Dalton & Michael: Will OpenAI kill all startups?

The next video. Next week will be AI scientist and AI Mike. AI you're right. Doing our video for us. And do a better job than us. Yes. What do they call it? It's not a deepfake.

It's like a complete AI recreation of us. Yes. Yes. We're done.

Well, it's been fun. So let's talk about how that happened. Right? So I think that to start, people need to understand that companies like OpenAI, Anthropic, etcetera, they're actually trying to build AGI. They're not trying to build the AI powered CRM Yeah. Or better search or the like, they're trying to build AGI. And this is not a debate. We're not gonna talk about Yeah.

We don't whether they're gonna succeed at building AGI. Yeah. There's plenty of videos and plenty of experts that are better expert than us to debate.

AGI is about to be created. And I kind of bring this up, if you're to Godwin's Law In an interview debate, when there's people arguing with each other, and one person calls the other person, a Nazi, the debate is over, and no no good Disposing productive action? It just means it's over. And so where I'm going with this is, once we start talking about how AI could become God, Yeah.

And we have Skynet, and like take all the things, and we're gonna be uploading the Matrix. I'm arguing nothing useful will hap that conversation is over without Chris. We can't help you in this video. Don't know about that. This is is outside. You know, whether or not Skynet is coming is outside the scope of this video. And we would love to talk about it, but just we don't have the expertise. Yeah.

We're not the listen. They should listen. Yeah. Someone else is the expert, not us. So what can we talk about, though? I think it's this. There's a lot of history to learn from about when major technological changes have come out. Yeah.

And to the extent this is a major technological change, as opposed to we're all gonna get uploaded to matrix or whatever. Yeah. There's a lot to learn from history. Yes. And so this is where when when founders do ask us advice on what they should be thinking about with AI, how will AI affect their startups, or is open AI going kill other startups? Yeah.

We have a lot to say about that, or we have a lot of suggestions to look from history. Yes. So why don't you list some of the Yeah. So I mean, when you look at major innovations, right, talk about.

farming or modern farming, you talk about electricity, talk about the Internet. I think what's been so interesting as a trend is how many businesses it's enabled. Right? Like, the number of businesses increased. And then the second trend is how startups were relatively advantaged versus incumbents.

Like, the greater the technology change and the shorter the period of time, the more startups are advantaged. And like the whole history of the Internet is is amazing. There's a whole industry around starting, about funding startups because so many innovations happen so quickly and so many companies are disrupted so quickly.

So there is clear, clear precedent to a major new technology trend creating opportunity for startups. If history repeats as it tends to, somebody who's smart is looking at these tools today saying, holy crap, real problems can be solved right now that couldn't be solved six to twelve months ago. I think it's interesting because you're seeing this in a lot of conversations with founders right now.

Right? Like, let's talk about who is choosing to start a company in this phase and what we can learn from them. Yeah. A couple of things. So one, there's a difference between cargo culting AI.

and actually using AI to build better features. Yes. And so let's talk about the difference. Cargo culting AI is to say, we have AI. And it's like tangential to what you're doing. You're just saying it to raise money. Yeah. It doesn't help your customers.

It doesn't improve your product. Whatever. Yes. But we are seeing people add AI features Yeah. That dramatically increase retention, dramatically increase the quality of the product, that are Yeah. Make it much easier to charge for it. And that stuff is real. And that is not hype.

That's not bullshit. No. That's real. Yes. This is like when people first started launching apps. Yeah. When the App Store came out. Yeah.

Apps were actually good. Yes. It was there was a hype cycle around apps, and a lot of people were cargo holding apps. Yeah. But building a high quality mobile app that increased the retention of your users? Incredible. Facebook almost died because they didn't do it fast enough. Exactly.

Yeah. I think if you look at I don't know. We saw from from our generation's founders, we saw open source and cloud computing come out. And think about cloud computing. Yeah. If someone was like, oh, this cloud computing thing's hype, or like, we're not gonna add cloud computing because it's it's just a thing VCs wanna hear. It's a computer. Know what I'm saying?

