#99 - Three Breakthroughs: Big AI vs Little AI

The AI world is splintering. E-commerce is evolving fast, and tech companies are stepping up to protect young users online. Today, we're diving into ex-OpenAI insiders launching rival startups, the rise of social-driven shopping that's leaving some big players behind, and how AI is being used to make the internet safer for children. Big shifts and big stakes. Let's get into it. All right, we are just getting started, but first, a quick word from our sponsors and a disclaimer before we jump into the action. Stick around.

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As a reminder, the Tech Optimist podcast is for informational purposes only. It is not personalized advice, and it is not an offer to buy or sell securities. For additional important details, please see the text description accompanying this episode. Before we dive into today's conversation, let's set the stage because the shifts we're about to discuss aren't just trends. They're reshaping the future of AI, commerce, and online safety in real time.

Hi, welcome to this week's Tech Optimist Alumni Ventures. We like to get together. I'm Mike Collins, the founder and CEO. I'm here With Lucas. And, you know, we try to bring some very practical, very casual quick takes on what we're thinking about, what we're talking about, things that are going on around venture capital water coolers. And obviously at this time and place, there's a lot about what's going on in the world, a lot of what's going on in DC. And AI is on everybody's list, maybe the most profound technology of our lifetime. Welcome to the episode, Lukas.

Thank you for having me for one last ride, right?

One last ride on your tour of duty, and then we'll get another young, talented, smart, young venture capitalist to indulge me. Starting again next week. So I wanted to kick off, Lukas, by talking a little bit about big AI versus little AI.

All right, that's my cue. First, we're seeing a familiar pattern in the tech world, which Mike and Lukas are going to get into first here in a second. When big companies grow too large, their best minds break away to build something new. It happened with PayPal, Fairchild Semiconductor, and even Google. And now we're seeing it with even OpenAI. Former executives and researchers are spinning off into new AI startups, raising huge investments and challenging the idea that AI will stay concentrated in just a few hands. But will this new wave of companies create true competition, or will they eventually be absorbed into the same AI powerhouses? The next topic for today is we're going to shift to the changing landscape of e-commerce. Shopping isn't just about clicking buy anymore. It's becoming more interactive, social, and even community-driven. Platforms that focus on live shopping, influencer-led commerce, and real-time engagement are thriving, but not everyone is getting it right. Some of the biggest players in tech have tried and failed to capitalize on this shift. So why are certain startups taking off while others are struggling to make an impact. And then finally, to wrap up the show for this week, we're going to turn to a major conversation about online safety. AI is now being used to protect younger users on digital platforms, with companies implementing new age estimation and content moderation tools. This signals a shift in responsibility where tech companies are no longer just providing platforms. They are expected to actively create safer digital spaces for generations to come. But how much can AI really do? And Where do we draw the line between protection and overreach? So we've got a lot to unpack. Let's get into it.

So this week we're hearing about a couple of former OpenAI executives starting their own versions of AI companies. So clearly, you know, they don't hate it so much that they don't want to do their own thing. So, you know, Mira Murati, who is the CTO of OpenAI, has started something. I believe it's called like Thinking Machines Lab or something like that. And oh, by the way, these companies, you know, these spin-out companies are raising enormous amounts of money. So, That's capitalism. That's venture capital. That's entrepreneurship. There's obviously all these things in the news every week about, you know, this week it was Elon and them coming out with their new model. You know, the clash of the titans internationally, a big speech by JD Vance in Europe on AI. But, but the point I want to make is that I think that this is the story of entrepreneurs starting new businesses is not being told enough. And, you know, there are things coming out of incubators. There are 2-person startups. There are meetups taking place that are, to me, very reminiscent of something— there was a homebrew club where some of the early enthusiasts about microcomputers got together, just hacking, hanging out, showing each other their projects. You know, Wozniak. Other companies, Osborne, Grid, that most, most of our listeners don't have any idea what I'm talking about. But the first wave of personal computers was just people hanging out together that were young and upstartish. And I just want to just remind people that that is happening now too. Yeah. Mm-hmm. And that I think there is a huge lack of imagination about what new businesses, new projects, new vectors will be created because of this enabling technology. When the personal computer was developed, who knew that there was going to be a job for an influencer, right? I mean, just, you know, or that, you know, when the cell phone was invented, that that would enable, you know, a revolution in kind of YouTube videos and Uber. And so, and I don't say I even know what these are, but when you have these enabling technologies that are very, very strong. Everybody, I think, tends to look at things in a very static way and say, oh, self-driving cars are going to eliminate the need for Uber drivers. Isn't— and they view that statically. And they don't talk about what do self-driving vehicles open up for people to do other things, create new businesses, have new jobs. And oh, by the way, Uber driving as a profession also did not even exist 10 years ago. You know what I'm saying? So I'm not trying to diminish or be flippant about people whose job can be changed or industries that have to undergo radical transformation. That disruption is very real and very painful. Mm-hmm. And so it is though, with all humility, that I just want to make the point that there are young, hungry, smart, entrepreneurial people that are taking these technology-enabling tools and are starting new businesses to do things that, you know, are going to be the next generation of Ubers and Airbnbs and OpenAIs and et cetera. So I think the system is working and the competition and people leave their exist— I mean, this is like people, you know, leaving to form Intel. Okay.

