AI startups: Lerer Hippeau sees a 'second generation' emerging

Pretty much, yes. The names dominating headlines and venture capital portfolios are always the same: OpenAI, Anthropic, and more recently, xAI. They've scooped up a massive chunk of global AI funding, leaving crumbs for everyone else. It's a gold rush where only a few have the right shovel.

But some, like Eric Hippeau of Lerer Hippeau, are starting to look past the dust kicked up by these behemoths. On July 8, 2026, Hippeau discussed on Bloomberg Tech how this landscape is evolving. Apparently, there's still room for the "little guys," provided they're clever.

These new startups aren't trying to compete with foundational models from OpenAI or Google; that would be suicide. Instead, they're focusing on how to apply artificial intelligence to specific, often niche, problems. Think AI solutions optimizing business processes, creating hyper-personalized content, or managing complex data in vertical sectors.

The idea is to build "on the shoulders of giants," not against them. They use existing AI models as building blocks to create something truly useful and profitable. It's a bit like the first generation invented the internal combustion engine, and now the second is creating cars, tractors, and generators. Not a bad strategy, is it? It's about finding added value where you least expect it.