WEBVTT

NOTE Sentence-level transcript of https://www.youtube.com/watch?v=eBUyTS7SzV4

NOTE One cue per sentence. Cue ids are the line anchors on /transcripts/eBUyTS7SzV4.html. A cue ends where the next begins, or 2 s after its last word.

s1
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[music]

s2
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Okay, great.

s3
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Hey everyone.

s4
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How's everyone doing?

s5
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All right.

s6
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Are we ready for the revolution?

s7
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Okay, Theo just asked the right question.

s8
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What do we build now?

s9
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I'm going to answer it from the other side of the table.

s10
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Uh I'm a founder, I'm an investor, and I run a 20-year-old institution that is becoming AI-native right now, which is a strange and wonderful thing to do to a 20-year-old institution.

s11
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Uh and I'll spend about 20 minutes um talking about, you know, what YC is we're trying to build companies where one person does what it took to two it

s12
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One person does what used to take a thousand people.

s13
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And I don't mean that as a metaphor.

s14
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I mean that me- mechanically this year, the people in this room will do this.

s15
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In about an hour, some of you will walk into the startup battlefield, and I want you to walk in knowing what's actually possible right now, because what is possible now

s16
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is much much bigger than what people believe.

s17
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So, let me start with a number and uh you know, I got torn apart on the internet for this, but I'm going to say it again in front of all of you anyway.

s18
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Uh this is the one room in the world that will stress test it, and I'd rather stress test it with you myself.

s19
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In 2013, I was a YC partner uh building the internal social network um at at YC.

s20
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Uh I was also investing in companies, but you know, I was also uh near full-time engineer.

s21
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Um and when I was doing that, I could maybe do about 14 usable logical lines of code a day.

s22
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Take out of the comments, take out all the and that's how many lines of code I was writing.

s23
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And if you look at the literature from that era, um you know, that's kind of normal.

s24
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Like some people write 15, some people write 50.

s25
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It was not, you know, the thousands of lines of code that I know a lot of you in this room are actually writing now per day.

s26
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Um that's about median 15.

s27
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That was me at full effort at that time.

s28
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This year I run uh YC full-time.

s29
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Uh same person, same hours, actually way less hours weirdly.

s30
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Uh you know, but I have a 5:00 p.m. kid pick-up now.

s31
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And I did the math on my output, and it's about 400X.

s32
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Now, before the skeptic in the third row right there deflates the number from for me, let me deflate it myself.

s33
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If you don't trust the raw code, well, fine.

s34
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Take the most pathological verbosity plant penalty you can stomach, and assume the agent writes bloated code.

s35
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Assume half of it is scaffolding.

s36
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Assume I'm flattering myself.

s37
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It's still 8X at the floor and 80X in the middle.

s38
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That number is large, no matter how you torture it.

s39
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And here's the part that matters, the part that I'd tattoo on the inside of everyone's eyelids if I could.

s40
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It's not the model.

s41
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The 2X people and the 100X people are using the exact same Claude.

s42
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Same weights, same context window, same API.

s43
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So, the leverage is not in the weights.

s44
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It's in how you wire the work.

s45
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And it's not just me.

s46
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At YC, we see this all the time.

s47
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In the winter 25 batch, a quarter of the companies had code base code bases that were 95% AI-generated, and that was a year ago.

s48
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That batch has become the fastest-growing, most profitable batch in the history of YC.

s49
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94 companies total have now crossed a hundred million in dollars in revenue from a seed check in the history of YC.

s50
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So, uh I think we know what we're talking about here.

s51
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And I can't prove that the AI-generated code caused the growth, but what I can tell you is the fastest growing founders we fund are not treating AI as auto-complete.

s52
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They're treating it as a workforce.

s53
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The companies that wired the work differently are the ones that are bending the curve.

s54
00:04:06.080 --> 00:04:09.840
So, what does wiring the work really mean?

s55
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This is the heart of the talk.

s56
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And this is what I most want you to steal.

s57
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Everything we've learned building with agents maps to an organization.

s58
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Sorry, there's no slides.

s59
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[laughter]

s60
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I have no slides.

s61
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I'm so sorry.

