The Ledger
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Bornstein: Chinese AI labs without commercial funding will rely on government backing
“If there's no source of economic, if there's no source of funding for Moonshot to continue to train models, like, we know where the funding will come from instead, and it's not, like, something we, right, you know, it's government and things that, like, are ac…”
Bornstein: Only 12 to 24 Silicon Valley Teams Truly Master AI Product Velocity
“I think there's a relatively small set of companies in Silicon Valley right now that Get AI, building AI-native products, and just, like, work their butts off and ship products at high velocity. That's kind of the magic recipe right now, I think, and there's, …”
Bornstein: AI developer tools will increase, not shrink, software engineering headcount
“I think the best way to think about this is simply that we're going to have more developers. I think it's very unlikely that like we're going to shrink development teams because we have amazing new tools. Like that's just kind of not how these markets have wor…”
Bornstein: Synthetic data will not produce self-improving AI models
“The question is, like, does this lead to sort of, like, a self-improving utopia of models or not? And I think we have some pretty strong opinions on the not side of that.”
Bornstein: AI cannot solve legacy code migration due to lost context
“AI may be able to transpile, you know, COBOL to Java, but there's a huge amount of context in what went into creating that COBOL code that's been totally lost, right?”
Bornstein: Most current commercial AI agents are just weekend demos
“Most of what we're seeing in the market now is like, is not the decade version of this problem. It's like the weekend demo version of this problem.”
Bornstein: Enterprise buyers force AI vendors into GPU cost-plus pricing
“In practice, I think most buyers are actually pretty sophisticated about what's going on under the hood. And to your point, they know it's like pretty simple stuff happening. And so what does it cost you to run all these GPUs? And we'll pay you some premium ov…”
Bornstein: Most AI startups do not understand their value creation yet
“And the reality is most AI companies don't know what value they're generating yet. Like this is like so new and so nascent that it's like, hey, we're just going to charge something that we're not going to lose money on.”
Bornstein: AI data access will be solved by scraping, not protocols
“These problems are rarely solved by defining a new protocol and just saying like, Hey, if we make it easy for people to give away their core assets, they'll just do it. You know, obviously, you know, that's very unlikely to work, but someone eventually will so…”
Bornstein: AI code autocomplete 'Tab' features no longer matter much
“Tab was the big thing when we, you know, Karpathy had that famous post. I guess he has a lot of famous posts where he's like, Tab, Tab, Tab. Yeah, exactly. Like that kind of doesn't matter that much anymore.”
Bornstein: OpenAI and Anthropic models remain more critical than open source
“At any given point in time, including now, I think models from open AI and Anthropic are kind of more widely used and more critical kind of in general than open source models.”
Bornstein: Startups like Cursor and Harvey shifted to open source for customization
“But I do think we passed a threshold in like, I want to say about a year ago where a bunch of smaller companies or like new application companies, as they were trying to figure out, how do I really build an AI? Without just being a wrapper on top of open AI, t…”
Bornstein: Volunteer open-source models cannot fund frontier AI development
“Like an AI model is not software at the end of the day. And so open source software used to be supported by people donating their time or big companies kind of authorizing their employees to donate their time. So it was sort of like a bulk in kind You know, do…”
Bornstein: Individual personalization is the wrong primitive for media consumption
“Like, I really do think, like, it turns out in an individual person, Is the wrong, like, primitive, or the wrong, like, cohort size for personalization, right? It's just like, it's, you know, you see this across all sorts of media consumption now.”
Bornstein: Cursor is a16z's top developer tool company right now
“Cursor is probably our top developer tool company right now.”
Bornstein: Simple AI wrapper startups no longer exist
“And like, we're like pretty clear past the sort of rapper phase. Like, I don't think there are any rappers anymore. Like, Building good products with AI is really hard, and the founders doing it now have, like, really good kind of intuition for how to do it.”
