John Luttig on hypercapitalism and the AI talent wars
Hypercapitalism is rewriting Silicon Valley's employment contracts, investment norms, and trust culture.
Core takeaways
Hypercapitalism is rewriting Silicon Valley's employment contracts, investment norms, and trust culture.
The established social contracts between founders, employees, and investors are being broken down by a massive influx of capital.
The outcome will be a concentration of returns, with fewer companies and fewer employees capturing significantly more value.
Drivers of the talent war
Compute leverage: Labs have spent billions on compute clusters, so the researchers who make them efficient are exponentially valuable.
Demand urgency: AI products distribute faster than previous technologies, creating extreme pressure to get ahead of the market.
Supply constraint: There are only a few hundred people with the current skills to harness frontier model capabilities, with little time to train new talent.
The new talent dynamics
Top AI talent is now like superstar athletes or actors, where their impact is magnified by expensive infrastructure like compute clusters.
Standard at-will employment contracts are now obsolete and fail to protect either companies or employees.
Companies will push for more aggressive trade secret protection and non-competes, while talent will demand professional representation and liquidity guarantees.
Impact on companies
The talent war is a consolidating force, making it nearly impossible for new AI research labs to enter the market.
AI R&D is now too expensive for most startups, pushing them to build on top of existing APIs.
A growing number of successful startups will have a "fat pitch" founding story: stacked teams, high institutional credibility, and massive initial funding.
A new "giga-cap" class of companies may emerge, with multiple $10T valuations by 2035.
New rules for investors
Being a rigid seed or Series A-only investor is anachronistic; investors must be more flexible.
A new investment thesis has emerged where the quality of the team constitutes the downside case, making it feel like an investment can't lose money.
Investors need to reconfigure social contracts to include new protections, such as key man clauses for founders.
Investors must factor in significantly more dilution from employee option pools than in previous tech waves.
notes from:
