Despite the wide availability of powerful AI models, a sustainable edge in the zero-sum game of investing comes from a combination of unique, curated data sets, bespoke technology for scale, and the experienced human context to ask the right questions of the models.

Existing companies ("AI emergent") are structurally disadvantaged by legacy tech, talent resistant to change, and outdated pricing models. AI-native startups, built from the ground up with AI, hold a significant advantage that even giants like Apple struggle to overcome.

Ken Griffin highlights AI's dual impact. While an agentic AI system reduced a 6-week, PhD-level task to a few hours, this same power erodes incumbents' competitive moats. This leveling of the playing field will enable entrepreneurs to launch new businesses with unprecedented speed and challenge established players.

Previously, startups competed on agility while incumbents held capital and distribution advantages. In the AI era, startups with massive funding can directly challenge incumbents on a capital basis. This, combined with AI solving distribution and the incumbent's cultural inertia, creates a new competitive dynamic.

As powerful AI models become cheap and universally accessible, having one is no longer a defensible moat. The real, lasting advantage for a business now comes from assets that a better model can't easily replace: proprietary customer data, deeply integrated user workflows that are difficult to replicate, and long-term client relationships.

Unlike previous tech shifts like cloud, AI is so disruptive that it creates a viable narrative for how incumbents could either massively win or be completely displaced. This complicates investment decisions across the software sector, as both optimistic and pessimistic outcomes are highly plausible.

Unlike past technologies that automated specific tasks, AI threatens to automate all economically valuable human labor. This removes the fundamental, non-seizable leverage that the general populace holds, creating a power vacuum that can be filled by capital owners.

AI empowers startups to challenge large, slow-moving incumbents burdened by legacy systems, high prices, and customer resentment. AI lowers the cost of building a competitive replacement, creating a massive opportunity for bootstrappers to go after enterprise customers with fairly priced, modern solutions.

As AI makes software and open markets hyper-efficient, it collapses margins. The only sustainable businesses will be those built on 'dark pools'—proprietary assets like exclusive deal flow, unique relationships, or private data that cannot be easily replicated or arbitraged by algorithms. Open access leads to zero value.