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- Alexandr Wang on founding Scale AI and investors telling him the TAM was too small
Alexandr Wang on founding Scale AI and investors telling him the TAM was too small
In the middle of Y Combinator’s S16 batch, Alex and his team felt lost after pivoting from their first idea. Then they noticed a bunch of companies were working on chatbots that required a lot of training data and decided they might be able to build a business around providing that data.
In three days, they bought the domain scaleapi[dot]com, built a landing page, and launched on ProductHunt. From there, they just started working with the engineers that reached out to them.
“That was enough for us to raise money and get going,” Alex reflects. “Then a few months after that, it became clear that self-driving cars were actually the first major application that we needed to focus on.”
In Alex’s view, focusing on this narrow problem of self-driving cars was fundamental to the success of Scale AI. But it wasn’t an obvious decision at the time. Scale’s investors thought self-driving cars was too small of a market. “You’re never going to build a gigantic business that way,” their investors told them.
“It’s funny looking back because both things are true,” Alex says. “[Focusing on the narrow problem of self-driving cars] enabled us to build a business and get to scale very quickly. But it was also true that it was not a big enough market to sustain a gigantic business.”
Alex offers founders the following advice:
“Startups have to switch modes at a certain point. Early on you’re trying to go for very narrow markets — almost the narrowest markets you can. Then you gain momentum, and at some point if you have ambitions of building a $100 billion company, you have to switch gears and ask, ‘Where are the infinite markets?’ and build towards those.”