Like, there were sometimes people, you remember these people, that were like haters on cloud computing because it was overly hyped. But that's missing the plot. Yeah. Just because it was overly hyped didn't mean you shouldn't put on your thinking Well, didn't mean you should be like, hey, should we be running some of this stuff in the cloud instead of running our own servers? Yeah.

Well, I think that this is a big there's a big difference,.

and we've now seen both. Right? Yep. I think that we've seen the kind of fintech boom and the crypto boom where the people attracted to them were slightly different. Yeah. And as tools, they just weren't as useful. Whereas, you know, like giving everyone a neobank, like for every single flavor.

Whereas like, we also saw literally during our lifetimes launching a website with like closed source expensive tools would cost $5,000,000. Yep. And then with the similar tools that were better and open source would cost like 50,000 companies on MySQL. Well, was Yes. Like Postgres. But, yeah. You did Postgres? Okay.

Ruby But regardless, like, that shift happened. And then I remember when, like, you had to buy servers and then wait for them to come and then configure them and then have to get more space in the colo.

Like, the speed of actually building software was incredible. Like, we're gonna keep buying server. Like like, some people rejected that. Yeah. And so there was a moment in time where it didn't make sense to jump on the wag bandwagon.

and start using the We were on bandwagon. But it was actually smart. It wasn't just bullshit hype. It wasn't bullshit hype. It was real. And so, I think it's obvious that now AI is clearly going to be a tool as impactful as mobile or open source back ends or cloud computing. And then we'll see from there. Right?

Like, LMs are clearly that useful. Yep. And so it's stupid to not think about how you can make your users more happy, more productive.

And again, think Without the tool. What's funny about this is you and I were in the room when OpenAI was created because we were working at YC with Sam Yep. When we had YC Research. Yeah. And it was a nonprofit. It was meant to be an enabling technology. Exactly. The vision here you were in the room.

Yes. It was to be a nonprofit so that all these startup flowers could bloom. Yes. And all these people, you know, could be enabled to create value. Yes. And so again, think sometimes people are afraid of a narrative that OpenAI, hey, maybe maybe that will happen. But like the vision was about creating the technology Yes. That'll be harnessed by other people, and by ideally creating AGI Yes.

Was kind of what his goal was. Yes. As opposed to, I want to create AI powered CRMs, and I'm gonna destroy every Yeah. Startup that's gonna create AI powered CRMs. That was not what we understood. No. Right? No.

No. No. I think what's interesting as well when you think about this game is that, like, there are very, very, very well paid people, and you were pointing this out. Very well paid people.

who are leaving their jobs and who are starting startups right now because they believe that LLMs.

are a powerful tool. Yeah. The way I think about this is opportunity cost and life. Yeah. There's people that I that I've been funding and they have a great job and they actually like their job. Yeah. They get choosing to leave because they know at this moment in history, because they become domain experts at AI Yeah. That this is the moment to do a startup.

Yeah. Like, this is this is that Yes. Imagine if you worked on, I don't know, cloud computing for years. Yeah. And then all of sudden, Web Services comes out. You're like, oh, this is my Yeah. They're calling me in. This is my moment into this.

Yes. Yes. And so it's really cool to see these people with all this vast domain expertise.

that they did before this stuff was cool realize that this is the moment in time to work on this stuff. Well, and I think that we see a second group of people too, and I feel like those are the people who got the first iPhone when the App Store came out and said, I'm gonna build an app. Yeah. And it was weird because at that moment, everyone had zero years of experience That's exactly right.

With apps. Well, remember the Brex founders, what they did when they were like 15 was jailbreak iPhones. Yeah. Remember all the kids that were doing jailbreaking? Yeah. Like, this was like a rite of passage Yeah. To be into this stuff and about it because no one knew anything about So I think there's like two sets of smart people who are really attracted to this, right?

