Diana Hu, YC managing partner and AR pioneer, says companies are hitting 7-figure revenue in 3 months — a pace that was impossible when she went through YC in 2017

Speaker 1: It's a lot of money. Let me tell you about Console. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. And without further ado, let's bring in Diana Taggar from YC. She's a managing partner. Diana, welcome to the show. How are you doing?

Speaker 13: Good. Thanks for Thank having

Speaker 1: so much for taking the time.

Speaker 2: How is today?

Speaker 1: Yeah. How's demo day going?

Speaker 13: The energy and vibes are immaculate.

Speaker 1: Mhmm. What is it how does it compare to your YC experience, your entrepreneurial journey? Tell us a little bit about that and then take us through how you're talking to today's entrepreneurs about what's changed, what's the same.

Speaker 13: It's kind of fun that you were just talking about Snap because my company was building augmented reality SDK Yeah. For game devs back in the era of HoloLens.

Speaker 2: Yeah.

Speaker 13: So my company went through the batch back in summer seventeen. And back then, the it it was different. It's way smaller than what it is now. And AR still taking time to get to the headset. And when we went through it, demo day was back in the computer history museum back in That's Mountain right. And now we got our campus here in San Francisco and have way more investors and companies are raising a lot of amount that probably was more series a Mhmm. When I was doing when I was running my company.

Speaker 1: Yeah. So What was the what was the mood like around, like, platform risk, building on top of something else? Obviously, a lot of the augmented reality companies like Niantic built on top of the iPhone, on top of smartphones. They and then now we see AR sort of, you know, trying to break in through new devices, specifically spectacles, headsets, wearables. But was that a risk factor that came up in pitching VCs? Or was there sort of like, okay, there's enough of an ecosystem here. There's enough of an enterprise play that you'll be able to, you know, be a winner no matter if there's one platform that breaks out?

Speaker 13: I think it's a very good question. I think it's the same question right now that a lot of the AI companies are wondering whether they're on the path of the roadmap for the big labs. Yeah. We had the same issue when one fun fact, maybe not so fun, but on the first day of the batch when we went through it, we basically had built the same platform that Apple ARKids released. Yeah. Exactly same. It was the same SDK. Oh, no. And on that first day of the batch, we actually freaked out because you have this giant company that Yeah. Have infinite amount of money that could just crush you. And I think what that forced us to do was to really accelerate a lot of our roadmap because we had thought of building basically this SDK that would enable anyone to build code once and run on any hardware. So we were the first SDK that could enable running it across you you build the code once and it was shipped on Android and iOS and eventually also got it to headset. Then later on, our company had an exit and got acquired by Niantic, the makers of Pokemon Go Yeah. Which was the biggest user of AR back then. And then I ended up running a lot the AR and engineering teams for for Niantic.

Speaker 2: We had Andrew Lee from Tasklet on first and I really appreciated how he just straight upset. He's like, yeah, we are in the path of Oh, yeah. Nootropic and AI and we're just we're we're we are but just sort of accepting that and and workflow automation, what what they're doing, such a big category, can obviously, with great execution, build a build a big company even even despite of that. What are some of the key themes for the batch? How does this batch compare to the last batch? What kind of trends are you seeing overall?

Speaker 13: I think this batch is following a similar trend to the winter twenty six batch where things that have been happening a lot of these companies are the first one that are basically riding the wave with agentic coding working. Mhmm. It is it has become the norm where company well, the norm. It's become more common that companies can go to 0 to 7 figures in revenue within just three months. Mhmm. Which when I did the batch, that would have been impossible. I don't think any companies did that. The best companies back then would grow, let's say, 10% week on week, which is what, let's say, Airbnb did back then. And that would get them to couple 100,000 in ARR, which is a very good very very very impressive accomplishment back then. But now, companies get to 7 figures because the companies are able to build a more mature product a lot quicker with with agentic coding. If they find the right user and customers and sales and nail nail on that, people can really speed through this right now.

Speaker 2: How how often how often do you do you find yourself talking to a company in office hours that you think shouldn't be optimizing for that? Because there's a lot of companies that, you know, we've talked to today like Madrone, for example, like very important sort of product category, clearly massive TAM, and they should go as fast as possible. But if they just optimize for revenue traction right away, it would take them on the wrong path, I imagine.

Speaker 13: Oh, absolutely. So this is where we give very customer advice depending on the type of company. If you're building, let's say, core infrastructure or defense type of applications, it's more important that you deploy deeply into few customers. And it doesn't matter if the revenue is small, but it has a lot of opportunity for growth. And it it really depends on the journey. So this is not advice for all the companies, for for some of them.

Speaker 1: The YC has gone through waves of, like, consumer boom in the early days with Airbnb and a lot of consumer companies and then sort of swung to business to business products and companies. And there's been demo days that we've been to where it's a lot of stuff that's deeper in the token path, which is a great place to be, enabling agentic workflows deeper in the stack. There's a lot of hard tech this time. But I'm wondering how you're viewing the opportunity in consumer, in gaming. We're just seeing so many vibe coded games that are remarkable demos, and it feels like with a YC team on an actual deadline to get to real functionality, real adoption, revenue traction, the tools are there now where previously to make something that looked anything like a breakout game, you'd see these companies and you'd and you'd hear, oh, well, you know, Epic Games was grinding in the dark for five years building their engine before they released a game or, you know, so many companies, Roblox, it took a long time. Now it feels like you can move faster. And that might make it more the the end state might be that all of this turns into, you know, there's no fundraising at all and it's all just indie devs. But it does feel like there's an opportunity here. But how are you seeing consumer either in gaming or just broadly develop over the next couple years at YC?

