# Behind the Scenes at Y Combinator: The Interview Process

What the Best & Worst Do in the Program · Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups · Why the Value is in Application Layer AI with Tom Blomfield

20VC · May 13, 2024 · 65 min · 14,336 words
Speakers: Tom Blomfield, Harry Stebbings
Source: https://www.996.fm/episodes/20vc--ep-9758c821/

## Cold open

**Tom Blomfield** [0:00]:

I don't think founders are necessarily the most likable people, honestly. If you just agree with everything that happens around you, you're never gonna create something different. So this is a key skill of a founder, holding these two realities in your head simultaneously without cognitive dissonance or driving yourself crazy. One is the big vision of the 1% best outcome. If this really, really works, what could this become? And then you have to hold the what is my top priority today and this week and this month? Very, very different from this billion people around the world. Right? And you have to execute on that, get your team to focus on it. But

**Harry Stebbings** [0:32]:

you have to have both. This is 20 VC

## Intro

**Harry Stebbings** [0:34]:

with me, Stebbings, and I couldn't be more thrilled about the show today. Now, I've known this guest for many years. He's the founder of not one, but two incredible unicorn businesses, and now a rock star YC partner, Tom Blomfield. Before YC, Tom was cofounder of Monzo, most recently valued at $5,000,000,000. One of the first challenger banks in The UK, Monzo raised more than $1,000,000,000 and counts, check this out, 15% of The UK population as customers. Before Monzo, Tom founded GoCardless, an online payments provider, which was most recently valued at $2,100,000,000. But before we dive into the show's

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**Unknown** [3:46]:

You have now arrived at your destination.

## Conversation

**Harry Stebbings** [3:49]:

Tom, I am so excited for this dude. We've known each other for many years, but thank you so much for joining me today. I'm delighted to be here. Now, I always think that people are shaped by early years in childhood. Childhood. Mhmm. When you think back to the 10 year old Tom, how what your parents and teachers would

**Tom Blomfield** [4:04]:

describe you? Precocious, probably. Don't think I listened very well. I was fascinated by lots of different things. I got into computers very, very young. And I was honestly trying to start businesses from when I was about six or seven, I think. I stole a bunch of my mom's jewelry and tried to sell it on the street outside her house before she saw me, literally age seven, I think. It was a it was a strange childhood.

**Harry Stebbings** [4:22]:

So I always ask founders when I'm investing, how did you first make money? Because I always think that actually exceptionalism shows itself early in life like that, and no one comes out of Cambridge and just makes money at Bain for the first time. Yep. Do you agree with that? Or do you think that exceptionalism and entrepreneurialism can be later, and actually, you'd miss a sway of the founders?

**Tom Blomfield** [4:42]:

I think it can be later. Certainly for myself, I started building websites as about 1415, and convinced my local estate agent to pay me 3 or £400 for a website. So that I do fit that mold, I guess. And I in general, I do agree.

**Harry Stebbings** [4:55]:

I always think, like, yeses and noes. Yeses can make careers, and noes can be incredibly hard and painful to hear. When you think about the yes that you think made

**Tom Blomfield** [5:05]:

you most, what yes was that? Very easy answer. Getting onto Y Combinator in 2011. Getting the call. I thought we'd bombed the interview. Why? So I was working with Hiroki and Matt on Group A at the time. We were all ex management consultants. We sort of all wanted to be startup up founders and really all wanted to be the CEO. And we were working on, like, not a very good idea. It was a a kind of student bills missing app. And in the interview, every question that was asked, one of the founders would answer, then a second founder would, like, contradict them. And then the third founder would try an answer to try and, square the circle somehow. And it just went on for this horrible, like, ten or twelve minutes of just, it was such a painful experience, and I was sure we'd bombed it. But when we got the call afterwards, it was like a dream come true. And honestly, those three or four months back in 2011 changed the entire course of my life. Mean, I I wouldn't have started Monzo without it for sure. And now I'm back at YC, feels like What specifically was it that enabled you to see something of the world that you didn't know? We were play acting before then. We were three guys in London who'd come out of consulting. We were play acting at being Startup Founders. Founders. You know, we'd hired a bunch of interns. We were just running around doing dumb stuff. We had no role models. We had no one who was smart or successful around us to model ourselves afterwards after. Being in YC just put us amongst this group of, like, high ambition, high achieving technical founders who thought they could accomplish something. And then every week, a new founder would come in. Max Levchin would come and tell us about the early days of Facebook, the early days of PayPal. And then I remember the next week, this sort of timid short guy walked up and said, hi. I'm I'm Mark Zuckerberg to give a talk on the early days of Facebook. And it was kind of incredible being surrounded by those people. Whereas in London, we just didn't have those role models. And I think we would've the company would've, like, slowly slowly sort of died in London. We couldn't raise a single penny of investment in 2011. So YC really gave us that break and raised the bar for us. What was the most painful no? Probably 2020, March or April. We'd had an easy ish time raising. We did around at 1,000,000,000 led by General Catalyst, then around a 2,000,000,000 valuation led by Y Combinator continuity, and then found it really hard to fundraise. And I had 96 nos in a row for that fundraise to try and do a flat round. And we finally got it together, a 100,000,000 at a flat valuation of 2,000,000,000. Tom, what do you tell

**Harry Stebbings** [7:23]:

yourself 95 times in? I I fundraise now, and it it really hurts me, actually.

**Tom Blomfield** [7:28]:

It was horrendous. And that's not even the worst no. It was really dispiriting, saying the same thing over and over again about how I believe this bank was gonna be valuable, how we're gonna make money, how people are gonna deposit their salaries, and people just not believing me 95 or 96 times in a row. I mean, now I feel vindicated. It turned all of the stuff I said turned out to be absolutely true. But at the end of '96 nos, we got these two Canadian pension funds to say yes. And they agreed to put in a 100,000,000 along with our existing investors at a flat valuation. I thought, we were burning a 100,000,000 a year at the time. So the company is gonna survive another year. This was like March or April 2020. And the documents were all agreed and ready to sign on Monday morning, ready to sign and wire. And on Friday afternoon, London went into lockdown. And they phoned me up and said, the investment committee back in Canada has said, every investment's on hold. We're not doing the investment. We're out. We're not investing. That feeling of, like, the world's going into lockdown. There's this crazy pandemic and no one knows what's gonna happen. We're running out of money. Our revenue in the next week halved, went down by 50. And I'm, like, staring down the barrel of this this funding hole we have and spending the next few weeks trying to get any investor to invest at any valuation in, the first few weeks of COVID. That was the hardest by far. What did you do? We got existing investors to invest at a significant down round. We spent a long time trying to figure out what was fair. The company was in a precarious position, but we all believed it was valuable. It was sort of this game of brinksmanship almost. It's sort of what is the fair valuation that rewards them for taking the risk, but sort of values the company appropriately. And it was tough. Three or four weeks. We got the round done. It was a sort of 40% down round, I think, about 1,300,000,000. And we got a 100,000,000, and and the company survived. That note from the pension fund, that is Horrible. I remember the call so vividly. The person you know, our champion on the inside was so upset about it. She'd worked with us so hard to get the deal done, and she was distraught. But these are sort of nameless IC I'd never met.

**Harry Stebbings** [9:22]:

I I don't think that you can actually ever really have empathy for a founder unless you fundraised. That just brutal. No. No. No. No. And every time, you've gotta just embrace it and be, do you know what? Next one. Next one is gonna But be I see so many 30 year old ambassadors at multistage funds. They've never raised Yeah. And they're deploying $10,000,000 checks at a time. They just have no idea how crushing it is. Totally.

