[HN Gopher] What "working" means in the era of AI apps
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What "working" means in the era of AI apps
Author : Brysonbw
Score : 98 points
Date : 2025-06-06 22:36 UTC (1 days ago)
(HTM) web link (a16z.com)
(TXT) w3m dump (a16z.com)
| scubbo wrote:
| The article lists the many ways in which the bar for success -
| the minimum "table stakes" that you have to achieve in order to
| be considered success - have drastically risen, and then
| concludes with:
|
| > we believe there's never been a better time to build an
| application-layer software company.
|
| Nothing could be a clearer indication that the primary desirable
| quality in a founder is the conviction that, against all odds,
| you are better than everyone else.
| paulddraper wrote:
| If you don't believe in yourself, no one else will.
| bluefirebrand wrote:
| I think there's a difference between "believe in yourself"
| and "have an ego the size of Jupiter" though
| paulddraper wrote:
| I think that too.
|
| Which is why I said what I said.
| nico wrote:
| > The article lists the many ways in which the bar for success
| - the minimum "table stakes" that you have to achieve in order
| to be considered success - have drastically risen
|
| Have seen how application processes for technical roles went,
| in less than a year, from considering AI cheating; to now
| requiring AI to do the take home or finish a live coding task
| ZeroTalent wrote:
| I'd rather take my $1M a year small company than cut-throat
| $10M a year revenue with VC funding any day.
| gerdesj wrote:
| When tulips suddenly became fashionable a few years back,
| articles like this were rife.
|
| This article even smells ... generative.
| jvanderbot wrote:
| I read TFA. Quickly but I read it. It's short but I have no idea
| if they were saying "wow AI products are popular" or "AI helps
| startups reach higher levels of profitability faster" or simply
| "A company that says they are making an AI driven product
| receives more initial users and funding".
|
| Each of those are so wildly different conclusions and require
| such wildly different data to support it.
| Ideapeeker wrote:
| Nowadays, I don't think work should be defined just by clocking
| in and clocking out. It's about the ability to complete tasks and
| hit goals efficiently. This is how AI will redefine work.
| lubujackson wrote:
| I don't disagree, but god help us.
|
| If we want a feature we can write a two sentence prompt and get
| that feature. But the technical debt is going to grow
| exponentially, and I haven't seen a shred of focus on
| preventing that inevitable outcome.
| antihipocrat wrote:
| How long until this starts biting companies en mass?
| samtho wrote:
| They would need to remain around long enough for the
| privilege of failing due to unmaintainable systems.
| hn_throwaway_99 wrote:
| That's not the kind of "working" that the title refers to.
|
| It really is about "How do you know your startup is 'working'
| (i.e. doing the right things to be successful) in this AI era".
| nothrowaways wrote:
| I don't take anything that comes from a16z seriously, specially
| since their crypto craze
| hn_throwaway_99 wrote:
| Your loss, then. There is a reason that "shoot the messenger"
| attacks are referred to as ad hominem _fallacies_.
|
| There may be loads I don't like about a16z, but this article
| contained lots of interesting insights and actual data. You
| don't have to agree with their conclusions to get tons of value
| out of the information they present.
| layer8 wrote:
| Bayesian priors aren't fallacies.
| babyshake wrote:
| Anyone else a bit confused by the use of the word "working" used,
| given the content of the post? I thought this was going to be
| about how white collar work is changing, not about fundraising
| and growth strategies.
| MathMonkeyMan wrote:
| I thought the same thing. Maybe "working" as in "providing
| value to investors." Or maybe "getting clicks on hacker news."
| edgarvaldes wrote:
| I thought this was going to be about apps barely working if
| created by vibe coding.
| i_love_retros wrote:
| I'm confused by the whole title. Very strange
| redwood wrote:
| Difficult to know the size of the pool of companies they're
| talking about
| yojo wrote:
| The metric the article focuses on is "revenue," but it seems like
| the foundation many of these startups build on (other people's
| LLM APIs) are much more expensive than the last generation of
| startups.
|
| Given the cost of training a SOTA model, it's not clear these
| companies have sustainable businesses. If your primary expense is
| AWS you can always shift to your own hardware once you hit
| sufficient scale. If you're Cursor, how big do you need to get to
| eliminate your 3rd party API dependency?
