Y Combinator’s Garry Tan supports some AI regulation, but warns against AI monopolies

Garry Tanpresident and CEO of Y Combinator, told a gathering at the Economic Club of Washington this week that “regulation probably needs to be done” when it comes to artificial intelligence.

Tan spoke with General Catalyst board member Teresa Carlson for a one-on-one conversation where he discussed everything from how to get into Y Combinator to artificial intelligence, noting that “there is no better time to work in technology than right now. “

Tan said he was “generally supportive” of the National Institute of Standards and Technology’s (NIST) attempt to construct the GenAI risk mitigation framework and said that “much of the Biden administration’s EO plan is likely on track.”

The NIST framework proposes things such as defining that GenAI should be compliant with existing regulations governing issues such as data privacy and copyright; disclosing the use of GenAI to end users; enacting laws prohibiting GenAI from producing child sexual abuse material, and so on. Biden’s executive order covers a wide range of mandates, from requiring AI companies to share security data with the government to ensuring small developers have fair access.

But Tan, like many Valley VC firms, was concerned about other regulatory actions. He called the AI-related bills pending in the California and San Francisco legislatures “very concerning.”

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Politico reports that one such California bill causing confusion is one proposed by state Sen. Scott Wiener, which would allow the attorney general to sue artificial intelligence companies if their products are harmful.

“There’s a lot of policy discussion going on right now about what does a good version of this really look like?” Tan said. “We can expect people like Ian Hogarth in the UK to be prudent. They also keep in mind the idea of ​​concentration of power. At the same time, they’re trying to figure out how we support innovation while also minimizing the worst possible harm.”

Hogarth is a former YC entrepreneur and artificial intelligence expert who was asked by the UK to form a task force on the artificial intelligence model.

“What scares me is that if we try to address a science fiction problem that is not present,” Tan said.

As for how YC manages liability, Tan said that if the organization doesn’t agree with the startup’s mission or what the product could do for society, “YC just doesn’t fund it.” He noted that he had read several times in the media about a company applying to YC.

“We go back and look at the interview notes and say we don’t think it’s good for society. And fortunately, we didn’t finance it,” he said.

AI leaders keep messing up

Tan’s guidance still leaves room for Y Combinator to create multiple AI startups as graduate cohorts. As my colleague Kyle Wiggers reported, there were 86 AI startups in the Winter 2024 cohort, almost double the number in the Winter 2023 cohort and almost triple the number in Winter 2021, according to YC’s official startup directory.

And recent news events have people wondering whether they can trust AI product vendors to be the ones to define responsible AI. Last week, TechCrunch reported that OpenAI was getting rid of its artificial intelligence team.

Then there was the debacle over the company’s use of a voice that sounded like actress Scarlett Johansson’s during the presentation of the new GPT-4o model. It turned out that she was asked to use her voice and she refused. OpenAI has since removed Sky’s voice, although it denied it was based on Johansson. This, and issues surrounding OpenAI’s ability to recoup employee equity, were among several factors that led people to openly question Sam Altman’s scruples.

Meanwhile, Meta announced the AI ​​news itself, announcing the creation of an AI advisory board that will be comprised entirely of white men, effectively leaving out women and people of color, many of whom have played key roles in the creation and innovation of this industry.

Tan did not comment on any of these cases. Like most Silicon Valley VCs, he sees opportunities for huge and lucrative new businesses.

“We like to think of startups as a maze of ideas,” Tan said. “When new technology emerges, such as large language models, the whole maze of ideas is shaken up. ChatGPT itself was probably one of the fastest-successful consumer products to hit the market in recent times. And that’s good news for founders.”

Meta’s new AI council is composed entirely of white men

Artificial intelligence of the future

Tan also said San Francisco is at the center of the AI ​​movement. For example, Anthropic, founded by YC graduates, and OpenAI, which was a YC spinout, were created there.

Tan also joked that he has no intention of following in Altman’s footsteps, noting that Altman “had my job a few years ago, so he has no plans to start an artificial intelligence lab.”

One of YC’s other success stories is legal startup Casetext, which was sold to Thomson Reuters in 2023 for $600 million. Tan believed that Casetext was one of the first companies in the world to gain access to generative AI, and then was one of the first companies to exit it. in generative artificial intelligence.

Looking at the future of artificial intelligence, Tan said that “we obviously have to be smart about this technology” as it poses threats from bioterrorism and cyberattacks. At the same time, he said there should be a “much more balanced approach.”

He also posits that there likely won’t be a winner-takes-all model, but rather “an amazing garden of consumer choice freedom and founders who can create something that touches a billion people.”

At least that’s what he wants to happen. It would be in his and YC’s best interest – many successful startups returned lots of cash to investors. So what scares Tan most is not the bewildered evil AI, but the scarcity of AI to choose from.

“In fact, we could end up in a different, truly monopolistic situation where there is a lot of concentration in just a few models. Then you talk about rent extraction and you have a world I don’t want to live in.

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