Qasar Younis came into the role of Chief Operating Officer at Y Combinator via an extraordinarily unique path. He did a stint at Google after his startup, TalkBin, was acquired by Google, but he’s also had the uniquely non-Silicon Valley vantage point of seeing an industry in decline and transformation from his time in Michigan’s automotive giant, General Motors.
Elliott Adams: How do you see the role of what Y Combinator does?
Qasar Younis: When we’re investing in startups, there’s some concept or belief that’s an inflection point we can help the company get to. It's to propel the company. The infrastructure to build a company is now even more free than it was even five or ten years ago. And just like there's all this free stuff as a consumer, free stuff exists on the developer side or on the company-building side. I mean, you can get credits for Amazon Web Services, there are a lot of open-source products out there, and you can distribute freely through app stores.
EA: I was hoping to touch on this with you: distribution channels—primarily Google, Apple, Facebook—in terms of big ad networks and app stores. How much of an existential threat are the big tech companies to startups in general?
QY: I’ve heard some people say these companies are different because they’re more sophisticated than the old companies, like the General Motors of the day. I think if you look at General Motors, though, in their heyday—in the 1940s, ’50s, ’60s, ‘70s—they’re just as aggressive at acquiring. I mean, General Motors literally is a conglomerate of all these individual coach shops which were making cars together. And that’s what Google is. Google is buying up software shops. There will one day exist a General Software, just like General Motors exists, and then in maybe thirty or forty years in the future, people will say “Oh, look at how stagnant this business is.”
QY: Yeah. Then biology modification—or whatever the next big wave is—is actually the more interesting business. So, I agree that there is a handful of companies that have a dominant position, and they’ll buy companies like WhatsApp rather than letting them stay independent. But, for the WhatsApp founders, twenty billion dollars is—
EA: Well, they’re happy, but what if instead you’re the guy who creates a WhatsApp that Google clones, with a billion people on their distribution channel?
QY: I think that happens a lot less than one thinks it happens. And the main reason is that the genius is not in the pixel, the genius is what got to that idea. It’s like what they say, “Money can buy fashion but not style.” There's something similar here. They can buy the product, but they don't buy the underlying genius behind it.
QY: Now when they acquire, that’s one of the main reasons to acquire. Google has done a very smart job in acquiring companies—I would say myself and my startup, Talkbin, included, YouTube, all these. When I say myself, it's not as in “we’re geniuses,” but in the sense that we’re founders who then lead within the company and inject a lot of that entrepreneurial, founder mentality within the company. My personal culture and the culture that our team brought within Google Maps was unique, and I think we brought that in and that was a huge value for the company. If you look at Google itself, Google really built search and a couple of other smaller apps but acquires the vast majority of the assets that it seizes. YouTube is an acquisition, Android is an acquisition, a bunch of Maps are acquisitions, a bunch of things in Chrome are acquisitions, a bunch of things in social space are acquisitions, so, you name it. There’s more—it would be an interesting study to see how much of Google is in-house and how much is outside. When you think about it, big, big silos like YouTube and Android are completely separate companies.
So, you have this Big Five. Does that mean if you’re a startup, you're kind of boxed out? They either copy, or they acquire you, or they hold the distribution channel. History is the best teacher because we’re basically re-living the same thing with different metaphors, and I think you could have made that argument with television a few years back. Or retail—if you go to 1985 and you have a CPG [consumer packaged goods] product—let’s say you have a new jam. People then were like, “Oh, you know what? The Kmarts and the Sears and the emerging Walmarts—if you don’t get stocked by them, you're never going to be a big jam maker.” But the truth is, you can look at Snapple as a great case study on this. Snapple emerges from selling to lots of small mom-and-pop shops and then ultimately breaks in. Analogously in software, what'll ultimately dislodge these players is probably a new distribution channel in itself—that can happen. Also, it’s in those big firms’ interest to distribute whatever's successful. They might hate what’s happening. They might hate Instagram, and let’s say they decided not to sell. Instagram, WhatsApp, and all those companies would still keep those products in their stores because they provide so much value.
EA: Right, there are definite benefits.
QY: Exactly. So, it’s important to know that nothing is permanent. I mean, I was watching this Charlie Rose interview with Bill Gates from 1996 on YouTube, and Charlie Rose asked him, “So, it’s going to be the Microsoft century, and how are you preparing?” And that’s literally a laughable statement today. Nobody would think that—that “we’re into the Microsoft century.” I think people would even maybe doubt that it’s going to be the Google century, you know?
