[0:00:00] Yeah, so as Jordan was saying, I got these three really awesome questions off of Twitter. I think you might have written them, actually. You really wanted to be asked, are we in a bubble? Should the Fed have hiked interest rates? And when is the Twitter board finally going to make a decision? Can I pass on all three questions? No, I'm really like, I think like many other people, very tired of the bubble question. I think it's people like really want to believe for some reason that like...
[0:00:27] These tech companies, or some of them aren't going to be great. The way it works, a lot of companies will fail. Some will be phenomenally successful. There will be another Google or Facebook that will emerge. And that is how innovation gets driven forward. And people that aren't doing that talk about whether or not it's a bubble. People that are doing that sort of create the future. Yeah, I mean, I definitely think there are examples from through 2000 when Google established itself as a leader, and then 2008 and 2009 when Uber and Airbnb were
[0:00:57] Thank you so much.
[0:01:25] I think five months had already raised $227 million. And then I kind of raised, I was like, well, I'm doing the math of how many housing units we're producing per year, which is about, you know, about between four and 5,000. And I'm like, how can all these companies even end up in San Francisco? And it seems like things are breaking. Yeah, look, I think, well, first of all, I mean, I sort of appreciate the implicit.
[0:01:50] Compliment about the size and impact of YC, but there are 7 million people that live in the Bay Area. The companies that we fund have hired people in tens of thousands total. So I don't think YC is yet breaking tech, or yet breaking the infrastructure of the Bay Area. But it would be cool if we actually got big enough someday where we had to think about that. But I do think that we have this huge problem. Housing prices have gotten completely untenable in San Francisco.
[0:02:19] Even for tech workers and certainly for non-tech workers. My personal belief about the only way that gets solved, one is it gets so untenable, people decide they want to go elsewhere, out of the Bay Area. Which has been happening for several decades. Which is beginning to happen. Or San Francisco builds a lot more housing units. I think there are like 380,000 or 390,000 housing units in San Francisco. And this speed at which the government has allowed to build more has been totally...
[0:02:49] Mismatch with the needs of the residents here. And until the supply side of this equation gets fixed, there's going to be continued pressure on the city in a very uncomfortable way. And it's not the right thing for people that already live here. It's not the right thing for new people that want to make this the greatest city in the world. I think it is, yeah, it's like a farce of the political process. Yeah, I mean, to me, it feels like there's this diverging rate of speed, which is like the speed at which...
[0:03:18] This industry is able to produce companies and jobs is just ramping up and even accelerating so much faster than we're able to scale physical infrastructure. And to some extent, that will always be an inherent problem, but it seems like it's widening. I think that's giving the city too much of a pass. Yeah, look, building buildings takes longer than starting companies, but it does not take the years or decades that it takes right now.
[0:03:48] If you want to build a lot of housing in the city, which will be good, I think, for everyone in the city. I know that some people are resistant to change. I myself wish things could stay the way they are here, but that's just not going to happen. We either live in the future or we try to cling on to the past. Having now watched people that are trying to get the city to a future with the density that we need to sort of support the number of people currently working here and already living here, it's just unbelievably broken. And the problem is homeowners.
[0:04:16] Who are sort of like happy watching the price of their houses continue to go up and up and up. Those are disproportionately the people that vote. Yeah. And the people that are lower income or, you know, renting or whatever, they don't vote as much. And so we have this like continual like let's not build any more units in San Francisco. Yeah. It feels like there's actually two groups. It feels like there's...
[0:04:38] Homeowners who have no particular incentive for things to change. And then there's a larger group of people of working and middle class residents throughout the Bay Area who simply want the right and ability to stay here as this community changes. A question for you, though. Do you ever think about encouraging a portion or part of the YC batch to just think about
[0:05:00] Are you going to a different city in the United States that maybe has more space or capacity? Well, we do. And with our new YC fellowship, we allow people to be anywhere in the world during that program. And we also allow people to be anywhere they want after the core YC program finishes. However, the great majority of people want to be in the Bay Area. I still think there are other places that are pretty good for starting a startup. I still think the Bay Area has advantages that exist nowhere else in the world.
