Sam Altman

Dear YC Community:

In response to a comment on Hacker News, I’m going to try writing an annual letter to the YC community with an update on our progress.

Our mission is to enable the most innovation of any company in the world in order to make the future great for everyone.  We believe new technology, economic growth, and new ideas about how our society might function are more important than ever before.

As of January 1, 2017, YC has funded over 3,200 founders and 1,470 companies.  This year, assuming there is not a macroeconomic meltdown, we expect the total valuation of companies that have gone through our program to surpass $100 billion.  We have also funded more than 30 non-profits.

As always, most of the credit goes to our founders—they, and the astonishingly strong and helpful community they create, are what make YC special.  The second-most credit goes to our team—I am incredibly thankful to work with such a talented and driven group of people.

YC Companies & Investments

We invested about $27 million in the Winter and Summer 2016 batches, and so far we have invested about $187 million in later-stage investments from our first Continuity fund.

We are excited to fund companies in any space that we believe is good for the world and can eventually sustain a very large company.  Some of the many areas we’re interested in are noted in our Requests for Startups.

Our largest exit of 2016 was Cruise, a self-driving car company.  We expect to fund many more machine learning-driven companies in the future (I will generally avoid calling out trends in these letters, because I’ve noticed doing that produced unintended consequences, but this one is so obvious and so important that I’m happy to mention it).

Helion, Oklo, and Bright are all working toward inexpensive clean energy, an area of great interest to us.  LendUp and Coinbase are two examples of YC companies innovating in financial services technology.  Boom and Relativity Space are pursuing strategies in aerospace that most companies haven’t pursued seriously in a long time, or ever.

Gingko Bioworks is learning how to design new organisms, and Science Exchange is making it easier to get new experiments done.  FarmLogs is making it easier and more efficient to grow food, and Gobble, Instacart and Doordash are making it easier to eat it.  Reddit and 9Gag continue to make me waste enormous amounts of time, but I love every minute I waste.  

Docker, PlanGrid, Checkr, Flexport, Gusto are just a few of the enterprise companies we’ve seen begin to thrive.  Machine Zone has become one of the largest gaming companies in the world.  Rappi, Wave, and Strikingly are some of the many YC companies succeeding on other continents.

In addition to the three companies we are currently best known for—Airbnb, Dropbox and Stripe—more than 50 of our companies are worth more than $100 million each.

We’ve funded a lot of other companies, but in the spirit of not exhausting your patience, I’ll stop listing them here.

Hyperscale

There’s one more trend I want to mention, though it’s not about a specific market.  I think we’re now in the era of hyperscale technology companies.  If you believe Metcalfe’s law, it stands to reason that network-effected technology companies are now far more powerful than ever before, simply because the number of people connected to the internet keeps getting bigger, and n^2 gets big really fast.

Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages that are still not fully understood by most founders and investors.  I expect that they will continue to do a lot of things well, have significant data and computation advantages, be able to attract a large percentage of the most talented engineers, and aggressively buy companies that get off to promising starts.  This trend is unlikely to reverse without antitrust action, and I suggest people carefully consider its implications for startups.  There will of course be areas where these companies are naturally weaker, and these are good areas to start companies.

Diversity & Inclusion

In 2016, we funded 68 female founders at 52 companies. About 22.3% of the companies we funded had a woman on the founding team, and about 12.5% of the founders we funded were women.  In 2016, we funded 52 Black and Latino founders at 29 companies.  11.6% of the founders we funded were Black or Latino.

The percentage of women who apply to YC is roughly the same as the percentage of women who get funded.  The same is true for Black and Latino founders.

From the data we have available, it seems that the percentage of women and people of color applying to YC is higher than the overall percentage of women and people of color starting startups.  This is encouraging, but we continue to want to understand and address the barriers that prevent more founders from underrepresented groups from starting startups and applying to YC.  We still have a long way to go.

While we remain committed to helping more underrepresented founders get started, we believe that’s only part of the solution.  We still see significant dropoffs at the stages after YC (e.g. raising late-stage capital).  The larger startup community needs to consider how little the unicorn-founder demographics resemble the early-stage demographics.

There’s clearly a lot more work to do here, and we’re committed to help do it.  We’re hosting our fourth annual Female Founders Conference this year in June, continuing our Open Office Hours with underrepresented communities and bringing in unconscious bias experts to train our team.  We’re always open to hearing how we can do a better job, so if you’ve come across practices or programs that work well to support diverse founders, please let us know.

YC Organization

Y Combinator is currently made up of 5 groups.  I’ll talk a little about each of them here.  We expect to add several more over the next few years, and in general you should expect us to try a lot of stuff (though of course not all of it will work).  You should also expect us to continue to grow the number of companies we fund.

YC (our flagship program)

In October of 2016, Michael Seibel took over responsibility for our main program as CEO of YC.  He’s doing an outstanding job, and I expect the program to significantly strengthen over the course of 2017 and beyond.

