# Garry's Channel: My $200 million startup mistake

**Author:** Garry Tan
**Type:** Video
**URL:** https://www.ycombinator.com/library/Jh-garry-s-channel-my-200-million-startup-mistake
**YouTube ID:** dtnG0ELjvcM

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I was 23 and didn't know anything about startups. Peter Thiel offered me a big equity stake and a full year's salary to
quit my stable job at Microsoft and join a startup he was starting. It wasn't even a risky decision. I still said no,
and it cost me $200M.

When opportunity knocks, you should think about taking the risk. If you're good, it's often the only way you can
actually get a larger piece of the kind of value you can create when making software. There are lots of good reasons to
work at a big tech giant, but there are also downsides. We talk through those things.

Don't make my mistake. Make all new mistakes.

## Transcript

- Working for Microsoft
cost me $200 million. My name's Garry Tan, I'm
a Venture Capitalist. I started off as an engineer,
a designer, a product manager. If you're new to this
channel, I'm here to teach you all the things that I
learned the hard way, starting with the most painful lesson, which cost me $200 million.

I'd just graduated in 2003, and my friends were starting
a company with Peter Thiel. They flew me down to
have dinner with Peter. It was about the time Peter
wrote the $500,000 check to Facebook that made him a billionaire. He was a known great entrepreneur. He just wasn't the billionaire
that you know him as today. He looked at me and said, "Garry, "what are you doing at Microsoft? "You're wasting your time." Keep in mind, I was 23 years old, I didn't know anything about startups, I didn't know anything about finance,

and I definitely didn't know
how these things got started. He said, "Garry, I'm so sure
this is the right thing for you, "you need to quit your job right now." He asked, "How much a year
do you make at Microsoft?" It was $72,000 a year,
really the lowest of the low coming right out of college. He got out his checkbook
and wrote me that check. He said, "Cash this check, quit your job. "This is a zero risk opportunity for you." I said, "Thank you very much, Mr. Thiel, "but I might get promoted
to Level 60 next year."

Big mistake. This mistake cost me $200
million in equity, at least. Palantir is now worth $20 billion or more. I did end up joining as employee number 10, I got to build one of their major product
teams from scratch, I learned a lot, and it still worked out, but this is a story that
you should keep in mind as you think about where you wanna work. There are lots of reasons
to work at Facebook, Apple, Amazon, Microsoft, and Google. I actually turned down a job
interview with Google in 2004,

but at the time, and this is what most Stanford engineers thought,
it was obviously useful, but it wasn't clear that
it was going to make money. In 2019, it's hard to
believe any other company other than Google is going to make money. Even though these companies
pay a lot of money, in real terms, what
software is doing in society is creating a lot more value
than what they pay you. Goodle's pure profit pure employee

is actually $1.6 million
per year, after all costs, and if you're in the
engineering, product, design, marketing, sort of the builder's
side of that organization, you've got to know that you're creating a lot more value than
that, possibly 10 times, maybe 100 times that
value, and the only way you can really access
that is by owning equity, and that means either being a founder or working at an early stage startup that gives significant equity. My friend, Bede Jordan of
Shelf Engine here in Seattle,

actually said it best, "If
you don't work on your dreams, "someone will put you to work on theirs." Here are the pros: you
get to ship products to millions of people;
that is pretty cool. Two, it's very stable, and
you get to learn some of the best techniques on how
to make products for people. That's really important. Three, you're gonna meet a
lot of really smart people, some of whom you may wanna co-found something with in the future.

Obviously, there are lots of downsides. If you like to make something new, it's a lot harder to do
that in a big organization. You have to be good at negotiation, you have to be good at getting
favors from other people, you have to be good at politics. Those are really valuable life skills, but they are a separate set of skills from being great technically,
or great at building product, and you should probably be aware of how you spend your time,
especially when you're young. Do you wanna maintain the status quo, or do you want to make something new?

The two things I really like about working for smaller places or
starting a company is you get very direct access to users and customers and their problems, which
means you can actually have empathy for what's
actually going on with them, and then you can directly solve it. That cycle is so powerful,
the sooner you learn how to make that cycle
happen in your career, the better off you'll be. If you can make software and
make software for other people,

the outcome truly is hundreds
of millions of dollars worth of value if you get it right. That's where I'm here to
try and encourage you to do. I'm not really saying that you shouldn't go work at a big tech company. I am saying you should probably leave before it makes you soft. Don't make my mistakes,
make all new mistakes.