[0:05:30] And we, as Bay Area residents, we should be excited about this. This is great. This is an incredible opportunity for everyone in the Bay Area. However, the strains on the environment, especially on the housing environment, really disproportionately favor rich people. And we have to fix that. And I believe the only way to fix that is to build more units so that new people coming to the area can go there and not displace people in their current houses.
[0:06:01] I want to ask you another question about another area that you've been very vocal about. You've talked about the risks of AI and the risks of artificial intelligence. It seems like there's a huge disagreement over whether unfriendly AI is going to lead us to an AIpocalypse. I've talked about the risks. I've also talked about the benefits. The way I look at this is it will happen. I have no idea if it happens in 10 or 50 years. I'd be surprised if it took all the way to 100.
[0:06:30] In a sense, this is not just creating new technology, this is creating a new life form. I think that's just really high beta. It could be great, but I think we should be working to make sure it's great and not bad. If you could have started working on global warming 50 years ago, it didn't seem that threatening at the time, but it would have been nice to bend the curve then, not trying to deal with a runaway situation later.
[0:07:02] I don't believe there are any circuits in my brain that will never be emulatable in a computer. So I believe strong AI will eventually happen. I believe that whatever we create there, it's sort of like our descendants or something. But it is, I think, a new species and probably a more powerful one than us. And we should just think about how we make that happen in the best way for humans. Do you have any specific doable...
[0:07:31] Do you have recommendations for either investors or founders in AI, like a code of ethics or something that you would recommend? You know, I think it's still so far away and so unknown that we're not at a point where we can sort of make any specific technical recommendations. I think that's still far away. But I think that what you can do is encourage some researchers to think about the sort of implications on humanity as a whole. This is going to be a far, far bigger deal than housing in San Francisco.
[0:07:59] And so I think starting to think about it now would be really good. We are going to do some new stuff here. We're not quite ready to talk about it, but it's really important. Another thing I wanted to ask you about was looking at the way that technological innovation is being organized. There's a bunch of fascinating simultaneous experiments being run with Google reorganizing into Alphabet. And I think about Ronald Coase and the nature of the firm and his theories about
[0:08:29] Back from the 1930s about why people organize in firms because bargaining costs and information costs and the expense that you need to do contracts makes it easier to be part of a large hierarchical firm. And yet YC has kind of a different, very horizontal and disaggregated model. Yeah, I think that Alphabet is now probably the most similar organization to YC in the world. Obviously a much different scale.
[0:08:56] The idea that you can have this thing that is like a meta company where you have like this one sort of organizing platform on which lots of other independent but collaborative companies exist. If I had to guess what the future of like the companies that sort of have the most impact on the world look like, it's some version of that. People always over underestimate how much that sort of
[0:09:25] Being stuck in a large hierarchy with lots of politics causes problems and slows you down. But they also underestimate the advantages of being aligned with this larger group. So I think that there's this new kind of organization of which YC is one, Alphabet is one, where Metacompany, I think, is still the best word for it. But you have this loosely coupled set of independent entities.
[0:09:53] That work together. The YC companies, one of the things that makes YC work is the YC companies work so hard to help each other. And we build shared resources for these companies. We have events for them. We have these online forums. We have custom software where they can find what other YC company they can work with or other YC company has a connection they need. And people have this very tight identity with YC. And they try to work together. But they're independent. They can do their own thing.
[0:10:22] Whatever this kind of entity is going to evolve into, you can get very quick and very deep innovation while still having the loose association with this organization that will help you. You've been running YC for a year? A year and a half. A year and a half. What do you want it to look like in five years?
[0:10:51] Look, we view our job as enabling as much innovation as we can. I think that the world faces all these challenges with slowing economic growth. We're sort of like out of new land and out of obvious other easy ways to grow. And innovation is sort of the only thing that will save us from here. And to the degree that we can help with that, to the degree we can enable lots of innovation, that is a powerful thing. That's not just funding companies.
[0:11:21] Funding companies is often the best way to create innovation, but it's not the only way. And we'll do some other things to fund innovation in other ways. On the company side, we recently announced the YC Fellowship. We said then that at some point we wanted to scale this up to 1,000 companies a year. When I think about, let's say you have a pool of $120 million of capital. One thing you could do with that is establish an SPV.
