Smash Notes

The Next New Thing

Investor Elad Gil’s next moves

Presented by Zapier https://zapier.com/ Episode Highlights / Timestamps 00:00 The first billion-dollar solo company (Minecraft) 00:27 Elad’s investing track record 01:12 What “making it” really means 04:03 Where today’s “toys” become tomorrow’s giants 08:51 AI puts building power in millions of hands 09:45 Will more builders mean smaller outcomes? 13:03 AI…

Transcript

Notes

  1. How Does Availability of Coding Models Enable Millions of People to Build the Next Minecraft?

    at 8:31 · Transcript

    Small things sometimes become giant things because people often underestimate total addressable market or the number of people who want something. Many great things have very humble origins. Coding models put the power of building things in the hands of millions of people who could not do it before. A subset will turn into really amazing huge things or huge companies.

    Minecraft originally was like three people. Minecraft was tiny. People always say when is the first billion dollar single person company. Minecraft was the first billion dollar single person company over a decade ago. Even then individuals could do really big things but only if somebody was very obsessed with building one thing or had the technical ability to do it. Now technical capabilities are expanding dramatically which means dramatically more people could build the next Minecraft in the future.

    The biggest things in the world are only getting bigger with more aggregation than less. A long tail of stuff can get much bigger than it used to be able to get. The world has moved to global liquidity on the internet where the market went from ten million users to a hundred million users to billions and billions of users so suddenly the global market can really accelerate adoption.

  2. How Did Brain Co Reduce Three to Six Months of Permitting Approval to One Hour?

    at 13:19 · Transcript

    Brain Co has built a common platform with data infra and evals then builds vertical specific apps for extremely large enterprises or very large institutions. The apps allow rapid adoption of artificial intelligence against specific vertical use cases. Brain Co created a permitting approval flow for a government that cut manual review from a few months down to an hour.

    A builder submits plans and documentation then waits for a permit to get approval. The builder loses money on a project after buying land and designing the project when approval takes three to six months. Brain Co condensed a few months of manual review into an hour and repackaged everything to point out risks before manual review. The flow understands architectural diagrams so permitting approval sells to other governments for the specific use case or for other types of permits in a government context.

    Fast success with the initial module builds trust and access to data so Brain Co adds the next thing within a vertical. The basic fundamental module tool can be customized and cross-sold to other customers in the same vertical over time.

  3. How Did Fifty People on One Problem Lead Companies to Buy Braintrust Three Months Later?

    at 21:17 · Transcript

    Many companies build internal tools for common problems like evaluation of large language models. The companies later decide to buy specialized software and redirect engineers to higher value work.

    Braintrust offers an evaluation suite for enterprise customers. During early customer calls companies often said internal teams already worked on the problem so the companies did not need the product. The companies called back three months later. The companies then explained the internal team resources should go to something else because the work was not secret sauce. Fifty people worked on one problem. The software covered the whole surface area in ways the companies never will. Three engineers should deploy somewhere else so the companies could use the software.

    The approach allows companies to avoid building every customization across platforms and data sources.

  4. How Did a Shift in Incentives Raise Attention Deficit Hyperactivity Disorder Diagnoses to Three Percent of Kids?

    at 29:24 · Transcript

    A shift in incentives combined with changes in diagnostic definitions drives ADHD diagnoses to about three percent of kids. Many claimed factors like parental age fail to explain the shift.

    Factors claimed as culprits get ruled out. Parental age actually is not that much of a factor. A bunch of stuff claimed to be the driver of the change is not. The punchline is really a shift in incentives. Incentives would be things like extra two hours on the test or whatever in school for kids with ADHD. A teacher gets rewarded for helping neurodiverse populations. The shift also includes how diagnosis is defined and who can provide the diagnosis. In the state of New Jersey it is something like sixty percent of ADHD diagnoses in kids where the kids have never taken any form of test. A teacher just says a kid has ADHD and then the kid is classified that way. Societal level drivers lead to the diagnoses unrelated to the actual spectrum.

  5. Why Does Artificial Intelligence Remain Interesting for the Next Decade Plus?

    at 38:15 · Transcript

    Technology waves are non-obvious until they are obvious. Then everybody starts looking for the non-obvious thing again, but the obvious thing is what you should do. Everybody proclaimed that social products were over four times. Artificial intelligence is going to take a decade. For the next decade plus there are going to be really really interesting things happening in the same way that SaaS took a decade to really see itself through and FinTech took a decade.

    The early social wave featured MySpace, Friendster, Multiply and other companies. Facebook became the really big thing. Twitter happened two years later. LinkedIn happened a couple years before. Right around after Twitter happened everybody said social is largely saturated. Suddenly Instagram, Pinterest and Snap appeared. People were like it is over. TikTok followed. It just keeps going. It took like a decade.

  6. Why Does a One to Four Trillion Dollar Market Cap Company Overlook a Couple Hundred Million Dollar Opportunity Worth Twenty Billion Dollars in Revenue?

    at 42:28 · Transcript

    Incumbents wake up late to new markets. Founders locate gaps large enough to reach scale before competition arrives from giants.

    In the early days of a startup competition comes from other startups. In the later days of a startup competition comes from incumbents. The question is when incumbents wake up and if a gap exists that lets a founder get something done to enough scale to survive. For a one to four trillion dollar market cap company a line of business needs five, ten, twenty billion dollars of revenue eventually to move the number at all. A couple hundred million dollars looks uninteresting. An opportunity looking like a couple hundred million dollars really becomes twenty billion dollars in revenue. A founder needs to find the loophole of building something an incumbent should pursue.

    The loophole provides enough time to achieve scale before an incumbent enters a market.

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