Jared Friedman, Partner, Y Combinator; Co-founder, Scribd

25:41It doesn't seem that great to me. I don't know. Right, right. And we have to ask, what did your parents think of all of this? It's our trademark question. Yeah, the trademark question. They were not exactly excited about it, but they also weren't jumping up and down on me. Like I was always a very independently minded person. And I think they had a sense that I was like very hardworking and ambitious. And I probably wouldn't end up homeless on like a street corner somewhere that like I'd figure it out. And so they weren't like overly alarmed. So Trip eventually convinced me to go out to Silicon Valley.

26:17And we end up moving into this building, Crystal Towers. Yes. Okay. Which became dubbed the Y Scraper because there were so many Y Combinator companies living in it. And that was actually a really big decision for us because we were in this building now with the Reddits were there. Hateron, like the Stripe founders were there. The Dropbox founders were there. Weebly, yeah. Like all of these epic companies. Yeah. And it was basically in the course of like being in that community, that early YC community, which was pretty focused on this one particular building at that time. Yeah. That we like got the idea for Scribd and also got the energy to keep going.

27:08I could see how it provided more energy because everyone was working on cool ideas. How did you get the idea for Scribd? We were like brainstorming random X for Y ideas. and like YouTube was like the hottest company at the time because it just got bought by Google for like$2 billion. And so like YouTube for X's were like really popular, but no one was doing YouTube for documents. Because it's kind of boring. Yeah, because it seems like a bad idea. You know, it's like intersection of seems like a bad idea is a good idea, right? Yeah, yeah, yeah. And so we had the idea for Scribd. We built it over the winter.

27:47we launched it in March of 2007 and we were pretty out of gas by then like I think you know we sort of been working on stuff for a while and like nothing was working we hadn't raised any money so we were like running on fumes and I don't know that we would have kept going much longer honestly if it hadn't worked but it did work and the launch really took off tell us about it like the glimmer of hope yeah and that was the second time when I met Carolyn because our launch like really blew up. It was at the top of Hacker News, which existed at the time. It was at the top of TechCrunch and Slashdot and Dig and Reddit and all of these big sites.

28:28It got picked up by like actual like journalists at like proper like news outlets like the New York Times and either ABC or NBC. It was even on cable news. I remember one day we woke up and there was one of those old school cable news fans with a big satellite dish on the top parked outside of the widescraper because they wanted to film the three guys making YouTube for documents. Wow. That's awesome. Oh, my gosh. And so we went from totally failing, no idea what we were doing, pivoting through random ideas, lost kids, essentially, to being for a brief moment one of the hottest companies in Silicon Valley.

29:10And we went from being totally broke to having multiple term sheets for a Series A in like a few weeks. All right. Who gave you term sheets and who did you take? Yeah. So we got term sheets from Redpoint and CRV and Sequoia. And we ended up going with Redpoint. And that was when you reintroduced us to Carolyn because you're like, these guys need help with their Series A. Yeah, yeah. Yeah. I remember Redpoint. Jeffrey Yang. Yeah, Jeff Yang. Super nice guy. Jeff Yang, yeah. Okay. Okay. So Carolyn, what do you remember? Well, I alluded to this earlier. But so T-Con was a late join. And I believe that you guys came into the Wilson-Sundity conference room to talk about how much stock he would get and what his vesting would be.

29:54And that's where the fireworks started. Oh, gosh. Well, expand a little bit on T-Con. So T-Con was another founder in the Summer Founders Program in the summer 2006 batch. He was a solo founder working on his own company. and his company, you know, like ours, didn't really go anywhere. And after the batch, he was sort of deciding what to do and he basically just asked Trip and me if he could join us and we were like, sure. And so he became the third co-founder. Was T-Con from Palo Alto as well and New Trip? Yes. Okay. Yes. All right. Okay, so they're in your office and that's how you met them.

30:35Yeah, so they obviously, as a third co-founder, or he needed to get some equity. And I think Jerry was just sitting there like, I don't care about this. My vibe for me was like, oh my gosh, why are we fighting about this? But Trip and TCOM were like going at it. And that's where I was like, wow, this is not great. And these people are very young. That's what I was thinking. Very young and extremely immature. I really hope they figure this out. I don't know what I can do here. This is like such an interpersonal thing here. Or like I can say what market standard is. Anyway, so I do remember that vividly.