**Tom Blomfield** [9:45]:

Do you agree with me? I totally agree with you. Yeah. I've never experienced anything life like it, really. Just that process of of continually having to show up and be positive and energetic and over and over being told no and being given reasons that you're like pretty sure are bullshit. The herd mentality at the start of Monzo said, you can never get anyone to switch bank accounts. It's impossible. People get divorced more often than they switch bank accounts. Then we proved that was wrong. Wait. It was like, people get divorced a lot. Yeah. And then they switched to Monzo at even higher rates, it turns out. Then they said, well, you'll never scale it. The first 10 or 20,000 maybe, but we got to a million customers with no advertising. Then they said, oh, but it's just a toy card. It's just a secondary card they use when they're traveling. Never be the

**Harry Stebbings** [10:23]:

primary account.

**Tom Blomfield** [10:24]:

Never be the primary. They're never gonna put their salary in. So then we spent the two years getting everyone to put their salary in, and now it's something like 60% of customers put their salary in. They're like, oh, well, you have got customers to switch banks and you have signed up several million of them and you have got people to put their salary in, but really you'll never make money, will you? And now Monzo is making almost $1,000,000,000 a year in revenue. And it's just painful to have had to go through that six, seven, eight I mean, full credit to the team last three or four years. I left at a 100,000,000 revenue or so, and it's now almost 10 x that.

**Harry Stebbings** [10:51]:

It is hard when you meet an investor and you just go, you're just stupid. No. And you have to pretend that, yes, that's a really good question, moron. Why

**Tom Blomfield** [11:02]:

do you think they were stupid?

**Harry Stebbings** [11:03]:

There's a say sure. There are some stupid investors. Dude, I just got out of an LP meeting with one of the largest British LPs, he goes, love it, Harry. I'll chat. But all of this that you're doing, it it feels like quite a lot of work. Why don't you do less? She's like, yeah, you don't get it. But moving swiftly on. I I do wanna talk first about the move, because obviously, we mentioned that the the challenge raising money in the early days for Monzo in London. And you've recently moved, obviously, to San Francisco. Why did you decide to make the move with the YC role? And just talk me through that process because you could have done anything.

**Tom Blomfield** [11:37]:

So I left Monzo. I took a year or two to recover. Honestly, my brain was really, like, melted. And then I started angel investing in 2021. I managed to sell some shares in GoCardless, my first company, and I put aside a pot of money that I wanted to put back into the tech ecosystem, The UK tech ecosystem. So I made a planning to invest over three or four years, and I think I put in nine months, I made nine 76 investments in nine months, 56 of which were in The UK. My brain just works that way. Just kind of find something fascinating, and I will just do it to an extreme. I took angel investing. Did you write the same size check with every investment? I got that message, and no. There were two or three outliers that I put bigger checks into that I am two of which I'm really happy about, one of which I was pretty sad about.

**Harry Stebbings** [12:19]:

What are your biggest lessons from doing, what, 76 checks in nine months? What are you like, did well, did badly, would do differently?

**Tom Blomfield** [12:26]:

The biggest mistake was over indexing on the idea and not enough on the quality of the founder. I pictured myself running each business. And I thought, wow, I could do this and this and this. And that's really dangerous. So dangerous. That happens with so many operators. They're like, I could do sales at this one. Yeah. And it's not me doing any of it. It's the founder. And so there are a few idea where I, like, really love the idea, and the founder just wasn't high enough quality, frankly. And that's something I've I've learned over and over again at YC. Picking the highest quality founders trumps everything else. Even if you think the idea is totally stupid, work with the best founders you can and everything else is easy to easier to fix down the line.

**Harry Stebbings** [12:59]:

Do you outcome scenario planning? Absolutely not. So you won't go, how do I think this looks If all of things go right, is this a billion dollar business? Is this not?

**Tom Blomfield** [13:06]:

I asked, like, is there a world in which if this goes really, really well, if this is like I thought about this a lot in the start of Monzo. There's like a sort of spectrum of outcomes. Yeah. If you look at the top 1% of that spectrum, is there a world in which this could be a multibillion dollar company? Absolutely. I don't know exactly how it happens. I don't I'm not smart enough to plan it out. But if there's absolutely no world in which that could happen

**Harry Stebbings** [13:27]:

Okay. So we have that angel investing as incredibly prolific, Tom. I mean, you worked hard. That was not some time off. 76 in nine months. That's a lot of company meetings. Yeah. It was. Okay. So we have that. Then what? Then I spent all my money.

**Tom Blomfield** [13:39]:

This money I was supposed to deploy over three or four years, but I found it a lonely process. And so YC serendipitously came along at just the right time and said, would you like to join us? You can invest our money. We've got a finance and ops and legal team that'll do all the admin for you, and you'll have a team of partners around you that you can learn from. All of the things I wanted. The only catch is you have to move to Silicon Valley.

**Harry Stebbings** [13:58]:

Okay. So you have this unique perspective built in two incredible businesses in London, European through and through, living in the valley now, seeing the incredible exposure that you have with YC. The most common critique, European work ethic is lackluster. The founders don't work as hard, and they don't

**Tom Blomfield** [14:15]:

want

**Harry Stebbings** [14:15]:

it as much.

**Tom Blomfield** [14:16]:

I've seen some data, who knows if it's true or not, on Twitter about the actual time worked by people in various countries. And The US is somewhere in the middle of Europe. May may they talk it up a lot. I really don't think it's a work ethic question at all. I think there are other big differences. I think the big difference is one of positivity, optimism, and ambition. So when I was starting Monzo, I was 28 years old. I'd never worked in a bank. People in The UK looked at me like I was crazy. I went to a lawyer to do preparation for the regulatory interviews. And the lawyer basically said to me, I'll do the prep for you, but I don't know why you're trying. They'll never approve you. There's no chance you get approved to the CEO of a bank in The UK. And obviously, I did. Whereas in The US, I tell people I'm starting a bank and they're like, that's awesome. How can I help? I can introduce you to this person, this person. It's like this. The American dream is not a reality that most people get to live, but it is a dream that a lot of people experience. They that optimism, that idea that anyone can create anything that they try hard enough is so deeply American and it's so antithetical to the British culture. Here, we've got this awful, like, know your place. Don't get too big for your boots. You know, you you grow up in a middle class family and you aspire to be a doctor or a banker or a lawyer or I've been talking to students the last few days at our top universities. And the high status thing to do as a university CS undergrad is to go and work at James Street or Goldman Sachs or McKinsey.

**Harry Stebbings** [15:34]:

Still? Because like Still. So funny because like, you know, EF have been touting that, hey, mindsets have changed. Mindsets have changed. They're

**Tom Blomfield** [15:41]:

changing slowly. And it is fifteen years ago when I started out, being a founder, literally people thought you were crazy. But if you can compare it to Berkeley or Stanford or MIT, everyone is starting startups there. You talk to like a an English literature major, they've got their startup plan. Whereas here, I've been talking to PhDs in computer science, and and they tell me they go to Goldman Sachs and McKinsey. Was Monzo doing The US a mistake? Maybe. It certainly hasn't worked yet. Of all of the money Monzo has spent so far, only two or 3% of that was spent on The US. And it didn't get very much management attention. I mean, it it has not been a success so far. And I think taking a kind of cookie cutter approach, taking the product as it is in The UK and assuming the same product will work in The US is not correct. And they've got a great new team. They've just hired a new CEO who has deep US sort of banking and payments expertise. But I think you need to fundamentally rethink, like, what a compelling product would be for US consumers. Because, you know, n twenty six has failed, Revolut's failed, Monzo's the first go has failed, give it another go. It's really interesting. There's just not been a successful mainstream neobank in The US. Chime is good, but it's targeting kind of gig economy workers. The more affluent customers, Chase Sapphire and American Express, just have the market sewn up.

**Harry Stebbings** [16:49]:

I do wanna go back. We we mentioned, obviously, the angel investing in the '76. We then moved to obviously, part of the move to SF, as you mentioned, was to be a partner at YC. That is a big transition shift from just being solo angel in London. How did you find the transition from angel to investor in partnership?

**Tom Blomfield** [17:09]:

So YC has this interesting model where they make you be a visiting partner for eighteen months. They're like the most brutal job interview I've ever done.

