On January 21, 2015 we met Sam Altman, President of Y-Combinator, situated amongst twenty-some odd students of ME 410B in Peterson Laboratory, speaking about his fund and sharing valuable insights around “finding conviction behind ideas”.
The class consisted of a quick lecture and a longer Q&A session focused on entrepreneurship, startups and innovation. We found this session particularly relevant to Stanford life as many of us are hoping to make it big in The Valley a.k.a. found a wildly successful startup. Now, that’s easier said than done so we wanted to share some of Altman’s first-hand advice with you:
Spoiler: Some of said advice may, or may not have revolved around “smart underwear”…
ME 410B: What do you do when you want to found a startup but don’t have an idea?
Altman admitted this was a difficult question to address, because the most obvious answer seems to be “don’t start one.” But for those, who may have an inkling about what they want to get involved in, here are a few take home points:
1. Good founders tend to be brimming with ideas. And if not, they surround themselves with creative, stimulating people.
2. It’s not terrible if you’re casting around for an idea, unless you have external pressure to pick something quickly.
He says its okay to sit on an idea and just think about it.
3. Startup ideas are fragile and take time.
People may initially begin working on their idea because it is “just a project” but over time it can transform, becoming a startup and then a company. It’s crucial to acknowledge these ideas and care for them. And yes they are risky and there are always reasons to shut them down. Altman explained that when startups are held up to the lens of investors and other demands, they run a higher risk of failing so it’s important to not immediately get discouraged but think hard about your idea.
4. It’s okay to continue to work on projects.
He noted that some of the most ambitious founders he’s met have been thinking about potential companies for a long time, even whilst they’re still in school.
ME 410:B Why don’t you fund students still in school?
Altman strongly believes that “[YC] won’t fund someone who wants to start a startup, and be in school, because those people suck 100% of the time.” “If you’re really invested in your idea and startup, then you should leave school, but those who do this prematurely tend to regret it,” said Altman.
ME 410B: What makes a really good founder?
Here’s Altman’s mental checklist:
2. Intelligence- and raw horsepower
4. Clarity of Vision
6. Rate of improvement
If Altman had to pick one metric, it would be the rate of improvement. He wants to know if the founders are able to listen, apply direction and act on feedback. He wants to see that, at the next meeting, the team has made the suggested improvements and also brought new ideas to the table. Altman is always open to hearing about something new and relevant.
ME 410B: Are you excited about anything in the wearable space?
Although he’s a fan of smart watches, Altman mentioned that he “really want[s] to see smart underwear on the market”.
He explained that there’s a limit to the number of additional accessories, such as watches and bracelets, people want to charge and put on their body. Underwear is one thing that people already put on, and stays hidden. So, why not take advantage of that?
Smart underwear could help monitor everyday functionality, measuring stress levels, blood pressure and even temperature. The only smart underwear company he’s seen to date tracks breathing patterns, showing you when your body was under stress. But, for whatever reason, that didn’t make the YC cut.
ME 410B: What other sectors of market should we be looking to?
Altman responded with: “Whatever the most important new area is, I don’t know yet, but people get the macro markets right all the time, because that’s really easy. Unfortunately, people get the micro markets wrong all the time.”
He was, however, able to share with us a few sectors that he thought were quite interesting:
- Enterprise software
- Social Media
- Machine learning
ME 410B: Do you have any advice for those of us interested in pitching to YC?
“We have designed the process to be unhackable. There are no tips and tricks. Just keep it simple.”
Thank you to: President of Y Combinator, Sam Altman, General Catalyst Managing Director Hemant Taneja, Stanford Lecturer Dr. William Cockayne, and the students of ME 410B