20VC: Behind the Scenes at Y Combinator: The Interview Process | What the Best & Worst Do in the Program | Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | Why the Value is in Application Layer AI with Tom Blomfield

Tom Blomfield
I don't think founders are necessarily the most likable people. Honestly, if you just agree with everything that happens around you, you're never going to create something different. So this is a key skill of a founder, holding these two realities in your head simultaneously without cognitive dissonance or driving yourself crazy. One is the big vision of the 1% best outcome. If this really, really works, what could this become?

And then you have to hold the what is my top priority today and this week and this month very, very different from this billion people around the world. Right? And you have to execute on that, get your team to focus on it, but you have to have both. This is 20 vc with me, Harry Stebbins and I couldnt be more thrilled about the show today. Ive known this guest for many years.

Harry Stebbings
Hes the founder of not one, but two incredible unicorn businesses and now a Rockstar YC partner, Tom Blomfield. Before YC, Tom was co founder of Monzo, most recently valued at $5,000,000,000.01 of the first challenger banks in the UK, Monzo raised more than a billion dollars and counts, check this out, 15% of the UK population as customers. Before Monzo, Tom founded Gocardless, an online payments provider which was most recently valued at $2.1 billion. But before we dive into the show today, we're all trying to grow our businesses here. So let's be real for a second.

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Remote opportunity is wherever you are, you. Have now arrived at your destination. Tom I am so excited for this dude. We've known each other for many years, but thank you so much for joining me today. I'm delighted to be here.

Now. I always think that people are shaped by early years in childhood. When you think back to the ten year old Tom, what your parents and teachers would describe to you. Precocious probably don't think I listened very well. I was fascinated by lots of different things.

Tom Blomfield
I got into computers very, very young and I was honestly trying to start businesses from when I was about six or seven I think stole a bunch of my mum's jewelry and tried to sell it on the street outside her house before she saw me literally age seven. I think it was a strange childhood. So I always ask founders when I'm investing, how did you first make money? Because I always think that actually exceptionalism shows itself early in life like that and no one comes out of Cambridge and just makes money at Bain for the first time. Do you agree with that?

Or do you think that exceptionalism and entrepreneurialism can be later and actually you'd miss the sway of the founders? I think it can be later, certainly. For myself, I started building websites as 1415 and convinced my local estate agent to pay me three or 400 quid for a website so that I do fit that mold. I guess. And in general, I do agree.

I always think, like, yeses and Nos yeses can make careers and nos can be incredibly hard and painful to hear. When you think about the yes that you think made you most, what yes. Was that very easy answer. Getting onto y combinator in 2011, getting the call, I thought we'd bomb the interview. So I was working with Hiroki and Matt on groupe at the time.

Tom Blomfield
We were all ex management consultants. We sort of all wanted to be startup founders and really all wanted to be the CEO. And we were working on like, not a very good idea, which is a kind of student bill spacing app. And in the interview, every question that was asked, one of the founders would answer, then a second founder would like, contradict them, and then the third founder would try and answer to try and like square the circle somehow. And it just went on for this horrible, like ten or twelve minutes of just like.

It was such a painful experience and I was sure we bombed it, but when we got the call afterwards, it was like a dream come true. And honestly, those three or four months back in 2011 changed the entire course of my life. I mean, I wouldn't have started Monzo without it, for sure. And now I'm back at YC, it feels like. What specifically was it?

It enabled you to see something of the world that you didn't know. We were play acting before then. We were three guys in London who'd come out of consulting. We were play acting at being startup founders. You know, we'd hired a bunch of interns.

Tom Blomfield
We were just running around doing dumb stuff. We had no role models. We had no one who was smart or successful around us to model ourselves. Afterwards, after being in YC just put us amongst this group of like, high ambition, high achieving technical founders who thought they could accomplish something. And then every week a new founder would come in, Max Levchin would come and tell us about the early days of Facebook, the early days of PayPal.

And then I remember the next week, this sort of timid short guy walked up and said, hi, I'm Mark Zuckerberg, to give a talk on the early days of Facebook. And it was kind of incredible being surrounded by those people, whereas in London we just didn't have those role models. And I think we would have, the company would have slowly sort of died in London. We couldn't raise a single penny of investment in 2011. So YC really gave us that break and raised the bar for us.

What was the most painful? No, probably 2020, March or April. We'd had an easy ish time raising. We did around at a billion, led by general Catalyst, then around a 2 billion valuation, led by Y combinator continuity, and then found it really hard to fundraise. And I had 96 no's in a row for that fundraise to try and do a flat round.

Tom Blomfield
And we finally got it together. 100 million at a flat valuation at 2 billion. Tom, what do you tell yourself 95 times in. I fundraise now and it really hurts me, actually. It was horrendous.

And that's not even the worst. No. It was really dispiriting, saying the same thing over and over again about how I believed this bank was going to be valuable, how we're going to make money, how people are going to deposit their salaries and people just not believing me 95 or 96 times in a row. I mean, now I feel vindicated. All of the stuff I said turned out to be absolutely true.

But at the end of 96 no's, we got these two canadian pension funds to say yes, and they agreed to put in 100 million along with our existing investors at a flat valuation. I thought we were burning 100 million a year at the time. So the company is going to survive another year. This was like March or April 2020. And the documents were all agreed and ready to sign on Monday morning, ready to sign and wire.

And on Friday afternoon, London went into lockdown. And they phoned me up and said, the investment committee back in Canada has said, every investment's on hold. We're not doing the investment, we're out, we're not investing. That feeling of like, the world's going into lockdown, there's this crazy pandemic and no one knows what's going to happen. We're running out of money.

Our revenue in the next week halved, went down by 50%. And I'm like, staring down the barrel of this funding hole we have and spending the next few weeks trying to get any investor to invest at any valuation. In the first few weeks of COVID that was the hardest by far. What did you do? We got existing investors to invest at a significant down round.

We spent a long time trying to figure out what was fair. The company was in a precarious position, but we all believed it was valuable. It was sort of this game of brinkmanship, almost, what is the fair valuation that rewards them for taking the risk, but values the company appropriately? And it was tough. Three or four weeks, we got the round done.

It was a sort of 40% down round, I think about 1.3 billion. And we got 100 million. And the company survived that note from the penchant punt. That is horrible. I remember the call so vividly.

The person, our champion on the inside, was so upset about it. She'd worked with us so hard to get the deal done, and she was distraught. But there's this sort of nameless I see I'd never met. I don't think that you can actually ever really have empathy for a founder unless you fundraise. That's just brutal.

No, no, no. And every time, you've got to just embrace it and be, do you know what? Next one. Next one is going to be it. But I see so many 30 year old investors at multistage funds they've never raised and are deploying $10 million checks at a time.

They just have no idea how crushing it is. Totally. Do you agree with me? I totally agree with you, yeah. I've never experienced anything in life like it really.

Tom Blomfield
Just that process of continually having to show up and be positive and energetic and over and over being told no and being given reasons that you're like, pretty sure are bullshit. The herd mentality at the start of Monzo said, you can never get anyone to switch bank accounts. It's impossible. People get divorced more often than they switch bank accounts. Then we proved that was wrong.