s62
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[applause]

s63
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A skill file is an employee.

s64
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It has one capability, one job, written down clearly enough that someone can execute it.

s65
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Uh a resolver table, uh the thing that many of you, you know, when you run into Claude code and it says your context is too big in Claude.md, you run off and create a resolver table.

s66
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Well, you know, it and if you don't know what that is, it's literally like whenever you need to uh alter a test, load tests.md, you have a whole table of these things.

s67
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Um that's an org chart.

s68
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A task comes in and the resolver decides who handles it and where it goes.

s69
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Uh filing rules are your internal process.

s70
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So, this can be um you know, whether or not the resolver is actually working and uh is you know, is there a is it actually in compliance?

s71
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And uh trigger e-vals.

s72
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So, going in and actually having a test that says, "When I need to alter a test file, does test.md actually get loaded?"

s73
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Those are performance reviews.

s74
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So, you know, what have we done?

s75
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Like literally every part of an organization, the organization that you used to have to hire a thousand people for, I just told you what those things are.

s76
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They're markdown files and other types of markdown files.

s77
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And maybe there's some TypeScript in there, too.

s78
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We've been building organizations this whole time, but we didn't have a management layer, but now that's what we have.

s79
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When you sit down with Claude Coder Codex, you're not writing software, you're hiring, training, and managing a workforce made of markdown.

s80
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Uh and you know, that's there are tons of companies at YC that are doing this.

s81
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Uh Emergence, an AI app builder out of Summer 24, they went from public launch to nine figures of ARR in eight months.

s82
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Uh when they crossed $15 million ARR, uh they were only 15 people.

s83
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Retail out of Winter 24, it's at $60 million with about 40 people.

s84
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The kind of that kind of revenue per head did not exist before.

s85
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Not in software, not in oil, not in railroads, never.

s86
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These are not freaks of nature.

s87
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They're just the first companies built natively on the new physics.

s88
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And so, how do companies like that actually run?

s89
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Not by hiring hundreds of people for sales, support, ops, and finance.

s90
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The AI-native companies that I see inside YC encode all of that as skills, written procedures that their agents execute, and they hire they hire engineers whose job it is to maintain those skills,

s91
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to do the work the skills can't do yet.

s92
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That is an AI-native company, and it's not a thought experiment.

s93
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It'll actually file your taxes if you have a skill file for it.

s94
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Now, picture YC's batch room.

s95
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Like it actually kind of looks like this.

s96
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Um 400 companies or 400 founders at long tables, and uh you know, I can imagine every single one of you each with a laptop every single day.

s97
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You're doing uh a former person's entire year worth of work in a single day.

s98
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That's not the future.

s99
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That's actually the bar right now.

s100
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And if you're not doing it, your competitor is, and they will eat your lunch politely and thank you for it.

s101
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Here's the extension uh most engineering stocks miss.

s102
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It's not just the engineers.

s103
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At YC, as we make our transformation, it's our media people, our event staff, our finance team.

s104
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People have never opened a terminal in their lives are building skill files and cron jobs.

s105
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And one of our finance folks just collapsed about a hundred Excel workbooks into a single app she built with our internal open claw and company brain.

s106
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She's not a programmer.

s107
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She's a manager of agents now and everyone at YC now is.

s108
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So, that's why YC can run at the scale it does with a staff that would look like a rounding error at any other comparable firm.

s109
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And that's not because we work harder, because it's because we have a different type of org.

s110
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And that's whole the whole game.

s111
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It's not just 400X engineers.

s112
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It's one company that operates at the level of 400X everyone else.

s113
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And so, you know, if you remember only one thing about this, I mean, this is one of the things I had to discover along the way.

s114
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Like, you actually have to be really, really careful about where the compute computation is actually happening.

s115
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It's happening almost always in two different places and all of the bugs, all of the AI engineering that we run into that's a problem, it's usually because something is happening in one side of the equation that should be in the other.

s116
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Uh the first area I would say is latent space.

s117
00:09:06.960 --> 00:09:08.280
So, the actual LLM.

s118
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It's you know, what do you use it for?

s119
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Taste judgment, understanding what a human actually wants when they say something vague, the non-deterministic calls, the computation that lives in the model and you steer it with the markdown file.

