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Sam Altman on Y Combinator's Success: It's a Monopoly

The new head of Silicon Valley's premier accelerator explains how YC gets the "best" founders, and why its companies are worth a total of more than $30 billion.
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Sam Altman is having a moment. (And he knows it.)

The 29-year-old entrepreneur and investor just took over the reins of Y Combinator from its co-founder Paul Graham. Just a few short years ago--in 2005, to be exact--he was part of the accelerator's inaugural cohort. 

At TechCrunch Disrupt on Monday, Altman spoke with former TechCrunch editor Michael Arrington about the sheer scale that the once-scrappy startup accelerator has reached. Since its early days, hundreds of companies, in batches ranging for a dozen to as many as 83, have come through three-month-long Y Combinator sessions. Graduates include Airbnb, Dropbox, OMGPOP, Reddit, and Salesforce.

What's that worth? Quite a lot.

When asked the total value of all of the companies still in existence that have gone through Y Combinator over the years, Altman noted that it's definitely more than $20 billion--and probably closer to $30 billion.

"So you're crushing them," Arrington says, referring to other accelerators working to invest in early-stage startups and give them a quick surge of growth. Then Altman dropped a bomb: Unlike other stages of investing, he said there may just be a monopoly in the accelerator space.

"You consider yourself a monopoly," Arrington added, seeding the question, but not quite asking one.

After some hemming, Altman agreed. "Yeah, sure."

It wasn't a stretch for him to say that--he'd already admitted that YC always "attracts the best founders in the world." And he and Arrington had tossed around potential valuations for Hacker News, a social news site operated by YC for the tech community. Hacker News makes no revenue directly, and Altman admitted that he doesn't think it would be sale-able, in that it's not "worth more to anyone else than it is to us."

But that doesn't mean the site, which uses an algorithm for up-voting is based on that of Reddit, doesn't have value, he adds. "In terms of a place where smart people go every day, it's pretty high."

When asked to throw out a number related to the site, which Paul Graham built early in Y Combinator's existence, Altman said, "$500 million." Arrington expressed some skepticism--calling that estimate high--before noting that he believed the site might be worth "hundreds of millions."

Then again, isn't all this valuation stuff nonsense anyway? Altman thinks so.

"Intermediate valuations are completely made up and silly," he says.

Just think on that.

IMAGE: Getty Images
Last updated: May 5, 2014

CHRISTINE LAGORIO-CHAFKIN | Staff Writer | Senior Writer

Christine Lagorio-Chafkin is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is a senior writer at Inc.




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