Smash Notes

Back to USV’s New $900M Fund: Fred Wilson, Rebecca Kaden & Mike Mignano, with Rebecca Kaden & Mike Mignano.

What Is the Rebel Alliance in AI?

Fred Wilson says Rebel Alliance is the open side of AI, set against established winners: OpenAI, Anthropic, Grok, and Gemini, which is Google. Around them sits a world of open-source models, open-weight models, open-source harnesses, and other infrastructure a developer can stitch into something that looks like Claude or Cursor.

Developers do not want to build on a closed stack. The worry, using Anthropic as the example, is that the company they build on will compete with them and cut them out. That already happened in early social media, when businesses built on Facebook and Facebook later wanted those businesses for itself. The name is for people building a stack they control. That stack is large, with layers for alignment, memory, routing, and models a developer can change, which is why it is a whole thesis.

At the firm's CEO summit the week before, the Coinbase chief technology officer said Coinbase had moved off Claude and built its own coding-agent harness on an open-source product called Pi. Coinbase and Shopify have both been public about needing something more flexible than building everything on Claude. Other venture firms are less excited about this open layer, and founders in it treat that shared interest as a reason to work with Union Square Ventures.

Transcript

USV’s New $900M Fund: Fred Wilson, Rebecca Kaden & Mike Mignano ·

Sourcery

More from this episode

  1. Why Is It Cheaper to Build a Product but Harder to Break Out?Mike Mignano says a startup can still be expensive to operate and scale when the product itself is easier to build. Inference is becoming a real line item.
  2. What Is New About Union Square Ventures' Latest Fund?Fred Wilson says Union Square Ventures closed its most recent set of funds and raised $900 million.
  3. Why Does AI Look Like the Internet in 2003?Fred Wilson says this moment in AI looks like the internet in 2003.
  4. Why Are AI Funding Rounds Still Getting Bigger?Rebecca Kaden says products are dramatically easier to build. The firm recently incubated one quickly and cheaply, and other builders are doing the same.
  5. Why Would Shoppers Want Their Own AI Agent?Fred Wilson says people will want their own agent, not only the agent that belongs to each store. Amazon, Shopify, and Etsy can each have an agent.
  6. Why Does Union Square Ventures Keep Its Funds Small?Rebecca Kaden says a small fund, even one that is only small relative to other funds, is easier to return, and the partners can be pickier.
  7. Why Does Union Square Ventures Stay Early Stage?Fred Wilson likes the earlier stage of investing. When Union Square Ventures started, the plan was writing about a $3 million Series A check.
  8. Why Do AI Markets Reward Founder Storytelling?Rebecca Kaden says the founding team matters more than ever, for two reasons. Hiring is harder.
  9. Why Can ARR Hide Weak Product Retention?Rebecca Kaden says annual recurring revenue has become a number a lot of investors watch, because revenue has ramped so fast at many of these companies.
  10. How Did Abridge Go From One Product to Three?Fred Wilson says Abridge went from one product to three after making all of its money for the last five or six years on a single product.
  11. Why Did Union Square Ventures Back Radiant Before the AI Power Rush?Mike Mignano says Union Square Ventures has done well at extremely early bets because it is thesis-driven. Coinbase was very early in crypto.
  12. What Does Obliterate, Don't Automate Mean?Fred Wilson wrote a blog post in 2014 called Obliterate, Don't Automate.
  13. Does Union Square Ventures Need Trillion-dollar Winners?Fred Wilson says Union Square Ventures does not need to underwrite to a trillion dollars. A company has to look like a market that can get bigger.

People

More answers like this

The other side

Related episodes

Plays from this note through the rest of the episode.

Note

Weekly highlights

One letter a week.

The notes worth hearing, with the minute they were said.