31:11I don't actually remember anything particular about your Series A. I'm sure it was just a standard fundraise. It was pretty standard except there was one wrinkle, which is from the moment that Scribd launched, we were a hotbed of piracy and copyright infringement. And so at the same time we were fielding off VCs with a stick who were trying to invest in our company. we were also fighting off book publishers and authors who were threatening to sue us. And so we spent a lot of time at the Wilson Cincinnati office with Brian Mendoza in particular, who was a godsend. Yes, he's great. Basically keeping us from getting sued out of existence.

31:47If not for Brian Mendoza, I think the company would have died basically as soon as it launched. Wow. How did he help you solve this? Well, he had been the lawyer for YouTube. Oh, my God. He knew everything about this. He was like the world expert at how to build a YouTube and not get sued out of existence. Wow, I did not know that. So you guys then, how much did you raise in your Series A? $4 million, which seemed like a lot of money at the time. That was a lot of money back then. I know it sounds so quaint. Do you remember what the valuation was? Riding your horse to school or something. Yeah, really.

32:20Do you remember the valuation? I think it was 21 post. 21 post. So modest. That was a big deal back then. Oh, totally, totally. Oh, my goodness. And then you guys, I remember you guys started having regular board meetings, which I showed up to, and we need to talk about that office. We definitely should talk about the office. Well, it was the same office building as Zodney. Okay. Which was NYC that same batch. In our batch. They were like the hottest company in summer 2006. Yes. They'd moved out to Silicon Valley and raised a Series A months before we did. And so they were like gods in our eyes.

32:57Like them and Reddit and Looped were the three companies that were like really like had turned into something. Right. And Zobny, just to refresh people's memory, Adam Smith and Matt Brazina, Adam Smith was Drew Houston's like little brother in his fraternity at MIT. And that's what spurred Drew to be like, hey, if he can do it, I should be able to do it. And he was a guest at the YC dinner where he asked all the questions, Carolyn. Remember when he talked about that? So the office, so it was there. It was also in just the next building over from what was the Dropbox office. Actually, Scribd and Dropbox shared a wall.

33:42Oh, wow. Yeah, for years. But what was your recollection of the office? So it was actually a very cool space. But my recollection is that we go into this conference room, there'd be a very serious board meeting. because your guys' board meetings, I recall, they were, like, really pretty good. Okay. Like, serious. I'm surprised to hear that since we had no idea what happened in a board meeting. Well, keep in mind, I went to a lot of startup company board meetings. So, you know, yours was pretty good. But then afterwards, it's like, hey, want to go on our zip line? Oh, yeah. So, I mean, like, back in the day, you kind of dress up a little bit for board meetings still.

34:18And so I'm, like, in this, like, semi-professional outfit. And I'm like hanging from this zip line going, wee, in this office, in this big loft space. And you guys had like go-karts. We had go-karts that we would race around the office. That sounds familiar. I think I remember the go-karts. You and Paul came and visited the office. Yeah. Not too long after we moved in, maybe a few months, you were in NSF or something else. And you stopped by. And that was a big moment for us that you guys were like willing to come to our office. I like vividly remember like how big a deal it was. Did you guys put all the toys in or had you rented it like the prior tenants had done all that?

34:58No, the toys were definitely ours. Oh, okay. Okay. And when you say ours, like your idea or Trip and T-Con's idea? I think it was mostly a Trip and T-Con thing. Did I ride a go-kart? That's what I really need. I don't think you rode a go-kart. That doesn't sound like me. I think you noticed the go-karts and were just like, hmm. I hope you're doing that off hours. so then did did you have all this momentum behind scribb did it keep the momentum or what no then happened so it you know it was a roller coaster of a company our hope was that it would be the next youtube you know we'd follow a youtube story they just launched and then the thing just like grew exponentially and then they got acquired for two billion dollars and continue to grow exponentially even after this like insane insane story right yeah um and so like we thought that we would be on that trajectory, but we were not, unfortunately.

35:48Shortly after we raised our Series A, our traffic did like plummeted. And in fact, during our whole Series A, Paul was checking in with us to see how things were going. And every email from him was like, close the round faster, like your round is going to fall apart. It probably would have if the investors had just asked for updated numbers during closing, but they didn't do that. They handed it off to their lawyers who just asked about like legal things and they didn't realize that - That the business was falling apart. It was falling apart. Minor detail, minor detail. Goodness. Wow. And the thing that actually, and honestly, like the company would have died.

