In short, a rage bait post.

In short, a rage bait post. About business, entrepreneurs, venture, and the “grown-up tech industry.”
TLDR: venture as it exists now is over, there’ll only be big rounds, entrepreneurs from the previous cycle (like Instagram cofounders) have lost their value, their experience isn’t needed.

Now in order. We’re standing at the threshold of a tech cycle. The entry threshold, obviously. AI is the kind of thing that cuts off all the “mid,” the “eh, kinda,” and everything below that in quality. The tech swaps two important things in priority: the ability to make and the ability to verify.

Before, the biggest entry barrier was: assemble a team, find money to pay them, motivate them, etc. The flow of people into the industry was growing. There were tons of hypotheses, but to test them you needed time and resources. The hypotheses were super simple. Like oh let’s sell this, or tag photos on a map, tag clients in a spreadsheet and track progress. Everything was open (the internet was less regulated). That’s why entrepreneurs were famous for their soft skills. It wasn’t that important to know the problem and solve it, it was important to find people and iterate. That was valued above all.

Today I see the picture differently. The barrier to testing a hypothesis has dropped to basically nothing. Simple things you can test on your knee. Look at the vibe-coding knockoffs. And then it turned out that solving the problem in the real world costs hundreds of millions, while your new SaaS is, God willing, two revenues. And for me the following flipped. Before it was important to find who with and set it up. Now it’s important to understand very precisely what to do, and ideally to formulate it concretely. And that notorious “knowledge” in the age of AI companies turned out to be very technical and very hard.

The first companies like Perplexity & Harvey made it in. And then reading the descriptions of companies raising 200m right away, it’s not even clear. And it’s not because they’re making bullshit (clowns lolol), it’s because you don’t understand what the essence of the problem they’re solving even is.

After the crisis among entrepreneurs there will be a capital allocation crisis. Because now you need to understand “what” to give money to, not who to give money to. Which really breaks the investors’ world. And soft skills move to the background, because assembling a team for a clear problem and knowing what’s inside is easier than for “Tinder for dogs.” Which means you need investors who actually get it. And there will be few of those, because it’s easier for them to build their own company.

You can already see all this now: top research people are leaving Google, faces in investment funds are changing, because the previous leaders just don’t understand what’s happening. Just straight up, basically, don’t grok the meaning of what’s going on.

This stage exists in a lot of industries. Where there basically isn’t venture. Where there have become way fewer high-risk ideas with potential. Because the ideas got too complex. That’s what’s coming for us in tech too. And yeah, I wouldn’t invest money in a track record from past years, I’d rather throw it at students and good ML professors. That’s how it is.

Maybe I’ll write a second part too. But I’m predicting a huge number of “great entrepreneurs” who, in the AI era, won’t get anything to work. At all.