Sam Altman on Backing Exceptional Founders

Sam Altman, the renowned investor and former president of Y Combinator, shares an important lesson about investing in startups. He admits that he has been tempted to back businesses based on strong metrics or peer pressure from other investors, even when he wasn’t impressed by the founders. The problem with this approach? It rarely works out in the long run. According to Altman, great businesses are built by exceptional founders, not just good numbers.

Sam Altman, CEO, OpenAI

Photo: Jason Redmond / AFP

The Importance of Exceptional Founders

Altman highlights the importance of backing founders who truly stand out. These are people who have an undeniable spark—individuals who are so compelling, you’d want to work for them yourself. Investing in just an “okay” founder, no matter how promising the business may seem, has never yielded the kind of success that investing in exceptional founders has. Altman emphasizes that a founder’s vision, leadership, and integrity are far more important than short-term growth.

Beware of “Scenesters”

Altman also introduces a concept called “scenesters,” which refers to people who are more interested in the startup culture than actually building a successful business. These are individuals who attend startup events and enjoy the social aspects but lack the passion or dedication to see their ventures through. For Altman, this is a major red flag, and he advises investors to steer clear of such founders. Success requires more than just being in the right circles—it requires drive and integrity.

Integrity Above All

Another critical factor Altman stresses is integrity. Low-integrity founders are a recipe for disaster, no matter how great the business idea may seem. Honesty, transparency, and ethical decision-making are non-negotiable qualities for founders if they want to build something lasting. Investors and entrepreneurs alike should prioritize these values in their partnerships.

Conclusion: Trust in the Founder, Not Just the Business

Sam Altman’s advice boils down to this: the quality of the founder is paramount. Exceptional founders, not just promising business ideas, are what drive long-term success. So when evaluating a startup, don’t just look at the metrics—focus on the people behind the idea. Their passion, integrity, and leadership are what will ultimately make or break the business.

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Source: Y Combinator 'Sam Altman - Startup Investor School Day 1'