Really, really smart people who love CS, who are like, this is an amazing tool and I'm gonna learn as much about it as possible because most people don't know anything about it. I can get on the ground floor. And then people who've been doing ML for a couple years who are like, oh my god, like all of the things I imagined were gonna happen are starting to happen. I can predict the future.

That's a perfect time to do a startup. I think what's tricky though is that there are people who don't think that this is a good time. Yep. The people who aren't really in to CS don't really don't aren't really excited by the power of LLMs and people who don't have experience with ML at all. And there those are the people who just wanna make money.

And I think what's interesting is in the last couple of cycles, those people have been very attracted to the startup world. How do I make money fast? Yep. Those people are not being attracted to this.

I think that's what makes our job so much fun because like working with people who wanna make startups fast, might make money fast in startups, it's it's not a great group of Those are harder office hours. Harder. Harder. When we're like, yeah, it'll just take a decade. They're like, no. No.

Why don't I do my ICO or something? Yeah. Whereas like this group of people, mean, it reminds me when people were nerding out about Ruby back in the day. Yeah. Like, oh, wow. Like, I'm just excited about what I can build. And when you think about it, this is a perfect time where if you're a creative person and you're an ambitious person Yeah. You can do really cool stuff.

And we we saw this with the iPhone. Yes. You can blow people's minds. Well, again, Uber would not have made sense without the iPhone. No. And so to me, it's less obvious that it's everyone's gonna build OpenAI competitors. I am worried that all the low hanging fruit ideas, OpenAI will just be able to do well enough. Yes.

But if you go deeper Yeah. To second level insights, a la Uber after a consequence of the iPhone Yep. Second order effects like this from LLMs are gonna be amazing. Get what I mean? It's like it wasn't the obvious shit. I'm try an analogy on you. Right? Like fart apps.

Remember when was making fart apps? Well That wasn't the big business. I would argue is that maybe the analogy here was that like, it was obvious that maps were gonna come to the phone.

Yeah. It wasn't obvious that Uber was gonna come. I agree. I never have imagined. And so I definitely think that if you can think second order, and I'll even I'll even be charitable. I think sometimes to think second order, you think first order. It's it's okay if your thing starts as a toy. Like when people are like, oh, this is a thin wrapper on OpenAI, I always laugh because I'm like, okay,.

is that the destination or the starting point? Yeah. If it's a starting point, oh, this is true. I imagine we had the old Dropbox as a thin wrapper on top of AWS, on top of S three. Right? Oh, could build this in a weekend. I could build this in a weekend.

It's a sure sign that the person doesn't know what the fuck they're talking about. So I will say that like, you know, if you are absorbing, if your thing is a thing wrapped in wrapper on OpenAI to start and you're absorbing hate, ignore those fuckers. Yeah. Like, that's silly. Like,.

understand that many good things started like toys and, like, make something that customers really love. Yeah. This is a time to be optimistic. Yeah. This is a time to build cool stuff. Yeah. And this is not a time to cargo cult, as I said earlier. So superficially copying AI stuff just because it's hot for raising money.

Don't do that. No. But if you can really solve customer problems in an amazing way Yeah. This is the time. Yeah. And I and I think the last point we'll give is that I think that until these big companies solve AGI, it's gonna be their first, second, and third goal.

And so using the existing tools to make people's lives better, their businesses better, it's not on their list. Like getting AGI in one, two, and three most important goals. So that's.

a huge opportunity for everyone. So look. In conclusion Yes. Unless you actually believe in the short term, AGI will be created by OpenAI that will do all the things that's impossible for us to predict. Yes. OpenAI is not gonna kill all the startups. No. And there's plenty of room to innovate.

And maybe we would say that the tools that exist now and the LLMs that are.

being made available, this could be a explosion of new amazing startups. This could be the moment that we've been waiting for since mobile. Yep. Where people can actually do cool new things and they there aren't just cargo cart culting. So this should be a moment where everyone's excited, except for the people on Twitter. They're never excited. Alright. Thanks much, Dalton.

Thanks.