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What's working for YC companies since the AI boom

jamesin.substack.com

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Re: What's working for YC companies since the AI boom

#51

Post by idiotsecant »

CyberRymden wrote: post #48
A_D_E_P_T wrote: post #20

Do "AI Startups" even make sense? There appears to be a pattern. Unmet need is identified: "I want ChatGPT -- but able to read PDFs" or "I want ChatGPT -- but able to do research and produce lengthy reports." Startup gets funding for this and, if they're lucky, releases a rough beta that leans heavily on the OpenAI API. Two months later OpenAI launches a better, much more polished and seamless version, which is integ…

I think it absolutely makes sense. ChatGPT's strength is how generalised it is as a tool, but openAI will never able to adapt the platform to every single use case. You can absolutely use it to learn a language for instance, but a great AI language learning platform needs a better tailored UI, it needs all kinds of non-AI functionality around it like idk a spaced repetition system, it might need to integrate into oth…

But any use case that gets large enough and makes money will be absorbed by openai direct, based on the market developed by the startup. OpenAI is using the Amazon model. Let someone else spend the money figuring out which market segments are profitable, then steal them with their inherently better access to the platform.

Re: What's working for YC companies since the AI boom

#52

Post by cushychicken »

zero… hardware startups in the Series A data

I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space.

I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

Re: What's working for YC companies since the AI boom

#53

Post by bravesoul2 »

threeseed wrote: post #14

a) The next two years are the reckoning for a lot of these AI startups. In the enterprise space everyone was being pushed to trial AI products to see whether they can deliver the ROI that was being marketed. Newsflash: it hasn't. And many of these startups will see serious churn. b) Everyone needs to stop perpetuating the YC lie that they invest in the best founders and they just happen to want to do AI. It's rubbish…

When you read people's experience with AI for building/coding I get the feeling we are still not quite there on a lot of things, but when we get there you can just buy direct from Costco (I.e. OpenAI etc.)

Sell your AI hot potato quickly!

Re: What's working for YC companies since the AI boom

#54

Post by ai-christianson »

cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

But hardware is super capital intensive, right? So the right kind of investor could add significant value if they were aligned.

Re: What's working for YC companies since the AI boom

#55

Post by bgnn »

cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

I second this. I've worked for several early stage HW start-ups (ASIC development). VC backed ones ended up in a weird state of not being able to move from proof of concept to production because at that point the VCs were out of patience and wanted returns for their money. Having spent 10s if millions and now, 2-3 years later, requiring even more didn't align with what they were used to. This ended badly for these companies, all with great potential. Lucky ones could get acquired for a meaningful amount.

Bootstrapped companies were much better but they lacked the capital to develop their own products, so they were often reliant on one big customer. Growth was slow but more organic.

Re: What's working for YC companies since the AI boom

#56

Post by lenkite »

simianwords wrote: post #22
A_D_E_P_T wrote: post #20

Do "AI Startups" even make sense? There appears to be a pattern. Unmet need is identified: "I want ChatGPT -- but able to read PDFs" or "I want ChatGPT -- but able to do research and produce lengthy reports." Startup gets funding for this and, if they're lucky, releases a rough beta that leans heavily on the OpenAI API. Two months later OpenAI launches a better, much more polished and seamless version, which is integ…

Its a good point and it comes back to why Google can't take up projects that other startups are working on. Google has all the technical infrastructure, talent and everything to make something like AirBnB, Docusign and hell even intellij. Why not?

Because everything they attempt is inevitably compared to Google's ad business - which makes everything else look like a starving beggar.

Re: What's working for YC companies since the AI boom

#57

Post by bgnn »

ai-christianson wrote: post #54
cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

But hardware is super capital intensive, right? So the right kind of investor could add significant value if they were aligned.

That's often potential customers. It's common to have other HW companies invest in HW start ups. Unfortunately there are not many good VCs for HW development. Even the ones marketing themselves as much don't like the meager returns in 5 to 10 years.

Re: What's working for YC companies since the AI boom

#58

Post by neom »

A_D_E_P_T wrote: post #20

Do "AI Startups" even make sense? There appears to be a pattern. Unmet need is identified: "I want ChatGPT -- but able to read PDFs" or "I want ChatGPT -- but able to do research and produce lengthy reports." Startup gets funding for this and, if they're lucky, releases a rough beta that leans heavily on the OpenAI API. Two months later OpenAI launches a better, much more polished and seamless version, which is integ…

I sit on an AI evaluation committee for a huge law firm (It's just a regular old consulting gig) - we get so much inbound from (mostly kids) folks trying to build wrappers for some aspect of legal workflow, but behind the scenes thomson reuters is slowly adding everything they're going to need to software they have been using for 10 years now.

Re: What's working for YC companies since the AI boom

#59

Post by belter »

eddythompson80 wrote: post #31
A_D_E_P_T wrote: post #20

Do "AI Startups" even make sense? There appears to be a pattern. Unmet need is identified: "I want ChatGPT -- but able to read PDFs" or "I want ChatGPT -- but able to do research and produce lengthy reports." Startup gets funding for this and, if they're lucky, releases a rough beta that leans heavily on the OpenAI API. Two months later OpenAI launches a better, much more polished and seamless version, which is integ…

They do exist, but not in the simplistic "AI but for X" you described. The article even explicitly says there were zero of those companies in that round. You can see "AI startups" examples there, A company that manages your business outbound communication with lots of AI features. AI powered code generation for business operations, Accounting services with lots of AI features, business finance software with lots of A…

This is the way. Use predictable logic and the control of automation with AI as augmentation. So not AI on the control loop, but AI as a helper. Who manages to find solutions that will find the sweet spot of this setup, will be the next success.

Re: What's working for YC companies since the AI boom

#60

Post by msgodel »

cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

I think it's a good thing. I've personally never been a huge fan of the culture that developed around VC (which sounds a little funny coming from someone who's been on Hackernews for ten years I guess) so it means there's a nice little niche for people who want to go a little slower.

Put on some ambient music, grab a trackball, do some CAD, don't think about equity.

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