{"url": "https://www.youtube.com/watch?v=JAYXUgNHHc4", "page_url": "https://www.youtube.com/watch?v=JAYXUgNHHc4", "title": "Sam Altman on Start-ups, Venture Capital, and the Y Combinator 07/28/2014", "show_or_channel": "EconTalk", "date": "2014-07-28", "duration_s": 3960, "type": "podcast", "speakers": ["Sam Altman", "Russ Roberts"], "confidence": "high", "notes": "EconTalk 2014-07-28; recorded 2014-07-28; uploaded 2020", "people": ["sam-altman"], "id": "2014-07-28_econtalk-sam-altman-on-start-ups-venture-capital", "audio_duration_s": 3960.00075, "worker": "jc-w15", "transcribe_s": 54.4, "model": "large-v3", "segments": [{"start": 2.45, "end": 29.39, "text": "Welcome to EconTalk, part of the Library of Economics and Liberty. I'm your host, Russ Roberts of Stanford University's Hoover Institution. Our website is econtalk.org, where you can subscribe, comment on this podcast, and find links and other information related to today's conversation. You'll also find our archives, where you can listen to every episode we've ever done going back to 2006. Our email address is mail at econtalk.org. We'd love to hear from you."}, {"start": 31.66, "end": 60.82, "text": "Today is July 17th, 2014, and my guest is Sam Altman, president of the Y Combinator. Sam, welcome to EconTalk. Thank you for having me. So tell us a little bit about your background and how you got involved in the Y Combinator. We interviewed Paul Graham, is he the founder? Yes. Five years ago, which was about four years into the life of the Y Combinator. It's now about how old? Nine years. Nine years, and so this is in some sense an update on the Y Combinator, but it's also our chance to get to know you."}, {"start": 60.82, "end": 90.24, "text": "And so tell us actually first what the Y Combinator does and then how you got involved. So Y Combinator is a firm that funds startups. We invest a small amount of capital in a lot of startups. We funded, I think, 716 so far. And then we try to help them. And our belief is that having sort of this central organization like Y Combinator can make these startups way more likely to be successful. And in the time that we've been operating..."}, {"start": 90.24, "end": 120.1, "text": "We've been fortunate enough to be part of some really successful companies and I think help them a lot. So really what we want to do is just make a lot more startups and thus a lot more innovation happen. You said 716. That's an enormous number. That's much more than a typical venture capital firm is going to be involved in. Way more. And probably in five years from now, we'll do that many every year. And why is that a good idea? There are some network effects to this business. There's this great..."}, {"start": 120.1, "end": 148.22, "text": "Cultural value of Y Combinator of helping startups that are part of the community. And so by having this very powerful community, startups can help each other. It also means other investors and big companies are less likely to maltreat any company that's part of sort of the YC family. And there's some power there and some benefits for the founders. And the more sort of influential founders we have in the community, the more powerful the community becomes."}, {"start": 148.22, "end": 178.22, "text": "Location for the Y Combinator is a virtual thing. We just moved into a new building because we outgrew our old one and we're in Mountain View. However, we don't let the startups work in our office space. That was sort of the bad old kind of incubator. Right. That's an incubator model. The idea is that they can share some oversight. They can share the copy machine. Yeah, but it turns out that startups need to feel unique. Startups need to feel like they're kind of taking on the world and that they are special and sort of a foregone, you know, they're sort of this like chosen."}, {"start": 178.22, "end": 207.18, "text": "So the worst possible way to get that is to put everybody in one big bullpen. People feel like employees. People get distracted. They go out every night because it's always someone's birthday. They poach people from other teams. It feels like this sort of like farce of startups. So we encourage our startups to work usually in their apartment, but certainly in their own office. Sometimes maybe share an office with one or two other companies, but not to feel like part of this."}, {"start": 207.18, "end": 232.53, "text": "Incubation space. So besides money and being chosen, which confers a feeling of psychological benefit, I'm sure. What else does the organization provide for these firms that makes it unusual? Well, the main thing that we do is advise the startups. So the partners, there's 14 of us or something like that. We spend all of our time advising the startups. And we help them with whatever they need. And we see a lot of startups. We have a lot of data."}, {"start": 232.53, "end": 261.36, "text": "And we can give them advice about their product or marketing or sales or further fundraising or legal issues or partnerships, HR, anything they need help with, we can help with. And that's what we do all day. Rather than have, you know, a number of people sort of around the periphery that help occasionally, we just really get involved very intensively with these startups, be with them whenever they need about any topic, you know, email with them 24-7. That's mostly what we do. The alumni network that you also get access to."}, {"start": 261.36, "end": 290.43, "text": "It's very powerful. These 716 companies will try to do anything they can to help another company in the network. So it's nice to have somebody to hold your hand, but of course the nature of a startup is you're on your own. So how do you balance that advising role with the need for them to be making their own decisions ultimately? We specifically are not hand holders, and we tell them on the first day, on the first dinner, we are not your boss. We will not hold your hand."}, {"start": 290.43, "end": 317.57, "text": "If you want to fail, we will let you drive off that cliff. And, you know, luckily we fund a lot of startups. But we're very clear about our role. We are an investor. We're along for the ride, but the founder runs the company. And some people freak out about this. You know, there are plenty of founders that on paper would be very good, but their whole life they've been on this track. And they've had someone telling them what to do. You know, first they had professors that said turn this in, and then they had a boss at Google that said do this."}, {"start": 317.57, "end": 346.77, "text": "And now they're off and they have to figure out themselves what to do. And some people step up and rise to that occasion. And some people paralyze with fear. And some people just have no self-discipline. But it's very hard to predict who will do well in that kind of environment. How do you discipline them when they call you eight times a day and say, what do I do now? What do I do now? What do I do now? You happily tell them, you're running your own company here. Why don't you come to us where the area is where we can help you? But no one but the founder is going to make these product decisions."}, {"start": 346.77, "end": 377.47, "text": "You have to figure this out. Of the 716, how many have been phenomenally successful? Well, I would argue at a minimum that anything over $100 million valuation is phenomenally successful. There's more than 20 of those. What are some of the biggest successes? Oh, Airbnb, Stripe, Dropbox, Weebly, Optimizely, Zenefits, Teespring. Instacart, I could go on for a long time."}, {"start": 377.47, "end": 407.06, "text": "One stat that I just heard that I loved is that since we sort of really got going, say two years in, since 2007, half of the 10 plus billion dollar technology companies that have been started have gone through YC. And they would be names like? Dropbox, Airbnb, and then WhatsApp and Uber did not. But pretty good hit rate. Yeah, I'd say so. And the other 696."}, {"start": 407.06, "end": 436.77, "text": "How many of them failed? Outright failure, I don't know, maybe 100, something like that. That's all? Yeah. A lot more yet to fail. Oh, good. Oh, phew. Okay. But also a lot more yet to become, you know, like the question is sort of like, you know, 10 years from now when sort of the results are in, how many of the 716 that we funded so far will have become these huge companies? So, so far there's like three that are over a billion dollar valuation, but I expect that, you know, when all the data's in."}, {"start": 436.77, "end": 467.86, "text": "10, 15 maybe even will be over that mark, which I think proves that if you look at the hit rate out of YC companies, hit rate over a billion dollars, versus startups in general, that I think proves that there is some value to having this sort of a network and a community and finding these early stage startups and helping them. If we're able to increase the success rate 10 or 100 times. Yeah, it's hard to know, of course, because obviously some of them might have been successful without you."