Wayne was like, people get divorced a lot. Yeah. And they switched to Monzo at even higher rates, it turns out. Then they said, well, you're never scaling the first ten or 20,000, maybe, but we got to a million customers with no advertising. Then they said, oh, but it's just a toy card.

Tom Blomfield
It's just a secondary card they use when they're traveling. Never be the primary account. They'll never be the primary account. They're never going to put their salary in. So then we spent the two years getting everyone to put their salary in, and now it's something like 60% of customers put their salary in.

They're like, oh, well, you have got customers to switch banks and you have signed up several million of them and you have got people to put their salary in. But really, you'll never make money, will you? And now Monzo's making almost a billion dollars a year in revenue, and it's just painful to have had to go through that. Six, seven, eight. I mean, full credit to the team for the last three or four years.

I left at 100 million revenue or so, and it's now almost ten x that. It's hard when you meet an investor and you just go, you're just stupid. No, and you have to pretend. Yes, that's a really good question. More on why do you think they were stupid?

Let's just say some are for sure. There are some stupid investors. Dude, I just got out of an LP meeting with one of the largest british LP's, and you go, love it, Harry, old chap. But all of this that you're doing, it feels like quite a lot of work. Why don't you do less?

Yeah, you don't get it. But moving swiftly on, I do want to talk first about the move, because obviously we mentioned there the challenge, raising money in the early days for Monzo in London, and you've recently moved, obviously, to San Francisco. Why did you decide to make the move with the YC role and just talk me through that process? Because you could have done anything. So I left Monzo.

Tom Blomfield
I took a year or two to recover. Honestly, my brain was really, like, melted. And then I started angel investing. In 2021, I managed to sell some shares in go kart as my first company, and I put aside a pot of money that I wanted to put back into the tech ecosystem, specifically the UK tech ecosystem. So I made.

I was planning to invest it over three or four years, and I think I put in nine months. I made 76 investments in nine months, 56 of which were in the UK. My brain just works that way. Kind of find something fascinating, and I will just do it to an extreme. I took angel investing.

Did you write the same size check with every investment? I got that message. And no, there are two or three outliers that I put bigger checks into that I am, two of which I'm really happy about and one of which I was pretty sad about. What are your biggest lessons from doing 76 checks in nine months? What do you did well, did badly, would do differently.

Tom Blomfield
The biggest mistake was over indexing on the idea and not enough on the quality of the founder. I pictured myself running each business and I thought, wow, I could do this and this and this, and that's really dangerous. So dangerous. That happens with so many operators. They're like, I could do sales at this one.

Yeah. And it's not me doing any of it, it's the founder. And so there are a few ideas where I, like, really loved the idea and the founder just wasn't high enough quality, frankly. And that's something I've learned over and over again at YC. Picking the highest quality founders trumps everything else, even if the idea is totally stupid.

Work with the best founders you can and everything else is easier to fix. Down the line, do you outcome scenario planning? Absolutely not. So you won't go, how do I think this looks if all of the things go right? Is this a billion dollar business?

Is this not, I asked, is there a world in which if this goes really, really well? I thought about this a lot in the start of Monzo. There's like a sort of spectrum of outcomes. If you look at the top 1% of that spectrum, is there a world in which this could be a multibillion dollar company? Absolutely.

I don't know exactly how it happens. I'm not smart enough to plan it out. But if there's absolutely no world in which that could happen. Okay, so we have that angel investing as incredibly prolific. Tom, I mean, you worked hard.

That was not some time off. 76 in nine months. That's a lot of company meetings. Yeah, it was. Okay, so we have that.

Then what? Then I spent all my money, this money I was supposed to deploy every three or four years, but I found it a lonely process. And so YC serendipitously came along at just the right time and said, would you like to join us? You can invest our money. We've got a finance and ops and legal team that'll do all the admin for you, and you'll have a team of partners around you that you can learn from all of the things I wanted.

Tom Blomfield
The only catch is you have to move to Silicon Valley. Okay. So you have this unique perspective. Built two incredible businesses in London, european through and through, living in the valley now, seeing the incredible exposure that you have with YC. The most common critique european work ethic is lackluster.

The founders don't work as hard and they don't want it as much. I've seen some data, who knows if it's true or not on Twitter about the actual time worked by people in various countries in the US, somewhere in the middle of Europe, maybe they talk it up a lot. I really don't think it's a work ethic question at all. I think there are other big differences. I think the big difference is one of positivity, optimism and ambition.

Tom Blomfield
So when I was starting Monzo, I was 28 years old and never worked in a bank. People in the UK looked at me like I was crazy. I went to a lawyer to do preparation for the regulatory interviews, and the lawyer basically said to me, I'll do the prep for you, but I don't know why you're trying. They'll never approve you. There's no chance you get approved as a CEO of a bank in the UK, and obviously I did.

Whereas in the US, I tell people I'm starting a bank and they're like, that's awesome. How can I help? I can introduce you to this person. This person. It's like this.

The american dream is not a reality that most people get to live, but it is a dream that a lot of people experience. That optimism, that idea that anyone can create anything that they try hard enough, is so deeply american, and it's so antithetical to the british culture. Here we've got this awful, like, know your place, don't get too big for your boots. You know, you. You grow up in a middle class family and you aspire to be a doctor or a banker or a lawyer or.

I've been talking to students the last few days at our top universities, and the high status thing to do as a university, Cs undergrad, is to go and work at Jane street or Goldman Sachs or McKinsey. Still. Still so funny. Because, like, you know, ef have been touting that, hey, mindsets have changed. Mindsets have changed.

They're changing slowly. And it is 15 years ago when I started out being a founder, literally, people thought you were crazy. But if you can compare it to Berkeley or Stanford or MIT, everyone is starting startups. There. You talk to like, an english literature major and they've got their startup plan, whereas here I've been talking to phds in computer science and they tell me they go to Goldman Sachs and McKinsey.

Was Monzo doing the US a mistake? Maybe. It certainly hasn't worked yet. Of all of the money Monzo has spent so far, only two or 3% of that was spent on the US, and it didn't get very much management attention. I mean, it has not been a success so far.

Tom Blomfield
And I think taking a kind of cookie cutter approach, taking the product as it is in the UK and assuming the same product will work in the US is not correct. And they've got a great new team. They've just hired a new CEO who has deep us sort of banking and payments expertise. But I think you need to fundamentally rethink, like, what a compelling product would be for us consumers. Because n 26 has failed.

Revolut's failed. Monzo's the first go has failed. Give it another go. It's really interesting. There's just not been a successful mainstream neo bank in the US.

Chime is good, but it's targeting gig economy workers. The more affluent customers chase Sapphire and American Express just have the market sewn up. I do want to go back? We mentioned, obviously the angel investing and the 76. We then moved to.

Obviously part of the move to SF, as you mentioned, was to be partner at YC. That is a big transition shift from just being solo angel in London. How did you find the transition from Angela to invest it in partnership? So YC has this interesting model where they make you be a visiting partner for 18 months. They're like the most brutal job interview I've ever done.