| simonw wrote:
| The cost of training a good model can be as low as $5.5m
| (DeepSeek v3) or "a few tens of millions of dollars" (Claude
| 3.7 Sonnet https://simonwillison.net/2025/Mar/2/ethan-mollick/)
| so once you have proven revenue against other models it might
| actually become a reasonable thing to do.
| hn_throwaway_99 wrote:
| This article is about AI _applications_ , not core foundation
| models. None of the initial 3 companies mentioned (Cursor,
| Lovable, Gamma) train there own models from scratch, _nor do
| they need to_. E.g. I get tons of value from Cursor, but I also
| still pay for ChatGPT Plus.
|
| There is also enough competition in the core model space that
| these apps don't need to have an Achilles heel by being reliant
| on a single vendor. E.g. I think Cursor was smart to let you
| "bring your own API key".
| yojo wrote:
| I get that the article is about applications, but the
| applications have a dependency on 3rd party models, and that
| dependency is costing them most (all? More than all?) of
| their revenue.
|
| Put another way, if I make $100M in annual revenue, but am
| paying out $110M to the API I wrap, it's not nearly as
| compelling a business as that top-line $100M number makes it
| out to be.
|
| In the previous generation of startups, expenses were mostly
| dominated by headcount, and the cost of actually delivering
| the service tended to be small. The story was "keep growing
| revenue, and if you need to show a profit, stop hiring."
|
| An AI startup built on other people's models has to hope that
| the foundational models end up being fungible commodities,
| otherwise any margins you might gain will get squeezed out by
| your LLM provider. Alternatively, you can train your own
| model.
|
| I don't know what Cursor's userbase looks like. If everyone
| is paying for Pro but using their own API key, that's
| obviously a high margin business.
| hn_throwaway_99 wrote:
| I think this has an interesting consequence for founders and
| employees at startups in this day and age, and I'm not quite sure
| how I feel about it.
|
| On one hand, it means you can "fail faster". That is, if you're a
| startup employee, and you don't see "hockey stick" growth that is
| looking crazy impressive at the end of year 1, you should know
| that the chances of your equity being worth more than a token are
| basically zero. Starting around the dot com boom, I worked in
| numerous startups, and for some of them we were still chugging
| along in years 3-4 with the hopes that our "semi-OK, decent
| growth" would turn vertical any day now. I've seen _numerous_
| startups that started in the 2015-2020 timeframe (so existed for
| 5-10 years) where they didn 't outright fail but common got wiped
| in an acquisition. That's more a consequence of the rise in
| interest rates and difficult fundraising environment, but it's
| really rough to plug along at a company for 5-10 years, think
| you're doing OK, and then your stock is worth nothing. So from a
| startup founder/employee perspective, you get signal faster and
| don't have to waste time.
|
| Simultaneously, though, it seems like any idea that would take a
| decent amount of upfront investment and time would be hella
| difficult to get funded, and I think that's unfortunate.
| ednite wrote:
| I can't speak to the world of startups or venture capital, I'm
| way too far from that ecosystem, but I'd like to add a
| perspective from the sidelines.
|
| What stands out to me right now is just how loud the expectations
| around AI have become, especially among non-technical folks. It's
| not just "Bitcoin hype" loud, it's bordering on "AI will solve
| everything" levels of noise. For those of us who've been around a
| bit longer (sorry, younger HN crowd), the current buzz feels
| reminiscent of Y2K or the first dot-com wave.
|
| Back then, I was early in my career, but I vividly remember the
| headlines, the overpromises, and the sheer volume of attention.
| The difference now is, there's a lot more substance under the
| surface. The tools are genuinely useful, and the adoption curve
| feels more practical, even inevitable. That's what makes me think
| AI might become to this era what the smartphone was to the last,
| not just a novelty, but an everyday dependency.
|
| That said, I've also learned a lot from voices here on HN,
| especially when it comes to the financial realities behind the
| tech. If there's one throughline in many of these discussions,
| it's that financial viability, not just hype or innovation, is
| what ultimately determines whether this all collapses or truly
| transforms the world.
|
| Just my 2 cents.
| kunzhi wrote:
| 100% agree on this. It's 1995 all over again. AI is as big (or
| bigger) as the Internet back then. Hype to totally insane
| levels but eventually all things that go up must come down.
|
| In the meantime, the usual suspects are gonna make a whole
| lotta money.
| ido wrote:
| The internet ended up just as big as predicted in 1995 (or
| bigger) - it just took a bit longer. What do we not have
| online today that was predicted in 1995?
