"the most delightful innovations in AI are coming from the bottom up, not the top down, as companies like Midjourney, Runway, and Stable Diffusion have captured the public imagination. Open source horizontal models like ChatGPT will form the foundation of the AI boom, but many more venture-scale businesses will be built on the application layer."

"Speed is arguably the one definitive advantage all startups have against incumbents. Midjourney and DALL-E were early to shipping great horizontal platforms, but Midjourney has come out on top thanks to quick product execution."

"Get creative and think about what new product paradigms and interfaces are now possible thanks to AI. This will be much more defensible than a product/tool that an existing software company can easily add onto their product suite."

"ChatGPT’s success is a case study in using advances in NLP to drive a shift change in UI/UX. While the underlying technology, GPT-3, already existed, the conversational interface OpenAI built on top made GPT-3 accessible to a mass market."

"Successful products in the AI space can start out looking like consumer companies. The largest Discord communities right now — Midjourney (1 at 15M members), Open AI, Blue Willow, and Leonardo.ai — are all consumer AI companies today."

"Grow mindshare by developing an online personality towards issues relevant to the AI community (development, regulation, etc.)."

"Offer perks to existing community members (e.g., gated access to beta users through Discord to grow the community, referral codes) to foster customer evangelists and incentivize non-members to join."

"Appoint power users as moderators in branded community spaces."

"Create a product with shareability and virality in mind."

"Startups can win initially by moving quickly, but long-term moats are built by going where big tech and incumbents won’t. In a world where anyone can access LLMs, verticalized solutions based on a deep understanding of a target persona is one of the best defensible ways to build in AI."

"Moats are cemented by building with collaboration, integrations, permissioning, and workflow top of mind."

"When evaluating the market, it’s also important to understand the buying power of your audience and their actual needs."

"The only truly defensible items in the application layer are workflow, product, community, and rapid iteration."