36:28And the thing that rescued it is we went to a Y Combinator event, some dinner that you guys were hosting with founders. I think it was just like a regular Tuesday night dinner and you guys just invited us because you would invite alumni. occasionally just hang out. Yes, totally. And so we were just hanging out with like the new batch of founders. And we struck up a conversation with Paul Buchite, who was hanging around on that dinner. And in, you know, his like quintessential like Paul Buchite way, he just like offhand dropped this like incredibly brilliant idea that totally changed the trajectory of the company.

37:02Tell us. Typical. He told us that what we had built was not actually like a YouTube-like site because it's not entertaining. Like documents are not entertaining, like videos are. He told us that what we'd actually built was an SEO destination and that the way to make Scribd work was to get lots and lots of search traffic from Google. And he told us how to do that because he'd worked at Google. And so he really understood Google and search traffic in this whole world. And he basically just like gave us the playbook for how to do it. And that changed everything. How long did it take you to implement Paul's idea?

37:34Oh, like that night. Really quickly. Really quickly. Easy. PB to the rescue. Thank you. Amazing. Wow. So I'll always be grateful to PB for that. And so that worked. So we implemented Paul Buchheit's ideas, and that created a viral growth loop where the core growth loop of Scribd is people upload some documents. Google sends us free traffic of random people who happen to want information in those documents. Once in a while, one of those people uploads their own document and adds to the collection. And basically, we got the viral growth factor of that loop to be greater than one, and the thing just like took off like a rocket.

38:10And just two years after that fateful meeting with Paul Buket, which would never have happened if you hadn't invited us to that random batch dinner. Oh my gosh. It's like save the whole company. Oh my gosh. Scribd is one of the top 100 sites on the web. Amazing. We had more than a billion people coming to Scribd every year. Wow. Wow. Yeah. What's a very like canonical use case for Scribd, for just an average person using Scribd? One of my favorite use cases is sheet music. So I'm an amateur pianist and I would often look for sheet music on the internet. And the best place to find it was Scribd because somebody would have like transcribed a song, uploaded it to Scribd, and you could just search for, you know, sheet music for X and like there a Scribd doc would like pop up.

38:59It would pop up. But you have to have good SEO to make that happen. You have to have good SEO, yeah. That's amazing. Do you play the piano a lot still? Yeah, from time to time. What's your favorite kind of music to play? Broadway show tunes. Nice. Oh, Jared. Oh, we're going to have to take this offline because I love Broadway show tunes. Oh, my God. I can actually sing a lot of Broadway shows that I just listened to as a child, so I actually have all the lyrics memorized. I could sing most of Evita. I mean, I can't sing it. Do you want to come to one of our show tune nights? We do show tune nights where I play piano and people sing.

39:35Oh, we're doing that while on our town. Yes, as long as it's a musical, I know the words too. Oh my gosh. Okay, show tunes night at Jared's house. Okay. I'm in. So this, what you just described, that happened in between the A and the B, or did you need the B to make that happen? It happened throughout the A to the C, I would say. Yeah, that whole process. And Red Point kept putting money in. CRV, which we turned down in the Series A, came back, and they let her be, which I'm very grateful for. Those guys were amazing. Bill. Yeah, Bill Tyen, George Zachary.

40:16And it was very close, though, because we raised our Series B at the worst possible time. So we raised our Series A on the back of this launch hype, which all went away. Then Paul Buchite saved the company. We had all this traffic. We get ready, geared up to raise our Series B. And we think it's going to be a piece of cake because our traffic growth is insane. We have millions of people on our site. We think this is going to be a really hot round. But then shortly before we go out to raise, the financial crisis starts. and basically all the VCs just like close up shop. This is 2008? Yeah. I just watched the big short last night, by the way.

41:01Oh my gosh. And it triggered me back to like the YC days. And I was trying to explain to my younger son like how Y Combinator was affected. Was a part of it. Yeah. It's a scary time. It really was. So what happened? Well, we had all this traffic, but we weren't making much revenue. We tried to monetize the site, but basically just by putting ads on it. So we had ads on the site, They weren't making us that much money. And we'd hired a pretty big team and we had a pretty big burn rate because we felt confident that we'd be able to raise this next round because like the traffic was growing so much.

41:33But we didn't really have an easy path to getting like default alive. Like we had to raise money or it was going to be really bad. And I'm just really grateful that the CRV guys were just like unperturbed by the financial crisis. They were like, we liked you guys last time. We still like you. We'll sign a term sheet right now. Amazing. That's really nice. Really save the company. Who was on the board? I mean, I remember Bill and I remember Jeff being on the board. Yeah. Who else was on the board? It was Bill and Jeff and me and Tripp. Okay. Okay. And you weren't an observer? I was an observer.