So is it different being a visiting partner to being a partner in terms of what you do, the actual role? Totally different. Being a visiting partner is a great apprenticeship, but it feels a little bit like being a teaching assistant at a university versus being a professor at university. You know, the professor sets the syllabus and the exam questions and admits the students, and the teaching assistant tries to figure out what the professor is going to do and mirror that. Basically it's training on the job and I think it's great training.

What did you learn by being a visiting partner? I learned so much different stuff from different people. My first bachelor was with Dalton and the way he can help young founders find new ideas. Really deeply technical. Young founders without a clue what they want to work on.

Tom Blomfield
Dalton can come in and sort of unpick their background and history and find some thread to pull on that they're super excited about and turns into a great startup idea. And it feels like it's their idea, but he somehow, like, conjures that up out of their background. Michael Cybel. I did a batch with just before I got partnership. He has this incredible way of giving the most brutally hard feedback you can imagine the founder absolutely needs to hear.

And then finishing off with this heartwarming chortle, this, like, laugh that kind of reassures you. Yeah, makes you realize he loves you deeply. He might think you're a total pile of shit, but he really cares about you, wants you to succeed. So being able to, and that's something I'm trying to learn. I think I can do the harsh feedback quite easily.

That comes naturally, but the sort of the warmth and the empathy alongside that, I think I really want to learn from Michael. So then we made the transition to partner, and now you're the teacher teaching the syllabus, so to speak. What's the hardest part about that? Accepting. Again, I'm not in the driving seat, that I'm a coach and a mentor and I give advice and it's up to the founder whether they want to take that advice or totally ignore it.

Do they take it because what I worry about is actually the weight of my words, which is, let's be honest, most founders kind of say, thank you, VC, for your advice, but fuck off and keep writing the check. More than with YC partners. They might actually listen to you. Could be great, but it could be dangerous. There's huge variation.

Tom Blomfield
You're right. If someone blindly accepts everything you say without thinking, not great. If they come to you with every small decision, they're not going to be a great founder. They need to take the training wheels off and ride the bike on their own. But honestly, we have founders who come to us for advice, listen to it and completely ignore it.

YC is not full of founders blindly following advice. I can tell you that. You meet a founder sometimes where they're not the best founders. I'm very good friends with some of them. But you're not investing in people who want to be your friends.

You're investing in people who you think are going to build fabulous businesses and work very, very hard to do so. Do you need to like them to invest? I don't think so. I mean, it helps. It makes your life more fun.

But there are people who are just like, a little bit scary. You know, they're a little bit arrogant, perhaps a little bit obnoxious, a little bit too sure of themselves. And I wouldn't want to spend every day with them, but I just feel like they have something special that's going to build a really, really big business. And that's a bet I would take every day as an investor. I don't think founders are necessarily the most likable people, honestly.

Why? Because you have to be, in a sense, contrarian. If you just agree with everything that happens around you, you're never going to create something different. My first job, I was not at all likable, honestly, I didn't know that it was useful to be likable in my job. You know, I didn't suck up to my boss.

Tom Blomfield
I told my boss every time I thought she was wrong and she hated me for it. But I could see everything that was broken in the way we were working. My brain wanted to fix that. That's not a way to endear yourself to people. But I think it makes great founders where they're like, just so annoyed if something's broken, they have to fix it and they have to tell people when something's wrong.

It can make a shitty employee, but a really good founder. And my family always say, with me, it's not calming to be around you. It's generally impatient, generally quite irritable. Because you want to change something. Yeah.

So when you are the teacher, the professor, Professor Blomfield, do you, like, pick which ones coming in are yours? Yes. So it's like a drafting process. Each of the partners has access to the entire application pool. But if I read an application and I'm the first one to say, yes, that's mine, then I get to interview it.

Tom Blomfield
And if I interview it and I'm the sole person who says, yes, we will invest and it gets money, and then it's my responsibility to work with throughout the batch and throughout the lifetime of that company. And how many do you choose? About 25 per partner. Per batch. You can do more, you can do less.

It's not prescriptive, but it's an amazing sense of ownership and accountability. When you go that one, I'm interested in that one. How often does the initial interest stay post meeting? How often do you write with that versus. Actually, I met them and it wasn't what I was.

I mean, statistically, you can figure out. Figure this out. So I will invite approximately 100 teams to interview, and I will fund 25 of them. So, yeah, I will pick 100 that I want to interview. I'll read several thousand.

Pick 100 to interview, fund 25 for you. What is it that makes you go, ah, that one. In that interview that they teach me. Something that they're so expert in their domain and so obsessive, and they thought really, really hard about it that they can come and in ten minutes show me something new about the industry I didn't know before. Do you really think you can get enough in ten minutes?

You can get enough in three or four minutes, but it seems rude to finish the interview so quickly. See, I don't. I love that, and I would hope so. But what if you just have someone who's come from bum fuck nowhere? They do not understand the process.

They are brilliant and gifted, but they're just nervous. That's okay. We adjust for that. You see what I mean? Like, I'm worried that you may miss stuff if it takes sometimes 20 minutes and to come out of their shells.

Tom Blomfield
A little bit, maybe, but it's not just the interview that we go on. I'd say the interview is like ten or 20% of the entire process. We make them write a long application form, so we get all of their academic and career backgrounds. We ask a bunch of weird sounding questions to try and pull out, stuff like that. What's the weirdest question?

Tell me about a non computer system you've hacked to your advantage. So what system in your life have you figured out the intricacies of in order to use for your advantage? Venture capital. Yeah, you started, right. And that's the kind of thing we would love to see as a.

What were you, 17 years old or something? I started a podcast in a bedroom in London. In a bedroom. I did 400 episodes without making a penny in revenue. But I got this amazing Rolodex, and then I parlayed that into raising a fund and becoming a VC.

Amazing. That's the kind of exceptionalism that we're looking for in some area of their life. And it might come out through the application. It might be the interview video or the interview itself, but we're looking for that spark that they are not average. They haven't just gone through standard steps of good high school, gone to Oxford or Cambridge, gone to McKinsey.

Just like boring, boring, boring all the way through that. At high school, they taught themselves to code and built websites for state agencies. That's what we said. The early signs of exceptionalism. Yeah.

In some way, Patrick Collison creates his own lisp dialect at age 15 or 16 or whatever. It's stuff like that. And so then we have 25. They're all in the valley with you, correct? Yes, more or less.

Require everyone to relocate now to San Francisco in the dog patch where we have our office and spend three to four months there. See, I think that is so important. I agree. My question to you is, when you speak to the other partners, especially, I guess, going through COVID, where it was completely remote, do they have any lessons, observations from the complete all remote YC to the all in person? Everyone's a lot happier now with the all in person.

There are elements that we have retained of the remote batches, so we had a few that were fully remote. Doing demo day with remote presentations like record or live, but on Zoom presentations with an investor, reception in the evening seems like a really good balance of the two, all on Zoom versus all in person. Sitting through two days of presentations in a stuffy lecture theater where the AC doesn't work well is not a pleasant experience. That's one thing. Remote interviews.

