Author | Chen Junda
Edit | Li Shuiqing
One day in 2014, Paul Graham, founder ·of Y Combinator (YC), a well-known incubator in Silicon Valley, threw a question to Sam ·Altman in his kitchen: "Do you want to take over YC?" ”
Altman smiled, and Graham said he had never seen Altman smile uncontrollably before, "as if he had successfully thrown a wad of paper into the wastebasket on the other side of the room, that smug smile, as if to say, 'It's finally done.'"
This joy is not unreasonable. As of early 2014, YC has invested in more than 550 startups, including Stripe, Airbnb, DoorDash, Twitch, and Reddit. Graham revealed in a tweet that the total valuation of YC's portfolio companies at the time was $14.4 billion, and the cumulative funding reached $2 billion. In an interview shortly after taking over YC, Altman had to admit that YC had an absolute monopoly in the incubator industry under repeated questions from the host.
▲Graham's tweet in early 2014 (Source: X platform)
YC's industry status has also been recognized by other investment institutions and individual investors. In 2009 and 2010, Sequoia Capital led two rounds of investment in YC, with a total amount of more than $10 million.
In 2011, Yuri Milner and Ron Conway, prominent investors who had invested in Facebook and made a lot of fortune as a result·· announced that they would inject $150,000 each into 40 YC startups that quarter, bringing the total investment to $6 million if all of them accepted their investments. At the time of the investment, they hadn't even met the founders of these businesses, and the investment was made out of trust in the overall quality of YC startups.
For start-ups, joining YC is a dream opportunity, and Altman's ambitions may not stop there, just joining YC is not enough, he wants to be at the helm of this venture capital giant.
In this article, Zhidong will detail the various decisions and judgments Altman made at this stage, and will also show the challenges and controversies he faced. This is the second in a series of articles that comprehensively present Altman's career over the past 20 years, so please stay tuned. (20 Years of Altman: From Entrepreneurial Failure to Power Center)
Altman has all the qualities you need to be at the helm of YC. He specializes in closing deals and has advised a number of businesses, including Stripe, on start-ups. He has a unique investment vision and began to identify potential investors for Sequoia Capital shortly after starting his business. The most important thing is that he has developed an extremely large network of contacts in Silicon Valley at this time, and the most influential investors and investment institutions in Silicon Valley are deeply impressed by him, which also gives him the ability to leverage a large number of resources and funds. This capability is something that many start-ups that join YC desperately need.
When Graham and his wife, Jessica · Livingston, were struggling with their two children, Altman became their savior. Graham wrote in his blog announcing Altman as YC's new president, "YC needs growth, and I'm not the best person to do that." Sam is exactly what YC is looking for at this stage of development. ”
▲Screenshot of Graham's blog post officially announcing Altman as the new president of YC (Source: YC)
Growth, the word that set the tone for Altman's five-year career as president of YC. In the past 5 years, YC will continue to expand the original YC core plan, and will also develop the YC Continuity Plan, YC Research Plan, YC Entrepreneurship School, and YC Growth Program. Under Altman's leadership, YC has also expanded globally, expanding their influence to countries such as China and India, which also have a vibrant entrepreneurial environment.
In addition, Altman's own investment projects continue to grow in the number and field, and he is also involved in non-profit projects such as Universal Basic Income (UBI) and affordable housing, and he was once rumored to be running for governor of California, which looks like he wants to become the underground king of Silicon Valley.
However, Altman was unable to avoid the fate of the tree. From the changes in YC's culture and investment style to his private investment controversy, as Altman and his YC's influence continued to permeate Silicon Valley and even all corners of the world, their every move became more and more eye-catching, and even generated a lot of controversy, Altman finally had to leave YC.
1. YC ushered in a drastic change, and many Altman's cronies joined
In early 2014, Altman was appointed president of YC by founder Graham, but by September 2016 he had delegated day-to-day operations to YC's new CEO, Michael ·, to oversee several new projects he started under YC.
According to this calculation, Altman's high-intensity participation in YC's work has only been 2 years, but these 2 years have made a huge difference in YC's future investment style.
