- The video discusses the potential impact of OpenAI on startups
- The hosts acknowledge that they are not experts on whether AGI will be created or if AI will become god-like
- They suggest looking at historical technological changes as a guide for understanding the impact of AI on startups
- They emphasize that startups have historically been advantaged by major technological changes
- They differentiate between "cargo culting" AI and using AI to improve products and customer experience
- They compare the hype around AI to past technological trends like mobile apps and cloud computing
- They believe that AI will be a powerful tool for startups and that now is a good time to start a company in this field
- They mention that well-paid individuals are leaving their jobs to start AI-focused startups
- They highlight the importance of domain expertise and the excitement of being on the ground floor of a new technology trend.

- The speaker believes that this is a great time for creative and ambitious individuals to do innovative work.
- They mention the success of the iPhone and how it enabled companies like Uber.
- The speaker encourages thinking beyond obvious ideas and focusing on second-level insights.
- They mention the importance of starting small and iterating on ideas.
- The speaker advises ignoring criticism and focusing on creating something customers will love.
- They emphasize the opportunity to use existing tools to improve people's lives and businesses.
- The speaker believes that until big companies solve AGI (artificial general intelligence), there is a huge opportunity for startups.
- They conclude that OpenAI will not kill all startups and that there is room for innovation and the emergence of new startups.
- The speaker encourages excitement and optimism, except for those on Twitter who are not excited.

How will the rise of AI impact startups and entrepreneurs? Join Michael Seibel and Dalton Caldwell for a discussion on the opportunities and challenges AI brings for founders.
Through the lens of history and other technological leaps, Michael and Dalton explore the difference between just cargo culting AI versus using it to solve real problems. Will AI usher in a new generation of startups or is this the beginning of the end? These are insights and predictions for startups in this new AI age.

Apply to Y Combinator: https://yc.link/DandM-apply
Work at a Startup: https://yc.link/DandM-jobs

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Intro
00:31 - Building AGI
01:45 - Historical Examples
03:20 - Current Startups
04:51 - Utilizing The Tools
07:15 - Opportunists
09:05 - Get Rich Quick
09:59 - Time For Optimism
11:59 - AGI Is The Goal
12:24 - Outro

This is Michael Saibel with Dalton Caldwell, and today we're going to talk about how OpenAI is going to kill all startups.

So I think that to start, people need to understand that companies like OpenAI, Anthropic, etc., they're actually trying to build AGI.

They're not trying to build the AI-powered CRM or better search.

We're not gonna talk about whether they're gonna succeed at building AGI.

Yeah, there's plenty of videos, and there's plenty of experts that are better experts than us to debate whether AGI is about to be created.

In an internet debate, when there's people arguing with each other, and 1 person calls the other person a Nazi, the debate is over and no good discourse can come.

And so where I'm going with this is, once we start talking about how AI could become God, and we have a Skynet, and take all the things, and we're gonna be uploading to the matrix, I'm arguing nothing useful will happen.

We can't help you in this video about that.

Whether or not Skynet is coming is outside the scope of this video.

Yeah, someone else is the expert on that, not us.

There's a lot of history to learn from about when major technological changes have come out.

And to the extent this is a major technological change, as opposed to we're all gonna get uploaded to the matrix or whatever.

And so this is where when founders do ask us advice on what they should be thinking about with AI or how will AI affect their startups or is open AI going to kill all their startups?

a lot to say about that or we have a lot of suggestions to look from history.

Yeah, so I mean, when you look at major innovations, talk about farming or modern farming, you talk about electricity, you talk about the internet.

I think what's been so interesting as a trend is how many businesses it's enabled, right?

And then the second trend is how startups were relatively advantaged versus incumbents.

Like The greater the technology change in the shorter the period of time, the more the startups are managed.

And like the whole history of the internet 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 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 6 to 12 months ago.

I think it's interesting because you're seeing this in a lot of conversations with founders right now, right?

Let's talk about who is choosing to start a company in this phase and what we can learn from them.

So 1, there's a difference between cargo culting AI and actually using AI to build better features.

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.

It doesn't help your customers, it doesn't improve your product, whatever.

But we are seeing people add AI features that dramatically increase retention, that dramatically increase the quality of the product, that make it much easier to charge for it.

And that stuff is real, and that is not hype, that's not bullshit, that's real.

This is like when people first started launching apps.