**Harry Stebbings** [17:18]:

So is it different being a visiting partner to being a partner in terms of what you do, the actual role? Totally different.

**Tom Blomfield** [17:24]:

Being a visiting partner is a great apprenticeship, but it feels like a little bit like being a teaching assistant at a university versus being a professor at university. You know, the professor sets the syllabus and exam questions and admits the students. And the teaching assistant tries to figure out what the professor is gonna do and and mirror that, basically. It's training on the job. And I think it's great training. What did you learn by being a visiting partner? I learned so much different stuff from different people. My first bachelor's with Dalton, and the way he can help young founders find new ideas, really deeply technical young founders without a clue what they wanna work on, Dalton can come in and sort of unpick their background and history and find some thread to pull on that they're super excited about and turns into a great startup idea. And it feels like it's their idea. But he somehow, like, conjures that up out of their background. Michael Seibel, I did a batch with just before I got partnership. He has this incredible way of giving the most brutally hard feedback you can imagine. The founder absolutely needs to hear and then finishing off with this heartwarming chortle. It's like laugh that kind of Reassures you. Yeah. Makes you realize he loves you deeply. He might think you're a total pile of shit, but he really cares about you and wants you to succeed. So being able to and that's something I'm trying to learn. I think I can do the harsh feedback quite easily. That comes naturally. But the sort of the warmth and the empathy alongside that, I think I I really wanna learn from Michael.

**Harry Stebbings** [18:45]:

So then we made the transition to partner, and now you're the teacher teaching the syllabus, so to What's the hardest part about that?

**Tom Blomfield** [18:52]:

Accepting, again, I'm not in the driving seat, that I'm a coach and a mentor and I give advice, and it's up to the founder whether they wanna take that advice or totally ignore it? Do they

**Harry Stebbings** [19:02]:

do they take it? Because what I worry about is actually the weight of my words, which is let's be honest. Most founders kinda say thank you, VC, for your advice, but fuck off and keep writing the check. More than with YC partners, they might actually listen to you. Could be great, but it could be dangerous.

**Tom Blomfield** [19:15]:

There's huge variation. You're right. If someone blindly blindly accepts everything you say without thinking, not great. And if they come with to you with every small decision, they're not gonna be a great founder. They need to, you know, take the training wheels off and and ride the bike on their own. But honestly, we have founders who come to us for advice, listen to it, and, like, completely ignore it. YC is not full of founders blindly following advice. I can tell you that. You meet a founder sometimes where they're not the best founders. I'm not I'm very good friends with some of them, but you're like, you're not investing in people who wanna be your friends. You know, you're investing in people who you think are gonna build fabulous businesses and work very, very hard to do so. Do you need to like them to invest? I don't think so. I mean, it it helps. It makes your life more fun. But there are people who are just, like, a little bit scary, you know. They're a little bit arrogant, perhaps a little bit obnoxious, a little bit too sure of themselves. And I wouldn't wanna spend every day with them. But I just feel like they have something special that's gonna build a really, really big business. And that's a bet I would take every day as an investor. I don't think founders are necessarily the most likable people, honestly. Why? Because you have to be, in a sense, contrarian. If you just agree with everything that happens around you, you're never gonna create something different. My first job, I was not at all likable, honestly. I didn't know that it was useful to be likable in my job. You know, I I didn't suck up to my boss. I told my boss every time I thought she was wrong and she hated me for it. But I could see everything that was broken in the way we were working. My brain wanted to fix that. That's not a way to endear yourself to people, but I think it makes great founders where they're like, just so annoyed if something's broken, they have to fix it and they have to tell people when something's wrong. You can make a shitty employee, but a really good founder.

**Harry Stebbings** [20:46]:

And my family always say with me, it's like, it's not calming to be around you. It's like, you're just generally impatient, generally quite irritable because you want Yeah. To change Kinda see, when you are the teacher, the professor, professor Blomfield, do you, like, pick which ones coming in are yours? Yes. So it's like

**Tom Blomfield** [21:01]:

a drafting process. Each of the partners has access to the entire application pool. But if I read an application and I I'm the first one to say, yes, that's mine, then I get to interview it. And if I interview it and I'm the sole person who says, yes, we will invest, then it gets money. And then it's my responsibility to work with throughout the batch and throughout the lifetime of that company. And how many do you choose? About 25 per partner per batch. You can do more, you can do less, it's not prescriptive. But it's an amazing sense of ownership accountability.

**Harry Stebbings** [21:27]:

When you go that one, I'm interested in that one, how often does the initial interest stay post meeting? Like, how often do you write with that versus, actually, I'm not then it wasn't what I I

**Tom Blomfield** [21:37]:

mean, statistically, you can figure this out. So I will invite invite approximately a 100 teams to interview, and I will fund 25 of them. So, yeah, I will pick a 100 that I want to interview. I'll read several thousand. Pick a 100 to interview, fund 25. For you, what is it that makes you go, ah, that one in that interview? That they teach me something. That they're so expert in their domain and so obsessive, and they thought really, really hard about it, that they can come and, in ten minutes, show me something new about the industry I didn't know before. Do you really think you can get enough in ten minutes? Get enough in three or four minutes, but it seems rude to finish the interview so quickly. See, don't I I love that, and I would hope so.

**Harry Stebbings** [22:16]:

But what if you just have someone who's come from bum fuck nowhere, they do not understand the process? They are brilliant and gifted, but they're just nervous. That's okay. We adjust for that. Do you see what I mean? Like, I'm worried that you may miss stuff if it takes sometimes twenty minutes and

**Tom Blomfield** [22:31]:

to come out of their shells a little bit. Maybe. But it's not just the interview that we go on. I'd say the interview is like 10 or 20% of the entire process. We make them write a long application form. So we get all of their academic and career backgrounds. We ask a bunch of weird sounding questions to try and pull out stuff like that. What's the weirdest questions? Tell me about a non computer system you've hacked to your advantage. So what if what system in your life have you figured out the intricacies of in order to use for your advantage? Venture capital. Yeah. You started right? And that's the kind of thing we would love to see as a what were you, 17 years old or something? I started a podcast In a bedroom in London. In a bedroom, I did 400 episodes without making a penny in revenue, but I got this amazing Rolodex, and then I parlayed that into raising a fund and becoming a a VC. Amazing. That's the kind of exceptionalism that we're looking for in some area of their life. And it might come out through the application, it might be the interview video or the interview itself. But we're looking for that spark that they are not average. They haven't just gone through standard steps of, you know, good high school, gone to Oxford or Cambridge, gone to McKinsey, just like boring boring boring boring all the way through. But at high school, they taught themselves to code and built websites for estate agents. That's what we said. The early signs were exceptionalism. Yeah. In some way, you know, Patrick Collison creates his own Lisp dialect at age 15 or 16 or whatever. Right? That it's stuff like that. And so then we have 25. They're all in the valley with you. Correct? Yes. More or less require everyone to relocate now to San Francisco in the dog patch where we have our office and spend three to four months there. See, I I think that

**Harry Stebbings** [24:01]:

is so important. I agree. My question to you is when you speak to the other partners, especially, I guess, going through COVID where it was completely remote, do they have any lessons, observations from the complete all remote YC to the all in person?

**Tom Blomfield** [24:13]:

Everyone's a lot happier now with the all in person. There are elements that we have retained of the remote batches. So we had a few that were fully remote. Doing Demo Day with remote presentations, like record or live but on Zoom presentations with an investor reception in the evening seems like a really good balance of the two. All on Zoom versus all in person. Sitting through two days of presentations in a stuffy lecture theater where the AC doesn't work well is not a pleasant experience. Yeah. That's one thing. Remote interviews. We used to fly everyone to San Francisco for interviews, which is seems insane now. But overall, the in person experience is dramatically better. Having in person office hours, group office hours, even cooking for people. Like the the act of cooking dinner for a group of people you invest in and then serving them with your own hands. An act of care that creates a just an emotional bond. That's trust as well. Totally. I get it. I trust you not to give me food poisoning. When it's just a twenty minute Zoom every week, it's so transactional and empty. I really feel like I know these founders now after four or five months.

