Joe Schmidt, a partner at a16z, argues that the real opportunity for AI startups lies in vertical scenarios deeply integrated into industry workflows, rather than competing with large model companies like OpenAI and Anthropic on general-purpose applications. Schmidt uses the metaphor of the "Yellow Brick Road" to describe the path large model companies are pursuing, such as code generation and image creation. He suggests startups focus on complex, industry-specific challenges that require deep integration, compliance, and operational knowledge. Schmidt emphasizes that businesses value systems that manage complex processes and compliance over simple AI tools. He notes that while large model labs are advancing in the application layer, they cannot address all industry-specific needs. Startups can thrive by building tailored solutions that leverage unique data and processes, offering more than just a smarter chat window. This approach allows startups to create defensible positions in the AI landscape by focusing on areas where large models cannot easily compete.