Technical Deflation
17 days ago
- #AI
- #economics
- #startups
- Deflation in economics refers to a decrease in prices, which can lead to harmful economic spirals due to reduced consumer spending.
- A 2% annual inflation rate is preferred as it encourages spending and prevents deflationary traps.
- In startups, 'technical deflation' describes how building software is becoming easier and cheaper, leading to delayed development.
- AI advancements make application development simpler by offloading complex tasks to models like LLMs.
- AI-generated code, while sometimes inefficient, allows startups to quickly build functional applications.
- Startups can now rapidly develop features that were previously time-consuming, challenging incumbents.
- Technical deflation causes delays in non-essential projects, like desktop apps, as developers anticipate future ease.
- Being a latecomer in the startup world can be advantageous due to learning from competitors' mistakes and leveraging newer technologies.
- Companies starting later benefit from improved AI tools, making initial efforts more successful with less complexity.
- Strategies for startups in this environment include focusing on distribution, understanding customers deeply, and leveraging disposable software.