AI Startup

“The answer there for every startup that I know outside of a very few. Is, yeah, it's, well, we're hoping the price, we're hoping the cost curve makes it efficient in 18 to 24 months, right? In the meantime, you're subsidizing in part, right? Because that's wha…”

“And like, what's crazy is AI, A, solves the distribution problem. It just solves the demand problem. And B, these companies are able to raise so much money that they're actually on competitive footing with like the Microsofts and the medicine and the Microsoft…”

“The multiple rounds that happen and, you know, we used to have seed and series A, series B, and I think the milestones to get from one to the other used to take you 18 months. Now you can move so fast with AI that things happen so quickly. And so it's only nor…”

“This last six months, the world put in about five hundred billion dollars in AI startups.”

“There's very little evidence yet that These hot, hot AI companies that are raising huge amounts of money are capital efficient, right? They're anything but capital efficient. There's, like, the jury's out on whether that's going to work still.”

“Like, 95% are not going to be there.”

“One is for the mid to late stage technology markets, people are continuing to invest as if there's velocity to get to a trillion for many companies where I don't think there's a velocity. Again, I think the, Some of them will get to 20, some will get to a hund…”

“And the thing that you really need to believe is that if the valuation is ten billion today, that you're going to generate the revenue, let's say it's a 30 X revenue multiple or 25 X revenue multiple to become a hundred billion dollar business. And so what tha…”

“The number one thing before you know, you get into defensibilities, make sure that whatever it is you're building is is was impossible to build four years ago. Make sure, you know, it is a 10 X or a hundred X better than the status quo. Make sure that it has a…”

“Having having the need for a meaningful services component does, for example I mean, it serves a useful purpose also today, right? Like in a manner which might not have been valued as much a few years ago, which is that It absolutely gives you a certain moat a…”

“It's so hard to like re-engineer how some of these things work based on what's possible today. That they're just going to get crushed by new companies started by younger people who are like, maybe not even younger necessarily, but people who are just doing thi…”

“There are a lot of categories where there never was an incumbent software company because the only job to be done was, like, actual human labor. And that's really exciting because now you don't have to worry about, like, oh, shoot, these guys are gonna come in…”

“You know, a lot of companies, just because of the cost of computing inference, it's harder to say you're going to be an 80, 90% gross margin company anymore. But, you know, great companies are, you know, 60, 70% gross margin.”

“By being first, multi-party, highly complex data that that hidden from the outside world, those are three pretty good criteria for a starting point.”

“Is I'm seeing Series A is priced at three to 500 on two to five million in revenue, but I'm finding the B at a hundred million in revenue priced at one to 1.5. It's a three X price increase for a 50 X revenue increase.”

“I think that that's why being a founder in the AI world is so hard is because the product has to be there because everybody can get the product to where it should be. But then breaking through the noise of everybody having this type of product is challenging.”

“If you're already the market leader and you only have share to lose if you're already the incumbent, that's a really tough place to be because there's not really share to gain, there's only share to lose, and AI is a great way to for startups to take share fro…”

“And now every single good AI company that they could acquire is too big for them to acquire and they can't do it. And so then it's like, well, we don't have the talent internally. We can't build a good AI product portfolio because we don't have the talent. The…”

“I think that the reality is it will come to haunt some of these companies one day, because I think right now where there's a gold rush and everyone's like desperate to sign, you know, and get more tokens from these people, it's easy. They're kind of like, in m…”

“Now, in the AI wave, I feel if you're heads down and you're focused, you don't know what's going to come hit you from the left or right. You are one anthropic press release away from not having a business ahead of you.”

“Because the traditional model of, like, enterprise reps doesn't get you to a hundred million ARR in two years. You have to do something drastically different for that, right? In fact, a lot of these hot AI startups aren't doing the traditional model. Be it for…”

“We know specifically, like we know the numbers, we know sales figures for some of these companies raising at Hundreds of millions to billions, and again, we're looking at thousand x to, you know, hundred to thousand x multipliers, like, a lot of these companie…”

“And I think it's, there's a lot of acquisitions happening right now, mostly for AI talent. So I think there's, candidly, I think there's a lot of companies quietly, not saying it, that are quietly being built to get acquired earlier.”

“Working in this world is, is completely insane and unhinged and it's over, it's all consuming.”

“But if you focus on cost at the expense of performance, you're going to lose.”

“If you're a decent AI company with a good team and good funding, chances are pretty much every large enterprise will do a free POC or maybe even do a pilot, a paid pilot. But do not think that that means you landed.”

“92% are failing right now, and it is only going to get worse because more companies are getting founded, a rate of change is increasing, and frontier models are coming and just swallowing, and SaaS companies aren't going to lie down and take it, which means th…”

“A lot of companies right now are doing point solutions where they're making today's process better... And there's so many like better note takers are better this and it's like, that's just making incremental progress.”

