The “hard tech” in AI are the LLMs available for rent from OpenAI, Anthropic, Cohere, and others, or available as open source with Llama, Bloom, Mistral and others. The hard-tech is a level playing field; startups do not have an advantage over incumbents.

There can be differentiation in prompt engineering, problem break-down, use of vector databases, and more. However, this isn’t something where startups have an edge, such as being willing to take more risks or be more creative. At best, it is neutral; certainly not an advantage.

This doesn’t mean it’s impossible for a startup to succeed; surely many will. It means that you need a strategy that creates differentiation and distribution, even more quickly and dramatically than is normally required

Whether you’re training existing models, developing models from scratch, or simply testing theories, high-quality data is crucial. Incumbents have the data because they have the customers. They can immediately leverage customers’ data to train models and tune algorithms, so long as they maintain secrecy and privacy.

Intercom’s AI strategy is built on the foundation of hundreds of millions of customer interactions. This gives them an advantage over a newcomer developing a chatbot from scratch. Similarly, Google has an advantage in AI video because they own the entire YouTube library. GitHub has an advantage with Copilot because they trained their AI on their vast code repository (including changes, with human-written explanations of the changes).

While there will always be individuals preferring the startup environment, the allure of working on AI at an incumbent is equally strong for many, especially pure computer and data scientsts who, more than anything else, want to work on interesting AI projects. They get to work in the code, with a large budget, with all the data, with above-market compensation, and a built-in large customer base that will enjoy the fruits of their labor, all without having to do sales, marketing, tech support, accounting, raising money, or anything else that isn’t the pure joy of writing interesting code. This is heaven for many.

A chatbot is in the chatbot market, and an SEO tool is in the SEO market. Adding AI to those tools is obviously a good idea; indeed companies who fail to add AI will likely become irrelevant in the long run. Thus we see that “AI” is a new tool for developing within existing markets, not itself a new market (except for actual hard-tech AI companies).

AI is in the solution-space, not the problem-space, as we say in product management. The customer problem you’re solving is still the same as ever. The problem a chatbot is solving is the same as ever: Talk to customers 24/7 in any language. AI enables completely new solutions that none of us were imagining a few years ago; that’s what’s so exciting and truly transformative. However, the customer problems remain the same, even though the solutions are different

Companies will pay more for chatbots where the AI is excellent, more support contacts are deferred from reaching a human, more languages are supported, and more kinds of questions can be answered, so existing chatbot customers might pay more, which grows the market. Furthermore, some companies who previously (rightly) saw chatbots as a terrible customer experience, will change their mind with sufficiently good AI, and will enter the chatbot market, which again grows that market.

the right way to analyze this is not to say “the AI market is big and growing” but rather: “Here is how AI will transform this existing market.” And then: “Here’s how we fit into that growth.”

That other people tried your idea without success could imply it’s a bad idea or simply that the timing or execution was wrong. Distinguishing between these cases is hard and where you should apply serious thought. If you think your competitors executed poorly, you should develop a theory of what they did wrong and how you’ll do better.

If you think your competitor’s timing was off, you should have a thesis about what’s changed to make now the right time. These changes could come in a variety of forms: for example, it could be that users have become more sophisticated, the prices of key inputs have dropped, or that prerequisite technologies have become widely adopted.

Startups are primarly competing against indifference, lack of awareness, and lack of understanding — not other startups.

There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.

Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose “portals” and had de-prioritized search (Yahoo even outsourced their search technology).

We still believe that there will be a separation between the “application layer” companies and foundation model providers, with model companies specializing in scale and research and application layer companies specializing in product and UI. In reality, that separation hasn’t cleanly happened yet. In fact, the most successful user-facing applications out of the gate have been vertically integrated.

We predicted that the best generative AI companies could generate a sustainable competitive advantage through a data flywheel: more usage → more data → better model → more usage. While this is still somewhat true, especially in domains with very specialized and hard-to-get data, the “data moats” are on shaky ground: the data that application companies generate does not create an insurmountable moat, and the next generations of foundation models may very well obliterate any data moats that startups generate. Rather, workflows and user networks seem to be creating more durable sources of competitive advantage.