}, {"start": 467.86, "end": 496.99, "text": "Well, some of them might be, but I think if I had to pick the company that we have funded so far that was likely to be the biggest, I'd say Airbnb. And at the time we funded Airbnb, they were completely out of money. They were living on credit card debt. They were eating dollar store cereal that they had a lot left over of because they couldn't afford other food. No investor would fund them. And they were in the middle of what they called a thousand days of darkness."}, {"start": 496.99, "end": 525.15, "text": "Their product wasn't working. That was another problem, kind of a big one. And we funded them when no one else would, and we also sort of worked with them to figure out how to get growth and how to evolve their product. How old were they at that point? A year and a half, two years, something like that. And what had happened in their company at that point? Nothing had worked. They first had this other startup, and then they were out of money. They couldn't afford rent. So they were like, man, we really need to get some money quickly. And the idea of Airbnb was born out of the necessity of them paying their own rent."}, {"start": 525.15, "end": 553.78, "text": "They looked at their assets. They had this airbed and this extra room. Nothing else. They needed some money. So they figured out a way to find someone on the internet. And then it evolved to people sharing their space for a conference. And it evolved from there and from there and from there. But that is a company that I'm very confident would have died had it not been for YC. Yeah. So what do you think was \u2013 well, two questions. First, why did you guys think it was a good \u2013"}, {"start": 554.03, "end": 573.87, "text": "Investment. What did you see or what did you hope for that no one else did? It's sort of this piece of YC lore, but I will recount it as accurately as I can, given that it's six years ago in history. You get someone rewritten. They came in and pitched. Paul Graham, my predecessor, thought it was a terrible idea."}, {"start": 573.9, "end": 603.06, "text": "Like shockingly terrible. He's like, why would anyone want this? This is ridiculous. It's a horrible idea. I don't like staying at my friend's house. Why do I want to stay at a stranger's house? Horrible idea. And they had not yet invented this idea of renting out the whole apartment. It was really you were staying with a stranger. So they probably were on a pace not to get funded. But as we say at YC, we care much more about the founders than the idea. And the founders were clearly very good. And then they did this one thing which was exceptional, which is at the end of the interview."}, {"start": 603.06, "end": 631.58, "text": "They gave YC two boxes of cereal. Oh, that's huge. That they had made for the presidential campaign. This was the 2008 presidential campaign, Obama versus McCain. And the guys were graphic designers. They had made these Obama O's and Captain McCain crunch cereals. And they made these boxes of cereal. They printed out these things. They wrapped them around dollar store cereal. That's why they had a lot of extra cereal. And they sold them on the internet."}, {"start": 631.58, "end": 661.07, "text": "Limited edition, $500 each for $40. They made $40,000, which they used to continue to operate their startup when nothing was working. And that is the kind of relentless resourcefulness that we like to see in founders. Founders that find a way when everything looks impossible to keep going. And so they had done that. And I was like, all right, this is our kind of team. And so we decided to fund them. And then during YC, they focused entirely on New York. They used to fly back and forth between New York and Silicon Valley every week."}, {"start": 661.07, "end": 689.57, "text": "And they got it to work in New York. They evolved the model. They figured out a whole apartment rental. And by the time YC was over, I think it was $7,000 a month. Maybe it was $7,000 a week. But I believe it was they were doing $7,000 a month in gross revenue. But it was growing on this beautifully exponential curve. And they raised some money and kept going ever since. So I heard recently, I don't know if it's true, but I heard it's probably roughly true."}, {"start": 689.57, "end": 719.65, "text": "That New York City and Chicago have the same number of hotel rooms. And of course, a lot more people want to visit New York than one of it. Chicago is a fine town. I went to school there. It's lovely. There are many fine things to see there. But many more people want to go to New York. And if they really do have the same number of hotel rooms, it's part of the reason that New York is so expensive. It raises the question as to why there aren't more there. Put that to the side. But that clearly is the opportunity for Airbnb to expand."}, {"start": 719.65, "end": 746.86, "text": "Supply of rooms. All of these situations where software platforms can expand supply when there is latent demand. Uber is another great example. When there's a snowstorm, rain, etc. You know, all these people that they just want enough cabs. The cabs are too expensive, too inconvenient to give up their car. But now, like, I very rarely drive anymore because Uber is just so great. You rarely drive your own car. Yeah. You get driven. Yeah. Now, go ahead."}, {"start": 746.86, "end": 773.95, "text": "And, you know, it just unlocked this sort of like the software platform was able to sort of unlock this asset that people had and that other people wanted. And that's been great. Yeah, I was recently talking in an episode with Mike Munger. We're talking about the sharing economy or peer-to-peer economy and what its potential is. And one of the issues we talked about, since we're both interested in political economy and politics, is the regulatory response from the people's, from the push from people who've gotten entrenched."}, {"start": 773.95, "end": 802.61, "text": "Asset, their hotel or their cab or their medallion. And I'm curious, do you think Uber is going to make it? Do you think Airbnb is going to make it given that natural political response? I think they're both going to because I think consumer demands, given enough time, will overrule corrupt and transgender entities. However, that said, I think that Silicon Valley is, in general, too disrespectful of trying to work with..."}, {"start": 802.61, "end": 832.96, "text": "The rest of the world and with regulatory frameworks. Not the personality. It's not in the... It's not, but what we need... Right now, there's this sense of Silicon Valley trying to disrupt the rest of the world. Correct. So there's this hatred among medallion owners or hotels or whatever. And I predict that if unchecked, it will get a lot worse as we get into more out there industries. But what we need is we need a world where everyone,"}, {"start": 832.96, "end": 863.5, "text": "Sort of becomes more optimistic about the future and realizes that over-regulating things is not the way that we sort of like fix all of our economic and social woes. But also that Silicon Valley is not sort of viewed as this like, screw you all, we're the best and we're going to do this with or without you thing. Right, we're doing it our own way. So like, there is a balance here and no one, I think, is on the right side of this balance. But you think as I do, by the way, that..."}, {"start": 864.53, "end": 889.2, "text": "Great stuff is very hard to stop with regulation. The track record is basically nearly 100%. The great stuff, the stuff that people desperately want, will eventually always win. Even if it harms the economic livelihood of a concentrated, politically motivated group of people, evidently they can't. They can't hold out for a little while, but the history on this is very strong. That's what I said."}, {"start": 889.2, "end": 919.01, "text": "Some of my listeners had a counter example. We're going to come back to that maybe toward the end of this podcast. We'll get your thoughts. But that's exactly was my thought as well. For whatever reason, the politics just don't seem to work out for those entrenched. They can hold it off. They can slow it down, but they can't stop it. Although even if you look at how much they can slow it down, I would argue that the cycle time is compressing. Yes, it is. That's correct. In a world of everyone having a mobile phone and social media and these things just spreading among."}, {"start": 919.01, "end": 948.19, "text": "People very quickly that the amount of time these entrenched interests can hold something off is just condensed and condensed and condensed. But talking about Uber and Airbnb and when you're saying that about the compression, I was thinking about the recent story. I don't know if it's a true story, but the Uber driver who panicked when he was being chased by a taxi cab commission guy drove his client all over town at high speeds to his dismay."}, {"start": 948.19, "end": 976.98, "text": "And those kind of things are going to happen occasionally. And they're prone, these kind of sharing things, to a very bad publicity event that could discourage folks. As a funder of Airbnb, did you guys talk about that? And how much did you or do you worry about it? There were a couple of events early on in Airbnb that were bad PR. And those are going to happen. Any great platform is going to have terrible."