42:04Yeah. I just took the minutes. You know, that's what lawyers do. In meetings, you just make these vacuous minutes.

42:12So then what? So then we kept trying to grow Scribd. And, you know, Scribd is a – I would argue that Scribd has never really had product market fit, not the way something like Airbnb does. But who guys know Paul Buchat's famous saying it's better to make a product that like a few people love than a lot of people like. Scribd is a classic example of why that is so true, which is we built a product that a lot of people like a little. So we had millions of people coming to the site, but nobody really cared. Yeah. And we tried for years to like make a product that people like really loved and just like a website that hosts documents just like wasn't it.

43:00And so we had all this traffic, but like we never like ended up on this sort of like, you know, like escape velocity trajectory like an Airbnb or a Stripe. There was one pretty pivotal moment almost 10 years in when we launched a second product, which was really inspired heavily by Emmett, Shira, Twitch. So the Justin.tv founders, we were like sister companies with them because we were doing YouTube for documents and they were doing YouTube for live video. That was like the one sentence of JTV. So we were both doing YouTube for Xs. we'd done YC at basically the same time. We'd lived in the same apartment building.

43:46I mean, we were so similar. And so we spent a lot of time with the Justin.tv people and we were very inspired by them. And they'd ended up in a similar situation before they pivoted to Twitch where they'd built a site that had a lot of traffic, but nobody really cared. A lot of it was pirated content. It wasn't on a escape velocity trajectory. And then Emma had pulled off this stunning pivot to Twitch and we were very inspired by that. And so we're like, how do we do that? Yeah. Yeah. And so our best idea was to pivot from being YouTube for documents to being Netflix for books. Oh. And this was when we launched the unlimited book subscription service.

44:21Yeah. Okay. Interesting. And this was 10 years in. Eight years in. Eight years in. Which is pretty long. It's pretty late to do like a big pivot. So you guys were really – you were slogging away at this for that long. Slogging away at this for that long. Yeah. And you're still there. Like, I don't mean. Yeah, Scribd is still the, it's the oldest independent YC company. Yeah, I guess I meant to ask that a different way, which is like you eventually dropped off, but Tripp continued to do it to this day. He left two years ago. Oh, he left two years ago. Like he did it for another eight, like seven or eight years after I left.

44:52Yeah. Okay. Yeah, I think Tripp started a new company. Yeah. Yeah. Okay. So when did you leave and why? I left in 2015 and I left for a few reasons. I've been working on it for 10 years.

45:12I never slotted that well into the CTO role. Trip is the CEO. I was the CTO. But I wasn't really a CTO. I was just a college student. And so even though I guess my title was CTO, I kind of just did a bit of everything and I liked doing that. and I wasn't really the right person to be like a VP of engineering and just like run the engineering team and just like do engineering management at scale. So I was just gonna say you didn't love doing being manager. I didn't love being a manager especially just an engineering manager I really like being a founder and like creating stuff and you know when I left here was you know a couple hundred people and by by that scale like it really needed people who would be managers and like own functions and divisions and responsibilities.

45:59I actually think a core reason that we left is that Paul hadn't published the essay founder mode yet. Like I actually think if Paul had published the essay founder mode like 15 years earlier, Scribd would have ended up on a totally different trajectory. Because we had let our VCs do exactly what Paul said in his essay, which is like pressure us into like running the company in manager mode. And so we had all these managers. And basically, I had to like operate within these very narrow lines or all the managers would get upset that I wasn't like playing by the rules of the system that they had created.

46:31And I just felt very stifled. And I felt like I was less good at this job of being like a manager of this like department than like a professional manager that I could hire who'd like worked at, you know, Google for 10 years and had lots of like management experience. And I was just like, well, I guess this is what a big company is like. It must suck. And so I don't want to do this big company shit anymore. I want to go back and start another company and do the early stage startup stuff and be a founder because that's what I'm good at. That's what I understand. I feel like – and it's more fun.

47:05Yeah. At its biggest, how many employees did Script have? 500. No way. That's big. I don't remember that at all. 500. Wow. Not all in San Francisco? All in person? Not all in San Francisco, but mostly in San Francisco. Oh, wow. So you leave after a long tenure at Scribd. Yeah. What are you off to do next? I wanted to start another startup. So I went back to my Y Combinator days and started thinking of stuff to build and talking to potential co-founders. And I had a few ideas that I was chasing. And I wanted some advice on which one to work on. And so I reached out to Sam Altman, who was the president of Y Combinator at the time, who I knew not that well, but casually from like the OGYC days because we'd done YC around the same time.

