# AI is widening the gap between startups and incumbents

Markdown copy of https://realalpha.app/s/ai-is-widening-the-gap-between-startups-and-incumbents/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Marc Andreessen](https://realalpha.app/people/marc-andreessen/) · Co-founder & General Partner, Andreessen Horowitz · Co-founded Netscape and co-created Mosaic, then co-founded a16z, a venture firm backing AI, crypto and frontier tech.
- Host: Erik Torenberg · General partner, Andreessen Horowitz · Helped build Product Hunt; founded On Deck, Village Global and Turpentine.
- Show: a16z Podcast
- Episode: [The Frontier Ideas a16z Wants to Fund Now | Marc Andreessen, Ben Horowitz & Chris Dixon](https://realalpha.app/v/-9XQMHhpypc/), Oct 22, 2026
- Moment: 18:13 to 25:08 of the episode (7 min), playing on https://realalpha.app/s/ai-is-widening-the-gap-between-startups-and-incumbents/; the episode from there: https://realalpha.app/v/-9XQMHhpypc/?t=1093

## Quote

> “We would have built the **whole damn internet**. It would have been absolutely incredible.”
> — [Marc Andreessen](https://realalpha.app/people/marc-andreessen/) at [19:32](https://realalpha.app/v/-9XQMHhpypc/?t=1172) · a16z Podcast

## Takeaways

1. AI-native startups are moving faster than many incumbent companies.
2. Founders can combine areas once treated as separate businesses.
3. Moderate ideas may not stand out as capabilities expand.

## About this segment

They argue that AI-native founders are gaining capabilities incumbents may not yet grasp, enabling more ambitious, full-stack companies. The widening gap could put entire industries up for grabs.

From “The Frontier Ideas a16z Wants to Fund Now | Marc Andreessen, Ben Horowitz & Chris Dixon”, Oct 22, 2026. [Watch the full episode](https://realalpha.app/v/-9XQMHhpypc/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[18:19](https://realalpha.app/v/-9XQMHhpypc/?t=1099) Um, so this is the biggest delta between, I would say what the early adopters understand is possible now, uh, versus what kind of everybody, kind of normal people understand. Um, and I think that's, you know, true at the individual level, but it's especially true at the company level. And the AI native early stage startups have just a completely different view on what they can do with AI than sort of, you know, typical incumbents in almost any industry, almost without exception.

[18:44](https://realalpha.app/v/-9XQMHhpypc/?t=1124) And I think that that gap is as wide as I've ever seen in my career. And then that gap seems like it's gapping further and further out, which is AI is just racing ahead in capability, even week by week. And so the leading edge entrepreneurs and technical people we deal with, like, they're getting – they're just – by the week, they're getting sort of steadily more advanced than a typical incumbent.

[19:05](https://realalpha.app/v/-9XQMHhpypc/?t=1145) And so it's the biggest adult I've ever seen. And if you kind of extrapolate from that, like, you know, if that's what happens, then there's just – there are going to be a lot of industries that are really up for grabs in a fundamentally, you know, kind of more profound way than maybe has been the case in the past. And then it's going to be because the founders are going to have a level of superpowers coming from the use of these tools and these technologies that they just simply haven't had in the past.

[19:26](https://realalpha.app/v/-9XQMHhpypc/?t=1166) I mean, you know, had I had, you know, Astra and Netscape in 1994, like, oh, my God. Like, you know, he said, like, Ben, like, what would you and I have been able to do at Netscape? We would have built the whole damn internet. It would have been absolutely incredible. It would have been absolutely incredible. And, you know, as Chris said, like, we're seeing this. We're seeing entrepreneurs come in with, like, with plans of a level of depth and sophistication in, you know, multiple parts.

[19:51](https://realalpha.app/v/-9XQMHhpypc/?t=1191) Connection together. By the way, we would have gotten crypto done then. Oh, 100%. Yeah, yeah. Like, by the way, in, like, two weeks. Like, we'd have streaming video a lot sooner. I mean, like, all kinds of things would have happened. And then, by the way, hardware. I mean, we never even, you know, bit off hardware. But, you know, had we been able to, there's all kinds of things we could have done.

[20:08](https://realalpha.app/v/-9XQMHhpypc/?t=1208) And so, I just, like, I think that the leading edge entrepreneurs now are going to have, like, capabilities. which means they're going to have business plans that are like a lot more, you know, they're going to have product plans that are a lot more technically intensive and complex. They're going to have business plans that are more ambitious and complex. We're building companies that just like ramp much, much faster, you know, the scope of the product that they build and then, you know, hopefully the scope of their business.

[20:29](https://realalpha.app/v/-9XQMHhpypc/?t=1229) And then, and then again, this goes right back to like those, those entrepreneurs are going to call it way outside the lines. Like they're, they're not going to, we already see this. They're not going to think of themselves as like, I'm just a software company or I'm just a hardware company or I'm just a whatever, or even I'm just an AI company or anything. They're going to, they're going to think very broadly and expansively about exactly what, you know, how, how many different areas they want to touch and how they want to combine things.