s120
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And then deterministic space is what engineers know.

s121
00:09:25.320 --> 00:09:33.400
Like, your your code agents go off and write TypeScript or, you know, maybe they're writing Erlang if you're using Elixir.

s122
00:09:33.400 --> 00:09:35.040
Um yeah.

s123
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Deterministic space is the second place.

s124
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Let's say, you know, this is a real problem that we have for Startup School coming up.

s125
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We have 6,000 people or we're going to try and, you know, one of the experiments we're going to try and do is can we seat 800 people at a time,

s126
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um, perfectly clustered?

s127
00:09:50.920 --> 00:09:56.320
So, the person sitting to the left and the right of you is the perfect person for you to meet at Startup School.

s128
00:09:56.320 --> 00:10:01.840
Um, we have to do that in deterministic space combined with latent space.

s129
00:10:01.840 --> 00:10:15.440
Uh, the computation, this computation, this actual storage of like where everyone is inside like, you know, this multi-dimensional array of 800 seats, um, it actually must not live in the context window.

s130
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The LLM has to do the human part and seat people.

s131
00:10:19.880 --> 00:10:25.120
Um, it's actually exactly what you would do if, um, you know, you were a human tasked with this thing.

s132
00:10:25.120 --> 00:10:32.080
You would probably have to physically print out 800 pages and go in a a big room and like say like, well, where does this person go?

s133
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Only now it can all happen, um, in your computer and it can instead of taking a month, it might be able to you might be able to do it with, uh, you know, couple hundred

s134
00:10:40.960 --> 00:10:44.480
dollars worth of tokens and probably 10 minutes.

s135
00:10:44.480 --> 00:10:48.160
Um, and so that's, you know, I would argue that's pretty remarkable.

s136
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These are things that you couldn't do even, uh, I don't know, six months ago.

s137
00:10:53.160 --> 00:11:05.520
Um, which brings me to working memory and, uh, that's, you know, sort of my favorite way to understand it is, um, you and I, human beings, we only hold about seven things in our head at once.

s138
00:11:05.520 --> 00:11:07.040
Uh, seven plus or minus two.

s139
00:11:07.040 --> 00:11:17.760
It's one of the most famous papers in cognitive psychology and it's why, uh, local phone numbers are seven digits and why you forget the eighth item on your grocery list.

s140
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Uh, that's the entire working memory generally of a human being and every institution humanity has ever built, every checklist, every org chart, every filing cabinet is a prosthetic for that limit.

s141
00:11:32.960 --> 00:11:35.640
It's kind of a wild thing to think about.

s142
00:11:35.640 --> 00:11:38.760
But an AI agent holds a million tokens.

s143
00:11:38.760 --> 00:11:40.560
That's about a thousand pages.

s144
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I was trying to explain to my 10-year-old what G brain was recently.

s145
00:11:43.960 --> 00:11:51.480
I said, "There's, you know, the AI agent can keep about three Harry Potter books sitting open in its head all at once.

s146
00:11:51.480 --> 00:11:57.800
And it can find a needle in any of them and synthesize across all three in seconds.

s147
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And that's quite magical, actually."

s148
00:12:00.360 --> 00:12:05.840
Three Harry Potter books versus seven digits.

s149
00:12:05.840 --> 00:12:07.360
I mean, that's pretty awesome.

s150
00:12:07.360 --> 00:12:09.120
I mean, I don't know.

s151
00:12:09.120 --> 00:12:10.040
Is that AGI?

s152
00:12:10.040 --> 00:12:15.640
Maybe not, but it's already a very different operating and regime.

s153
00:12:15.640 --> 00:12:22.480
Almost every company on the earth is still running an org that's designed for the seven-digit brain.

s154
00:12:23.360 --> 00:12:25.640
But notice what that also tells you.

s155
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Three books is a lot, but it's also very little.

s156
00:12:28.240 --> 00:12:30.000
Your company is not three books.

s157
00:12:30.000 --> 00:12:31.800
Your company is a library.

s158
00:12:31.800 --> 00:12:39.360
Every email, every meeting, every decision, its reasoning, every customer conversation, every postmortem.

