In a dynamic discussion on the future of AI, leading founders and investors, including Emad Mostak of Stability AI, Vince Hanks of Thrive Capital, and Tom Tungus of Redpoint Ventures, debate whether startups or incumbents will dominate the industry. They explore the advantages of incumbents like Google and Microsoft in terms of scale and resources versus the agility and innovative potential of startups. The conversation touches on the critical role of foundational model companies, the importance of data quality, and the necessity for startups to find their niche and execute flawlessly. Jan Lacoon and Sarah Groh weigh in on the potential for an open platform ecosystem for base large language models (LLMs) and the balance of speed versus data advantages in this rapidly evolving field. The episode also highlights the tools and services like Coda, Brex, and AngelList that support startups and venture ecosystems in this competitive landscape.
"I think that there's only going to be five or six foundation model companies in the world in three years. Five years." "I think it's going to be us, Nvidia, Google, Microsoft, OpenAI, and Demeta. And Apple probably are the ones that train these models."
The quotes indicate Emad's forecast about the limited number of key players in the foundation model industry and identify the companies he believes will be leading in this space.
"AI and the investing world. Who is best positioned to win? Is it startups with speed and innovation, or is it incumbents with scale, resources and distribution?"
The quote frames the central question of the podcast, setting the stage for the discussion about the competitive dynamics between startups and established companies in the AI industry.
"Coder allows your team to operate on the same information and collaborate in one place by putting data in one centralized location regardless of format, eliminating roadblocks that can really stop your team in their tracks."
This quote emphasizes the utility of Coda as a collaborative tool that centralizes information, which is crucial for team productivity.
"With Brex, you get a high limit corporate card, a high yield business account with up to $6 million in FDIC protection and bill pay, all billed with a global first mindset."
The quote outlines the services provided by Brex, highlighting the benefits for startups that require robust financial tools to support their growth and international operations.
"The startup world is just buzing about how fast they've been shipping products that meaningfully improve the lives of both startups and fund managers and their investors."
This quote praises AngelList for its rapid product development and the positive impact it has on various stakeholders in the venture ecosystem.
"I think it's incumbents, but there's a lot of startups that be billion dollars. And even on the thin layer thing, ITA software sold for 700 million and kayak sold for 2 billion. And that was a layer on top of ITA."
The quote acknowledges the success of startups in the tech industry while emphasizing that incumbents still hold a strong position due to their existing infrastructure.
"Infrastructure versus application layer and both actually were about $2 trillion town. The difference is in the infrastructure layer there was three companies and in the application layer there was 50."
The quote summarizes Tom Tungus's analysis, highlighting the market value concentration in the AI industry and the disparity in enterprise value between the infrastructure and application layers.
"Google spend $20 billion a year on AI. DeepMind salary budget is 1.2 billion a year." "The objective function of OpenAI is to build AGI, and they reckon they need $10 billion to do it."
These quotes reveal the significant financial commitment from companies like Google towards AI development and OpenAI's ambitious goal of building AGI with substantial funding requirements.## AI and Enterprise Transformation
"I have a solution and I'm going to start with you. And I might go bigger, but I'm going to help you through this period by doing this and this. And they will appreciate that."
This quote emphasizes the strategic approach a startup can take by offering tailored AI solutions to an enterprise and potentially scaling up later. It highlights the value of starting with a focused, dedicated partnership.
"When this starts going in enterprise, it's going to be a freaking train."
This quote conveys the anticipated rapid and unstoppable adoption of AI within the enterprise sector, likening it to a powerful, fast-moving train.
"My Tam analysis is that 1000 companies will spend 10 million in the next year. 100 companies spend 110 companies spend a billion."
This quote provides a quantitative forecast of enterprise spending on AI, indicating a significant investment from a large number of companies.
"The amount of capacity versus the amount and whale and wall of money into something that's growing faster than anything we've ever seen is completely mismatched."
This quote discusses the imbalance between the capacity to absorb investment and the immense amount of money flowing into the rapidly growing AI sector.
"This will be a bigger economic impact than Covid."
This quote suggests that the economic repercussions of AI adoption could be more significant than those experienced during the COVID pandemic, though the direction of the impact is uncertain.
"The talent is so clustered in these big tech companies."
This quote highlights the concentration of AI expertise within large tech corporations, suggesting they have a competitive advantage due to their access to top talent.
"Microsoft 200,000 person company, they've shipped AI in Bing AI and PowerPoint."
This quote exemplifies how even large companies are quickly incorporating AI into their products, demonstrating their ability to innovate despite their size.
"I'd bet on the startup ten times out of ten."
This quote expresses confidence in startups that differentiate themselves by offering novel user experiences not yet provided by incumbents.
"What you're describing is a great opportunity for AI native startups to disrupt the incumbent solutions, even if it's not sustainable in the long run."
