The era of AI-powered SMBs
Who needs VCs’ money anyway?
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Three years ago, I started a company that turns PDF and image documents into structured data. My twist? Using language models. Two years later, I decided to refocus my energy elsewhere with the main reason being commoditization. The OCR and document intelligence market were a race to the bottom, and even though I could raise VC money - I realized it was a lost war.
Since then, the same commoditization conclusion has spread to many more applications and fields. We are in an era in which AI can finally construct plausible essays. Actually, not only that - it can outperform doctors in summarizing clinical text, writing poems, and being your therapist. It can turn text into songs, images, and videos in mere seconds and at a fraction of the cost of what used to be cutting-edge technology just a few years ago.
Those with great aspirations would conclude such breakthroughs prompt starting a venture. Their mission? Democratize [enter profession here] and make it more accessible to all. The route? Raising money from venture capital funds.
That makes sense. A whole generation from 2008-2023, myself included, grew up in an environment that worships growth at all costs. The caliber of talent you can access will depend on the VCs on your About page. An era where VCs ask: “Well, what if Google builds the same thing?”, followed by a room-wide laugh, acknowledging the fact that incumbents don’t build, they buy.
Things have changed. Incumbents are no longer sleeping giants. The latest technology makes building new products too easy for companies to spend time integrating with that new YC startup, and disruptive progress is outpacing distribution, preventing companies from building their distribution moat before getting commoditized (see Jasper).
The tricky part? We are far from reaching a standstill. With the releases of multimodal GPT and Google’s Gemini around the corner, things are only going to become less predictable. The times of VC-backed ventures as the default is over, and the faster we adjust, the better.
P.S. It is not all gloomy. I also explore a few areas where I still see opportunities for VC-backed startups to operate in the outro section below.
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