}, {"start": 976.98, "end": 1006.94, "text": "Thank you, Hope."}, {"start": 1006.94, "end": 1036.64, "text": "And so people love to talk about it, but then they go back and they book Airbnb for their next vacation. Even after swearing, they never would again because it's an awful thing. Yeah, because it creeps them out or whatever. I think it's an age thing, by the way, because I think younger people are much more prone to be comfortable with these products. I think it's age correlated, but I think loving scandal in the press and loving others' misfortune is true for any age. No, that is. I'm talking about possible discomfort people would have in reaction to a bad PR event."}, {"start": 1036.64, "end": 1060.24, "text": "I think older folks are more like, say, well, I'm never going to do that again. And younger people will say, well, stuff happens. So my general belief on this is whatever is considered the sort of privacy and personal, whatever you want to call it, whatever the privacy norms are, when you are, say, 18, you're going to be comfortable with that for the rest of your life as you grow up."}, {"start": 1060.24, "end": 1086.54, "text": "And then older people will slowly get more comfortable with these other things. But they're never going to be the same way as the younger people who grew up that way. Right. And, you know, I think you can look at this like first with IM and then social networks and then like phase two of social networks and now things like Airbnb and stuff like that. And if you ask like my little sister, you know, if she has a problem with Airbnb, like it would be weird to her that the idea that people might object at all."}, {"start": 1086.54, "end": 1111.58, "text": "It fascinates me. Obviously, the cultural interplay between technology and then vice versa, how they work together, it fascinates me. What actually happens is technology shapes society. It's not the other way around. I agree. And so whatever is around as you're growing up."}, {"start": 1111.58, "end": 1137.18, "text": "You're like, oh, this is great. I love it. And that's my work. If it's good, yeah. The stuff that people love, they get used to, and then they internalize it, and then it drives the culture. It's correct. I don't think it's the other way around at all. In fact, the more fabulous the product is, the more you want it, the easier it is for you to realign your way of looking at the world to think, oh, yeah, this is no big deal. It's fine. Right. So you mentioned, which, of course,"}, {"start": 1137.18, "end": 1166.06, "text": "I'm going to make a bizarre analogy, but when people will ask me what course should I take, I go to such and such a university, what course should I take? I always tell them, don't take the course, take the teacher. A great teacher, it doesn't matter what they teach, it's phenomenal. And you're echoing that in a different way, a bit similar, that a great founder is worth giving money to, even if maybe this particular product is going to have to change a lot. What else do you look for? What else matters? What do you care about? Well, since you mentioned that great founder, I'll tell something that I don't think we've ever said publicly before."}, {"start": 1166.06, "end": 1197.01, "text": "We have something that we say after interviews sometimes, which is fund for the pivot. Which means that this idea is so terrible, but this founder is so good, we're going to give them money anyway. And we know this first idea is going to fail, but we want them in the YC community. That's how strong we feel about it. So the other things that we look for, I'll talk first about sort of founders, and then I'll talk about ideas. On the founder front,"}, {"start": 1197.01, "end": 1225.87, "text": "We look for founders that are determined and smart in that order. It is more important to be determined than smart. Success in startups is really a game of being willing to beat your head bloody against the wall for many years, and things like endurance and dedication really matter. We look for founders that can communicate well. That turns out to be incredibly correlated with success. Talk about why. Founders eventually become sort of the chief evangelist for the company."}, {"start": 1225.87, "end": 1252.93, "text": "And if you can't communicate with people well, in the hundreds of people every week that you have to talk to about your company, employees, press, customers, suppliers, everything, then you're really going to struggle. And so it turns out that if you can't, if you're not a good communicator, that's a big strike against you. We like teams that have known each other for a while and function together really well. We like founders that are particularly set on this idea."}, {"start": 1252.93, "end": 1282.54, "text": "Founders that say, I want to start a startup, what should I do? Yeah, I'm not sure what it is. That's really bad. We want founders that are like, I'm in love with this idea, and a startup is the best way for me to get this done. So we like that a lot. Teams that have known each other well and work well together and complement each other's skills, we like. And then on the idea side, we don't want ideas that are whatever the current fashionable thing is. So by the time everyone is already starting something in some category, it's too late."}, {"start": 1282.54, "end": 1311.89, "text": "You know, like Facebook starts in 2004. Everyone else decides to start a social network in 2006. The one of those that looks like the bad idea, Twitter, is the only one that goes on to be successful. Right. It looks like the bad idea because 140 characters. Who's going to? It's really different. Is that why it looks like the bad idea? Why does it look like the bad idea? You know, as people were, like, tweeting, like, I'm pooping. Like, I'm doing, you know, it was so inane in the early days. Yeah, not like now. No, I'm kidding. I actually like Twitter. I learn a lot and get a lot of intellectual stimulation from it."}, {"start": 1311.89, "end": 1339.95, "text": "But what most people were doing in 2006 was starting social networks that looked a lot like Facebook. Right, of course, yeah. And that was wrong. So we like ideas that are new and that are almost unpopular. A friend of mine once drew this great Venn diagram, and one circle was things that look like a good idea is a good idea, and the other circle was looks like a bad idea. And you want the things that are at this intersection. So you want things that look bad but are in fact good."}, {"start": 1339.95, "end": 1369.71, "text": "And that not a lot of other people are doing. Mark Anderson said it the same, different way, but said it similarly a few episodes back, yeah. It's really true. Because otherwise you won't make any money. The ones that look good, that are good, everybody knows about and recognizes that you're not going to make a lot of money. You know, they always end up looking a little crazy. You also want something that's the appropriate size to start with. If Airbnb, since we've been talking about them, tried to start with what they were doing today, they never would have gotten off the ground. Why? Too much to do at once. You know, too hard of a problem."}, {"start": 1369.71, "end": 1399.07, "text": "You have to get a small beachhead somewhere. That scales. So they started just in one city. They did things that didn't scale, actually, in that one city. They went door to door. They knocked on people's doors. They sent their own photographers. They went door to door and did what? Would you like to list your apartment on Airbnb? We'll make a listing for you. We'll take photographs of your place for free with a professional photographer, which turned out to be one of the other co-founders. And how many people thought that was an attractive opportunity at that point? Dozens, but that was enough. That was enough to get it going. And so they started with this very small subsection of the problem."}, {"start": 1399.07, "end": 1426.08, "text": "Stripe. They didn't say, we'll start with the East Coast and then move on. You know, Stripe. What is Stripe? They're a payments company for developers. I think for their first year and a half, they had like four customers or something. And they just worked relentlessly on this product to make it really good for these few customers. And then they were able to expand it. Another thing that we see among good founders is that they care so much about the product, almost too much."}, {"start": 1426.08, "end": 1456.62, "text": "They get obsessed with small details of the user experience. They've read Steve Jobs' autobiography by Walter Isaacson. They learned that the inside of the machine has got to be as pretty as the outside. I wonder if they're trying to emulate Steve Jobs or just if that's a shared trait among these sorts of people. I don't know which way it goes. When they make their presentations, or better yet, when you make a decision, what amount of stuff do you expect? I used to run a business."