Less than a month after Graham named him as his successor, Altman called on founders to create startups around breakthrough technology. He listed areas such as energy, artificial intelligence, transportation and housing, internet infrastructure, and education, all of which YC has rarely invested in in the past. "Now small start-ups can do things that used to require resources at the national level," he wrote in his blog. ”
In terms of personnel adjustments, Altman has introduced a large number of new partners to YC in the past two years, and has made many senior management adjustments. Most of them have a strong connection to him and have a high degree of overlap with his personal interests.
Altman's new partners include the two brothers who are the founders of the United States electronic payment giant Stripe, Ben ·Silbermann, the founder of the social platform Pinterest, and Joe Gebbia, the co-founder of Airbnb, · others. These people have all received advice, mentoring and even direct investment from Altman in their respective venture capital careers, and it can be said that Altman is the mentor of these founders. Their addition has given YC a stronger Altman color.
The background of YC's new executives in 2014-2016 is also noteworthy. Altman's group of executives includes academics who study biology, quantum physics and other issues, two senior media professionals from TechCrunch, a well-known technology media outlet in United States, and even executives with experience in property management and housing research. Judging from YC's subsequent expansion direction, Altman's executive adjustment may be some kind of advance layout.
Second, new projects were launched one after another, and Altman jokingly said that he wanted to buy Sequoia
YC's original main business was called YC Core (YC Core Program), which is the investment and mentoring program for two batches of startups recruited by YC in summer and winter every year. During Altman's first two years as president, he launched YC Fellowship, YC Continuity, and YC Research.
The YC Fellowship program is a larger program with a smaller investment. In the past, the YC program was mainly offline, while the Fellowship program did not require offline participation. This gives YC access to more early-stage start-ups, and allows YC companies and partners to identify investment opportunities earlier.
However, the project has also received some criticism after its launch. It is difficult for the online-based fellowship program to create the university-like atmosphere that YC had in the early days, and it is even more difficult to accumulate contacts and resources. Today's YC is more like a venture capital harvester, which obtains a large number of investment opportunities by casting a wide net, but the training and resource support for individual entrepreneurs are decreasing, which is also contrary to YC's original intention.
▲In the early days, YC had a university-like atmosphere (Source: YC)
The YC Continuity program is a continuous investment program for startups after graduating from YC, which allows YC to continue to benefit from the graduated companies and even lead future rounds of financing for these companies. YC has even shown a willingness to serve on the board of directors of start-ups, which has increased YC's influence on the company.
YC Continuity's investment is much larger than YC's core plan. In 2016, YC's core plan invested a total of $27 million in hundreds of companies in the summer and winter batches, and YC's first continuation fund invested $187 million. This figure is a fantasy for YC in the past.
However, YC Continuity's investment in a specific YC company may be seen as YC's assessment of the potential value of the company, which is extremely unfair to other companies that have not received investment.
Garry Tan, the current president ·of YC, believes that YC Continuity distracts YC's core mission (early-stage investment).
YC Research (YCR) is Altman's most personally committed project, spending his time on the research project in 2016 when he reduced his involvement in day-to-day operations, and donated $10 million as start-up funding. The main purpose of the YCR is to fund research on technologies that require long-term investment or should not be developed by the private sector.
OpenAI is actually YCR's first project. At the beginning of its existence, Altman and Musk served as co-chairs at OpenAI. A number of tech bigwigs who are familiar with Altman have also donated. The YCR also funds research on universal basic income, new types of cities, and more.
▲Altman and Musk at Tesla Giga Factory (Source: YC)
Looking at Altman's actions in the first two years of his tenure as YC's president, he has defined the future of YC with growth, as founder Graham said. In a YC blog post on April Fool's Day 2016, Altman also joked that YC was going to buy Sequoia Capital and regain its position as the largest outside shareholder of Airbnb, Dropbox and Stripe. Although it is an April Fool's Day joke, this blog also mentions projects that will really land in the future, such as YC China. Altman's ambitions don't stop at the expansion itself, he may also want to translate it into tangible impact on the world.
At the end of 2016, Altman also led the establishment of YC Startup School. This program aims to provide early access to young entrepreneurs from all over the world in the form of online courses, which will enhance YC's influence in the global venture capital community.
