The incumbent inertial drag exists in all large companies as a function of their structure, not just WS, even within the biggest so called ‘fast moving tech innovators’ such as G, and this inertial drag is why small and highly adaptive/pivotable startups can rapidly erode large incumbents from underneath.
I agree, and what I take from that fact is that it a startup obligation to disrupt incumbents so that we clear the chaff of bureaucracy away and make room for the next step forward
1. AI's Disruptive Potential: AI has caused significant excitement due to its vast potential to disrupt various industries. Its applications span across society, culture, education, and business, offering new opportunities for startups. 2. Historical Perspective on AI Impact: By looking back at events like Gary Kasparov's defeat by IBM's AI in chess, we can understand the potential of AI to challenge and beat human expertise, signaling early examples of AI's disruptive capability. 3. Startups vs. Incumbents: There's a debate on whether AI will benefit existing large companies (incumbents) or enable startups to thrive. While incumbents like Microsoft and Meta have seen their value increase due to AI, there's still significant potential for startups to innovate and disrupt established markets. 4. Sustaining vs. Disrupting Innovation: AI can act as a sustaining innovation that strengthens incumbents' positions by enhancing existing models (e.g., Meta using AI for ad targeting) or as a disrupting innovation that challenges and potentially replaces incumbents. 5. Paths for Disruptive Innovation in AI Startups: - Exploiting business model conflicts (e.g., ChatGPT disrupting Google's revenue model). - Speed of execution in traditional, slow-moving industries. - Being radically better by leveraging AI to offer superior solutions. - Utilizing AI to navigate and derive insights from unstructured data. - Enhancing user experience significantly through simple, intuitive interfaces. 6. Importance of Niche Markets: Startups often emerge from serving underserved niches, providing solutions that may initially appear as toys but can grow to dominate markets. [IMPORTANT] 7. Timing for Startups: Successful startups often align with enabling technologies, economic impetus, and cultural acceptance to hit the market at the right time. 8. Investment Criteria for AI Startups: NFX focuses on long-term defensibility, fast and capable teams, economic moats, initial markets with growth potential, fair valuation, and products that are significantly better than existing solutions.
If any startup watching this has a 100x better solution (what they want), don’t pitch these guys. They will low ball you. If you truly have a 100x better solution it’s worth 100m Val don’t let these low ballers tell you otherwise, their entire job is to make you accept a low value.