}, {"start": 1456.62, "end": 1487.09, "text": "Plan competition program at Washington University and St. Louis's Business School. And I don't think I've told this. Maybe I've told this story in InconTalk. I'm not sure. But one of the student teams had their business plan. And over the life of the company that they projected in their numbers, they made no profits. And I said, well, this is around, I don't know, 19, somewhere in the mid to late 90s. And I said, well, this is a little bit discouraging that you're not making any profit."}, {"start": 1487.09, "end": 1516.54, "text": "Students said, well, all the best companies don't make any money at first. So they viewed that as a selling point, that they weren't making any money. I explained that, well, Amazon at this point had never made any money, and that really wasn't the idea. The idea was to actually make money. So I'm curious what level of projection and detail. In other words, if after this interview was over, I said to you, by the way, Sam, I've always had this great idea, and it grabbed your attention."}, {"start": 1516.54, "end": 1545.98, "text": "Is that level of... Very little, honestly. Very little what? Detail? Yeah. So on the specific question of profits, we actually like startups that are reinvesting the money they're making into making their company better. Oh, sure. So if they don't actually have profits when we see them, that's expected. The level of detail is quite low. You know, the startups, we look at their demo, but we never read a business plan. You do not? Never, ever, ever. Why? I've never written one in my life. At the stage that we're operating at."}, {"start": 1545.98, "end": 1575.09, "text": "It's irrelevant. It's irrelevant. Like financial projections also we never look at. It's the wrong hoop to make them jump through. You'd rather make them bang their head against the wall for three days. We would rather them spend the time working on their product, talking to users. So what we care about is, have you built a product? Have you spoken to users? Can we see that? Can we talk about where it may evolve? The really good interviews end up being this sort of back and forth brainstorming session about all the things they could do. The future directions the product could go in, what they could do to get users, how they could improve it. We care about stuff like that."}, {"start": 1575.73, "end": 1603.92, "text": "But in terms of business plans or financial projections, nothing. We get an application, which is like some text but not much, a video, a one-minute video of the team. You say one minute? One-minute video introducing the team. That's 60 seconds. It's very short. A demo if they have one. That's all that we use to make our decision about whether or not we're going to interview the team. And if we interview them, we meet with them for 10 minutes and then we decide on the spot."}, {"start": 1604.3, "end": 1632.85, "text": "So it's pretty quick, which means we get it wrong some of the time. The good news is... Hang on. When you say you decide on the spot, there are many dimensions to deciding, right? So are they coming to you with a particular ask in terms of money? We have a standard funding offer. So our deal is always the same. It's $120,000 for 7% of the company. Oh, wow. And we don't really change that. Wow. Because... Nobody else does anything remotely like that. No, but if you look at our timescale, it would take 10 minutes just to negotiate an offer."}, {"start": 1632.85, "end": 1657.84, "text": "And so at the speed that we have to operate, there's no time to negotiate. So we just say this is our offer, it's the same for all companies, and that's it. But, like, again, these are very much... Does anybody say now? It's happened like once, I think, but not really. They say, well, six. And then we just say we don't negotiate, goodbye, and they say, okay, we'll take it. So, but like, you know..."}, {"start": 1658.35, "end": 1686.9, "text": "I probably shouldn't admit this. I'm on the board of a public company. I can't read a balance sheet or an income statement or anything like that. I have to have someone explain it to me every board meeting. And so I don't think any of the other partners can either. Maybe one guy can. But that would all be wasted on us. We'd much rather spend the time talking about the product and the strategy for the company because that we really understand. And hearing their reaction to those thoughts and how they respond to it. So $120,000 is a very small sum of money. It is."}, {"start": 1686.9, "end": 1715.33, "text": "It determines who walks in the door and where they go after. I mean, what's next? So they get $120,000. And then the program lasts for about three months. And that's enough for them to survive on for three months. What do you mean, the program? Y Combinator. So we work in these batch cycles. We're in the middle of one right now. And during this three-month cycle, they work very, very closely with us. They come in once a week to meet with the other companies and also to hear a dinner speaker."}, {"start": 1715.33, "end": 1743.5, "text": "We had the benchmark partners last night, Mark Zuckerberg the week before that, Peter Thiel the week before that. But they come in, and we have other events. We help them get their company into the best shape possible. At the end of the program, we have a day where they meet a lot of other later stage investors who, instead of writing $120,000 checks, write $3 million or $12 million checks. Are you part of that? No. So you don't invest in that stage? We do not."}, {"start": 1743.5, "end": 1772.51, "text": "The historical reason was we just didn't have enough capital to do that. Now we do, but there would still be a conflict problem. If we were investing in some companies at the end of our program and not others, it would really hurt the ones we didn't invest in. One of the other accelerators does this, and I think it basically is going to kill their program. We'll find out. So you said you try not to invest in the copycat or the Fed or trending thing."}, {"start": 1772.51, "end": 1797.7, "text": "So I'm going to ask you about a few trending things. When I recently announced who I was interviewing, I said I was coming up on EconTalk, Chris Blattman, who's a development economist at Columbia, Sam Altman of the Y Combinator, and Daphne Kohler of Coursera MOOCs and Artificial Intelligence. And somebody tweeted, oh no, all caps."}, {"start": 1797.7, "end": 1827.62, "text": "EconTalk's getting into this, is going to start raving about how great technology and entrepreneurs are like everything else on the internet. But I have to admit, I do kind of like technology and entrepreneurs. And one of the things that happens to me when I come out here in the summer, I live in outside Washington, D.C. I come out here for seven weeks, six, seven weeks in the summer and come to Stanford. I feel like I'm at the center of the universe. Washington is, everyone in Washington, except for me, thinks they're in the center. And there are things they are at the center in, obviously."}, {"start": 1827.62, "end": 1857.22, "text": "It's so placid there. And when I come to Stanford, the intellectual, the excitement about products and transforming concepts into reality is palpable. And then I run into startup people and venture capitalists, and they're so alive compared to, say, a lobbyist in Washington, say, just to pick a random example. And there are certain things that just..."}, {"start": 1857.22, "end": 1885.14, "text": "Again, they're almost palpable. You can almost feel them. So the things that I noticed being here, which are already the next big thing, at least it feels like they are. So there's health. There's personalized health devices that are exploding in this area where people are trying to either customize medical care or provide diagnostic stuff through iPhone, through other devices, through simpler things. So there's health. There's wearables."}, {"start": 1885.14, "end": 1913.44, "text": "I mean, the excitement over the iWatch is growing despite the fact that the iWatch seems like a really bad idea. You know, a Dick Tracy throwback device that everybody, a bunch of other people have done that don't seem to excite much excitement. Well, no one had gotten the tablet to work before the iPad. Correct. Or the, well, I was going to say the portable device. Palm did that, really. They launched that when the Newton didn't make it. But anyway, so."}, {"start": 1913.44, "end": 1941.66, "text": "Wearables, whether it's some better version of Google Glass, which doesn't seem to be moving along, but the iWatch seems to be. We'll see. And then Bitcoin, which is... So of those three things, first of all, tell me if you think there's anything to the hype. And what am I missing? What are the other things that you see dozens of? And it's like, enough. It's already the spaces. It's overfilled. Well, instead of answering what I think is overfilled, I could talk about enterprise software or..."