Y Combinator's head of public policy says Apple's App Store is choking the vibe-coding revolution

Speaker 1: Truthfully. High yield Harry's joking, Steve Buscemi has been revealed as the Bitcoin founder, not Satoshi Nakamoto. Well, we have our first guest in the waiting room, Luther Lowe from Y Combinator. He's the head of public policy, and we are going to be talking to him about Vibe Cody. Luther, how are you doing?

Speaker 7: Hey, guys. Great to see you. Congrats on the acquisition.

Speaker 1: Thank you. Thank you. Great to have you on. Can you kick us off with a little bit of an introduction on yourself and what you do day to day at Y Combinator?

Speaker 5: Sure. So, yeah, I'm the head of public policy, for Y Combinator. I'm based in Washington. Mhmm. And Gary created the role when he started at YC and really his observation many years ago was, Gary and I had actually met in Washington. We were sitting around the table at some kind of White House meeting and he said, you know, you you go to Brussels, you go to Washington, and the largest tech companies have lots of representation. Mhmm. But little tech doesn't have a seat at the table. And that was actually the first time I'd heard that phrase little tech and Gary actually kinda coined that phrase. He went back and you look on X Twitter, he has had said that a number of times years ago. And so, you know, my role is to really, like, help the founders navigate Washington, Brussels, the state capitals, advocate for pro little tech issues in the broader ecosystem, and, yeah, just really do everything I can to help the founders. And what's the what what is what

Speaker 1: is your view on on vibe coding, the App Store, the boom? I I was we were talking about it yesterday. There's, you know, there's a whole bunch of stories of where it feels like we're getting close to the one person, absolutely massive company, whether that's GMV or revenue or something. It's like it's starting to happen. But I was looking at my home screen. I don't have an app that is new or vibe coded. Maybe it'll come in a in a boom in video games. But how have you been tracking? I mean, I'm sure you see this at YC. Just the the the growth of broad app development.

Speaker 5: Yeah. I mean, I think I I would almost kind of take a step back. It sort of reminds me of when I first started geeking out on the Internet like twenty five years ago where you saw the rise of sort of what you see is what you get HTML based or browser based HTML editors. Yeah. And that allowed anybody that kind of democratized the process so anybody could create a web page or a website. Mhmm. And now we have tools that allow anybody to create a web service or an app. And so the difference though between now and twenty years ago is that today we have basically these two bottlenecks in the form of Apple and Google that sit between the creation and the potential users of those services. Yeah. The Apple app store is basically like the worst DMV in the world. And so we're seeing not only sort of, and see, you know, there's reports all over X about this, but if you just barely kind of look around for it, you're going to encounter lots of folks that are trying to develop apps and services that are not being accepted or getting kicked out. And then it's not only that kind of like app layer, it's sort of the layer up of the tools like Replit and Anywhere that are facing, you know, the inability to update their apps. And so it's a real problem. Yeah. What

Speaker 1: when you say the worst DMV in the world, are you actually referring to we saw a chart where the number of App Store submissions is spiking. It's going exponential. And that feels very logical because people I mean, we've been building vibe coded web apps here. The next step was, hey, maybe we should actually get one of these in the App Store. But very quickly, we realized, okay. Well, it's at least a two week review process. It could be a lot of back and forth. It's a new hurdle. We need to actually compile it to Swift or Objective C. It's a whole different process. Probably doable on a technical side, but we might be hung up there. But are you seeing an issue with actually getting just a one off vibe coded app approved? And then I think we should talk about the apps that help you vibe code new apps because that's a whole separate thing. But just in terms of like, I want a special recipe app and I vibe code it and I want to get it on my phone and I want to send a link to the App Store page to a friend. Is that slowing down? What's slowing that down? Is that going to be a permanent thing or do you think Apple can just adjust there?

Speaker 5: Well, I think the problem with Apple, I mean, it's this is a sort of perennial issue with Apple is their culture is one of just absolute control. And I think that we have reached this inflection point where, you know, if I've got my MacBook in my lap, can open it up, I can download any app I want, I can open terminal, I can do all kinds of crazy mods, but the second that that form factor fits in my pocket, all of that freedom goes away. And then and I'm living in sort of North Korea in terms of what I can do with my Mhmm. With my stuff, with my property. Yeah. And so I think the, you know, this is you know, sure. I could I could launch something in test flight if I want some kind of little bespoke Yeah. You know, training app or something. But God forbid, if I want to share it with friends or I want to, you you know, make some money because I've created sort of a differentiated product that's actually interesting that people want, I've got to pay this ridiculous vig to Apple. So for them, it's actually about the reason they want control is because it's it's about App Store revenue. And also, they have competing products. It's an anti competitive thing because they've got Xcode and they've got their own dev tools that they're starting to kind of kind of roll out their own sort of vibe coding services. So the longer that they can kind of delay and slow roll both the developers and the the tools that allow the Vibe coders to create stuff. Theory is that they'll they wanna basically make their own version of

