Why Y Combinator is Working to Make a Name for Itself in Washington, DC | StrictlyVC DC

Um I'm so happy to be sitting down with You thank you so Much so I think some people in this room Are very familiar with you others are Not um I was reading before I came here This story that I think I had read last Year but a longtime reporter Adel Mashinsky had profiled you last year and I just wanted to share what he wrote Which is that it is no understatement to Say that yelp's fingerprints and Therefore lows have been on every major Effort to reign in big tech for more Than a decade in Anti-Trust circles low Has earned a reputation for both Marshalling allegations of abuse by the Biggest Tech players and suggesting Remedies to rein them in this is great Uh he was instrumental for example in Lobbying the eu's then antitrust Chief Margareta vasta I'm sure I'm mangling Her name uh to bring charges against Google in 2015 resulting in a guilty Verdict two years later you're on a First first name basis Adam said with Members of Congress behind reform and Legis in Washington and a persistent Thorn in the side of big Tech Accurate um Yeah I'm I'm Pritt Tech I'm I feel like I'm maybe less uh slightly less costic Uh and and aggro that I was in my Wearing my last hat but still care a lot About what uh you know

That whether or not little tech Companies are uh fairly represented in Places like like Washington and Brussels Absolutely well obviously there are People in this audience who have that Same concern um I did want to ask really Quickly the story talks about how American law has long favored um Products um improved products over Protecting failed um competitors which We saw you know Lena talking a little Bit about I mean they've had to sort of Come up with new ways to decide whether Or not something's a monopoly um so so Google was improving its offerings for a Long time and the FDC was sort of like Okay well they're offering great stuff So that's that um you started persuading People who matter that the problem is That Google's Growing Power harms Consumers by degrading their competitor Products which I thought was a pretty Smart take can you elaborate a little Bit um actually in that case I it the The study that um was done and I think What's interesting is that you can see All kinds of examples across all the Major Gatekeepers these days um of this Is that um when you have dominance when You have basically you get a monopoly Congratulations and now you are sort of Scanning the landscape and looking for Adjacent markets to enter and how can You sort of unfairly uh use some kind of

Edge to Snuff out competitors and so as You and Cher Khan spoke about the lens At least for the last 40 years before The Biden Administration kind of came in And brought some fresh thinking into It was very oriented around consumer Pricing And uh it turns out that me you can uh With these Gatekeepers you can actually See very often people are the U Gatekeeper is degrading quality and so That becomes the proxy for price Increase so even though the product is Quot and quot free uh if they are Degrading the quality then uh then you Can kind of swap that for a consumer uh Price increase in a consumer welfare Analysis and that was the basis of a Paper that Tim woo and Professor Michael Did in 2015 that uh really was kind of The Ling pin of a lot of yelp's Arguments basically was like look don't You know ultimately when they put their Thumb on the skill they're not it just Hurting competitors it wasn't cons Competitor degradation it was actually They were degrading their own product And hurting consumers so in other words If you did a search for pediatrician in New York City instead of seeing services Like Zach do rmds Health grades you know Services that had hundreds and hundreds Of reviews for that type of query you Would be getting you know a handful of

Reviews from from Google and that kind Of self-dealing again is just pernicious Across all these uh dominant platforms Are any of those Brands still in Business Zach do I believe is Socko Headquarter in New York I haven't really Kept up with the the medical local Search space but just names I haven't Heard in a long time well I I will say And I hope this doesn't sound offensive But I I am amazed that you stayed so Long with Yelp which is no shrinking Violet but not a power player and has Sort of credibility issues of its own And I'm sure that the big tech companies Were trying to pull you in as a lobbyist For them why stay so long um you know I'm really proud of what uh you know What you know in my old hat again just Here here uh with my new head on but the We're really proud of what um uh yelp's Mission was and and what we did there in Terms of helping I think uh Adam Lensky's piece you know is is accurate That inflection points along the way Over the last decade plus uh looking at The kind of anti-ig tech uh backlash you Know we were uh part of it along the way And I think helping shift the Conversation um it it made it feel like I'm not just showing up to work to do This um you know this uh you know help Improve local search results it's like Shifting the conversation about economic

