Sam Altman: The Success Equation
Sam Altman is a successful programmer, entrepreneur, and AI enthusiast, mostly known as the former president of Y Combinator, the world’s most successful startup incubator. Sam went to Standford and studied computer science. He was the co-founder and CEO of a mobile location-based startup called Loopt which was funded by Y Combinator.
Altman is widely known for writing essays on a variety of topics, several of which are held in high esteem and are considered a great work of providing valuable advice and guidance, especially for younger people.
Sam, in his essays, emphasizes the importance of creating value, choosing the right project, and looking through the long-term perspective. His most well-received essays are "The days are long but the decades are short", "How to Be Successful" and "Idea Generation".
He has a lot of insightful frameworks that can significantly improve our decision-making process and give us a bigger picture of success and value creation. And the learnings from Sam can be applied not only in the tech and startup world but as guides and mental models for our careers and overall thinking patterns.
1. Choose the right project to work on.
“Pick the right thing to do (this is critical and usually ignored), focus, believe in yourself (especially when others tell you it’s not going to work), develop personal connections with people that will help you, learn to identify talented people, and work hard. It’s hard to identify what to work on because original thought is hard.“
Altman in one of his most popular essays “The days are long but decades are short“ shared a couple of thoughts and ideas on work and success.
Sam pointed out the importance of working on the right projects because it’s often easy to get heads down, lose the appropriate focus and mislike the accomplishments.
And especially in today's, ever-changing and dynamic world is much easy to lose the right frame of picking the right thing to do and jump from one to another project.
“The number of people who said to me like man I thought for 10 years I was doing incredible work because I felt like I was creating a huge amount of output but in retrospect it was in the wrong direction“
Obviously, we do need to focus and work hard but it’s good to put the focus in the right direction. Therefore, the good idea would be to focus on some time and then step back and think if I’m doing the right thing.
And on the other hand, we want to avoid reckless mistakes and constantly flip our attention from project to project. And Altman describes this kind of mistake as a 22-year-old stereotypical college dropout in Silicon Valley:
“I’m gonna solve all the world’s problems in three months and if I haven’t done in three months, I failed, so I’m going to give up and do the next thing, and they jump onto some other projects“
So the advice that Sam left us is to make check-in to make sure you work on things that matter and work on an appropriate time scale because as he noticed, the time horizon is crucial. 2. Compound Yourself
“Compounding is magic. Look for it everywhere. Exponential curves are the key to wealth generation. “
One of the most crucial and lucrative but difficult things to do is to be on the exponential curve, and since most careers progress fairly linearly, it’s important to move towards a career that has a compounding effect.
I’m going to refer to Albert Einstein who described the compound interest not only as the most powerful force in the universe but also the greatest mathematical discovery of all time.
“you should aim for your life to follow an ever-increasing up-and-to-the-right trajectory.“
The perfect scenario is when your rate of learning is always high, and each unit of work adds up well, generating more results and causing the great effect of compounding.
The case in which twenty years of your work could be condensed and as effective as two years of work of something different is not recommended and would be better to shift the direction of effort.
And the form of leverage and compounding applied not only to the capital, but also to networks, brands, relationships, and many more - anything of importance.
“It’s useful to focus on adding another zero to whatever you define as your success metric—money, status, impact on the world, or whatever. I am willing to take as much time as needed between projects to find my next thing. But I always want it to be a project that, if successful, will make the rest of my career look like a footnote.“
As we noted before, it's often common and easy to get your head down and focus on the wrong things, and this approach also applies to compounding because most people are stuck with linear opportunities. We should have willing to let these kinds of opportunities go and expose ourselves to exponential opportunities that can bring beneficial returns.
“I think the biggest competitive advantage in business—either for a company or for an individual’s career—is long-term thinking with a broad view of how different systems in the world are going to come together. One of the notable aspects of compound growth is that the furthest out years are the most important. In a world where almost no one takes a truly long-term view, the market richly rewards those who do.“
In short, it’s crucial to arm yourself with the form of leverage, and all the important benefits in life come from compound interest.
3. The importance of momentum
“I was told and I thought for a long time that you get burned out from working too hard and at least in my experience burnout actually comes from failing and things not working. Momentum is really energizing, the lack of momentum is super draining“
Sam pointed out how gaining momentum can do wonders for our growth, which resonates and complements the previous advice on compounding. It gives us the bigger picture, and from my personal experience, it seems to be true.
I find that I have infinite energy to work on things that interest me and additionally work. On the contrary, I hardly have the motivation to work on projects that either interest me or that don't work out.
