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Y Combinator's Sam Altman

The October 10 issue of The New Yorker has a profile of Y Combinator's new leader, Sam Altman, who succeeded Paul Graham as President of the company back in 2014. It is titled "Adding a zero" in the paper version of the magazine and "Sam Altman's Manifest Destiny" online. I'm still not quite sure what to make of the profile (authored by New Yorker staff writer Tad Friend), except that 31-year-old Altman struck me as exceptionally juvenile and uncharismatic. (If you'd like to know more about Y Combinator in the Paul Graham days, I recommend The Launchpad by Randall Stross, which I reviewed here.)

Y Combinator is arguably the best known and most powerful start-up incubator/accelerator in the United States today, with TechStars its main competitor. Altman has launched a number of new initiatives to leave his mark on Y Combinator, including the YC Fellowship Program, targeting companies at an earlier stage than the batch of companies selected for YC's traditional program, and the YC Continuity Fund, to invest in YC alumni companies. 

Before I go in more detail over YC's new strategy, let me explain why I found him exceptionally juvenile. Here is a key quote by Altman: "The missing circuit in my brain, the circuit that would make me care what people think about me, is a real gift. Most people want to be accepted, so they won’t take risks that could make them look crazy—which actually makes them wildly miscalculate risk." This reeks of so much condescension toward the average person - in particular the average person coming in contact with Altman - that I'm surprised he's been able to get anything done. I suppose his subordinates will be glad to know he doesn't care what they think and believes they primarily want to be accepted. He apparently also doesn't believe in advisors, mentors, or any outside source of wisdom and experience (why bother).

That sort of nonsense about "I don't care what other people think" reminds me of my parents (not a good thing) when I was teen and they insisted "don't care what others think" to try to make me do exactly what they wanted me to do. Altman uses that cliche to do exactly what he wants to do. People above the age of twelve have typically learned that you should learn to make the difference between people whose advice you're going to value and people whose advice you're going to discard. The anecdote about a blogger asking Altman, “How has having Asperger’s helped and hurt you?” and Altman reacting at first with anger (“I don’t have Asperger’s!’) but then proceeding to describe character traits of his that make him an excellent candidate for undiagnosed Asperger's, provided a bit of levity to the piece. 

The thing is, you can't be a very effective leader or mentor if you're so proud of saying you don't care about what other people think (because what you're really saying is that you don't care about other people, so it's going to make it difficult to make them want to follow you or pay your advice any heed). The journalist comments: "Altman's regime has left some people at YC nostalgic of the early days. One YC stalwart told me, 'Sam's a little too focused on glory - he puts his personal brand way out front... Sam's always managing up but as the leader of the organization he needs to manage down." It is when the journalist asks Altman about that critique that he made his "Not caring about what other people think is a gift" comment.

(Another excerpt, early on: "Two YC partners sat Altman down last year “and told him, ‘Slow down, chill out!’ ” another partner, Jonathan Levy, told me. “Sam said, ‘Yes, you’re right!’—and went off and did something else on the side that we didn’t know about for a while.” That was YC Research, a nonprofit, initially funded with a ten-million-dollar personal gift, to conduct pure research into moon-shot ideas." Not a bad idea either, but the fact that Altman didn't try to enlist the other partners for his new vision of YC is a red flag for me.)

Leaders are only leaders because other people want to follow them. Some people will undoubtedly find it in their best interest to follow Altman since he is at the helm of the top incubator. But in the long run, the Altman portrayed in this article doesn't seem to behave like an effective leader. It seems to me that he'd be more effective in a number-two role, making big plans for the number-one person and reporting only to him with no direct reports. There, I imagine Altman would be transcendent.

Now, on to the new YC initiatives. As mentioned earlier, Altman doesn't have a choice if he wants to leave his mark on Y Combinator, which was founded by his predecessor: he needs to have some big initiatives. But while he argues that more companies should fail fast, he also recognizes that the "Y Combinator" tag (stamp of approval) may needlessly lengthen the life span of a company that would have been better off dying soon. Yet, he hopes to place YC's stamp of approval into many more companies and at earlier stages.

One has to wonder what would happen to companies that don't make the cut. Is it possible to imagine that YC can make a mistake once in a while? Or will it strangle innovation by making participation in a YC program a must-have for young entrepreneurs, leaving the ones who are not selected by YC (by real people, I might add, and real people have this inconvenient characteristic that they may make mistakes, in contrast with the A.I. that Altman and Friend banter about) out in the cold? Even Harvard doesn't pretend to have the magic recipe to select the future stars of tomorrow. Or is the thinking going to be along the lines of "Only the top 200 [random number I just picked] companies have a chance to succeed so by admitting 10,000 we're quite sure to be admitting all the possible future Reddit or Dropbox"? And at a higher level, is the company better served and its staff's time better used by early but superficial involvement in 10,000 start-up ideas or by more focused interaction with fewer? Is the risk higher at the later stage because the number of companies is smaller, or higher at the early stage because, well, it's so early?

Friend explains: "Starting this winter, YC Fellowship is becoming Startup School, a free, online, ten-week course for as many companies as want to take part. They won’t get funded, but they can learn the same lessons as batch companies do. Altman, who will personally oversee this initiative, believes it is the fastest, easiest way to bring ten thousand new founders a year into the network." But will the alumni of the regular program really consider those other people as members of the network? Won't they fear the stamp of approval will get diluted and create an exclusive network of their own for the main program's alumni? (People who benefit from the system don't want to change it.) In itself, it's not a bad idea: preventing waste and misallocated time and resources by decreasing the failure rate of later-stage companies by intervening earlier, but it's hard to imagine that current later-stage companies will be pleased, and not clear where YC will find the resources (especially in mentors' time, since participants are supposed to have access to such people via Skype).

Friend raises similar questions when he writes: "Concerns about the accelerator scaling too much and too fast remain widespread... [Is YC] stretching the network to its breaking point?... [Silicon] Valley's guiding principles conflict: scale precludes uniform excellence and a tight-knit network." Maybe a people-oriented leader could pull it off, but Altman goes out of his way in the article to appear emotionally deaf, so that his announcements don't seem to rally the troops. Now, maybe he gives so inspiring advice at the ripe old age of thirty-one that founders will forgive him anything, But most leaders would know they have to make the case for change to their troops and establish a sense of urgency to effect change. Altman certainly doesn't use the New Yorker profile as an opportunity to make that case for change. 

The other thing that bothers me is that I wonder how founders' innovation and independent-thinking skills will be maintained if YC mentors them closely from beginning to end while they develop their startup idea. (A big if.) Ultimately the founders must make their own decisions to hone their expertise. Because of YC's clout, it will be very tempting for them to agree with whatever YC says even if they had a different vision for their startup. If YC is involved from the very beginning, young entrepreneurs may not grow professionally as easily.

 YC definitely has an ambitious plan but the failure for Altman to inspire audiences when he communicates his agenda may signal troubles ahead. The subtitle of The New Yorker's article says it best: "Is Y Combinator's Sam Altman fixing the world, or trying to take over Silicon Valley?" If he's picked the second option, my guess is that he's in for a rude awakening.

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