The “hard tech” in AI are the LLMs available for rent from OpenAI, Anthropic, Cohere, and others, or available as open source with Llama, Bloom, Mistral and others. The hard-tech is a level playing field; startups do not have an advantage over incumbents.

There can be differentiation in prompt engineering, problem break-down, use of vector databases, and more. However, this isn’t something where startups have an edge, such as being willing to take more risks or be more creative. At best, it is neutral; certainly not an advantage.

This doesn’t mean it’s impossible for a startup to succeed; surely many will. It means that you need a strategy that creates differentiation and distribution, even more quickly and dramatically than is normally required

Whether you’re training existing models, developing models from scratch, or simply testing theories, high-quality data is crucial. Incumbents have the data because they have the customers. They can immediately leverage customers’ data to train models and tune algorithms, so long as they maintain secrecy and privacy.

Intercom’s AI strategy is built on the foundation of hundreds of millions of customer interactions. This gives them an advantage over a newcomer developing a chatbot from scratch. Similarly, Google has an advantage in AI video because they own the entire YouTube library. GitHub has an advantage with Copilot because they trained their AI on their vast code repository (including changes, with human-written explanations of the changes).

While there will always be individuals preferring the startup environment, the allure of working on AI at an incumbent is equally strong for many, especially pure computer and data scientsts who, more than anything else, want to work on interesting AI projects. They get to work in the code, with a large budget, with all the data, with above-market compensation, and a built-in large customer base that will enjoy the fruits of their labor, all without having to do sales, marketing, tech support, accounting, raising money, or anything else that isn’t the pure joy of writing interesting code. This is heaven for many.

A chatbot is in the chatbot market, and an SEO tool is in the SEO market. Adding AI to those tools is obviously a good idea; indeed companies who fail to add AI will likely become irrelevant in the long run. Thus we see that “AI” is a new tool for developing within existing markets, not itself a new market (except for actual hard-tech AI companies).

AI is in the solution-space, not the problem-space, as we say in product management. The customer problem you’re solving is still the same as ever. The problem a chatbot is solving is the same as ever: Talk to customers 24/7 in any language. AI enables completely new solutions that none of us were imagining a few years ago; that’s what’s so exciting and truly transformative. However, the customer problems remain the same, even though the solutions are different

Companies will pay more for chatbots where the AI is excellent, more support contacts are deferred from reaching a human, more languages are supported, and more kinds of questions can be answered, so existing chatbot customers might pay more, which grows the market. Furthermore, some companies who previously (rightly) saw chatbots as a terrible customer experience, will change their mind with sufficiently good AI, and will enter the chatbot market, which again grows that market.

the right way to analyze this is not to say “the AI market is big and growing” but rather: “Here is how AI will transform this existing market.” And then: “Here’s how we fit into that growth.”

We still believe that there will be a separation between the “application layer” companies and foundation model providers, with model companies specializing in scale and research and application layer companies specializing in product and UI. In reality, that separation hasn’t cleanly happened yet. In fact, the most successful user-facing applications out of the gate have been vertically integrated.

We predicted that the best generative AI companies could generate a sustainable competitive advantage through a data flywheel: more usage → more data → better model → more usage. While this is still somewhat true, especially in domains with very specialized and hard-to-get data, the “data moats” are on shaky ground: the data that application companies generate does not create an insurmountable moat, and the next generations of foundation models may very well obliterate any data moats that startups generate. Rather, workflows and user networks seem to be creating more durable sources of competitive advantage.

Some of the best consumer companies have 60-65% DAU/MAU; WhatsApp’s is 85%. By contrast, generative AI apps have a median of 14% (with the notable exception of Character and the “AI companionship” category). This means that users are not finding enough value in Generative AI products to use them every day yet.

generative AI’s biggest problem is not finding use cases or demand or distribution, it is proving value. As our colleague David Cahn writes, “the $200B question is: What are you going to use all this infrastructure to do? How is it going to change people’s lives?”

Netflix could buy 10 top quality screenplays per year with the cash they’ll spend on that one job.  They must have big plans for AI.There are also a half dozen AI job openings at Disney. And the tech-based streamers (Apple, Amazon) already have made big investments in AI. Sony launched an AI business unit in April 2020—in order to “enhance human imagination and creativity, particularly in the realm of entertainment.”