In an in-depth interview with The New Yorker, Altman said YC's Startup School program will attract tens of thousands of people to YC's network and increase the number of outstanding startups by 10 times. While YC doesn't own equity in these companies, he believes YC can still benefit from them in a way that can't be predicted with precision. He did not mention how startups participating in the courses would benefit.
▲Altman teaches entrepreneurship courses at Stanford University (Source: YouTube)
Altman is also eyeing the incubator market outside the United States. YC moved the selection interview directly to China, India and other countries and regions where entrepreneurship is more active, and also held the Startup School meeting at Tsinghua University. In the summer of 2018, Lu Qi, who was Microsoft's global executive vice president and Baidu's chief operating officer, joined YC and established YC China.
▲ Lu Qi in YC (Source: YC)
At the time of the closure of YC China, the YC leadership listed Altman's departure as an important reason, which also reflected that the establishment of YC China may only be Altman's personal will.
3. Invest in bionuclear chips, own guns and gold, and land in large areas
In addition to YC, Altman's personal investment is also growing. According to Altman's own estimates, he and his venture capital fund have invested in more than 400 businesses. Altman currently publicly discloses that his holdings are worth at least $2.8 billion.
Altman's early investments were mainly in YC companies. In 2009, he invested $15,000 in Stripe, which was then involved in the YC project, in exchange for a 2% stake. Although Stripe is not yet publicly listed, according to their latest 2024 valuation of $65 billion, Altman's stake is worth more than $1 billion, with a return on investment of more than 70,000 times.
In 2014, when Altman took over YC, he disclosed in his personal blog that he had invested in more than 40 companies, five of which had grown in value a hundredfold or more.
Biological, nuclear and chip companies are Altman's main investment targets outside of traditional technology companies.
In the field of biology, Altman's main focus is on synthetic biology and life extension technologies. In 2014, Altman led YC's investment in Ginkgo Bioworks, a synthetic biology company that produces various chemicals from genetically modified cells and funded the development of a vaccine during the pandemic. Later, Altman himself invested in similar businesses through his family fund.
Many billionaires in Silicon Valley like to invest in life-extension technology, and Altman is no exception, having made a $180 million investment in life-extension technology company Retro. Musk has publicly criticized that this technology, if successful, will lead to the stagnation of social development - the idea that the rich will continue to influence the world as their lives are extended.
In terms of nuclear energy, Altman has invested in Helion, a nuclear fusion company, and Oklo, a nuclear waste recycling power generation company. Helion has even signed a contract with OpenAI to provide OpenAI with the large amount of power necessary for its data center operations.
▲Conceptual diagram of Oklo's nuclear reactor (Source: Oklo)
Altman's investment in chips is also noteworthy. In addition to the staggering "$7 trillion" chip fundraising rumors, Altman is also listed at the top of their official investor list by AI chip unicorn Cerebras Systems, a company that has recently been rumored to have IPO plans. In addition, Altman has invested in another AI chip company, Rain AI, and OpenAI also has plans to buy chips from this company.
Artificial intelligence and virus leaks are among several reasons why Altman and his friends envision the possible destruction of the world, and Altman's personal investments seem to revolve around these risks. Altman's portfolio reflects a certain vision of his future.
Altman likes to drive racing cars, fly airplanes and other extreme sports. In an interview with The New Yorker, he also shared that he is actually a "doomsday preparer." He said he had a large collection of guns, gold, batteries, water and the same gas masks of the Israel Defense Forces, as well as a large plot of land in the mountains of southern California, and that he could fly to Peter ·'s home in New Zealand.
▲Altman's $20 million McLaren sports car
Fourth, he made a large donation to strengthen political participation, and he also considered running for governor of California
Like most Silicon Valley people, Altman is a Democrat. According to Newsweek, Altman has donated to more than 100 Democratic candidates, but these donations have been made on an individual basis, so the amount is not too high. His main endorsers are based in California, but he has also endorsed candidates in New York and Virginia.
In addition to his support for the candidates, Altman donated $250,000 to Senate Majority PAC, a Democratic campaign organization in the Senate, and also donated to state-level Democratic organizations in several key swing states.
