Founders ship faster on deal set up payroll for any country and minutes hire anyone anywhere and get visas handled fast So you stay focused on scaling deal takes care of onboarding HR IT or benefits and compliance so your team can grow without borders It's why more than 40,000 fast-growing companies trust deal to move fast visit deal calm slash mos. That's D E L Dot com slash mos Hey folks step-perman here exciting news Applications are now open for the masters of scale summit. It's happening October 20th through October 22nd in San Francisco And it is a really special event Please join our curated community of founders innovators and leaders shaping the future Expect ideas that challenge your assumptions and connections that move your business and maybe even your life forward It's an experience that can change literally everything apply now at masters of scale comm slash apply 26 That's masters of scale comm slash apply 26 Humans will never be more intelligent than AI There's gonna be two types of companies those were graded AI and those that went out of business because they weren't how do we build a future That is human centered. I run at El Kuyu B and on my podcast pioneers of AI We answered that question and so many more as an AI scientist entrepreneur and investor I know what it takes to build AI that works for everyone every week I sit down with the pioneers shaping our future and we take you behind the scenes of the AI that's transforming our lives Find pioneers of AI wherever you tune in my friend Sam Altman is a bit of a geek And he's okay with me saying that I asked to talk about my nerdy qualities.
I prove of that Yeah, I thought you did many people noted you have to do for cargo shorts Honestly, I don't think they're that ugly and I find it incredibly convenient You can like put a lot of stuff like I like to I'd still be paperbacks. I like to carry on around with me I carry like computer chargers cables. They're just like no efficient. It's somewhat your Batman utility belt.
Yeah, you just can carry a lot of stuff People don't often ask Sam directly about his cargo shorts or his geekiness for that matter Sam's the president of Y Combinator one of Silicon Valley's most prestigious startup accelerators He's incredibly respected and founders everywhere know he can make or break their fledgling company But if you really want to understand Sam you've got to understand what species of geek dumb he falls under Sam is not just your garden variety geek. He's a student of the history of geese An aspiring student aspiring student with a fascination for an entire range of of tech So one of the pieces of tech that you ended up getting was a bronze sword I'm not sure exactly which sword you're referring to turns out Sam has a whole collection of swords and battle axes And this fascination with ancient weaponry has put him in some uncomfortable situations I asked him about one and one of the things I learned from the New Yorker profile Which I had no idea because I've ever seen it is that you occasionally bring a sword in with you to interviewing entrepreneurs No, that's not true. No, either they wrote that wrong. No, I think I remember what happened So here's the story of Sam remembers it a reporter from the New Yorker had been shadowing him for weeks to work on a profile They're in Sam's home office sitting through meeting after meeting and Sam is getting bored It's the 16th meeting of the day.
I needed some energy suddenly a package arrives and Sam gets really excited I had bought this Bronze Age sword. Yes, you heard that right a Bronze Age sword. It had just arrived I'm waiting for this thing finally, you know like I did flown away from Europe and this has been great and I got it out It's stunning, perfect. And so I was like so excited I mean the first thing you do is like pick up and swing it and see like how it's weighted how it feels and this particular one It had like the mix of where it hit people's helmets a couple thousand years ago or maybe bones, right?
Too much of a nick for a bone too too deep of a neck in the middle The nicks in the metal might not have been from bones But he's swinging around this massive weapon from the Bronze Age with a journalist from the New Yorker in the room and the day isn't over yet I was on the phone with him It was kind of like a not-particularly exciting conversation and so I picked it up and I just started like while I was on the speaker phone I'm like swinging around and like fighting this pretend enemy because I was so excited. I just got this I've been waiting for so long and I didn't realize till I put it down at the end But like that was probably really dominant probably gonna make it into the profile Because reporters didn't watch you kind of just forget after someone's with you for weeks But I have never saw a sword at someone during every process. I'm glad we can finally put that rumor to rest the headline Sam Altman swing swords at young company founders can officially be put in the category fake news He's not just an ancient history geek. He's a geek history geek He collects tech artifacts from historic computers to jet engines any object that represents a breakthrough in engineering history And that's also essentially what he's searching for today a technology that's so new so unlike anything That's come before it unleashes a geyser of demand there have been consumers across all eras who've just had to have the next big thing And if the history of geek dumb has taught Sam anything It's that a product that's deeply loved by a small group of early users is a product that can scale I agree and in fact I believe it's more important to have a hundred people who love your product than a million people who just sort of like it You don't have incredible talent at every position There are fires burning Right This is Masters of scale I'm Reed Hoffman co-founder of LinkedIn investor Greylock and your host and while I'm obviously a big believer in creating things that can scale I believe it's more important to have a hundred people who love your product Than a million people who just sort of like it and this isn't always obvious many entrepreneurs fall into the trap of chasing the illusion of scale The one million users who show up to use a flash in the pan product What you actually want to do is seek out the true seed of scale which has much humbler origins many great scale stories begin with a t Colonel of die hard fans perhaps no more than a hundred strong who are almost zealous in their passion for your work They hang on to every product release.
