How the Rise of Generative AI Rewrote the Rules for Tech Startups

Generative AI has changed how technology companies compete, especially in Silicon Valley. In the past, small startups often began with limited money and staff but could still grow into major companies. With generative AI, that path has become much harder. Building powerful AI systems now requires massive amounts of data, extremely expensive computer power, and large teams of highly paid experts. These resources are mostly controlled by big tech companies, not small startups.

Training large AI models can cost millions—or even billions—of dollars. Startups also struggle to hire skilled AI engineers, who now expect very high salaries, large bonuses, and stock options. This has tilted the playing field toward established companies like Google, Microsoft, and Meta, which already have deep pockets, global data access, and huge computing systems.

This shift echoes earlier tech booms, such as the rise of the internet in the 1990s. Back then, breakthroughs like web browsers helped launch new companies and reshape the economy. With AI, however, many of the biggest breakthroughs are happening inside existing giants rather than new startups. Years before AI became a public obsession, these companies were already investing heavily in machine learning, hiring top researchers, and integrating AI into products like search engines and online ads . The release of conversational AI tools in 2022 made the technology feel magical and widely accessible. People were amazed by how quickly AI could write, translate, and create new content. At the same time, serious concerns emerged. These systems are difficult to explain, can repeat harmful biases found online, and sometimes produce convincing but false information. There are also worries about misuse, safety, and whether AI systems truly reflect human values.

Despite the risks, companies rushed to add generative AI to everyday products, from search engines to shopping apps. As with the early internet, excitement, fear, and big promises now coexist. Generative AI marks a major turning point, but its long-term impact—and who truly benefits—remains uncertain.

Read the full article “How the Rise of Generative AI Rewrote the Rules for Tech Startups” by Gary Rivlin

🔭   This summary was human-edited with AI-assist.