There was a hype cycle around apps, and a lot of people were cargo holding apps.

But building a high quality mobile app that increased the retention of your users.

Facebook almost died because they didn't do it fast enough.

I think if you look at, I don't know, we saw from our generation's founders, we saw open source and cloud computing come out.

If someone was like, oh, this cloud computing thing's hype, or like, we're not going to add cloud computing because it's just a thing VCs want to hear.

Like there was sometimes people, you remember these people, they were like haters on cloud computing

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 our own servers?

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

I think that we've seen the kind of FinTech boom and the crypto boom, where the people attracted to them were slightly different, 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 closed source expensive tools would cost 5 million bucks.

And then with the similar tools that were better and open source would cost like $50,000.

We built our companies on MySQL, both of us did.

And then I remember when 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.

The speed of actually building software was

Some people were like, we're going to keep buying server.

And so there was a moment in time where it did make sense to jump on the bandwagon and

And so I think it's obvious that now AI is clearly going to be a tool as impactful as mobile or open source backends or cloud computing.

And so it's stupid to not think about how you can make your users more happy, more productive.

And again, I think 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 when we had YC Research

It was meant to be an enabling technology.

The vision here, you were in the room, it was to be a non-profit so that all these startup flowers could bloom and all these people could be enabled to create value.

And so again, I think sometimes people are afraid of a narrative that opening AI, and maybe that will happen, But the vision was about creating the technology that would be harnessed by other people and by ideally creating AGI, which is kind of what his goal was, as opposed to, I want to create AI-powered CRMs and I'm going to destroy every startup that's going to create AI-powered CRMs.

I think what's interesting as well when you think about this game is that 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.

There's people that I've been funding, and they have a great job, and they actually like their job.

choosing to leave because they know at this moment in history, because they become domain experts at AI, that this is the moment to do a startup.

Imagine if you worked on cloud computing for years, and then all of a sudden, Amazon Web Services comes out.

You'd be like, oh, this is my, they're calling me in.

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.

And it was weird because at that moment, everyone had 0 years of experience

Well, Remember the Brexfounders, 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

So I think there's like 2 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.

And then people who have been doing ML for a couple years, who are like, oh my God, all of the things I imagined were gonna happen are starting to happen.

I think what's tricky, though, is that there are people who don't think that this is a good time.

The people who aren't really in to see us don't really, 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.

Those people are not being attracted to this.

I think that's what makes our job so much fun because working with people who want to make money fast in startups, it's not a great group

When we're like, yeah, it'll just take a decade.

Whereas this group of people, I mean, it reminds me when people were nerding out about Ruby back in the day.

Like, oh wow, I'm just excited about what

And when you think about it, this is a perfect time where if you're a creative person and you're an ambitious person, you can do really cool stuff.

Well, again, Uber would not have made sense without the iPhone.

And so To me, it's less obvious that everyone's going to build open AI competitors.

I am worried that all the low-hanging fruit ideas, open AI will just be able to do well enough.

But if you go deeper to second-level insights, a la Uber after a consequence of the iPhone, second-order effects like this from LLMs are gonna be amazing.

I would argue, maybe the analogy here was the like, it was obvious that maps were gonna come to the phone.

It wasn't obvious that Uber was going to come.

And so I definitely think that if you can think second order, and I'll even be charitable.

I think sometimes to think second order, you think first order.

Like when people are like, oh, this is a thin wrapper on OpenAI, I always laugh because I'm like, OK, is that the destination or the starting point?

I imagine we had the old Dropbox as a thin wrapper on top of AWS, on top of S3, right?

Is 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 thin wrapper on OpenAI to start, and you're absorbing hate, ignore those fuckers.

Understand that many good things started like toys, and make something that customers really love.

And this is not a time to cargo colt, as I said earlier.

So superficially copying AI stuff just because it's hot or raising money.

But if you can really solve customer problems in an amazing way, this is the time.

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 1, 2, and 3 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 OpenAI that will do all the things that's possible for us to predict.

OpenAI is not going to kill all the startups.

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, where people can actually do cool new things and there aren't just cog-a-cog-a-culting.

So this should be a moment where everyone's excited, except for the people on Twitter, they're not very excited.


Speaker 0: This is Michael Saibel with Dalton Caldwell, and today we're going to talk about how OpenAI is going to kill all startups. This is our last video.

