Every startup is at the mercy of the big 3 (OpenAI, Anthropic, Google).
They can and most likely will release something that vaporises the thin moat you have built around their product.
This feels like the first time in tech where there are more startups/products being subsumed (agar.io style) than being created.
LLMs by their very nature subsume software products (and services). LLM vendors are actually quite restrained - the models are close to being able to destroy the entire software industry (and I believe they will, eventually). However, at the moment, it's much more convenient to let the status quo continue, and just milk the entire industry via paid APIs and subscriptions, rather than compete with it across the board. Not to mention, there are laws that would kick in at this point.
I think the function of a company is to address limitations of a single human by distributing a task across different people and stabilized with some bureaucracy. However, if we can train models past human scales at corporation scale, there might be large efficiency gains when the entire corporation can function literally as a single organism instead of coordinating separate entities. I think the impact of this phase of AI will be really big.
Surely they've reserved the best models for themselves and have people looking into how to optimally harness untapped potential from LLMs?
Edit: I guess the competition between them keeps them honest and forces them to release their best models so they don't lose face.
> the models are close to being able to destroy the entire software industry
Are you saying this based on some insider knowledge of models being dramatically more capable internally, yet deliberately nerfed in their commercialized versions? Because I use the publicly available paid SOTA models every day and I certainly do not get the sense that their impact on the software industry is being restrained by deliberate choice but rather as a consequence of the limitations of the technology...
Best defense is to basically stay small/niche enough that the big guys don't think your work is worth consuming/competing with directly.
There will always be a market for dedicated tools that do really specific things REALLY well.
I believe there has never been a better time to do a micro SaaS. For 200$ a month you can use Ruby on Rails, Laravel, Adonisjs, or some other boring full stack framework, to vibe code most things you need. Only a few things need to be truly original in any given SaaS product, while most of it is just the same old stuff that is amendable to vibe coding.
This means the smaller niches become viable. You can be a smaller team targeting a smaller niche and still be able to pull of a full SaaS product profitably. Before it would just be too costly.
And as you say, the smaller niches just aren't interesting to the big companies.
When some new tech comes along that unlocks big new possibilities - like PCs, the Internet, Smartphones (and now Agentic Chat AI) - the often recited wisdom is that you should look at what open green fields are now accessible that weren't before, and you should run there as fast as possible to stake your claim. Well there are now a lot of small pastures available that it are also profitable to go for as a small team/individual.
> They can and most likely will release something that vaporises the thin moat you have built around their product.
As they should if they're doing most of the heavy lifting.
And it's not just LLM adjacent startups at risk. LLMs have enabled any random person with a claude code subscription to pole vault over your drying up moat over the course of a weekend.