}, {"start": 1941.66, "end": 1966.45, "text": "Like news aggregators or a whole bunch of other things. I'll try and answer what I think is really interesting that not a lot of people are paying attention to. Okay, take a chance. That's valuable information. You're just going to throw that out here? Sure, sure. But first I'll comment on those three categories. Because I do actually believe there's interesting things happening in all three of those areas, but not what most people think they are. Okay. So, on healthcare."}, {"start": 1966.74, "end": 1996.37, "text": "That is an area I think that we're seeing great development in after having been ignored for a long period of time. Most investors, interestingly enough, are still not paying a lot of attention. And probably in two years, when some of these healthcare companies really get successful, there'll be a true flood of investment into the space and it'll already be too late. So some of that's a reaction to the disappointment of the genetic space that didn't quite pan out yet and people lost money. Often, though, these ideas are good but too early."}, {"start": 1996.37, "end": 2021.79, "text": "So biotech is probably a very good idea. But in the first biotech boom, it was just too early. The costs were too high and the cycle time was too long. And I've really come to believe that those two things, low cost and low cycle time, are the most important things for startups in a given area to be successful. But now, in biotech specifically, which is an area we've been active recently, the costs and the cycle time have come down quite dramatically."}, {"start": 2021.79, "end": 2047.95, "text": "And so you're able to have a startup that for a few million dollars and in a year or something can get something really meaningful done. And that's a brand new thing. And that's hugely like a gigantic mega deal. And I think most people still fail to understand that. Also, just there's all this data that's now available on healthcare. You know, you can get your entire genome, the whole thing for $1,000 soon. You can get your like..."}, {"start": 2047.95, "end": 2074.72, "text": "You know, your microbiome, the bacteria in your gut sequence and figure out all these other things. You can like get your blood drawn and have like 800 biomarkers specific to you and know exactly how they're training over time. So there's just so much data that's available. And we have these like devices. And I would add that it's real data. Unlike these claims that, oh, we're going to figure out which drugs work the best. And, you know, to me, epidemiology is a cesspool of intellectual failure. Right."}, {"start": 2074.72, "end": 2104.56, "text": "But we'll have more data to fail on. Right. But this is real data. This is stuff that is true about you, which is different than, say, the characteristics of the whole population. And so, you know, this just huge amount of data and personalization. A company I just agreed to fund can take a piece of your tumor out, try hundreds of different drugs against that in different combinations, and say, for you, for your particular tumor and your body, here's the combination that works the best."}, {"start": 2104.56, "end": 2134.45, "text": "Rather than have a doctor like blindly try a few dozen things. Oh, let's try one, yeah. So this is like, these are huge developments. What technology is making that possible? Well, it's a bunch of things together. So one is just... I mean, like, why is that now available? Yeah, so one is just like the sort of the software revolution, which is that like these are gigantic data sets that have been expensive to process. Two is that the custom hardware has gotten much better. So like the new gene sequencers,"}, {"start": 2134.45, "end": 2164.26, "text": "On that example are just unbelievable. And the robotics of the lab are unbelievable. Yeah, that's what I've heard about is the robotics of the lab, its ability to generate the test results, which used to be a person with an eyedropper is now... So I just went to the... I'm trying to decide if I should mention this company right now. You don't have to. I guess I won't, but I just went to this one company, a company that is a synthetic biology company that has a roboticized lab I could not believe where there's probably 20 different machines working in unison in a robotic arm on a track."}, {"start": 2164.26, "end": 2195.04, "text": "And they automated this entire thing. And they can have the throughput now of thousands and thousands of humans in a lab with no mistakes 24 hours a day. And that is a huge change. And then there are also these new \u2013 but coming back to these concepts of cost and cycle time, those have come down a great deal because of things like this. Right. It's not so useful. In 20 years, I'll be able to tell you what the best drug for your tumor. Right."}, {"start": 2195.04, "end": 2223.18, "text": "Also, this thing that was huge for the internet, Amazon Web Services, has happened now for biotech. So this thing that was really important in the history of the web was this idea that you no longer had to set up your own servers and infrastructure and network equipment, but you could just throw it off to Amazon in the cloud and they would host it and serve it for you. And you could just work on your product and they would run it. And there are now these labs where you can say, hey, do this physical life science experiment for me."}, {"start": 2223.18, "end": 2253.65, "text": "Here are the parameters. Here's the experiment run. Do it. And you push them out on your computer. And just like Amazon, AWS, they do it. So all these things have changed for healthcare and biotech. That's going to be really big. So that's going to be really big. The Bitcoin. You're skipping over wearables? Oh, wearables. No, I'll do wearables next. Are you going to make a forecast for the iWatch? I think it'll do really well. So there's been a lot of hype for wearables."}, {"start": 2253.65, "end": 2282.83, "text": "They've all not been very good, but that doesn't mean they're not going to be great someday. Before the iPhone, smartphones were pretty disappointing. Before the iPad, everyone else had failed with tablets. And I am confident that there is going to be a new computing platform on our bodies somehow. And that's going to be really important. Every time in human history that there's been a new computing platform, it has been hugely important and a ton of value has been created."}, {"start": 2282.83, "end": 2310.46, "text": "They don't come along very often. Yeah, what are the breakpoints in your mind when you say a new platform? Going from mainframe to desktop. Supercomputer to desktop to laptop to phone to tablet, I would say. Yeah, and what's next? Something is next. We don't know what it is. Something is next. Well, I think two things are coming. And I think one is wearables, and I think the other is virtual reality. Within wearables, I include augmented reality. So in some ways, I'd say the future is a combination."}, {"start": 2310.46, "end": 2331.2, "text": "The two future platforms are augmented reality and virtual reality. What are those? What do you mean by augmented and virtual? Oculus Rift is virtual reality, where you put this thing and then you can go live in this computer world, but you move around and the world moves with you and it feels like you're immersed. Augmented reality is something like Google Glass, hopefully a version much better in the future, or Meta, a company YC funded."}, {"start": 2331.2, "end": 2356.53, "text": "Even an iWatch is a piece of that. This will be where I'm at the baseball game and the hologram of the highlight pops up so I can watch the play again. Or even if you have to hold your watch up and see something, but you're looking without points being out of your pocket. You're sort of looking there and seeing something and something else on your watch that helps you inform. I'm somewhat excited about the iWatch. Of course, I don't know what it's going to do or what it will be."}, {"start": 2356.53, "end": 2385.57, "text": "I have to confess, a part of me just wants to be excited because it's just fun when a new, cool product comes out. But when I talk to people, they say, well, what's the big deal? What's the big deal? You take your phone out. I know they said this before the iPhone came, and then when the iPad came, they said, what's the big deal? It's just a big iPhone. And again, new platforms, the problem, the reason it's hard to conceptualize is that the things you're going to use those platforms for don't yet exist. And thus, you're like, well, I can already see the weather on my phone. Why do I need it in my field division?"}, {"start": 2385.57, "end": 2411.62, "text": "And you don't. That's not what the really cool thing is going to be. The reason you're going to need some wearable computer is for some reason you haven't even thought about yet. And that always makes it difficult to conceptualize what's going to do well. But the history of tech pundits saying people are going to need or not need some new technology is horrible in both directions. Right, yeah. Is wearables going to be followed by embeddables? I assume we're going to be..."