They can't believe that they ever lived without you think of Sam when that sword arrived It sounds like that and when a user like Sam gets excited that matters not only because it drives use in loyalty But because it will drive him to tell his friends He tells two friends and they each tell two friends and they tell two other friends while that story gets big pretty fast I wanted to talk to Sam about this because he has an uncanny eye for these kernels of passionate early users Why common error has become known as a king maker in Silicon Valley? There are alumni include Airbnb drop box stripe Reddit and more than 40 companies that are valued at a hundred million dollars or more After being incubated at y-com or yc is we call him? But Sam doesn't look for Kings He looks for startups that show these early signs of love from their users And how does he spot them he pattern matches with history think about his private collection of engineering milestones He has an insatiable appetite for these objects and his collection is constantly expanding I like things that were like super important technological milestones in human history Even if they look like not really technology, so I forgot big collection of hand axes This was the longest serving by far like a million or half years piece of knowledge in history Is there any particular artifact that you're hunting for? I don't know how I'm gonna get this one But I would like an f1 engine or at least I would like a bell of an engine Yeah, you know base was got one by pulling it out of the ocean and convincing NASA to loan it to him I mean that's really a lot of work is another one or two because this is actually personally fun.
Oh Alan Kay gave me a alto Alan Kay created the first computer with a graphical interface called the alto it inspired the first Macintosh That's not the very last computer that I think is within my capability to understand everything that's happening in there But it's it's getting near the end This collection is like a wet stone Sam uses a sharp in his instincts when he's deciding which founder to admit to a Y Combinator class He looks for a groundbreaking idea that has the potential give users something they can't live without If he doesn't see it he passes but to understand how Sam spots the indispensable startups You have to know how he arrived at YC himself He wasn't predestined to become the startup kingmaker when he graduated from college. It could have gone either way I'm very ashamed to say that I had been planning to go be in internal Goldman Sachs that summer ashamed is a pretty strong word and a distinctly Silicon Valley reaction After all, it's tougher to get a job at Goldman Sachs than it is to get into Harvard Only about 3% of applicants get hired it would make his family proud and his friends envious He could live comfortably ever after or he could take the far less comfortable path one better suited My cargo shirt wearing bronze aid sword-wielding friend it began with a little mobile app that Sam and his friends developed while studying at Stanford It was called looped and it let you share your location with friends It started as just a project Did we worked on sort of like after class in the night we had worked on it during a spring quarter and it was really fun Fun isn't exactly a sound business plan and what makes this idea even shick here is that it's 2005 Two years before the first iPhone was even invented the word App Store had not entered into our vocabulary So the odds of making money with this mobile app were incredibly low and remember the odds of making money at Goldman Sachs are a hundred percent The odds were stacked against Sam and his startup and everyone could see it If you said you were working on startup people you sort of laughed at you in a nice way But not everyone was laughing a new community was just forming one that was deadly serious about startups and fun It was called y-combinator and an immediately called out to Sam for starters It's founder was a now legendary computer scientist and entrepreneur Paul Graham We all kind of knew who Paul Graham was we had followed him online and he posted this thing saying like hey Not excited about your summer job like come back on your project and you make a startup and you know that seemed like it would be more fun than you know That's a maker fun Actually can make business sense if you love what you're doing and other people do too and Paul was determined to prove that young innovators with deep passions Could find success if they were willing to take a gamble But this was a controversial idea outside of y-combinator Paul Graham was considered a sort of pied Piper for young entrepreneurs Leading them down the road to ruin he wrote an essay about this in 2007 which you can find on masters of scale calm Traditionally investors would fund companies in stages show me growth and I'll show you the money Step-by-step you had to show user growth hypothesize how much they'd spend on your product and lay out in painfully minute detail How much money you'll need and how much money you'll make it's classic business one-on-one thinking and it can be exasperating for a founder I Experienced myself when I was raising a series a round for LinkedIn right around the time that Sam was a college student I was looking for investors at the time potential series a investors wanted to see a business model that showed how LinkedIn would get to profitability I told potential investors that we weren't gonna generate any revenue until after the next round of financing and that therefore it shouldn't matter to them They insisted anyway, so the team and I generated a financial model that included revenue sources I don't even remember what we put in it rather than wasting weeks on it We simply