Speaker 1: Might as well pack it in. We're done. OpenAI is going to do this. They're going to make the videos next.

Speaker 0: They are, yes. We're on the next video.

Speaker 1: Next video will be.

Speaker 0: AI Dalton and AI Michael. Yeah, You're right.

Speaker 1: Doing our video for us. And do a better job than

Speaker 0: us. Yes. What do they call it? It's not a

Speaker 1: deep fake.

Speaker 0: 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 that to start, people need to understand that companies like OpenAI, Anthropic, etc., they're actually trying to build AGI. They're not trying to build the AI-powered CRM or better search. They're trying to build AGI.

And this is not a debate. We're not gonna talk about whether they're gonna succeed at building AGI.

Speaker 1: Yeah, there's plenty of videos, and there's plenty of experts that are better experts than us to debate whether AGI is about to be created. And I kind of bring this up. I've heard of Godwin's Law. In an internet debate, when there's people arguing with each other, and 1 person calls the other person a Nazi, the debate is over and no good discourse can come. There's nothing productive after.

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, and we have a Skynet, and take all the things, and we're gonna be uploading to the matrix, I'm arguing nothing useful will happen. Like that conversation is over without-

Speaker 0: We can't help you in this video about that.

Speaker 1: We don't know. Yeah, this is outside. Whether or not Skynet is coming is outside the scope of this video.

Speaker 0: And we would love to talk about it, but

Speaker 1: we just don't have the expertise. Yeah, we're not there. They should listen. Yeah, someone else is the expert on that, not us.

Speaker 0: So what can we talk about, then?

Speaker 1: I think it's this. There's a lot of history to learn from about when major technological changes have come out. And to the extent this is a major technological change, as opposed to we're all gonna get uploaded to the matrix or whatever. There's a lot to learn from history. And so this is where when founders do ask us advice on what they should be thinking about with AI or how will AI affect their startups or is open AI going to kill all their startups?

Speaker 0: We have

Speaker 1: 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...

Speaker 0: Yeah, so I mean, when you look at major innovations, talk about farming or modern farming, you talk about electricity, you 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 in the shorter the period of time, the more the startups are managed.

And like the whole history of the internet 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 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 6 to 12 months ago. I think it's interesting because you're seeing this in a lot of conversations with founders right now, right?

Let's talk about who is choosing to start a company in this phase and what we can learn from them.

Speaker 1: Yeah, a couple of things. So 1, there's a difference between cargo culting AI and actually using AI to build better features. 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. It doesn't help your customers, it doesn't improve your product, whatever.

But we are seeing people add AI features that dramatically increase retention, that dramatically increase the quality of the product, that make it much easier to charge for it. And that stuff is real, and that is not hype, that's not bullshit, that's real. This is like when people first started launching apps. Yeah. When the App Store came out.

Speaker 0: Yeah.

Speaker 1: Apps were actually good. Yes. 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.

Speaker 0: Incredible. Facebook almost died because they didn't do it fast enough. Exactly.

Speaker 1: Yeah. I think if you look at, I don't know, we saw from our generation's founders, we saw open source and cloud computing come out. And think about cloud computing. If someone was like, oh, this cloud computing thing's hype, or like, we're not going to add cloud computing because it's just a thing VCs want to hear. You know what I'm saying?

Like there was sometimes people, you remember these people, they were like haters on cloud computing

Speaker 0: because

Speaker 1: it was overly hyped. But that's missing the plot. 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 our own servers?

Speaker 0: 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, 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 closed source expensive tools would cost 5 million bucks. And then with the similar tools that were better and open source would cost like $50,000.

Speaker 1: We built our companies on MySQL, both of us did.

Speaker 0: Yes, like Postgres. But yeah, yes.

Speaker 1: You did Postgres?

Speaker 0: I did

Speaker 1: Postgres, yeah.

Speaker 0: Well, fair enough. Ruby Postgres. But regardless, that shift happened. And then I remember when 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. The speed of actually building software was

Speaker 1: incredible. Some people were like, we're going to keep buying server. Some people rejected that. And so there was a moment in time where it did make sense to jump on the bandwagon and

Speaker 0: start using AWS.

Speaker 1: We were on the bandwagon. But it was actually smart. It wasn't just bullshit hype.

Speaker 0: It wasn't bullshit hype.

Speaker 1: It was real.