We used to fly everyone to San Francisco for interviews, which seems insane now, but overall, the in person experience is dramatically better. Having in person office hours, group office hours, even cooking for people, like the act of cooking dinner for a group of people you've invested and then serving them with your own hands, an act of care that creates just an emotional bond. Trust as well. Totally. I trust you.

Not to give me food points when it's just a 20 minutes Zoom every week. It's so transactional and empty. I really feel like I know these founders now after four or five months. Brilliant video of Putin and Xi, who both cheers with the Ross and then put it down and you're like, ah, okay, okay, so we have the 25. I'm sorry for asking, but I actually, I listen to a lot of startup Pogba.

I didn't hear this. What does the time look like, then, for you, with the 25? One hourly meeting per week. So YC is split into four groups. So it's not a whole IC, it's four separate mini YC.

Tom Blomfield
It's sharded. You'll get a very different experience in each one of them. The partners are specific and we have our own speakers. One night a week will be your group event, and you'll get someone like Brian Chesky or Paul Graham, or we had Kevin Systrom, the Instagram founder, come and talk to our founders. So you've got your Tuesday dinner, you've got prescheduled office hours, sort of one on one, or one company with one partner every two weeks, and then group office hours every two, the alternating two weeks, which is a really great mechanism, I think, was introduced in 2011, where you have seven to nine companies who all come for a sort of one and a half to two hour session.

And they're organized thematically. So we had a fintech section and a biotech or whatever it might be, ideally all at roughly the same stage of company life as well. And then we basically, the founders are sort of problem solving with each other. You know, how do you find a banking partner in fintech? Or how do you deal with government regulation?

Or how do you sign your first enterprise deal as a B, two B SaaS company? So these group office hours are really good way to share knowledge between founders and then set goals. So you say in front of these 20 odd people, we're going to go from twenty five k at ARR to 50k in two weeks. And you come back in two weeks. And, like, the public pressure, even though it's only 20 people in a room, pushes people to work harder than they ever believed was possible.

It's really those three things. So the Tuesday night or the dinners, the individual office hours and group office hours, that's the core of YC. There's a bunch of other stuff. So there's an incredible internal knowledge base, a forum, a user manual on how to run startups. But for the in person stuff, it's those three things.

What do you think are the most common mistakes that founders make in the batch process when they are working with you in that three to four month process? Not launching early enough, very often, being too afraid to get something out there and iterate. I agree. I saw a tweet the other day. They're saying, actually it's never been harder to capture consumer attention than stay.

And so actually this idea that you can release an imperfect product is not true because you release that imperfect product, Tom engages with it, goes, eh, that's not great. Churns. It's so hard to get them back. I disagreed with it. Yeah.

Tom Blomfield
I think you need to make the scope narrower, differentiate between breadth of functionality versus a level of quality and polish. So I would always encourage founders to go for a very, very, very narrow feature set, like even narrower than they possibly could imagine. Polish it to a very, very high level of quality and get people, only a few people, a few hundred people, really excited that really narrow thing, and then broaden out. What way too many founders try to do is they're competing with Google Docs, say, or something, and they try to replicate every single feature of Google Docs to a mediocre level of quality and then release that and a surprise when no one likes it. So keep your initial product super, super, super narrow so you can build it quite quickly but keep the quality bar super high.

A lot of founders worry, yeah, but I'm going to have a super specialized product then, and I can't sell that big vision to VC's. What do you say to them? Yeah. So this is a key skill of a founder, holding these two realities in your head simultaneously without cognitive dissonance or driving yourself crazy, one is the big vision of the 1% best outcome. If this really, really works, what could this become?

Tom Blomfield
Holding that in your head? And for Momzo, it was, we're building a bank for a billion people around the world. That's the big vision that you have to hold in your head and then you have to hold the. What is my top priority today and this week and this month, which is very, very different from this billion people around the world. Right.

And you have to execute on that and get your team to focus on it, but you have to have both. If you only have the big vision and you think that's today, you're a bullshitter, you're just full of hot air, none of it's real. Whereas if you're too execution focused and you continue that for several years, you build a small business you build a very successful, or rather a medium sized small business that's very profitable. It's never going to get big. So you have to have both simultaneously.

How many of the companies pivot in the batch? 2020? 5%. What do the successful ones do that the others don't? Pick an idea and stick with it.

Tom Blomfield
As simple as that. The worst pivoting founders just can never get the conviction to stick with anything. And they just pivot and pivot and pivot because they overthink it. And I hear this more and more from young founders, like, I'm not sure this is my life's work. You know, I can't commit to it because I'm not sure I'm passionate enough to spend my.

Dude, I'm asking you to spend six months on this, not your entire life. No. When I add here line, it's dating. I'm like, no one goes to the first date being like, you are my partner for life. It'd be terrifying.

Yeah, Dalton said something very funny a couple of weeks ago. Pivoting is like divorces. Maybe one or two is reasonable, but if you're doing it multiple times in a row, maybe the problem is you. I like that a lot. What are the big challenges for you advising these batches?

Is it that VC's come early and you're like, don't take their money, don't take their money. Is it that shutting down continuity, our growth fund, has enabled YC to have a much more collaborative relationship with multistage VC's previously. It's very competitive, so that's fine. I think everyone behaves pretty well. Do a lot of your batches get approached while in batch?

Tom Blomfield
100%. Yeah. The trope was always, everyone raises before Demo Day, which is true. Like, the best companies absolutely always raise before demo day. And so now we've just set a deadline, like two weeks before demo Day and said, you may start fundraising on that day.

Two weeks before demo day, and they're. Not allowed to start before then. We strongly encourage them not to, and we'll be very, very disappointed if they do because it's not in their interest. Because running a competitive process with lots of people bidding is going to get them better terms. And what happens is nervous founders will fundraise early because they're like, well, what if demo day doesn't go well?

So I'll just talk to some early? And then what happens? Either the VC looks at you without much progress and writes you off because you've not made enough progress, or they like you so much they give you a preemptive offer, but the valuation is not as good as you would get by demo day, because that's why they're doing this. Right. So they give you an offer of 2 million on pick evaluation.

I don't know. X, right. 1010. Two on ten. And the founder's feed price.

This is more money than I've ever seen. Price. You guys seen ten? Seen that? No.

No, not for a while. Huh? No. But the nervous founder is like two on ten. Wow.

Tom Blomfield
This is more money than I've ever seen in my life. And they can't turn it down. They don't have competitive offers. They can't turn it down. And so they accept this preemptive offer and they've just screwed themselves.

And this happened to a couple of my companies, dispatch, where crazy all star team, ridiculous. Like, every pedigree you'd want, amazing product, profitable, more than a million in revenue. And the founder was just so nervous about fundraising that she took. It was fine, it wasn't terrible, but it was heartbreaking for me because I knew that if she just trusted the process and waited till this sort of auction process, she'd get a better round. Okay, so you mentioned better round, better round, better round, and like, kind of the more auction process.

