# Dalton & Michael: Will OpenAI kill all startups?

**Author:** Dalton Caldwell, Michael Seibel
**Type:** Video
**URL:** https://www.ycombinator.com/library/Ie-dalton-michael-will-openai-kill-all-startups
**YouTube ID:** smHw9kEwcgM

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Through the lens of history and other technological leaps, Michael and Dalton explore the difference between just riding
the AI hype versus using it to solve real problems. Will AI usher in a new generation of startups or is this the
beginning of the end?

## Transcript

this is Michael Seibel with Dalton Caldwell and today we're going to talk about how open AI is going to kill all startups this is our last video might as well pack it in we're done open eye is going to do this they're going to make the videos next video next video doing our video for us and do a better job than us yes what do they call it it's not a deep fake it's like a complete AI Recreation yes yes we're done well it's been fun so let's talk about how that happened right so I think

the to start people need to understand that companies like open AI anthropic Etc they're actually trying to build AGI they're not trying to build the AI powered CRM or better search or like they're trying to build AGI and this is not a debate we're not going to talk about yeah whether they're going to succeed at building ATI yeah there's plenty of videos and there's plenty of experts that are better expert than us to debate whether egi is about to be created and yes I kind of bring this up

Godwin's law debate one of those people arguing with each other and one person calls the other person a Nazi the debate is over and no no good discussing productive it just means it's over and so where I'm going with this is one we once we start talking about how AI could become God yeah and we have a Skynet and like take all the things and when we upload to the Matrix I'm arguing nothing useful like that conversation is over without we can't help you in this video we don't know

you know whether or not Skynet is coming it's outside the scope of this video and and we would love to talk about we just we don't have the expertise yeah they should listen yeah someone else is um so what can we talk about that 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 going to get uploaded to The Matrix or whatever yeah

um 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 or how will AI affect their startups or what is open AI going to kill other startups yeah we have a lot to say about that or we have a lot of suggestions to look from history 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 the startups are advantage and like the whole history of the internet is is amazing there's a whole industry around starting about funding startups because some Innovations happen so quickly and so many companies are disrupted so quickly so there is clear clear precedence to 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 12 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 cultane Ai and actually using AI to build better

features yes and so let's talk about the difference cargo quilting 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 it doesn't help your customers doesn't improve your product whatever yes but we are seeing people add AI features yeah that dramatically increase retention the dramatically increase the quality of the product that are make it much easier to charge for it and that stuff is real and that is not hype that's not [ __ ] 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 quilting 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 Our Generations 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 going to add cloud computing because it's it's just a thing VCS want to hear what I'm saying like there were sometimes people you remember these people they were like haters on cloud computing because it was overly hyped

yeah but that's missing the plot yeah just because it was overly hyped didn't mean you shouldn't put on your thinking cap well it didn't mean you should be like hey should we be running some of this stuff from the cloud instead of running around servers yeah well and I think that this is a big there's a big difference and we've now seen both right 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 new bank 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 five million bucks and then with the similar tools that were better and open source would cost like 50. we built our companies on my seat belt yes like postgres but yeah well Ruby postgres 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 and incredible like we're going to keep buying server like like some people rejected that yeah and so there was a moment in time where it was didn't make sense to jump on the bandwagon and we were on the bandwagon but it was actually smart it wasn't just [ __ ] hype it wasn't [ __ ] 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 and so it's stupid to not think about how you can make your users more happy more productive and again I think without what's funny about this is you and I were in the room when open AI was created because we were working at YC with Sam and we had YC research yeah and it was a non-profit it

was meant to be an enabling technology exactly the vision here you were in the room it was to be a non-profit so that all these startup flowers could bloom yes and all these people you know could be enabled to create value and so again I think sometimes people are afraid of a narrative that opening maybe maybe that will happen but like the vision was about creating the technology yes they'll be harnessed by other people and by ideally creating an AGI was kind of what his goal was yeah as opposed to I want to create ai-powered crms and I'm going to destroy every startup this degree I've ever known that was not what

we understood right no no no I think what's interesting as well when you think about this game is that like there are very very well paid people and you're 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're

choosing to leave because they know at this moment in history because they become domain experts at AI yeah this is the moment to do a startup 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 a sudden Amazon web services comes out you're like you'll be like oh this is my yeah they're calling me in this is my moment yes yes and so it's really cool to see these people with all this vast domain expertise that they did before the 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 remember the brex founders what they did when they were like 15 was jailbreak iPhones remember all the kids that were doing jailbreaking like this was like a Rite of Passage to be into this stuff and learn about it because no one knew anything about it so I think there's like two sets of smart people who are really attracted to this right really really smart people who love to

see us who are like this is an amazing tool and I'm going to 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 have been doing ml for a couple years who were like oh my God like all of the things I imagined were going to happen are starting to happen I can predict the future it'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 the people who are really in to see us 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 those are the people who just want to 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 yeah those people are not being attracted to this I think that's what makes our job so much fun because like working in people who want to make startups fat might make money fast and startups this is it's not a great group 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 um whereas like this group of people I 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 you know we saw this with the iPhone yes well again Uber would not have made sense without the iPhone and so to me it's less obvious that it's everyone's gonna build open AI competitors I am

worried that all the low-hanging fruit ideas open AI will just be able to do well enough yes but if you go deeper yeah to second level insights I'll uh Uber after a consequence of the iPhone yep second order effects like this from llms are going to be amazing you know what I mean it's like it wasn't the obvious to try an analogy on you right like fart apps remember everyone was making fart apps that wasn't the big business I would argue maybe the analogy here was the like it was obvious that Maps were going to come to the phone yeah it wasn't obvious that Uber was gonna come right and so it was like never never

would 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 open AI I always laugh because I'm like okay is that the destination or the starting point yeah if it's a starting point reminds me of the old Dropbox as a thin wrapper on top of uh AWS on top of S3 right I can do this in a weekend I've always been a weekend is a sure sign

that the person doesn't [ __ ] they're talking about so I will say that like you know if you are absorbing if your thing is a thing wrapped then rapper on open AI to start and you're absorbing hate ignore those [ __ ] yeah like that's silly like understand that many good things started like toys and like make something the customers really love yeah this is a time to be optimistic 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 or 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 think the last point we'll give is that I think that until these big companies solve AGI it's going to 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 unless you

actually believe in the short term AGI will be created by open AI that will do all the things that's possible for us to predict yes opening is not going to kill all startups 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 culting so uh there should be a moment where everyone's excited except for the people on Twitter that are very exciting all right thanks so much Dalton thanks [Music] [Music]