Yeah.

So I think it's like, this is just, you know, history, you know, rhyming with itself over and over again. So

yeah, there's a lot you brought up there. And to your point, you know, the entrepreneurship ecosystem is all about what you could do in the face of limited resources. And the answer now more than ever is quite a lot. You could do quite a lot with limited resources, more than you ever have been able to in the past. And it will spurn a boom of value creation on the back of the introduction and proliferation of AI. But yeah, this story about the OpenAI talent, you know, to your point, Fairchild Semiconductors were in my mind first. Like, we've seen this pattern before. There is a single pioneering company that becomes a breeding ground for talent and that fans out to create massive industry-defining companies. So if our listeners are interested in our world, you know, the history of our world was captured very well by, in a book called Power Law. And the first few chapters is dedicated to this company, Fairchild Semiconductor. It was the birthplace of the so-called Fairchild Mafia and many of its key engineers, a couple of them founded Intel, others built companies that shaped the entire semiconductor industry. We've seen it more recently with PayPal.

PayPal Mafia, same deal, right? This is the OpenAI Mafia, right?

Yeah, exactly. So it's Mira Murati with her new company. It's Ilya Sutskever. It's Dario Amodei who co-founded Anthropic, and Claude is their model that we use all the time here at Alumni Ventures alongside the OpenAI models. And we're going to see more and more of this happen.

I mean, you see this with companies and the people who leave to, you know, the tree of the PayPal tree of life kind of thing. Yeah. I think you also find it geographically. So, you know, you can go to a town and if you can have 1 or 2 very successful tech companies, And attract talent and attract skills and that they then leave, but like the area. And, you know, it becomes— that's the story of Silicon Valley was not just the people and the companies they created, but just the whole culture of the Bay Area can be transformed. And I've made the point as well, which is I think the Silicon Valley— it's not Silicon Valley or Boston to a lesser extent or New York to a lesser extent— has— is losing share. Everybody says, oh, you know, everybody's leaving the Bay Area to move to Austin or what have you. I just think the rest of the world is becoming Silicon Valley. Yeah. So I think it's, you know, this, you know, and I would argue nothing is, um, pure. There's, there's good and bad of that. But I do think that the culture of, um, innovation, risk, taking, trying new things, failure is okay, that these things that I think of when I think of Silicon Valley, I think are generally good for society and generally good for moving the technology forward. You know, we build on these things and some of these things are not just the technical knowledge, but it is just, The culture of this is what a talented person does at some point. They join a tech company, and it doesn't have to be high-tech, but it's about growth and innovating and disruption and trying new things and moving fast and failing and trying again. And, you know, that is spreading Across this country, but I think if you take a step back and look at the arc, kind of the arc of history, it's spreading around the world because it works. And, you know, technology is the underlying thing behind all of this stuff. So,

yeah, look, as investors, when we're talking with a founder, one of the things that we always ask is, What is your strongly held belief about the industry that you're playing in? What is your unique insight that you're building for that?

What does everybody else have wrong?

Yeah. And, and so the people who are building, you know, through the founding period at OpenAI have these unique insights about, okay, here's this incredible culture that we built at OpenAI, but there's an offshoot of something that I want to do differently and that I think the market will respond really well to. Yeah. And nobody else knows about that because I was there. I was in the room where it happened. And so we're always looking for that. And it's where you're gonna see a lot of value creation from Mira and from Ilya and all the others that come out of that ecosystem. And to your point, it's not necessarily about fragmentation of one, like a, of an overall set of values. It's about kind of building that culture in new and interesting and bigger directions.

I want to take it in this direction versus that direction, and I'm highly motivated to do it. So it's great.