QY: But now, people will start saying, for the next ten years maybe, it’s the Elon Musk, the Telsa, the SpaceX century. It’s a lack of understanding about how these business cycles work. It’s a lack of sophistication. And so, if you’re a founder, and you feel this overwhelming, impenetrable force of the Big Five or whoever, wondering how you are going to get around it, it’s just not true.
EA: So, you're absolutely bullish on software?
QY: Oh, 200 percent.
EA: In addition to looking at all the new things you're looking at for YC?
QY: Yeah, absolutely. It’s like the automotive industry in the 1920s and the 1930s. The cars in the 1930s were dramatically better than in the 1870s and 1880s when Mr. Benz and Mr. Mercedes and Daimler were actually starting their own individual motorcycle shops, basically. And it would be hard, I think—and imagine when you look at the original motorcycles in the 1880s—to even comprehend that in the 1950s, you’re nowhere near the peak of automotive. They could not imagine what a Ferrari today is or Tesla today is because they could only see, “Look how far we have come: this car can go in any weather and it can run for five, ten years, and anyone can afford it.”
EA: Interchangeable parts, to start.
QY: Interchangeable parts. How could it get better than this? Well, guess what? It can get a lot better, and I think software will look back the same way. Let me give you some concept of the ridiculousness of software today. We come into this place, we sit down, open up a computer, and make sure the battery's there. Now, okay, let’s find a power outlet. Okay, now turn it on. Wait for it to start up. Okay, now let’s look for Wi-Fi. Oh shit! Who has Wi-Fi? What’s the Wi-Fi address? Well, is this secure? Okay, we need a secure one. Okay, let me go find somebody who has a password for the secure thing. Okay, we finally got the password. Now we’re fifteen minutes into this thing. Then you're going to fire up a browser. Oh, it needs to update. Okay, let’s update that. Then it's going to fire up the—oh, the OS needs updating. Ah, it’s forcing me to update. Okay, let’s hold on. Let’s wait. Okay, it’s updated. Now, let’s, let's . . . what was that website again? Let me go to another website to locate the website I was trying to find. Ah, there it is. Okay. Damn! I forgot my username. Let me open up this document. Ah, I don’t have the password for my docs.
It’s absolutely absurd, and so I do believe there’s room for growth—endless growth. Certainly in our lifetimes. I think, maybe, beyond our lifetimes. If you’re in your twenties or thirties right now, in the next thirty years, you can safely put your chips into software and it will be productive.
EA: Let’s talk about leadership. YC is just doing things that no one else is doing.
QY: YC was doing this for a few years before other companies started in similarly, and I think there’s always been that distance. I think it's just not been apparent numerically or through press releases. I think YC, post-Paul-Graham era, is better at press.
EA: You were pretty low key back in the day.
QY: Relatively speaking, we’re low key. But from 2005 to about 2012 or '13, YC did virtually zero press, and it was very insular. And so, part of that is just us coming out and having more partners. And look, we never went to conferences. That was a normal thing, so now we'll go out here to make sure we can evangelize a little bit of the message because there’s some image of us being elitist or some version of that.
EA: One of things that I was referring to a moment ago is that you’re talking publicly about how technology can make human labor less necessary.
Do you feel like you guys have good company around that conversation in Silicon Valley, or are you just kind of out there on your own with it?
QY: So, when we talk about basic income, we’re never looking at it as, “Okay, what’s the cohort doing, and let's see how we can move ahead of it.” I think we've always, from the early days, looked at carving our own path, and so it’s not a response or reactiveness to the market.
Now specifically, are there other people in Silicon Valley who emotionally understand basic income and things like that? One of the reasons research exists, one of the reasons the Gates Foundation and a bunch of other things exist is—I mean, Gates Foundation is the one that says, “We want to invest where capital markets are ignoring,” and I think we feel similarly in that degree. It's like, “Let’s do research where the others aren’t.” There’s certainly a market fundamentalism that exists, probably more in America than anywhere else, and maybe more in Silicon Valley than anywhere else in America.
That’s not speaking for YC, because on a personal level, I just don’t agree with that view of the world. Capital markets are not this end-all, be-all solution for everything. It’s like saying that socialism would be the end-all, be-all of everything. It isn't. Within all these different ideas and different concepts, there are powerful points, and that's where the difficulty and the nuance arise, in picking the best.