Some of the best consumer companies have 60-65% DAU/MAU; WhatsApp’s is 85%. By contrast, generative AI apps have a median of 14% (with the notable exception of Character and the “AI companionship” category). This means that users are not finding enough value in Generative AI products to use them every day yet.

generative AI’s biggest problem is not finding use cases or demand or distribution, it is proving value. As our colleague David Cahn writes, “the $200B question is: What are you going to use all this infrastructure to do? How is it going to change people’s lives?”

There is little precedent for a civilian’s becoming the arbiter of a war between nations in such a granular way, or for the degree of dependency that the U.S. now has on Musk in a variety of fields, from the future of energy and transportation to the exploration of space. SpaceX is currently the sole means by which NASA transports crew from U.S. soil into space, a situation that will persist for at least another year. The government’s plan to move the auto industry toward electric cars requires increasing access to charging stations along America’s highways. But this rests on the actions of another Musk enterprise, Tesla. The automaker has seeded so much of the country with its proprietary charging stations that the Biden Administration relaxed an early push for a universal charging standard disliked by Musk. His stations are eligible for billions of dollars in subsidies, so long as Tesla makes them compatible with the other charging standard.

In the past twenty years, against a backdrop of crumbling infrastructure and declining trust in institutions, Musk has sought out business opportunities in crucial areas where, after decades of privatization, the state has receded. The government is now reliant on him, but struggles to respond to his risk-taking, brinkmanship, and caprice

Current and former officials from NASA, the Department of Defense, the Department of Transportation, the Federal Aviation Administration, and the Occupational Safety and Health Administration told me that Musk’s influence had become inescapable in their work, and several of them said that they now treat him like a sort of unelected official

Sam Altman, the C.E.O. of OpenAI, with whom Musk has both worked and sparred, told me, “Elon desperately wants the world to be saved. But only if he can be the one to save it.

later. “He had grown up in the male-dominated culture of South Africa,” Justine wrote. “The will to compete and dominate that made him so successful in business did not magically shut off when he came home.”

There are competitors in the field, including Jeff Bezos’s Blue Origin and Richard Branson’s Virgin Galactic, but none yet rival SpaceX. The new space race has the potential to shape the global balance of power. Satellites enable the navigation of drones and missiles and generate imagery used for intelligence, and they are mostly under the control of private companies.

A number of officials suggested to me that, despite the tensions related to the company, it has made government bureaucracies nimbler. “When SpaceX and NASA work together, we work closer to optimal speed,” Kenneth Bowersox, NASA’s associate administrator for space operations, told me. Still, some figures in the aerospace world, even ones who think that Musk’s rockets are basically safe, fear that concentrating so much power in private companies, with so few restraints, invites tragedy.

Tesla for a time included in its vehicles the ability to replace the humming noises that electric cars must emit—since their engines make little sound—with goat bleats, farting, or a sound of the owner’s choice. “We’re, like, ‘No, that’s not compliant with the regulations, don’t be stupid,’ ” Cliff told me. Tesla argued with regulators for more than a year, according to an N.H.T.S.A. safety report

Musk’s personal wealth dwarfs the entire budget of OSHA, which is tasked with monitoring the conditions in his workplaces. “You add on the fact that he considers himself to be a master of the universe and these rules just don’t apply to people like him,” Jordan Barab, a former Deputy Assistant Secretary of Labor at OSHA, told me. “There’s a lot of underreporting in industry in general. And Elon Musk kind of seems to raise that to an art form.”

Some people who know Musk well still struggle to make sense of his political shift. “There was nothing political about him ever,” a close associate told me. “I’ve been around him for a long time, and had lots of deep conversations with the man, at all hours of the day—never heard a fucking word about this.”

the cuts that Musk had instituted quickly took a toll on the company. Employees had been informed of their termination via brusque, impersonal e-mails—Musk is now being sued for hundreds of millions of dollars by employees who say that they are owed additional severance pay—and the remaining staffers were abruptly ordered to return to work in person. Twitter’s business model was also in question, since Musk had alienated advertisers and invited a flood of fake accounts by reinventing the platform’s verification process

Musk’s trolling has increasingly taken on the vernacular of hard-right social media, in which grooming, pedophilia, and human trafficking are associated with liberalism

It is difficult to say whether Musk’s interest in A.I. is driven by scientific wonder and altruism or by a desire to dominate a new and potentially powerful industry.

