Everyone is talking about generative AI products like ChatGPT, Midjourney, DALL-E 2, and Stable Diffusion (among dozens more), so it’s clear that we’re on the cusp of something exciting and new. What no one knows is where value will accrue.
The best article I’ve seen on this topic is from the nice folks at Andreessen Horowitz, which discusses the traditional ways businesses differentiate their products and services (aka “the standard moats”): scale moats (“I have or can raise more money than you!”), supply-chain moats (“I have the GPUs, you don’t!”), ecosystem moats (“Everyone uses my software already!”), algorithmic moats (“We’re more clever than you!”), distribution moats (“I already have a sales team and more customers than you!”) and data pipeline moats (“I’ve crawled more of the internet than you!”). None of these moats, however, tend to be durable over the long term, which raises the question: Is generative AI so disruptive that the old business models may not apply?
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