Will Quist

Personal update: I'm taking a leave of absence from YC to join Anthropic. I'll be working with @NotTomBrown on the compute team. Powerful AI has the potential to improve the life of every human on earth and, as we enter the early stages of recursive self-improvement, availability of compute becomes one of the most important issues to solve. I'm excited to get started 🚀

@PapaBearett @Philip_DT As a believer in capitalism, free markets, and private enterprise, I believe the social norm should be people pay for what they need. So fat people may need to pay for an extra seat and tall people may need to pay for extra legroom.

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The venture markets are wide open for founders, but 99% of the capital is only available if you fit one of these three archetypes right now. Here's the summary of a convo @maxaltman and I had last week - 1. App Layer, AI infrastructure and a few vertically integrated AI native businesses that all have one thing in common: obscene, historically unprecedented growth rates. Examples include: Harvey/Legora in Legal, Profound in Marketing, Replit and Lovable in software engineering and Baseten, Fireworks, Crusoe etc at the infrastructure layer. Not only are these businesses delivering historically unprecedented growth, their valuations remain reasonable by comparison to the AI ‘pure play’ labs.Loosely defined as $1 to$10m+in y1 after launch and then $10m to$100m+ in y2. These reasonable valuations reflect anxiety among investors that these new markets are not yet settled; that the revenue could contract as easily as it grew. Because this anxiety is depressing valuations evenly across the market, the most obvious opportunity for venture investors right now is to determine which of these high-growers have actually built durable moats. Those that have done so are effectively ‘on sale’ right now. 2. The Hand of God Companies - The megafunds and the titans who lead them are now structurally influential enough to occasionally preordain a business in a valuable category. The hit rates of such businesses are not 100% but they are systematically higher and, as such, appear ‘overpriced’ at every round despite being sound investments. These businesses often require significantly more upfront capital than the market would normally accept at each early stage of risk but exist in categories so large that any new winner is obviously extremely valuable. This is real alpha creation by the top firms and to deny this reality is to deny the simplest way to make money in venture today. 3. Speculative AI labs - effectively cargo cults hoping to summon new labs into existence. There are currently ~200 neolabs, all raising up rounds on ideas alone, many without yet-released models. VCs are buying numerous versions of the OpenAI/Anthropic lottery ticket. This segment of the market has the tactile sensation of 2021: high entry prices, valuations dictated by narrative (though not a guarantee of the same outcome). There will be new frontier labs and the overall returns will justify the endeavor, but the loss ratios will be legendary.