Speaker 2: Replit or anything that they have in, you know, total control over. And they can make the argument they could probably make the argument that this is better for users, it's more secure, it's better for privacy, less like malware risk, what what whatever it is. But they yeah. Anyways, I mean, they they give you there's already like they give you like pretty, meaningful autonomy over like shortcuts and other things like that. It's not that

Speaker 5: unbelievable that they would wanna actually make something here. But but it's like embarrassing, like, I mean, Siri is embarrassingly stupid. We've had sort of LLM Yeah. Consumer facing services like, you know, Sam brought them down from the mountain, you know, whatever. Are we all at almost three years ago and I you know, like, Siri still can't do, like, basic subtraction. The other day, I asked it for, like, what was, like, you know, days, from, you know, this particular date, and it was like, do you want Google to consummate that query? Do you want ChatGPT to do it? Yeah. It's like, why can't Siri do it? And and so you've got all these this just lots of energy. There's lots of YC companies that are trying to take a crack at creating kind of serial alternatives, but until kind of this self preferencing is addressed, I think at the sort of policy making level, and it's not just Apple self preferencing, it's Google, it's all of them. Yeah. Then we're not gonna really be able to see the the fruits of this sort of LLM revolution diffused into the hands of consumers.

Speaker 1: Do you think the the the the side button to trigger the helpful assistant that is currently mapped to Siri and can interface with ChetGPT and is reportedly going to interface with Gemini soon. Do you think that there's any actual chance that that becomes remappable at like a, you know, pick your browser search engine level in the in the OS? Even if it's even if it's defaulting to Apple's stack, do you think there's any motion there? Because that feels like the logical analogy and what, as an Apple consumer, I would like. I'd like to be able to pick my assistant but be able to assign the hardware button. But where do you think that actually goes?

Speaker 5: Look. I there is no technical reason why we shouldn't have a flourishing ecosystem of third party Mhmm. AI assistant developers competing to do all kinds of interesting stuff. You guys should check out a YC company called Blue. It's heyblue.com. They have this amazing demo on their website and they talk about and basically the guy's sitting in his car Yeah. And he's driving he's driving up the 101 Mhmm. And he's saying, hey, go through my Slack messages from last night. Okay. Cool. Jerry needs a document. Share it, get into Google Docs and share that with Jerry, but make it read only. I mean, look. I like my third button having perplexity and being able to queue that, but I can't if I can't access those deeper OS API commands, then, it's it stops being, that interesting pretty quickly. Anyway, the the blue guys, the what you learn, you're like, god. This is magic. How'd they how'd they do this? How'd they figure this out? You realize it's a USB c dongle that they've basically, 70% of the company is is hardware. They're they're doing soldering irons. They're they're flying to China, negotiating with distributor. It's like, why is this a hardware company? This should be there should be, you know, there should be 50 different companies like this duking it out to to create something that's better than Siri because Siri clearly is not cutting it. And I think the antidote to this frankly is, you know, we just announced yesterday a coalition of 275 startups and VCs in support of the BASE Act. Yeah. It's the banning anti competitive self preferencing by entrenched dominant platforms act bill. In ten seventy four by Scott Wiener, not to be confused with Scott Wiener's ill fated bill ten forty seven from a couple years ago that had to do with AI regulation. This one we're really excited about because basically, it it call it calls upon companies that are a trillion in market cap or above a 100,000,000 US users, to end this type of egregious forms of self preferencing. We're totally fine with innocuous forms of vertical integration. In fact, most of the time, that's like a great thing in technology products. But, you know, when you've got, you know, the GitHub COO last week said that commit rates, if they stay linear, are on track to be 14 x what they were last year. Wow. Like, you know, something's gotta give you. Yeah. There's gonna be more software. Everyone's building software. There's gonna be a ton more software. How do you think the

Speaker 1: the vibe coding apps apps that go in the App Store and allow you to build more apps with that particular app, how do you think that will shake out? Because that is a place where it feels like Apple has spent a lot more time making the case. When I think about the Siri button, I feel like they haven't made a strong case for why that can't map to a different app that's already gone through approval. But when I think about the consumer protections and privacy that comes with knowing that the software that you download from the App Store has been audited, They've made a pretty strong case there. What's the counterargument for why Apple should open the floodgates of apps that allow anyone to vibe code an app and and deliver it to anyone else's device sort of willy nilly?

