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Maksym bondarenko's avatar

I think AI startups become defensible as soon as they can leverage the positive feedback where user interaction with AI can lead to improving the model. For example midjourney can leverage user image preferences to collect training data, use the data to improve the model, and use the better model to attract even more users and collect even more training data for the next run. So if you built it in a weekend and get to market first, and the benefit of finetuning on user preferences is sufficient, it's quite defensible.

I also think talent/culture is a moat of its own. OpenAI is nothing without its people, but it's also unstoppable with them. Given the right culture/team a company can consistently produce banger models and stay ahead of the curve, which attracts more top talent and investment, and so on.

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Taha Mo's avatar

I generally agree with the article's point about the necessity of unique, proprietary data MOATs for AI startups. However, it's important to note the speed at which these startups need to act. A notable trend in AI adoption is the willingness of many to try new applications at least once. When ChatGPT was released for free, everyone and their aunt tried it. It had record user signups for a reason.

The appeal of AI, in its basic form, lies in task automation. This is particularly true for sectors yet untouched by AI and possessing significant data MOATs. These areas seem more open to considering AI solutions than before. A personal observation supporting this is my mother's experience. She struggles with basic digital tools like Gmail, yet she found ChatGPT intuitive and easy to use. The simplicity of typing a query and receiving a response resonated with her immediately. Most importantly, she immediately understood how this could evolve to automating so much of her previous job at the US Postal Service.

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