set aside a single evening drink a couple glasses of wine and put together the model I might have even been a little miffed at having a waste even that single evening, but it was pretty good wine So wasn't a total waste Contrast that with an investor like Paul Graham He says forget the spreadsheets quit speculating just start building on a shoestring budget and build something a teeny cohort of users will love Love is all you need Some of you might be rolling your eyes at this idea love is all you need So I had to share a story that might soften your cynicism It comes from Dominique and Sal the famed New York chef who invented a pastry that became a global sensation You may have heard of it. It's called the cronut It's part donut and part croissant ever since the cronut became the hottest thing since sliced bread people have been mistaking Dominique for a master publicity a sort of PT Barnum of the baking world So our producers visited Dominique's Manhattan bakery and asked how he engineers these publicity coups Dominique's answer he doesn't There was no marketing there was a team of like literally like four employees and myself and when people approached me and asked me what My marketing strategy was and it was by budget to launch a company like this. I'm like you guys don't understand It's didn't happen this way and we're small small bakery a tiny baker neighborhood bakery and a street of Soho It's you know it happened naturally organically Here's Dominique's memory of how the cronut scaled naturally every day he bakes a fresh batch of croissant and studies them like a scientist Actually look at it every day and get in half and I look at what we call the honeycomb Which is the structure created by the fermentation of the dough So all these little like air pockets that are inside the fermentation you have to smell it You know different type of fermentation the crust the volume the flakiness everything is so so important and it's it's alive This obsession with the fermentation the flakiness the technical details reminds me of all the great product designers I know Dominique was singular in his focus on getting his question right then one day Dominique staff challenged him to make a donut instead And I don't do donuts I told him that I have no recipe for the nuts since I'm French But I definitely can come up with something new something special 100 taste test later The cronut was born a food blogger humer when arrives snaps a photo and shared the invention with his fans on Grub Street the massive Response stunned even the blogger and he called me the same afternoon Letting me know that he had an increase of traffic of 300% on his website and over 140,000 link And he told me to be ready to be visited more I had no idea what I was talking about I was happy for him I told him I'm happy for you I need to go sleep Dominique and his staff were facing a situation I'm all too familiar with It's the inevitable fallout on the morning after the overnight success and next day We had over 100 people outside by the third day We had over 150 people waiting outside and it was just like overwhelming 441 and it was better and you know like this doesn't happen But it happened to us it was just overwhelming for everyone the staff or one to quit it was too much The rest is pastry history and if Dominique staff initially wanted to quit they soon learned to cultivate the unexpected outpouring of love His staff treats the loyal customers lined up outside like invited guests serving them hot chocolate before the bakery opened each day I think it's important for any any chef to be in touch with the guests the customers to see them to listen to them To wish them a happy holidays and thank them for keeping coming to our shop I think it's important we have a lot of loyal customers a lot of people from neighborhood and At the end of the day The bakery is a local business is a neighborhood business and it's not live without the people in neighborhood If you've never waited in line to enter a popular New York store like Supreme for example You may not realize just how radical these small acts of kindness are and I suspect that had no small impact on the corona Success, but if you think Dominique now sits around trying to concoct the next novelty goody think again I don't think there's a need or a desire for me to try to recreate something like the corona I don't think I can I don't think I want I am to create Pastries that that talk to people and of course I want them to be popular of course I want them to be successful of course I want people to appreciate it But it's not you know, I'm not trying to be gimmicky or trying to do something that doesn't mean anything to me I'm still trying to like translate my ideas through pastries You cannot force it, you know, even with all the money of the world Like you cannot recreate the corona you if like you can hire, you know the biggest team like the smallest people you cannot Recruit something like the corona You can apply the same argument to just about any globally successful product all the money and all the markings Having the world cannot sustain its growth in the long run You need more than your customers attention You need to unflagging devotion and this poses an almost zen-like riddle for entrepreneurs The first step to scale is to renounce your desire to scale focus on those happy few This is a concept that every artisanal maker a small batch goods grasps instinctively scale entrepreneurs not so much But Paul Graham was determined to prove the same fundamental truths applied to entrepreneurs with global ambitions And to prove his point he offered a laughably small sum of seed money to those early Y Combinator entrepreneurs like Sam Each one got six thousand dollars plus free dinners.
