Daily Edition · Page 12

THE DAILY INDEX

Technology, AI, software, security, crypto and business

GENERAL

TLDR Founders

KEITH RABOIS' NEW RULES OF VERTICAL AI

Frontier models will continue to improve. Vertical AI that does the job end-to-end gains from improving models. Use model routing to optimize workflows - long term, model mixes and open-weights can recapture margin. Let labs supply intelligence, but own the data loops, private data, corner cases, and last-mile liability. Earn data by having a primary product that customers pay for, and learn what labs can't by doing work previously done by humans.

NOBODY LEARNS IN THE CLEAN HALF

AI is taking over the routine work that used to teach new hires their job, like reconciling ledgers or fixing small bugs. ATMs took over cash handling and left bank tellers with customer problems and loan conversations. The worry is who learns the messy half now, since a 500-person compliance team might shrink to 30 and the cuts land on people who learned on the easy tasks. One startup studio hired its AI engineer by asking them to fix a real SEO problem and demo the fix, so new hires hit judgment calls in their first months.

PERSISTENCE IS A NUMBERS GAME: 150 STARTUPS, ONE COLLAPSE, AND THE ONE THAT WORKED

Startup studios look like a machine for making companies until the studio itself runs out of money. A former studio CTO who helped build more than 150 startups walks through why theirs collapsed. It carried 50 staff on a model where partners had to fund every accelerator round, so when the partners slowed down, the payroll didn't. The CTO lost their stake in the collapse, and their next company runs with a skeleton crew.

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