48:00And I asked him if I could do office hours with him to get advice on my new startup. And to his credit, he said, sure. And I went over to the tiny little Y Combinator office in San Francisco where he was working at it. I don't know if you remember this one on Kearney Street. Yes, I do. The Kearney Street office. I had like one room. Yeah, no privacy. No privacy, yeah. And I met with Sam. And I think I just had very good timing because unbeknownst to me, shortly before I scheduled this meeting with Sam, Gary Tan had left Y Combinator to start initialized. And Sam had to run the winter 2016 batch, and he was short a partner.

48:42Oh, boy. So I think I just happened to show up at the right time where he was like, well. Let's do this for a little bit, a few months, Jared. That was exactly his pitch to me. It was like, just do one batch and then like you can go do your startup afterwards. And I mean, it sounded awesome to me. I mean, I loved YC, you know, from the beginning. It had been super influential. And like I really respected Sam and the other partners at the time. And it just sounded like it would be super fun to like hang out at YC for a batch and learn from everybody and work at some startups. And so that was my plan was to do one batch at YC and then go start my startup.

49:16They always start with just one batch. I love it. And now it's 10 years later. Now it's 10 years later. This is, sorry, this is a little bit of a non sequitur, but to go back really quick, why do I remember David Sachs being on your board? Is that true or am I thinking? He was on my board for a while. He joined as an independent. He was the independent. Why? Why him? I mean, he, like he was a big deal. You know, he. Was he a big deal back then? He was a big deal back then. Was it Yammer? Yammer, yeah. Oh, Yammer. He had sold, he joined when he was still running Yammer, and then he sold Yammer for like a lot of money.

49:47It was like a billion dollars. Okay. And so he was like a pretty high profile person. Yeah. And you guys thought he would help you just get to the next level with his advice? We did, or maybe just our VCs did. Our VCs, yeah. I think our VCs were like, you need, our VCs were always pushing us to have more adult supervision. Like from day one, that was the VC playbook in Silicon Valley. It was the exact opposite of founder mode. It was like, oh, you guys are kids who are racing around on go-karts. We need some adult supervision, and here we're going to lose all our money. Yeah. Yeah. Yeah, yeah, yeah.

50:18Interesting. Okay, so it's 2015. Who's at YC? What other partners are there that you're working with that? Was it in the summer? So my first batch was winter 16. Okay. It was Michael Seibel and Dalton Caldwell and Aaron Harris and Kevin Hale and Kasser Younis and Justin Kahn. and Tim Brady joined in the middle of the batch. Oh, my gosh. What a memory you have, Jared. Yeah, yeah, yeah. This is remarkable. Dalton had just joined, too, I'm pretty sure. A couple years earlier. No, I think it was, I don't think it was a couple years. I think it was just one, like one batch. Because I remember him coming to the Kearney office to sign his employment agreement.

50:58That's why I remember that Dalton was not too far ahead of you. And you loved it? I loved it. I mean, it was just incredible. I mean, it was just, yeah, I just like, yeah, it was an incredible privilege to get to be one of the people that you had selected to be the custodians of the incredible institution that you had started that had launched all of our careers. I just felt like an opportunity I couldn't let go. Who was in that batch? Do you remember? Some amazing companies were in winter 16. That was the batch where we had not one, not two, but$3 billion hard tech companies in the same batch.

51:37Relativity Space, Astronus, and Boom Supersonic were all in that batch. Oh, my word. Yeah, yeah. So there's a really good batch for hard tech. Oh, because Sam was doing all the hard tech stuff then at that point. Yeah, but lots of other great stuff too. You've been around for a long time at YC. What has YC retained, in your opinion, still that makes it so special? Well, one of the things that I've really enjoyed, especially the last two years, is I feel like the current iteration of YC, the Gary Tan era here in this building where we're in, is the most similar to the 2005, 2006 era that I did and that you guys all remember because AI has – it's just like Web 2.0.

52:27It's literally just like Web 2.0. It's this new technology. Nobody knows what you can do with it. Nobody knows what kind of companies are the right kind of companies to start. Every month, they're inventing new stuff that you can do something with. And it's brought the same kind of founders back to YC that were there in 2006. You know, recent college grads like me and Trip who just like think this stuff is really cool and want to tinker with it. Yeah. And deeply technical. And deeply technical. Yeah. I would agree with that. So compared to other changes in human history, like where do you think the AI revolution ranks?