| LunaSea wrote:
| Timeline is important in a world where AI is under VC
| capital drip IVs.
| TeMPOraL wrote:
| Now that depends, doesn't it?
|
| I think discussions about AI hype miss a critical factor:
| there are _two_ groups of people getting swept up in
| hype. One are the Investors[0]. The other are the
| Beneficiaries of the technology[1]. AI is over-hyped for
| the former, but not for the latter.
|
| If AI hype is anything like dotcom boom - or like
| telecom, or building up railways in the US - well, it
| sucks for the Investors. For them, the hype is getting
| dangerous - if it's a bubble and it bursts, plenty of
| them will lose money, and many companies will fold.
|
| But I'm not in that group, _so I don 't care_.
|
| For me, one of the Beneficiaries, the hype seems totally
| warranted. The capability is there, the possibilities are
| enormous, pace of advancement is staggering, and
| achieving them is realistic. If it takes a few years
| longer than the Investor group thinks - that's fine with
| us; it's only a problem for them.
|
| --
|
| [0] - In a broad sense, to include both people funding it
| and people making big investments around the expectations
| - whether regular investments, or company strategy, or
| career plans.
|
| [1] - People using it for work and personally,
| researchers, etc.; also people with defined hopes for the
| technology; also ultimately everyone who benefits from it
| when it matures (and possibly builds on top of it).
| ednite wrote:
| Good explanation. Thanks.
| LunaSea wrote:
| > If it takes a few years longer than the Investor group
| thinks - that's fine with us; it's only a problem for
| them.
|
| It is also for the beneficiaries because price comes into
| the equation and the longer it takes, the more expensive
| it will be.
|
| We are currently paying the early-Uber prices at the
| moment but it's likely not sustainable (or not enough)
| and we'll see price hikes as soon as vendor lockin is
| sufficiently set in.
| ido wrote:
| Assuming there remains more than one vendor, where the
| lock-in? I use Claude 4 via an IDE plug-in and both
| Claude and the plug-in (and the IDE!) are replaceable.
| 1970-01-01 wrote:
| IPv6 :P
| ednite wrote:
| It is insane. You should see my inbox, daily links to AI
| articles, sales execs panicking about falling behind.
| Honestly, it's understandable with all the noise, but it's
| also hard to keep up.
|
| I've lost count of how many times I've had to explain, again
| and again "No, AI can't do that... and no, it's definitely
| not drawing up your architectural building plans." Well, not
| yet, anyway.
| barrenko wrote:
| I can only hope AI somehow kills the smartphone.
| surfingdino wrote:
| > just how loud the expectations around AI have become,
| especially among non-technical folks.
|
| This. It's bordering on mass madness. I am taking 2-4 calls a
| week from "two guys from ..." with mad ideas and unrealistic
| expectations of what it takes to build and maintain an AI
| product. I've seen it with early internet rush, Web 2.0, and
| crypto before.
| ednite wrote:
| Like that deja vu scene in The Matrix, except instead of a
| black cat, it's AI pitch decks with wild ideas. Appreciate
| the sanity check!
| planckscnst wrote:
| I agree that financial viability is critical to the long-term
| prospects of a technology. It must deliver an ROI above other
| options. I'd recommend getting off the sidelines and jumping in
| to see what's happening. At the least, you'll have another
| perspective to inform your position. It's a pretty minimal
| investment to try it out.
| ednite wrote:
| You're right to think that I probably do sound more like a
| cautious observer than I actually am. For what it's worth,
| I've been experimenting with AI tools on the side (mostly in
| coding and writing workflows), and I'm planning to dive
| deeper soon, especially around integrating agents into my
| SaaS.
|
| The post was more about the hype and attention surrounding
| AI, which can feel mentally exhausting at times, mostly
| because of how fast everything is moving. Not a complaint,
| really. If anything, that might be a good sign. I totally get
| why people are excited, it just takes effort to stay grounded
| in the middle of it all.
|
| Appreciate the comment! Hopefully next time I'll be jumping
| in with war stories instead of sideline takes.
| karmakurtisaani wrote:
| The latest trend I've seen is blabber about AI super
| intelligence which will either kill us or lead to absolute
| utopia by 2030.
|
| In the mean time, I try to enjoy the freely available LLMs for
| quick summaries on technical topics before the inevitable
| enshittification ruins them forever.