In 2016 (and the first part of 2017), we added three remarkable partners to the flagship group: Tim Brady, Adora Cheung and Daniel Gross.

One of my partners that I’d like to especially thank is Dalton Caldwell.  Dalton has been a YC partner since 2013, and now runs our admissions team, which is perhaps the most important function we have.  Dalton has taken a process that used to be stressful and deeply imperfect and improved it by a huge amount.  Though I’m sure we’ll still make mistakes, I sleep better at night thinking that we’re making far fewer in this area than we used to.

While I’m on the topic of recognizing partners, I’d also like to thank the three partners at YC that get some of the least public recognition.  Kirsty Nathoo is our CFO, and Jon and Carolynn Levy are our General Counsels.  They are full partners at YC but since they don’t advise our companies (as much) on business as the other partners, they are less well-known.  However, they work incredibly hard and thoughtfully, and they are one of the secrets to our success.  In fact, one of our most successful founders recently said to me “I tell every startup I meet they should do YC, and the reason is Jon Levy.  I don’t get how he managed to take my calls at all hours of the day, because the other founders in my batch said he did the same for them, but he solved more problems for us than I can count, and also just listened to me when I had a bad day.”

Finally, I’d like to thank our entire software team, lead by my partner Jared Friedman.  We’ve had an incredible improvement in our software over the past year, and someday when the history of YC is written, I expect that people will talk about software as one of our secret weapons.  This shouldn’t be so secret—one might reasonably expect technology investors to understand the importance of great software for themselves—but it is generally not the case.

We give companies in this program $120k for 7% ownership in their company, and work with them intensively for 3 months and then less intensively for the rest of the company’s life.  We run this program twice a year, and currently fund about 125 companies per batch. While at YC, founders get access to a range of resources, advice, connections, and special deals.

Anyone can apply on our website, and all sorts of people do (here are some common misconceptions about who YC accepts).

Companies often ask us how we decide who gets into YC.  There are four questions I consider:

1) Will this company build something lots of people really love?

If so, and if ‘lots’ is sufficiently large, the company has the chance to produce substantial earnings.

2) Will this company be easy to copy?

The most successful companies I’ve worked with have a significant competitive advantage—network effect, proprietary technology, complex coordination, or barrier to entry of some other sort.  I understand in theory it’s possible to build a very successful commodity company, but I don’t know how to do it.

3) Will these founders develop into “forces of nature”?

As most people say, it’s hard to make money unless you invest in great founders.  Defining what that means is usually left as an exercise to the reader.  Here are some questions I ask myself: Are these founders relentlessly determined?  Are they original thinkers?  Are they smart, and especially do they have new insights I haven’t heard before?  Are they good communicators (and so will they be able to hire, sell, raise money, talk to the press, etc)?  Are they focused and intense?  Do they always seem to find a way around obstacles?  Would I work for them?

This is the often the hardest factor for me to evaluate, because you have to make a judgment about trajectory—you are trying to predict where someone will be in five years.

4) Does this company have a clear and important mission?

Without this, I usually get bored.  More importantly, companies that don’t have this usually have a hard time recruiting enough great people to work with them, and thus struggle to become very large.

We especially like founders who have some sort of non-traditional background; we are somewhat suspicious of founders with extremely “tracked” lives.  Startups are not a resume item, and we don’t like founders who view YC as a stop on the way to B-school.  Although in many ways it’s a good problem to have, the increase in the value of YC’s brand means we have to work harder to find people doing a startup for the right reason: to bring an idea they’re obsessed with to life, and willing to do something unreasonable to see it happen.

We have had great success funding “unknown” people, and we will keep doing this—it’s one of our two or three best secrets.  Please help us spread the message: you don’t need to be experienced, well-known, or have an impressive resume to get into YC.  We fund smart, ambitious people with a great idea and evidence that they can build things.

If you know a founder who should apply to YC, you can recommend them to us. That said, companies don’t need a recommendation or introduction, and most companies we fund don’t have one.

As I mentioned before, I think the strength and quality of our community is one of the most important things we have to offer.  As with any community, this emerges from a complex set of factors, but I’ll mention three here.

One of the most important cultural values PG and Jessica put in place was to do the right thing for founders, even when it is not in our own short-term interest.  When I was going through YC, it was the thing that most stuck out to me as different from other investors.

Another cultural value they created is to try to fund only good people (in the sense of doing the right thing, though separately we evaluate for effectiveness).  We sometimes get this very wrong, and dealing with the repercussions is the most unpleasant part of our job.  However, we manage to get it right a lot.

Thirdly, we have a ‘pay-it-forward’ mentality.  Startups in the batch know they can ask any alumni for help, well beyond normal Silicon Valley expectations.  Later, when they’re successful alumni, they help new companies without us ever asking.