That's it off you go. Sam was intrigued So we applied to YC and flew out and interviewed and got funded We actually first come in ever funded by YC and managed to go So Sam entered the first class of entrepreneurs at Y Combinator And they were essentially the guinea pigs who were meant to validate Paul Graham's theory of scale and Sam offered quite the validation After graduating from YC his company looped struck deals with Sprint Verizon Blackberry and AT&T With the advent of the iPhone they were positioned for growth and became one of the first offerings in the iPhone App Store Here's Sam sharing the stage with Steve Jobs in 2008 We are incredibly psyched about looped on the iPhone location plus a contact list and information about cool places means You never have to eat lunch alone again or at a bad place and we think that's really cool We really do you can use loop with your friends on most other careers In 2012 looped was acquired by Green Dot Corporation for more than 43 million dollars We got acquired and I was trying to figure out what I went to next Sam was 26 years old And I thought I was going to partly take a mid-career sabbatical race cars, fire planes, travel the world all that kind of stuff When he wasn't on the racetrack or in the air Sam tried his hand at the venture capital gate He had an eye for it, investing early in companies with real potential, but it just wasn't his idea of fun I liked running a company. I did not like being on the sidelines I didn't get the adrenaline rush I get out of being in the trenches of running a company Which I think is something that a lot of founders miss when they start investing Sam missed being in the trenches He felt adrift and Paul Graham Sam's mentor could see it And I was thinking about things I wanted to do in Paul Graham That sort of jokingly said a number of times over the years that I'm retiring used to go I see it Turns out Paul Graham was only half-joking in 2014 He asked Sam in all seriousness to take over Y Combinator Sam accepted the offer and became president of Y Combinator at the age of 28 Despite his youth, he was the perfect fit YC isn't just an investment firm It's an incubator for founders who want to reshape the future Think of Y Combinator as an extension of his Bronze Age storage collection Only this time he's collecting the people who can make the swords that will change the world So where does he begin? He begins with a simple mantra He repeats it to every founder that comes through YC's doors Love is better than like The very best founders I know are brilliant at building systems They connect teams, they remove bottlenecks, and they eliminate single points of failure And yet, when it comes to their own wealth, most are running a disconnected stack A tax accountant here and a state attorney there, a wealth manager who doesn't talk to either one of them Creative planning was built to fix exactly that One integrated team of tax professionals, estate planners, investment specialists, all coordinated By a dedicated wealth manager who sees your full financial picture and keeps every piece working together Proactive tax efficiency, estate strategy, investments all under one roof Creative planning where wealth works together Learn more at creativeplanning.com slash masters of scale Listen to rapid response on masters of scale, you may be missing half the show Because every Friday we release a second rapid response exclusively in the rapid response feed The guests and topics are just as compelling and timely From Ford's CEO to NASA's administrator to the lessons from the Devil Wears Prada It takes about 10 seconds to find just search rapid response wherever you listen to podcasts And hit follow to make sure you never miss an episode I hope to see you there So love is much better than like Why this central mantra within YC and all of the startups that are coming through Well, I think there's a few different reasons for that One is that it objectively seems to be true If you look at the companies that have gone on to become super important and valuable And shape the world in the big way They tend to have fairly fanatical early users If you think about how you first came across Facebook or Google It's very likely because a friend told you how great it was It is indeed objectively true that these hit products spread by word of mouth On the other hand, I can point to a whole graveyard of startups that started out with passionate users And then the passion faded A startup withered away and died of loneliness It's heartbreaking So passion is a great indicator of success But it leads to a vital question that every founder must ask a user How deep is your love?