Sam Altman additionally often put the concept of momentum in the startups world:
“Growth and momentum are what a startup lives on and you always have to focus on maintaining these“
And he summarized the concept of momentum by drawing two conclusions and lessons:
The tiring is banging your head against the wall, not the number of hours worked
If you don't have momentum, nothing except getting momentum will solve your problems.
4. Rate of iteration
“The number one predictor of success for a very young startup: rate of iteration.”
As we previously mentioned, Einstein described the compounding effect as the most beautiful mathematical discovery, but I think that we human beings underestimate the power of compounding.
And the main cause of that may be that we cannot look through the long-term perspective and we overestimate the short-term consequences.
The compounding power of the rapid execution and iterated learning feedback loop can do wonders to our growth, and commitment to this, over the course of career, is, what Sam described, the closest thing you can get to guaranteed success.
“I think most people give up on things way too early[…] Most of the founders that I have spent time with that have gone on to be super successful spent a very long time on their idea when a lot of people would have given up and either people said it sucks or people said nothing at all“
This advice is also highly valuable in the startup world, where Altman encourages us to begin with a “minimum viable product” and then iterate rapidly. But the common ground between startups, our lives, and careers is that it’s all about execution.
A good summary of the concept of iterations could be the quote by Naval Ravikant:
“It isn’t 10,000 hours that creates outliers, it’s 10,000 iterations.“
5. Useful frameworks
Sam through his speeches shared a couple of frameworks that support his decision-making process, and the common theme of these mental models is to look through the long-term lens and get the winding path of progress.
a) Impact maximization / regret minimization - how to allocate time
“Impact maximization slash regret minimization. So I try to look at those two curves together. And I try to think about where I can have the biggest net impact on the world, net positive impact on the world. Easy to have a big impact. And then, also, just regret minimization. You know, you get to live once. It’s really important that you do what you want to do and that you spend time with the people you’d like to work with and work on the things that you find personally fulfilling.“
b) How to pick what’s important to work on
“I think you want to look for the intersection of what you’re good at, what you enjoy and where you can create value for the world. And in my experience, if you don’t find some of the intersection of those three it’s hard to really have an impact.“
c) Starting a lot of things then prune down and focus on the thing that is working
“I found really useful is spend a little bit of effort trying a lot of things, and then relentlessly prune down and focus quickly on the ones that you like and the ones that seem to be working. So in some sense, this is the Y Combinator model of fund a lot of startups with a little bit of money. And then, you know, most don’t work out, and some work really well. You spend more time and more money on the ones that do. “
d) Decision of quitting should be internal
“A Framework that I have for when to give up and when to keep working is that it should be internal not external decision. If people aren’t using it or are saying it’s bad that alone is not a reason to give up. You want to pay some attention to that, they might be right, but I think that the best entrepreneurs I know, they make an internal decision about when to give up or when to keep working on something. “
The books that Sam recommends to improve the quality of the thinking process are “Thinking, Fast and Slow” by Daniel Kahneman and “Zero to One“ by Peter Thiel.
6. Success = ability x will x direction x luck
Sam shared this equation of success through one of his tweets and combining our information we can somehow break it down and grasp the notion of that equation.
Firstly, the direction cannot be accidental, and our focus should be directed on important and exponential projects. And it’s not easy to maintain that frame in such a dynamic world, so a good framework is to be internally driven and step back and think deeply about the project.
Secondly, you have to give yourself a lot of chances to get lucky, and it can be done by frequently iterating things. The more energy around you, the higher chances that you get lucky. And another powerful lesson you can learn is that you can figure out what to do in situations that seem to have no solution.
“Grit comes from learning you can get back up after you get knocked down.”
Thirdly, it seems that ability and will follow your success and momentum, so to improve the ability and motivation, I would seek out creating momentum and get the compound effect, again by a frequent rate of iterations on exponential projects.
“Study the unusually successful people you know, and you will find them imbued with enthusiasm for their work which is contagious. Not only are they themselves excited about what they are doing, but they also get you excited“
For more insights, I encourage you to follow me on Twitter and join our community on Discord!
Summary:
More crucial than hard work itself is to pick the right thing to do, and it’s usually ignored and a critical factor to future success.
“Compounding is magic. Look for it everywhere. Exponential curves are the key to wealth generation. “
“Momentum is really energizing, the lack of momentum is super draining“
“The number one predictor of success for a very young startup: rate of iteration.”
Have useful frameworks and mental models in your toolbox to improve the quality of the decision-making process. The recommended book that covers that topic well is “Thinking, Fast and Slow“.
Success = ability x will x direction x luck.