53:04I mean, this is going to sound cliche, but I think it's probably going to be the most important thing in all of human history. Really? The most important? I actually think so, yeah. I mean, perhaps after the agricultural revolution, probably like on par with that. Certainly much more important than the internet. Yeah. Yeah. Wow. Makes sense. Paul said the same thing. Oh, yeah. Paul, I think, has compared it to like the industrial revolution. Yeah. Yeah. Well, we can keep talking about AI, but I want to know, did you want to talk about YC software? I did want to talk about YC software because one of the unique things about Y Combinator, even dating back to the earliest days, is that we used software more than other investment firms.

53:48And Jared has been a big part of the YC software team. I mean, you started the first team. We didn't have a team before you. Tell us about how software plays a role. Sure. This has been one of the most fun parts of my job at YC, and one of the reasons that I didn't end up leaving YC to start a startup, actually. Really? It was actually core to this. So let me tell you about my first day on the job at Y Combinator. So Sam recruits me. He convinced me to join. He tells me to start on like Tuesday. I show up on Tuesday at the Kearney Street office. And here's what happens on the very first day. Do you guys remember Brett Gibson?

54:31Yes. Yes. So Brett Gibson was the software engineer who worked at YC. He was the one software engineer who was working at YC at the time. He had been a YC founder with a company called Slinkset. Oh, I forgot about Slinkset. Yes. Okay. Didn't take off, but yeah. And my first day at Y Combinator was his last day at Y Combinator because he was leaving to join Gary Tan at Initialize because Gary left to go to Initialize, brought Brett with him. Brett is now the president of Initialize. He now runs the firm. But at the time, he was the software engineer at YC, the only person who understood all the code that he'd written.

55:09And by the way, he had also founded Post Haven with Gary. Oh, OK. That's right. Like my blog's on. Yeah, yeah, yeah. Still. Still is on Post Haven. Who maintains that thing now? I don't know. Paul and I were promised that if we put our stuff on Post Haven, it would last forever. That was sort of the promise from Gary. And it's still there. So I don't know who looks after it. He's maintaining the promise. I'll have to ask Gary. Okay. So it was Brett's last day. And so it was my first day. And I had, you know, I'd been the CTO at Scribd. So I was technical. I knew how to build web applications. And like Brett, basically like the hair on fire problem at YC was like the only engineer was leaving and there was nobody who could like keep the website up and running.

55:55And I didn't have any other, I didn't have anything else to do. So I was like, well, I can do that. And so I spent the day doing like a code handoff from Brett as he like taught me how everything worked. And so day one, like my job was to be the software engineer at YC. Wow. So Jared is not only a YC partner, but also the YC software team. Head engineer. An entire team. But I loved it. I thought the software was super fascinating. I mean, I'd been a user of Hacker News from like the day that it launched. I'd been a user of Bookface from the day that Gary launched that. So I had followed this evolution of the software.

56:34And I found it a very intellectually interesting piece of software to write. I mean, it's like software for founders. Is it software for a community that I cared about? One thing that I've learned is that like at the end of the day, I didn't really care that much about the Scribd users. Like I cared that there were a lot of them and that they paid us lots of money. But I didn't really care that much about them as humans and that they had – I didn't have much more of a personal relationship with them. There were like millions of them and they were all over the world versus like the YC software.

57:01Like the users, like the most important users of the YC software all work in this building. And I know them all personally. And when we make something good, they tell us. And when we make something bad, they tell us. And it feels totally different from building like a mass consumer product. How much feedback did Paul give you on the software? Well, he gave me some feedback last night. He reported a bug that I need to fix after this. Ten years later, he was still harassing you. He found a bug in book Facebook? In internal, yeah. Oh, Jared. You're getting some award for patience. But it's been a great privilege to get to continue the tradition of building software at YC, which is something that Paul started.

57:41I mean, people who are listening might not know that like the whole time that Paul was running Y Combinator and doing interviews and office hours and batches and everything, he was building Hacker News. I still have no idea how he did it. Would he just like come home after a day of office hours and then like write code until midnight or something? He worked on it a lot. I remember that. But back when he was building it, YC wasn't quite as busy because there were fewer founders. You always have to keep that in mind. But it was always an important part of what we did. And I remember Paul built, like for me, incorporation documents.

