sgoel9/sam_altman_essays huggingface dataset:
Financial Misstatements
2015-08-21

First-time startup CEOs make a lot of mistakes, mostly due to ignorance.

One particularly bad one is misunderstanding or misusing basic financial terms. I started noticing this in Y Combinator applicants a couple of years ago, but see it now in startups at all stages (including some YC companies).

It is very important to make accurate financial statements to investors, and it is well worth the time it takes to learn the difference between concepts like “revenue” and “GMV” (gross merchandise volume) and revenue from a “contract” or “LOI” (letter of intent). Most terms have very specific definitions, and it’s well worth a little bit of time learning what these are. When in doubt, you will never get in trouble for defining the way you’re using a financial term too precisely.

I’ve seen people use GMV for revenue or refer to an LOI as a contract many times in the past year when talking to investors. This is a felony.

Although investors should be doing more diligence than is currently in fashion, this issue is on the founders to fix.
The U.S. Digital Service
2015-08-14

A lot of us complain about how the government is not very good at technology. The U.S. Digital Service is actually trying to do something about it, by applying the way startups build products to make government services work better for veterans, immigrants, students, seniors, and the American public as a whole.

This is clearly a good idea. (See U.S. Digital Service Playbook for more details.)

Inspired by the successful rescue of HealthCare.gov, small teams get deployed inside government agencies to improve critical government software.

It seems to be working. To use HealthCare.gov again as an example, the Digital Service effort helped replace a $200 million login system that cost $70 million per year to operate (I know…) with one that cost $4 million to build and less than $4 million per year to operate, and worked better in every way. In another example, at U.S. Citizenship and Immigration Services, a Digital Service team has been instrumental in enabling green cards to be renewed online for the first time and a growing number of other improvements to the immigrant experience.

The Digital Service attracted talent on par with the best Silicon Valley startups, including talented veterans from Amazon, Google, Facebook, Twitter, Twilio, YC, and more – engineers, designers, and product managers who have committed to do tours of duty serving the country.

As an American, I am grateful to these men and women for doing this. Because of their work, the government will work better.

I often get asked about what people can do for a year or two to make a big impact between projects. Here is a good answer. Consider joining the ranks. I think it’d be great if it became a new tradition that people from the tech world do a tour of duty serving our country at some point in their careers. We need better technology in government.
Projects and Companies
2015-08-12

In the early days of my startup, I used to get slightly offended when people would refer to it as a “project”. “How’s your project going?” seemed like the asker didn't take us seriously, even though everything felt serious to us. I remember assuming this would stop after we announced a $5 million Series A; it didn’t. I kept feeling like we’d know we made it when people started referring to us a company.

I now have the opposite belief. It’s far better to be thought of—and to think of yourself—as a project than a company for as long as possible.

Companies sound serious. When you start thinking of yourself as a company, you start acting like one. You worry more about pretend work involving things like lawyers, conferences, and finance stuff, and less about building product, because that’s what people who run companies are supposed to do. This is, of course, the kiss of death for promising ideas.

Projects have very low expectations, which is great. Projects also usually mean less people and less money, so you get the good parts of both flexibility and focus. Companies have high expectations—and the more money out of the gate and the more press, the worse off they are (think Color and Clinkle, for example).

Worst of all, you won’t work on slightly crazy ideas—this is a company, not a hobby, and you need to do something that sounds like a good, respectable idea. There is a limit to what most people are willing to work on for something called a company that does not exist if it’s just a project. The risk of seeming stupid when something is just a project is almost zero, and no one cares if you fail. So you’re much more likely to work on something good, instead of derivative but plausible-sounding crap.

When you’re working on a project, you can experiment with ideas for a long time. When you have a company, the clock is ticking and people expect results. This gets to the danger with projects—a lot of people use them as an excuse to not work very hard. If you don’t have the self-discipline to work hard without external pressure, projects can be a license to slack off.

The best companies start out with ideas that don’t sound very good. They start out as projects, and in fact sometimes they sound so inconsequential the founders wouldn't let themselves work on them if they had to defend them as a company. Google and Yahoo started as grad students’ projects. Facebook was a project Zuckerberg built while he was a sophomore in college. Twitter was a side project that started with a single engineer inside a company doing something totally different. Airbnb was a side project to make some money to afford rent. They all became companies later.

