The Future of AI: Function Calling, API Updates, and Product-Led AI

The Future of AI: Function Calling, API Updates, and Product-Led AI

In recent developments, there have been significant updates in the field of AI, particularly in function calling and API updates. One notable advancement is the release of the new 16k context version of gpt-3.5-turbo, which is a more powerful version compared to the standard 4k version. This update brings about a 75% cost reduction on the state-of-the-art embeddings model, allowing for more affordable AI solutions.

The text-embedding-ada-002 model, known for its popularity, has also undergone a significant cost reduction of 75% to $0.0001 per 1K tokens. This reduction in cost makes AI more accessible and affordable for businesses and developers. Additionally, the introduction of gpt-3.5-turbo-16k offers a pricing structure of $0.003 per 1K input tokens and $0.004 per 1K output tokens.

On the other hand, the concept of product-led AI has gained traction in recent years. With the advancement of foundation models, it has become possible for anyone to build an AI company. The most strategic advantage of applications in this context is the ability to coexist with multiple systems of record and collect valuable data. This shift from networks connecting people to algorithms connecting people to content has now evolved into algorithms replacing people.

AI-powered networks have transformed into platforms where AI creates personalized content for each individual user. This shift has far-reaching implications beyond social networks, affecting various "bits only" networks such as dating apps, gaming platforms, labor marketplaces, and specialized skill marketplaces. These changes in platforms often create opportunities to rebuild large categories of software, as demonstrated by the shift from traditional productivity software to cloud-based collaborative software.

Despite the dominant position of incumbents like Microsoft Office, the transition to the cloud left a significant gap in the market for collaborative software. This gap was filled by products like GSuite and Figma, showcasing the best opportunities for startups to attack large software categories by finding angles where incumbents cannot compete.

Furthermore, the role of co-pilots in the AI landscape is crucial. Co-pilots, in the form of "branded" salespeople like wealth managers, insurance brokers, and mortgage brokers, play a vital role in text-based coordination across multiple applications. The increased efficiency brought about by AI assistance in their tasks has tangible benefits and a positive impact on client retention. According to Morgan Stanley, personalized interactions with clients, rather than portfolio performance, have been identified as the most significant indicator of client retention for wealth managers.