}, {"start": 2411.62, "end": 2440.74, "text": "You know, I have been thinking about getting an RFID chip implanted in my hand. Me too. No, actually not. But what would that, why? What is an RFID chip? It's a little device that can sort of emit a signal. So it can identify itself. So it can find you? Well, it's more like I could start my car, get into my house or whatever without having any devices. My phone is theoretically good enough for this, but there are all these reasons in practice why it doesn't quite work. Well, it's out of batteries. It's really annoying."}, {"start": 2440.74, "end": 2464.32, "text": "That's one problem that's often an issue. Of course, that chip, what's going to be powering that chip? Your blood? It's passively powered. What does that mean? So basically, as it moves through the flux of the receiving station, it generates some charge, some power, and then can send it back. Some crazy people have already done this. The current devices are pretty big. Yeah. But I just met with someone that's produced this much, much smaller one."}, {"start": 2464.32, "end": 2494.56, "text": "And I think that would be pretty cool. Put it in the fat part of your thumb, maybe? There's a number of places people can do it. Yeah, sure. Finger pads are bad because the tactile stuff is so important. I agree. But I'd say I'm in an extreme case here. Yeah, I think that's true. But that's just now. And who knows if I even will. In a way, though, I'm confident that for some definition of..."}, {"start": 2494.56, "end": 2518.98, "text": "Even if it's like a little nanorobot that gets injected into my bloodstream that does something that doesn't really look like a computer because it's this biological thing. I am very confident that at some point in my life, assuming I don't die in a car crash in the short term, that I will inject some sort of embeddable into my body. I think that's in the next three years, actually."}, {"start": 2518.98, "end": 2548.4, "text": "I think I'll even live to see that. Maybe I don't have to wait out the car crash too long. Yeah, I think I talked to a startup last summer that puts a thing the size of a grain of sand in a pill so it's cheap. And so, you know, when people take their meds and it's just a phenomenal idea that implementing it is reasonable. It's not a fantasy. You know, there are all these different ways that sort of the man-machine merge gets talked about."}, {"start": 2548.69, "end": 2577.81, "text": "There's the crazy out there stuff, but there are all these little versions like that that are already coming. Yeah, they're coming. You can't stop them. It gives some people the creeps, but it's coming. It's just a matter of time. So on the wearables, I think it will be a big new computing platform. My sense is that the risk-based stuff is much closer than the vision-based stuff, but that the future is likely to have a vision-based piece in it, although these predictions are historically difficult to make. Yeah, I agree with that. How about Bitcoin?"}, {"start": 2578.67, "end": 2607.31, "text": "Okay. I think the most interesting piece of Bitcoin is this idea of the blockchain, this idea that we can have this decentralized network agree on what the truth is and have an incentive system to make that work. The truth being you've got the money and I don't anymore. I gave it to you and now it's done. Yeah, all that. But that's not just for the money. There's a startup in this current YC batch that is doing a distributed file storage system based off of the concept of the blockchain. I've seen companies doing contracts and future revenue shares. So explain."}, {"start": 2607.47, "end": 2636.88, "text": "The blockchain, the only thing I understand about it is it's the thing that allows Bitcoin to do its magic. So give us a little background. The blockchain is basically this sort of shared ledger where transactions, which could be like, I give you money, I get money, or I have this file, I give you this file, I approve it, I still have this file. These things get entered into this public ledger, and then they get verified. And then it's not disputed. And then it is not disputed. These are just sort of in, the ink is dry, that's done. And we can look back forever at this shared ledger."}, {"start": 2636.88, "end": 2663.73, "text": "And, you know, it works just off of math and the Internet as a whole doing this, which is very powerful. You're saying it has applications on the payment systems. Yeah. So Bitcoin itself, you know, specifically, like, is Bitcoin going to win? Unfortunately, I can only say the same thing that everyone else does, which has gotten tiring, which is probably not. But if it does, it'll be a big deal. Yeah. You know, I own like."}, {"start": 2663.73, "end": 2691.12, "text": "Not that many Bitcoins, and I have them as a hedge in case it does win. But I think it still is looking unlikely. The thing that you would need to see. So if you say that currencies can be used for speculation, illegal transactions, and legal transactions, you could then look at, like, what does the dollar mostly get used for? You know, what does the RMB mostly get used for? What does Bitcoin mostly get used for? And you could look at the dollar and you could say, definitely, probably, like..."}, {"start": 2691.12, "end": 2720.96, "text": "You know, $100 bills are the sort of illegal transaction currency of choice. But that is dwarfed by all of the legal transaction stuff that happens in dollars. And there is some speculation, you know. Absolutely, but not so much. But, like, it's more of a people are, like, rushing dollars because they'll still be here or not because they think they're going to go way up in value. But they believe in sort of the authority of the government and all of its guns, saying a dollar is worth a dollar. You know, you can look at Bitcoin."}, {"start": 2720.96, "end": 2748.29, "text": "And there's a huge amount of speculation. Most people that buy Bitcoin today do it because they think they're going to get rich by holding their Bitcoin because they figured it out early. There is some illegal transaction volume, but not actually that much. You know, people buying like drugs or worse. And then there is very little legitimate transaction volume. Correct. But there's some. Very little. Is it growing?"}, {"start": 2748.29, "end": 2776.59, "text": "That's the worst part, is that if you look at most of these estimated transaction volume things, which are notoriously hard to do, it at least does not appear to be undergoing runaway growth, as everyone has been predicting. And so I think the big challenge with Bitcoin as a currency is it still has not found what it's better at than other payment systems. And that's really important. Personally, I think the most promising green shoots are around international remittance."}, {"start": 2776.59, "end": 2806.43, "text": "International. Remittance. Sending money to my family in Mexico or whatever. And that seems to maybe be picking up real steam, but it's so early and the data is so noisy, it's hard to know for sure. So basically what I think about Bitcoin is it's unbelievably interesting technology. It's one of these things that just gets lodged in my brain and won't go away. But I have been continually disappointed about the speed with which it has found real usage. But I'm sure you're also..."}, {"start": 2806.43, "end": 2829.9, "text": "Continuously cheered by the fact that it still exists, despite that failure to take off. Because I look at it, that's what I look at. I think it's amazing it exists. So it's all gravy for me. Well, it has this kind of great thing, which is that there are all of these people that are really incented for it to continue to exist, which is everyone that holds Bitcoin and all the VCs."}, {"start": 2829.9, "end": 2859.22, "text": "Who invest a lot in Bitcoin companies. One of the greatest things Bitcoin has going for it is that P. Marka made a bunch of Bitcoin investments. And thus will go on these Twitter stories. That's Mark Andreessen, for those of you who don't follow him on Twitter. Which is a very small group, evidently. We don't. Actually, that was his old email address. So I've always heard him and I've always called him P. Marka way before Twitter. But, you know, there are like all these people that really want to succeed. And hopefully, hopefully, that can give it the activation energy to get over this hump of the current state being ahead of the reality."}, {"start": 2859.22, "end": 2890.42, "text": "But I think one of the things that I think YC can do that's really important is try to fund Bitcoin companies that are actually enabling real, legitimate usage in transactions. Because that can make Bitcoin survive. And Bitcoin is good for the world, I believe. Any areas, as I pick three, that anybody would think about? Are there any areas you're thinking about that... And by the way, I'm going to ask you a preliminary question, which is, as you do something like this,"}, {"start": 2890.42, "end": 2920.53, "text": "Running the Y Combinator. Do you find yourself censoring yourself? Oh, I can't talk about that. You just mentioned, should I say the name of that company? So here I am asking you, what's the next big thing? Are you saying to yourself, well, I can't say that publicly? No, I'm definitely going to answer it. For better or for worse, I have very little filter. And I just say whatever's on my mind. And sometimes that gets me in trouble in the press, and sometimes it doesn't. But I'm just going to tell you. I'm very bad at self-censoring. It's the short version of that. So I think..."