So now there are very many instances of this where executives from top industry leader companies fan out, like Lucas was saying, and do their own thing and create their own industry-leading companies. So I wanted to share a few because there are some really cool ones that I think are going to surprise a lot of our listeners. So let's start with this: what do Twitter, LinkedIn, Uber, and Bumble all have in common? Yes, they are apps, and yes, there is some sort of social media involved in them, but these major companies didn't start in garages or dorm rooms. They started within the industry. Take Evan Williams. After working at Google and playing a role in the rise of Blogger, he went on to co-found Twitter in 2006. Reid Hoffman helped build PayPal before launching LinkedIn, which later sold to Microsoft for $26 billion. Travis Kalanick, who had already spent over a decade in the startup world, took what he knew and co-founded Uber. Turning it into a global transportation giant. Even in corporate leadership, future founders have emerged. Spencer Raskoff, a former Goldman Sachs employee, went on to co-found Zillow, transforming how people buy and sell homes. Eric Baker, once a consultant at McKinsey, built StubHub and then later founded a competing platform, Figago. These stories prove that experience in major companies can be the perfect launchpad for innovation. But there— this isn't just a story about men in tech. Women founders have also taken the industry experience and have built their own empires. Take Whitney Wolfe Herd, who left her role as VP of marketing at Tinder and launched Bumble, a dating app that flipped the script by putting women in control. Just a few years later, she took Bumble public and became the world's youngest self-made female billionaire at the age 31. Then there's Sara Blakely, who didn't have an executive title but worked as a fax machine salesperson before launching Spanx with just $5,000 in savings. Today, she's a billionaire who revolutionized what we know as the fashion industry. And let's not forget Meg Whitman, who brought her leadership skills from companies like Disney and Procter& Gamble to eBay, turning it from a $5 million company to an $8 billion-dollar powerhouse. Now, these stories prove a simple truth: experience breeds innovation. The skills, connections, and knowledge gained inside major companies often lead to game-changing new ideas. And with more funding and resources available to women and underrepresented founders than ever before, the next wave of industry-changing companies could be coming from places we at the least expect. So the question is, Who's next?

Okay. What do you got?

All right. So I do wanna talk about, um, some evolving trends in e-commerce. So e-commerce is evolving beyond simple transactions. Younger consumers raised on streaming and gaming and social media, uh, when they shop, they want an experience, something more robust than clicking and dropping items in a cart. So shopping is becoming interactive, it's becoming community-driven, it's, it's more infused with entertainment. And platforms that embrace that shift are seeing pretty explosive growth right now. There are a few companies that embody that trend really well. So Whatnot is kind of the core example that I think of. It's a live shopping startup. They just raised close to $300 million, pushing its valuation to nearly $5 billion. And Whatnot's success is all about creating this shopping experience that feels dynamic and feels social and engaging. It's all about real-time interaction. Sellers are hosting these live auctions. They chat with their buyers. They generate a sense of urgency that kind of mirrors the excitement of a, of a bidding war or, or a limited time drop. And, and that format is working. Especially well for some niche markets like collectibles and sneakers and vintage fashion. But I think it's gonna keep coming more and more into the, into the mainstream. And it taps into like engagement mechanics that are the same types of mechanics that are keeping people glued to platforms like Twitch or TikTok. So I think that's one interesting trend. And on the opposite end of that trend, Amazon, despite its its dominance in e-commerce has completely misread this shift of live shopping. They launched a platform called Inspire, and it, it was this TikTok-style shopping feed. They launched it in 2022, and it was designed to bring short-form shoppable videos into the Amazon ecosystem. But Amazon doesn't have an organic creator community. Its users don't come to the platform to passively browse Browse videos, even with financial incentives, Inspire could not manufacture the kind of engagement that fuels platforms like TikTok. And I think at the core of that, so so last week they quietly shut down the whole entire platform. And I think at the core of that shutdown, and something we should all take away here, is is hey, if you are a consumer-facing company. you have to be real with people. Whether it doesn't matter what the bit, it could be a D2C model, a marketplace, retail business, or some other compelling business model. You need to build for who your users are. And if you don't, you're gonna be snuffed out pretty quickly. And so when Amazon launched Inspire, they basically offered creators $25 per video, and it was viewed by the broader creator community as a joke.

It's a joke.

