Something Different...

This week is a little different - something more like a blog post or essay 🙂 I hope you enjoy. We’ll be back to the regular programming next week!

How to Win in the Age of AI

/idea - AI does not impact how you win. It just raises the bottom.

If you look at the way big players to the space are tackling AI generation for the consumer, you really only see 3 major categories:

1. Hardware (Nvidia, Groq)- AKA more, faster generations

2. Base model improvement (OpenAI, Claude) - AKA better base AI

3. Implementation (Perplexity, AI search) - AKA better, faster results for the consumer

In a very real way, the AI market, like any consumer goods segment, has a supply chain.

Imagine you want to open a vertically integrated burger shop. You'd need to understand the entire supply chain, from farm to fork. This means owning or partnering with a cattle ranch, a wheat farm, a lettuce farm, and a tomato farm. You'd also need a processing plant for the meat and produce, a bakery for the buns, and a distribution network to get everything to your restaurant. Finally, you'd need to find a spot in trendy Soho, a talented chef, and a skilled team of staff.

AI is no different. Nvidia owns the farm. The building is owned by Cloudflare and Google, OpenAI and Claude have the best butchers and bakers, and a bunch of people (myself included) make sandwiches with all the ingredients.

But what does this mean for you?

All the info around success in the AI age is written from the perspective of the founders and dreamers that want to build the next Perplexity. But what about the businesses that just want to provide value for the consumer? What if I want to make the best burger joint in the world, with or without an AI patty in my buns?

The short answer is, quality. Now, before you click away, let me explain myself. The AI goldrush has left people with the impression that more, bigger, faster, is better. I believe we are coming to the end of this phase of development. More is not necessarily better. More is just more.

The mistake comes from a skewed focus on efficiency. This skew causes people to ignore one crucial part of the value equation. For those that don't know, the equation is:

value = (likelihood to outcome) x (value of outcome) / (time to outcome) x (sacrifice needed)

AI minimizes both the time to outcome and the sacrifice needed, and arguably increases the likelihood to outcome. But AI will not be the thing that raises the bar on quality.

In a system where everyone has access to the same AI features, the only true differenciator is the dream outcome. How unbelievably fucking good can you make your thing? This is your only advantage.

Most AI focuses on content - written, visual, audio or otherwise. Content is a leveraged form of delivery. What this means is you don't need to spend more effort to give out your content to 1 person vs 1000. In a network-driven economy where everyone has access to everything, the BEST takes the entire piece.

From a monetary standpoint, we can look at Amazon reviews. The difference in score between two identical products at a 4.5 and 4.8 rating is 0.3 - the monetary difference in sales is usually about 10x.

From a reputation standpoint, we can think about brand recognition. There are 250 mobile phone brands in the world. How many can you name? Or even better, how many have you owned?

(My list is: Apple, Samsung, Nokia, Blackberry (are they still going?), Morotola, Oneplus, Nothing. I have only ever owned iphones)

AI changes nothing. If anything, it evens the playing field. You can now go from 0 to 60 instantly. It's up to you to take it the rest of the way.