The Future of Generative AI and Community-Led Growth

Hatched by Kazuki
Jul 18, 2023
4 min read
2 views
Copy Link
The Future of Generative AI and Community-Led Growth
Introduction:
The world of technology is constantly evolving, and two emerging trends that have taken the industry by storm are generative AI and community-led growth. Generative AI has seen exponential growth, with applications such as image generation, copywriting, and code writing already generating over $100 million in annual revenue. On the other hand, community-led growth has become a powerful strategy for companies to engage with their users, build a strong community, and drive customer loyalty. In this article, we will explore the potential of these two trends, their impact on the market, and how companies can leverage them for success.
Generative AI: A Market Perspective
While the potential of generative AI is immense, the question of who owns the generative AI platform remains unanswered. Infrastructure vendors have emerged as the biggest winners in this market, capturing the majority of revenue flowing through the stack. Application companies, although experiencing rapid growth, face challenges such as retention, product differentiation, and gross margins. Model providers, responsible for the existence of this market, are yet to achieve large-scale commercial success. However, the demand for proprietary APIs and hosting services for open-source models is growing rapidly, indicating that the path to commercialization may be tied to hosting.
The Role of Infrastructure Companies
Behind the scenes, infrastructure companies like Nvidia have become the biggest winners in the generative AI market. These companies, running the majority of AI workloads, have established themselves as lucrative and durable players in the industry. While they have traditional moats such as scale, supply-chain, and ecosystem advantages, it is too early to determine if strong network effects will develop in any layer of the generative AI stack. The market dynamics suggest that a long-term winner-take-all scenario is uncertain, and both horizontal and vertical companies can succeed based on end-markets and end-users.
The Rise of Community-Led Growth
In the realm of software, community-led growth has gained significant traction. People are naturally inclined to seek advice, and this behavior extends to software purchasing decisions. Community-led growth acts as a multiplier on top of product-led growth, allowing companies to actively engage with their users, gain insights, and provide real-time support. COVID-19 has further accelerated this trend as people seek a sense of belonging online. Users turn to their communities for guidance, relying on friends, peers, and influencers to choose the right tools.
The Power of Engaged Communities
Creating a successful community goes beyond simply providing a communication platform. It requires fostering a sense of belonging, active participation, and value creation. Users have the opportunity to educate each other on the market and share different use cases for the product. This not only expands the knowledge base but also creates a network effect as the circle of creators expands. Companies must actively cultivate community engagement as part of their culture and identity to reap the benefits of a strong and loyal user base.
Actionable Advice:
- 1. Embrace hosting and proprietary APIs: For model providers, commercialization is likely tied to hosting. Embrace the growing demand for proprietary APIs and consider offering hosting services for open-source models to facilitate integration and drive value.
- 2. Invest in community building: Companies should actively invest in building communities around their products. This includes creating a platform that fosters engagement, providing real-time support, and encouraging users to share their experiences and tutorials. Engage with users to create a sense of belonging and leverage their knowledge to educate and expand the user base.
- 3. Focus on long-term differentiation: While end-user apps are currently driving the generative AI market, companies should consider alternative paths to building a sustainable business. Vertical integration, tightly coupling user-facing apps with home-grown models, can drive differentiation and long-term value. Assess the role of AI within a larger feature set to determine if horizontalization or verticalization is the best approach.
Conclusion:
Generative AI and community-led growth are shaping the future of the technology industry. While infrastructure companies dominate the generative AI market, the path to commercialization lies in hosting and proprietary APIs. Community-led growth offers companies an opportunity to build strong communities, engage users, and drive customer loyalty. By investing in community building and focusing on long-term differentiation, companies can position themselves for success in this rapidly evolving landscape.
Resource:
Copy Link