Netflix could buy 10 top quality screenplays per year with the cash they’ll spend on that one job.  They must have big plans for AI.There are also a half dozen AI job openings at Disney. And the tech-based streamers (Apple, Amazon) already have made big investments in AI. Sony launched an AI business unit in April 2020—in order to “enhance human imagination and creativity, particularly in the realm of entertainment.”

When Spotify launched on the stock exchange in 2018, it was losing around $30 million per month. Now it’s much larger, and is losing money at the pace of more than $100 million per month.

But the real problem at Spotify isn’t just convincing people to pay more. It runs much deeper. Spotify finds itself in the awkward position of asking people to pay more for a lousy interface that degrades the entire user experience.

Boredom is built into the platform, because they lose money if you get too excited about music—you’re like the person at the all-you-can-eat buffet who goes back for a third helping. They make the most money from indifferent, lukewarm fans, and they created their interface with them in mind. In other words, Spotify’s highest aspiration is to be the Applebee’s of music.

They need to prepare for a possible royalty war against record labels and musicians—yes, that could actually happen—and they do that by creating a zombie world of brain dead listeners who don’t even know what artist they’re hearing. I know that sounds extreme, but spend some time on the platform and draw your own conclusions.

Maybe we’ll get to a point where the novelty will be that a human being wrote something: This person proved that they were in a box away from any A.I. when they wrote this thing

as writers and creators, you want people to watch your show, so if you can make something look and sound like something else that people already want to watch, then you might be able to convince a producer that it will have legs. But I discovered through doing “Fleabag” that you have to write something that is more dangerous, more honest, more unusual and more provocative — especially if it’s going to go into a pool with a million other things. Honing the uniqueness of whatever you do is your best chance. I know I’m saying that having just signed up to do “Tomb Raider,” which has an audience already, and I know that’s what Amazon wants, and Amazon made this unbelievable deal8 8 In 2019, Variety reported about Waller-Bridge’s development deal with Amazon Studios, that “sources say the deal is worth around $20 million a year.” with me. I care so much about delivering for them. Being able to do that dangerous, naughty, transgressive stuff in the heart of something that is very valuable to them in terms of I.P. satisfies both of those things, but the discipline for me is to not just give them the “Tomb Raider” they think they want, but to give them something else.

People are going to interpret everything I do as my feelings on contemporary womanhood because I’m a contemporary woman. I don’t want to escape that part of me. I can see how I’ve gone into masculine roles with Bond and “Indiana Jones,” but those worlds are the ones that always intrigued me. The high-stakes action world appeals to me, whether it’s masculine or feminine. I like the urgency of it and the idea of being able to write a female character in a world like that.

It’s a window into your psychology: You want to be a pleaser and do the assignment well, but what you actually want to do is something riskier. Oh, my gosh. That’s exactly what it is. But the best thing is when you satisfy both. The journey there can be quite [laughs] — I love the feeling of having done what’s been asked, but I hate the feeling of pleasing.

I think that with Bond there is something dangerous, transgressive and incendiary about that character, and it’s the same with Indy. He completely revolutionized the action hero, which Harrison1 1 Harrison Ford, of course, who has said “Indiana Jones and the Dial of Destiny” will be his last go-round with Indy’s famous whip and fedora. is dead set against him being described as, but there was something that broke the form. We accept them now as the biggest franchises, but in the kernel of these characters is something naughty and dangerous. They were the rascals of their time, and I feel like Villanelle and Fleabag are rascals.2 2 Villanelle is the name of the assassin character, played by Jodie Comer, in “Killing Eve.” “Fleabag,” for those who haven’t seen it, is that show’s title character, played by Waller-Bridge. The show earned six Emmy Awards and 11 nominations for its second season. So it was less like, “I want to go do this big movie,” and more, “I want to play in the sand pit with these rascals.” That’s one way of looking at it.