[0:11:48] And spend months organizing this complicated thing and negotiate an investment into Uber at $51 billion. And you will make money on that. You will make a lot of money. So it's not a bad thing to do. And that is what maybe most people in Silicon Valley that are sort of investors are trying to do. But the other thing you could do with that is you could take that and you could invest in 10,000 companies with promising unknown entrepreneurs that cannot afford the $12,000 it takes to get started.
[0:12:15] We look at those two things and we say, wow, that second option sounds like it is a lot more likely to impact the world. If we didn't do that, it would be a lot worse for the world than if we didn't invest $120 million in one of these crazy SPVs. We trust that if we enable a lot of innovation, we will eventually get paid for it and we're willing to work hard to do that. Obviously, funding 10,000 companies is a lot harder than
[0:12:46] Putting money into the Uber series. Why? So, yeah, that's what we want to do. You've been vocal about policies like universal basic income. I'm wondering what should the leaders of this industry be taking a really public stand on that's not necessarily tech per se? Well, the reason that I think a basic income is worth a debate and the other...
[0:13:16] And more generally the issues that I think tech leaders need to think about. I think there is going to be massive job destruction in the next 10 or 20 years. I think you're already sort of seeing that by technology. I think technological revolutions increase wealth, but they also concentrate it. And so I don't have a particular problem with this. And I don't value hard work for its own sake.
[0:13:45] I think that's sort of this puritanical idea I just don't care about. I think most people are like, oh, everyone needs to work hard and that's the only way that people should get any money. But in a world where technology is going to eliminate jobs faster than we can create new ones, at least for a while, I believe people will find new things to do. But I think there is going to be a very hard shift that people aren't ready for. I think we are a rich enough country that no one should be worrying about...
[0:14:14] You know, a place to sleep or what food to eat. And I think that current sort of wealth redistribution systems are so bad, so mismanaged that maybe we should just, like, give everyone a little bit of money. I mean, the worry with this is that, like, you know, people will do drugs and play video games. And, you know, like, that's true. A lot of people will. But, like, that's also what most people that complain about this call the weekend.
[0:14:42] And some people, maybe 10% of people, go on to create the best new companies, write the best new novels, create the best new art, make incredible scientific discoveries. So I think we just need to get over this old school American ideal that hard work is valuable for its own sake. Because the machines are going to do the rote work better. Realize that we are going to have...
[0:15:09] That sort of wealth inequality just continues on this unending trajectory at the hands of technology and say, you know what? This is not fair. We need to do something about this. No one should have to worry about basic human rights to food and shelter and trust that by taking that pressure off people, some people will do nothing productive and some people will create...
[0:15:36] Incredible new leaps forward for all of us, and that's okay. Yeah, I mean, it seems like YC and Alphabet and all these companies are sort of at the center of this phenomenon, which is like you're able to spin up companies and ideas and concepts faster and faster than ever before, and yet it seems totally unfathomable for leaders and companies to deal with actual institutional and political mechanics of fixing things like what you're talking about, income and housing.
[0:16:06] It seems beyond that. It does, yeah. I think that the greatest threat to this country is incompetence of governance. What do you mean by that? What do you mean by that? Oh, well, like exactly what you're saying. If San Francisco, if the founders in San Francisco can build a new $50 billion company in five years, but the government of San Francisco cannot approve a...
[0:16:32] Single new housing development in five years. That's going to be a mismatch and that's eventually going to break. If what employment and wealth and income shifts in 10 years but the US government takes 50 years to react, that's going to break. I think this is a huge threat to all of us and to the country and it's really bad. I'm a very optimistic person most of the time but on this one I'm not super optimistic.
[0:17:00] The government is going to get its act together in time, but I sure hope I'm wrong. We were on a panel, I think, like, was it like a month or two ago? And I think you said something about you had a bet that by 2020, someone with a technological or engineering background would make a serious run at president. No, I think 2030, I said. 2030. Yeah. Say 2030. Yeah. I think, yeah, I think that technology is such a part of our future and it's changing things so much that...
[0:17:32] I think that if the government continues to be sort of relatively incompetent towards supporting technology and addressing the changes on the rest of society that technology causes, yeah, I think someone from like the tech world will run. Okay, cool. Well, I think that's all we have time for. Thanks for having me. Yeah, of course. Thank you. Thank you.