All of these were ideas that seemed bad but turned out to be good, and this is the magic formula for major success. But in the rush to claim a company, they could have been lost. The pressure from external (and internal) expectations is constant and subtle, and it often kills the magic ideas. Great companies often start as projects.
Energy
2015-06-29

I think a lot about how important cheap, safe, and abundant energy is to our future. A lot of problems—economic, environmental, war, poverty, food and water availability, bad side effects of globalization, etc.—are deeply related to the energy problem.

I believe that if you could choose one single technological development to help the most people in the world, radically better energy generation is probably it. Throughout history, quality of life has gone up as the cost of energy has gone down.

The 20th century was the century of carbon-based energy. I am confident the 22nd century is going to be the century of atomic energy (i.e. terrestrial atomic generation and energy relatively directly from the sun’s fusion). [1] I am unsure how the majority of the 21st century will be powered, but I’d like to help get things moving.

Although a lot of people are working on solar, I don’t think enough people are working on terrestrial-based atomic energy, which has major advantages when it comes to cost, density, and predictability.

Given the potential importance, I’m making an exception to my normal policy of not joining YC boards for Helion Energy and UPower. Both of these companies went through YC about a year ago. Helion is working on fusion and UPower is working on fission; I’ve looked at many companies working on both and think these are the two best. I’ll be the chairman of both companies and I’m also investing in the seed/A rounds for both companies. [2]

Both companies hope to have a test reactor operating in a few years, and both companies are hiring. If you’re interested in working on this, please get in touch.

[1] I’m unsure of is what the split between sun-generated (I’m just going to call it solar but I use it to include wind and biofuels) and terrestrial-generated will be. There will only be one cheapest source of energy, and history suggests whatever that is will be fairly dominant. So it will probably be 80/20 one way or the other.

[2] I will save my thoughts about traditional technology investors being afraid to touch expensive, long-term, high-risk high-reward projects for another time. A lot of people talk about the need to try new things that are hard but could have huge impact; it’s important to not just talk about them but to act. I think it’s easier for individual investors to do this than for venture funds, at least given how they are currently structured.

I don’t think investors are doing nearly enough to fund atomic energy. With the exception of China, new fission development has effectively stopped and very few plants have been built in recent memory. Fission has been a remarkably safe and effective power source while generating 11% of the world’s electricity—the first time I saw the data on the safety data of fission energy relative to other power sources, I thought there was an error.

On the fusion side, only about four US fusion companies have raised venture capital in the past few decades. The big government projects, like NIF and ITER, unfortunately have the feel of peacetime big government projects.
Bubble talk
2015-03-24

I’m tired of reading about investors and journalists claiming there’s a bubble in tech. I understand that it’s fun to do and easy press, but it’s boring reading. I also understand that it might scare newer investors away and bring down valuations, but there’s got to be a better way to win than that.

I would much rather read about what companies are doing than the state of the markets. The gleeful anticipation of a correction by investors and pundits is not helping the world get better in any meaningful way.

Investors that think companies are overpriced are always free not to invest. Eventually, the market will find its clearing price.

I am pretty paranoid about bubbles, but things still feel grounded in reason (the thing that feels least reasonable is some early-stage valuations, but it’s a small amount of capital and still nothing I would call a “bubble”). Even my own recent comments were misinterpreted as claiming we’re in a bubble—that’s how much the press wants to write about this.

Although they cause a lot of handwringing, business cycles are short compared to the arc of innovation. In October of 2008, Sequoia Capital—arguably the best-ever in the business—gave the famous “RIP Good Times” presentation (I was there). A few months later, we funded Airbnb. A few months after that, a company called UberCab got started.

Instead of just making statements, here is a bet looking 5 years out. To win, I have to be right on all three propositions.

1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate.

2) Stripe, Zenefits, Instacart, Mixpanel, Teespring, Optimizely, Coinbase, Docker, and Weebly are a selection of mid-stage YC companies currently worth less than $9B in aggregate. Proposition 2: On January 1st, 2020, they will be worth at least $27B in aggregate.

3) Proposition 3: The current YC Winter 2015 batch—currently worth something that rounds down to $0—will be worth at least $3B on Jan 1st, 2020.

Acquisitions at any point between now and the decision date are counted as their acquisition value. Private companies are valued as of their last round that sold stock with at most a 1x liquidation preference or last secondary transaction of at least $100MM of stock. Public companies are valued by their market capitalization.

There will be downward pressure on valuations as interest rates rise. But I think it will be less than the upward pressure of the phenomenal innovation and earning power of these businesses.

Of course, there could be a macro collapse in 2018 or 2019, which wouldn’t have time to recover by 2020. I think that’s the most likely way for me to lose.