}, {"start": 2921.78, "end": 2949.89, "text": "Energy is one area I've been looking at really closely. All the clean tech stuff basically failed. But it had all these weird problems. The companies were going after markets that were way too big. They never had an answer to how they were going to be economically competitive. The answer was like, we hope the government subsidies don't dry up. Bad model. The teams were really broken. They raised way too much capital. So energy is now this kind of wasteland that no one's trying stuff in. But I believe that..."}, {"start": 2949.89, "end": 2978.03, "text": "They're in the physical world. We had an interview on fracking recently. It's unbelievable. It's been a very quiet revolution for people who don't live in Oklahoma. The innovation in fracking is remarkable. That is one of the great technology stories of the last 10 years. Yeah, and it's kind of a quiet story. And my sense is there's going to be a lot more coming that is actual lower-cost energy. And energy is the biggest market in the world. So if you can get that to work, you can have a very, very large company. Yeah."}, {"start": 2978.03, "end": 3005.39, "text": "And there's the same things about cost and cycle time. I think it really come down. So let's talk about that because I was going to ask you this at the end. I said I would. So when somebody, when I had said after a recent episode that I couldn't think of a historical example where a new technology came along that was stopped by regulation, somebody emailed me or tweeted or commented, what about nuclear power?"}, {"start": 3005.39, "end": 3034.91, "text": "I would say that's a different case. That's a case I think where most citizens, Matt could be wrong, maybe that really is a case where the entrenched utility companies fought it and under the mask of saving people from a nuclear holocaust. It's a bootlegger and Baptist example for those listeners who that example speaks to. You've got people who are altruistic versus people who are self-interested. They make this very powerful coalition. Maybe that's really what stops nuclear power in the United States. I don't think so. I think it's mainly..."}, {"start": 3034.91, "end": 3063.92, "text": "An unease on most people's parts that comes naturally of associating this with bad things. And so you told me before we started this interview that you funded some nuclear power companies, which shocks me. So tell me what's going on in that space I don't know about. So there are two nuclear energy companies in this batch. I believe that the 20th century was clearly the carbon century. And I believe the 22nd century."}, {"start": 3063.92, "end": 3092.06, "text": "is going to be the Atomic Power Century. I'm very convinced of that. It's just a question of how long it takes. That's the next one. That's not this one. Right. Okay. And this one, you know, the outcome is in doubt. This is the Red Sox Century. I mean, we've won three World Series in this century. That's the way I think about it, but that's a little bit narrow. So go ahead. Incredible performance. We're going to eventually get to the nuclear, but what's going to happen to meanwhile? So I do believe that this is not a regulatory issue."}, {"start": 3092.06, "end": 3117.58, "text": "I've actually spent a decent amount of time with the NRC. I've been out there to meet with them a number of times. And I think they want nuclear power to happen. They're mostly nuclear engineers. Nuclear is one of these rare things where the downside is so bad, it's not like some guy losing his taxi medallion, but it's like my city getting blown up. Exactly. So, okay, you're going to make energy a little cheaper. I think I'll pass. I think I'll pass. I think I'll pass. And also, like, you know..."}, {"start": 3117.58, "end": 3147.81, "text": "Nuclear power is like way safer than coal, like hundreds or thousands of times safer in terms of deaths. But when it fails, it fails spectacularly. And when you die of lung cancer, you die very slowly. And humans very badly overrate these spectacular deaths. So I think the problem with nuclear is a public perception problem, not a regulatory problem, first and foremost. Well, I think the regulatory response to that, if that changed, the regulatory response would be different."}, {"start": 3147.81, "end": 3175.39, "text": "You know, again, I know all of the physics. I know a lot about the engineering, and I know that it's totally safe. And I do not want a nuclear power plant on my block. I really don't. And it's totally irrational. But I understand why people feel that way. So I think... You say it's totally safe, but there have been problems with nuclear power plants, right? So are those problems exaggerated? Are they not... No, there have been three problems, but there's a lot of problems. Three Mile Island, Chernobyl."}, {"start": 3175.39, "end": 3199.1, "text": "Fukushima? Yeah. And some smaller ones, but those are the big ones. They weren't so bad. How many people do you think died on all of those, right? Very, very few. But again, the specter of... It's the spectacle of the... No, the specter, this sort of ominous feeling that this 800-mile radius around the planet is going to be a nuclear wasteland with no life and radiation deaths. It feels like, you know, we're doing this thing."}, {"start": 3199.1, "end": 3228.05, "text": "That is not a normal human thing. Like burning coal, everyone's comfortable with. Just like burning wood. Changing the number of transmuting elements. It's just a weird thing. You don't feel that. And also, the history of this is that nuclear power was developed as a byproduct of developing an atomic bomb. Yeah, not a good selling point. And the first nuclear power plants that most countries built"}, {"start": 3228.05, "end": 3258.46, "text": "Although advertised as energy generating facilities were really weapon development facilities. So they weren't that safe and they weren't necessarily that cheap. Any new plants will be very safe. Power will be much less relatively inexpensive. And I believe they'll be very difficult to use to create materials for atomic weapons. But like, you know, a lot of people have talked about the tech slowdown. Like why has innovation other than computers slowed down?"}, {"start": 3258.46, "end": 3288.58, "text": "Innovation in the bits world has been fantastic. Innovation in the atoms world has been somewhat very, depending on who you ask, disappointing. And sort of what changed? And a lot of people sort of say that this still don't happen. Maybe in the early 70s, we went to the moon in 1969 for the first time, and there was an incredible 20 years of science before that. Maybe 30 years. Really, let's say from the Bell Labs heyday up through then. And what..."}, {"start": 3288.58, "end": 3317.14, "text": "What changed? And my view is that it really was, in this very big way, the atomic bomb in 1945 that sort of changed the perception of technology. And then it weirdly took another 25 years for the Cold War to, like, for a long time the U.S. was like, we have this great thing, these other people don't. And then as the Cold War heated up, people were like, wow, we unleashed this technology on the world. But, like, you know, now we have to hide under our desks in schools because it might come and get us."}, {"start": 3317.14, "end": 3345.1, "text": "People got afraid of science. It was like the first time that we had something that could destroy on this huge scale. It's a Frankenstein story. It's a big Frankenstein. And I don't think we've ever recovered from that. And I think there's still this fear of science and technology that in many senses comes from that event. And so why Combinator?"}, {"start": 3345.1, "end": 3376.48, "text": "Crazily fun two nuclear power ventures. Well, there's the selfish version, which is we think they can be phenomenal investment returns. And why? Given that nobody likes it, nobody's afraid of it. New sorts of nuclear, right? Without sort of pre-announcing the companies, neither of them are traditional light water reactors. Okay. Brand new technology. Okay. But then the sort of the real reason is I have studied a lot about what I think is sort of the best use of my time and money."}, {"start": 3376.48, "end": 3406.48, "text": "And what I think will help the world the most. And I really do believe that safe, cheap, clean energy is probably the most important thing an individual could do for the future of the world. There's a few other things in the running, but certainly in the top five, top ten. What would you put as five things above it? Health. Related. Why?"