When Spotify launched on the stock exchange in 2018, it was losing around $30 million per month. Now it’s much larger, and is losing money at the pace of more than $100 million per month.

But the real problem at Spotify isn’t just convincing people to pay more. It runs much deeper. Spotify finds itself in the awkward position of asking people to pay more for a lousy interface that degrades the entire user experience.

Boredom is built into the platform, because they lose money if you get too excited about music—you’re like the person at the all-you-can-eat buffet who goes back for a third helping. They make the most money from indifferent, lukewarm fans, and they created their interface with them in mind. In other words, Spotify’s highest aspiration is to be the Applebee’s of music.

They need to prepare for a possible royalty war against record labels and musicians—yes, that could actually happen—and they do that by creating a zombie world of brain dead listeners who don’t even know what artist they’re hearing. I know that sounds extreme, but spend some time on the platform and draw your own conclusions.

Maybe we’ll get to a point where the novelty will be that a human being wrote something: This person proved that they were in a box away from any A.I. when they wrote this thing

as writers and creators, you want people to watch your show, so if you can make something look and sound like something else that people already want to watch, then you might be able to convince a producer that it will have legs. But I discovered through doing “Fleabag” that you have to write something that is more dangerous, more honest, more unusual and more provocative — especially if it’s going to go into a pool with a million other things. Honing the uniqueness of whatever you do is your best chance. I know I’m saying that having just signed up to do “Tomb Raider,” which has an audience already, and I know that’s what Amazon wants, and Amazon made this unbelievable deal8 8 In 2019, Variety reported about Waller-Bridge’s development deal with Amazon Studios, that “sources say the deal is worth around $20 million a year.” with me. I care so much about delivering for them. Being able to do that dangerous, naughty, transgressive stuff in the heart of something that is very valuable to them in terms of I.P. satisfies both of those things, but the discipline for me is to not just give them the “Tomb Raider” they think they want, but to give them something else.

People are going to interpret everything I do as my feelings on contemporary womanhood because I’m a contemporary woman. I don’t want to escape that part of me. I can see how I’ve gone into masculine roles with Bond and “Indiana Jones,” but those worlds are the ones that always intrigued me. The high-stakes action world appeals to me, whether it’s masculine or feminine. I like the urgency of it and the idea of being able to write a female character in a world like that.

It’s a window into your psychology: You want to be a pleaser and do the assignment well, but what you actually want to do is something riskier. Oh, my gosh. That’s exactly what it is. But the best thing is when you satisfy both. The journey there can be quite [laughs] — I love the feeling of having done what’s been asked, but I hate the feeling of pleasing.

I think that with Bond there is something dangerous, transgressive and incendiary about that character, and it’s the same with Indy. He completely revolutionized the action hero, which Harrison1 1 Harrison Ford, of course, who has said “Indiana Jones and the Dial of Destiny” will be his last go-round with Indy’s famous whip and fedora. is dead set against him being described as, but there was something that broke the form. We accept them now as the biggest franchises, but in the kernel of these characters is something naughty and dangerous. They were the rascals of their time, and I feel like Villanelle and Fleabag are rascals.2 2 Villanelle is the name of the assassin character, played by Jodie Comer, in “Killing Eve.” “Fleabag,” for those who haven’t seen it, is that show’s title character, played by Waller-Bridge. The show earned six Emmy Awards and 11 nominations for its second season. So it was less like, “I want to go do this big movie,” and more, “I want to play in the sand pit with these rascals.” That’s one way of looking at it.

I couldn’t write anything that I felt didn’t have that deeper element sincerely at the heart of it, and that writer is with me everywhere I go. It’s ever-present: What does this mean? Because I’m obsessed with having an audience be moved.6 6 Waller-Bridge said the most recent things that moved her were the TV series “Dead Ringers,” a concert by the singer Christine Bovill in which she performed Edith Piaf songs and a revival of “Guys and Dolls” at the Bridge Theater in London. I was moved when I read the script, and I was moved when I heard Jim7 7 James Mangold, the director of “Dial of Destiny.” He is the first director other than Steven Spielberg to direct an “Indiana Jones” movie. and Harrison and Kathy talk about it. I mean, I wasn’t in tears on the floor, but I felt that tingle of, this has got some human stuff going on. But the day-to-day? Some of the days were superfun, and we did look really cool. But the proper actors don’t want to just look cool. They want to make you cry while looking cool.