I couldn’t write anything that I felt didn’t have that deeper element sincerely at the heart of it, and that writer is with me everywhere I go. It’s ever-present: What does this mean? Because I’m obsessed with having an audience be moved.6 6 Waller-Bridge said the most recent things that moved her were the TV series “Dead Ringers,” a concert by the singer Christine Bovill in which she performed Edith Piaf songs and a revival of “Guys and Dolls” at the Bridge Theater in London. I was moved when I read the script, and I was moved when I heard Jim7 7 James Mangold, the director of “Dial of Destiny.” He is the first director other than Steven Spielberg to direct an “Indiana Jones” movie. and Harrison and Kathy talk about it. I mean, I wasn’t in tears on the floor, but I felt that tingle of, this has got some human stuff going on. But the day-to-day? Some of the days were superfun, and we did look really cool. But the proper actors don’t want to just look cool. They want to make you cry while looking cool.

I think hardcore Twitter users have rose-colored glasses about the site’s coolness. The reason for its success, if you can argue that it was ever really successful, wasn’t that it was cooler than Facebook. It was because of its proximity to power. The reason it was so popular with activists, extremists, journalists, and shitposters was because what you posted there could actually affect culture.

The thing that ties together pretty much everything that’s happened on Twitter since it launched in 2006 was the possibility that those who were not in power (or wanted more) could influence those who were.

I subscribe to the belief that internet trends are defined by a ratio of laziness to social reward. Users will always do the laziest possible thing to achieve the maximum amount clout. So, if every platform becomes either a Twitter alternative or a short-form video feed, but all with their own unique requirements for virality, users won’t make individual posts for each. They will instead shotgun blast all of them with the same posts and bet on the odds that something will breakthrough eventually. Which means everything eventually just becomes a reuploaded video or a screenshot from somewhere else.

While trying to track down the actual hyperlink to a post I found a screenshot of on a closed social network I was struck by how on an internet full of closed platforms, broken embeds, and crumbling indexes, the last reliable way to share anything is a screenshot.

the camera roll is, at this point, the real content management system of the social web. This is something that TikTok realized faster than other platforms, with their downloadable watermarked videos that have now become ubiquitous on every platform that allows video.

My theory as to why New Yorkers were so allergic to independent content creators is because for all the tedious guffawing about being a city of hustlers, most of the people who live there crave, on some level, institutional legitimacy and influencers, by definition, don’t get it or really need it. It could also just be that New Yorkers hate tourists and content creators are, in some form, permanent tourists of their own lives.

I actually think the post-COVID New York TikTok boom is already cresting. I think once these trends become calcified enough to report on, they’re already on their way out. I also don’t think Gen Z TikTokers are driving rents up, but rather documenting its rise due to other factors, like landlords being able to blame TikTok hype to jack up their rents.

Oh ElonWell, look, if I were the newly hired chief executive officer of a social media company, and if the directors and shareholders who brought me in as CEO had told me that my main mission was to turn around the company’s precarious financial situation by improving our position with advertisers, and if I spent my first few weeks reassuring advertisers and rebuilding relationships and talking up our site’s unique audience and powerful engagement, and then one day my head of software engineering came to me and said “hey boss, too many people were too engaged with too many posts, so I had to limit everyone’s ability to view posts on our site, just FYI,” I would … probably … fire ... him?

I mean I suppose I might ask questions like “Is this because of some technological limitation on our system? Is it because you were monkeying with the code without understanding it? Is it because you tried to stop people from reading the site without logging in, 3 and messed up and stopped them from reading the site even when they logged in? Is it because you fired and demoralized too many engineers so no one was left to keep the systems running normally? Is it because you forgot to pay the cloud bills? Is it because deep down you don’t like it when people read posts on our site and you want to stop them, or you don’t like relying on ad revenue and want to sabotage my ability to sell ads?”

no matter what the answers are, this guy’s gotta go. If you are in charge of the software engineers at a social media site, and you make it so that people can’t read the site, that’s bad.