I can see where this is going. What? No, my question actually, before I just parlay and just lay into you, is actually what is the biggest advice that you give founders when they say, how should I think about structuring this round ahead of this two weeks of conversations before demo day? Yeah, this is an area where I think it's way too easy to say YC's advice is X. YC's advice is custom for every single company.

I'll answer the question, but with the caveat that this is not advice, that we, that we will tailor it much more specifically. The trends we've seen over the last few years is that founders were getting way over diluted in their seed round. They were giving away 25 or 30% of their company at seed. That's too much. I agree.

Keeping dilution slightly lower is probably better for them. I think some founders have taken that way too far and aggressively will only give away eight or 10%. So this is my trouble. I see 10% the whole time, and I'm just like, how on earth do you expect a great ambassador to really, really be a partner with you when they're going to get six? Because you also want to have these angels in.

It's not going to happen. The more nuanced truth is not YC is telling founders to only raise ten or 12%. We are telling founders that over diluting at seed is not good for them and that retaining control would be good for them. And they can make progress towards a series a milestones with probably a million and a half or 2 million. And the valuations they might get at demo day are around 15 to 20 million, which roughly ends up at 10% dilution.

Tom Blomfield
But if a great partner comes in, top tier fund or someone has a specialist and they really, really like, and they'd want 15% ownership or even 20% ownership. Absolutely. Consider it. I wouldn't write anything, I wouldn't rule anything out. And I think this is where it gets misunderstood that YC's rule is only 10%.

It's absolutely not true. We've had Sequoia and Andreessen Excel and founders fund and Google Ventures and all of these funds leading rounds in companies in the last batch. And it's just about having a reasonable conversation with the founders to say where's the flexibility and where can we meet in the middle? I find one commonality. I've done 170 investments now.

One commonality is when the seed round is large, they lose urgency. Totally agree. Execution speed goes down. Totally agree. Always.

Five on 25 is kind of the sweet spot. Do you agree with that? Yes. We push founders to raise less in general because most of our companies at demo day are pre product market fit. They've got some inkling that something's working, but they're certainly not in the scale up phase.

Tom Blomfield
More capital. Pre product market fit does not help. People just end up hiring tons of people, which slows everything down and stops them being so nimble. So really our advice is to raise slightly less money. Pre product market fit.

Absolutely. Once you've got product market fit, pour gasoline on the fire. Go, go, go. But yeah, raising less early is probably best for most companies. Do you see bad investor behavior?

Oh, a lot. Do you? A huge amount. I thought they'd be quite worried about that. They are, but then why would they let you see?

Because they haven't. It's got better and better and better. What is the bad investment? Because often people talk about this, but. I'm like, I don't see it.

YSC has an investor database which has 10,000 people in. I'm sure you're in there. We can perhaps look it up. And it has reviews from all of the YC founders that have taken investment from them, both on their process and what they would like to work with after the investment and it has a rating. All YC companies have a huge amount of inbound investor interest.

And before they book meetings, they will look each investor up in the database and see, have you treated founders well or have you not? And if you've not treated founders well, you're not getting meetings with YC companies. And some investors go, why is everyone ignoring my emails? It's like, well, dude, because you've fucked over these companies again and again and again. Very typical bad investor behavior would be something like making a binding handshake offer.

We have a protocol on this, you know, I offer this amount, this valuation. Yes, I agree. And then not wiring the money or just saying, oh, of course, I will only wire when the round's full. Let me know when you've got the full round completed and then I will wire you've signed it safe. You have to wire the money straight away.

Or being extremely onerous in terms of like, you must meet with us every two weeks or whatever. Like, I want to be helpful and being a little too helpful. The biggest annoyance to me is actually when people don't understand the weight of their check. And what I mean by that is like, when a small 50 or 100k check wants ten diligence meetings and then wants 15 references, and you're like, dude, you're a fucking addendum to this round. Yep, know your place.

Yeah. And we are actually going to start publishing this data internally for our founders where we know how many. Can we check it first? Absolutely. This is what I'm doing right now with another of our partners, Brad.

We have data on how many meetings each vc takes, how many investments they actually make, and what the check size is. And so we can tell our founders what is the percentage chance of conversion and what is the expected value of each meeting. You got like the most intelligent routing system. Then where you're like, hey, for those that want the easiest cash quickest, the highest converting checks are these 20 investors. If you meet with Sequoia Andreessen or founders Fund, it's going to have a 3% chance of conversion.

And on average they're going to invest 2.7 million. I'm making these numbers up, but we have that data now and we are going to all of the top funds to work with them to make sure their understanding matches with our understanding that they actually have made three investments. They actually did take 163 meetings. And then we're going to publish data. To our founders are the companies that get the supremely hot rounds, the ones you think will, in other words, can you predict the ones that will be hot.

Yes. And that's because of founder space, everything. Yeah. Combo attraction. Yeah.

It's not one for one. You can't predict 100% of them, but directionally, yes. Do you ever have one where you're like, that one's going to be a rocket in terms of investor attraction, and then it's like crickets. Sometimes the vast, vast majority of YC companies end up raising their target anyway. Some might take a little longer than you expected and some might go very fast, but something like 80 or 85% will raise their full sort of target amount, which might be two or 3 million or something like that.

And then for you, you have these 25 batch which you really craft and work with. You have the carry on that batch. It's all shared. It's shared like an equal partnership. Yeah.

Fascinating. And so do you get involved with other people's partners, like. Absolutely, yeah. You want to pick the best companies for pride. And also it's more fun to work with better companies than worse companies.

Do you stack rank each other? No. No. That would be interesting to see. You'd need a long time period to really know you would.

But you could get interesting signals from who raised the most from the best, the amount that converted, that didn't. Yeah, we have that data and we ignore it because it's just so easy to. Easy to gamify, for sure. Yeah. Who cares that you raised 10 million from x, y, Z investor?

Tom Blomfield
It just. We don't want to incentivize people to raising that. If you could change anything about the YC process in that three to four months, what would you change? The thing I am trying to change, I ran an experiment last batch where I randomly matched groups of six to eight founders across groups for dinner and just sent them out for dinner. It turned out to be unbelievably difficult to get a group of eight founders to organize anything for themselves.

It was astonishing. And so this time round, we are doing way more of the curation where we're like, we literally tell you, turn up at 06:00 p.m. At this restaurant and you will meet seven random YC founders and you can chat about your startups. So the thing that I found most valuable as a founder in London was meeting groups of peers that I would then share experiences with. So we're trying to curate those experiences for people so they get more of a community.

If it works for the batch, we'll start doing it for alumni as well. So you can say, I'm in London, we're going to do 20 YC dinners next week of all the YC alums. So they get to meet each other and just make that network of YC even more powerful. I do want to move to the theme of the day, which is obviously AI. I mean, every YC company is also an AI company now.

70%. 70%. There we go. Is the hype surrounding AI a hype cycle or is it justified? I think it's justified.

I am so excited about what the future holds. I was really annoyed, actually, back in like 20 when I was starting go Kardas and Monzo. I was so annoyed that I wasn't around for the dawn of the Internet, you know, like 95 to 2001. I was like, I always heard about Netscape in 95. And I'm like, yeah, we're way too late.