**Harry Stebbings** [25:12]:

It's a brilliant video of Putin and Xi, who kind of both, like, cheers from the rasse and then put it down. And you're like, ah. Okay. Okay. So we have the 25. I'm sorry for asking, but I actually I listen to a lot of startup I I didn't hear this. What does the time look like then for you with the twenty five? One hourly meeting per week?

**Tom Blomfield** [25:28]:

So YC's split into four groups. So it's not a whole YC, it's four separate mini YCs. It's sharded. You'll get a very different experience in each one of them. Specific, and then we have our own speakers. One night a week will be your group event, and you'll get someone like Brian Chesky or Paul Graham, or we had Kevin Sister on the Instagram founder come and talk to our founders. So you got your your Tuesday dinner. You've got pre scheduled office hours, sort of one on one or one company with one partner every two weeks, and then group office hours every two, the alternating two weeks, which is a really great mechanism. I think it was introduced in 2011, where you have seven to nine companies who all come for sort of one and a half to two hour session, and they're organized thematically. So we had a Fintech section and a biotech or whatever it might be. Ideally, all roughly the same stage of of company life as well. And then we basically, the founders are sort of problem solving with each other, you know. How do you find a banking partner in Fintech? Or how do you deal with government regulation? Or how do you sign your first enterprise deal as a b to b SaaS company? So these group office has a really good way to share knowledge between founders and then set goals. So you say in front of these 20 odd people, we're gonna go from 25 k at ARR to 50 k in two weeks. And you come back in two weeks, and, like, the public pressure, even though there's only 20 people in a room, pushes people to work harder than they ever believed was possible. It's really those three things. So the Tuesday night or the the dinners, the individual office hours and group office hours, that's the core of YC. There's a bunch of other stuff. So there's an incredible internal knowledge base, a forum, a a user manual on how to how to run startups. But for the in person stuff, it's those three things.

**Harry Stebbings** [26:56]:

What do you think are the most common mistakes that founders make in the batch process when they are working with you in that three to four month process?

**Tom Blomfield** [27:04]:

Not launching early enough very often. Being too afraid to get something out there and iterate.

**Harry Stebbings** [27:10]:

I agree. I saw a tweet the other day. They're saying, actually, it's never been harder to capture consumer attention than stay. And so, actually, this idea that you can release an imperfect product is not true because you release that imperfect product, Tom engages with it, goes, ugh, that's not great. Churns, it's so hard to get them back. I disagreed with it.

**Tom Blomfield** [27:27]:

Yeah. I think you need to make the scope narrower. I differentiate between breadth of functionality versus a level of quality and polish. So I would always encourage founders to go for a very, very, very narrow feature set, like, even narrower than they possibly could imagine. Polish it at to a very, very high level of quality and get people only a few people, a few 100 people really excited at that really narrow thing, and then broaden out. What way too many founders try to do is they're competing with Google Docs, say, or something. They try to they try to replicate every single feature of Google Docs to a mediocre level of quality and then release that on a surprise when no one likes it. So keep your initial product super super super narrow so you can build it quite quickly, but keep the quality bar super high.

**Harry Stebbings** [28:05]:

A lot of founders worry, yeah, but I'm gonna have a super specialized product then, and I can't sell that big vision to VCs. What do

**Tom Blomfield** [28:11]:

say you to that? Yeah. So this is a key skill of a founder, holding these two realities in your head simultaneously without cognitive dissonance or driving yourself crazy. One is the big vision of the 1% best outcome. If this really, really works, what could this become? Holding that in your head. And for Monzo, it was we're building a bank for a billion people around the world. That's the big vision that you have to hold in your head. And then you have to hold the what is my top priority today and this week and this month, which is very, very different from this billion people around the world. Right? And you have to execute on that and get your team to focus on it. But you have to have both. If you only have the big vision and you think that's today, you're a bullshitter. You're just full of hot air, none of it's real. Whereas if you're too execution focused and you continue that for several years, You build a very successful or rather a medium sized small business that's very profitable. It's never gonna get big. So you have to have both simultaneously.

**Harry Stebbings** [29:01]:

How many of the companies pivot in the batch?

**Tom Blomfield** [29:04]:

25%. What do the successful ones do that the others don't? Pick an idea and stick with it. It's simple as that. The worst pivoting founders just can never get the conviction to stick with anything. And they just pivot and pivot and pivot. Because they they overthink it and they I hear this more and more from young founders, I'm not sure this is my life's work. You know, I can't I can't commit to it because I'm sure I'm passionate enough to spend my it's like, dude, I'm asking you to spend six months on this, not your entire life.

**Harry Stebbings** [29:30]:

You know what I actually align it with dating? I'm like, no one goes to the first date being like, you are my partner for life. Be terrifying. Yeah. Dalton

**Tom Blomfield** [29:38]:

said something very funny a couple weeks ago. Pivoting is like divorces. Maybe one or two is reasonable. But if you're doing it multiple times in a row, maybe the problem is you.

**Harry Stebbings** [29:47]:

I like that a lot. What are the big challenges for you advising these batches? Is it that VCs come early and you're like, don't take their money.

**Tom Blomfield** [29:56]:

Don't take their money. Is it that Shutting down continuity, our growth fund, has enabled to have a enabled YC to have a much more collaborative relationship with multistage VCs. Previously, it was very competitive. So that's fine. I think everyone behaves pretty well. What's Do a lot of your batches get approached while in batch? A 100%. Yeah. Yeah. Trope was always, oh, everyone raises before Demo Day, which is true. Like, the best companies absolutely always raise before Demo Day. And so now we've just set a deadline, like, two weeks before Demo Day and said, you may start fundraising on that day, two weeks before Demo Day. And they're not allowed to start before then? We strongly encourage them not to and we'll be very, very disappointed if they do because it's not in their interest. Because running a competitive process with lots of people bidding is gonna get them better terms. And what happens is nervous founders will fundraise early because they're like, well, what if Demo Day isn't going well? So I'll just talk to some early. And then what happens, either the VC looks at you without much progress and writes you off because you've not made enough progress, or they like you so much, they give you a preemptive offer. But the valuation is not as good as you would get by Demo Day, because that's why they're doing this. Right? So they give you an offer of 2,000,000 on pick a valuation, I don't know, x. Right? 10. 10. Two on 10. And the fan is like, Good this is feed price. This is more money

**Harry Stebbings** [31:04]:

than I'd get. The feed price.

**Tom Blomfield** [31:16]:

And they can't turn it down. They don't have competitive offers. They can't turn it down. So they accept this preemptive offer and they've just screwed themselves. And this happened to a couple of my companies this batch where crazy all star team, ridiculous, like every pedigree you'd want, amazing product, profitable, more than 1,000,000 in revenue. And that just the founder was just so nervous about fundraising that she took it was fine. It wasn't terrible, but it was heartbreaking for me because I I knew that if she just trusted the process and waited till this sort of auction process, she'd get a a better round.

**Harry Stebbings** [31:47]:

Okay. So you mentioned better round, better round, better round, and, like, kind of the more auction process. I can see where this is going. What what no. My my question, actually, before I just parlay and just lay into you is actually, what is the biggest advice that you give founders when they say, how should I think about structuring this round ahead of this two weeks of conversations before Demo Day?

**Tom Blomfield** [32:09]:

Yeah. This is an area where I think it's way too easy to say YC's advice is x. YC's advice is custom for every single company. I'll answer the question, but with the caveat that this is not advice that we that we will tailor it much more specifically. The trends we see over the last few years is that founders were getting way over diluted in their seed round. They're giving away 25 or 30% of their company at seed. That's too much. I agree. Keeping dilution slightly lower is probably better for them. I think some founders have taken that way too, like, too far and, you know, aggressively will only give away eight or 10%.

