Worldbuilders: Why Most AI Startups Won't Survive | The Model Economy by Sumeet Singh

I'm Sumeet Singh, and I'm guest hosting a new series for the Village Global Podcast called World Builders. I run Worldbuild, a thesis driven investment firm that backs creative technologists. We spend our time exploring rabbit holes because some of these rabbit holes are actually tunnels that open into the future. In this show, I'll be taking you down those tunnels. We'll have conversations with the people shaping what comes next, break down the frameworks for where value accrues when the rules are changing, and figure out what the builders actually see that the rest of us don't. So come take the leap with world builders. For this episode, I want to lay out a framework I've been developing called the Model Economy, which I briefly touched on in our last episode with Evan Conrad, the CEO of the San Francisco Compute Company. It's a way of thinking about where durable value gets created in the age of AI, and why most of what's being built right now might not survive. I'll walk through the history with the bitter lesson, what the mobile era teaches us about what's coming, and the two types of companies I think actually win in this era. Think of this as my investing thesis out loud. The playbook of the last, you know, era of software tech investing is over. For a while, we were locked in this, like, era of homogeneity. It was dictated by, like, a well trodden path of fundraising, I would argue, rather than true innovation. It was like, how do we make the best looking spreadsheet company? Right? Every company was almost fungible. There wasn't change. And how do I not optimize for new experiences and new products, but how do I optimize for our fundraise? Honestly, that led to companies raising too much capital, too high valuations, and that obviously, you know, corrected itself. I think that error is over. We, of course, have the advent of transformer models, generative AI, also combine that with the end of easy monetary policy. And as an investor, you know, I'm actually excited. Like, AI has finally opened up the potential for real innovation that's been missing since the mobile revolution. Right? Post mobile until just a few years ago, there wasn't much change. But I'm a bit worried about how founders are reacting to this. Right? I often see founders building these specialist AI products. Imagine a AI product for marketing or an AI product for finance as if they were still building for the same sort of subscription software era of the last decade. They're treating AI like it's just another feature in a SaaS app. And those who are playing by that old framework, though, are about to make a make a big mistake in my opinion. I think the old framework fails because of what the AI pioneer, Richard Sutton, one of the early reinforcement learning pioneers, calls the bitter lesson. In traditional SaaS, right, again, the last …