Speaker 5: Look, I don't think that anything is gonna in terms of creating consumer outcomes that maximize privacy competition, all the great things that you want, I don't think any mechanism is gonna work better than good old competition. Mhmm. And so that means allowing for side loading. It means allowing for alternative app stores. Know, you know, we make fun of a lot of European regulation, but the Digital Markets Act has actually done a pretty solid job at that. And so, like, in places like Japan and Europe, if you don't if if you are just hitting a wall with the worst DMV in the world, you can just go to the the alternative app stores, and I, a consumer, can decide to download one of those and use that as a way to access a whole other ecosystem of services. And they have their own vetting processes and I think, again, competition is gonna be the mechanism that actually enables better privacy, better consumer protection. And I think what we found historically with with Apple, and we saw this a lot a few years ago with, Beeper, which was a YC company that had interoperable messaging. Eric Eric Mujakovsky solved the blue bubble, green bubble thing, basically made it where it's not awkward for you to buy an Android and, like, you know, Kool Aid man into your, you know, college chat and turn turn the whole thing green. Yeah. He fixed that and of course, you know, what does Apple do? They said, no. You we're you know, Android users don't get that. We've gotta basically reduce security to this lowest common denominator. Sure. Like, you know, SMS, RCS, standard. So there's no it it's pretextual. Like, we we we can have choices. We can have nice things, and little tech's trying to build it, but, I think policymakers have got to do a better job at, you know, ensuring that the the biggest players are not kind of egregiously putting their thumb on the scale. Yeah. Last question. What else are you tracking in DC?

Speaker 1: It feels like with the AI boom, there's a lot of new company formation. I'm sure you're seeing that on the YC side, but we see it every day on the show. Are there are there policy initiatives to encourage entrepreneurship that you're tracking? Is there anything else on, like, the small business side that you find interesting these days?

Speaker 5: Yeah. I think, you know, there's I I would say where I I think the Trump administration's doing a good job is, you know, they've they've done a lot to sort of advocate for the American AI stack and sort of encourage entrepreneurs to like interface with government and become and they've, you know, put out sort of bids for the where the government is a a buyer of these tools and they've been very proactive and have a great relationship. You see like lots of renewed interest in defense tech and dual use tech. I think where I wish that there was more work, and I think they could probably be doing a better job, thinking about how do we make sure that The United States is brain draining the world and bringing in the top talent, and making sure that the smartest people in the world are building companies here. I think that that that's where if I could change anything, would say, oh, they could do a little bit better. But I I would say, you know, have been they have been very thoughtful. The president's talked about little text in his in his tweets, like and and I think, you know, this is not a partisan issue. We want to have a thousand flowers flourish, but it is yeah. I mean, think getting the the tech the tech talent piece Yeah. With the sort of being bullish on AI. That that I think is gonna get and and also the competition piece. Getting all the those things right, I think that's gonna put us in a position to be, really,

Speaker 1: amazing here. Yeah. I love it. Well, thank you so much for coming on the show. Yeah. Great to meet you. Thanks for having me, guys. Your day. Appreciate the hot takes. Alright. You too. Cheers. Before we bring in Dan Primak from Axios, we have an exclusive clip from his interview with Kalshi CEO Tariq Mansour on the Axios show,

Speaker 8: which we will be discussing with Dan after we play it here. It's about a minute and a half. So let's listen to this. For customers to lose. Actually, the proof of that is that, you know, when a customer wins on a traditional sportsbook, they block that customer. And

Speaker 9: the CFTC chair who supports prediction markets being legal, sports federal framework, etcetera, said recently that one of the when he was asked about this, he said, well, part of the difference is that when you walk into a casino, there's all sorts of entertainment. Right? There might be shows, there's food, there's drink. He said, so casino betting in a casino is different than than betting Kalshi,

Speaker 8: but it's not necessarily different than betting on a sportsbook app on my couch. There's no entertainment difference. There's big fundamental differences, it goes back to the market mechanic. Like, one of them is essentially a product that is designed for customers to lose. Actually, the proof of that is that, you know, when a customer wins on a traditional sportsbook, they block that customer because those winnings are coming from the business model, the business itself. If they win enough, yeah. If they win enough, or if they win, really, they win and consistently, if they do research, if they get informed They're good. If they're good. Exactly. And if they're not, actually you get them promos and you figure out how to bring them back, and there's kind of a bit of this sort of like, I think, what you call like kind of marketing tactics to bring these people back. It could be like entertainment or promos and so on and so forth. That does not exist in prediction markets. It is a fundamental difference in structure where actually a lot the people that win, the people that are doing research, are getting informed, that are traders,