tom

The cost of equivalent intelligence falls ~10x annually, so founders should not optimize for current token costs; within 6-12 months, AI will be cheaper than human engineers for any task, fundamentally changing startup economics.

An engineer with today's best models is approximately 1000x more effective than one without, and there is no single programming task where a human outperforms the model — pure software development is no longer a durable moat.

Writing software is no longer a 'hard bit' — AI makes replication trivial. Durable startups must tackle genuinely hard problems: regulatory barriers (banking licenses), physics (space launch, nuclear), or complex B2B sales. Pure SaaS like Calendly is 'basically dead'.

Because AI makes writing software trivial, pure software companies are too easy to replicate. Durable startups must have a 'hard bit' — regulatory barriers (banking licenses), physics (spacecraft, nuclear), hardware, or brutally difficult B2B sales — that AI cannot easily commoditize.

The cost of intelligence is falling roughly 10x per year for the same capability, so founders should not optimize for current token costs — the economics will solve themselves within 6-12 months.

A YC solo founder building autonomous self-improving agents hit a crisis of confidence at 6 weeks; co-founders provide essential emotional modulation (pulling you up when down, grounding you when manic) that AI cannot replace. Solo billion-dollar companies are theoretically possible but economically irrational.

Most pivots are driven by founder sadness and sales rejection, not genuine hypothesis invalidation. Good pivots come from customers pulling you into a bigger adjacent problem (GoCardless: sports teams → business payments). Bad pivots abandon deep domain knowledge for shallow new ideas.

With AI making code generation near-free, distribution (getting customers, standing out) is now a key differentiator. Early-stage founders should do unscalable white-glove service; later-stage must invent novel distribution meta-games (like Brex buying all SF billboards).