Speaker 0: And so I think it's obvious that now AI is clearly going to be a tool as impactful as mobile or open source backends 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.

Speaker 1: And again, I think 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 when we had YC Research

Speaker 0: and it was

Speaker 1: a non-profit. It was meant to be an enabling technology.

Speaker 0: Exactly.

Speaker 1: The vision here, you were in the room, it was to be a non-profit so that all these startup flowers could bloom and all these people could be enabled to create value. And so again, I think sometimes people are afraid of a narrative that opening AI, and maybe that will happen, But the vision was about creating the technology that would be harnessed by other people and by ideally creating AGI, which is kind of what his goal was, as opposed to, I want to create AI-powered CRMs and I'm going to destroy every startup that's going to create AI-powered CRMs. That was not what we understood.

Speaker 0: No, no, no, no. I think what's interesting as well when you think about this game is that 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.

Speaker 1: Yeah, the way I think about this is opportunity, cost, and life. There's people that I've been funding, and they have a great job, and they actually like their job.

Speaker 0: And they're

Speaker 1: choosing to leave because they know at this moment in history, because they become domain experts at AI, that this is the moment to do a startup. Imagine if you worked on cloud computing for years, and then all of a sudden, Amazon Web Services comes out. You'd be like, oh, this is my, they're calling me in. This is my moment in time. 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.

Speaker 0: 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. And it was weird because at that moment, everyone had 0 years of experience

Speaker 1: building apps. Well, Remember the Brexfounders, 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

Speaker 0: about it,

Speaker 1: because no 1 knew anything about it.

Speaker 0: So I think there's like 2 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 have been doing ML for a couple years, who are like, oh my God, 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. The people who aren't really in to see us don't really, 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?

Those people are not being attracted to this. I think that's what makes our job so much fun because working with people who want to make money fast in startups, it's not a great group

Speaker 1: of folks.

Speaker 0: 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?

Whereas this group of people, I mean, it reminds me when people were nerding out about Ruby back in the day. Like, oh wow, I'm just excited about what

Speaker 1: 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, you can do really cool stuff. And we saw this with the iPhone.

Speaker 0: Yes, you can blow people's minds.

Speaker 1: Well, again, Uber would not have made sense without the iPhone. And so To me, it's less obvious that everyone's going to build open AI competitors. I am worried that all the low-hanging fruit ideas, open AI will just be able to do well enough. But if you go deeper to second-level insights, a la Uber after a consequence of the iPhone, second-order effects like this from LLMs are gonna be amazing. You get what I mean?

It's like, it wasn't the obvious shit. I wanna

Speaker 0: try an analogy on you, right?

Speaker 1: Like Fard apps. Remember when I was making Fard apps? That wasn't the big business.

Speaker 0: I would argue, maybe the analogy here was the like, it was obvious that maps were gonna come to the phone. Yeah. It wasn't obvious that Uber was going to come. I agree. I never would have imagined.

Whoever would have imagined. And so I definitely think that if you can think second order, and I'll even be charitable. I think sometimes to think second order, you think first order. 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, OK, is that the destination or the starting point?

Yeah. If it's a starting point,

Speaker 1: I'm OK. I imagine we had the old Dropbox as a thin wrapper on top of AWS, on top of S3, right? Oh, I can build this in a weekend.

Speaker 0: I can build this in a weekend. Is 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 thin wrapper on OpenAI to start, and you're absorbing hate, ignore those fuckers. That's silly. Understand that many good things started like toys, and make something that customers really love.

Speaker 1: This is a time to be optimistic. This is a time to build cool stuff. And this is not a time to cargo colt, as I said earlier. So superficially copying AI stuff just because it's hot or raising money. Don't do that.

But if you can really solve customer problems in an amazing way, this is the time.

Speaker 0: 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 1, 2, and 3 most important goals. So that's a huge opportunity for everyone.

Speaker 1: So look, in conclusion, unless you actually believe in the short term, AGI will be created by OpenAI that will do all the things that's possible for us to predict. Yes. OpenAI is not going to kill all the startups. No. And there's plenty of room to innovate.

Speaker 0: 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, where people can actually do cool new things and there aren't just cog-a-cog-a-culting. So this should be a moment where everyone's excited, except for the people on Twitter, they're not very excited. All right, thanks much Dalton. Thanks.

Thanks. Bye!

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Will OpenAI Kill All Startups?