Justice concentration in our economy and So uh it ended up being much bigger kind Of mission and I really kind of relish That and there were very few things that I would even consider leaving for which Is why I'm like so thrilled to kind of Have upgraded from a speedboat to an Armada yeah absolutely so um I was going To ask if you thought you'd find or you Are finding a bigger audience for white Combinator I mean in Silicon Valley it Is you know the 800 PB gorilla on the Startup scene how how is it perceived Here the same way I mean I was actually Going to kind of take a step back and And explain that you know what white Combinator is because a lot of folks in In Washington DC you know that part of You know part of my role is about kind Of YC 101 because so many folks in DC Don't actually know what it is you know Essentially it started in is the Original accelerator started back in uh 2005 uh Paul Graham and and uh who had Uh successfully sold the company in the 90s and was sort of helping uh uh uh Founders by writing essays and you know Avoiding pitfalls for uh people who were Thinking about doing technology startups Created this program he had a call for Applications uh 12 people got in moved To Cambridge Mass for the summer of that Class Reddit and twitch uh were born and It just kept going and growing and now

Basically the way it works is if you and I had a cool idea we could apply there's About a 1% acceptance rate uh you give Up about 10% uh roughly Equity you get Half a million uh in funding and you you Move to San Francisco now is where Anchored and you for about 12 weeks and You're just get intensive mentoring and You're getting that kind of zero to1 Product Market fit and what's been the Most surprising thing with the new role Is how many in Washington don't even Know it exists and you think about we've Now uh seated 5,000 companies have 11,000 Founders in our Network like that Is just an insane impact for the US Technology economy and so trying to uh Educate policy makers about that impact And how we touch virtually every uh Congressional district in the United States that's been a big part of my uh Kind of early work you could wear like a T-shirt every time you show up with Somebody Airbnb coinbase Dropbox exactly Um well I was going to ask then what People make of Gary tan who is the President so Gary is a long time uh he Was partner with YC he's been an Entrepreneur he's back at YC is the President the most courtest even killed Guy in the world to talk with but very Combative on social media um and so I Just was wondering what people think of Him because I think people in San

Francisco are like what's what's going On it's you know I mean Gary I really Love Gary because uh I met Gary back in Uh 2022 and he was the only Venture Capitalists at the time that was putting His neck out for this legislation called The American innovation and consumer uh American innovation Choice online act it Was introduced by clar and Grassley and Basically the bill would have curbed the Most egregious forms of self- Preferencing by uh the largest Gatekeeping companies and you know I Think there's a lot of reasons uh you Know invest the investors uh kind of That Community will sit on its hands for For those questions sometimes it's Almost like a social capture sometimes It's like folks are libertarian or you Know they have different political views About like the role of the government And stuff but I was really impressed With his leadership on that we we sort Of hit it off and stayed in touch and Then when he came into uh the YC role Um got coffee and um you know basically You know within six 6 months or so he Said invited me to come be part of the Team and so I I love Gary you're not Going to get me to say anything uh you Know but he he is he's a he's a mench And is uh I agree with with uh what You've said he is um interpersonally

He's like so warm and is just uh he was Out in Washington a few weeks ago and Like off of a red eye was just like Going uh non-stop until about 11:00 p.m. And um yeah it sometimes sometimes has Some spicy tweets yeah no no I guess I Just wondered if it's a strategy I mean You know attention is good and he's been Getting a lot of attention and it's it Seems just I guess sort of unlike him Historically so I I thought it was sort Of an interesting you Know path he's been taking anyway we'll Move On um so so my understanding is that you Have a three-pronged approach here to Helping startups find more breathing Room um and that is access to Talent Access to markets and access to AI which Um the latter part means you like for AI To be open- sourced so that again like We've been talking about all night it's Not just the big companies that are Controlling and benefiting from this Tech um on the talent piece the FTC just Adopted this non-compete rule for us in California it has less impact because We've had this sort of regulation in Place but everywhere else it's seems Like a very big deal are you happy with Uh the look of that it it protects Everybody except for a senior Executives In a policy role that make over $150,000 Right I I think that uh the the

Non-competes uh rule was great we Thought it was a good move by the FTC Look we would be happy if Congress did Something as well but I you know we'll See the part of the issue is in Washington uh you have such just Pernicious influence by the most Powerful largest companies and and Really there's been a vacuum for the Voice of these smaller uh companies and That's really what we're trying to fill Um so I you know I I would love for Congress to do to to tackle non-competes As uh a federal legislation but I just Frankly don't see it happening just Because of that pernicious influence um O Open Source AI is so critically Important uh making sure that uh people Can build uh on these mod models without Fear that you know uh you know they're Going to have to you know register with Some kind of uh uh safety commission Like we are still in very very nent Stages uh of these tools and we want to Make sure that um ultimately this field Is very competitive and we don't want Just a handful of companies to control The entire kind of llm uh uh Innovations And so um access to markets has to do With basically uh ensuring that we have Robust competition in the United States Supporting strong enforcement of uh Against companies that are egregiously Self- preferencing um access to Talent