YC Continuity

YC Continuity is our growth-stage fund.  We started it in 2015, and it’s run by Ali Rowghani.  Last year, Anu Hariharan joined as our second YC Continuity partner.

We do this to provide a source of friendly growth-stage capital to companies and founders that go through the YC program, especially to companies that other investors may not fully understand.  We also hope to be a force for good in the growth-stage investing market.

YC Continuity will begin to experiment with programs to provide more advice and resources to growth-stage companies in 2017.

YC Research

YC Research is a non-profit research division of YC.  Although we think startups are a good structure to align people to solve a problem, they are clearly not the best solution for everything.  For some important problems, a non-profit research lab is a good approach.

We sometimes fund and run internal groups, and sometimes fund external organizations.

So far there are 5 groups: Basic Income, OpenAI, HARC, New Cities, and Universal Healthcare.

Basic Income is studying the effects of giving people unconditional monthly cash.  We are currently in our pilot phase in Oakland.  We are continuing to learn and make changes, and work with various public agencies and governments to enable the full-scale study.  We are planning to run a larger study than we originally intended, and we hope to start fundraising for it soon.

OpenAI is trying to develop artificial intelligence for the benefit of humanity.  In our first year, we released Gym, Universe, and a number of new ideas that were at the limits of my understanding but that I enjoyed reading about.  In 2017, we hope to achieve significant new milestones that are not possible with current AI technology.

HARC is a group headed by Alan Kay inventing new ways for humans to learn and understand more.  My visit to Bret Victor’s lab last year, which is a sort of computerized interactive room, remains one of the new technologies I think most about.

New Cities is still in the exploration phase, but we hope to have more to share over the course of this year.

Universal Healthcare is a project on which we are partnering with Watsi to study how we can use technology to make healthcare both better and more affordable.

We grew a little faster than we were expecting, so we are trying to take a breather on further growth at YCR.  But we may still add one more group in 2017.

Startup School

Startup School is our new MOOC (which we will supplement with our existing series of conferences).  It will be open to anyone (unless we get absolutely overwhelmed with interest) and is free.  We will stream talks like the ones that happen during YC dinners, provide advice to startups, and help them connect to other startups in the program and other people that may be helpful.

Although we clearly stand to gain from this, we are doing it because we believe spreading the message about entrepreneurship and making the necessary information, community, and connections freely accessible to everyone who might want to start a company is important.

This year, I’ll be teaching it.

If this goes well, we hope to offer it every year.  In future years, we also hope to explore how something like ‘financial aid’ might work for people that need a small amount of capital to help get their startup going.

Hacker News

Hacker News (HN) is an internet forum, created by Paul Graham shortly after YC got started and now run by Daniel Gackle.  Its original purpose was to try out the programming language PG was developing—a dialect of Lisp called Arc, that HN still proudly uses today—and to be a place to find interesting things to read.

HN’s initial users were fans of the essays PG had been publishing about startups, programming, and a lot of other things.  Soon it became a hub for everyone interested in YC and startups YC was funding.  YC and HN grew up together, and many YC founders started as HN users.

HN remains focused on startups, programming, and lots of other things—anything intellectually interesting goes.  The HN community has developed many unique features over the years, such as the "Show HN" format, where users share something they've made, and monthly "Who Is Hiring" threads that have helped many community members find jobs.

Hacker News has 3.4 million users per month and 350,000 users per day, with 4 million pageviews a day.  There are just under 1 million registered accounts, with several hundred added each day.  Users post around 1,000 articles and 6,000 comments to the site per day.

These numbers are all growing, but relatively slowly, and we like it that way.  Internet forums are notorious for degrading over time--one of the ways PG described HN was as an experiment in seeing how long a forum could stay good before it deteriorated.  We've mostly managed to stave that off, for 10 years now, but we're always mindful of this risk.

HN has grown into the leading community for tech and startups on the internet, known for its emphasis on civil, substantive discussion—at least in theory!  Our team affectionately refers to HN as "the worst internet forum, except for all the others".

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We are only about 30 years into the age of software, about 20 years into the age of the internet, and about 2 years into the age of artificial intelligence.  Each of these by themselves is a technology revolution that I believe we will look back on as being extremely significant; taken together, I believe they will represent the most significant technology revolution in human history—I believe we are likely to have less in common with whatever we call the most intelligent species on the planet in 600 years than we did with humans 60,000 years ago.

It’s an exciting time to do what we do.

Sam Altman

President, YC Group

It is time for tech companies to start speaking up about some of the actions taken by President Trump’s administration.

There are many actions from his first week that are objectionable.  In repeatedly invoking unsubstantiated conspiracy theories (like the 3 million illegal votes), he's delegitimizing his opponents and continuing to damage our society.  So much objectionable action makes it hard to know where and when to focus, and outrage fatigue is an effective strategy.