This bet is open to the first VC who would like to take it (though it is not clear to me anyone who wants to take the other side should be investing in startups.) The loser donates $100,000 to a charity of the winner’s choice.
Technology predictions
2015-03-03

Some of these are probably apocryphal, but making predictions about the limits of technology is really hard:

Space travel is utter bilge.

Computers in the future may...perhaps only weigh 1.5 tons.

- Popular Mechanics, 1949

X-rays are a hoax.

- Lord Kelvin, ca. 1900

I confess that in 1901 I said to my brother Orville that man would not fly for fifty years. Two years later we ourselves made flights. This demonstration of my impotence as a prophet gave me such a shock that ever since I have distrusted myself and avoided all predictions.

To place a man in a multi-stage rocket and project him into the controlling gravitational field of the moon where the passengers can make scientific observations, perhaps land alive, and then return to earth--all that constitutes a wild dream worthy of Jules Verne. I am bold enough to say that such a man-made voyage will never occur regardless of all future advances.

- Lee deForest, inventor of the vacuum tube, 1957

There is not the slightest indication that [nuclear energy] will ever be obtainable. It would mean that the atom would have to be shattered at will.

- Albert Einstein, 1932

That is the biggest fool thing we have ever done. The bomb will never go off, and I speak as an expert in explosives.

Anyone who expects a source of power from the transformation of these atoms is talking moonshine.

- Ernest Rutherford, 1933

The abolishment of pain in surgery is a chimera. It is absurd to go on seeking it... Knife and pain are two words in surgery that must forever be associated in the consciousness of the patient.

- Dr. Alfred Velpeaum, French surgeon, 1839

Bitcoin is definitely going to be trading at $10,000 or more and in wide use by the end of 2014.

- Many otherwise smart people, November of 2013

Superhuman machine intelligence is prima facie ridiculous.

- Many otherwise smart people, 2015

(Most of these from: https://www.lhup.edu/~dsimanek/neverwrk.htm)
FarmLogs
2015-02-10

I recently got to be a guest at a FarmLogs board meeting. I was struck by how much of an impact the company was having on the world, and how just a couple of years ago it seemed like they were doing something so small.

FarmLogs is a great example of a company that started out with a seemingly boring idea--a way for farmers to store their data in the cloud--and has developed into a way for farmers to run their entire farm, gather all the data about a particular piece of farmland, and optimize production. The company is now used by 20% of US row crop farms, and those farms are all more productive than they were without the software.

Eventually, FarmLogs can become the operating system for efficient, semi-autonomous farms.

Technology is about doing more with less. This is important in a lot of areas, but few as important as natural resources.

We need technology like this to meet the resource challenges that the planet will continue to face as the population grows and standards of living continue to increase. In fact, we need another hundred companies like this.

The good news is that it’s doable. FarmLogs is only three years old (YC Winter 2012). The company has used less than $3 million of capital so far, and with it they have already helped farmers gain hundreds of millions of dollars in efficiency. The software revolution is making it possible to create world-changing companies relatively quickly and with relatively modest resources.

And importantly, they started out doing something that any two programmers (with domain expertise in their market) could have done.
A new team at reddit
2014-11-13

Last week, Yishan Wong resigned from reddit.

The reason was a disagreement with the board about a new office (location and amount of money to spend on a lease). To be clear, though, we didn’t ask or suggest that he resign—he decided to when we didn’t approve the new office plan.

We wish him the best and we’re thankful for the work he’s done to grow reddit more than 5x.

I am delighted to announce the new team we have in place. Ellen Pao will be stepping up to be interim CEO. Because of her combination of vision, execution, and leadership, I expect that she’ll do an incredible job.

Alexis Ohanian, who cofounded reddit nine and a half years ago, is returning as full-time executive chairman (he will transition to a part-time partner role at Y Combinator). He will be responsible for marketing, communications, strategy, and community.

There is a long history of founders returning to companies and doing great things. Alexis probably knows the reddit community better than anyone else on the planet. He had the original product vision for the company and I’m excited he’ll get to finish the job. Founders are able to set the vision for their companies with an authority no one else can.

Dan McComas will become SVP Product. Dan founded redditgifts, where in addition to building a great product he built a great culture, and has already been an integral part of the reddit team—I look forward to seeing him impact the company more broadly.

Although my 8 days as the CEO of reddit have been sort of fun, I am happy they are coming to a close and I am sure the new team will do a far better job and take reddit to great heights. It’s interesting to note that during my very brief tenure, reddit added more users than Hacker News has in total.
A Question
2014-11-12

I have a question for all the people that use their iPhone or Android to complain on Twitter, Facebook, or reddit about the lack of innovation…

Or message their friends on WhatsApp or Snapchat about how Silicon Valley only builds toys for rich people in between looking at photos from their family across the world in Dropbox and listening to almost any song they want on Spotify while in an Uber to their Airbnb…

What were you doing 10 years ago?

