How To Leverage AI In Your Startup

Summary

This Y Combinator video discusses the integration of AI in startups, emphasizing that founders need to focus on creating value, regardless of the technology used. AI should be naturally integrated into new businesses, similar to how cloud computing became essential a decade ago. The video shares success stories of startups pivoting to AI and highlights the importance of location, suggesting founders immerse themselves in AI-centric environments like San Francisco. It also explores various applications of AI across industries, particularly in healthcare and localization.

Highlights

• Founders should focus on creating value, not just using AI as a trend. 🔑
• AI should be a natural part of any new tech startup. 🤖
• Location matters - being where AI innovation happens, like the Bay Area, is crucial. 🌍
• Healthcare and localization are promising fields for AI applications. 🏥🌍
• Successful pivots to AI have enabled startups to rapidly scale. 🚀

Key Takeaways

• AI should be seamlessly integrated into new startups for optimal success. 🤖
• Founders need to focus on creating true value beyond just using AI. 💡
• Being in an AI-centric environment like San Francisco can spur innovation. 🌉
• AI offers significant opportunities in industries like healthcare and localization. 🏥🗺️
• Success stories show well-timed pivots to AI can lead to rapid growth. 📈

Overview

The integration of AI in startups is not just about riding the tech wave; it's about embedding AI authentically to drive real value. The speakers emphasize that the fundamental duties of a founder remain constant—creating something that delivers genuine value to customers. Simply incorporating AI won't change a company's fate unless it's strategically utilized.

The video urges startups to consider AI as a fundamental component, much like the shift to cloud computing in the past. It offers examples of startups that have succeeded by pivoting to AI, underscoring the importance of insights and community, and advocating for founders to position themselves in dynamic, AI-focused environments like San Francisco.

AI's potential extends across various sectors, with healthcare and localization highlighted as fields ripe for AI disruption. Successful ventures have seen explosive growth by innovating with AI, proving that while technology plays a crucial role, strategic execution and understanding customer needs are key to leveraging AI effectively.