But the executive order from yesterday titled “Protecting the Nation From Foreign Terrorist Entry Into the United States” is tantamount to a Muslim ban and requires objection.  I am obviously in favor of safety and rules, but broad-strokes actions targeted at a specific religious group is the wrong solution, and a first step toward a further reduction in rights.

In addition, the precedent of invalidating already-issued visas and green cards should be extremely troubling for immigrants of any country or for anyone who thinks their contributions to the US are important.  This is not just a Muslim ban.  This is a breach of America's contract with all the immigrants in the nation.

This administration has already shown that they are not particularly impressed by the first amendment, and that they are interested in other anti-immigrant action.  So we must object, or our inaction will send a message that the administration can continue to take away our rights.  

In doing so, we should not demonize Trump voters—most of them voted for him for reasons other than the promise of a Muslim ban.  We need their eventual support in resisting actions like these, and we will not get it if we further isolate them. 

The tech community is powerful.  Large tech companies in particular have enormous power and are held in high regard.  We need to hear from the CEOs clearly and unequivocally.  Although there is some business risk in doing so, there is strength in numbers—if everyone does it early this coming week, we will all make each other stronger.

Tech companies go to extraordinary lengths to recruit and retain employees; those employees have a lot of leverage.  If employees push companies to do something, I believe they’ll have to.  

At a minimum, companies should take a public stance.  But talking is only somewhat effective, and employees should push their companies to figure out what actions they can take.  I wish I had better ideas here, but we’re going to have a meeting on Friday at Y Combinator to discuss.  I’d love to see other tech companies do the same. 

If this action has not crossed a line for you, I suggest you think now about what your own line in the sand is.  It’s easy, with gradual escalation, for the definition of ‘acceptable’ to get moved.  So think now about what action President Trump might take that you would consider crossing a line, and write it down.  

Almost every member of the GOP I have spoken to knows that these actions are wrong.  Paul Ryan, Mike Pence, Kevin McCarthy and James Mattis said so themselves when Trump first proposed his Muslim ban.  We need to remind anyone involved in this administration that, for the rest of their lives, they will have to explain why they were complicit in this. 

In my first post on Trump last June, I said it would be a good time for all of us to start speaking up.  We are now at the stage where something is starting that is going to be taught in history classes, and not in a good way.  This morning, Kellyanne Conway posted on Twitter that Trump is "a man of action" who is "just getting started".  I believe her.  We must now start speaking up.

The Affordable Care Act is far from perfect–for one thing, I think health insurance should be entirely separate from employment–but I hate the thought of losing it without a replacement for people who will lose insurance. If Congress ends up repealing it, I hope they earnestly try to preserve the best parts, and put in place something better.

One thing the ACA definitely did was help a lot of founders start their companies--without it, being a founder would make sense for less people. The Department of Health and Human Services released a lot of new data yesterday showing how the ACA helped support entrepreneurs, and in light of that, I thought it would be good to collect and share stories of how the ACA helped some Y Combinator founders get started.

Here they are in the founders’ own words:

Dan Carroll, Clever, S12

March 3, 2012: I'm holed up in a hotel room in San Francisco with two of my best friends, wildly excited about the idea that will become Clever. We've packed the day with difficult conversations – Where will the company be founded? Do we have enough savings? Who will be CEO? – but the only topic that I'm truly afraid of is health. I've been living with Crohn's Disease for nearly ten years, and I know that without health care, I'd die, and without health insurance, I'd go broke. But some quick research tells me that, thanks to the ACA, I can join my parents' healthcare plan until I turn 26 the following January. Risk mitigated, I make the commitment to my cofounders - I'm in.

Ethan Perlstein, Perlara, W16

I left academia on Jan 1, 2013 as unemployed former postdoc. I would not have been able to move across the country to start my company, and my wife wouldn't have given up her employer-sponsored health insurance, if not for Obamacare. Also, some of the first employees at Perlara depended on the ACA for insurance.

Randall Bennett, VidPresso, W14

There's a good chance that without the aca my startup wouldn't exist... or I'd be dead. When launching my startup we couldn't get health insurance because one insurer denied us because I once had a sleep study for sleep apnea. Once you get one rejection, all the others reject you.

Then, last year I had a brain tumor. I had moved off to a more normal health plan... but with the last set of rules chances are it'd have been unlikely I could have gotten any insurance, let alone a somewhat reasonable plan.

Ben Maitland-Lewis, Pretty Instant, W15

We aren't yet at a stage where we can offer healthcare to our employees but thanks to the ACA we are all individually insured. This has been instrumental in helping us grow the business while keeping costs low. I hope the next administration doesn't repeal our access to individualized affordable healthcare as it would have a direct effect on the company at this stage.

