequate size as $100mm annual revenue within 5–7 years. Recurring revenue is better than one-time sale.

On growth vs reorganizing:

“As soon as you stop growing, you get a lot more problems.”

I have noticed this with people in general!

Sam says that there are only about 20 years of your life where you can maintain the intensity that you need as a startup CEO.

“If you believe that, you sort of have a limited number of shots on goal.”

It’s a good way to frame these things. He doesn’t suggest it has to be age 20–40. He’s saying that whenever you do start (say, age 30), that you only have 20 years before you burn out. Maybe 30 years if you’re good. Strategically it could make sense to spend some easy years thinking of what ideas you want to pursue and then go after them with full intensity once you start.

Sam gives his thoughts on hiring, and especially firing. This was my favorite part: