AI in 2024: From Big Bang to Primordial Soup

Over the Christmas holiday, I had time to reflect on 2023 and the whirlwind year we had in AI.

The “Big Bang” of ChatGPT in late 2022 unleashed a fervor and, ultimately, a feeding frenzy in 2023. Not only was AI the #1 story in Silicon Valley, but it became a hot topic in every corporate boardroom, in the media and even in Washington, DC. AI drove public market stock performance too.

For a technology so nascent and still with low usage, as we covered in Generative AI’s Act Two, the feeding frenzy of 2023 had a key weakness. It was an assumption that the hard problems in AI had been solved, and therefore it’s a foregone conclusion that AI will become ubiquitous and powerful.

This fallacy is understandable. It is human nature to avoid ambiguity because humans desire certainty. The idea that AI is the “end of history”—and that we’re within sight of that—appeals to this instinct. This is an easier idea to hold in our minds than the reality we are living in: We are in the primordial soup phase of AI. There is much potential in the air, and yet it is still amorphous. Vision is required to convert it into something real, tangible and, ultimately, impactful.

In Silicon Valley, the frenzy of 2023 was productive in attracting talent to AI. But it was also unproductive in the type of company formation it drove and the psychology it induced. Specifically, it led to implementation-oriented thinking vs. vision-oriented thinking. If you believe that the hard problems have already been solved, it changes the nature of the company that you build. Instead of building deep-benched teams that are eager to face down new, unsolved problems, you build shallower organizations.

As a result, you had themes in AI with five or six new companies being formed, each with one or two great technologists and a very similar objective. One of the biggest challenges for startups in 2023 was convincing talent to join their companies—everyone wanted to start an AI company of their own.

In 2024, we need to look farther out and build companies that are fundamentally architected for the murky reality of AI. When we realize that we are in the primordial soup phase, we begin to think not about how we can win the race, but about how we can invent new things. And we realize that we need to join forces to do that. By focusing on impact, we can assemble teams capable of taking on demanding challenges and surmounting them.

I want to draw an explicit contrast to SaaS. SaaS was an evolution from on-premise, license-based software to cloud. AI is a revolution, where we are building new intelligence for the first time. There is no precedent, so we don’t even know what problems are worth solving. Fundamental innovation is going to be exceptionally important.

The primordial soup phase will give rise to visionary founders. I believe we will see more visionary thinking emerge in 2024. In times of murkiness and uncertainty, vision is required to see through the fog and understand what needs to exist on the other side. Vision is also necessary to attract a team capable of getting there.

We are going to move away from “AI for X” toward customer-centric companies. The goal of solving deep societal problems by building hard technology will reshape the culture of these companies, how they are built and the type of talent they attract. We will see innovation in the company formation process itself—the AI research labs are one expression of that creativity. 

In 2024, we will build from the substrate of Transformers, GPUs, RAG, Diffusers, open source and everything else that has been floating around the ecosystem in 2023. From these primitives, we will discover new ideas and new insights about how to build advanced AI systems. We will look back at 2024 and say, this is the year that we began to convert AI’s potential into real solutions.

At a conference in September, I heard Jakub Uszkoreit, one of the inventors of the Transformer, say he thought we had prematurely jumped from the exploration phase of AI to exploitation. 2024 will be a reset year, where those focused on quick and easy exploitation of this technology lose steam, and founders who are driving deep exploration toward value creation will pull ahead.

Here’s to a year of turning this primordial soup into impactful products and companies. And here’s to the daring founders who will build them.

If you are building a visionary company in this primordial soup, I’d love to hear from you. Please reach out at dcahn@sequoiacap.com