It's just like it felt somehow like all the ideas were not taken. That's just as silly as low hanging. We missed it out. We missed out on that time. And what I actually realized is that Monzo rode the smartphone wave.

Smartphones and apps were 2010 to 2020, say, and that was the predominant technological wave. We are now going through another, which is AI, which is going to be as big as the Internet. I think really there's a technological revolution that I think will impact every part of our lives in small ways in the next year or two, and in very, very large ways over 10, 20, 30 years. And I think it's going to transform every industry, and there's so much opportunity to build right now. There's kind of two opposing camps at this time, I think, which is like having interviewed many different people on both sides, which is really interesting, actually having the different perspectives, but those things, it's like a sustaining innovation, which is like an add on to adobe notion, all the existing, and it enables a better experience for existing products.

And then there's others who say it's disruptive and it creates entirely new categories and markets. I'm going to cop out and say kind of both. I do think big incumbents with distribution who can add sort of AI copilot functionality will make their products more effective. But I think there are huge new categories that will be created as well. I'm really excited to see what it does to consumer, consumer behavior, because consumer companies tend to be winner takes all or winner takes most, and they tend to be created when a new technology shift happens.

Tom Blomfield
So Internet or smartphone, and we haven't had a lot of exciting new consumer companies for like the last five or six or seven years, because they all started in 2011 to 2015. Clearly AI is that technological shift and I think it enables a whole generation of new consumer companies to be created and I don't even know what they are yet, but I think they're going to be created this year and next year and year after. Okay, I just want to then kind of unpack that a little bit because there's obviously the sustaining versus disruptive and then there's also kind of infrastructure versus application layer. If we start on infrastructure layer, we see so much money going into the core providers today, your openais, your mistrals, your anthropics. Do you think there's money to be made investing in foundation models?

I don't know. The best case for me and for YC probably, and for you and like humanity I'd argue, is that roll forward's ten years and there are like five or six foundational model companies and they're probably attached to Google and Microsoft and Amazon and Facebook and Apple because they have the funds to power them and they are all about as good as each other. It's like how, you know, GCP versus AWS versus Azure kind of do this slightly different things, but there's great functionality and commodity pricing because they've all beaten each other down on price. That is not so great for the investors who invested in those companies, but great for the world, great for humanity, great for startups. I think this is exactly what happens, which is they realize that actually the cloud services is where the cash cow is.

You acquire them, the tools that help you acquire amazing customers. But absolutely, they're kind of aqua hires to aid the core cash cow business. Yep. And maybe the LLMs themselves are kind of part of that infrastructure, but I see them being in the case that's good, frankly, for YCN, for most of the world, I think, is that they're more or less equivalently good. And you could build on any of them, you could swap any of them out.

Tom Blomfield
I think the dangerous thing I insanely. Impressed, I was meeting a company the other day and they were talking about how quickly they swap out different models on a real time basis for different use cases. There was a language that happened, it was literally like we use twelve different models at once and varied in real time. The US has made like non competes even less enforceable. Now talent is going to jump between these places so quickly.

So you discover an innovation at one place weeks or months later, it's replicated everywhere else. I think unless you really believe that raising a trillion dollars to train your biggest model is going to be the advantage? Who knows? But I think it's quite dangerous to the world if there is one singular godlike Agi that we're all beholden to. Okay, so we move then to the application layer that sits on top of foundation models, which is where I presume you're excited.

Yeah. Why is that? Because most, it's a wrapper, it's non sustainable. Why are you excited? There are clearly some wrappers if you can build it in a weekend at a hackathon and make a bunch of money.

Probably not defensible for most businesses building on top of these models. I see it, you can describe the last generation of startups as mysql wrappers or AWS wrappers or something. The same kind of logic applies. I think where the sustaining value lies is identifying an industry, deeply understanding the regulation in that industry, the tooling, the language, the all of the training, how people work and behave and act and tailor your software to fit into that industry in a way that's extremely deeply embedded. Most people building application layer stuff in an AI say it's 80% to 90% traditional software with 10% AI.

It's working in construction, figuring out how procore works or how the Salesforce CRM works or some oracle database. I don't think OpenAI is going to come and steamroll the construction company AI companies because they're not going to deeply integrate into the processes and software that exists in each of those industries. So I really believe everyone works with the computer will have an AI copilot assistant thing in the next two or three years, whether you're an oncologist or a law professor. The thing that worries me with a lot of it is actually that you see a lot of these service providers. Oh, we have a better user experience.

We'Ve got a better soundproof. And I'm just going, I get it. But the trouble is you don't have distribution. And what I worry about is distribution trumps product in this world, which is where Microsoft Office just bake it in. And because of Microsoft's distribution capabilities into all, was it oncologists or dentists or whatever we want to use as that famous dentist example.

Fucking dentists, poor dentists. But do you see what I mean? I do, but I don't agree because I think Microsoft Office by definition has to be a general product. It will be the best word processor for sure, but it's not going to be the tool that the dentist is actually using to write their clinical notes after a meeting. That is a specialist piece of dentistry software, the 3d modeling software that some architect is using to design a skyscraper.

Tom Blomfield
Microsoft Office will benefit for sure Google Docs and Microsoft Office as a general document writing thing. But one of our companies was called solve intelligence, which is a tool for patent writing. So taking scientific inventions and papers and turning it into really, really high quality patent submissions are very likely to be accepted. I don't think you can tell me Microsoft Office is going to help write those patents. No.

So I think that it's that vertical focus. Was that an incredibly hot company? It was a normal hot YC company and that's the bread and butter of the stuff I love to invest in. Find a vertical where you are a domain expert and you're nerd out on it really, really hard. You can talk to these people and build something that's so specifically tailored for their needs.

Do you find the advice that you're giving these startups is different to the advice that you gave in a completely pre AI world? Yes. Big companies are now more willing to spend money on this stuff than they ever were. The previous advice of like go and sell to other startups I think is not good for very and maybe a dev tool startup, you go and sell to other startups, but in general I push companies B two B SaaS companies to start mid market and go up as quickly as they can. Every manager of every big company in the world is being asked by their boss what is AI going to do to our company?

Tom Blomfield
And many of them do not have a good answer and they're looking around for startups to help them. And for sure it's innovation budgets and proof of concepts and all this stuff. But where it works, they convert to real contracts. I've seen companies go from zero to like half a million or a million of revenue within the YC batch with really, really big companies like Fortune 500 companies, and turn them into recurring contracts. This is real, this is saving people so much time it's astonishing.

Do you think you know that you're a good investor now? I don't think I am. I don't know. Do I think I'm a good investor? I was having this chat with Tom Hughman, he was like, dude, I just don't know if I'm good at this.

After all this time. I don't know either. I think I'm a good founder and operator. I'm not sure I'm like that. Temperamentally suited to being a coach or a mentor.

Tom Blomfield
I still have that fire. Like do you want to go back and found another company? Absolutely not. Really. I love it, but it ruined my life, my life, in a way.

Honestly, I love the earliest stages. I love working with smart people. I love building stuff. I love having my hand on the steering wheel and making decisions quickly and feeling the whole company moving at pace. And I think I'm good at it.