Chapters

• 00:00 - 00:30: Introduction and YC Spring Batch Deadline The deadline for applying to Y Combinator's first spring batch is February 11th. Accepted startups will receive a $500,000 investment along with access to a world-leading startup community. The chapter highlights the importance of foundational tasks that founders must focus on to deliver value to customers, regardless of the advancements in AI or technology. The emphasis is on maintaining core business principles even when integrating new technologies like AI.
• 00:30 - 01:30: Leveraging AI in Startups The chapter discusses the imperative for startups to incorporate AI into their business strategies. It draws an analogy with cloud services, emphasizing that just as new companies naturally integrate cloud technology, they should do the same with AI. The chapter suggests learning from professionals who already use AI by observing their workflows to identify repetitive tasks that could be optimized with AI technology.
• 01:30 - 02:00: Office Hours Introduction with Brad and Pete Brad and Pete introduce an episode of Office Hours, featuring guests Gustav and Nicola. They share their experiences from meeting thousands of founders and aim to discuss various arising topics. In this episode, they focus on the age of AI, exploring the diverse opportunities available for startups to capitalize on AI advancements.
• 02:00 - 03:00: Discussion on AI Opportunities and Startups The chapter explores the new opportunities emerging from large language models (LLMs) for startups. It discusses the potential of these models as they improve, suggesting that founders should consider the possibilities when these models become more advanced. The conversation questions whether current startups should pivot to AI and concludes with two perspectives: founders should not pivot to AI solely because it appears attractive, but they should strongly consider integrating AI into their work.
• 03:00 - 04:00: Integration of AI in Existing Companies The chapter titled 'Integration of AI in Existing Companies' focuses on how organizations are increasingly adopting large language models (LLMs) to enhance efficiency in their operations. It gives an example of a company involved in HOA (Homeowner Association) management, which uses LLMs to streamline its internal processes. The transcript suggests that the use of LLMs is becoming as fundamental to companies as cloud technology is today, and these models are embedded at the core of certain businesses to optimize their functions.
• 04:00 - 05:00: Technological Shifts and Opportunities for Startups The chapter explores the necessity and inevitability of leveraging new technologies like AI and cloud computing for startups. It draws a parallel between the movement of software businesses to the cloud in the early 2010s and the current technological shift towards integrating AI. The chapter emphasizes that incorporating these technologies represents both a significant opportunity and a strategic requirement for modern businesses, akin to the past transition from on-premise to cloud software solutions.
• 05:00 - 06:00: Impact of Technological Cycles on Startups The chapter discusses how technological cycles influence startups, using historical examples and predictions for future trends. It begins by illustrating how innovation can transform existing ideas when new technologies, like AI or the cloud, become available. A key example is shared involving a conversation with the CEO of Workday, referencing his experiences in realizing that cloud technology would revolutionize enterprise software once it was incorporated. The narrative emphasizes the potential for similar transformations using AI today, analogous to the cloud's impact in the 2000s, and how startups can leverage these moments for growth and innovation.
• 06:00 - 07:00: Emerging Opportunities and Competitive Advantages The chapter discusses the time around 2007, highlighting the period just before the mobile wave took off. It notes the introduction of the iPhone by Steve Jobs during the speaker's first week at YC (Y Combinator), marking a transformative phase in technology. However, the speaker indicates that their company was ahead of its time, as essential app developments and permissions were not available until 2009. The chapter emphasizes the significant development and opportunities over the next five years, shaped by advancements in mobile technology and app ecosystems.
• 07:00 - 08:00: Success Story: Superpowered to Bappy The narrator reflects on the early days of mobile company development, reminiscing about a hackathon where their acquaintance Joe was creating Facebook's first mobile app for the iPhone. At the time, the narrator had a casual reaction to this innovation. However, looking back, they recognize they were at the start of a significant cycle in mobile technology development. They note the importance of witnessing these technological cycles and how it distinguishes them from founders who didn't recognize these pivotal moments as they happened.
• 08:00 - 09:00: Strategic Moves and Startup Survival The chapter discusses the impact of recent technological shifts on businesses, particularly startups. It highlights how these changes are often unseen by large companies, which tend to react slowly. The speaker notes that technological advancements are happening rapidly compared to just two years ago, and startups should capitalize on opportunities that were unavailable even a year and a half prior. The speaker advises not to fear competition from large established companies, as they are slow to adapt to new technology. The reference to 'chpt' being two years old underscores the rapid pace of tech developments.
• 09:00 - 10:00: Challenges and Missteps in AI Pivot The chapter titled "Challenges and Missteps in AI Pivot" discusses the slow speed of execution in large companies, exemplified by Alexa's development. It highlights the advantages this presents for startups, providing opportunities to innovate and grow without the constraints that big companies face. Additionally, the chapter touches on an inspiring story of a company that applied to Y Combinator, suggesting a narrative of entrepreneurial ambition and potential realization.
• 10:00 - 11:00: Importance of Location for AI Innovation The chapter discusses the importance of being adaptable and innovative in AI technology, using the pivot example of a company that shifted from building a financial investment platform to a productivity tool for Zoom calls during the onset of COVID-19.
• 11:00 - 12:00: AI Applications in Various Industries The chapter discusses the growth and survival of products from YC that reached a significant user base and maintained a 'default alive' status. Despite initial success, the business faced challenges as time passed, leading them to relocate from Toronto to San Francisco to adapt and explore new opportunities amid changing circumstances.
• 12:00 - 13:00: AI in Healthcare and Administrative Tasks The chapter discusses the rapid growth and impact of a company called Bappy, highlighting its rise over the last 15 months. Despite having a modest start, Bappy has become a significant player, powering numerous companies both within and outside of Y Combinator (YC), such as Boyi companies, U Plan, and Retell. The narrator has a close working relationship with a company called W, noting its success and pivotal role in advancing the industry.
• 13:00 - 14:00: AI Enhancing Patient Care The chapter discusses how founders of a company foresaw the potential in AI and embedded themselves within a community to capitalize on these advancements, leading to their success. It highlights the point that some companies may try to pivot to AI-related projects when their original ideas aren't successful, but this doesn't always lead to success.
• 14:00 - 15:00: Closing Thoughts on AI and Startup Innovation In this chapter, the focus is on critiquing common mistakes made by startups, especially in the realm of artificial intelligence and innovation. The speaker criticizes those who simply replicate existing models, like becoming yet another customer support company, without offering new insights or innovations. The importance of embedding oneself in relevant communities and gaining deeper customer insights is emphasized. It highlights the need for startup founders to take fundamental steps to effectively integrate and leverage technology.