It wasn't gonna move the needle for them. And everything started to unravel from there. You know, we're always talking about how we cater to our customers. Yeah. And how important that is. And so consumers are gravitating toward these very—

And it's a case too, Lucas, too, of like, this is, you know, like classic upstart entrepreneurial fresh approach. Taking on the big company that just can't get out of its own way, that is locked in a different paradigm. It's nothing against Amazon, but they've created systems to do what they do really, really well. And that's entrepreneurship. And that's, we try to find teams like that and invest in those kinds of companies. And sometimes they work and sometimes they don't, but that's the game, right? And You know, consumer behavior changes. And, you know, listen, if you go back in time, you know, as you described it, it's like, oh, that's a 2025 version of QVC, right? When we had cable television, you know, there was a huge innovation, which like, oh, we're going to 24/7 shop. And they'd have— and they still are around. But it's like, you know, This is QVC for, you know, 2025 and young generation kind of deal, right? And we're seeing this, I think, with physical, physical space selling as well, which is, you know, there's all kinds of innovation about what kind of experience do you want as a shopper. And I know there's innovations going on. We're looking at some of these deals where it's like, Is this even a store? Because it doesn't even feel like a store. It feels like a place where people are hanging out. But you're, you know, you can buy the furniture. So I think it's— I think one of the things about consumer-facing stuff too is it— there's so much innovation and it's so into kind of the technology foundation that you can build it on. And yeah, people are on their phones, people are lonely, people are, you know, wanting to be entertained every second of every day. So if you're going to sell them stuff, design it for the world we're living in kind of thing and not trying to bolt something onto what you already have. Amazon would've been much better buying these kinds of places and leaving them alone. And, you know, again, very tricky conversation about how do you stay innovative and experimental while trying to serve your existing business really efficiently.

All right. This seems like a good place to take a break. We will be right back. Don't go anywhere.

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So that's a good one.

And it's something that they've at their core have always tried to work into their philosophy at Amazon. Bezos was known for his His quote-unquote day one culture, trying to lay out all the foundations to a— I

mean, they tried at least, right? The other part of it on the good side is their list of kind of failures is really long. And so at least they're taking swings, right? Kind of thing. And so I think that this is like Bessemer's anti-portfolio, right? Which is like, you're going to miss, but keep trying.

Yeah. Yeah, for sure. And hey, to be clear, Amazon's gonna be okay.

Yeah, they're gonna be okay. They're gonna be okay. Yeah.

All right. Should we go to our last topic?

Yeah, take it away.

All right. So I wanted to talk here about internet safety for children. Okay. Um, a couple of interesting headlines in the past week. So look, for, for a lot of families with kids of a certain age, this is just one of the only things you could think about every day. No one wants their kids exposed to harmful content. Or manipulated by online predators or influenced by AI-generated misinformation or disinformation. Stakes have never been higher here. The National Center for Missing and Exploited Children reported a 12% rise in suspected child exploitation cases in each of the last 2 years. And platforms like Roblox and Discord, where millions of kids are spending hours daily, have been coming under fire for failing to appropriately control content for, for children. So this week, Google announced an AI-driven age estimation system. Yeah. A pretty aggressive move toward enforcing age-appropriate experiences at scale. So instead of relying on the, you know, enter your birthday model, which is about as effective as, you know, a bar hanging a sign that says you must be 21 to drink. Google is now going to at least start testing to analyze a user's browsing data and behavior patterns to detect if a user is under 18 and automatically enforce stricter settings like SafeSearch and YouTube content restrictions. If misclassified, users can verify their age and, you know, use official documentation. But this is kind of an evolution in digital identity. AI You know, acting for good and acting as an active guardian rather than a passive gatekeeper. And if successful, I think it could be a new standard for online safety and start to force other platforms.

These wonderful technologies can be part of the solution in these challenges for sure. I mean, again, I'm a little beyond the young kids phase now, probably entering more of the grandparent phase soon. But I— and I hear experts talk about generally we're probably a little overprotective of our kids in the physical world and a little underprotective of our kids in the electronic world. And again, we just had our own Cyber Night in New York recently where we're talking about cybersecurity. There was a venture capital firm that was recently kind of hacked. So, you know, I think we're all concerned with AI and deepfakes and protecting our kids in online ways. There's a huge movement now, and this isn't directly safety, but I think it's related, which is there's a huge movement toward kind of taking away phones in schools that is really gaining a lot of traction in both blue and red states. So I think, you know, we've talked a lot about, you know, are you a tech optimist or a tech pessimist? And as tech optimists, we tend to see these problems which are brought about by technology You really can say, hey, this, we need to go back in time. And I think that there are guardrails like no phones in schools, like sign me up. My parents are teachers. I get it. My brother's a teacher. I think it would be wonderful. And then tools where we use technology and innovators solve problems to protect our kids. That's, I think, a more practical way to address these problems through entrepreneurship and technology and systems and innovation than to just clutch our pearls or try to go back in time.

Yeah.