s159
00:12:39.760 --> 00:12:51.520
The question that determines whether your agents are geniuses or goldfish is who decides which three books are open on that desk.

s160
00:12:51.520 --> 00:12:53.280
That's context engineering.

s161
00:12:53.280 --> 00:12:54.880
And this is what a company brain is.

s162
00:12:54.880 --> 00:12:57.720
It's the library plus the librarian.

s163
00:12:57.720 --> 00:13:01.320
Now, some of you are already thinking, "This is just rag."

s164
00:13:01.320 --> 00:13:06.640
And you're right that retrieval is the primitive, the same way Postgres is just B-trees.

s165
00:13:06.640 --> 00:13:09.000
The hard part is everything around it.

s166
00:13:09.000 --> 00:13:19.200
What gets written down in the first place into the knowledge wiki, how it gets enriched and linked, what gets promoted to hot memory versus filed as cold reference, who arbitrates

s167
00:13:19.200 --> 00:13:21.520
when two facts disagree.

s168
00:13:21.520 --> 00:13:23.360
Retrieval is easy.

s169
00:13:23.360 --> 00:13:28.440
Being worth retrieving from is the product.

s170
00:13:28.440 --> 00:13:29.800
So, I've been building mine in the open.

s171
00:13:29.800 --> 00:13:33.480
It's called It works with any harness, but it loves open client Hermes agent.

s172
00:13:33.480 --> 00:13:44.440
It's effectively Postgres for agents, a retrieval layer whose job is to figure out for uh for any three you know, for any task, what three books should be loaded into the agent's head.

s173
00:13:44.440 --> 00:13:47.760
My personal one started as a rooms full of books or so.

s174
00:13:47.760 --> 00:13:58.080
Now it's a warehouse, about 220,000 pages written mostly by my agents from my email, meetings, 20 years of notes, uh and the lived experience of me.

s175
00:13:58.080 --> 00:13:59.160
And that's the point.

s176
00:13:59.160 --> 00:14:00.240
It's my second brain.

s177
00:14:00.240 --> 00:14:13.200
And when a founder emails me about a crisis, before I start reading as before I even finish reading that email, my agent has already pulled every prior conversation with that founder, three portfolio companies that hit the same wall,

s178
00:14:13.200 --> 00:14:15.640
and what actually worked for those people.

s179
00:14:15.640 --> 00:14:21.040
Uh when my agent does anything, it does it does everything knowing what I already know.

s180
00:14:21.040 --> 00:14:24.720
And that's the difference between an assistant and a colleague.

s181
00:14:24.720 --> 00:14:27.720
So, let me stress test my own pitch because you would anyway.

s182
00:14:27.720 --> 00:14:30.440
Company brains do have failure modes.

s183
00:14:30.440 --> 00:14:36.760
Uh a brain nobody curates becomes a garbage dump with great search.

s184
00:14:36.760 --> 00:14:41.320
Retrieval will surface a stale fact with total confidence.

s185
00:14:41.320 --> 00:14:46.000
Um a bad skill file encodes a bad process forever.

s186
00:14:46.000 --> 00:14:47.000
Uh that's bad.

s187
00:14:47.000 --> 00:14:49.480
So, primitive the primitive is not memory.

s188
00:14:49.480 --> 00:15:03.000
It's memory plus hygiene, provenance on every fact, contradiction contradiction checks when new information collides with the old, and a librarian, human plus agent, whose actual job is pruning.

s189
00:15:03.000 --> 00:15:06.720
Treat the brain like a production infrastructure, and it compounds.

s190
00:15:06.720 --> 00:15:13.240
Treat it like a dumping ground, and you get a very confident agent that is wrong in ways nobody can trace.

s191
00:15:13.240 --> 00:15:21.280
And um here's the discipline that I think, you know, personally uh makes our company brain and my personal AI compound.

s192
00:15:21.280 --> 00:15:24.440
Um that's my signature move.

s193
00:15:24.440 --> 00:15:31.200
And, uh, you know, it's what I say to every YC company and every, uh, everyone inside YC, which is never do one-off work.

s194
00:15:31.200 --> 00:15:37.400
You can open open claw, you can open your harness, you do some work, but then when you're happy, you know, and it'll come back.