Has all all everything to do with um Immigration making sure that uh talented People can get into the United States And uh unfortunately and and that's Actually an example of how you know you Asked about like am I still a a thorn in Big Tech site I mean that's a great Example of how uh you know we cooperate With with the larger tech companies cuz The entire technology and Industry is Affected so uh those are kind of the big Themes I've noticed it's the the job is Also involved a lot of kind of white Glove Federal bureaucracy navigation There's some tax issues like uh section 174 basically uh We've abruptly uh Started um sort of pulled the rug on on Founders who are um trying to deduct Their R&D expenses they can no longer do That they have to that has to be Amortized over many years it's somewhat Esoteric but it's really really Important for these tiny companies I was Going to say I need to learn more about That um I did wonder so we talked about You know and you talk fleetingly about Immigration it's so it seems like such An intractable Pro problem because Congress really doesn't want to Disentangle high-skilled immigration From illegal immigration meaning you Know as it relates to the border and That's obviously a political grenade um Are there other things that could be

Done other than and non-competes and High skilled uh immigration you know Another issue that we're seeing all the Time in Silicon Valley is just with with Regard to access to Talent is um how Much these companies are paying these College graduates and and uh you know People working at startups I mean it's Very hard for a startup to compete if Google says here's $3 million to start With plus Equity I mean has anybody ever Talked about capping these salary Packages or is that just completely Bananas would never happen I I think the Reason that the you have to look at why This is such an exciting time to to Build something that people want and That is because uh the reason that that Google or open AI or whoever is is Throwing these seven figure salaries at These young people is because uh they Know that's the competition that they Can walk and with you know either by Themselves or with a with a co-founder Go build something and that's that has a Strong likelihood of being worth a whole Lot more and so um you know that's the Market I don't know if if like Throttling salaries is going to is going To solve it I think uh it's actually Ultimately a good signal because it Means they are uh fearful that uh people Are going to go off and build uh you Know build on this new wave of

Technology can I ask quickly what is YC's relationship with open AI because In some ways it was kind of partly Incubated at YC the former president Sam Alman was at YC when he was Transitioning over to open aai he's Still running open AI is it Contentious what's you know you have a Sake in the company comp I came uh I Started at YC in in October so I don't I've never met uh Sam but like I my my Read is that you know you know folks are Still friends and whatnot there's uh a You know uh he he uh led the Organization for Sam led the Organization for for many years and it Was sort of in some ways sort of spun Out of uh White commentator um and Paul Graham has has tweeted a decent amount About this to dispel some of the myths You know many of our companies are uh Like about half of our so every year now We're doing about uh 250 companies per Batch so every 6 months uh 250 companies So every year 500 companies um and of Those companies are Ai and a lot of Those companies are building on open AI So I think that's you know I think that Reflects the there is a strong Relationship there's a lot of former YC Folks that are in open AI we we you know Every one once every couple weeks I'm You know exchanging emails with them and And corresponding with them on an issue

So uh you know there there might be Issues where we don't totally see I to Ey maybe on on um when it comes to uh These open sour SCE debates but frankly I think all this stuff is so early that It's it's hard to like diagnose that you Know you know a how you know I think the Relationship is is is fine well I guess I I was just thinking it makes your Position sort of hard to articulate Because you do have these companies that Are building on uh open AI open AI says Look we're only keeping it closed Because of safety concerns we just want To make sure we're building this Responsibly and on the other side you're You're telling people it's got to be Open Source or these companies startups Can't Thrive so it's a little bit hard To square I think we just want maximum Options for Founders you don't want a System where look if if open AI is Providing you know I use open AI uh Almost on a daily basis I think that People uh Founders if they find that GPT 4 and and later iterations are the right Tool to build on that's that's that's Great we encourage that we also think That um Founders need to have the option To be able to build on uh mrol all the Other open source tools because uh that Perhaps can provide uh maybe cost Savings it maybe provides some more Flexibility in terms of the type of

Tinkering that they can do so I think The more uh the more competition the Better is ultimately our position it's Not like absolute one or the other sure And spread your bets a little bit it's Never great to have you know be Completely dependent on some other Company for your business um I wanted to Ask you uh also About um I Guess uh hold on a second I'm sorry Excuse me I I guess well you and I were Talking about this backstage a little Bit Um sometimes I worry that we're we're Late and I don't know how and I would Have loved to talk to you about this as Well but you know five years ago Sam Actually come came to one of these Events and he was talking and we were All sort of laughing and he said I think I' asked him are you going to license This technology how how are you going to Make money and he said some someday I'm Going to asked this generally Intelligent system how we make money for Our investors and everybody in the Audience laughed and he was like I know It sounds like an episode of Silicon Valley but I'm not kidding um I really Believe that's going to happen but he Was saying back then like we have to Regulate things we got to regulate Things and there was a lot happening but

