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PredictionVideo · 54:29 — 55:59

The biggest startup opportunity is not competing head-on with an incumbent's existing category, but positioning between two established players, since incumbents will bolt AI onto their existing products rather than disrupt their own product line.

Steven Sinofsky argues the winning startup strategy during a technology shift is to occupy the space between two entrenched incumbents rather than attack either directly, since incumbents will defend their product lines by bolting AI on rather than reinventing them. ✦ AI generated

Steven Sinofsky · a16z Podcast · 2026-07-07 · original ↗

starts at this moment · 54:29

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Where are we really seeing the biggest opportunities for startups right now?

The biggest opportunity right now is always always to look at the existing sort of mental map of enterprise categories and be in between two established players because the thing that you know right now during a massive technology shift is the one thing that established players won't do is disturb their existing product line and go to market.

verbatim transcript · starts at 54:29

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54:29existing uh sort of mental map of enterprise categories and be in between two established players because the thing that you know right now during a massive technology shift is the one thing that established players won't do is disturb their existing product line and go to market. So they absolutely will just be bolting AI on top of their existing product. They they won't be getting rid of it. They won't stop working on it.

54:57They won't do anything to to break it. They're just going to try to weather this technology storm by sort of power throughing it, powering powering through it. And so your opportunity in a startup is to just look at two big players who are bolting AI onto the side and exposing some existing API as an agent or whatever and just aim for the middle and do things in in the new way and the

55:23new way. And by not attacking head-on, you don't show up at every single customer and have them go, you know, well, you need to the do these 8,000 things before you even enter the door. Instead, you have a equally difficult question, but one you're in control of. It's which is why do you even exist? And and that but you that's your own question. You you don't have to answer

55:45to a a series of 20-year frameworks that a 20-year-old framework that got created to answer a bunch of questions that aren't even relevant anymore. And and the best example of this is is is HTTP and HTML. client server existed, but the reason that those took over was not because it did all the things that client server did. In fact, it did none of them, but it implemented that concept

56:12in an entirely new way. And so, the web exists in spite of the fact that legacy vendors had a trillion dollars invested on how client servers should work. >> Well, and I and I would say the other piece too, it's not just two between two legacy vendors, but I think now there's like a layer of translation between two different functions within an organization, too. Oh yeah. Yeah, for

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