Focused startups can beat companies with far more resources

Transcript

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

1. 52:18

   No, I mean, look, I think in practice, there's a lot of positive, some work for us to do together. And so, like, you know, the way that we think about ourselves, a couple things. One, software is the only thing that we care about, obviously. And there's a lot of value and focus and in building products and building our home home motions specifically around that. Say more about how you think about focus and the value in it.

2. 52:39

   You know, back to what we were saying about startups, right? Like, why do startups ever win at all? And if you do everything, you will lose to Microsoft or Google who does everything but also has like trillions of dollars, more resources and 100,000 more people than you, right? And infinitely more brand name, right? And like the way that you build, you know, like a real kind of like, you know, a real like lasting business or lasting product is by really, really focusing and narrowing on one specific thing, making a very concentrated bet.

3. 53:10

   And then obviously, you know, your bet has to end up being right. But like, you know, from there, it's like a lot of just like really tight execution. And so in software, you know, I love, you and I have talked about this. I love the quote from Daniel Eck in Spotify, right? People were saying, so like, you know, there's like YouTube's trying to go and do this and Apple has Apple Music and like, why should there be like a, he was like, you know, I can give you all the other reasons, but the truth is we're just going to care way more about music than they are.

4. 53:35

   And I think for us, it's true. It's like, we are just going to care so much more about like, what does it look like to build software end to end at Goldman Sachs or at like Mercedes-Benz or something like that, you know? And there's a lot of nuance in that. And there's like a lot of messiness in that, right? It's not as simple as like, oh, here's a sandbox algorithms problem. Go and code me the correct 30-line program that solves this problem or something.

5. 53:58

   It's like, how do you work with all the messiness of the real world? How do you understand the code base as it exists today? How do you collaborate with all the humans on it? How do you plug into their ticketing system? How do you give the agent the ability to test its own code and run everything locally? All of these are obviously super hairy, messy problems. And that's what we care a lot about. And so from that perspective, it's a very kind of nice, like, you know, the labs have their own products.

6. 54:21

   I'm sure they'll continue to do more. But in practice, there are a lot of nice ways for us to cooperate. Obviously, like on top of that, like being the Switzerland means that, you know, folks can work with us and kind of like trust in us that we will kind of route them to the right models, that we will optimize the price performance for them, that we will kind of like direct them to the right use cases and so on.

7. 54:40

   Because, you know, we're not incentivized for them to spend more on the models either. You know, we're incentivized for them to get value and to get output out of it. I love that you use the example of the war between Spotify and the rest of the Apple Music, for example. Jimmy Iovine, who also came on the show and now is actually a friend of mine. He actually called me yesterday about this because anything, anytime anything happens with AI.

8. 55:00

   music and Spotify calls me, but we talked about this because he's like, you don't understand, like he had like 40 years of experience in the music industry, had all the relationships. He's like, Apple bought me for $3 billion. Spotify at the time, he's like, we're going to go head to head with them. Spotify only had 3 million paid subscribers at the time Jimmy's going to fight the war. And he's like, I have one of the biggest companies in the world. And then he talked about, he's like, that wind up being a huge, he thought it was an asset. It was a huge liability because they're like, we don't give a shit about getting a couple million more, tens of millions or more of subscribers.

9. 55:29

   We invented the most successful consumer product of all time. And he said something like they just clipped his wings. And he was like, he was trying to do something like, oh, this isn't important to us. Where Daniel was going to die if he was not successful. He just cared about a lot more. Dude, even in the two years that we've been around, you know, I've heard so many different versions of the same argument.

10. 55:48

    Because when we started, as you can imagine, this was true for us. It was true for everybody in the space, building the space. the number one pushback that you would always hear from investors from other people it was like but like Microsoft already has GitHub Copilot like isn't that everybody's just going to use that right and it's like it's a very reasonable thing to say in some sense because you know they did have all they did own all of GitHub and they did have a partnership with OpenAI and they did have like VS Code and so on I think in practice the reality is there's so much more innovation and so much more to build that there was a lot of like positive you know Microsoft's like a great partner of ours and we do a lot of things together and we build even more together right And I think the reality is, like, people have said this forever, like, oh, like, yeah, like, startups versus, you know, like, why should, you can give all the rational arguments.

11. 56:30

    Ten years ago, it was like, Google will do this or Facebook will do this. Yeah, yeah, for sure. It's like, oh, why should Datadog exist or why should Snowflake or Databricks exist or whatever? You know, the clouds, the clouds have all of it. You know, the clouds care about observability, too. The clouds care. And the reality is, like, it's in some sense a bit of an uncreative way to think about things, I think.

12. 56:47

    Like if there was like one thing that, okay, here's what we all know is going to be the end state future and everybody's just working toward it and whoever has the most resources toward it wins. And of course, yeah, you know, it's like we know who has the most resources to it, right? But if there are millions of problems out there to solve, there's lots of different things. The world is dynamic. Things change all the time.

13. 57:06

    There's lots of new ideas or opportunities or ways to build new products. Then the reality is like, of course, there's lots of different niches to own. There's different things to really bet on. There's different focuses to spend your time on. And I think that will continue.