Small companies buying and selling each other's services is probably the #1 thing that other ecosystems should emulate.

Getting your first 3 customer is hard, you need an open and empathetic system for that - a 'cohort' is exactly that.

Even if you larp revenue, when you get acquired or go public auditors will figure stuff out. Or worse you go to prison. Its like cheating in college-youre just hurtung yourself and others

Cohorts are not 'raising massive rounds' on selling to a couple of poor YC startups that 'don't want they product but pay for it anyhow' <- the implication there is very wrong.

They're selling to people who are using their product, but probably have bit of an open mind about things, and are willing to overlook hiccups. A bit like how buyers often have a 'national preference' in some cases.

Every startup ecosystem should do this, it's probably one of the top things any system could do to try to get things going.

And once you go through enough hops and convince the world that this thing which your company happens to be pioneering will forever change the world and everyone will use it the money circle isn't even relevant because the entire goal was to make your stock prices skyrocket and now you're valued at ridiculous levels!

Just make sure to get out of it all before any Investor actually wants to see real profit being made.

Software-only startups make nothing but hype and (these days) merely copy-paste existing frameworks and libraries into an AWS account, fill in predefined config parameters, generate zero net new knowledge

Studied applied physics and EE in college, been in high tech eng for almost 3 decades and lived through the evolution of software truth still being discovery into streamlined template filling.

People need jobs in this political system so whatever but I know a lot about engineering across contexts and where the bleeding edge is and know SaaS startups are rarely engaged in pushing the edge out further. It's a jobs program to validate political memes

"To be clear: every deal here is legal, publicly announced, and defended by the people in it — Anthropic CEO Dario Amodei called the structure "nothing inappropriate in principle." Critics compare the pattern to 1990s dot-com vendor financing and warn it can inflate the appearance of demand. As Bloomberg puts it, a circular deal is legally different from a fraudulent "round-trip" — regulators' term for sham trades with no economic substance designed to inflate results. LARP is a joke about the round-trip. This is the legal cousin it rhymes with."

When you're paying an average of, say £50k GBP/yr, for some engineers but a lot of other disciplines, and have a 30% margin it's a very different thing, especially when it's hard to justify the actual time savings.

Excess isn't a problem, it's the distribution of the excess. Right now (in America) pretty much all of it goes to the top couple percent. The bottom ~40% of Americans have, by all practical measures, experienced a reduction in standard of living compared to 1980. Like, yes, they can afford more trivialities. TVs are cheap, particle-board furniture is cheap, and so on. But the actually important things like healthcare, education, and housing have moved further out of reach.

So yes, it's nice that my Anthropic friends can retire to work on, in one case, their fantasy novels. I'm very happy they can focus on something they love (and I look forward to reading their books). However, that much capital concentration leads to a hefty chunk of our (really rather rich) country struggling to service basic needs (like having a roof).

Innovation!

that's why every mayor vc firm has one datalake, one cdn, etc etc.

they know their investment will go to these, why not keep it in their own ecosystem by some verticalization?

...the absurdity with Ai is when even competitors join in

UH OH

Did you write in more detail about that threat somewhere?

I think the main question about Corgi is: are they underpricing risk so severely that they go bust? And honestly, we have no idea.

For all we know startups are buying overpriced insurance from Corgi because they have a better brand and are easier to deal with than Berkshire's army of underwriters.

Though it's also worth noting that the main reasons startups buy insurance is not because they want insurance, but because enterprise customers demand insurance. Which is to say, it's not out of the realm of possibility that funded startups are not actually that price sensitive, because they just want to get the deal signed and move on.

We got our insurance elsewhere because we're a little older, so I have no actual opinion of Corgi, but there's a lot of stuff that enterprise customers demand that is driven by some compliance checklist. Delve took this to an extreme, but directionally, they were providing the service customers wanted, and at least in the insurance market, you can just pay more to paper over your problems rather than addressing the core risks in a way where there is no fraud. We pay for random shit we don't need that delivers no value for enterprise customers to tick boxes, for all I know Corgi fills the same need.

How big of a chance do you think those books will be about a gentle and kind but supremely powerful entity guiding the world? Of course it would be best if the book only appears to be based on that premise, and while the entity is quite powerful, it is being supported by a cabal of individuals who claim they are merely its caretakers but actually derive extraordinary social power by controlling it, and it is revealed that in other lands there are other such entities, and what appeared to be an general peace is actually an illusion created by this powerful group of people using their entity, that they are engaged in near constant warfare, directly or indirectly, with other entities; but, even they believe so deeply that what they are doing is right that they think they are only the entity's caretakers, and that there are only wars because other people want to use their entity for personal gain!

Who knows, your friend might be very clever.

Cooking up fake transactions to make an investor think there is business happening is the definition of fraud.

Your draft’s statement that “Corgi will help you share that risk,” combined with the question whether customers understand the risk of other companies in the group, does not merely describe RRGs in the abstract. It falsely implies that Corgi leaves customers exposed to open ended financial liability for other insureds. That implication is defamatory and false. RRGs are regulated insurance carriers subject to financial, reserve, governance, and regulatory requirements. They are not informal risk sharing clubs where policyholders unknowingly become responsible for each other’s balance sheets.

