No Priors Ep. 116 | With Sarah and Elad

(instrumental music plays) Elad, what's going on?

How you doing, Sarah?

I'm good. I can't tell if it is a very stable time in the market, like it's crystallizing into known businesses and models, or it's as, as fluid. What's your take?

You know, it's interesting. AI is the, um, the one market in my career where I've sort of consistently said the more I learn, the less I know, right? Every other market, you kinda learn more, you know more, you keep advancing. And I actually feel like that's shifted in the last couple months, where I feel for a subset of areas, despite the rapid pace of innovation, all the really exciting new models and research findings and everything else, I actually feel like a bunch of markets have sort of consolidated. And it's kinda clear now who are the likely players or winners in, like, two or three big areas. And that may change, right? In three years, another new startup may launch and displace everybody, or an incumbent may make a bold move, or whatever it may be. But I feel like in the foundation model market, at least for, uh, LLMs, there's a clearer view of sort of what's important and what isn't. At the application level, I think it's kinda clear who the winners are gonna be in sort of at least the first set of services for healthcare-related, uh, things like medical scribing or other flows. Encoding, it seems like it's consolidated into two or three players. Um, you know, may- maybe that's Cursor or Codium Cognition, and then Microso- Microsoft's, like, Copilot, right? But, um, there aren't probably, like, two dozen companies that are all still competing there. In, uh, customer success, it seems like things are kinda consolidating against Sierra and Decagon. So you kinda go through market by market and you're like, okay, there's a bunch of markets where it's kinda clear who we think some of the winners may end up being, or at least the ones who are gonna be important for the next two, three years. And then I think there's a set of markets where it's still wide open, right? So you look at, um, sales productivity tooling. There's gonna be something really important there. There's gonna be some financial analyst thing that's gonna be really important. There's gonna be an accounting company that's really important. And the question is, um, has that not consolidated yet because of nobody yet doing the exact right product approach? Is it because the models aren't good enough and the capabilities have to get better? So it feels like there's a bunch of stuff that is still unknown, but it's way clearer than I think it was a year ago. I feel like for the first time in, like, two years or something. You know, when I first started investing in generative AI, you just went and you backed the things that the people seemed really good and the market seemed interesting, 'cause there wasn't a lot of competition, right? So that's when I led the seed round for Perplexity or invested in Character or Harvey or some of these other things. That was, you know, pre-ChatGPT or pre-Midjourney.