Paul Graham on ambition, formidable founders and starting on little money

Key points

1. 1

   Fear of failure is the daily fuel

   Asked whether ambition means wanting to be a billionaire, Graham says that rarely drives a founder in the moment. Fear does: of disaster, of looking like a fool, of the server crashing. After ten years of head-down work, some founders do the math on their last round and learn they are billionaires. Graham says he is sometimes the one who tells them.

   “You know what actually motivates founders day-to-day? The fear of failure.”

2. 2

   Ambition is mostly inborn

   Graham says founders rarely turn ambitious during the batch, because the trait is there from the start. His example is Sam Altman, who was formidable the first time they met. The one exception he allows is the founder trained to hide it by school or pushy parents. Even then, he says, the ambition was there all along.

   “Those stories are rare because most of this quality is inborn.”

3. 3

   Token prices fall about 30x a year

   Graham says today's high AI prices come from a chip shortage and will not last. By his estimate, the price of AI output at a fixed quality drops something like 30x a year. The output you buy also keeps getting better, so today's price overstates the real cost. A startup can still start on not much money.

   “inference prices at any given any given level of inference go down dramatically like 30 x a year”

4. 4

   Spend what you have, then raise on a milestone

   Pushed on whether this holds for a rocket company, Graham says you fit the work to the money. You cannot build a rocket, but you can design one, simulate it and show it to experts. If that convinces them, you raise the next stage. Booking a launch convinces most of all, he adds, though it comes easier to a known expert than to a new graduate.

   “you just do what you can on the money you got. As long as you can get to some kind of milestone”

5. 5

   Shipping pace still predicts success

   Graham stands by his view that how fast a startup ships is the best predictor of success, and he says AI has not changed it. Plenty of startups in the current batch still ship slowly, because speed also depends on coming up with the ideas. The one new thing he sees is cost: AI bills that can run to tens of thousands of dollars a day, next to salaries.

   “we have all these powerful AI tools and there's still a lot of startups in this batch that are not shipping fast enough”

6. 6

   The next giant company comes from the founder

   Asked where the next trillion-dollar company comes from, Graham names a type of person. Its founders will be formidable, which he defines as getting what they want in any situation. That is why investors want them, since the stock rides on the founder winning. With 20 years of data, he says founders look the way they did 20 years ago.

   “The answer to your question where the next giant company comes from is it comes from the right founders.”