Y Combinator Startup Podcast
00:22:03 · Paul Graham, Amjad Masad
[00:22:03] S1: They were gonna become the new outsourcing shops, just like piecemeal as a bunch of teenagers. [00:22:07] S0: Yeah. But like the insight there was that they're powered by the rudimentary AI we had on Replit back then, but that in itself was enough of an edge that they have. [00:22:18] S1: The people doing the Replit bounties were already using AI to write the stuff. [00:22:23] S0: Yeah, exactly. [00:22:23] S1: Oh, man. Exactly. [00:22:24] S0: And it grew really fast, then I looked at it and I was like, okay, if this is where the future's headed, that's like a dead business. So we shut it down. [00:22:33] S1: Why would it be dead? [00:22:34] S0: Because ultimately people would just ask agents for the entire thing. [00:22:39] S1: And not even use, not even go through the teenage kids asking the agents on their behalf. [00:22:44] S0: Yeah. Okay. Okay. I mean, that's the case right now. We go into big multinational corporations, banks, things like that. And they have a lot of SaaS software they pay $10,000,000 for or old software. And they find a few Vibe coders inside the company that have adopted Replit, and they're going in replacing all these different systems. And it starts with internal stuff. It starts with internal yes. And previously they would tell us that we've actually scoped this project out and it would have been $10,000,000 we spent $250,000 on Replit. And so it's happening all over the place. And I think really the outsourcing industry is sort of dead at this point.
00:22:44 · Amjad Masad, Paul Graham
[00:22:44] S0: Yeah. Okay. Okay. I mean, that's the case right now. We go into big multinational corporations, banks, things like that. And they have a lot of SaaS software they pay $10,000,000 for or old software. And they find a few Vibe coders inside the company that have adopted Replit, and they're going in replacing all these different systems. And it starts with internal stuff. It starts with internal yes. And previously they would tell us that we've actually scoped this project out and it would have been $10,000,000 we spent $250,000 on Replit. And so it's happening all over the place. And I think really the outsourcing industry is sort of dead at this point. [00:23:29] S1: So is it mostly not very technical companies that you're talking to? Companies that don't specialize in technology. They wouldn't call themselves tech companies, [00:23:39] S0: We have a lot of tech companies as customers. I think that that's not where we have the biggest impact because I think they can fish for their own, but the sort of the banks, know, Ordinary companies, companies. Need something like Replit. Otherwise, they'll shoot themselves in the foot. [00:24:02] S1: And really, it's driven mostly by people internally who, like, are sort of ambitious, like some guy who's in charge of sales and wants to write some tool for his sales department.
00:24:02 · Paul Graham, Amjad Masad
[00:24:02] S1: And really, it's driven mostly by people internally who, like, are sort of ambitious, like some guy who's in charge of sales and wants to write some tool for his sales department. [00:24:13] S0: Yes. So, you know, this created a bit of a, you know, identity question inside Replit. Was like, well, like, the enterprise, like, that... That's, like, not part of our mission. But what I tell my team is that those aren't entrepreneurial people. Those are ambitious people. Ambitious people building businesses. This feels very core to what we do. Those are scrappy people within companies too. Exactly. [00:24:38] S1: Yeah. Even if the companies aren't scrappy, the people are. [00:24:41] S0: The people are, and they tend to get promoted. A lot of people who bring Replit into their organization will get promoted because they are having great impact. [00:24:49] S1: And also because especially now, all these companies are thinking, we got to use AI. I keep reading how AI has taken over the world. We ought be using AI within our... Who within our company understands anything about AI? Who's using it? And here's the person using Replit to make stuff. They're going be the ones that they trust. [00:25:05] S0: Exactly. So it's a continuation of that, but there's a bit of a, what do you call it, like schlep? [00:25:14] S1: Schlep blindness [00:25:15] S0: or just schleps? Just like there's a lot of boring work to be enterprise ready. Oh, that you [00:25:23] S1: have to do? Yeah. Well, you have practice doing that Yeah, kind of yeah, It's just like systems programming.
00:25:23 · Paul Graham, Amjad Masad
[00:25:23] S1: have to do? Yeah. Well, you have practice doing that Yeah, kind of yeah, It's just like systems programming. [00:25:29] S0: Is it like systems programming? Yeah, a little bit. I mean, a lot of it is also just like giving admins and IT a lot of controls over what people could do and setting budgets and [00:25:40] S1: Oh, they want to have rules. Rules. Well, it's Yeah. Sort of like sandboxing for humans. [00:25:47] S0: Yeah. It's like the principal actor problem, right? Like, you know, the end users are not actually decision makers for the buyer, like, for who buys software, which is why I think most of history of tech industry enterprise software has sucked. But now I think people have a lot more say on what they want to use, and therefore products that are really good are winning in the enterprise. But that problem still exists. Where sometimes IT and security will force you to make the product worse for the users. Do [00:26:19] S1: you think the answer is give them what they want? Like, they want to do stupid things, let them do the stupid things? Or do you think the answer is secretly you're working on behalf of the ambitious, scrappy people in the company and you secretly want to give them a way to get around the
00:26:19 · Paul Graham, Amjad Masad
[00:26:19] S1: you think the answer is give them what they want? Like, they want to do stupid things, let them do the stupid things? Or do you think the answer is secretly you're working on behalf of the ambitious, scrappy people in the company and you secretly want to give them a way to get around the [00:26:35] S0: bureaucrats? Yeah. That's a tough one. So for example, you take a real thing. I disagree with, like, rationing tokens. So the way companies are kind of approaching this is saying everyone gets, you know, $100 of tokens a month. What they should care about is ROI. ROI, exactly. And what we see from our customers is there's a power law of ROI inside companies. So one person could drive 100x the I next bet there is. [00:27:06] S1: Absolutely. There always isn't software. [00:27:08] S0: And especially with agents, it becomes... It used to be 10x, now it's 100x, it's 1000x. Yeah. You want to control token spend. [00:27:18] S1: So what you need is to help the companies see where good stuff is happening. [00:27:22] S0: Yes. And I think there is some invention we could do there to help with that. So in the short term, I think you kind of have to do what they're asking for. [00:27:32] S1: Because that's how you get in. [00:27:33] S0: That's how you get in. And then you want to invent something better and then show them the way.
00:27:33 · Amjad Masad, Paul Graham
[00:27:33] S0: That's how you get in. And then you want to invent something better and then show them the way. [00:27:39] S1: So there's more stuff to build. There's more stuff to build. This could be very valuable stuff. Wouldn't this be valuable stuff? Because when you think about what you're doing when you're trying to figure out which of the projects that people are using tokens for are the most valuable, you're fixing the biggest problem inside big companies. This is why big companies are the way they are. They can't figure out the value of stuff done by individual people. So if you build something that makes them even 10% better at that, you're fixing the whole fundamental problem with big companies. [00:28:10] S0: Right. Yeah, and I think That's a lot [00:28:13] S1: more than just vibe coding. [00:28:14] S0: Yeah, I think we describe ourselves as vibe coding now. We wrote this blog post called The Self Driving Company. And so the idea behind it is a Replit where early adopters of of technology broadly, but definitely AI, we're seeing that we're working differently. Like, there's fundamental shift in how we work. [00:28:39] S1: You mean Replit as a company? [00:28:40] S0: Replit as a company, which is customer zero for Replit. [00:28:43] S1: Yeah, yeah, yeah. So maybe you should figure this out yourself first. How do you identify people doing valuable things?