Former Reddit CEO: “AI startups will disappear faster than they can grow”

Former Reddit CEO Yishan Wong has warned that artificial intelligence (AI) startups are being wiped out by the rapid evolution of foundational models upgrading every 9-12 months, leaving no time for app-level products to mature as success windows shrink to just 12-18 months.

As it happens, Wong has argued that the rapid advancement of foundational AI models is making app-level innovation nearly obsolete before companies can mature, stabilize, or even meaningfully enter the market, according to his X post shared on November 10.

New Kind of Pressure for Startups

Furthermore, Wong emphasized that the current AI cycle is unlike any previous technological shift. During the rise of the internet, mobile, or cloud, startups had multi-year windows to build products, establish teams, raise funding, and acquire users. Today, that window has shrunk dramatically.

AI foundational models like GPT-style systems evolve in 9-12 month cycles, rapidly absorbing the capabilities that startups attempt to build on top. As a result, most AI apps become outdated before they can even scale. 

According to Wong, this isn’t the typical story of big tech companies copying startups. Instead, the underlying technology evolves so quickly that app-level businesses just can’t keep up.

12-18 Month “Success Window”

Given the speed of technological shifts, Wong argues that AI startups now realistically have only two viable paths: either generate massive revenue fast from a single breakout app or the foundational models acquiring them before absorbing their functionality.

He estimates the average “success window” to be only 12-18 months, far shorter than any previous era in tech. During that same time, startups still face the usual long-term challenges: hiring, product-market fit, sales channels, customer acquisition, regulatory issues, and revenue stability – human and organizational processes that can’t simply accelerate because AI evolves quickly.

Meanwhile, the ground shifts under them as foundational models gain new abilities that make app-level value propositions redundant. 

Ecosystem at Risk

If foundational models continue absorbing the tasks once handled by startups, Wong believes the structure of the AI industry could change dramatically. In this case, only companies in very niche domains, protected by proprietary data or specialized workflows, may survive.

Everyone else risks becoming irrelevant, which would contribute to a potential concentration of power among the few companies capable of building and operating frontier models. This raises broader concerns for innovation, competition, and the long-term diversity of the AI ecosystem.

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