| username223 wrote:
| I think of it like Uber in the early days, when it was
| subsidizing rides to try to gain market share while ignoring
| taxi and labor laws until it could pay to change them. Uber's
| original plan was to bleed money until it could replace human
| drivers with robots, but that didn't work out.
|
| The current AI companies are burning money with an exit
| strategy of replacing office workers with robots. If/when
| that doesn't happen, they'll have to jack up prices and
| figure out another business model. Uber had the two-sided
| market and network effects for a true enshittification play
| -- riders and drivers are both trapped -- but LLM companies
| haven't figured that part out yet. Do they go for ads once
| they have enough users and brand recognition? Hoard GPUs and
| training data (maybe through licensing deals) to create a
| moat?
|
| Anyways, it's fun while it lasts.
| Ancapistani wrote:
| Eh... I honestly can't even pretend to see that far in the
| future.
|
| What I will say is that AI will either fundamentally
| transform the economy for all of humanity, or it will fizzle
| out. I really don't see any in-between.
| squidbeak wrote:
| I lived through the dotcom boom too. It's a poor point of
| comparison, because as thrilling as the moment was, there
| weren't any techs then that could think or reason. And right
| now are we at the furthest point in its development? From the
| extreme pace of improvements it looks more like its infancy.
| ednite wrote:
| Yeah, I totally agree, we're still at the beginning, and
| that's what makes it a little scary
|
| My dotcom comparison wasn't really about the tech, more about
| the noise and hype. Feels like that same kind of frenzy, but
| now the tech's actually capable of doing something big. The
| financial viability is still a big question though. Thanks
| for the comment.
| layer8 wrote:
| Any S-curve looks like an exponential until it doesn't. It's
| impossible to make predictions like that. It's in its infancy
| in terms of adoption all right.
| TeMPOraL wrote:
| Posted this downthread, but it's also a reply to your points:
|
| https://news.ycombinator.com/item?id=44208831
|
| TL;DR: there are two groups of people mixed up in the hype: the
| people investing in it, and people using it. AI may indeed be
| overhyped for the former. It's not overhyped for the latter.
|
| Makes me think of how railways were built across the US. AFAIK,
| the first generation of investors generally lost big. They
| funded a huge, capital-expensive infrastructure project, and
| didn't get a return on it in time. But even as they lost, the
| work they funded remained - subsequent waves of businesses
| built on top of it and became profitable, the society
| benefited, and the country was transformed. The _only_ losers
| to this "bubble" were the first-movers and their backers.
|
| So when someone wonders if AI is overhyped, I'd ask them:
| what's your stake in this? Are you an investor hoping for quick
| returns, or are you someone who stands to benefit from the
| technology existing?
| ednite wrote:
| Totally agree that the tech can still be transformative even
| if investors lose money. The question for me is if it stops
| being financially viable, what keeps driving it forward?
| TeMPOraL wrote:
| Hope.
| 1970-01-01 wrote:
| >financial viability, not just hype or innovation, is what
| ultimately determines whether this all collapses or truly
| transforms the world.
|
| That is some of the best wisdom on HN. Beating your
| competition's AI model at whatever goalposts you think is
| important means nothing until you have positive cash flow. All
| hype must encounter reality and survive to not only make a
| sale, but then go and do it very consistently.
| bigbuppo wrote:
| It means doing your normal work and then staying late to finish
| your mandatory use of AI to meet management checkboxes.
| nilirl wrote:
| Misleading title. Has nothing to say about working, i.e paid
| employment, with AI apps.
|
| The main claim in the post: Their portfolio companies have shown
| an improved rate of accumulating revenue ever since LLMs took
| off.
|
| Weakest part of the post: No attempt at explaining how or why a
| LLM affects these numbers. They allude to 'shipping speed' and
| 'product iteration', but how an LLM helps these functions is left
| unexplored.
|
| There's an implied deductive argument that a LLM can write some
| code, so obviously shipping speed is faster, so obviously revenue
| is faster. But the argument is never explored for magnitude of
| effect or defended against examples where shipping faster or
| using LLMs doesn't equal faster revenue.
|
| Also, nothing about sampling bias, size or spread.
|
| Overall: Probably meant as a confidence boost to the sleep-
| deprived founders out there. But teaches nothing.
| athrowaway3z wrote:
| > Probably meant as a confidence boost to the sleep-deprived
| founders out there. But teaches nothing.
|
| The post insist 2 to 4 million ARR in 1 year is the new norm.
| My guess its meant for their own investors and get founders to
| undervalue their achievements (Or learn to get creative with
| what ARR means).