58:18He put that all online so you could just fill in the blanks and it would propagate. And so I feel like from the very beginning, there's been this tradition of YC, unlike other venture firms that just throw people at problems, We like write software to scale because that's what Paul knew how to do. And we've like kept that tradition going. And Carolyn is now super involved in like the nth level descendant of the software that Paul wrote for you for legal documents. We now have a three-person team that like automates stuff for the legal team. By the way, so I'll just stop for a minute and give Jared huge – Jared and all the other people who work on this at YC.

59:00Building software for lawyers is boring and it is unsexy, but it is so, so helpful. It's so important. It's so great that this is built and it really helps our team a lot. What about software in the application process? Can you talk at all about that? Sure. Well, that was one of the first pieces of software that Paul wrote, right? It was like software to manage the applications. Because the first batch, you printed them out. Oh, yeah. And you passed them around the desk. Yep. But at what point did you stop printing them out and started reading them on computers? It was pretty early because I think that was such a huge pain point.

59:34And, you know, my co-founders were three software engineers. They were like, there's got to be a better way than printing out PDFs and writing all the scores on it. How I remember that changed my life, though, when they moved the applications to software, what I used to do, I wouldn't read all the applications. I would go through as they filtered to the top and we knew there's a chance we're going to interview them. I'd go through and hand mark any red flags I'd see. Like, is someone not quitting their job? Is there an unequal, hugely unequal equity split? any red flag, I'd go through and manually designate that.

1:00:16And that's really laborious. Now that's all automated. And this is not by the way, oh, we're not going to fund them. Just a red flag. Something to ask about. Something to ask about. So I remember having all of that, all of the applications online was huge. And we could track who applied for a second time. And I mean, how sophisticated is it now? It's pretty darn sophisticated. We've been making this better every batch for 24 batches. So it's gotten pretty good now. We used to always joke the initial software used to like weed out the goat farmers, you know, who we weren't going to fund. The goat farmers.

1:00:55I don't know. Because we really did have someone apply that was a goat farmer. Well, I'm not surprised at all by that. And we used to have alumni, Carolyn, do early stage passes and sort of basically weed out definite no's. Yeah. Yeah, so that's been automated. There's a cool part about software at YC that I think people outside don't know anything about, which is that the fact that we build our own software keeps the partners current and technical. I remember Paul told me this offhand a few years ago. He was like, when he was running Hacker News, it gave him a lot of empathy for the founders because he was dealing with the same stuff that they were.

1:01:39He was dealing with like bugs and the server goes down and the database is full and all of these like problems that happen when you run a website. And so I think a lot of founders see the partners as just these, I don't know, like manager people who like just like do office hours and stuff. But like the partners now are heavily involved in the software. It's not just me. Actually, all the partners are like involved in building the software at NYC. And now we have so much software that we've divided it up into five different products. And each GP is involved with one or two of the products. And it's been really cool in the AI era especially.

1:02:19The majority of the software team at YC now is actually focused on basically building AI stuff into the YC software. and because of that we get to be the early adopters of all of the stuff that our companies are building and all the technologies that they are working with and we get to basically sort of be like founders of ai companies and build really complicated prompts and ai agents just like all of our founders are doing and that's been incredibly helpful actually for us as partners because like the stuff that we're investing in is the same stuff that we're like using and building all day And it's made us much smarter about AI.

1:02:58Wow. Do you think you need to be super technical to be a good investor in this new world of AI? I don't think you need to be. I think it's helpful. I think also the definition of technical is going to change. You know, like now a lot of the code that we write like is English. and lawyers actually are amazing at writing prompts because the lawyers are the original prompt engineers I actually yeah I agree with that you guys have been programming in English for like hundreds of years yeah the rest of the world has finally caught on that you can program in English Carolyn I want to see some results here I want to see you create something I actually really want to show you what we work with because you'd be amazed it's so good yeah have you seen the new stuff no we should show you the new stuff it's actually really cool I mentioned to her that I really wanted to show her, like the pipelines and stuff.

1:03:48In the legal department. I'll stop high. You know I'm secretly a legal nerd, and I love the stuff. I used to do a lot of it. Yes, I know. I know. You don't have to be a secret legal nerd. You can be an out legal nerd. I won't be an out legal nerd. Let me see what other questions I have. When you were talking about the past two years have been really exciting, and it feels like sort of the early days of YC and those types of people, Do you think it's fair to say that there are fewer sort of fakers or, you know, posers, if you will, who are doing YC or doing a startup for just the coolness factor or the brand?

