Y Combinator revealed yesterday that the chairman, Sam Altman, is stepping down from his role to grew the accelerator program’s chairwoman. This change, said YC, will allow Altman to” expend more time be concentrated on OpenAI ,” the San Francisco-based nonprofit that was cofounded by Altman and Elon Musk three years ago to get ahead of the risks posed by artificial intelligence.
The timing may not be so coincidental. Two weeks ago, Musk separated from OpenAI, whose operations Musk and Altman have funded, together with Reid Hoffman, Peter Thiel, YC cofounder Jessica Livingston, and Stripe’s former CTO Greg Brockman, who is today the CTO of OpenAI. Musk cited conflicts about the company’s development as reason to” place spaces on good terms .” A informant tells us now that Altman actually intends to become CEO of the organization, though told you about this directly yesterday, Altman said he was too busy to discuss his immediate plans.
Either way, Altman’s newest move ask a question that industry watchers are likely to be asking for some time, and that is whether Altman– who was part of the first YC startup class in 2005, began working part-time as a YC partner in 2011, and was constructed the head of the organization five years ago — stimulated YC better or worse during his tenure at the top.
Certainly, it is much changed. When Altman was handed the reins, YC had just graduated 67 startups, all of them from the U.S. It was a record amount at the time, but Altman has since more than tripled the increasing numbers of startups that YC will process in one batch, with YC set to present 205 startups to investors over two days across two stages in San Francisco two weeks from now.
Those numbers simply hint at Altman’s ambition. In the past two years, YC has launched Startup School, a free 10 -week online program; the Series A program, which coaches seed-stage alums on how to nab follow-on funding; the YC Growth program, a 10 -week dinner series that it characterizes as a kind of grad school program; Work at a Startup, a platform that connects technologists with YC corporations; and YC China, a standalone program that will be run out of Beijing formerly it gets up and travelling.
Even with a network that has 4,000 alumni and 1,900 companies, Altman has long like to remind you that he conceives YC can do even more.” Part of our framework is to induce the costs of blunders truly low-spirited, and then make a lot of corrects ,” he said at TechCrunch Disrupt in 2017.” We’ll fund a lot of people doing a lot of things that voice genuinely dumb, and most of the time they will be. And some of the time, it will seem like a bad idea and be jaw-droppingly brilliant. The best good startup ideas are at the intersection of the Venn diagram of,’ looks just like a bad mind ,” is in fact a good idea.'”
Some were concerned that Altman may have taken YC to unsustainable extremes, encouraging too many people with wobbly ideas to abandon safer, more conventional options for a chance to become the next Brian Chesky, and encouraging them, specifically, to come to the Bay Area for its accelerator program, despite overcrowding and soaring costs.
Others wonder if startups might eventually revolt against YC’s words, which see it investing $150,000 in exchange for 7 percent of each company — a stake that it can maintain throughout the company’s life it it so chooses, per its pact with its founders.
While the halo effect of YC is real, giving away so large-hearted a piece of one’s company for so little fund irks some founders later.
VCs — many of whom have a love-hate relation with the powerful accelerator — have been previously whispered at times about potential conflict in the best interest owing to lack of Hydrazine Capital, a enterprise fund that Altman formed before being appointed as head of YC, with” significant investment” from Peter Thiel, as described in a 2017 New Yorker article about Altman.
Still, even people who might be invited to take Altman down a notch say he has done a phenomenal position of leading Y Combinator, including by turning the outfit into a global brand, creating a constant torrent of new products, and by exercised control over the development of infrastructure and software that has allowed the company to continue to magnitude for the foreseeable future.
Altman also diversified the types of founders that YC acknowledges( though it could do better ); 15 percent of the founders to pass through the accelerator last summertime were women. And whereas the program was once dominated by buyer startups, it now graduates business-to-business software and services startups, healthcare startups, blockchain startups, real estate, govtech and fintech startups, among others.
Equally important, Altman — a masterful networker who isn’t known for being a awfully warm boss — ensured that everyone at the partner level at Y Combinator enjoys the same economics. It’s a astonishingly rare structure in venture capital, where it’s more often the example that a small group of investors is accruing most of the financial rewards based on how long they’ve been involved with an attire or their specific contributions.
Indeed, Altman’s obvious drive will make it all the more interesting to see what he does with OpenAI, which just two weeks ago said it had developed an AI system that can create fake report so authentic gazing that it decided not to liberate the full research to the public so it can better weigh its ramifications.
In the meantime, one guesses that YC, where Altman has not been involved operationally for some time, will be fine without him at the helm, including thanks to the continued involvement of Altman and YC founders Livingston and Paul Graham at the board grade. More crucially, YC has Michael Seibel, its CEO, who has led the core YC program for the last four-and-a-half years.( Others of its several spouses have also been with the firm for years .)
As one VC told us yesterday, even with a YC that looks very different than it did five years ago — or perhaps because of it — investors would be” idiots not to pay attention” to the founders it backs. Many of even the most nascent YC startups have begun growing fund at valuations that make it too expensive for angels or some seed-stage firms to participate — and that these founders may afterwards repent when the market downturn inevitably comes.
But for Series A and later-stage investors, there’s still best available boulevard to reaching up-and-coming founders. When it comes to curating talent, says this investor, YC” been too good .”