The RRG structure unique to Corgi. Major insurance groups use different insurer structures for different classes of risk because different risks are best served by different structures. Berkshire Hathaway, which the draft itself invokes, has affiliated insurance operations involving Risk Retention Groups in specialty liability markets, including medical and legal professional liability. That underscores the point: RRGs are a widely recognized insurance structure for specialty liability lines, and allow insurers to provide more tailored coverage options rather than issuing a generic policy.

The draft’s statement that Corgi “innovated with AI in a regulated industry by cutting corners” is also false and defamatory. Corgi raised millions pre-revenue and spent nearly two years building and obtaining regulatory approvals for its insurance operations, including approvals and requirements relating to reserves, pricing, liquidity, governance, and compliance. That is the opposite of “cutting corners.” Any allegation that Corgi used AI to evade regulatory approval, underwriting standards, reserve requirements, pricing controls, liquidity controls, or other compliance obligations is false.

Any article suggesting otherwise, including by implying that Corgi misleads customers, conceals the RRG structure, exposes policyholders to undisclosed balance-sheet risk, or uses RRGs and AI to evade proper underwriting or regulatory obligations, is false and highly damaging.

To be clear, if you publish these false statements or defamatory implications, Corgi will sue you personally and will pursue all available claims and remedies against you and any other responsible parties. Corgi has enforced its rights before and will do so again. You should not mistake this for an abstract legal reservation."

From their head of legal.

Yes, insurance is mostly a box ticking exercise for most startups. My concern with Corgi is that even after accounting for how unimportant insurance is to startups, they are so blasé about their underwriting that for the small number of startups that will eventually need the protection insurance offers, there is a substantial amount of exposure to Corgi going under.

A typical startup needs D&O insurance to satisfy their investors -> the startup approaches Corgi -> Corgi's sales team negotiate more comprehensive insurance that covers many more of the risks that the startup faces that would not be insurable by traditional underwriting -> the startup uses their insurance coverage to justify risk taking.

Historically, the type of risks startups took were of little legal consequence but that has changed with AI. The social and political appetite for taking down AI companies is only getting stronger. We're already seeing OpenAI and Character.AI subject to multiple lawsuits over teenage user suicide.

All it takes is a single large judgement against a single Corgi insured company to liquidate the whole Risk Retention Group and then any ongoing litigation that Corgi was covering, is suddenly uncovered, and uninsurable elsewhere. The potential fallout from a startup losing coverage mid-litigation could be substantial when that litigation is government sponsored, the corporate veil isn't very useful when a government is looking to make an example of a company.

Multiple Corgi customers are already involved in expensive litigation and while I believe that is not covered by their Corgi policies because it predates Corgi's launch, it is a sign that expensive litigation is well within the realms of possibility for their customers.

You should read up on what a risk retention group is and how it works. To me, it's even worse than you think.

> For all we know startups are buying overpriced insurance from Corgi because they have a better brand...

Is this tongue in cheek?

> ...and are easier to deal with than Berkshire's army of underwriters.

Or they provide "insurance" for things that the world's most experienced insurers don't want to touch, or won't touch without a lot of underwriting. Which in itself is a red flag.

I did some basic reading but don't really see anything particularly wrong with them.

AFAICT, the argument being advanced against Corgi is that insured customers might be doing risky things assuming their insurance will bail them out. This just doesn't ring true to me because I think most startup founders are just willing to accept more risk and accept that sometimes that includes legal risk.

When you look at Corgi's marketing, e.g. https://www.corgi.insure/ai what you'll see in the common risk triggers is basically compliance: AI Safety Audits, VC due diligence, EU Regulation. It's basically all about showing other people that you're "doing something", not because you think you need or want insurance.

I think the comparison to Delve is actually quite apt: startups generally do not care about SOC 2, they just need the checkbox that their customers are asking for. And startup's customers often themselves don't really care, they are just doing it to satisfy their own SOC 2 requirements, ad infinitum.

I think the main people that are being potentially deceived here are not Corgi's customers, those customers' customers, but I don't think they truly care either and are also checking a box.

They found a way to sidestep regulations in a non-traditional way, they're using AI for underwriting, but like I said, there's no actual evidence the underwriting is wrong.

Is a startup gets insurance for something they couldn't get insurance for elsewhere and then Corgi goes belly up, the startup is our their premiums but otherwise in the same place.

For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.

Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure. If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.

I agree that insurers definitely faces the urge to underprice risk because the shoe will drop later, but there's no actual evidence here that they're mispricing risk of that people buying it really think it's going to save them if they do something risky.

That’s not accurate if the startup is making a claim against their insurance. And even in cases where the startup hasn’t yet filed a claim, losing insurance that cannot be replaced could be catastrophic. Corgi are insuring things that are uninsurable elsewhere. If your startup relies on being insured against hallucination risk, and you lose your hallucination risk insurance, then what?

> For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.

There aren’t and there can’t be. A Risk Retention Group requires that all insured parties are equal members, Corgi cannot divide customers up based on risk profile. The entire premise of a Risk Retention Group is the risk is shared across all members. Hence, it is wildly unsuitable for how it is being used by Corgi.

> Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure.

Newfront built a $1.2bn business on startup insurance.

> If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.

We live in a brave new world. Startups are doing more and more politically and socially risky business, like AI medical advice. You are assuming that a startup being sued and losing their insurance is whatever, just shut down the company, but the founders are at risk, and losing legal coverage mid litigation has a material impact on their ability to defend themselves. Good lawyers can keep founders out of prison, no lawyers cannot.