People outside of the industry didn't Have visibility into that now it feels Like every these it feels like the the Chips have fallen um to some extent how How are you thinking about things I mean The way that I think about AI policy Perhaps unsurprisingly I see it as Something that you really cannot Decouple from competition policy that we Really kind of need to get the Competition policy um sorted out first So if we don't have some type of you Know I I I'm you know you look at Europe And the digital markets act um not Perfect but at least they're taking a Stab at figuring out how do we curb the Most egregious forms of self- Preferencing by these uh large firms and If we don't do that then it's pretty Easy to see how this plays out I mean I Looked with some concern at the uh the Apple announcements yesterday and and There a lot of kind of actually this was Just talked about with Cher KH con the The memes and the uh tweet threads about Look at all the startups that have been Uh killed by this and there's an Alternate universe where we're embracing Interoperability where we're uh Compelling these firms to uh stop self- Preferencing and it's better for Everybody it restores so the answer is Like it's not too late I think we can um If we compel the the largest Gatekeepers

To uh be more interoperable to stop Self- referencing then we can move Toward more pluralism which is what the Web used to be and that you know was a Pretty cool time uh you know 15 year you Know plus years ago when I when I Originally moved out to San Francisco it Felt like there was promise and Potential on lots of little companies uh Gary was here a couple uh uh weeks ago And Washington and he said I'd much Rather see a thousand unicorns than a Single uh another trillion dollar Company and I think that's possible but We have to do all we can to nurture uh Founders to compel the largest Gatekeepers to interoperate and stop Self- preferencing once we do that I Think uh it's really uh incredible Potential for and and protect open Source Ai and the ability for uh people To Tinker and uh build uh on open ource Tools uh it's going to unlock unleash a Ton of innovation you know the problem Though again not to be too negative but You are going up against these companies Now are trillion dollar companies they Are spending hundreds of millions of Dollars here and then there's you and Some VC who are coming in slowly so how Do you fight against this and and and And who I guess who is part of this like Loose Coalition that you're hopefully Forming to fight back against all of

That money you know there was a great Story over the weekend in the Wall Street Journal about Google and this guy Named Joshua Wright who was at George Mason University and Bas you know the The tldr of the of the story is that you Know he was doing kind of Harvey wein Steiny stuff uh at the law school at George Mason which is very disturbing But all the while he's just getting he Was before during and after he was Served as an FTC commissioner he was uh Uh sort of uh being paid to essentially Use GMU to launder these Uh these ideas from the companies that Were defending their abuses of dominance As like legit academic things and and it Just talked about this pernicious Corruption and and ultimately uh you Know Amazon Facebook Google were were uh Paying his you know paying a millions of Dollars a year there are lots of Characters not the um wein steiny stuff But the but there are lots of characters In Washington that are this this type of Uh corruption is quite pernicious what I'm excited about what I think YC brings To the table is the ability to tell Authentic uh the authentic stories of of These Founders and I'm not kidding when I say you know 11,000 Founders were Connected to virtually every Congressional district in the United States I've seen uh if you can tell an

Authentic story that means a whole lot More than some you know astr Turf front Group that is purporting to represent The interest of of uh small businesses Or or startups and there are tons of uh Groups that exist BAS basically they Were propped up by the large companies To to push that and sometimes you know They're pushing things that everybody Agrees with like the immigration thing I Was mentioning but a lot of times They're it's sort of the you know uh They're trying to get the chickens to Vote for Colonel Sanders and I think That if we can um you know be that Authentic voice you actually don't need To spend a lot of money the authenticity Is just like this incredible coefficient I found in Washington for moving the Needle and it's not like we're not we're Not not going to spend money we're going To definitely invest res resources here We're going to be um you know uh heavily Engaged uh you know we don't need to Spend the $300 million that uh big Tech Spent to kill ioa uh in the last Congress um we I think we can win with a Lot less and your network your network Effects are so considerable um yeah You'll definitely be hearing much more About YC combinator soon if not already Luther thank you so much for joining us You are Rockstar for doing this and uh Thank you all for sitting here and

Spending your night with us um we have More drinks and more food in the back so Please stick around and do some Networking thank you