Y Combinator's Sam Altman On Silicon Valley Malaise Together With Unit Of Measurement Economics

There's a chip of a buzz re: IPO exits heating upward which should assistance value what the concluding x years was all about. But that's simply me. Here's Sam from iii years ago:

 

Unit Economics

Commentators are looking difficult for what’s incorrect alongside startups inwards Silicon Valley.  First they talked nigh valuations existence besides high.  Then they talked nigh valuations non actually important anything.  Then they talked nigh companies staying somebody besides long.  Then they talked nigh lavatory rates.
But something does experience off, though it’s been difficult to exactly identify.

I think the response is unit of measurement economics.  One of the jokes that came out of the 2000 bubble was “we lose a piddling coin on every customer, but nosotros survive inwards upward on volume”.  This was in addition to therefore out of fashion for a long fourth dimension equally Google in addition to Facebook hitting their stride.

There are directly to a greater extent than businesses than I ever holler back earlier that combat to explicate how their unit of measurement economic science are ever going to brand sense.  It commonly requires an explanation on the social club of interplanetary space memory (“yes, our sales in addition to marketing costs are actually high in addition to our annual turn a profit margins per user are thin, but we’re going to conk along the client forever”), a massive reduction inwards costs (“we’re going to supersede all our human project alongside robots”), a claim that eventually the companionship tin halt buying users (“we larn users for to a greater extent than than they’re worth for directly simply to larn the flywheel spinning”), or something fifty-fifty less plausible.

This is peculiarly mutual inwards startups that don’t transcend the Peter Thiel monopoly test—these startups seem to convey to pass every available dollar on user acquisition, in addition to if they enhance prices, customers defect to a like service.

Most neat companies historically convey had adept unit of measurement economic science shortly later they began monetizing, fifty-fifty if the companionship equally a whole lost coin for a long catamenia of time.

Silicon Valley has e'er been willing to invest inwards money-losing companies that may eventually brand lots of money.  That’s great.  I convey never seen Silicon Valley therefore willing to invest inwards companies that convey well-understood financials showing they volition in all likelihood e'er lose money.  Low-margin businesses convey never been to a greater extent than stylish hither than they are correct now....MORE

If interested here's his latest, Apr. 10:

 

Productivity

I think I am at to the lowest degree somewhat to a greater extent than productive than average, in addition to people sometimes inquire me for productivity tips.  So I decided to simply write them all downwards inwards i place.

Compound increment gets discussed equally a fiscal concept, but it industrial plant inwards careers equally well, in addition to it is magic.  Influenza A virus subtype H5N1 pocket-size productivity gain, compounded over 50 years, is worth a lot.  So it’s worth figuring out how to optimize productivity. If yous larn 10% to a greater extent than done in addition to 1% meliorate every twenty-four hr catamenia compared to someone else, the compounded deviation is massive....