}, {"start": 3408.18, "end": 3437.07, "text": "So to talk about magic bullets and great stuff, so we touched on some of them earlier. So I interviewed Eric Topol way back, and he suggested that we're going to come to a world where you'll get a two-week advance notice you're going to have a heart attack. That'd be a big thing. That'd be really a big thing for the developed world. For the underdeveloped world, not so much, but eventually for everybody. Clean water would be an enormous thing. The thing that I find interesting about energy is a lot of these problems."}, {"start": 3437.07, "end": 3465.84, "text": "And certainly the two that you've just mentioned. Dramatically cheaper energy. These problems are reduced to an energy problem. If we can get energy to be one-tenth the cost it is today, we can have all the clean water the world ever wants. Which is huge. Huge, huge. You know, if we can stop destroying the environment, I think that will have a huge long-term impact on all of our health. Maybe. I'm not as optimistic about it. I don't think that's as big a bang for the buck, but okay. A lot of the economic challenges we face, a lot of the wars that we fight,"}, {"start": 3465.84, "end": 3493.94, "text": "I think these do reduce to the cost and the availability. Okay, I'll accept that point. So, and I derailed you. You started saying energy is the next big thing, and I steered you to the nuclear. Is nuclear where we're going? It's certainly a possibility. Are you excited about something else that you want to mention? I mean, so when I say solar, I include anything that comes with one hop from fusion in the sun. And so anything that's like a photovoltaic."}, {"start": 3493.94, "end": 3523.73, "text": "Or concentrated solar power, or wind, and even biofuels. Which is sort of, you know, I count all of those things as solar power. Okay. Are they common? Yeah. They're not doing so well. And so here's the question. Like, let's say that we believe, you know, in this weird way, like, atomic energy includes anything that we can do in the nuclear plant on Earth, but also anything from the sun. It's the same fundamental physical force. It's just a transport problem in one case. So, like, let's say we can agree that the 22nd century..."}, {"start": 3523.73, "end": 3551.92, "text": "is likely to be powered by atomic energy, either terrestrial-generated or sun-generated. The thing I have no strong opinion on yet is if it's going to be 80-20 one way or the other. I mean, I think it will be 80-20 one way or the other, but I don't know which one is likely to win. There can only be one cheapest source of power, and historically, whatever that has been, whether it's the steam engine or an internal combustion engine or coal plants or whatever, has been dominant. But which of those two is going to be cheaper? I think it would be very hard to call it at this point."}, {"start": 3551.92, "end": 3579.07, "text": "So let me ask you a micro energy problem. I would say another prize is waiting out there for somebody to figure out a way for batteries to last a lot longer, not just a little bit longer. I actually have a project going on that, but I can't share anything yet. But people are working on it, obviously. I will have something to announce there in the not super distant future. Okay. But I agree with you. The energy storage problem. Big deal. So if you look at energy, the three kind of big areas I look at are..."}, {"start": 3579.07, "end": 3607.17, "text": "Energy generation, energy transmission, energy storage. And I'm doing a little bit of work at least on all three of those areas. Cool. Now, we're almost out of time. You alluded to what you call the man-machine interface. I don't know how you called it, but the merging of humans and technology. And let's close on that. We could spend another hour on it, but it's an issue we've talked about a number of times here. The two things I'm interested in."}, {"start": 3607.17, "end": 3637.47, "text": "There's sort of three things. One is singularity. Is technology going to become self-replicating or take over? I'm not worried about that. Maybe I'm wrong, but I'm not worried about that. But I'll let you talk in a sec about your views. The second is what's going to do the workforce. People are worried that there's going to be nothing left for humans, robots, and smart machines are going to be able to do everything. And the third area that seems interesting is that there are all these people saying, as you sort of alluded to,"}, {"start": 3637.47, "end": 3667.66, "text": "Look, I am in the camp that technological"}, {"start": 3667.66, "end": 3695.94, "text": "Innovation is actually going in a very impressive clip, but a lot of people don't. People like to talk about the theatrics of this man-machine merge. There's going to be this moment in time where we're separate and now we're together. And they call it the singularity or whatever, and they talk about AI. I do actually believe AI is undervalued and people should pay more attention to it. It's all one of those cycle time problems, because the early promise didn't quite pay off. So now people said..."}, {"start": 3695.94, "end": 3724.94, "text": "Forget about it, but they're making a mistake. It's important. But all of these things are, they happen gradually. So, like, you know, maybe step one is I can start keeping track of my thoughts in some software, and then I can ask that software, hey, what was the answer to this thing? And I can have, like, an augmentation in my brain around my machine. And maybe it can source, you know, maybe it can search across far more data than I could ever keep in my brain."}, {"start": 3724.94, "end": 3754.02, "text": "Maybe it could search against like all of Google servers, for example. There's this great book, this great science fiction book called The City and the Stars, which was, it's like kind of 50 or 60 years old, but it's held up in sort of, it was incredibly accurate in its predictions, I'll say. But a lot of these ideas like are finally coming true, right? And if you look 50 or 60 years ago, they sounded comically futuristic. And we're pretty far along down a lot of these paths."}, {"start": 3754.02, "end": 3782.91, "text": "Computers are augmented to humans in big ways. Humans are augmented to computers in big ways. And that's already happening. So I think in some way, we don't have the drama and spectacle of computers implanted inside of people or whatever. But when people look back in 100 years, I think we'll already be much further along this path than many people think. And I think if you look at what a human is capable of today compared to what they were capable of 30, 40, 50 years ago."}, {"start": 3782.91, "end": 3811.5, "text": "You would say it's like qualitatively different at this point. And that, you know, like, yes, this iPhone is technically like not, you know, part of my body. Pretty close. It never leaves it very far. It's pretty close. And it has a lot, like it's like we have a pretty tight partnership. Yeah, and it's kind of already a wearable, right? Because it's in one's hand, in my hand anyway, way more often than I would have thought."}, {"start": 3811.57, "end": 3841.49, "text": "Right. So, you know, the point I would make, though, is that we're already sort of much further along this path, I think, than most people think. And even though we don't have the sci-fi movie, like, things injected into our brain or cables going into our brain, which I hope we get someday, by the way. Like, everyone's obsessed with biological immortality and living forever, which I'm never that excited about because I think the risk of accidental death is still just too high. What I would like to do is, like, live forever in a computer. I would like to have some computer that can download my entire, like, brain and thoughts and all of that and memories. And that would seem like a lot."}, {"start": 3841.49, "end": 3867.78, "text": "Less error-prone and risk-prone than just never dying of cancer. But I would like to not do that either. So yeah, I think it's easy to sort of look at the day-to-day and say we're not making enough progress. But if you look at year-to-year, decade-to-decade, it's really been wild. Yeah, I think we're on the cusp of an incredible transformation, actually."}, {"start": 3867.78, "end": 3900.58, "text": "People who say that we've thought of most of the good things, I think they're out of their mind. Well, here's the thing. It always feels like we're on the cusp, right? Because it's one of these exponential curves. So at any point on that curve, when you look up, it looks vertical. But if you can zoom out and look at how far we've already come, you know, we've gotten over a lot of cusps already. Yeah, that's true. Which I think is really great. My guest today has been Sam Altman. Sam, thanks for being part of EconTalk. Thanks for having me. This is EconTalk, part of the Library of Economics and Liberty."}, {"start": 3900.58, "end": 3916.66, "text": "For more EconTalk, go to econtalk.org, where you can also comment on today's podcast and find links and readings related to today's conversation. The sound engineer for EconTalk is Rich Goyette. I'm your host, Russ Roberts. Thanks for listening. Talk to you on Monday."}]}