observations on AI startups in early 2023

1/ founders are going $0-10M in ARR first 18 months of (efficient) selling, leveraging LLMs against “niche” use cases 2/ despite the AI hype, there’s plenty of real customer value, retention and repeat usage 3/ too many people are hunting for a neat strategic narrative of “which layer of the stack endures,” telling some clean story about “data moats,” or wringing their hands that large labs or incumbents are going to win the core modalities (text, code, image etc.) 4/ this kind of hand wringing is folly. the history of software markets is nondeterministic 5/ the huge amount of value creation / capture out of the box for creative product folks is incredibly promising for startups. time and effort is better spent understanding customer problems deeply, and understanding the state of the art, and leveraging the latter for the former 6/ who wins is based part on market structure, but also partly on who the players are, their execution, and how they redraw the software category lines

1/ founders are going $0-10M in ARR first 18 months of (efficient) selling, leveraging LLMs against “niche” use cases 2/ despite the AI hype, there’s plenty of real customer value, retention and repeat usage 3/ too many people are hunting for a neat strategic narrative of “which layer of the stack endures,” telling some clean story about “data moats,” or wringing their hands that large labs or incumbents are going to win the core modalities (text, code, image etc.) 4/ this kind of hand wringing is folly. the history of software markets is nondeterministic 5/ the huge amount of value creation /