Startups have always disrupted large companies that fail to keep up with the times, but this could be accelerated in the AI era.
OpenAI CEO Sam Altman says that established giants often fumble during technological upheavals, a pattern he believes is repeating itself with artificial intelligence. His words paint a picture of entrenched behaviors and organizational inertia that innovative startups are poised to exploit.
Altman was responding to a question on why larger companies were struggling in the AI era, while startups were making big gains.”I think this basically happens every major Tech Revolution. There’s nothing to me surprising about it,” he said.
He then pinpointed the core issue that, in his view, consistently trips up large corporations. “The thing that they’re getting wrong is the same thing they always get wrong, which is people get incredibly stuck in their ways, and organizations get incredibly stuck in their ways,” he said.
To illustrate the practical impact of this inertia, Altman provided a vivid example of how slow-moving internal processes clash with a rapidly evolving technological landscape: “If things are changing a lot every quarter and you have an information security console that meets once a year to decide what applications you’re going to allow and what it means to put data into a system, it’s just so painful to watch what happens here,” he said.
Despite the “painful” nature of observing this struggle, Altman sees it as a natural and even necessary part of industrial progress, directly benefiting agile newcomers: “But you know, this is creative destruction. This is what startups win. This is how the industry moves forward.”
He expressed a sense of inevitability, mixed with a hint of frustration, at the predictable pace of adoption by these larger entities: “I’d say I feel disappointed but not surprised at the rate that big companies are willing to do this. My kind of prediction would be that there’s another couple of years of fighting, pretending like this isn’t going to reshape everything, and then there’s a capitulation and a last minute scramble, and it’s sort of too late. And in general, startups just sort of blow past people doing it the old way,” he says.
Altman’s diagnosis highlights the classic ‘Innovator’s Dilemma,’ where successful companies, invested in their existing profitable models, find it difficult to pivot towards disruptive, initially less certain technologies. Large companies also have to deal with myriad bureaucratic hurdles, risk aversion, and complex decision-making chains that startups can often avoid. In the AI era, where breakthroughs in models, applications, and ethical considerations are occurring at a breakneck pace – weekly, if not daily – such lengthy cycles become a critical liability.
This seems to be playing out within AI startups itself. Companies like OpenAI, Anthropic, Perplexity, and a host of smaller, specialized AI firms are pushing boundaries in everything from foundational models to enterprise applications and consumer-facing tools. While giants like Google (with Gemini) and Microsoft are making significant strides, they are also navigating internal reorganizations and grappling with integrating AI into vast, existing ecosystems, sometimes with public stumbles. If Altman’s prediction of a “capitulation and a last minute scramble” holds true, the next few years will be a critical proving ground — the tech behemoths will undoubtedly play a significant role, but the fundamental reshaping of industries may well be led by the nimble, focused, and daring startups that are built for the speed of the AI revolution.