Bornstein: AI coding agents succeed because code environments provide error-correction loops
“If you take the simplest definition that basically an agent is a, is an LLM running in a loop a very simple way to think about this is errors propagate throughout the loop, right? So if you have a small error, it gets worse and worse. And this is why a lot of …”
Bornstein: System prompts mirror company organizational structures like Conway's Law
“My biggest takeaway from this is the system prompt often reflects the organization it came from. Like it's some new form of Conway's law. You know, Conway's law is this thing that you kind of ship your org structure as a software company. Like I think as an AI…”
Bornstein: Cursor is outperforming GitHub Copilot in AI coding adoption
“And I think companies like Cursor have just done a much better job with that now.”
Bornstein: 'AI agent' is just a rebrand for standard AI applications
“I kind of think agent is just a word for AI applications, right? Anything that uses AI kind of can be an agent.”
Bornstein: OpenAI, Midjourney, and Replicate engineers adopted Cursor early
“Engineers working at the time, the leading AI companies like OpenAI, Midjourney, Replicate, a bunch of others you know, all, all kind of use this and subscribe to this model.”
Bornstein: Open source was the norm for early frontier AI models
“Open source was the norm for AI models early on, right? I mean, we literally had this company called OpenAI, which, you know, it's become a little bit of a joke. It's not as open as it once was or not nearly as open as it once was, but early on, all, all the f…”
Bornstein: Meta tailored Llama license thresholds to exclude only two companies
“I do remember that the numbers were like specifically chosen at that time that you could go find it was like two companies in the world. That like fit the definition that they had excluded from their license.”
Bornstein: Low-latency interactive AI books are near technical reality
“I think we actually can do it now. Like, I think we're actually quite close to having, like, a low latency, fully interactive book, and things like Hidro are kind of the key piece.”
Bornstein: Video product design is qualitatively different than 2D media
“Three dimensions is way, way bigger than two dimensions. Right. And actually like a qualitative difference, like the product you need is probably different for three dimensions and for two.”
Bornstein: Enterprises Resist Replacing Core Databases with AI Alternatives
“It's relatively hard to get a big company to swap out their database for some AI powered database, you know, or like, you know, core workflows, billing workflows, whatever, but like these brand new experiences, that's kind of the exciting part of the market an…”
Bornstein: Horseshoe theory applies to software buyers as dev tools mirror consumer
“Horseshoe theory of software buyers happening now, where you have, like, consumers over here, and then you kind of work up to, like, apps, and, like, you would think that, like, infra is way over here, but it's actually kind of bending back around. Like, devel…”
Bornstein: Coding is the second-largest AI market behind consumer chatbots
“We're pretty sure it's the second biggest AI market right now. Correct me, you guys, if I'm wrong, but, you know, consumer pure chatbot, I think, is number one, and I think coding is number two, just purely, purely looking at the numbers.”
Bornstein: AI coding excels at front-end tasks but struggles with niche libraries
“And I've always found it works really well for high complexity, high kind of annoyance factor things like front end. Like if anybody on earth can remember All of the CSS classes that people use now for margins and padding, it's like, it's, you know, I don't th…”
Bornstein: AI systems cannot be defined by user inputs because LLMs accept anything
“I just think it's really tough To define a system based on what someone says to it, right? Because these are by design, unstructured inputs, like these systems will accept literally anything. And so sure, if you tell it, you know, what's today's weather, I wou…”
Bornstein: AI coding tool prices are decoupling from underlying model costs
“Code, you can somewhat see the decoupling of price from the underlying technology now, because there's very clear, like it really works. There's very clear ROI to all of the to people who use it.”
Bornstein: Copilot was the dominant AI coding tool in early 2024
“Now the leading coding harness was Copilot by like a mile, right? This was like the consensus thing.”
Bornstein: Cursor founder initially refused to build a dedicated sales team
“Early on, I think I told Michael a few times too. It's like, oh, you better invest in sales. He's like, nope, I'm not going to do that. They literally set up enterprise at cursor.com. It's like, if you're an enterprise, send your inquiries to this.”