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Back to Martin Casado on Frontier Model Economics, AI's Slowdown, and the Cursor Deal, with Martin Casado.

What Is the Mythical Man Month?

Martin Casado says the mythical man month means you cannot increase the speed of engineering by adding people. The effect is very sublinear, like a natural law, because extra people add organizational communication. One author laid it out in the 70s. Software projects that were meant to ship faster went slower once more people were thrown at them. Engineering has always been the bottleneck.

Ten years ago, five founders who asked for a billion dollars and got it would have left the money sitting there or hired a bunch of engineers and detonated the company. He spent 10 years on a startup that became a very large business, and the limit held: engineering does not scale, so capital could not be thrown at the work. The biggest shift, at an industrial revolution level, is AI. A team of 20 people can be given a billion dollars and use it. Whether they make 500 million from that billion or two billion is unknown. The new part is that the money can be used productively. Anthropic and OpenAI have probably raised more money in aggregate than the entire downstream ecosystem combined. They turn money into growth.

Capital markets still have to figure out how to supply money on that scale.

Grokipedia·Martin Casado·OpenAI

Transcript

Martin Casado on Frontier Model Economics, AI's Slowdown, and the Cursor Deal ·

Invest Like the Best with Patrick O'Shaughnessy

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  3. Why Do Traditional Investors Miss Disruptive Technology?Martin Casado says traditional investors miss disruptive technology because they judge revenue quality before anyone knows the pricing model.
  4. How Do Frontier AI Models Keep Pricing Power?Martin Casado says frontier AI models keep pricing power because the market is still large and growing, and buyers want the smartest model.
  5. Why Do Startups Always Buy the Smartest AI Model?Martin Casado says two competing startups never pick a dumber model to get ahead.
  6. Was Early Internet Security Worse Than Now?Martin Casado lived through the early internet on the ground, with formal studies in security, and the era was way worse than the breaches happening now.
  7. What Was Larry Page Asked About Orbital Compute?Martin Casado heard that someone asked Larry Page how much compute will be orbital.
  8. What Does Martin Casado Believe About Private Market Money?Martin Casado believes money put into private markets grows private markets.
  9. How Did the Cursor Deal Come Together?Martin Casado says the Cursor deal came together off a raise that was already closing, once building models required compute few people have.
  10. Has Software Become a Capital Problem?Martin Casado believes software has become a capital problem, and he treats the shift as industrial-revolution scale.

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