1:04:27And they're actually more genuinely technical people who like to create things? I certainly hope so. You know, I think there's probably two forces happening simultaneously. I think the first force is that the technology is really interesting. And so it's pulled a lot of people into startups who were maybe not like money driven. They're just like actually genuinely really interested in the technology, which I think was not really true in 2021. Like there just hadn't been any new technology in a long time. And so the people doing startups back then were mostly people who wanted to build a business, which is a totally reasonable reason to do a startup, of course.

1:05:06But like there weren't that many people who were just like deeply like technology focused. And so it's brought in those people. But I think there's a second like cultural trend, which is like Y Combinator worked. Like when you guys started it, you wanted there to be more startups. You wanted being a founder to be normalized, to be something that like was way more common than it was back then. Something that like didn't seem so weird. And you succeeded. And now it's like far more mainstream than it was before. And so you have a lot more people who are doing a startup for the same reasons that you would get an internship at OpenAI right now.

1:05:47Because it like looks good on your resume and it's what the cool people are doing and their status and prestige associated with it. I want to talk about Light Cone, your fabulous podcast. How long have you been doing this? A year and a half now. Oh, my God. Has it been that long? How often do you launch episodes? We're supposed to do it every two weeks, but realistically it's been more like once a month. Okay. If Gary had his way, you'd be doing it every week. Gary is a content creator. But I was on the show and loved it. And I think you talk about such interesting things on every episode. What's been one of your favorite episodes?

1:06:29Well, other than the one we did with you, of course. Oh, stop it. I think my favorite episode was the one that we did on how AI agents are going to become the new vertical SaaS companies. Because I think we kind of called a trend when some people were talking about it, but it wasn't like quite obvious yet in the world. And I think it's played out the way that we said that it was going to. And I've talked to a lot of founders who told me that like that episode was a big part of their inspiration to like work on their current idea. That they had like heard that episode and they were like, oh, I should start an AI agent company.

1:07:00That makes sense. And then they did. Oh, wow. That's very cool. How long ago was that one? That was about a year ago. Oh, about a year. Okay. Okay. And you guys sometimes have guests, but not always. Yeah. What did you guys talk about when you were on? Oh, we talked a lot about early days of YC and stuff. Because I can't talk about how AI agents are going to be the vertical integration of SaaS. I'm not even sure if I just said that correctly.

1:07:28It was a lot of fun, though. It was a lot of fun. because, you know, you've got Gary, Harge, Diana, Jared. It's a fun group. Yeah, for sure. Jared, we had so much fun catching up with you. I cannot believe all of the, like, fascinating nuggets you've thrown out that I either don't remember or didn't know. I had such a great time, guys. Actually, also, you must be really organized about your emails. Did you pull those up out of the archives or did you just do a search? I just searched. Okay. All right. Thanks to Gmail, I have all the old emails. Paul Bukai gave us unlimited stars. I got all the old emails.

1:08:03I love it. I love rereading the old emails from like – because, you know, I've been getting Y Combinator emails since like 2006. And so like the whole like archaeological record is there. Well, that's what I'm banking on for my book that I someday – I keep threatening to write. About the history of Y Combinator? Yes. Oh, please do. Crazy stories. That would be amazing. Well, I'll be coming to you because you clearly remember them. But I swear the only thing I can rely on are my email archives. But we loved having you. It was so much fun. I hope you're at Y Combinator for another 10 years. We won't let you leave.

1:08:40Thank you guys so much. You are both so important in everything that's happened to me since I was 20 years old. Since you was 20 years old. Wow. Thank you so much for everything you guys have done for me. Aw. Thanks, Jared. Talk to you soon. Bye. Bye. oh Carolyn that was so much fun well Jared is a favorite and he is such a nice person and it is I actually had I had actually forgotten the whole Scribd story me too so I'm really glad that he walked us through that because I knew I knew kind of it generally I've obviously known him since he was 20 but I didn't remember all those details so I didn't remember so many of the things that he said so that was really fun to be reminded of all those things and he does have a great memory and And the fact that he could just dig around and find all those emails.

1:09:25I mean, I'm so glad everyone's saving those emails because they will be very helpful for you. I think that they will. And Jared is such a nice person, too. He is. And he has. He's so smart. And he's so smart. And he's got a great dog. And he's got a great wife. And he's like just. He's awesome. He's awesome. I love doing it in person. Yeah. Actually, that is really fun. I'm sorry I'm not here as much as I would like to be. But I loved catching up with him and I think it's going to be a great episode. Yeah, for sure. All right. I'll talk to you later. Okay, bye. Bye.