How YC Rewrote the Seed Playbook with Garry Tan

**Ben Gilbert** (0:00)
Hello, Acquired LPs. We are coming at you today with a very special episode with Garry Tan of Initialized Fame, and of course, before that, Y Combinator and Posterous has had a long and very illustrious career here in Silicon Valley.
And we are gonna talk about the evolution of early stage investing. Garry has seen it all. I think he started back in the early days when early stage investing meant a $2 million Series A at a $5 million poster. Maybe that was even high.
Goodness, things have changed. So excited to have you here. Thanks for joining us and we can't wait to dive in.

**Garry Tan** (0:44)
Yeah, thank you for having me. Yeah, big fan of the show and it means a lot to me that you'd have me.

**Ben Gilbert** (0:49)
Oh, well, likewise, that you would come on. Let's just dive right in. We're gonna weave in the story of Initialized along the way, but we thought maybe we'd start kind of way back in those prehistoric days of what life was like. Arthur Rock.
We've already done that on the Sequoia episodes. Not that far back, but when was it that you started Posterous? Was it in 2005?

**Garry Tan** (1:16)
Oh, it was 2008, actually.

**Ben Gilbert** (1:18)
Oh, it was later, I thought.

**Garry Tan** (1:19)
2005, I was still at Palantir, so I had just designed the logo for Palantir and built one of the major product teams.
And then before that, I was, you know, Stanford Computer Engineering, and the crazy story for me is that friends of mine were starting a company, and I was, you know, lowest of the low PM at Microsoft, and my friends. Yeah, what's that like? Great place to start, you know, great reach. And then friends of mine were starting a company with Peter Thiel, so they flew me down to San Francisco to have dinner with Peter right when he wrote the $500,000 check to Facebook. And he said, Gary, what are you doing at Microsoft? You're wasting your time. And I said, I wanted to work at a startup, but there weren't startups in 2003, 2004 He said, I'm so sure this is the right thing. You need to quit your job. He asked me how much a year I made, and I told him it was 70 grand. And he said, well, how about this? I'll write you a personal check from my bank account to yours. This is your risk opportunity. Quit your job.
And I said, thank you very much, Mr. Thiel, but I might make it to level 60 next year. And I got on a plane and went back to Seattle and that company turned into Palantir.
But I ended up joining a year later. They had hired away some of my closest friends who were way smarter than me. Bob McGrew, who now runs stuff over at OpenAI and just so many smart people you get to meet in Silicon Valley over time. But once they hired away people smarter than I, I was like, I need to quit my job at Microsoft because in the moment when your friends are starting a business and you don't know anything about startups or tech or how these things are funded, you say, well, I have a real job and you say no, so.

**Ben Gilbert** (3:01)
We're talking about this with Kevin and Julia Hartz on the Eventbrite episode. Like I imagine you were right out of college, your parents were probably like, if you even told them about this, like.

**Garry Tan** (3:10)
Oh yeah, they're like, don't do it.

**Ben Gilbert** (3:12)
No way would they let you do this, right?

**Garry Tan** (3:13)
That seems unsafe. Yeah, the immigrant mentality for sure.

**David Rosenthal** (3:18)
Gary, that's an amazing story and it is absolutely one of survivorship bias. Because I want to share my story is that I had a friend who was starting a YC company. I had just moved to Seattle and I was about to start my job at Microsoft.
And this friend lobbied and lobbied and lobbied to come and get me to co-found the company with them. And for years, it looked like a huge mistake that I said, are you kidding me? I'd have to give back my signing bonus. I just moved here. This person told me something very similar that they would help definitely pay back the signing bonus. So it'd be a zero risk thing. They'd pay for my move.
But as years have gone by, that company sold for exactly the preference.

**Garry Tan** (3:55)
Yeah, totally.

**David Rosenthal** (3:55)
And it would have been a completely, it would have been a wash.