**Harry Stebbings** [32:42]:

So this is my trouble. I see 10% the whole time. And I'm just like, how on earth do you expect a great investor to really, really be a partner with you Yep. When they're gonna get six? Because you also wanna have these angels in. It's not gonna happen.

**Tom Blomfield** [32:54]:

The more nuanced truth is not YC is telling founders to only raise 10 or 12%. They're we are telling founders that over diluting a seed is not good for them, and that retaining control would be good for them, and they can make progress towards their series a milestones with probably a 0.5 or 2,000,000. And the valuations they might get at Demo Day are around 15 to 20,000,000, which roughly ends up at 10% dilution. But if a great partner comes in, top tier fund or someone they has a specialist and they really, really like and they'd want 15% ownership or even 20% ownership, absolutely consider it. I wouldn't write anything I wouldn't rule anything out. And I think this is where it gets misunderstood that YC's rule is only 10%. It's absolutely not true. We've had Sequoia and Andreessen Accel and Founders Fund and Google Ventures and all of these funds leading rounds in companies in the last batch. And it's just about having a reasonable conversation with the founders to say, where's the flexibility and where can we meet in the middle?

**Harry Stebbings** [33:45]:

I find one commonality. I've done a 170 investments now. One commonality is when the seed round is large, they lose urgency. Totally agree. Execution speed goes down. Totally agree. It's always five on 25 is kind of the sweet spot.

**Tom Blomfield** [33:58]:

Do you agree with that? Yes. We push founders to raise less in general, because most of our companies at Demo Day are pre product market fit. They've got some inkling that something's working, but they're certainly not in the scale up phase. More capital pre product market fit does not help. People just end up hiring tons of people, which slows everything down and and stops them being so nimble. So really, our advice is to raise slightly less money pre product market fit. Absolutely. Once you've got product market fit, pour gasoline on the fire. Go go go. But yeah, raising less early is probably best for most companies. Do you see bad investor behavior? Oh, a lot. Do you? A huge amount.

**Harry Stebbings** [34:35]:

I thought they'd be quite worried about that. They are. But then why would they let you Because they

**Tom Blomfield** [34:40]:

haven't it's got better and better and better. What is the bad investment? Because often people talk about this, but I'm like, I didn't see it. YC has an investor database, which has 10,000 people in. I'm sure you're in there. We can perhaps look it up. And it has reviews from all of the YC founders that have taken investment from them, on their process and what they would like to work with after the investment. And it has a rating. All YC companies have a huge amount of inbound investor interest. And before they book meetings, they will look investor up in the database and see, have you treated founders well or have you not? And if you've not treated founders well, you're not getting meetings with YC companies. And some investors go, why why is everyone ignoring my emails? It's like, well, dude, because you've fucked over these companies again and again and again. Very typical bad investor behavior would be something like making a binding handshake offer. We have a protocol on this, you know, I offer this amount, this valuation, yes, I agree. And then not wiring the money. Or just saying, oh, I'm of course, I will only wire when the round's full. Let me know when you've got your the the full round completed, and then I will wire. Like, you've signed it safe. You have to wire the money straight away. Or being extremely onerous in terms of, like, you must meet meet with us every two weeks or whatever. Like, I wanna be helpful and being a little too helpful.

**Harry Stebbings** [35:45]:

The biggest annoyance to me is when people don't understand the weight of their check. And what I mean by that is, like, when a small 50 or a 100 k check wants 10 diligence meetings Yeah. And then wants 15 references, and you're like, dude, you're a fucking addendum to this round. Yep.

**Tom Blomfield** [36:00]:

Know your place. Yeah. And we are actually gonna start publishing this data internally for our founders, where we know how many Can

**Harry Stebbings** [36:07]:

we check it first? Absolutely.

**Tom Blomfield** [36:10]:

This is what I'm doing right now with another of our partners, Brad. We have data on how many meetings each VC takes, how many investments they actually make, and what the check size is. And so we can tell our founders what is the percentage chance of conversion and what is the expected value of each meeting. And these You look like the most intelligent

**Harry Stebbings** [36:25]:

routing system then, where you're like, hey, for those that want the easiest cash, actually, quickest, the highest converting jacks of these.

**Tom Blomfield** [36:31]:

Here are these 20 investors. Yeah. If you meet with Sequoia, Andreessen, or, you know, Founders Fund, it's gonna have a 3% chance of conversion. And on average, they're gonna invest 2,700,000. I'm I'm making these numbers up. Sure. Sure. But we have that data now, and we are going to all of the top funds to work with them to make sure their understanding matches with our understanding, that they actually have made three investments. They actually did take a 163 meetings, and then we're publish the data to our founders. Are the companies

**Harry Stebbings** [36:56]:

that get the supremely hot rounds the ones you think will? In other words, can you predict the ones that will be hot? Yes. And that's because of Founder, Space?

**Tom Blomfield** [37:04]:

Everything. Yeah. Combo. Of traction. Yeah. It's not one for one. You can't predict a 100% of them, but you directionally, yes. Do you ever have one where you're like, that one's gonna be rocket in terms of investor

**Harry Stebbings** [37:14]:

attraction, and then it's like crickets?

**Tom Blomfield** [37:16]:

Sometimes. The vast vast majority of YC companies end up raising their target anyway. Some may might take a little longer than you expected, and some might go very fast. But something like 80 or 85% will raise their full sort of target amount, which might be 2 or 3,000,000 or something like that.

**Harry Stebbings** [37:29]:

And then for you, you have these 25 batch which you really craft and work with. You have the carry on that batch? It's all shared. It's shared like a equal partnership. Yep. Fascinating. And

**Tom Blomfield** [37:40]:

so do you get involved with other people's partner, like Absolutely. Yeah. You want to pick the best companies for pride, and also it's more fun to work with better companies than worse companies. Do you stack rank each other? No. No. That would be interesting to see.

**Harry Stebbings** [37:53]:

You'd need a a a long time period to really know. You would, but you could get interesting signals from who raised the most from the best, the amount that converted that didn't.

**Tom Blomfield** [38:03]:

Yeah. I, we have that data and we ignore it because it's just so easy to Easy to gamify, for sure. Yeah. Who cares that you raise 10,000,000 from x y z investment? It just we don't wanna incentivize people to raise raising that

**Harry Stebbings** [38:16]:

If you could change anything about the y z process in that three to four months, what would you change? The thing I am trying to change,

**Tom Blomfield** [38:23]:

I ran an experiment last batch where I randomly matched groups of six to eight founders with across groups for dinner and just sent them out for dinner. It turned out to be unbelievably difficult to get a group of eight founders to organize anything for themselves. It was astonishing. And so this time around, we are doing way more of the curation where we're like, we'll literally tell you, turn up at 6PM at this restaurant and you will meet seven random YC founders and you can chat about your startups. So the thing that I found most valuable as a founder in London was meeting groups of peers Yeah. That I would then share experiences with. So we're trying to curate those experiences for people, so they get more of a community. If it works for the batch, we'll start doing it for alumni as well. So you can say, I'm in London, we're gonna do 20 YC dinners next week of all the YC alums so they get to meet each other, and just make that network of YC even more powerful.

**Harry Stebbings** [39:08]:

I do wanna move to the the theme of the day, which is obviously AI. I mean, every YC company is also an AI company now. 70%, I'd say. 70%. There we go. Is the hype surrounding AI a hype cycle? Or is it justified?

**Tom Blomfield** [39:22]:

I think it's justified. I am so excited about what the future holds. I was really annoyed, actually, back in, like, '20 when I was starting GoCardless and and Monzo, I was so annoyed that I wasn't around for the dawn of the internet, you know, like '95 to 2001, I was like I always heard about Netscape in '95 and I'm like Yeah. Negative one. We're way too late. It's just like, it felt somehow like all the ideas were not taken. That's just a silly thing Yeah. To But like, we missed out. We missed out on that time. And what I actually realized is that Monzo rode the smartphone wave. Know, smartphones and apps were 2010 to 2020, say. And that was the predominant, like, technological wave. We are now going through another, which is AI, which is gonna be as big as the Internet, I think. Really, there's a technological revolution that I think will impact every part of our lives in small ways over the next year or two and in very, very large ways over ten, twenty, thirty years. And I think it's gonna transform every industry, and there's so much opportunity to build right now.