Ravi Parikh, Heap, W13

The provision in ACA that allows young adults to remain on their parents' health insurance until they're 26 has helped me multiple times. In 2011, I was self-employed as a musician, which would have been much more difficult to pursue if I weren't able to take advantage of my parents' health insurance. Later, my co-founder Matin left his job at Facebook in 2012. He and I worked on a number of side projects, one of which eventually became Heap. Both him and I remained on our parents' insurance until Heap had enough funding and traction to offer health plans to employees. Again, without being able to remain on our parents' insurance, this would have been much more difficult.

Mike Romano, Lendsnap, S16

The ACA has been a blessing for me and my family, and without it, I could not pursue my entrepreneurial dreams. I began my new career within days of the birth of my son, and the fact he arrived five weeks early only complicated plans further. My wife is a graphic designer and usually only finds contract work without benefits. The ACA allows me to follow my passion of transforming the mortgage industry while ensuring our son gets the crucial care he needs during his early life.

Brian Merritt, Seed, W15

For me, the ACA was life changing. Prior to the ACA I was only able to obtain insurance either through an established group plan, or via Medical/Medicaid “last resort” insurance. This was because I have a pre-existing condition that made me ineligible to buy an individual insurance plan. Due to having a chronic condition that needs to be managed carefully, having a quality insurance plan was not an option, but a requirement. So my only option was to work for a large employer with an established health plan that would provide me with the appropriate benefits to support my situation. After the ACA made it so that pre-existing conditions don’t disqualify applicants, I was able to purchase an individual insurance plan outside of my employer, and as as a result I was able to start a company and work on it for almost two years before we were able to put our own group plan together.

Mick Johnson, Whereoscope, S10

The ACA was essential when starting my new business - I founded the company, was pre-funding for 9 months, and the only employee, so was unable to get small group coverage. I have a wife, a child, and another child on the way so health insurance was essential. Without the ACA I could never have left a regular job to found this new company, which has now raised funding and employs 7 people.

Kevin Law, Cambly, W14

I had to apply for individual health care twice while starting Cambly before the ACA exchanges launched at the end of 2013. It was incredibly difficult and expensive, because I had to keep paying for expensive COBRA coverage from my previous employer while repeatedly applying, appealing, and getting rejected by insurers for individual plans. I was still on a group plan during the ACA debates and assumed that the only people getting rejected were the chronically ill. I learned through my experience that nearly anyone who had past health care expenses would often be rejected when applying for individual plans (as was my case).

An especially ironic moment occurred when I was on a Blue Cross group plan via COBRA and appealing a rejection for a Blue Cross individual plan. I got a physical, so my doctor could write a letter saying I was in good health for the appeal. I simultaneously received a rejection letter for my individual plan appeal citing pasts health costs AND a letter from my group plan asking if the physical was related to a workplace incident (presumably so they could sue someone to get reimbursed for the costs).

The exchanges finally went live at the end of 2013, and I quickly got insurance coverage. No extensive health history paperwork. No rejections or appeals. It launched right around when we got into YC, so it was great to focus on building and growing our business rather than trying to obtain health insurance.

Tristan Tao, Leada, S15

I'm currently 24 years old (going on 25). I am fortunately covered under my parent's health insurance under ACA (until I'm 26). This was critical in reducing my personal burn. I would not go without health insurance; this meant I'd have to either join a larger company to gain coverage, or purchase them out of pocket. Either way it would've significantly hindered the 22 yrs old me to start a company as a Senior in College.

I strongly hope that the successor of Obamacare will include a clause that makes it cheaper for recent graduates to get coverage (or retain the current policy of enabling people younger than 26 to stay on their parents' coverage).

Looking back, the largest hindrance to starting a company would've been debt (which I didn't have any), and personal burn (insurance being a huge part).

Ram Jayaraman, PlateIQ, S15

5 out of 7 members of the initial team at Plate IQ were on ACA. Without ACA in the early days we would have to spend large amounts on employer health insurance and since the team was small we would not have gotten much discounts either. Since the team just needed something basic until we raise decent venture money, they were all able to find very affordable options with good networks like Kaiser.

In thinking of an ACA successor: very few plans are coupled with HSA accounts and HSA withdrawals are penalized. For startups with young teams I would ideally like to continue getting plans with large deductibles and large co-pays and instead contribute to an HSA account. Avoiding the 20% penalty for the HSA withdrawal would definitely encourage more participation.

Ben Thompson, Gitprime, W16

I have a family of 5. Had it not been for the affordable care act, it would have been incredibly difficult to take the leap to become a co-founder. Because of the ACA, I was able to take a calculated career risk without having to sacrifice health coverage for my family as part of that decision. Two years later, we’ve built a company that provides benefits for all of our employees and their dependents.

Brendan Lim, Kicksend, S11

In 2009 my wife was in a life threatening car accident. After her recovery, she was unable to get reasonably priced coverage due to her new "pre-existing conditions". During this time, my co-founder and I had quit our jobs and started working on Kicksend (S11) and were living off of our savings. As a result, we were unable to afford reasonable insurance. The ACA removed the "pre-existing conditions" and gave us peace of mind since my wife was finally able to get covered.