s195
00:15:37.400 --> 00:15:38.720
It's, you know, kind of a bad job.

s196
00:15:38.720 --> 00:15:41.120
It's kind of like an intern that's not that good.

s197
00:15:41.120 --> 00:15:44.120
But the great thing is you can just say, "Hey, I didn't like that.

s198
00:15:44.120 --> 00:15:44.680
Fix it."

s199
00:15:44.680 --> 00:15:44.880
Right?

s200
00:15:44.880 --> 00:15:46.360
I'm sure all of you do this.

s201
00:15:46.360 --> 00:15:47.880
But don't stop there.

s202
00:15:47.880 --> 00:15:53.360
You actually need to at the end of that task, uh, skillify it.

s203
00:15:53.360 --> 00:15:56.080
And so I have a blog post on X about that.

s204
00:15:56.080 --> 00:16:08.000
You can search for skillify it and, you know, go get that skill file and then just load it into your your own harness and it'll just turn whatever you just did into a skill that you can reuse.

s205
00:16:08.000 --> 00:16:11.440
Because if you have to ask for something twice, you failed.

s206
00:16:11.440 --> 00:16:15.000
Um, so yeah, if you remember only one thing, it's that.

s207
00:16:15.000 --> 00:16:22.000
Like when you, you know, use your AI agent and then when you're done with it and you're happy with the output, skillify it.

s208
00:16:22.000 --> 00:16:23.600
It's going to be awesome.

s209
00:16:23.600 --> 00:16:29.480
Um, the organization that captures what it learns like this gets smarter every single day.

s210
00:16:29.480 --> 00:16:35.640
The one that doesn't wakes up every morning with amnesia, no matter how good the model is.

s211
00:16:35.640 --> 00:16:41.640
Model quality is rented, but if you build your brain, you you own that brain.

s212
00:16:41.640 --> 00:16:43.080
So, Theo's question head-on.

s213
00:16:43.080 --> 00:16:44.280
What do we build now?

s214
00:16:44.280 --> 00:16:47.760
Build the AI native company, not a company that just uses AI.

s215
00:16:47.760 --> 00:16:51.960
A company that is shaped like what I just described from day one.

s216
00:16:51.960 --> 00:17:00.480
A thin team, skill files for everything, the founder still in the code, library, this library, this company brain, your personal AI.

s217
00:17:00.480 --> 00:17:02.320
Uh, use G brain if you'd like.

s218
00:17:02.320 --> 00:17:04.360
Uh, it's open source and free, but you don't have to.

s219
00:17:04.360 --> 00:17:05.880
There are a lot of really good ones.

s220
00:17:05.880 --> 00:17:15.880
The the library will compound from the first week and your whole org will be wired to run at about 400X.

s221
00:17:15.880 --> 00:17:23.079
And if you want the green field, the thing that I'd build if I were 25 and sitting where you're sitting, every company on this earth is about to need a brain.

s222
00:17:23.079 --> 00:17:26.600
The memory layer that means that you never have to re-ask what you knew.

s223
00:17:26.600 --> 00:17:29.120
Personal AI that actually knows you.

s224
00:17:29.120 --> 00:17:32.680
We're building G brain in the open and MIT open source.

s225
00:17:32.680 --> 00:17:38.600
Um I'm not trying to make money from this because I think the layer should be open the way Linux is open.

s226
00:17:38.600 --> 00:17:45.040
But the layer itself, company brains, personal context, the librarian that picks the three books, that's all wide open territory.

s227
00:17:45.040 --> 00:17:48.680
I hope somebody builds the defining company here.

s228
00:17:48.680 --> 00:17:52.840
And I'd like to fund you at YC if you do.

s229
00:17:52.840 --> 00:17:55.960
Now, let me be honest in a way that maybe undercuts my own pitch.

s230
00:17:55.960 --> 00:17:58.120
You don't need my tools to start.

s231
00:17:58.120 --> 00:18:03.560
Open Claw is the Ferrari, I will always recommend it, but Codex is a really good Honda.

s232
00:18:03.560 --> 00:18:06.240
It will do 90% of this.