**Harry Stebbings** [40:18]:

There's kind of two opposing camps at this time, I think, is like having interviewed many different people on both sides, which is really interesting, actually, having the different perspectives. But those things, it's like a sustaining innovation, which is like an add on to Adobe Notion, all the existing, and it enables a better experience for existing device. And then there's others who say it's disruptive, and it creates entirely new categories and markets. I'm gonna cop out and

**Tom Blomfield** [40:37]:

say kind of both. Like, I do think big incumbents with distribution who can add sort of AI copilot functionality will make their products more effective. But I think there are huge new categories that will be created as well. I'm really excited to see what it does to consumer consumer behavior because consumer companies tend to be winner takes all or winner takes most. And they tend to be created when a new tech technology shift happens, so Internet or smartphone. And we haven't had a lot of exciting new consumer companies for, like, the last five or six or seven years because they all started in, like, 2011 to 2015. Clearly, AI is that technological shift, and I think it enables a whole generation of new consumer companies to be created. And I don't even know what they are yet, but I think they're, like, they're gonna be created this year and next year and year after.

**Harry Stebbings** [41:18]:

Okay. I just wanna then kind of unpack that a little bit, because there's, obviously, the sustaining versus disruptive, and then there's also kind of infrastructure versus application. Yeah. If we start on infrastructure layer, we see so much money going into the core providers today, your OpenAI's, your Mystral's, your Anthropix. Mhmm. Do you think there's money to be made investing in foundation models?

**Tom Blomfield** [41:37]:

I don't know. The best case for me and for YC probably and for you, and like humanity, I'd argue, is that roll forward ten years, and there are like five or six foundational model companies. And they're probably attached to Google and Microsoft and Facebook and Apple because they have the funds to power them. And they are all about as good as each other. It's like how, you know, GCP versus AWS versus Azure, they kinda do this, you know, slightly different But there's great functionality and commodity pricing because they've all, like, beaten each other down on price. That is not so great for the investors who invested in those companies, but great for the world, great for humanity, great for startups. I think this is exactly

**Harry Stebbings** [42:16]:

what happens, which is they realize that actually the cloud services is where the cash cow is. You acquire them the the tools that help you acquire amazing customers. But absolutely, they're kind of acqui hires to aid the core cash cow business.

**Tom Blomfield** [42:28]:

Yep. And, you know, maybe LLMs themselves are kind of part of that infrastructure, but I see them being in the the case that's good for, frankly, for for YC and for most of world, I think, is that they're more or less equivalently good. And you could build on anything, you could swap any of them out. I think the dangerous case I'm

**Harry Stebbings** [42:45]:

insanely impressed. I was meeting a company the other day, and they were talking about how quickly they swap out different models on a real time basis for different use cases. Yep. It was a language that only happened. Was literally, like, we used 12 different models at once and varied in real time.

**Tom Blomfield** [42:57]:

The US has made, like, non competes even less enforceable now. People talent is gonna jump between these places so quickly. So you discover an innovation at one place. Weeks or months later, it's replicated everywhere else, I I think. Unless you really believe that raising a trillion dollars to train your biggest model is gonna be the advantage. Knows? But I think it's quite dangerous to the world if there is one singular godlike AGI that we're all beholden to.

**Harry Stebbings** [43:19]:

Okay. So we move then to, like, the application layer that sits on top of Foundation models Yep. Which is where I presume you are excited. Yeah. Why why is that? Because most it's a wrapper. It's non sustainable. Why are you excited?

**Tom Blomfield** [43:32]:

There are clearly some wrappers.

**Unknown** [43:34]:

Mhmm.

**Tom Blomfield** [43:34]:

You know, if you can build it in a weekend at a hackathon and make a bunch of money, probably not defensible. For most businesses building on top of these models, I see it as you know, you can describe the last generation of startups as like MySQL wrappers or AWS wrappers or something like, you know, it's the same kind of logic applies. I think where the sustaining value lies is identifying an industry, deeply understanding the regulation in that industry, the tooling, the language, the all of the training, how people sort of work and behave and act, and tailor your software to fit into that industry in a way that's extremely deeply embedded. Most people building application layer stuff in AI say it's 80 to 90% traditional software with 10% AI. It's working in construction figuring out how Procore works or, you know, how the Salesforce CRM works or some Oracle database. And like, I don't think OpenAI is gonna come and steamroll the construction company, AI companies, because they're not gonna deeply integrate into the processes and software that exists in each of those industries. So I really believe everyone who works with a computer will have an AI Copilot assistant thing in the next two or three years, whether you're like a an oncologist or a law professor.

**Harry Stebbings** [44:44]:

The thing that worries me with a lot of it is actually that you see a lot of these service providers be, oh, we have a a better user experience. We've got a better sample. And I'm just saying, I get it. But the trouble is you don't have distribution. And what I worry about is distribution trumps products in this world, which is where Microsoft Office just bake it in. And because of Microsoft's distribution capabilities into all was it oncologists or or dentists or whatever we wanna use as that famous dentist example, fucking dentists. Poor poor dentists. But

**Tom Blomfield** [45:13]:

do you see what I mean? I do, but I don't agree. Because I think Microsoft Office, like, by definition has to be a general product. It will be the best word processor for sure, but it's not gonna be the tool that the dentist is actually using to write their clinical notes after a meeting. That is a specialist piece of dentistry software, the three d modeling software that some architect is using to design a skyscraper. Microsoft Office is it will benefit for sure Google Docs and Microsoft Office as a general document writing thing. But one of our companies was called Solve Intelligence, which is a tool for patent writing. So taking scientific inventions and papers and turning into really, really high quality patent submissions are very likely to be accepted. I don't think you can tell me Microsoft Office is gonna help write those patents.

**Harry Stebbings** [45:55]:

No.

**Tom Blomfield** [45:55]:

So I think that it's that vertical's focus. Was

**Harry Stebbings** [45:57]:

that an incredibly hot company?

**Tom Blomfield** [45:59]:

It was a normal hot YC company. And that's the bread and butter of the stuff I love to invest in. Find a a vertical where you are a domain expert and you nerd out on it really, really hard. You can talk to these people and build something that's so specifically tailored for their needs. Do you find the advice that you're giving these startups is different to the advice that you gave in a completely pre AI world? Yes. Big companies are now more willing to spend money on this stuff than they ever were. The previous advice of, like, go and sell to other startups, I think, is not good for very and maybe a DevTool startup, you're gonna sell to other startups. But in general, I push companies, b to b SaaS companies, to start mid market and go up as quickly as they can. Every manager of every big company in the world is being asked by their boss, what is AI gonna do to our company? And many of them do not have a good answer, and they're looking around for startups to help them. And for sure, it's innovation budgets and proof of concepts and all this stuff. But where it works, they convert to real contracts. I've seen companies go from zero to like 500,000 or 1,000,000 of revenue within the YC batch with really, really big companies, like Fortune 500 companies, and turn them into recurring contracts. This is real. This is saving people so much time. It's astonishing.

**Harry Stebbings** [47:09]:

Do you think you know that you're a good investor now?

**Tom Blomfield** [47:12]:

I don't think I am. I don't I don't know. Do I think I'm a good investor? I

**Harry Stebbings** [47:16]:

was having this chat with Tom Heumann. He was like, dude, I just don't know if I'm good at this after all this time.