Sam has a clever way to plumb the depths of their affection When the first iPhone came to market Everyone has a gog at its new features A touchscreen, apps, music on your phone And don't forget about me But Sam wasn't just studying the iPhone's features He was studying its users intently So one of the things that was obvious When people got iPhones Even though like You know, only a few million of the first iPhones sold in this people had them used them every day And loved them and it became like their most precious item I remember shortly after the iPhone came out I was in a developing world country It was really quite poor And people had nothing except they all had a smartphone And once they had one like You read these statistics and people need to do some lightweight journalism But like would you rather give up your smartphone or X And it doesn't really matter what X is there Keep the smartphone And so I think you could have predicted with a lot of certainty Many people did That this was going to be a large market This is a rather extreme case of attachment to a product The odds you'll create a product that is so addictive Your fans will give up all their other worldly possessions for it Are pretty much slimmed and un But the extremity of that thought experiment is clarifying You want to make your product as indispensable as humanly possible That's your primary objective Before you short up your business plan Or plan your PR campaign Or any other steps along the road to world domination Your first step must be make yourself indispensable But the truth is you're unlikely to build a product that makes a user say I'd give up my left arm for this So short of that ideal Sam sets a more modest objective for founders Focus on love not likes Sam can't stress this enough That's really important because Startups once they get big enough can only grow by word of mouth All they grow up hacking eventually stops working If you're going to keep going exponentially at some point It is probably going to be because people tell you You got to use this product with me or you got to try this it's so great You've got to try this There's a hidden power to that simple phrase Which Y Combinator has elevated to an almost mythic status It's like open sesame Open sesame Once invoked Y Combinator graduates react as if a wall had opened before their eyes And a secret pathway to scale is laid at their feet They know if they keep hearing the words You've got to try this It will propel them to the far off future The years that their valuation is based on And that seems to be really important Because these startups So much of the value is in the far out years And in those years it depends on continuing to grow At these fantastic rates By fantastic rates He needs exponential rates The sort of viral growth that can only occur when that first cohort of users says You've got to try this to two friends each And they say You've got to try this to two friends And so on and so on This can scale to millions of users in a matter of months But make no mistake It's exceedingly difficult to kick off this chain reaction Unless you're willing to hone in on a teeny cohort of users You should almost have a willful blindness to growth And a monomaniacal focus on making just a few people happy You win people over one person at a time That's Aubrey Pagano Co-founder and CEO of Bow and Drape A fashion line that lets customers personalize the design and fit of any piece of clothing And she had to fight for that early cult following Get handing out combat Especially when you're under resource Even when you are well-re sourced actually It doesn't matter There's no cutting quarters around that You can't like Throw no money at that problem You can't like Trick people into like Loving your brand You just have to win that over That's how we grew the brand We grew the brand through word of mouth We didn't even start marketing until last year Mind you They've been in business for five years And by their third year, Bow and Drape had grown revenue by over 300% from their first It was all word about And I really do think that that is Such an important part to early stuff And if your users really can't stop raving about your product You can defer marketing indefinitely Even if that product is underwear Huh? No matter what kind you wear No matter what gender you are I'm going to bet you've heard of them Spanx has been the name in undergarments Since it's launched in 2000 Sarah Blakely, the founding CEO, has come a long way Since she was shipping packages from her home in Atlanta One thing she never updated? Her marketing plan I ran Spanx out of my apartment for two and a half years With a handful of people before we moved out of my apartment You know, it's been like that I mean, I had $5,000 and I've been self-funded from the start So I didn't ever raise a bunch of money I didn't even know how to do that Or that that was even really an option You know, Spanx has never advertised until this year And we're 16 years old So this has been a word of mouth brand And Sarah didn't spread the word about Spanx on her own She recruited an all volunteer sales force She found a way to enlist department store clerks To her cause By setting up booths in quiet store corners Sarah's enthusiasm was infectious Not just the shoppers, but to anyone within your shot So for the next two years, I stood in department stores For literally eight hours a day And in the entrance of Neiman's or where Cosmetics were Where there was so much more foot traffic I set up a little table and I had my own display table And I brought my own television with a VCR in it And put the Oprah tape in there and some other news clips that had happened to me And I was like a one woman show What I was doing is I was creating this very loyal sales force That wasn't on my payroll Because I would win over all of the associates that every Neiman sats and works from That sold the product By being there and explaining it and giving away free product to them I would do morning rallies for the store before the store opened So Sarah targeted users who would bring in more users She honed in on heavy hitters People who already had the platform to do her marketing for her The power of word of mouth is multiplied exponentially If you can recruit anyone that comes with a megaphone Whether it's a salesperson in a department store or Oprah Winfrey But what comes next? After you've gathered new users around, how do you know they'll stick around?