I think it’s remarkable how much of what people do and use today didn’t exist 10 years ago. And I hope that 10 years from now, we’re using things that today seem unimaginably fantastic.

And while I’d like to see us turn up the pace on innovation in the world of atoms, I hope we keep up the current blistering progress in the world of bits.  I’ve really enjoyed working with some of the energy and biotech companies we’ve funded at YC and hope we see a lot more companies like SpaceX and Tesla get created.

There are some things technological innovation alone won’t help with and that we need to address in other ways—for example, I think massive wealth inequality is likely to be the biggest social problem of our time—but it seems to stretch credulity to claim that we have a lack of innovation.

I’m always in awe of the remarkable technological progress we make decade over decade. I think it’s important to try not to lose your sense of wonder about this.
Board Members
2014-11-11

Over the last five years, there has been an incredible shift in leverage from investors to founders. It’s good in most ways, but bad in an important few. Founders’ desire for control is good in moderation but hurts companies when it gets taken to extremes.

Many founders (or at least, many of the founders I talk to) generally want few to no outsiders on their boards. A popular way to win an A round in the current environment is to not ask for a board seat. Some investors are happy to do this—it’s certainly easier to write a check and go hang out on the beach than it is to take a board seat. And this trend is likely to continue, because these new investors are generally willing to pay much higher prices than investors that want to be involved with the company.

But great board members, with a lot of experience seeing companies get built, are the sort of people founders should want thinking about their companies every day. There are a lot of roles where experience doesn’t matter in a startup, but board members usually aren’t one of them. Board members are very useful in helping founders think big and hire executives.

Board members are also a good forcing function to keep the company focused on execution. In my experience, companies without any outsiders on their boards often have less discipline around operational cadence.

Finally, board members stick with the company when things really go wrong, in a way that advisors usually don’t.

Board members certainly don't have to be investors. If founders do choose to take money without an involved board member, I think it’s very important to get an advisor with a significant equity position that will play the role of a board member (or better, actually put them on the board).

Personally, I think the ideal board structure for most early-stage companies is a 5-member board with 2 founders, 2 investors, and one outsider. I think a 4-member board with 2 founders, 1 investor and 1 outsider is also good (in practice, the even number is almost never a problem).

As a side note, bad board members are disastrous. You should check references thoroughly on someone before you let them join your board.

The companies that have had the biggest impact and created the most value have had excellent board members (and executives). I don’t believe this is a coincidence.

It’s a good idea to keep enough control so that investors can’t fire you (there are a lot of different ways to do this), but beyond that, it’s important to bring in other people and trust them to help you build the company.

Thanks to Mike Moritz for reviewing a draft of this.
reddit
2014-09-30

I’m very excited to share that I’m investing in reddit (personally, not via Y Combinator).

I have been a daily reddit user for 9 years—longer than pretty much any other service I still use besides Facebook, Google, and Amazon—and reddit's founders (Steve Huffman and Alexis Ohanian) were in the first YC batch with me. I was probably in the first dozen people to use the site, and I shudder to imagine the number of hours I have spent there

reddit is an example of something that started out looking like a silly toy for wasting time and has become something very interesting. It’s been an important community for me over the years—I can find like-minded people that I can’t always find in the real world. For many people, it’s as important as their real-world communities (and reddit is very powerful when it comes to coordinating real-world action). There are lots of challenges to address, of course, but I think the reddit team has the opportunity to build something amazing.

In several years, I think reddit could have close to a billion users.

Two other things I’d like to mention.

First, it’s always bothered me that users create so much of the value of sites like reddit but don’t own any of it. So, the Series B Investors are giving 10% of our shares in this round to the people in the reddit community, and I hope we increase community ownership over time. We have some creative thoughts about the mechanics of this, but it’ll take us awhile to sort through all the issues. If it works as we hope, it’s going to be really cool and hopefully a new way to think about community ownership.

Second, I’m giving the company a proxy on my Series B shares. reddit will have voting control of the class and thus pretty significant protection against investors screwing it up by forcing an acquisition or blocking a future fundraise or whatever.

Yishan Wong has a big vision for what reddit can be. I’m excited to watch it play out. I believe we are still in the early days of importance of online communities, and that reddit will be among the great ones.