Vishal Joshi, Joy, S16

When we started Joy, we had insurance as dependents and did not need to create company healthcare offer for a bit.  But soon we had a new employee very eager to join Joy but needed health insurance.  We agreed to start the process but it so happens that the entire ordeal to get company healthcare setup takes a couple of months.  If not for ACA, Joy would had lost a really good employee who is still with us and actually helped us build our website.  She was able to keep afloat using ACA while we got our company policy setup.

Jason Chen, Verge Genomics, S15

The Affordable Care Act makes it easy for us to purchase and manage health insurance plans – all of our employees are covered rapidly with no medical underwriting. However, we pay high premiums, incur rising deductibles, and plans are bloated with benefits we cannot use. We have also had to pay for "retroactive coverage" for some employees to avoid penalties from the individual mandate, even though no services were used. Future patient-centered health reform should facilitate access to coverage for small business and individuals while allowing greater customization of benefits.

Zachary Garbow, SocialBrowse, W08

When I began working on my startup full time, my wife and I wanted to start a family. At that time, when trying to purchase private insurance being pregnant was considered a pre-existing condition. My wife also had undertaken some preventative procedures years earlier, which made it difficult to obtain coverage. As a result, we were stressed and anxious about not being able to get coverage, and fearful that we'd not be covered for our pregnancy and I'd have to quit my startup to find a corporate job with health insurance. Luckily, the ACA passed just in time to provide us the peace of mind to both start our family and continue building my startup. We now have 2 kids and a thriving, growing business.

Varun Aroroa, OpenCurriculum, W14

ACA has allowed me to have health insurance. Before I got on Obamacare, I had no insurance and had stopped all physical activity beyond basic exercise for years, being too scared to hurt myself. Living below the adjusted poverty line, I just can't afford normal plans. It is amazing how much mental comfort and freedom it can bring in life.

Mike Knoop, Zapier, S12

Thanks to the ACA and my parents, the provision to cover dependents through the age of 26 enabled me to take more risk starting Zapier. Specifically, I did not have to worry about healthcare coverage when the company was small and could not afford health benefits. Now, Zapier provides health benefit coverage to our 50+ US employees.

Zachariah Reitano, Shout, S14

I am endorsing Hillary Clinton for president.  I've never endorsed a presidential candidate before, but I'm making an exception this year, because this election is exceptional.  Donald Trump represents an unprecedented threat to America, and voting for Hillary is the best way to defend our country against it.

A Trump presidency would be a disaster for the American economy.  He has no real plan to restore economic growth.

His racist, isolationist policies would divide our country, and American innovation would suffer.  But the man himself is even more dangerous than his policies.  He's erratic, abusive, and prone to fits of rage.

He represents a real threat to the safety of women, minorities, and immigrants, and I believe this reason alone more than disqualifies him to be president.  My godson’s father, who is Mexican by birth and fears being deported or worse, is who convinced me to spend a significant amount of time working on this election at the beginning of this year, when Trump still seemed like an unlikely possibility.

Trump shows little respect for the Constitution, the Republic, or for human decency, and I fear for national security if he becomes our president.

The only two vocal Trump supporters I am close to are Peter Thiel and my grandma.  Peter is a part-time partner at YC, meaning he spends a small fraction of his time advising YC companies, does not have a vote in how YC is run, and in his case waives the equity part-time partners normally get.

This has been a strain on my relationship with both of them—I think they are completely wrong in their support of this man.  Though I don’t ascribe all positions of a politician to his or her supporters, I do not understand how one continues to support someone who brags about sexual assault, calls for a total and complete shutdown of Muslims entering the US, or any number or other disqualifying statements.  I will continue to try to change both of their minds.

Some have said that YC should terminate its relationship with Peter over this.  But as repugnant as Trump is to many of us, we are not going to fire someone over his or her support of a political candidate.  As far as we know, that would be unprecedented for supporting a major party nominee, and a dangerous path to start down (of course, if Peter said some of the things Trump says himself, he would no longer be part of Y Combinator).  

The way we got into a situation with Trump as a major party nominee in the first place was by not talking to people who are very different than we are.  The polarization of the country into two parallel political realities is not good for any of us.  We should listen to each other more, not less.

We should all feel a duty to try to understand the roughly half of the country that thinks we are severely misguided.  I don’t understand how 43% of the country supports Trump.  But I’d like to find out, because we have to include everyone in our path forward.  If our best ideas are to stop talking to or fire anyone who disagrees with us, we’ll be facing this whole situation again in 2020.

That kind of diversity is painful and unpopular, but it is critical to health of a democratic and pluralistic society.  We shouldn’t start purging people for supporting the wrong political candidate.  That's not how things are done in this country.