How To Leverage AI In Your Startup Transcription

• 00:00 - 00:30 the deadline to apply for the first YC spring batch is February 11th if you're accepted you'll receive a $500,000 investment plus access to the best startup community in the world so apply now and come build the future with us we're talking about all this AI stuff and it's all awesome but the fundamental things that the founders still need to do to like enable uh the technology to to produce value for customers are the same and if you're not doing that just switching your idea over to something that makes calls to open AI is not going
• 00:30 - 01:00 to not going to change your fate as a startup if you are building a cloud company obviously you're going to use the cloud same thing with AI like it doesn't make sense for anyone creating a new company today to not leverage AI within their company go to your friend who works in this and go and sit next to them and ask them how they do their job and watch their screens and you will get ideas right away I'm very convinced that like you don't have to do spend more than like a few hours in front of their screens and see what of their repetitive tasks can be done better
• 01:00 - 01:30 [Music] welcome to another episode of office hours I'm Brad and this is Pete and we're here with Gustav and Nicola we've sat across the table from thousands of Founders over the years digging into just about every question you can possibly imagine and we want to talk with you today about some of those things that have come up we are in the age of AI that can mean a lot of things though and there's a lot of different directions you can go with that so what are some of the ways that startups are taking advantage of the fact fact that
• 01:30 - 02:00 there's so many new opportunities coming on board from llms if I were a Founder today what I would be asking myself is what's going to be possible when all of these models become twice as good as they are today so if you are a startup today in the old world of how you build the startup should you pivot to AI should you how do you see that going like should use AI I have I have two answers to that the strongman answer to that is that no you should not pivot to AI you shouldn't do that just because it seems like a good idea but yes you should almost absolutely be working on
• 02:00 - 02:30 something that's using llms at the heart of it today what's in the company anyway exactly what what what does it even mean um I I think uh anyone that's using llms either internally for to to make things more efficient um I've got a company that I that I worked with a few batches ago that's literally building an HOA management company just like straight up we are an HOA management company we we sell to condo boards and then we do all the stuff for them but they're using llms to make everything more efficient internally you don't ask people if you are a cloud company obviously you're
• 02:30 - 03:00 going to use the cloud same thing with the like it doesn't make sense for anyone creating a new company today to not leverage AI within their company right that's exactly right and it's in the early 2010s when a lot of software businesses started moving onto the cloud there was this moment in time as a Founder where there were just a lot of good ideas lying around because you had the opportunity to replace some Legacy piece of software that was on Prem and I think we're in a similar moment right right
• 03:00 - 03:30 now where there's just a lot of good ideas where you can take some existing piece of software and build it from scratch with AI and Native part of that and it's going to be much better I I've talked to the CEO of workday about this and he was previously a people soft and just saw this 2000 or whenever like okay people soft is huge but now the cloud is here someone's going to build a whole new version of all the same stuff just have it be based in the cloud and it'll be better and similar moment now for a lot of companies I think like this if I look back at my time I I I arrived here
• 03:30 - 04:00 in 2007 um roughly the same time for for you you when you these start with your startups the mobile wave had not happened yet like my first week of YC was Steve Jobs presenting the iPhone and if you haven't lived through these Cycles it's kind of it was hard for me to kind of imagine what would happen from that from that week on but uh our company was too early like like the apps didn't come until summer after and the permissions that we needed didn't come out until the summer after that it's 2009 but the following 5 years were just like that that period when all the
• 04:00 - 04:30 interesting mobile companies were generally started like a lot of the stuff that we now use and I remember in my match was Joe and Joe sat next to me and hackathon him like what are you working on he like I'm building Facebook's first mobile app you can now build apps for the iPhone and it was like oh cool that was my reaction it wasn't like like anything more than that but I if you look back I realize we were right in the middle of the beginning of that cycle and I think because I saw that or we all saw that we now see this and a Founder who didn't see any of the people cycles that actually was real
• 04:30 - 05:00 that like had a really big impact they can't see the they might not be able to see this cycle in the same way big companies generally are preceded by big technology shifts and um this one happened two years ago and we're like very increasingly getting more intense throughout every month and like whatever we saw in like the beginning of last year um it's like we' moved much further already and there's a lot more things you can build now they couldn't build a year and a half ago and you shouldn't fear existing big companies is that so slow like look chpt is like 2 years old