Over the past 10 days, [Ultimate Fighting Championship President Dana] White said he, Mr. Musk and [Mark] Zuckerberg — aided by advisers — have negotiated behind the scenes and are inching toward physical combat. While there are no guarantees a match will happen, the broad contours of an event are taking shape, said Mr. White and three people with knowledge of the discussions.People keep emailing to ask about, like, the fiduciary duties and securities-law disclosure issues here, but I’m gonna wait until they’re in the octagon before I worry about that stuff

Meanwhile, whenever I talk to music people or book people, very quickly the conversation becomes a music industry conversation or a book industry conversation. What matters for music are artists and touring and labels and so on, and what matters for books are writers and publishers and rights and Amazon’s bargaining power in books and so on. These aren’t tech conversations.

Tech needed content to make their devices viable, but having got the content (by any means necessary), and with it of course completely resetting the dynamics of the industry, tech outgrew music and books and moved on to bigger opportunities.

All of this of course takes us to TV, the industry that’s next on the tech industry’s content journey. Just as new technology unlocked massive change in music and (rather less so) in books, it is now about to break apart the bundled, linear channel model of the TV industry (this is especially the case in the USA, which has a hugely over-served pay TV market). As this happens, there are all sorts of questions that follow on: what happens to channels that might be able to make more going direct to consumer (HBO, perhaps); what happens to channels that might benefit from being in a bundle and lose from having to go direct (ESPN, perhaps), where the syndication model goes, and so on, and so on.

Just as for music or books, though, these are all fundamentally TV industry questions. What viewing distribution, what rights structure, what exploitation chain, what relationship between creatives, financiers, aggregators and distributors - these are all southern California questions, not northern California questions. So, what are the northern California questions, and will this end up being any more strategic than books or music?

Amazon and Netflix have entered TV content creation and ownership in ways and on a scale that no-one from tech ever did for music or books. Amazon did try to get into book publishing and has a significant self-publishing arm, but it had little success recruiting existing mainstream authors; neither Apple nor Spotify created a record label.

Netflix, of course, is a TV company, in the context of this conversation - it isn’t using content for leverage for some other platform (Spotify is the same, without the commissioning). But Amazon clearly is using content for platform leverage - as something else to speed up the Prime flywheel. Prime has become a third pillar to Amazon’s business, next to logistics and the ecommerce platform, and Amazon is always looking for ways to add more perceived value to it, preferably with no marginal cost - TV content that it owns outright is exactly that.

You don't close your Facebook account - you just go there less. You might stop paying for the Youtube TV service, but that won’t cut off your access to any other part of Google - nor would anyone want it to - the purpose of these businesses is reach. Nor, really, will you fundamentally change your search behaviour if Google discovers the next Game of Thrones. That is, cancel Prime and you'd lose Amazon, but what do Google & FB have to cancel? Without some platform decision to lock you into, content is marketing, and revenue, but not a lever.

Apple has always preferred a very asset-light approach to things that are outside its core skills. It didn’t create a record label, or an MVNO, and it didn’t create a credit card for Apple Pay - it works with partners on the existing rails as much as possible (even the upcoming Apple Pay P2P service uses a partner bank).

Part of ‘content is king’ was the idea that (at least in theory) content companies can withhold access to their libraries entirely, and in the past one might have presumed that that meant they had the power to kill any new service at birth. In reality, rights-holders have always had too strong a need for short-term revenue to forgo broad distribution, and few of them individually had a strong enough brand to extract a fee that was high enough to justify exclusivity. They always have to take the cheques - individually to meet their bonus targets, and collectively to meet their earnings estimates.

This is a multi-sided market place with too many players on both sides for anyone to exert dominance: Apple dominated purchased music and Amazon dominates ebooks (thanks to the DoJ), but there is no such dominance on the buy or sell side for TV, for now.

The reason Apple TV, Chromecast, FireTV and everything else feel so anti-climactic is that getting onto the TV was a red herring - the device is the phone and the network is the internet. The smartphone is the sun and everything else orbits it. Internet advertising will be bigger than TV advertising this year, and Apple’s revenue is larger than the entire global pay TV industry. This is also why tech companies are even thinking about commissioning their own premium shows today - they are now so big that the budgets involved in buying or creating TV look a lot less daunting than they once did.