“I think that there's 12 months where competition starts catching up. Some of the best niches get claimed. Some of the tools get crowded. I think there's probably 24 months where the window narrows. The builders who get started now Are going to start owning moa…”

“All asset management industries have some scale benefits to them. Venture traditionally had less and now has a lot. So if you're going to back a new AI startup, you can't show up with a million dollar check or two million dollar check that it's useless or let …”

“And I've heard this in conversations where a VC would be like, do you, do I invest in startups, which is like a risky business and I'm still getting a 10 X return or do I just put my money in Anthropic and I'll just get a 10 X return without doing any work. So…”

“Right now a lot of easy money everywhere, right? There's teams that have built nothing that can raise between 50 to a billion dollars at times.”

“If I was starting a company today, I, I'm really excited about these companies that are going into companies and getting extremely hands-on and doing effect effectively professional services with AI because we've saturated all the evals and you need to get pro…”

“Both of us together, it's almost like old guard of Sarah's and new guard of like truly employees that don't have that context, that don't have that baggage is what creates a perfect harmony that pushes the company forward. Because you can prevent stupid mistak…”

“If you're directly in the path of what the big model companies are building, you have to be a lot more opinionated about how you package the model and how you deliver an output, and hopefully you do it for a specific type of user that's willing to pay a lot fo…”

“If your story is not changing significantly every six to nine months, you are probably falling behind. In fact, not probably, you are falling behind.”

“They said, look, AI, AI is one of these technology, AI is a technology basically that the government is going to completely control. This is not going to be a startup thing. They actually said flat out to us, don't start, don't do AI startups. Like, don't fund…”

“They actually said flat out to us, don't start, don't do AI startups. Like, don't fund AI startups. Let's not, Something that we're going to allow to happen. They're not going to be allowed to exist. There's no point. They basically said AI is going to be a ga…”

“Our belief is that the most successful AI startups of the future will be those that are able to build a moat by building a unique context graph.”

“Your terminal operating margin may actually be higher in this world than the last world. Your gross margin might be lower, but your operating margin, which is ultimately at the end of the day is really what matters, may end up being higher.”

“I think the best researchers in the world have this dilemma of, okay, I want to go all in on AGI, but it's the product usage revenue flywheel that keeps the revenue in the house to power all the GPUs to get to AGI. And so it does make you know, I think it sets…”

“My general advice, and I've been giving this to people for a while, and I think it's still true today, is make sure you're building for where the models are going and not where they are today. You know, the, it's clearly a moving target, and I think a lot of t…”

“This crop of companies, I would say is more impressive than prior crops of companies, partially because the demand for their products is so high.”

“So I think that there is a pocket that startups can really thrive in, which is building these weird products that really touch on many core aspects of humanity that the models can reflect, but the big corporations are uncomfortable.”

“Like the bigger the better, but certainly 50% is solid, right? And if you're 60, 70%, I mean, we're very, very happy.”

“As the models get better, downstream players' ability to take those capabilities, productize them, and raise prices, Has outstripped the raising costs, right? So the incremental cost increase potentially, and in many cases not a cost increase, but it's, you kn…”

“The fact that these companies have costs actually forces a business model hygiene that I don't think existed across the board 10 years ago, and that's a good thing.”

“Carta put out a recent report that Series A's that are AI enabled, or AI in their name, are getting a 30% premium.”

“And if you prod deep enough, I would say for at least 90% of companies, they're actually just, like, changing a prompt on an LLM, right? And then they're pitching all of this other stuff that they hope exists or want to believe. Could be the future of what the…”

“How many people even believe by the end of the year, AI startup revenue is over a hundred billion dollars? I think that's an insane statement for a lot of people, but that's what it's gonna be, right?”

“If your customers are getting value from your AI agent that they can't get anywhere else, and you can make that value clear. Then you can charge enough to pay for your tokens, and yay you. If you're not getting, if you're not giving value, or if you're locked …”

“The models are becoming so good that if you try to build a company that is light, that is not a hard problem, the foundation model companies are going to eat you.”

“The top companies that we've seen you know, have gotten to ten million, then a hundred million, like, Four times faster or something like that.”

“I think for startups to win, I think you need all three and that's just in the head-to-head stuff.”

“There is a strategy that we think is very interesting, which is instead of having a sales team, you buy one.”

“The fastest growing AI companies are burning more AI and their gross margins are lower, but their burn multiples are also lower because they're adding so much revenue.”

“All the models just constantly get better and a new entrant coming in today can probably out of the box, have a product that is equally as good as yours. And so your time in market mode, frankly, doesn't exist.”

“So now you've got to compete with incumbents, foundational models, and new entrance. So competition becomes a primary risk. All of a sudden the ability to deliver incredible value is not nearly as hard as used to be, but The counter to that is competition is m…”

“Startups like the future Facebook or the future Google are yet to be started because those come in in the deployment phase, because right now I think these things, things are still getting built up.”

“Yeah, like, post-series A, it actually largely feels, like, the playbook is the same, and the companies might be smaller for the same amount of revenue, but it Feels it's entirely because they hit the revenue so fast and there's still just bottlenecked on how …”