Notes from Gokul Rajaram

Notes from Gokul Rajaram — Oct 16, 2024

Foundational models have converged around 4-5 companies. There is no more space left for foundational models. More consumer companies are building on top of the foundational models.
Investors focus on the application layer - horizontal apps, especially new ones, won't succeed.
For example, customer service AI or software AI startups emerge, but there are 5-10-year-old customer service software companies that have developed customer service AI, generating more revenue than all the above startups combined in a year. They hold more data and have more market share.
There are enough horizontal incumbents, and it's so easy for them to verticalize their software.
Verticalization of software means to go niche, delve deep, and own end to end.

Don't join a very early-stage company - you're taking the same risk as the founder - if it's really interesting, go build it yourself - I don't think the risk-reward is worth it.
When to build a startup:
- Have a specific idea that consumes your thoughts deeply.
- Startups started as a toy project.
- Google - Stanford research.
- Square - Jim and Jack had payment issues.
- DoorDash - Stanford class project.
- You can't engineer a company.
- Don't try to be a founder.
- Starting what you read on TechCrunch, what other people are getting funded on - bad advice.
- No matter whether there's a recession or the first employee quits, you've got to believe in it.
Two things - how is the company doing, how is your career doing (earnings, growing as a person, growing as a leader).
FAANGs offer attractive packages of $1M to $2M in RSU, with immediate liquidity. You can gain credentials and build a network. If you're already there, consider joining a mid-scale company.
4 years each - 10 shots. A smart person will hit the jackpot in a mid-sized company, in terms of the role they own and the growth of the company. Don't make the same mistake of joining a company with the same pattern as a failed company.
Mid-sized is 500 - 1000 people.