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AI-Generated Content for Startup Growth
Artificial intelligence (AI) technology has become increasingly popular among entrepreneurs who are looking to start companies that leverage its capabilities. However, it is important for these entrepreneurs to evaluate whether they should compete with foundational models or focus on developing applications that use these models. In this article, we will explore the benefits and challenges of both approaches and provide guidance for startups considering AI-generated content for their growth.
The Upsides of Generative AI
Generative AI has the potential to revolutionize various industries by providing companies with artificial intelligence models that have general language reasoning abilities. This opens up opportunities for innovative product development in areas such as screenwriting, marketing materials, teaching software, customer service, and more. For example, Luka, a software company, created an AI companion that allows customers to have conversations with an AI friend. This technology was so powerful that Luka received requests to provide a white label enterprise solution for businesses looking to improve their chatbot customer service. Additionally, Luka used the same technology to develop a direct-to-consumer AI dating app.
Competing on Foundational Models vs. Top-Layer Applications
When deciding whether to compete on foundational models or top-layer applications, startups need to consider the long-term implications for their ability to defend themselves against competition. Tech giants like Amazon and Google offer their proprietary models for rent, making foundational models more accessible to companies. This commoditization of foundational models makes it challenging for startups to afford competing in this space. Although foundational models may seem attractive due to their extensive use and growth opportunities, startups must keep in mind that they need to continuously enhance their offerings to survive in a commoditized market.
Instead of competing on foundational models, most startups find it more beneficial to differentiate themselves by offering top-layer applications that leverage existing foundational models. By fine-tuning these models on their own high-quality datasets, startups can provide high-value solutions to customers. For example, the marketing content creator uses foundational models from OpenAI to generate content for various purposes. The company also offers specialized tools tailored to marketers and copywriters. While top-layer apps provide unique competitive advantages, startups should be cautious about their dataset privacy when relying on tech giants for foundational models.
Choosing the Right Approach: Scripted vs. Generative Solutions
Startups need to decide where their company will reside on the continuum between scripted and generative solutions. Scripted solutions involve predefined responses from a dataset, while generative solutions create unique responses from scratch. Scripted solutions are safer and more constrained but lack creativity and human-like interaction. Generative solutions, on the other hand, are riskier but offer greater creativity and human-like characteristics.
Different industries and use-cases may require more scripted or generative approaches. Medical and educational applications, for example, benefit from scripted solutions to establish clear boundaries. However, reliance on scripted solutions can limit growth options and customer retention. Generative solutions provide a more engaging user experience but require proactive risk anticipation and management. Managers should also be prepared for the potential expenses associated with managing a fully generative solution.
Conclusion
When considering AI-generated content for startup growth, entrepreneurs should evaluate whether they should compete on foundational models or develop top-layer applications that leverage these models. Startups should also decide where they want their company to reside on the continuum between scripted and generative solutions. By making informed decisions, startups can scale quickly and maintain long-term defensibility.
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