At a certain point, as you're zipping up a growth curve You may think these users are here to stay Retention is strong, growth is ticking upward And the only thing standing between you and global domination Is a slick sales and marketing campaign You'll try to hack your way to growth through targeted ad campaigns and promotional offers And you'll have all the appearances of growth But Sam has a warning for you Scaling falls into two categories The easy kind and the hard kind And you may not know you're doing the hard kind of scaling Until it's too late The hard kind of lit scaling is where you try to start scaling up before the product is really great And then most of your effort in scaling is to generate demand So I think the number one most important insight about how to split scale Is that the good kind of split scaling is when you are Not having to generate demand as you go But that you first got the product right So the easy kind of scaling is when you first got the product right When you've created something users love and instinctively want to share This kind of scaling happens organically As users bring in other users The hard kind of scaling is when you only get the product half right When you've created something users kind of like And which they'll use But not something so good they'll stick with it And certainly not so good that they think to share it And that's when we see again and again People don't stick with products that they don't love And so it is easy to get a lot of people to try something with a clever growth hack The value of those users is often very low They use it for a little while You engage them with some trick And they don't stick around And that is not how you build these enduring valuable companies You need things that people want to come back to and use a lot And I think it's much easier to figure that out early When you can still make a lot of changes to the product Everyone's like, well, I'm just gonna get a lot of people to like me And then I'll figure out how to make them love it later In practice, that's really rare I would challenge you to think of an example Challenge accepted I actually founded one of these companies LinkedIn, one rather striking exception to Sam's rule We had a passionate set of early users But these were not the users that helped us get to scale We were grateful, we appreciated their support But what they ultimately wanted from us was something that no one could deliver I explained this to Sam in our interview And so LinkedIn, for example, is one Because of our early users who loved us Called Open Networkers, they actually went by a term They put in their headline called Lions LinkedIn Open Networkers They loved us because they wanted us to be something different than what we were They wanted a whole world to say Everyone should be able to connect to Bill Gates And have him connect back And it's unrealistic about Bill's time and commitments And things that he needs to be doing And so we are not an open network And it took us to get to scale When other people started loving us The kind of people that we were targeting Because the thing I can't really agree with Is say, well, if you don't have millions of people loving you You don't have a fundamental company But the question is, the initial people we had loving us And LinkedIn were not the people that we wanted to love us when we were, you know, hundreds of millions So we've seen a version of this pattern a bunch of times Which is, if you have a network effect consumer business You have this close start problem Exactly If scaling your product is ultimately dependent on having a large group of users Then you have a chicken and egg dilemma The truly magical features we envisioned Simply couldn't come to fruition Until we had a dense network of users We wanted to create such a vast reservoir of talent That a recruiter could say, I'm looking for an accountant Based in Biloxi, Mississippi Who has a humanities degree Plus 10 years of work experience And the capabilities to lead team building events And I wouldn't be surprised if you could find that dream candidate in just one click But it took years of clever hacks and grunt work To enable that sort of high definition headhunting And those valuable users just weren't going to love us straight out of the gate So how do you get there? You work in batches Adding one narrow group of users at a time Sam explains You've got to find someone or some people that are going to use you a lot in the early days And that may be a small, you know, narrow but deep wedge And then you expand it later And this is fine We see this all the time with companies where they start with some Group of users that is not a particularly lucrative market Maybe not the long term users they want But people for whatever reason can use the product a lot and get a lot of value out of it And use that as a bootstrap to create value for everybody else Another example is Facebook When Facebook first launched, it was only the students of a few colleges It slowly expanded from Harvard to Columbia to Stanford and beyond But the ultimate way to scale was to go far beyond college students Sam explains In fact, Facebook, it