The 2016 US Presidential election feels like the most important one so far in my lifetime.  No one able to vote in the US should be sitting this one out—we have a major choice to make.

I sent this email to the current YC batch this morning:

I've talked to some of you who are really bummed about negative press coverage or online comments about your company.  Often this takes the general form of "ugh, all these new startups suck, everything good has already been started."

I'm going to say something very unpopular in my world: Trump is right about some big things.

He's right that many Americans are getting screwed by the system.  He’s right that the economy is not growing nearly fast enough.  He's right that we're drowning in political correctness, and that broken campaign finance laws have bred a class of ineffective career politicians.  He may even be right that free trade is not the best policy.  Trump supporters are not dumb.

But Trump is wrong about the more important part: how to fix these problems.  Many of his proposals, such as they are, are so wrong they’re difficult to even respond to.

Even more dangerous, though, is the way he's wrong.  He is not merely irresponsible.  He is irresponsible in the way dictators are.

Trump's casual racism, misogyny, and conspiracy theories are without precedent among major presidential nominees.  He has said that a judge of Mexican descent isn't treating him fairly because of his heritage and that we should ban Muslims from entering the country.

When his supporters beat up a homeless Hispanic man and cited Trump, he called them “very passionate”.  He has accused Obama of somehow being responsible for the recent shooting in Orlando.

To anyone familiar with the history of Germany in the 1930s, it's chilling to watch Trump in action.  Though I know intellectually it’s easy in hard economic times to rile people up with a hatred of outsiders, it's still surprising to watch this happen right in front of us.

It's hard to tell, as it often is with demagogues, how much is calculation and how much is genuine belief.  But it's a real and terrifying possibility that Trump actually believes much of what he says.  In any case, when he says it, it signals to other people that it’s ok to believe.

Demagogic hate-mongers lead down terrible paths.  It would be particularly embarrassing for us to fall for this—we are a nation of immigrants, and we know that immigrants built this country (and Trump, of course, is the grandson of immigrants and married to an immigrant).

Hitler taught us about the Big Lie—the lie so big, and so often repeated, that people end up believing it.

Trump’s Big Lie is hiding in plain sight.  His Big Lie is that he’s going to Make America Great by keeping us safe from outsiders.

But he has no serious plan for how to restore economic growth, which is what we actually need.  Without it, we’ll be in a zero-sum game and face continued infighting.  And without it, we’ll lose our position as the most powerful country in the world.

He distracts us with hate of outsiders in the hopes that we don’t notice he has no plan for the inside.  He has failed to put forward a serious plan for major investments in research and technology that we so desperately need.  Instead, he tries to distract us with fear of Them.

At least Trump is willing to talk about the fact that the US is not on an acceptable growth trajectory.  The Big Truth in Trump’s slogan is “Again”—we do need a fundamental change to get back to where we were.  Clinton’s dangerously bad Big Lie is that there’s no big problem here at all.

Trump is right about the problem, but horribly wrong about the solution.

I take some risk by writing this (even though I’ve supported some Republicans in the past), and I’ll feel bad if I end up hurting Y Combinator by doing so.  I understand why other people in the technology industry aren’t saying much.  In an ordinary election it's reasonable for people in the business world to remain publicly neutral.  But this is not an ordinary election.

In the words of Edmund Burke, "The only thing necessary for the triumph of evil is for good men to do nothing."  This would be a good time for us all—even Republicans, especially Republican politicians who previously endorsed Trump—to start speaking up.

Note: Anyone is welcome to republish this.

Note 2: Apparently the Burke quote was not definitively said by him :(

A lot of people have been saying we’re in a tech bubble for quite some time. Someday they’ll be right, but in the meantime, I thought it'd be fun to look back at some articles from the last 10 years:

2007, Coding Horror -- Welcome to Dot-Com Bubble 2.0. “You might argue that the new bubble has been in effect since mid-2006, but the signs are absolutely unmistakable now.”

2008, Gigaom -- Is Linkedin worth $1B? “The valuation of $1 billion – not as insane as the [$15 billion] valuation placed by Microsoft on Facebook – was jaw dropping.”

2009, Wall Street Journal -- The Bursting of the Silicon Valley Bubble (2009 Edition). “Some think that this round of Silicon Valley blowups might be more damaging than the last.”

2010, Daily Beast -- Facebook's $56 Billion Valuation and More Signs of the Tech Apocalypse.  “One analyst predicts Facebook will easily be worth $200 billion by 2015. Right on! And by 2020 it could be the first company with a $1 zillion market value, so buy-buy-buy, everybody!”

2011, The Economist -- The New Tech Bubble (cover story). “Some time after the dotcom boom turned into a spectacular bust in 2000, bumper stickers began appearing in Silicon Valley imploring: ‘Please God, just one more bubble.’ That wish has now been granted.”

