The Machines Are Training Themselves Now. Here’s What That Means for Startups, Investors, and the Rest of Us.

Last Tuesday I was reviewing a deal memo for a YC company building developer tools. Solid team, good traction, reasonable valuation. The kind of deal I’ve seen hundreds of times. But midway through the call, the founder said something that stopped me cold. “We used Claude Code to build about 95% of the product. Our AI researcher agent designed three of our five core experiments. And last week, the model we were fine-tuning started suggesting changes to its own training pipeline that actually worked.”

I wrote it down in my notebook and circled it twice. Not because it was surprising. Because it was the third time I’d heard something like that in a single month.

Something has shifted. Quietly, across multiple frontier AI labs and in the garages of solo developers, we have entered the recursive self-improvement phase of artificial intelligence. The machines are helping build the next version of themselves. And the implications for startups, for venture capital, and for how society organizes itself around technology are enormous.

Let me be specific about what I mean by “recursive self-improvement,” because the term gets thrown around loosely.