This quote suggests that while AI native startups have the potential to disrupt incumbents, their advantage may not be sustainable over time.
"The pace with which Microsoft is injecting its products with llms is astounding."
This quote underscores the rapid integration of language models into Microsoft's product suite, highlighting the company's commitment to AI.
"Startups are in this unusual position where they have negative time to launch."
This quote captures the pressure on startups to innovate quickly, as they are competing against incumbents who are already bringing AI products to market.## Execution as the Moat
"Which is better execution is the moat. If you can build a better CRM and get it into market, you can win."
This quote emphasizes that the primary competitive advantage or 'moat' for startups is their ability to execute their business plans effectively.
"The reality is, no models that are out today will be used in a year."
This quote suggests that the landscape of data models is changing so rapidly that current models are likely to become obsolete in a short time span.
"There's no one better than this than Jan Lacoon."
This quote introduces Jan Lacoon as an authority in AI research, setting the stage for his perspective on the future of AI development.
"So the scenario I think will happen, and I'm certainly rooting for, is the scenario I described earlier, where you have some sort of open platform for base LLMs."
This quote describes the speaker's belief that the future of AI will involve an open platform for base LLMs, fostering an ecosystem of specialized applications.
"Will the value accrue to the incumbents? Or do you believe that given what you just said about size not being everything in terms of models, it could be startups as well?"
This quote raises the question of whether startups can compete with incumbents in the AI space, considering the dynamic nature of AI model development.## AI Doomers and Risk Analysis
"AI doomers, people who just did not think about the risk benefit analysis, the risk of flooding the literature with nonsense is ridiculous because scientific publications are vetted and things like that."
This quote addresses the criticism that AI skeptics, or "doomers," often fail to consider the rigorous vetting process that scientific publications undergo, which mitigates the risk of disseminating inaccurate information.
"And then a few months later, Google came out with Bard. And in the demo, Bard made a tiny, minor factual mistake about some astronomical fact, and Google's stock went down by 8%."
This quote illustrates the high stakes for large companies like Google when their AI technology makes public errors, even minor ones, and the significant financial repercussions that can result.
"The companies that have the best technology basically can't have difficulties putting it out because of those legal issues and public image, people are kind of extrapolating."
Here, the speaker points out the paradox where companies with advanced technology face challenges in deployment due to legal concerns and the fear of damaging their public image.
"There is this idea. Somehow the desire and the ability to dominate is linked with intelligence."
The speaker challenges the common belief that intelligence is inherently linked to a desire for domination, which is a significant topic in the debate about AI's impact on society.
"Even within the human species. It is not the smartest among us that want to dominate the others, to dominate other entities, you don't necessarily need to be smarter than them, but you need to want to dominate them."
This quote emphasizes that the desire to dominate is not necessarily linked to intelligence but rather to the individual's intentions and personality traits.
"The desire to influence others was built into us by evolution, because we are a social species, same as baboons and chimpanzees and wolves and dogs and et cetera."
The speaker explains that the drive to influence others is an evolutionary trait found in social species, suggesting that it is not solely a function of intelligence.
"We need to separate those two concepts, the will, the desire, and the ability to dominate on one hand, and intelligence on the other hand."
By distinguishing between the will to dominate and intelligence, the speaker argues that possessing intelligence does not automatically lead to a desire for control.
"The fact that we're going to have superintelligent machines at our disposal means that every one of us is going to be like a business leader, a politician, or an academic with a staff of people working for them that are more intelligent than themselves."
The speaker suggests that superintelligent machines could serve as highly capable assistants, enhancing our capabilities rather than posing a threat to control.
"Classically, the only real advantage startups have is speed."
This quote highlights the traditional view that startups' main competitive edge is their ability to move quickly in the market.
"What's the quote? Some decades nothing happens, and some years a decade happens. I feel like that is happening right now."
The speaker reflects on the current pace of change, implying that rapid developments are giving startups an opportunity to leverage their agility.
"On the incumbent advantage side, much ado has been made about this idea of a data moat, but honestly, there's a lot of data out there, and entrepreneurs are incredibly creative about collecting it and increasingly about generating it."
Here, the speaker challenges the notion that incumbents have an insurmountable advantage due to their data reserves, pointing out that startups are finding innovative ways to access and create data.
"Coder allows your team to operate on the same information and collaborate in one place by putting data in one centralized location regardless of format, eliminating roadblocks that can really stop your team in their tracks."
This quote explains how Coder helps teams by centralizing data and collaboration, which enhances productivity and project management.
"With Brex, you get a high limit corporate card, a high yield business account with up to $6 million in FDIC protection and bill pay, all billed with a global first mindset."
The speaker describes the financial services provided by Brex, emphasizing its high limits and international focus, which are beneficial for growing startups.
"Thousands of startups have moved their camp tables to Angellist in the past year."
The quote indicates the popularity and trust that startups place in AngelList for managing various aspects of their business operations.