| jonasft wrote:
| I just realized you can slightly tweak his comment to fit
| almost all articles on AI/LLMs/etc lately
| teekert wrote:
| Exactly this. They say increased delivery speed etc. No proof
| that it's not at least as feasible that "the Covid + cheap
| money induced bubble" just started increasing in size faster...
| Because it's just too painful of it wouldn't.
| 9cb14c1ec0 wrote:
| Reminds me so much of the no-code bubble maybe 10 years ago,
| which also was full of big loud talk about shipping speed,
| product iteration, and developer obsolescence.
| ldjkfkdsjnv wrote:
| except this time its computers with intelligence? this is
| nothing like no code
| ashwinsundar wrote:
| Were computers not intelligent before the latest AI wave?
| What is "intelligence", with regards to computers?
| browningstreet wrote:
| Per this statement from their conclusion:
|
| > Startups are working faster than ever, and both businesses
| and consumers are demonstrating high willingness to pay for new
| products.
|
| ..I feel like the focus was more "offering (generative) AI
| features" than "built with AI", as in startups being AI forward
| for their ICPs are building businesses faster than the
| incumbents who are still trying to figure out how to wedge AI
| into their tech debt laden product landscape.
| nilirl wrote:
| Even so, the increased rate of revenue generation cannot be
| explained by AI features since all the other (read: not
| skyrocketing) startups also offer AI features.
|
| Did these portfolio companies just get the UX right? That
| would mean their entire portfolio, across industries, just
| happens to be filled with exceptional designers of products,
| who all simultaneosly cracked the UX for their respective
| industries.
|
| A simpler inquiry:
|
| What if the cause of this revenue growth is not on the
| startup/VC side but on the buyer side? Why are more companies
| rushing out there willing to spend more than before?
|
| Here we have some candidates to consider: FOMO, labor
| efficiency, excitement.
|
| Now, we have economics (behavioral and regular) to form a
| causal narrative; we have loss aversion and job cuts as
| incentives.
|
| So, based on this post can we say this is a better time to
| start a startup than before? I don't think so.
|
| Can we say that if you do start one with the same odds of
| success as before, grow it to a VC happy size, and have AI
| somewhere in the offering, you'll probably have more revenue
| than companies of a similar size from a few years ago? Yes, I
| think we can say that.
| GiorgioG wrote:
| Come back to this comment in 5 years. Everyone's that's fully
| bought into the AI hype is on serious crack. This is not my first
| (or 2nd) rodeo.
| csomar wrote:
| This hides one major caveat in AI which is, contrasting to "old"
| tech, your OpEx on compute doesn't scale the same way your
| engineered app traditionally did.
|
| In other terms, as your revenue scales, your OpEx scales too.
| This breaks the idea that you need to grow revenue to "break off"
| as your margin as set due to compute.
|
| The other issue is, I've been burning compute between Perplexity,
| Grok, Gemini, Claude and Deepseek. I pay nothing for these and
| they are good enough. It is easy to grow revenue to $1m when you
| are burning $2m of compute.
| pclmulqdq wrote:
| This is how normal companies work. The app/SaaS model is the
| exception, not the norm.
| JustinCS wrote:
| This seems like a case of selection bias, where they are looking
| at all the Gen AI startups and seeing that they are making
| revenue faster than previous startups. But Gen AI startups have
| mostly only started very recently, so it's obvious that all the
| successes must have grown fast, as they haven't been around long
| enough to grow slowly. Maybe in 5 years, we'll see a lot of cases
| of successful startups that took a slower growth trajectory
| instead.
|
| But whether it's short-sighted for the investors or not, I think
| the takeaway for founders is "investors now expect you to make
| more revenue faster, and B2C applications are more interesting
| than before".
| ost-ing wrote:
| I tried using Claude Code, was utterly disappointed with using it
| and it cost me a lot of money very quickly. Just goes to show
| these tools can augment and improve your workflow and knowledge,
| but in their current state they cannot replace you - any CEO who
| says otherwise has no clue and is riding the hype train
| koakuma-chan wrote:
| How does Cursor make 100 million in revenue? Do they add that
| much markup?
| klabb3 wrote:
| Revenue only covers money flowing in. Virtually all companies
| in an extreme hype race like this one is deliberately losing
| money total (ie expenses are higher than revenue). Even during
| shit-hype times like food delivery apps, the companies were
| massively unprofitable.
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