• 05:00 - 05:30 like even a little more now and we still are like such a dumb Alexa come it's it's been obvious for two years that that's the way things change and still we are the we have the whole ala so I of course it's going to eventually get there but yeah I would not fear big company speed of execution and I think there that opens up so many opportunities for for startups and I have a story I find quite inspiring actually it's about a a company that applied to YC I looked up the application yesterday they applied in
• 05:30 - 06:00 the fall of 2020 as invest better um and they were building a financial investment platform they came into IC and then within a month or so they had pivoted and they were building a productivity tool to help you with zoom calls this is right in the beginning of covid like in January of 21 we got used to being onsms 20 times a day and it turned out that every time you have to open suum you had to go to the calendar click and click and click and then open and they're like no we just build something they just like drop down and click one time and then everything is perfect so they built that it's called superpowered it became I thought it was one of the most beautiful consumer
• 06:00 - 06:30 products or pruma products I've seen in YC they grow to thousands of of daus and they grow to like a decent sized business they can probably survive survive themselves they were like at least default alive but what happened is like a year went by and another year went by and they moved back to Toronto they were here they were here despite covid and in Toronto they were like LMS are happening something is happening we need you to do something else and they took two very specific decisions in the beginning of last year which one to move to San Francisco from Toronto
• 06:30 - 07:00 um uh and the other one which is to just try to stop working well they try to sell it but they stop working on the previous product and then they want build something new and that company is now called bappy and the last 15 months it's not even 18 months they've grown from nothing to powering uh a big portion of the boyi companies in YC and outside of YC there are other companies like U plan and retell as well but but um I've worked closely with W that's a story that I know it's doing incredibly well and they are a very important part of of sort of like bringing this forward
• 07:00 - 07:30 and I think those Founders just kind of saw the writing on the wall and they then they did get the Insight okay if we move to Asaf and we kind of uh embed ourselves in this community was happening right now good things will happen and that was absolutely true and and this company is on fire right now I I think you rais a really interesting point I've have some companies that I've worked with that were not working on AI ideas and things were not going that well and they said okay we're going to Pivot to an AI idea it also didn't work well and and and in those cases the
• 07:30 - 08:00 things that I think they did wrong were they um had kind of a very obvious approach you know we're going to be customer support agent company number 50 uh and didn't really have any new insights on what to do differently there um they didn't change up uh any of like the environment that they were working in they didn't embed themselves in any communities they didn't get deeper into any customer insights and so we're talking about all this AI stuff and it's all awesome but the fundamental things that the founders still need to do to like enable uh the technology to to
• 08:00 - 08:30 produce value for customers are the same and if you're not doing that just switching your idea over to something that makes calls to open AI is not going to not going to change your fate as a startup you got a good point here that's what you uh discovered in Europe here like everything in AI is happening in SF right now moving here is actually a great way to open yourself up to new ideas to to new insights and to not be left behind and realize when you're later than voice eyes is a thing and to know what the state of the art is and to know like okay I can do this and to know that maybe that's not impressive enough
• 08:30 - 09:00 yet that's not useful enough yet that's not going to get a deal done yet it's very hard to know what you're missing without actually going experienc it so if you're not ready to move here well at least come here for three or four weeks yes and like camp out here go to go to the hack hackathons that you want to go to try to meet stay at gustoff's house yeah and just try to embed yourself in this community that is now very apparent and I remember I used to get asked this question in the past is like why is it so good to be in the Bay Area and I gave this example and I worked at Airbnb and I was like well we wanted to learn how
• 09:00 - 09:30 to be good at SEO and we're like who is really world class an SEO in the world Pinterest where are they oh they're downstairs so we walked downstairs to the Pinterest and we talked about them about SEO we learned from the absolute best team and I think that is the state of LMS here right now like you go next door or three doors down and then you have the company that's probably the best at the thing that you want to learn learn about and imagine if you're like in Chicago or someplace like that and you have the same Insight oh I need to talk to someone at Pinterest and you're lobbing emails across and liking someone on LinkedIn and all this stuff and it's