In 2016, Altman also met with then·United States Defense Secretary Ashton Carter at the San Francisco trade show to finalize a pilot project between the United States Department of Defense and YC. He was open to cooperation between the United States Department of Defense and technology companies, because the United States Department of Defense's budget that year was more than twice the R&D spending of Apple, Google and Intel combined.
▲Altman at the hearing (Source: Axios)
The issues of universal health care, housing and infrastructure renewal are Altman's main political concerns. He has personally traveled across California to hear from the front lines of public opinion and make proposals to the California Legislature on housing issues.
In 2017, Altman was also rumored to be running for governor of California, but he abandoned that plan in favor of an open call for candidates who could realize his political vision. Altman said he was willing to provide technology platforms and seed funding to potential candidates, hoping to find non-traditional Democratic candidates and use them to influence the political ideas of the tech community in United States.
Fifth, he was obsessed with personal affairs and ignored YC, and the founder leaped across the ocean to dismiss his position
After Altman became the president of YC, YC underwent profound changes. Today's YC is more of a VC than an incubator in the traditional sense. According to the Washington Post, many have described Altman as a manager who doesn't interfere much with specific tasks, and who is only responsible for picking potential winners, giving them a lot of autonomy so that he can continue to work on what interests him.
A close friend of Altman's said that even at OpenAI, Altman considers himself like an investor rather than a typical CEO.
YC's platform advantage also allows Altman to gain more contacts and investment opportunities. Later in his tenure at YC, he frequently attended various conferences as YC's president, gave media interviews, and set up an investment company to make larger-scale angel investments.
This indifferent style of behavior eventually attracted the dissatisfaction of colleagues and companies involved in the YC project. Colleagues accused him of being aloof, absent-minded, and not giving constructive advice to people, but taking credit for YC's success during that time. He used his private fund to invest in companies involved in YC's projects, but banned other full-time partners from owning their own private funds. Some of the founders involved in the YC program felt that he was too focused on his personal accolades.
In 2019, the dissatisfaction with Altman within YC had fermented to a certain extent, and Graham had to fly from United Kingdom to San Francisco to ask Altman to leave, and Altman immediately agreed.
▲Graham and Livingston, the two were Altman's most loyal supporters (Source: Bloomberg)
Graham, who has lived semi-retired in United Kingdom since having children, said he had no idea that Altman spent so little time nurturing start-ups. When he led YC, he spent most of his time communicating with the founders.
Interestingly, before officially announcing his resignation, Altman proclaimed himself chairman of YC. However, YC does not have a board of directors at all, only a body called the Supervisory Committee, and this body has a low presence in YC. Altman never officially assumed the so-called chairmanship position.
After Altman's departure, YC quietly deleted Altman's self-proclaimed post as chairman of the board. Altman's behavior may also be a means of a power game.
Conclusion: The road to Silicon Valley has come to an abrupt end, where is Altman's future path?
Altman's five years at YC have been mixed. On the one hand, he helped YC achieve the expansion that Graham had hoped for, and it really made YC bigger, stronger, and more impactful. But in this expansion, YC seems to have lost its original intimate and friendly atmosphere. In addition, Altman uses YC's platform to advance the projects and agendas he is interested in, but does not give enough attention and support to other startups, which is also a departure from YC's mission.
Graham once said of Altman, "He's good at being strong." During his five years at YC, he gained unprecedented influence, and he participated in the founding and financing process of almost every major company in Silicon Valley during that period, and was a mentor to many business founders. He has said that financing is already a highly commoditized industry, and that connections and networks are Silicon Valley's most valuable resources. Altman became the intersection of these complex networks of people, a position that may be the invisible throne of Silicon Valley. His involvement in political and social issues further strengthened this seat of power.
Altman left YC, but he did not lose his original influence. OpenAI, founded in 2015, has grown and has grown to accelerate its research, turning to Microsoft for funding. At this time, Altman has taken full control of OpenAI from Musk, and he can now use OpenAI to realize his ideas about artificial intelligence. And this technology will not only revolutionize all technology companies in Silicon Valley, but will also have an unprecedented impact on the world. In the next article, Zhidong will tell about Altman's experience at OpenAI.