Startups vs. Big Tech: Where AI Creates Opportunity with Eric Yuan & Reid Hoffman

Where do startups and large companies kind of have? I think AI changes the landscape a little bit, but the principle is still the same: the things that a large company is doing most centrally and where its position gives an advantage are a terrible idea for a startup to go after. So, you go, 'Well, I've got a new desktop search idea. I'm just going to do desktop search.' That's different than ChatGPT and so forth. Desktop search? That's not a good idea because, okay, Google and even Bing and all the rest. That being said, all these large companies have lots of efforts. So you go, 'But wait, Google's doing this over here, or Amazon's doing this over here.' You go actually, if it's not in the core set and it doesn't leverage the key assets that the large company has and is broadly potentially available to startups because startups can take risks, go to market, move faster, be much more focused… there's a bunch of things that large companies will simply not take risks about outside the core three or five things that they're doing, maybe one as a topline. And so it comes to a score of: do I actually have a really bold idea? Is there a really smart risk? Do I have a go-to-market? Do I have a distribution possibility? Usually distribution's one of the hardest things to get to. I think there's a broad range. Part of what to build on Eric's comment: with AI, you can make a whole bunch of new things. You might see something that other people don't see, have a speed and risk of 'I'll build it, I'll deploy it, and I'll see what happens.' Building and deployment doesn't happen in large companies; it happens in startups. And kind of see what's going on. That's the kind of thing I think is a very broad surface. Part of the things I love about being a tech investor are the things I hadn't thought about that someone shows up and goes, 'Oh my god, that's amazing.' It's like the Airbnbs, like, 'Whoa, that's a great idea.'

And Reed, you were doing startups for so many years, building startups, investing in startups. Now you spent the last few years on the Microsoft board. I guess, has that given you a new appreciation of the power of big platforms like Microsoft? Or are you newly energized by the opportunities for startups in a world where big tech is so dominant? Or how has that changed your mind at all in terms of the surface area for startups now that you have such an intimate view of Microsoft?

Well, the short answer is both. Part of it is this question of Microsoft has a bunch of assets that make it a very challenging competitor in certain arenas: large-scale enterprise, productivity software, a bunch of that kind of stuff. That makes it hard for a startup to do. On the other hand, even take some things where you'd say Microsoft has a natural advantage—like coding, with not just GitHub but Visual Studio and a bunch of other things. Coding goes all the way back to the very beginnings of Microsoft's concept of being a software factory. You look at it and go, okay, Cursor, Kloud Code. The range of available ability for doing compelling stuff with startups is actually much broader than most people think. It doesn't mean there aren't really central things—like what's happening with ChatGPT and the OpenAI Microsoft work, what's happening with Copilot—those are Microsoft's core efforts. They're putting a lot of energy into upgrading core things like Office, Active Directory. That's challenging for a startup. But on the other hand, there's a huge range for startups. So the answer is both.

Yeah. Eric, do you want to—I'm going to switch topics—but anything you want to comment on there?

Yeah. Indeed. And that's why it's such an exciting time to be an entrepreneur. We're thrilled to back so many of them with your support. Reed, you've been thinking about AI for a long time. Both of you have. Reed, let me start with you. You've seen different hype cycles. You helped get OpenAI started before people really cared about OpenAI. What have you changed your mind about in the last 6 to 12 months, given that broad context and all the things you've seen, your moments of excitement, moments of doubt? And it could be a small tactical thing or a bigger picture thing around anything related to AI.

Well, it'll be a little bit of a two-faced thing. Look, one of the things I still believe generally—I did believe and do believe—then I'll put the change of belief in the frame of that. The way adoption will happen: generally technology is slow then fast. It's slow because people are slow to adopt new things, especially in work and all the rest. Then fast when they're operating on a competitive clock. They're like, 'I'm going to be beaten out by company X or person Y.' So that's how I've been thinking about AI adoption. What's interesting is AI adoption has been slower than I anticipated in various ways. When you ask people about what they do for AI in their own personal or work life, very few are as advanced as Eric. Think about every public company could do what Eric did with the earnings announcement, and I don't know if there's another one other than Eric.

That's a great question. I actually want to take that as a to-do. Do we know, Eric, are you the first public company CEO in history to do what you just did yesterday?