**Tom Blomfield** [47:21]:

I don't know either. I think I'm a good founder and operator. I'm not sure I'm like that temperamentally suited to being a coach or a mentor. I still have that fire of like Do you wanna go back and found another company? Absolutely not. Really? I love it, but it ruined My life. My life in a way. Like, honestly, like, I love the earlier stages. I love working with smart people. I love building stuff. I love having my hand on the steering wheel and making decisions quickly and feeling the whole company moving at pace. And I think I'm good at it. The problem is, when you're good at that stuff, it turns into a big company. And then you have to run a fucking big company, which sucks. It really, really What

**Harry Stebbings** [48:00]:

sucks most?

**Tom Blomfield** [48:01]:

I'm so proud of Monzo. Think it's an amazing product and company. But that was like startups on hard mode because it was regulated. Yeah. We built a product we thought people loved. Customers gave us incredible feedback. It was profitable. And still the regulator comes in and says, no, no. This is actually this is really bad for customers. Despite all the customers loving it, it's actually really bad for them and we have to protect them and so you've gotta change all your plans. Having this random team rolling in hand grenades every two or three months, you know, you think you're talking to customers and doing the right thing, and then you just get blown up all of a sudden because the regulators decide decided for some reason it's not treating customers fairly. It was astonishing.

**Harry Stebbings** [48:37]:

What advice would you give Nick at Revolut on getting regulated?

**Tom Blomfield** [48:41]:

I'm not sure Nick would take any advice I gave him, so it's totally irrelevant. I don't know. I think Revolut have acted in a certain way for so long that it is hard for them to change course, really honestly. We intended to be regulated bank from the very, very start. Now, ten years on, we are reaping rewards of that.

**Harry Stebbings** [49:00]:

Final one. You mentioned there about kind of the impact that it had on your life, obviously, founding companies. And I've heard you talk about the ability of balance before.

**Unknown** [49:08]:

Mhmm.

**Harry Stebbings** [49:08]:

And I've never agreed with you on this one, Tom. I'm really sorry. I'm like, the reason why Monzo and GoCardless were successful is because you didn't have balance. Yep. And nothing great is created actually with value. You have to be exceptional. That's what makes it a great.

**Tom Blomfield** [49:20]:

I agree. I agree over a short to medium time period. Mhmm. I don't know how founders do it over a ten or twenty year time period, because I cannot work for that intensity for that long. Absolutely, first two, three years at Monzo, we were working like crazy people. I mean, the first 50 people at Monzo were so spectacularly talented. They bear the scars of it, you know. They like worked so hard and gave part of themselves to this company to make it exist. It was really annoying actually when we got to like a thousand people. People are joining and like demanding work life balance, you know, asking when we're gonna do a four day work week. And the the first 50 or a 100 people are going, what the fuck is going on? Like, it feels like we're getting limbs to this con company. And then these newcomers are demanding like, they wanna work twenty five hours a week or something. Like, what the hell's happened? So, yeah, it's tricky.

**Harry Stebbings** [50:05]:

Did you fall in and out of love with what you did over that time? I think people always say, fans, you're always so in love with what you do. And

**Tom Blomfield** [50:12]:

I think

**Harry Stebbings** [50:12]:

that's a bit of a lie.

**Tom Blomfield** [50:14]:

I loved the product all the way through. But by the end, I hated the company because it got so big, so overregulated in my opinion. It wasn't as simple as identifying something customers wanted and building an amazing product that they would pay for. That was not enough. There was this other whole, like, crazy language that we didn't speak called financial regulation. You had to keep these regulators happy as well. I was not good at that, really honestly. And I think TS, the new CEO, and Seedjata, the COO, are spectacularly good at that, as well as maintaining the culture and the products. And they've they've just done such a good job taking over, you know, where I left it over the next four years that I couldn't have done.

**Harry Stebbings** [50:47]:

Final final one, I promise. Do you have a challenge in terms of loss of identity? Like, I don't go on holiday because you're detached from work. And you mentioned me starting in '17. I've never ever done anything else but this. So it's really uncomfortable actually to have ten days or seven days with nothing.

**Tom Blomfield** [51:03]:

Yeah. This was a big problem for me when I when I was thinking about leaving. The year or so before I actually left, I couldn't imagine myself and the company not being the same thing, and who I would be or what I would be, or whether I would be relevant anymore or and I was worried the company wouldn't survive without me, which is a very arrogant and untrue thing to think. It thrived without me. And I had to rebuild my sense of identity, my ego. And honestly, going to America where no one knew who I was and joining YC as a basic intern was incredibly humbling and really positive because I had to, like, rebuild my entire self image. At Monzo, anytime I said anything, a whole team would, like, spring into action. And even if I didn't intend them to do it, I'd be very careful what I said because literally, I'd come back two weeks later and find 30 people had gone off in crazy tangent. And I joined YC and I say things and people like ignored me. And not in a nasty way, I was just like just another person. Right? I was a visiting partner. I was a teaching assistant. My ideas didn't matter that much, and that was so humbling. Honestly, really, really great.

**Harry Stebbings** [52:00]:

Right. We're gonna do a quick fire. So I say a short statement. You give me your immediate thoughts. Okay. Let's do it. What's the biggest takeaway from

**Tom Blomfield** [52:07]:

optimism. PG? He will meet with founders, get so excited by their idea, and imagine the future they could build if this just works. And the 1% chance it works, how it's gonna change the world. And he'll get so so excited, excite the founders themselves, and they will come out with way more optimism and self belief than they went in with. I it's a superpower. It's astonishing to see how he can jazz people up and just get them so so driven and motivated, and something I really wanna emulate.

**Harry Stebbings** [52:35]:

It's really interesting the unlocking investor enthusiasm gives to the willingness to open up of the founder.

**Tom Blomfield** [52:41]:

Yeah.

**Harry Stebbings** [52:41]:

Totally. Totally makes sense. If you have a pessimist, well, this one, well, this one, well.

**Tom Blomfield** [52:45]:

And it's the British culture, you know. It's so easy to trash an idea sarcastic and it makes for great comedy, makes for terrible startups. You need that, like, boundless energy and optimism. And it's not natural British state, but it is Californian.

**Harry Stebbings** [52:59]:

You can start one company again and choose a board member. Who do you choose as a board

**Tom Blomfield** [53:05]:

member and why then? If I was doing Fintech, I would choose Mickey Malka from Ribbit. They finally invested. Ribbit, I don't know if it's public, I should check. The name Monzo? Yeah. I love Mickey. He's so great. I like, the quality of thought I got from Mickey and the deep personal connection I felt with that guy was just on a different planet. I'm sad I haven't had the chance to work directly with him.

**Harry Stebbings** [53:27]:

Yeah. No. Listen, I think he's incredible. What investor would you never have on the cap table?

**Tom Blomfield** [53:34]:

Probably SoftBank. I had a very unpleasant experience with the SoftBank London team. Just a bunch of pretty arrogant, like, Deutsche Bank traders turned venture capital investors. They were not fun at all. I met tons of really bad investors through my time, honestly. What was the worst investor meeting you had? There was one, and I can't actually remember his name even. He was an intro to one of our existing investors, and he, on the first call, was like raving. He's like, this is so exciting. This company's great. I really wanna be in reserve like 10,000,000. I want 10,000,000 allocation. Will you give me 10,000,000? And we're like, yeah. Will we like yeah. Sure. Like, we're raising a 100,000,000, but yeah, we can we'll earmark 10 for you if you're that keen. You know, like, go through diligence. And we got the rest of rounds together over the next few weeks. Like a week before signing, he was like, you know, I've been looking at your numbers and the cohorts. The cohorts really aren't as good as you said they were. And really, this valuation that we agreed doesn't really make sense anymore, Tom. And really, you know, I agreed at one, but actually I'm only gonna do this at 500 or something. And it was like three days before signing the term sheet. I was like, okay. No worries. I'll just give your allocation to someone else. Thanks. He's like, what are doing? I was like, you're backing out. Like, we agreed on something. You've you're backing out. You're like, you've not got it. And he went, fucking ape shit. And I heard from another investor, he this is just standard practice for him. He will go in super super super happy, like, supportive. I really want in. And then at last second, he'll be like, oh, no. There's actually something wrong. Just try and squeeze 20 or 30% out of the round.