• 09:30 - 10:00 just not going to happen for you the same way it's not going to happen and I think the advice could not be more clear I think now um compared to anytime in the last 10 years that you should come here uh at least temporarily but like you should consider being booming here permanently so it sounds like we've we've uncovered a onew punch of yes you probably should pivot to AI with some caveats and you should come to the Bay Area so that you do it in the best way possible should we talk about other other applications of AI of things you've seen
• 10:00 - 10:30 um like other parts of the um world where AI is having a big big impact and no one has a good example yeah sure so uh just looking at the last batch the first ever fall batch that we just completed uh a few of the companies I worked with so there are two companies that are working on different problems uh but they're solving them in a in a similar way and so one is a company called replex they're building software that automatically translates your UI from one language into another so they automated AI localization and another another is called gecko security and
• 10:30 - 11:00 they are an AI security engineer and so both of these companies are taking some previously specialized skill and automating it with AI putting it behind an intuitive interface and giving software engineer software Engineers the ability to manage this independently as part of the release cycle there's another example of a company I worked in the last worked with in the last batch who all worked at an insurance technology company before this and because of that they had a lot of
• 11:00 - 11:30 exposure to the workflow that Medicare Advantage agents go through selling Medicare Advantage insurance plans and this is a relatively obscure workflow most software Engineers don't have much experience with that but because of that experience they were able to build an AI co-pilot for Medicare Advantage uh insurance agents and it's doing very well that's interesting like I have a whole framework in my head for for for how to go after the healthcare section um like you said most people that are building for healthcare have never had a
• 11:30 - 12:00 job in healthcare where you actually get come across these inefficiencies yes but the US Healthcare System I believe it's like something like4 trillion dollar in spend of which 1.3 or 1.4 is is admin if you look at the companies that we funded in YC it seems like much of this admin is Legacy Software System plus a human who's moving data from one system into another and that's what most of this actually is and that's shocking and we have more admins per doctor in the US than many many many many other countries
• 12:00 - 12:30 in the world and I think it has a combination of like we have lots of softwares and lots of people and then we have incentive structures that kind of everyone needs to make money in this system now most of the tasks are fully automatable so there's a company doing preo um Tara and they are basically taking the information from the doctor plus some other information and they're summarizing it and they're automatically creating the pre-o request that goes into the payment portal and you can now do this fully with LMS and that's just one out of like dozens and dozens and
• 12:30 - 13:00 dozens of these manual repetitive tasks that happens as a result of our inefficient Healthcare Systems we basically are moving things between one legac system in another like it's both both software portals and there's human who's translating the information in between with agents you can do almost all of these tasks I'm pretty convinced that like healthcare is not just front desk scheduling it is like every single back office task but Founders don't know what these tasks are so the challenge I have to someone's looking for an Healthcare is like go to your friend who works in this and go and sit next to them and ask them how they do their job
• 13:00 - 13:30 and watch their screens and you will get ideas right away I'm very convinced that like you don't have to do spend more than like a few hours in front of their screens and see what of their repetitive tasks can be done better it can go even further for healthcare you can actually help patients too I have a company this batch who's actually using voice AI to call patient in between visits to make sure they're doing well and possibly to schedule a new visit when necessary it's very simple but my God for the practice first more business but also it's way better experience for the patient
• 13:30 - 14:00 awesome so those are some great examples that we just heard about of companies that are using llms to do awesome stuff and to grow much faster than we've been seeing companies grow for some time here within the YC portfolio I hope that you listening and watching this maybe have gotten some ideas that can encourage you as you're thinking about whether you should change idea whether the idea you're thinking of starting is on the right track whether you should stay where you are whether you should come here to the Bay Area um we just see a ton of opportunity here and we see a lot of things happening that are tremendously exciting to us in our jobs
• 14:00 - 14:30 this has been a really fun fun time to be group Partners here at White combinator and we hope some of this is useful to you thanks so much for watching and we'll see you on the next office hours [Music]