[20:49](https://realalpha.app/v/-9XQMHhpypc/?t=1249) And so the sort of conceptual artist kind of aspect of this is going to just like blow way out. Yeah, I was going to say, you know, we used to kind of ask the question, is this idea too ambitious? And I think we're much more likely to ask this, is this ambitious enough? Because, you know, what's possible is so spectacular. And if you do something moderate, like it probably won't be differentiated enough.

[21:18](https://realalpha.app/v/-9XQMHhpypc/?t=1278) And by the way, look, incumbents, you know, we spend a lot of time, have a lot of friends in incumbent companies, by the way, including incumbent tech, including incumbent companies in Silicon Valley. And it's like, you know, we wish them all the best. And, you know, we, by the way, we have lots of companies that would like to arm them up with all these, all these new tools also. And so, you know, so I said no doubt some of them are going to be able to adapt.

[21:35](https://realalpha.app/v/-9XQMHhpypc/?t=1295) But like, you know, if any of them are listening right now, I would say like the clock is ticking. Like it's like stuff is moving. Yeah. I mean, like, I am basically, I mean, I'm full-time, I'm basically drowning with the pace development right now and the speed with which things are changing. And I'm trying to keep up with all of it, and it's nearly impossible. Like, yeah, the super-empowered 24-year-old with AI is going to just achieve, like, amazing things in the next decade.

[22:03](https://realalpha.app/v/-9XQMHhpypc/?t=1323) And there's a question we were asking right before this, which is, you know, is AI more sustaining or disruptive in terms of, like, will more of the gains go to incumbents or startups and it seems so far it's both in some sense which is some you know the comments like you know meta and others have you know uh sort of adjusted very well and and also they're net new companies that are you know uh almost trillion dollars in you know within a decade and it's so it is that your read that that's effectively both or how do you think about the sustaining disruptive well the incumbents that are adapting are actually the incumbents i think for the most part that are actually going directly into ai you know and then there are others and then you know there are certain companies you know there's certain companies certainly in tech that are on

[22:38](https://realalpha.app/v/-9XQMHhpypc/?t=1358) leading as you've been if they're not primary primary ad developers but at least right now the pattern is is not that I mean it's it's just really actually there's a very specific thing that I think it's maybe it's a topic for a different podcast and a very specific thing I think is happening which is I think many companies are not adopting AI while their employees are and their employees are and their employees are not necessarily telling them what's happening and I and by the way I'm gonna guess every single person listening to this podcast right now is thinking oh yeah that's what I'm doing you know I'm using AI, you know, to, you know, do all, you know, do all my work or at least let's say fact check all my work, you know, proofread all of my, all my, all my emails, even if not have them

[23:16](https://realalpha.app/v/-9XQMHhpypc/?t=1396) written out right. And so there's this weird thing where there's something about AI right now where it's like, it's much easier for the individual to adopt than it is the institution. And by the way, and again, it goes back to like our role in the world, which is like those, some of those individuals are going to figure out like, oh, well, with this tool, I can now like start my, you know, it's now easier than ever for me to start my own business. And so I think startup information is going to skyrocket from here.

[23:38](https://realalpha.app/v/-9XQMHhpypc/?t=1418) By the way, it already is. Oh, yeah. I mean, we're seeing it. I mean, we're seeing it 100% for sure. So anyway, just to kind of go back to the theme of this, is just I'm completely convinced, like, we're going to see a wave of, like, much more technically aggressive, much more business aggressive, much more expansionist, creative, original thinking, many more combinations of things that we would have considered to be separate things in the past.

[24:02](https://realalpha.app/v/-9XQMHhpypc/?t=1442) And we're going to see, yeah, Founders was just like and teams was just like an incredible level of skill level, incredible level of skill that they otherwise might have needed, you know, 30 years to achieve or something they're going to have like right out of the gate. And by the way, the other thing I'd say is that the Christensen disruptive innovation frame assumes that sort of the technology world is relatively contained and that these are.

[24:23](https://realalpha.app/v/-9XQMHhpypc/?t=1463) I think it's probably the wrong frame right now, which is it's really sort of people who are technologically modern going out into other industries and just changing the economy more broadly. Yeah. Right. Especially with these kind of full stack companies, you go and you create a full, you know, like you just announced our investment in Adams. Like they're going and they're building like a full stack kind of food service and and other things. Right.

[24:46](https://realalpha.app/v/-9XQMHhpypc/?t=1486) And so I think that you talk about this sometimes more, like the market has sort of gone from, you know, the 10 big tech companies fighting with each other to the 10 tech company or 10 and all the startups going against the other Fortune 500 or the rest of the economy. Yeah, that's right.