"Horizontal LLMs will lose."

"This thesis comes in two flavors. The first is, LLMs generally will lose when they get displaced by a new and better technology."

"Many of the people I know who work at the cutting edge of AI believe LLMs will not get us to AGI, and that the next leaps will come from something new, not just more data."

"The second version of this thesis is that LLMs will verticalize to the extent it probably makes more sense to use multiple versions of vertical LLMs than one horizontal one, for most applications."

"AI won’t impact full markets the way previous tech waves have - but instead will only impact specific companies."

"The way to think about AI isn’t “here’s what it will mean for this industry.”"

"AI fundamentally applies intelligence and learning to steps in the corporate value chain, and some companies have value chains that are much much more amenable to taking advantage of that than others."

"In fact, most companies try to build their workflows so you need as little intelligence and learning as possible. Best practice is to systematize everything you can."

"So one possibility here is that the companies that benefit most from AI may have more in common by having similar steps in their value chain rather than in terms of the product they make or customer they serve."

"AI will kill most forms of competitive advantage."

"Google’s “we have no moat” memo is a good example of where this thinking currently is on AI."

"AI will bifurcate the economy into real and AI worlds."

"Customer acquisition channels will collapse into agents. Like many of you I’ve been following AutoGPT closely."

"The first order effect, if agents become the norm, is simply that we use them more for more tasks and maybe we use fewer software application interfaces."

"If you like a company because of their PLG or community driven GTM, it’s possible those are irrelevant in a few years."

"Vertical SaaS becomes a bad place to invest. Part of the reason SaaS is such a great business model is that switching costs are high."

"if writing the migration code, and executing on the migration takes just a couple of days with AI-based development tools, will companies switch more? Will churn rates go up?"

"Build vs buy decisions skew towards build."

"What does that mean for software companies in general if building becomes cheaper than buying?"

"Non-venture backable software companies could explode. If the price of software drops dramatically, that means we will get more software."

"Most likely that means more fragmented software markets, and that means perhaps we see a lot of $15M revenue software companies with 5 employees and 30% net margins that can’t grow at venture scale."

"Maybe the prompt precision required to create custom software creates so much complexity and overhead - that the benefits of rapid low-cost software creation aren’t fully realized because of the requirements→prompts bottleneck."