ChatGPT has triggered a wave of generative AI products, which is creating huge ripples in the tech space. In just one week, the number of ChatGPT users exceeded one million, making it the fastest growing software in history, surpassing both Twitter and Facebook. New AI tools in areas like copywriting, coding, interior design, are popping up one after another, and generative AI is already the darling of the venture capital world.
According to CBinsight data, the amount of financing related to generative AI in 2022 exceeded 2.6 billion US dollars, almost double the amount of 2021. Tech giants like Microsoft and Google are rolling out new AI products in a display of strength to see who will own the last word in the AI era.
But this surge in generative AI reminds me of the launch of location-based services 15 years ago.
Location-based technology dominated the entrepreneurial conversation in those years, propped up by the launch of the iPhone in 2008. New products leveraging the technology in areas such as social media, shopping, and dating emerged one after another, each of them aiming to be the next big platform for the time.
Let’s look at Foursquare as a prime example of where the “location-based wars” started and how they’re going. We all remember the check-in and location sharing for badges functions, which helped the app break one million users in just one year after its launch, overtaking Twitter, which took two. This led to Foursquare attracting $70 million in VC funding. Internet giants like Facebook, Google, Groupon, and Twitter all followed suit, aggressively acquiring location-based tech startups to offer similar services. Those startups have all since changed their business models or disappeared. And the originally consumer-facing Foursquare is now a data analysis provider for enterprises.
The lesson is that new tech always creates huge opportunities and triggers entrepreneurship, but only a few startups can survive till the end. So what mindset should we adopt around generative AI?
As time passes, startups built entirely on new tech will lose their advantage as soon as the barrier to implementing that technology is lowered. So will it be when AI eventually becomes a commodity that any company can integrate into its services with just a few lines of code. That’s exactly what happened with location-based services. At times like these, it’s those startups that can solve the most user pain points and retain those users that will make it through the night.
In the face of new technologies, founders need to go back to the essentials of entrepreneurship and first ask themselves what pain points they can solve and in which industries. Only after they have taken these first two steps should they ask: “What role can the new tech play in this use case?” Location-based technology enabled Uber and Google Maps to exist, but neither company defined themselves as “location-based services companies”. They started from the perspective of which transportation pain points needed fixing.
Whether you are a founder or an investor, as long as you can return to the essence of the problem every time a new technology arrives, the answers to these questions will become clear.