And so, specifically: basic income, and is there an issue? You know, early in my career, I worked in Detroit, in manufacturing. I went to the General Motors Institute in undergrad. I worked at General Motors for five years. I worked at Bosch for two years. I lived in Flint, Michigan, for five years. I mean, I've been in it, you know? I’ve probably worked in five different factories for long periods of time, here and in Japan. So, this is my bread and butter. I really know it—my life is split between that, and then I do software and come to the Valley. So, I know that world maybe better than anybody, you know, certainly better than any of my venture capitalist peers in the Valley. And so, I think it’s a real problem. I think it’s absolutely a real problem. I mean, ten years ago when I managed robots, I managed robots on the line with humans. Humans were definitely considerably better. That will tilt one day. Will it tilt in the next five to ten years? Maybe not, but it will definitely tilt. And I think we have to have real answers for that.
I mean, when I was finishing my MBA at Harvard, we had this last conversation as a section, and I made this point at the time: I grew up in a farming village in Pakistan, so before I came to Detroit, and all the way until we sold that company, I was not in the elite, let’s just say. We were always poor. I paid my undergrad and my grad school, and I was finishing Harvard—it was my first exposure to the elite class of society. The business school has some great people. And it's strange, actually, that very few of them are very, very rich. Most of them are actually middle class, but for the first time, you interact with people who own private jets, and you’re like, “Oh, I’ve never flown first class, let alone . . . ”
And so, my closing argument—this is in 2008, the closing point that I made to my section—it was a very controversial point. I said, “You know, it’s our responsibility, the people in this room. I think wealth inequality will be the dominant conversation of the next fifty years." And what you see with the election or what you see with automation is just the manifestation of those things. It was almost like you saw from far away what the picture is and now we’re getting closer. We're seeing, “Oh, this is the tactical way it’s going to get to this picture of automation forking wealth inequality to a huge degree.” I mean, you have that movie Elysium, where you have this separate class of people who live outside of Earth. They live in this, like, satellite station above Earth.
EA: Or Palo Alto, perhaps.
QY: Yeah, exactly. And so, I think those are real forces. And are people in Silicon Valley looking at them? Probably not, only because it’s not what the market cares about. And that conversation—I think we’re all responsible for it. But I think that conversation happens as it happened last night on the national stage [Note: This interview was conducted the day after the election of Donald Trump]. It’s like saying the automotive industry is responsible for solving wealth inequality. And it just sounds kind of crazy to say that. Or the shoe manufacturers of Old Boston, should they be? And the main reason I think that conversation comes up right now is we have, in all of our hands, software technology, and so you can’t avoid the subject, even if you wanted to. And there’s incredible wealth being created in this business, and they become the poster children.
EA: They embody it.
QY: They embody it more than anywhere else. I don’t think people necessarily look at the Valley as a scapegoat, like, “Oh, you are responsible for my manufacturing job.” But they do look at it as, "Why do you have all this stuff and I don't?”
EA: “You’re part of this new world that I'm not a part of.”
QY: I mean, the single biggest decision I made in my life in 2000, and roughly 2004, 2005, was to leave automotive for Silicon Valley. I had this conversation—I had this guy, Joe Lantini, who was another GMI (General Motors Institute) and Harvard Business School grad. And Joe said to me, “You know the automotive industry in the future is not what it is in the past. As your manager, I want you to stay at General Motors. But as a friend, I say you should really consider making a pretty dramatic move.” And that’s a very hard conversation to have. Imagine if you grew up in Palo Alto and you did software, and then you went to Stanford, and you're working at Google, and then your engineering manager comes in to say, “Hey listen, hey buddy, I know you’re kind of all-in on this software stuff, but software is kind of fucked, and you should go move to Detroit and Flint and learn a new business because . . . ” And my own personal economic success has been indicative that I made the right decision because I think if I hadn't, I would still be an engineer, maybe toiling away in some factory. So, it was a real significant inflection point, and I knew that even then. I didn't fall into that decision; I had to sell my stuff and move to the Valley.
So, what I did was I first made the transition out of General Motors into Bosch, and I thought, “Well, maybe I can sort of get into consumer goods and maybe just leave automotive altogether.” And then I got into business school, and that was, like, my hardship. That was ’06 to ’08, and I was like, “Okay, now I can really make this change.” And that’s when I started my first software company.