Recent content on Soren Larson
Motivation Link to heading An AI provider does not merely sell an answer. By receiving the information needed to produce that answer, it may also learn how to produce better answers in the future. That creates two economic flows in every context-rich AI relationship: Learning travels: private operating context enters an AI system and may improve what the system can do elsewhere. Value travels:…
Summary: Lab margins and value participation fall out of the distribution of task complexity, but these present conflicting incentives for the labs. ⚠️ Fair warning this blog is more technical – feel free to copy as markdown to a LM. Dario continues to predict high unemployment with high GDP growth The signature of this technology is it’s going to take us to a world where we have very high…
Clay Christensen has two theories of disruption. The one everyone knows – new technology comes out that incumbents ignore or don’t understand is misaligned with existing business doesn’t directly serve existing customers but unlocks new markets that end up dominating. This is the classic Blockbuster v Netflix story. It may very well also be a story of the labs v the…
Judging by the last few months of AI-econ discourse, apparently the firm is dead. It’s over––companies have no reason to exist. Agents run the economy now. The narrative is not coming from AI anime pfp schizos, but from top labs, crypto or fintech pumpers, and economists. The narrative goes––the firm will implode birthing billions of agents who transact. How long until agentic payments…
This technology cycle has been particularly interested in economist Ronald Coase. He’s been in the discourse for his near century-old writing on the Nature of the Firm, answering why firms exist and why they grow. His view: Firms exist to minimize transaction costs––firms grow larger whenever hiring is cheaper than transacting and vice versa. His later writing on monopolies and durability…
Judging by public markets, the future of software looks bleak . Memes abound . Even optimistic software investors appear wary. Upfront’s Peter Zakin ’earnestly love[s] software startups.’ But even he accepts Agents Will Climb The Ladder forcing startups either up the ladder with agent capability or down to infrastructure agents use. Following his bet on Daytona (“agent…
Summary: Agents earn not from routing but from capturing inefficiencies at the edge––creating new supply, capturing latent context, or productizing uncertainty buffers. Truth > Scale. Will AI agents get paid a living wage? Labs earn money from providing intelligence either directly or through subscriptions. Whether their margins persist as open models catch up ( Kimi K2.5 let’s go! ) is a…
Summary: For labs to capture durable value, the world has to be meta-surprising. I’m not sure it is. 🎶 The more the world is changing, the more it stays the same. Life is full of small surprises, it’s a never ending game. If nothing is impossible, will you believe your eyes? If the unexpected brings a smile, that’s a big surprise! -Cilla Black “Surprise! Surprise!”…
Summary: Software modularized nouns; AI modularizes verbs, migrating profit from enabling middleware to asset owners bearing structurally non-deferrable liability. CapEx is the new CAC. Last month Anthropic published a blog highlighting their new Tool Search Tool . The key insight is that registering all tools with Claude directly through MCP consumes too many tokens. A superior approach instead…
Summary: AI commoditizes intelligence, forcing profits to migrate to asset-heavy Cybernetic Rollups that own context at the edge. I started this blog five months ago to combat a venture narrative I’m now convinced is wrong. The narrative: That AI’s winners will be middleware SaaS companies––agentic platforms, cognition resellers, outcomes-pricing vendors––selling intelligence to…
We shut down Crosshatch . We built a “Plaid for personalized AI”: a portable context layer that let users bring their complete context to their favorite apps. We believed consumer AI wouldn’t be interesting without it. I think we were right. Go to your favorite consumer website –- has it changed much since ChatGPT launched now three years ago? Some still imagine a portable…
💡 Knowledge and action are the central relations between mind and world. -– Timothy Williamson “Programmability is eating the world.” declared USV’s Nikhil Raman. USV’s Matt Mandel introduces programmability The Information Age was a consequence of two developments: the ability to work with information programmatically and the democratization of that capability. USV sees…
Silicon Valley will not stop talking about outcome-based pricing. Better Tomorrow Ventures’ Sheel Mohnot explained that SaaS isn’t dead––it’s really that “per-seat pricing is dead.” I’ve strong conviction this thesis is exactly wrong , and in this blog I’ll explain why. The Origins of Outcomes-Based Pricing Link to heading Brett Taylor’s Sierra is…
SaaS and vertical AI are getting squeezed. Public market SaaS growth rates are slowing and the AI application layer is facing both margin pressure and competitive pressures from their AI suppliers and even their own customers. As Ethan Mollick asked in May, with 5-9 year startup exit horizons, what paths remain for startups that won’t be disrupted by AI or eaten by the labs? In this blog…
The diffusion of AI into the economy is too slow and too concentrated. Today’s top application-layer companies are mostly not end-to-end. They succeed where tasks can be precisely defined and near-instantly verified. We spin up bespoke vertical SaaS companies to wrap AI labor in trustworthy veneers, often hiding “ very negative ” unit economics. The Outcomes Protocol replaces…
In Friedrich Hayek’s cornerstone “ The Use of Knowledge in Society ” he introduces the “man on the spot.” If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place , it would seem to follow that the ultimate decisions must be left to the people who are familiar with these…
Introduction Link to heading High-intelligence applications make dumb businesses. Dumb applications make good businesses. To be a smart startup, you must be dumb. The Windsurf warning Link to heading The intuition largely follows Jevons Paradox. Consider AI code editors like Windsurf. When only Claude 3.7 was available, coding agents were ok but not great. Developers on Windsurf didn’t…
Agentic commerce is a mirage. The future is Autonomous Commerce. But why not agentic commerce? 2025 is the Year of Agents! Reasoning models are here. AI won’t just answer questions––it will do things for us. But what things? An agent could search for products we might like, choose them, and even place an order on our behalf. But what if we enjoy the act of finding things? [See Chris Paik:…
The worst software businesses are smart. The best ones are dumb. Let me explain. There’s been ongoing debate of where value accrues in the AI era. Many believe it accrues to the app layer! YC: Vertical Agents could be 10x bigger than SaaS Aaron Levie : “As cost of intelligence drops, value accrues to the app layer” USV : “The internet stack is composed of … fat applications.” Foundation Cap:…
This piece was originally published on Medium . This is a Spring / Summer show from Chanel. This is not Gucci. If there were any uniting theme of the chaos that the technocrats’ internet has brought, it is abstraction. It is the hiding away of details––whether they’re pieces of code, business processes, ulterior motives, control panels, real identities, or physical activities…
Contact @hypersoren Soren Larson I am a cofounder of Crosshatch, the internet's first personalized AI gateway. I received a masters in applied maths at Harvard. Before that, I studied probability theory at Columbia and received a BA in Economics, Maths, and Music at Swarthmore College. I'm interested in businesses that drive consumer surplus by helping consumers save time and money while expanding…