s233
00:18:06.240 --> 00:18:09.000
Uh it will not blow your face off, but it will get you there.

s234
00:18:09.000 --> 00:18:10.120
Use whatever.

s235
00:18:10.120 --> 00:18:13.000
The concepts are the point, not my repos.

s236
00:18:13.000 --> 00:18:15.080
You know, think about where the computation is.

s237
00:18:15.080 --> 00:18:17.280
Use skill files as employees.

s238
00:18:17.280 --> 00:18:18.760
The librarian the librarian.

s239
00:18:18.760 --> 00:18:20.960
Never do one-off work.

s240
00:18:20.960 --> 00:18:23.560
Those travel with you to any stack.

s241
00:18:23.560 --> 00:18:25.640
So, let me land this.

s242
00:18:25.640 --> 00:18:32.760
A lot of people in the world right now are terrified about what happens to all the jobs, and I understand the fear.

s243
00:18:32.760 --> 00:18:36.680
But I want to say it plainly, that is a failure of imagination.

s244
00:18:36.680 --> 00:18:40.040
And the people in this room are the answer to it.

s245
00:18:40.040 --> 00:18:43.400
What I just described, you're going to take to your startup.

s246
00:18:43.400 --> 00:18:56.120
You will multiply yourself, and every person in your company will multiply themselves, and you will go build the companies that become the beacon for how all of this works in society.

s247
00:18:56.120 --> 00:19:00.840
Abundance is not a policy paper, it is shipped software.

s248
00:19:00.840 --> 00:19:04.200
I have a friend who has a rare form of epilepsy.

s249
00:19:04.200 --> 00:19:15.640
He built a repo of 80,000 markdown files, a company brain for one small boy, and he pushed himself to the absolute edge of human, what humanity knows about his son's exact condition.

s250
00:19:15.640 --> 00:19:18.760
No lab, no grant, no permission.

s251
00:19:18.760 --> 00:19:22.000
A father, a laptop, and a library.

s252
00:19:22.000 --> 00:19:23.520
That's not a side story.

s253
00:19:23.520 --> 00:19:28.240
That is the exact architecture I've been describing for the last 20 minutes.

s254
00:19:28.240 --> 00:19:37.400
A library of the librarian, the right three books open at the right moment, pointed at the thing this man loves the most in the world.

s255
00:19:37.400 --> 00:19:38.800
You can do that now.

s256
00:19:38.800 --> 00:19:42.920
Every problem where you thought, I wish I had that person but I can't get them.

s257
00:19:42.920 --> 00:19:43.920
You can.

s258
00:19:43.920 --> 00:19:49.320
Every code base you thought was too buggy to fix, you can fix all of it.

s259
00:19:49.320 --> 00:19:59.280
Every archive too big to read, every data set too gnarly to clean, every ocean you were told not to boil.

s260
00:19:59.280 --> 00:20:02.800
We can boil the ocean now.

s261
00:20:05.868 --> 00:20:07.868
[applause]

s262
00:20:10.453 --> 00:20:11.680
[applause]

s263
00:20:11.680 --> 00:20:16.400
And every single one of you can fly, not metaphorically, mechanically.

s264
00:20:16.400 --> 00:20:21.320
And you need to to survive, to thrive, to win.

s265
00:20:21.320 --> 00:20:24.960
Theo asked, "What we should build now?"

s266
00:20:24.960 --> 00:20:26.760
And here's the whole damn whole answer.

s267
00:20:26.760 --> 00:20:34.080
Build that AI native company and build it build the thing underneath it, the brain, the memory, the compounding library.

s268
00:20:34.080 --> 00:20:37.280
That makes every company after yours easier to build.

s269
00:20:37.280 --> 00:20:39.000
Go boil the ocean.

s270
00:20:39.000 --> 00:20:40.080
Go write that test.

s271
00:20:40.080 --> 00:20:42.680
Go ship that skill.

s272
00:20:42.720 --> 00:20:46.600
Some of the companies you're about to watch in the battlefield are already doing this.

s273
00:20:46.600 --> 00:20:49.560
Go build the one that does it best.

s274
00:20:49.560 --> 00:20:51.760
Thank you.
