No Priors Ep. 116 | With Sarah and Elad

In this episode of No Priors, Sarah and Elad unpack the current state of the AI market - whether it’s consolidating, what’s enabling or blocking key mergers, and where the most promising untapped opportunities lie, particularly in biotech. They also explore the rise of world models and how AI’s novel methods for understanding complex systems may ultimately reshape how humans approach discovery and problem-solving. Show Notes: 0:00 Is the AI market consolidating into clear winners? + the physics of the current landscape 7:01 Why more companies don’t merge (even when it makes sense) 10:09 Exploring biotech’s biggest commercial opportunities and the challenges founders face 17:14 Building world models 21:34 How AI is expanding the way humans reason, design, and evolve systems

Sarah GuohostElad Gilhost

May 28, 202525mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

AI Markets Crystallize As Founders Face Consolidation And New Frontiers

Sarah and Elad discuss how parts of the AI market are finally consolidating, with clearer early winners emerging in areas like coding assistants, customer success, and healthcare applications. They contrast these with still-open arenas such as sales, finance, accounting, and pharma, where the right product approach or model capabilities have yet to fully materialize. Elad argues that startup–startup mergers will increasingly be rational to better fight entrenched incumbents, while Sarah highlights cultural and status barriers to such moves. The conversation then pivots to under-explored biotech opportunities and to AI research frontiers like world models and reinforcement learning as pathways toward more capable agents and eventual AGI.

IDEAS WORTH REMEMBERING

5 ideas

Several AI verticals are already consolidating around early leaders.

In coding, customer success, and healthcare/medical scribing, Elad sees a small number of companies emerging as clear near-term winners, reducing the sense of chaos that dominated the last two years.

Large opportunity spaces remain underclaimed in sales, finance, accounting, and pharma.

Despite obvious potential for AI-driven productivity in document-heavy industries, the right product workflows and model capabilities haven’t yet crystallized, leaving room for new entrants.

Startup–startup mergers may be a rational play to beat incumbents.

Elad argues founders who are #1 and #2 in a niche should consider merging to stop fighting each other on every deal and instead consolidate resources to compete with big-platform players.

Ego, culture fears, and valuation anxiety often block sensible consolidation.

Founders and investors frequently over-index on control, status, and integration worries rather than using simple metrics (users, revenue) to structure fair deals and focus on winning larger markets.

Biotech’s structure and culture push innovation toward pharma pipelines, not new categories.

Because biotech VCs design companies to be sold into pharma’s narrow set of priorities (cancer, cardio, neuroscience), huge markets like fertility, aging, baldness, and sensory decline are relatively neglected.

WORDS WORTH SAVING

5 quotes

AI is the one market in my career where I've consistently said the more I learn, the less I know.

— Elad

For the first time in like two years, it feels like some subset of things are consolidating back down.

— Elad

If I was a number one or number two in a market and I was a startup, I'd consider merging with the other party, because the real threat will be fighting the incumbents.

— Elad

People will feel like it is capitulating, but it's capitulating in service of winning.

— Sarah

Scaling up model size and training data has given us this really powerful foundation of knowledge and pattern recognition, but what people want from here is not just predicting text.

— Sarah

Market consolidation in AI foundation models and applicationsOpen opportunity areas: sales, finance, accounting, pharma, and engineering toolsStartup–startup mergers versus competing against large incumbentsStructural and cultural issues limiting innovation in biotech and agingSpeculative biotech fronts: fertility, tooth regrowth, cosmetic and neurosensory agingWorld models, reinforcement learning, and agents beyond text predictionTranshumanist themes: mind uploading, evolved systems, and emotional modulation

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