The problem is, when you're good at that stuff, it turns into a big company, and then you have to run a fucking big company, which sucks. Really. Really. What sucks most? I'm so proud of Monzo.

I think it's an amazing product and company, but that was like startups on hard mode, because it was regulated. We built a product we thought people loved customers, gave us incredible feedback, it was profitable. And still the regulator comes in and says, no, no, this is actually. This is really bad for customers. Despite all the customers loving it, it's actually really bad for them, and we have to protect them.

And so you've got to change all your plans. Having this random team rolling in hand grenades every two or three months, you know, you think you're talking to customers and doing the right thing, and then you just get blown up all of a sudden because the regulator decided, for some reason, it's not treating customers fairly. It was astonishing. What advice would you give Nick at revolut on getting regulated? I'm not sure Nick would take any advice I gave him, so it's totally irrelevant.

I don't know. I think revolut have acted in a certain way for so long that it is hard for them to change course. Really, honestly, we intended to be regulated bank from the very, very start. Now, ten years on, we are reaping. The rewards of that final one you mentioned there about the impact that it had on your life, obviously found in companies.

And I've heard you talk about the ability of balance before, and I've never agreed with you on this one, Tom. I'm really sorry. The reason why Monza and go cardless were successful is because you didn't have balance. And nothing great is created. Actually, with balance, you have to be exceptional.

That's what makes it a great. I agree, I agree. Over a short to medium time period. I don't know how founders do it over a ten or 20 year time period, because I cannot work for that intensity for that long. Absolutely.

Tom Blomfield
First two, three years at Monzo, we were working like crazy people. I mean, the first 50 people at Monzo were so spectacularly talented, they bare the scars of it. You know, they, like, worked so hard and gave part of themselves to this company to make it exist. It was really annoying, actually, when we got to, like, a thousand people. People are joining and, like, demanding work life balance, and, you know, asking when we're going to do a four day work week, and the first 50 or 100 people are going, what the fuck is going on?

Like, it feels like we give limbs to this company, and then these newcomers are demanding, like they want to work 25 hours a week or something. Like, what the hell's happened? So, yeah, it's tricky. Did you fall in and out of love with what you did over that time? I think people always say, like, oh, fans, you're always so in love with what you do.

And I think that's a bit of a lie. I loved the product all the way through, but by the end, I hated the company because it got so big, so over regulated. In my opinion, it wasn't as simple as identifying something customers wanted and building an amazing product that they would pay for. That was not enough. There was this other whole, like, crazy language that we didn't speak called financial regulation.

Tom Blomfield
You had to keep these regulators happy as well. I was not good at that, really, honestly. And I think t's the new CEO, and Sujata, the COO, are spectacularly good at that, as well as maintaining the culture and the products. And they've just done such a good job taking it when I left it over the next four years that I couldn't have done final, final one, I promise. Do you have a challenge in terms of loss of identity?

I don't go on holiday because you're detached from work, and you mentioned me starting at 17. I've never, ever done anything else but this. So it's really uncomfortable, actually, to have ten days or seven days with nothing. Yeah, this was a big problem for me when I was thinking about leaving the year or so before I actually left, I couldn't imagine myself and the company not being the same thing and who I would be or what I would be or whether I would be relevant anymore, or. I was worried the company wouldn't survive without me, which was a very arrogant and untrue thing to think.

Tom Blomfield
It thrived without me. And I had to rebuild my sense of identity, my ego. And honestly, going to America where no one knew who I was, and joining YC as basically an intern was incredibly humbling and really positive because I. I had to, like, rebuild my entire self image at Monzo. Anytime I said anything, a whole team would, like, spring into action.

And even if I didn't intend them to do it, I'd be very careful what I said because literally I'd come back two weeks later and find 30 people had gone off in crazy tangent. And I joined YC and I say things and people like, ignored me and not in a nasty way, but I was just like just another person, right? I was a visiting partner, I was a teaching assistant. My ideas didn't matter that much. And that was so humbling, honestly, really, really great.

Right. We're going to do a quick fire. So I say a short statement. You give me your immediate thoughts. Let's do it.

What's the biggest takeaway from PG? Relentless optimism. He will meet with founders, get so excited by their idea, and imagine the future they could build. If this just works in the 1% chance it works, how it's going to change the world, and he'll get so, so excited. He will excite the founders themselves and they will come out with way more optimism and self belief than they went in with.

Tom Blomfield
It's a superpower. It's astonishing to see how we can jazz people up and just get them so, so driven and motivated. And it's something I really want to emulate. It's really interesting, the unlocking investor enthusiasm gives to the willingness to open up of the founder. Yeah, totally, totally makes sense if you have a pessimistic, well, this won't work.

This won't work. And it's the british culture, you know, it's so easy to trash an idea and be kind of sarcastic, and it makes for great comedy, makes for terrible startups. You need that, like, boundless energy and optimism. And it's not a natural british state, but it is californian. You can start one company again and choose a board member.

Who do you choose as a board member and why then? If I was doing fintech, I would choose Mickey Malka from Ribbit. They finally invested Ribbit. I don't know if this public, I should check. Yeah.

I love Mickey. He's so great. And I like the quality of thought I got from Mickey and the deep personal connection I felt with that guy was just on a different planet. I'm sad I haven't had the chance to work directly with him. Yeah, no, listen, I think he's incredible.

What investor would you never have on the cap table?

Tom Blomfield
Probably Softbank. I had a very unpleasant experience with the Softbank London team. Just a bunch of pretty arrogant, like Deutsche bank traders turned venture capital investors. They were not fun at all. I met tons of really bad investors through my time.

Honestly, what was the worst investment meeting you had. There was one, and I can't actually remember his name even. He was an intro through one of our existing investors and he, on the first call was like, raving. He's like, this is so exciting. This company's great.

Tom Blomfield
I really want to be in reserve. Like 10 million. I want 10 million allocation. Will you give me 10 million? We were like, yeah, sure, we're raising 100 million, but, yeah, we'll earmark ten for you.

If you're that keen, go through diligence. And we got the rest of the round together. Over the next few weeks, like a week before signing, he was like, you know, I've been looking at your numbers and the cohorts. The cohorts really aren't as good as you said they were. And really, this valuation that we agreed doesn't really make sense anymore, Tom.

And really, I, you know, I agreed at one, but actually, I'm only going to do this at 500 or something. And it was like three days before signing the term sheet. And I was like, okay, no worries, I'll just give your allocation to someone else. Thanks. He's like, what are you doing?

I was like, you're backing out. Like, we agreed on something, you're backing out like, you've not got it. And he went fucking apeshit. And I heard from another investor, this is just standard practice for him. He will go in super, super, super happy, like, supportive.

I really want in. And then at the last second, he'll be like, oh, no, there's actually something wrong. Just try and squeeze 20 or 30% out of the round. I don't understand why I do that. Because you've got to have ball control on the round to squeeze it 20% to 30%.

