David Weisburd here.

This past week, the venture capital and angel investing world has been abuzz with OpenAI’s new release of GPT-3, the third generation of its machine learning software. OpenAI is a nonprofit laboratory focused on artificial intelligence, founded by Elon Musk and other prominent technologists and funded by $1 billion from Microsoft.

GPT-3’s release, which boasts over 100X more parameters than the previous version, has been received with much fanfare, with MIT’s Technology Review calling it “shockingly good” and others calling it the biggest paradigm shift in technology since the creation of Bitcoin and cryptocurrency.

What exactly is GPT-3?

At its very basic level, GPT-3 is a language model that can predict the future characters in a sentence. For example, if you are writing the following sentence, “Despite training my puppy, he continues to pee,” the GPT-3 model would know to complete the sentence with “inside” or “inside the home.”

What’s shocking about GPT-3 is that due to its 175 billion-parameter library and its elegantly coded system, GPT-3 acts as a “master model,” which means it can create both a new model and its output within seconds.

Do you need GPT-3 to translate something from Kurdish to English? Great. Do you want GPT-3 to write an original essay or short story in the tone of a certain author? Easy. Need to generate a completely new painting in the style of a favorite artist? No problem.

In fact, GPT-3 has so much data and is so powerful that it can even mimic human intelligence and independent thought, although it doesn’t truly “know” what is it is saying. Click here for an example.

What are the implications for startups?

The short-term implications for startups are significant. Historically, even great startups have been unable to compete in data-intensive industries (e.g., autonomous driving), not because they lacked great models but because they lacked great data sets.

GPT-3 changes that overnight by providing one of the most comprehensive data sets in existence, allowing the best model to win in a range of verticals, including software, hardware, IoT (internet of things), and virtually every other industry out there.

As GPT-3 comes out of Beta this year, expect to see every application you use become smarter. Do you think that Siri is not quite as sharp as Alexa? No problem, GPT-3 will solve that. Are you frustrated by the customer service provided by a chatbot? Soon, chatbots will be as good at their jobs or better than their human counterparts.

And while the short-term implications for startups are significant, the long-term implications are even greater. Some people, such as yours truly, believe that GPT-3 (and future releases) will replace many software engineers and coders over the next decade, as it can already complete mundane tasks that previously took hours for software engineers to handle (check out an example here).

Eliminating these lower-level positions will leave only elite coders and engineers who will interact with and utilize the GPT model.

What does this mean for you and I?

With one release, GPT-3 has taken society 3-5 years into the future virtually overnight. This is great news for all of us, and here’s why: startups will be the biggest beneficiaries of the new tech, giving them a leg up over larger corporations (who will come out as net losers).

Technology stack:

All the technology services used to build and run an application.

The implications of GPT-3 are so wide and so far-ranging that there is no one vertical that will benefit the most. My belief is that the entire startup ecosystem, including angel investors, will greatly benefit and will enjoy better returns, starting with existing companies that implement GPT-3 into their current technology stacks.

Though GPT-3 is sure to revolutionize countless industries, it is important to continue to be disciplined as an investor by never investing too much capital into any one opportunity and by continuing to diversify across a portfolio of investments.

The implications of GPT-3 as it relates to startups and angel investing cannot be overstated. The biggest returns are made in venture capital when you are “non-consensus right” – meaning that you are correct on a startup or vertical while the rest of the world disagrees with your bet.

We are in the dawn of a new era of startups and angel investing, and the future has never looked so bright. How will you take advantage of the opportunity?

Very best,

David Weisburd