Speaker 13: I think it's still very early. We haven't seen these companies break out yet.

Speaker 1: Yeah.

Speaker 13: I mean, this whole era of AI right now, which is one of the most fun areas in tech right now, there's still so many patterns that we're figuring out. And with regard to consumers, I think there's going to be a lot of big category winners that we don't know what the shape of them could be. Sort of like trying to predict the Airbnb or DoorDash back in the twenty tens would be very hard. And with regards to gaming, having worked in gaming myself and know a lot of these triple a studios that you mentioned that take a long time to get game out there because they build the engine and there's just so much technical complexity. A lot of that, yes, the barrier of that is entry is lower. But I think the thing that's still in short supply is the ability to encode fun. The thing why you could build lots of games today, which I've tried and and and by coded some games, but it's hard to build actually game loops that Yeah. People keep coming back and have fun. And those are new patterns that we haven't discovered. I mean, you could imagine now in the era where a lot of games could be in an agentic loop and based on a lot of the metrics of the usage, they could self improve. And it could be more fun, but I don't think people figure out how to build those Because you you have to be able to measure fun which I'm not sure if there's a easy way to do that. It it really depends game per game.

Speaker 1: Yeah. Yeah. Yeah. Makes a lot of sense. Anyway, thank you so much for taking the time to come chat with us. Have a great

Speaker 2: great work this batch. There's lot of fun companies.

Speaker 1: Yeah. We'll talk to you soon.

Speaker 13: Alright, guys.

Speaker 12: Have a

Speaker 14: good one.

Speaker 13: Good to

Speaker 3: see you. Cheers. Bye.

Speaker 1: Well, Manitis is getting himself in trouble for debating the world's population. He says population is max 500,000,000 global. Earth is max 15,000 years old. People are asking if it's bait. He's going back and forth with a bunch of people. He he's he's pointing out that there are some economic incentives to certain countries to misreport population numbers if they're getting if they're getting economic incentives or distributions based on that. He's having fun on the timeline. You can go dig into his post and make a make a call for yourself. Anyway, over in China, one of the most populous company countries in the world, allegedly, The final boss of ADHD has been spotted. The guy is simultaneously watching TikTok, chatting in a messenger, and playing a game. This is what a foldable smartphone is for. There's pushback against smartphones now. Imagine what foldable smartphones will do. Is it is it gonna be even worse? Who knows? This is an absolutely crazy setup to be rocking. And is he paw is this a single player game that he pauses or

Speaker 2: Yeah. It kinda seems like he's larping.

Speaker 1: Yeah. This seems performative. Right? This is a larp. This is a larp. Yeah. A larp. I don't think this is real. I got in trouble for my game knowledge. I I apparently used min maxing improperly. Although, there was some debate over whether or not min maxing has has transformed into the definition that I used, whether I was using a more modern interpretation of that term. But anyway, you can go and dig into Sutrini's post and make your own justification on where you sit on token maxing, token minning, token min maxing. The clear point is that you've gotta focus on ROI like any other business process.

Speaker 2: Andrew Gao sharing some data. This is our very cognition. He says, this isn't public but Stanford CS degrees dropped 42% year over year. Berkeley down 61%. All of the propaganda, like, don't need you don't need to learn to code anymore

Speaker 1: Yeah.

Speaker 2: Seems to be working.

Speaker 1: I mean, it's gotta dramatically change the experience and, like, the fun of being like, part of the fun of taking a computer science course is doing an exercise and working through the code and, like, solving the puzzle that is the code challenge. And when you can just one shop that with any frontier model, it gets a lot less fun. And so, you have to imagine that people moved over to other more amorphous, more rewarding disciplines. But it does seem silly because I'm sure that if you if you go really deep in a CS degree and you're AI enabled as well, you can both find a job and also have a really, really interesting and and rewarding experience. But certainly a reaction to the fact that the the the existing path of just, like, like, someone tells me exactly what to implement, then I go and implement that, and I make 6 figures forever is is less and less clear. And so people are reacting to that by going to other places. I wanna see the data on where where these students went. What are they what are they studying? Yeah. If not CS, did they did they bleed into everything else? Because sometimes you read these and it's oh, they're not studying computer science anymore. They're studying computer engineering. No. And it's like, yeah, that's kind of the same thing. You saw that like computer programming declined but computer science jobs increased or something like studying Yeah. Yeah. I mean, a lot of the AI track has always been symbolic systems anyway, not CS, at least at Stanford. That's what a lot of the early Facebook employees and lot of those folks studied. There's a lot of other folks that study physics or math or all sorts of things. And it's gotta be more fun to study a really hard topic like physics or math because you have an AI tutor and you can use AI to to close that gap, to bridge that gap.