Do you see what I mean? So it's like, if you're a 10 million of 100 million, you're not even going to be able to do that. But even if you wanted to, you couldn't without carving out a separate deal for him. Yeah, I don't know what his plan was. It was really stupid.

Tom Blomfield
And I was just like, I don't want to work with you. He has been blacklisted from, he's tried to invest even after I left. And to their credit, the Monzo board have said, we're not working with you. And I was just like, fuck you, dude. Don't treat founders like that.

It's not cool. Okay, which is the most helpful angel I know? Angels are different for different companies, obviously for different, but like, the one where you're like, ah, they're amazing. So like Guy Pijani at SNCC, for me, consistently in companies I invest in with him, I founders love him. That's a good question.

For me personally, it was Eileen Burbich. I'm not an angel investor, but our seed investor was the most personally helpful. We were obviously her biggest position. She said to make a lot of money, so economically it makes sense. But she went above and beyond.

I mean, she was like offered for me to go and stay in her house, cook me meals. When we lost a chief people officer, she came and did an exec job at Monzo, effectively for like four days a week for six months. She put her portfolio to one side and just said, I'm just going to come and turn up every day and work with you at the company. It was just astonishing. So Eileen is, for me, head and shoulders above everyone else I've worked with.

Gary's clearly fucking great. Like when you see Gary Tan. Yeah, yeah. When you see him as CEO of YC and what he's done, the excitement that he brings, especially around demo day, when you see him taking photos with the old school camera, and just the joy that he, at imminent holiday has brought back it then to the YC community, what do you think makes him so good as the CEO of YC? YC has changed a lot in the last two years for the better.

Tom Blomfield
And I put it, a lot of it down to Gary. He was there in the early days when I was there in 2011, he was, I think, a part time partner. He helped us design our pitch deck for go Kardas in 2011, and he was taking the photographs back then. So I think he, like, experienced YC at its purest, at its core. And then really, honestly, under Sam Altman, I think it expanded in a bunch of different weird areas.

And Sam was distracted. He was doing OpenAI from very, very early on. And so to have a CEO now whose full focus is the batch is core YC. It's not some growth program, it's not something international program. It's not creating AGI.

It's the core YC batch that Gary has experienced and loves and cares about has made it great. What is the single biggest threat to the YC model? Complacency. I think we could coast on our laurel, rest on our laurels, I guess. Not to mix metaphors for quite a long time without realizing it.

You could. I think the decay rate would take a long time. Like a decade plus. Yeah. Then we just recruit bad partners who give bad advice but continue to recruit reasonable companies and they will continue to fundraise because of the brand.

Tom Blomfield
But then after ten years of decay, we realize it's all fucked. And so just being really, really having a really high bar for the partners we hire and a really high bar for the companies we fund so that we're making YC stronger and stronger and stronger every batch and not risking this, like, decade long decay. Which founder is not a YC partner, but you'd love to have them as a YC partner. I mean, I think either of the collisons would be incredible. I think they're a little bit busy at the moment.

Brian Chesky, maybe as a second actor, he could come to YC. He speaks at every batch event. And his advice is just phenomenal. Do you care about money now that. I have more than a surplus of money?

Clearly not really like I cared about it when I was younger, for sure. Does it make you happy in the way that you thought it would? No. Was that a hard moment when you realize because you do chase it? To a certain extent, I chased success and money.

Did you know what success was? Yeah, like building a company. My dad, when I was very, very young, created his own company. And it was drilled into us from a young age that being successful in life meant being rich and being successful. And so I had this huge drive to create something big and to that external recognition and validation.

And the money went with it. But it wasn't the money alone. It was like, it was successful. It drove me to do Monzo and drove me to stay at Monzo for a long time after I was happy. In the years since, it's kind of gone away.

It's weird. Like, I don't. Is it freeing? Yeah, it is. It really is.

I don't feel like I have to create another. I felt compelled to create monsoon. I really did. I keep getting the urge to build something because I really, really love building stuff. But I don't have the urge to build a big company.

I don't want to run YC. I. I would not want Gary's job. I have been there. I've had the stress.

I've had the packed calendar. I do my work. I get to go home at the end of the day. I shut my laptop and I can focus on my. Do all of the cliched founder sports.

I love cooking, I bake, I do pottery, I hike and cycle. I love that part of my life so much. And I'm the happiest I've ever been, I think, in the last six months, because I have the work that keeps me intellectually stimulated, but tons of hobbies and friends and I'm not striving for it, like external validation as much. I mean, I still am. You know, I get a buzz when I'm.

I get a tweet that goes viral or I'm on, you know, a podcast or in the, you know, BBC asked me to go and talk on the radio. It's like a little bit. Of course you should rush. I think it drives me much less than it used to. What do you miss most about London?

Friends. Friends and family. Yeah. A big part of me leaving, honestly, was my friends all got to the stage of life where they were getting married and moving to the suburbs and having kids. It makes a big change to friendships.

Kids are wonderful, obviously, but I really noticed my friends, when the kids happen, the friendships fall away. Totally. And it happened in like a two or three year period where I genuinely found myself in London thinking, I don't have friends to hang around with now. I've got to make a new friendship group. And that, for me, was a catalyst to move countries.

Tom Blomfield
It's like, if I'm going to have to make new friends, I might as well take this opportunity to move to a new country as well and have that. So ten years time. Final one is 2034. Why do you want to be then? Is Tom back in London running a fund?

Is Tom not running another company? Hopefully not running another company. Would you like to run a fund? Not really, no. All of the funds I've seen have pretty horrible politics, and I think YC has the least politics of all of them.

Tom Blomfield
I don't want to run YC. I'm very, very happy not having Gary's job. If I'm still doing YC, that would be great. I would like to be able to split time between San Francisco and New York and maybe the Caribbean a little bit. I love sailing and maybe London.

I would love a long term partner and I would. I think I like kids. My brother has two children and they're one and three years old. Before I came to work today, I went into the living room and the two of them were sitting there playing just like very, very blonde, very cute one and three year old. And the eldest runs up and says, uncle Tom, uncle Tom, I've drawn you this picture and it's like my heart melted.

It's like, oh, my God, I can see what these things do to you now. Yeah. If I meet the right person, I'd love to have a family. If over the next ten years, I met someone great and we had a family. That would be happiness for me over creating another billion dollar company.

Like who needs another one of those? Tom, I've loved doing this. Thank you for letting me just pepper you with questions. It's been such a joy. Thanks Harry.

Harry Stebbings
I have to admit that show was so much fun to do. Now if you want to see a resemblance, then you can check out the video of the interview. Apparently we look slightly like twins. You can find that on YouTube by searching for 20 BC. That's 20 vc.

Tom Blomfield
I always love to hear your thoughts. On the show and video, so let. Us know what you think there. But before we leave you today, we're all trying to grow our businesses here. So let's be real for a second.

Harry Stebbings
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20VC: Behind the Scenes at Y Combinator: The Interview Process | What the Best & Worst Do in the Program | Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | Why the Value is in Application Layer AI with Tom Blomfield

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1. Introduction to Tom Blomfield

2. Discussing Y Combinator's Impact

3. Challenges of Startup Life

4. The Role of AI in Startups

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