**Harry Stebbings** [54:56]:

I don't understand, though, why I do that, because you've gotta have ball control on the round to squeeze it 20 to 30%. Do you see what I mean? So it's like, as if you're a 10,000,000 of a 100,000,000, you're not even gonna be able to do that. But even if you wanted to, you couldn't without carving

**Tom Blomfield** [55:08]:

separate deal for him. Yeah. I don't know what his plan was. It was really stupid. And I was just like, I don't wanna work with you. He has been blacklisted from me. He's tried to invest even after I left. And to their credit, the Monzo board have said, we're not working with you. And I was just like, fuck you, dude. Don't treat founders like that. It's not cool.

**Harry Stebbings** [55:23]:

Okay. Which is the most helpful angel? I know angels are different for different companies, obviously, for different but like, the one where you're like, ah, they're amazing. So like, Pajani at SNCC, for me, consistently in companies I've invest in with with him, the founders love it.

**Tom Blomfield** [55:38]:

That's a good question. For me, personally, it was Aileen Burbage. I'm not an angel investor, but our our seed investor was the most personally helpful. We were obviously her biggest position. She stood to make a lot of money, so, like, economically, it makes sense. But she went above and beyond. I mean, she was, like, offered for me to go and stay in her house, cook me meals. She would when we lost a chief people officer, she came and did an exec job at Monzo effectively for, like, four days a week for six months. She, like, put her portfolio to one side and just said, I'm just gonna come and turn up every day and work with you at the company. It was just astonishing. So Aileen is, for me, head and shoulders above everyone else I've worked with.

**Harry Stebbings** [56:12]:

Garry is clearly fucking great. Like, when you see Garry Tan. Yeah. Yeah. When you see him as CEO of YC and what he's done, the excitement that he brings, especially around Demo Day, when you see him taking photos with the old school camera and just the joy that he imminent horribly, has brought back it then to the YC community. What do you think makes him so good as the CEO of YC?

**Tom Blomfield** [56:30]:

YC has changed a lot in the last two years for the better, and I put it a lot of it down to Garry. He was there in the early days. When I was there in 2011, he was, I think, a part time partner. He helped us design our pitch deck for GoCardless in 2011, and he was taking photographs back then. So I think he, like, experienced YC at its purest, at its core. And then really honestly, under Sam Altman, I think it expanded in a bunch of different weird areas. And and Sam was distracted. He was doing OpenAI from very, very early on. And so to have a CEO now who is whose full focus is the batch, the core YC. It's not some growth program. It's not some international program. It's not, you know, creating AGI. It's the core YC batch that Garry has experienced and loves and cares about, has made it great.

**Harry Stebbings** [57:13]:

What is the single biggest threat to the YC model?

**Tom Blomfield** [57:16]:

Complacency, I think. We could coast on our on our laurels, rest on our laurels, I guess, not to mix metaphors, for quite a long time without realizing it.

**Harry Stebbings** [57:26]:

You could. Think the decay rate would take a long time, like a decade plus.

**Tom Blomfield** [57:29]:

Yeah. And then we just recruit bad partners who give bad advice, but continue to recruit reasonable companies, they will continue to fundraise because of the brand. But then after ten years of decay, we realize it's all fucked. And so just being really, really having a really high bar for the partners we hire and a really high bar for the companies we fund so that we're making YC stronger and stronger and stronger every batch and not risking this, like, decade long decay. Which

**Harry Stebbings** [57:52]:

founder

**Tom Blomfield** [57:52]:

is not a YC partner, but you'd love to have them as a YC partner? I mean, I think either of the Colossus would be incredible. I think they're a little bit busy at the moment. I mean, Brian Chesky, maybe as a second act, he he could come to YC. He speaks at every batch event, and his advice is just phenomenal. Do you care about money? Now that I have more than a surplus of money, clearly, not really. Like, I cared about it when I was younger, for sure.

**Harry Stebbings** [58:16]:

Does it make you happy in the way that you thought it would? No. Was that a hard moment when you realized? Because you you do chase it to a certain extent. I chase

**Tom Blomfield** [58:24]:

success and money. Then Did you know what success was? Yeah. Like building the company. My dad, when I was very, very young, created created his his own own company, company, and it was drilled into us from a young age that that being successful in life meant being rich and and being successful. And so I had this huge drive to create something big and to that external recognition and validation. And the money went with it, but it wasn't the, you know, the money alone. It was like, it was success. It drove me to do Monzo and drove me to stay at Monzo for a long time after I was happy. In the years since, it's kind of gone away. It's weird. Like, I don't Is it freeing? Yeah. It is. It really is. Yeah. I don't feel like I have to create another I I felt compelled to create Monzo. I really did. I keep in the urge to build something, because I really, really love building stuff. But I don't have the urge to build a big company. I I don't wanna run YC. I I would not want Garry's job. I have been there. I've had the stress. I've had the pack calendar. I do my work. I get to go home in the day. I shut my laptop, and I can focus on my do all of the cliched founder sports. I love cooking. I bake. I do pottery. I hike and cycle. I love that part of my life so much. And I'm the happiest I've ever been, I think, in the last six months because I have the work that keeps me intellectually stimulated, but tons of hobbies and friends. And I'm not striving for like, external validation as much. I mean, I still am, you know. I get a buzz when I'm when I get a tweet that goes viral or I'm on, you know, a podcast or in the, you know, BBC asked me to go and talk on the radio. It's like a little bit of Of course, you should. A rush. I think it drives me much less than it used to. What do you miss most about London? Friends. Friends and family. Yeah. A big part of me leaving, honestly, was my friends all got to the stage of life where they were getting married and moving to the suburbs Yeah. And having kids. It makes a

**Harry Stebbings** [60:14]:

big change to friendships. Kids are wonderful, obviously. Yeah. But I really notice with my friends when the kids happen, like, the friendships fall away.

**Tom Blomfield** [60:20]:

Totally. And it it happened in like a two or three year period where I genuinely found myself in London thinking, don't have friends to hang around with now. I've got to make a new friendship group. And that for me was a catalyst to move countries. It's like, if I'm gonna have to make new friends, I might as well take this opportunity to move to a new country as well and have that

**Harry Stebbings** [60:36]:

So ten years time, final one, it's 2034. Why do you wanna be then? Is is Tom back in London running a fund? Is Tom not running another company?

**Tom Blomfield** [60:45]:

Hopefully not running another company. Would you like to run a fund? Not really. No. All of the funds I've seen have, like, pretty horrible politics, and I think YC has the least politics of all of them. I don't wanna run YC. I'm very, very happy not having Carrie's job. If I'm still doing YC, that would be great. I would like to be able to split time between San Francisco and New York and maybe The Caribbean a little bit. I love sailing and maybe London. I would love a long term partner and I would I think I'd like kids. My brother has two children, and they're one and three years old. Before I came to work today, I went into the living room, and the two of them were sitting there playing. It's just like very, very blonde, very cute one and three year old. And the eldest runs up and says, uncle Tom, uncle Tom, I've drawn you a this picture. It's like my heart melted. It's like, oh my god. I can see what these things do to you now. Yeah. If it if I meet the right person, I'd love to have a family. If if over the next ten years, met someone great and we had a family, that would be happiness for me over creating another billion dollar company. Like, who needs another one of those?

**Harry Stebbings** [61:41]:

Tom, I've loved doing this. Thank you for letting me just pepper you with questions. It's such a joy. Thanks, Harry. I have to admit, that show was so much fun to do. Now, if you wanna see a resemblance, then you can check out the video of the interview. Apparently, we look slightly like twins. You can find that on YouTube by searching for 20 VC. That's two zero VC. I always love to hear your thoughts on the show and video, so let us know what you think there. But before we leave you today,

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