turns out that their most profitable market Is not students at, you know, the 10 most elite colleges But those are people with a lot of time when they're friends, they really care about their social lives They all had internet access and time when, you know, not everybody at that age did And so it turned out to be a really good primer That's right, sometimes you can't get to the millions of people who love you Until you're actually at a critical mass Just like Facebook, LinkedIn had to find its initial users from somewhere The next generation of truly-level ideas will look nothing like the previous generation If you take a backward glance at Y Combinator's most stellar graduates, Airbnb, Dropbox, Stripe You'll think they've mastered the app economy And the assumption is that Y Combinator should stick to what they know Sam begs the different YC was mostly funny software companies But I had a lot of conviction that we could apply the same thing that made YC work so well for software companies The companies in a lot of the areas that I care about AI, static biology, energy This may sound like a radical leap outside of Sam's area of expertise After all, you can't build a supersonic jet on a shoestring budget You can't ask a user to hop into an experimental self-driving car And hope they come back in one piece to give you their feedback And when you think about the differences between apps and what is often called hard tech You might be tempted to ask Sam, what on earth are you doing? In fact, Sam hears this a lot But the time it was like, this is a really dumb thing One of the things is funny as a side note And just as a note to anyone that tries to do anything Where you take a company in a different direction or scale it is That it is always funny to sort of read the articles from the same journalists That when you say you're gonna do those things say like Sam is crazy, completely unqualified, this is not gonna work Why is he gonna die? Like going after hard tech companies is so stupid But to Sam, this leap into the unknown is completely consistent with Y Combinator's mantra Focus on love, not likes To him, if a company is inventing something unheard of You can ensure users will love it right from the proof of concept Who wouldn't love the invention of a supersonic jet Or a self-driving car to battle through rush hour while you flip through a magazine Or fusion energy plants that simultaneously make energy cheap and solve climate change One company that you and I were talking about recently is this company called Boom They're making a supersonic airplane And they really have laid out people's imagination And people really want it, people really love the idea Of going to Japan in a few hours since that of 10 hours from San Francisco Boom technology, the supersonic jet company, graduated from Y Combinator in 2016 One year later, they raised $51 million in venture capital Here's the magic of tackling the seemingly insoluble engineering problems People fall in love with your idea alone Take for instance, Boom It is harder for sure to make a Mach 2.2 airplane than a Mach 0.95 airplane But it is easier in the sense that people care People want to be part of it, people are excited to pay attention CEOs of large airlines decide to come visit you That's the meaning we see again and again That so-called hard tech?
Sam says it's easy This is why I tell people in many ways It is easier to start a hard company than an easy company So ironically, it may be harder to start an easy company And easier to start a hard company They're just so lovable And now Sam notes with rye amusement that in a span of 14 months Press coverage flipped from scornful to glowing You know, this is great, like Sam is a genius It is like predestining to take over YC You know, it's ridiculous that YC is doing any software companies all I think you have to ignore all of that and just say like, I love the conviction We're going to try this thing And most people will tell you it's not going to work If it's something new, most people are afraid of things that are new And you just do it, it's probably not that risky Probably won't kill the company And probably undervalue if everyone else says it's stupid So we were able to do that And the first thing was expand YC into all these different directions I think the greatest companies are created on the bleeding edge of what people are working on And when you think about it, this brings Sam one step closer to expanding his collection of engineering milestones It's only at the bleeding edge of innovation You can discover a product that makes you say Because I just got this, I've been waiting for so long I'm Reid Hoffman, thank you for listening Master's of scale is a weight-wet original Our executive producers are June Cohen and Darren Triff Our producers are Dan Kettney, Chris McLeod, Natalie Chang, Jenny Cataldo, and Ben Manila Our supervising producer is Jay Punjabi Original music and sound design is by the Holiday Brothers Mixing and mastering by Brian Pugh Special thanks to Chris Shea, Elisa Schreiber, David Sanford, Saida Sepieba, and Stephanie Kent Visit MastersofScale.com to find the transcript for this episode