2012, The Guardian --  Facebook’s IPO and the new tech bubble. “So yes, the collapse is beginning even as the bubble is filling. Some of us call this fun.”

2013, Gawker / ValleyWag -- The $4 Billion Secret: Don’t Bother Making any Money. “[Pinterest and Snapchat] were both recently, insanely valued by investors at around $4 billion . . . how is this not a bubble, and why aren't more people saying this is crazy?”

2014, Wall Street Journal -- David Einhorn: ‘We Are Witnessing Our Second Tech Bubble in 15 Years’. “ ‘There is a clear consensus that we are witnessing our second tech bubble in 15 years,’ said Mr. Einhorn.”

2015, TechCrunch -- The Tech Industry is in Denial, but the Bubble is About to Burst. “The fact that we are in a tech bubble is in no doubt. . . The tech startup space at the moment resembles the story of the emperor with no clothes.”

Jerry Brown has proposed legislation that would allow a lot more housing to be built in the Bay Area, and hopefully significantly reduce the cost of housing here. More supply should lead to lower prices.

I believe that lowering the cost of housing is one of the most important things we can do to help people increase their quality of life and to reduce wealth inequality.

A huge part of the problem has been that building in the Bay Area is approved by discretion; even when developments comply with local zoning, they can still be vetoed or stalled by local planning commissions, lawsuits, or ballot measures.

This type of discretionary approval isn't common in most of the US, and Governor Brown's legislation helps align California with most states. His bill would make it so multi-family buildings are automatically approved by right as long as they comply with local zoning, and have 5-20% affordable units--the percentage depending on location and subsidy offered.

The bill is currently being debated in California's State Legislature as part of the upcoming annual budget, which will be voted on on June 15. If you'd like to help pass this bill, consider calling the members below, as well as the Governor, in support of the Budget Trailer Bill--it only takes a few minutes [1], and it will likely hinge on their support.

Assemblyman Phil Ting (SF): (916) 319-2019

Senator Mark Leno (SF): (916) 651-4011

Senator Kevin de León (Los Angeles): (916) 651-4024

Assemblyman Rendon (Los Angeles): (916) 319-2063

Governor Jerry Brown: (916) 445-2841

There is a long and sordid history of people coming out of the woodwork with bogus claims when huge amounts of money are on the line.  This has just happened to Cruise, which is run by my friend Kyle Vogt.  Cruise is a YC company, and I also personally invested in the company last year.

As detailed in a complaint filed by Kyle and Cruise, Jeremy Guillory collaborated with Kyle for a very short period early on in the life of Cruise.  I know that at least Kyle had been thinking about autonomous vehicles for quite some time, and I assume Jeremy had been too given all of the attention on the topic in the press about Google’s activities.  After a little over a month, Kyle and Jeremy parted ways.  This event happened more than two years ago, and well before the company had achieved much of anything. 

There is more detail in this footnote [1] if you’re curious, or you can read the complaint online here.

Jeremy is now claiming to Kyle that he should own a substantial amount of Cruise’s equity, and by doing so is interfering with the pending Cruise/GM merger.

Kyle made an extremely generous offer to settle this claim by offering to give Jeremy a lot of his own money. [2] In my opinion, Jeremy’s claim is completely baseless and opportunistic—it obviously comes at a bad time for the company with the merger still pending, and Kyle understandably wanted to avoid a protracted litigation.  Kyle has worked incredibly hard to settle this claim amicably, despite what I consider to be the obvious ridiculousness of it, and has done far more than I would have personally done under these circumstances.

Kyle and Cruise are now suing Jeremy for making a false equity claim.  It’s an incredible bummer these situations have to happen in the first place.  This is one of the least sensible professional situations I’ve ever been involved with, but unfortunately these situations are not uncommon.

I recognize that I place myself at risk talking about this, but it’s time that someone speaks publicly about situations like what is happening at Cruise.  And so I’ve decided to say something before the lawyers can stop me.  Even with this issue, both sides still expect the merger to close on schedule in Q2.

[1] Kyle and Jeremy applied to YC together but Jeremy left before the YC interview.  Neither took a salary, and Kyle was funding the company by himself at that point.

According to Kyle, Jeremy did not write any code or build any hardware during this exploratory period.  He did help find an office for the company.  At the point of Jeremy’s departure, neither he nor Kyle had signed employment agreements, stock agreements, or any documents of any sort with the company.  Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity.

Kyle told me that Jeremy would occasionally reach out to congratulate him on press about Cruise (for example, he reached out to congratulate Kyle on Cruise’s Series A), but he never asked for anything—until now, when, in my opinion, he saw an opportunity to make a ton of money.

[2] I was personally involved all day on Friday last week to try to help settle this claim.  Given the time pressure because of the pending merger, we had to set a Friday at 5 pm deadline for Kyle’s offer, which Jeremy let expire.