Because that just won't work. But it is good to see, you know, again, an area where you can bring AI to bear. To do good and protecting kids and authenticating and frankly, probably long overdue. And again, where I'm a big believer in competition and innovation, you know, if they, if there was a profit incentive to age gate kids, figure it out, right? Because there's, there's No reason that this can't be done. And so competitive pressure to make it happen and consumer pressure to make it happen is good. And then, you know, AI is a fantastic tool to do it. If it can spot, you know, if it can spot cancer in an X-ray, it should surely figure out, you know, that with 97% likelihood, this is a 13-year-old girl. And act accordingly.

Yeah, and there's there's some hope there. And and you know, Google, OpenAI, Roblox, Discord—they've they have banded together to to do this. And I I hope this isn't just you know maybe this is naive. I hope it's not just PR. I hope it's not just optics. I think AI-driven safety tools have the potential to make a real difference, but their impact needs to be measurable. It can't just be a it can't just be a feel-good announcement to appease. to appease lawmakers and kind of keep the lawmakers at bay.

So you have to watch that because it can be that at times. Yeah, we all, we all have to be vigilant and really demand.

We are tech optimists here, right? You know, kids using technology, I think, is an overwhelmingly positive thing. But those digital spaces need to be designed with their safety and not, not just their safety, but their development in mind. You know, something I've, I've thought about recently is when I was in high school, uh, I was on a debate team. Yeah. And my partner and I would spend hours and hours and hours poring over articles and, and developing these super tight arguments, um, and crafting our narratives and practicing on each other. You know, she says this, I say that, and vice versa. Um, and there are parts of me like, okay, high schoolers today using AI to generate all of that is on the one hand, I think damaging at times because it can, uh, oh, you know, they, they, they won't be, they're not developing the tools they need to.

Their own, their own software. It's their own software maximizing its own development. Right.

Yeah.

Yeah.

Like, well, are they creating a, a, a, a system for themselves where they're not teaching themselves how to actually hold a conversation as an adult? But on the flip side, AI can be incredibly enriching. Like they could find new, uh, arguments and narratives and paths and kind of enrich themselves and dig deeper than I ever was able to. Um, so, so I think we just gotta create the right ecosystems to, you know, push this AI usage toward enrichment as much as possible. Yeah.

Yeah. And again, it's— I think these— a lot of these debates are often pushed to extremes. And I think the right answer is a muddy middle, right? And so, you know, I was hearing a debate on kind of How free range of a parent do you want to be? And, you know, there is, I think there's a growing movement toward less helicopter, more let the kids develop their own decision-making, let them do what they want when they want, eat what they want, and they'll, and let them learn to own all of their own decisions. Right. And taken to extremes, I think that that can be a little nutty. And I think the command and control parenting where the kid never develops any of those independent decision-making abilities and to make mistakes and to learn from those mistakes and to have agency, you know, and obviously the difference between a 3-year-old and a 13-year-old is huge there, but I think That also applies to technology and education and learning. I mean, again, in my era, there was that debate about calculators, believe it or not, which is— Yeah. You know, outlaw calculators in schools because, you know, what if, you know, what if Mike is in the woods and, you know, can't do long division? You know, so, you know, I, and I do think you want to be able to have some, you have to have your own brain be capable of doing some basics. And, and, and there are things about communicating with another human being and developing an ability to empathize and to write and to communicate and to speak and to, you know, I think those things regardless of AI. But to say that those tools are all bad and that we're not going to allow them when they're going to live in a world where, you know, again, I was in the car with my, my wife and we're just, you know, literally asking kind of an audio version of ChatGPT question after question about, you know, what is the history of 21-gun salutes? And the answer was there, you know, and we're talking to them and, you know, it just kept like, you know, and then going through my own family history where my grandmother taught in a one-room schoolhouse with 9 grades and an outdoor bathroom. And that was 75 years ago. And so, you know, crazy. the state of change in technology and, you know, what parents have to deal with. Um, very different and a kind of a moving target. So, Lucas, it's been, it's been a good tour. We've had great conversations. I've enjoyed it. I think we've covered some important topics. It'll be fun to look back in 5 years to kind of what we were talking about, like what was on What was on the agenda for these conversations. And I look forward to kind of getting you back in the, in the mix down the road.

Sounds great. Well, I would love to be back sometime. Uh, thank you for having me on these last couple of months. It's been a lot of fun. And, uh, yeah, well, good, good luck to the, to the next.

Yeah, we'll carry the torch forward. All right. We'll talk again soon. Thank you, Lucas. Take care.

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