AI in 2023: The Application Layer Has Arrived

AI in 2023: The Application Layer Has Arrived

In the rapidly evolving landscape of artificial intelligence (AI), one thing is clear: the application layer has arrived. The use of AI can be broadly categorized into two buckets: creativity and productivity. AI is not only transforming industries but also shaping the way we live and work.

In the realm of creativity, AI has made significant strides. One remarkable example is Copilot, a program that generates about 40% of the code in projects where it's installed, with expectations to reach 80% within the next five years. While we are still in the early stages of AI applications, it's challenging to predict what the killer apps will be. Companies must find ways to build competitive moats in this rapidly evolving field. This can be achieved through network effects or iterative loops of user engagement and product refinement. In fact, many of the most successful AI startups are likely to be Software-as-a-Service (SaaS) companies. However, these companies must strive to develop best-in-class products to stand out in the crowded enterprise SaaS market.

Ethan Mollick, a professor at Wharton, argues that rather than banning large language models, we should find ways to adjust and adapt to these tools. It is crucial for future generations to understand how to navigate a world teeming with AI. Despite computers surpassing 99% of humans in visual imagination, it does not mean that humans will stop imagining. AI serves as an engine for the imagination, amplifying our creative capabilities.

AI also has a significant impact on productivity. Tools like Jasper.ai, Copy.ai, and Lex empower writers and marketers with superpowers. They streamline workflows, enhance efficiency, and enable professionals to achieve more in less time. This amplification of productivity is a positive and humanistic aspect of AI.

"The Creator Economy Needs a Middle Class"

The current landscape of the creator economy reflects an economy where wealth is concentrated at the top. To ensure the sustainability and defensibility of platforms, there must be a thriving middle class. A healthy middle class is critical for promoting societal trust, driving innovation, and providing a stable source of demand for products and services.

Google's revelation that 15% of all queries have never been searched before highlights the need for diverse creators and content. The lack of an upper limit for engagement in games and the winner-take-all network effects in social games contribute to the concentration of success among a few mega-hits. To create a more equitable creator ecosystem, platforms must focus on content types with lower replay value and serve heterogeneity in user preferences.

Algorithmic recommendations with an element of randomness can also foster the success of niche creators. By diversifying the content showcased to users, platforms increase the chances of discovering new creators, perspectives, and ideas. Additionally, facilitating collaborations and building communities among creators can provide emotional support, foster collaboration, and enable peer-to-peer education.

Platforms should consider providing capital investment to up-and-coming creators, especially in verticals that require upfront investment. Decoupling creator payouts from audience demographics can help level the playing field and ensure a more inclusive environment. Furthermore, creators should be given opportunities to capitalize on superfans, who are willing to spend more for closer access to their favorite creators.

Creating passive or almost-passive income opportunities for creators allows them to explore other income streams and achieve financial security. Universal Creative Income (UCI) programs could also address the concerns of inconsistent income, lack of investment capital, and the fear of earning less.

Lastly, offering creator education and training can empower creators to enhance their skills and navigate the evolving landscape effectively. Rapid technological progress has created a wage premium for skilled workers, but platforms must ensure that there is a path for everyone to have upward mobility and financial security.

In conclusion, AI has reached the application layer, transforming industries and shaping the future. The AI landscape can be categorized into creativity and productivity, with AI amplifying both aspects. To ensure the sustainability and defensibility of platforms, the creator economy needs a thriving middle class. Platforms must focus on diverse content types, serve user heterogeneity, provide opportunities for collaboration, offer capital investment, decouple payouts from demographics, capitalize on superfans, create passive income opportunities, provide UCI programs, and offer education and training. By implementing these strategies, platforms can foster an inclusive and equitable environment for creators to thrive and succeed.