#9 - Sam Altman and Reid Hoffman - From Startup to Scaleup

**Craig Cannon** (0:00)
Hey, this is Craig Cannon, and you're listening to Y Combinator's podcast. So today's episode is a conversation between Sam Altman and Reid Hoffman. They focus on the key changes founders should think about as they scale their company. This conversation was recorded at The Scaleup Offsite, a private event hosted by YC Continuity and Greylock Partners in April 2017
Okay, here we go.

**Reid Hoffman** (0:20)
Thank you all for coming here.
Everyone here is an important part of our joint network. This event started with a kind of a funny set of accidents. First, Sam had this brilliant idea of teaching a startup class at Stanford and getting a bunch of different founders to come and talk about kind of the key elements. And, you know, he got me to give some talk on how to be a great founder, I think.

**Sam Altman** (0:50)
I remember.

**Reid Hoffman** (0:51)
Was that one. And then I went, wow, that's a really good idea. And part of how innovation, I said, well, you know, startup's one part. Scaleup's the other thing. And so we did a similar class with teaching blitzscaling, which is the theme of a book that I'm working on with Chris Yeh, who's in the audience somewhere.
And so we did a Stanford class as well, where we got a bunch of different folks. And then Sam and I started talking about this, and we said, look, actually, in fact, this is not just a kind of a good Stanford topic, but this is actually a good topic for essentially our network and for the businesses, because you really only build something amazing if you hit the scale problem. It's not just a, hey, you invent, and then, hey, it's easy after that. We hit the oil and we just pump out the oil. There's actually, in fact, a lot of innovation, a lot of hard work, and a lot of skill and craft that goes into scaling. And if you fail, you fail. And so then Sam called me and said, hey, we should do an event like this, and we should start doing this as a regular basis. And I said, oh, that's a great idea.
And so here we are.

**Sam Altman** (1:59)
Here we are.

**Reid Hoffman** (2:00)
So I thought I would open a little bit with some of the blitzscaling stuff, and then we'll just kind of kick back and forth.

**Sam Altman** (2:07)
Great.

**Reid Hoffman** (2:09)
So, oh, and then the other thing, by the way, actually one other little housekeeping thing. The stage conversation, including the Q&A, is essentially going to be published, right? So it's public, so anticipate that being public. The hallway conversations are private, right? So don't tweet or otherwise publish anything in the hallway conversations unless you have permission from the person you're talking to.
So with that, one of the key things that I think is interesting is you say, well, why is it that Silicon Valley produces so much of the technological impact in the world?
And, you know, we tend to tell ourselves still classically this kind of startup story of, well, we're inventive and we have venture capital and we import a ton of talent here and the venture capital stuff all works. But actually, in fact, it's the fact that we intersect technology invention with business invention, where that business invention includes such things as network effects, new business models and so forth. And then in seeing those, we realize that certain of those businesses are super important and we move really fast to establish that business model. And that's one of the reasons why you'll find that most people in the Valley all say network effects as something super important. And one thing that actually, in fact, I think is a fun hobby, in case any of you would like to do this, is occasionally when I'm feeling impish, I will actually in fact ask people, well, what's network effects? Because a lot of people will use the term and actually don't actually in fact know what it is, don't know how to measure it, don't know the different kinds of network effects, don't know like network effects in growth, network effects in engagement, network effects in revenue, network effects in a bunch of these sorts of things. And yet the reason why we're obsessed with network effects is we know that's the kind of thing that causes us to scale.
Now, and so part of the whole thing is a whole set of different techniques. And I'll go through some of the different blitz scaling areas of kind of hiring. But maybe one of the things we should start with is how you've been scaling YC actually, because the fellowship and the clouds and the MOOC and everything else, because it's not just that we kind of advise the stuff and practice, you practice the stuff.