Is ChatGPT the next big bootstrapper opportunity?

Lately, I've been getting an increasing number of DMs from founders trying to launch new products built on top of ChatGPT.

They ask me for my advice, and honestly, I don't know what to tell them.

Justin Jackson @mijustin I don't think ChatGPT will enable indie startups to launch profitable businesses. In most cases, AI/ChatGPT will be added as a feature in existing apps; no need for an intermediary stand-alone product. In the "ChatGPT value chain," OpenAI will accrue most of the revenue. March 23rd 2023 11 Retweets 236 Likes

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​I'm not convinced that ChatGPT is going to be the platform that a wave of new indie startups will be built on top of.

I'm not saying that tools like ChatGPT can't be helpful assistants.

But it seems increasingly unlikely that new software products that have "X powered by AI" as their main value prop will succeed long-term.

The first problem is that many of these new AI-driven products are similar to one another. I've already see many "AI-driven transcriptions for podcasts" products. AI software that writes your tweets and blog posts also seems popular.

Differentiation and acquisition for these products will be challenging (especially since every day, there seems to be a new competitor launching).

But the biggest risk for ChatGPT-enabled apps is that existing products (Microsoft Office, Descript, Google Sheets, Zapier) are just implementing these features directly into their apps.

It's surprising how fast mature companies like Microsoft have been able to incorporate AI/ChatGPT as features in their existing apps. This greatly diminishes the need for intermediary products (often built by indie founders and bootstrappers).

This dynamic has become even more potent with the launch of OpenAI's new plugin directory:

Aaron Yang @IAmAaronYang With @OpenAI moving up the stack into integrations and plugins, they basically killed half of LLM infra startups that were focusing on on that part of the stack. Startups need to rethink where they can build without being disrupted by the foundation model providers. March 24th 2023 0 Retweets 1 Likes

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In the "ChatGPT value chain," OpenAI will accrue most of the revenue.

I talk more about how "the main thing" often gets most of the revenue in a value chain here:
​https://justinjackson.ca/the-main-thing

I see this happening with ChatGPT (the main thing) and many of the startups being launched (most are "side dishes").

I'm writing this mostly as a warning. I know a lot of indie founders are hopeful that AI is the next big platform that will produce the next wave of bootstrapped startups (similar to the iOS store, Shopify store, etc).

I do think that there will be opportunities for established bootstrapped startups, who already have strong customer base, to incorporate AI into their products.

And, everyone can benefit from AI-assisted coding, problem solving, outline writing.

But it seems, with AI, I think most of the upside is going to go to big companies (and especially to OpenAI).

(For more on this, check out Arvid and Tyler's episode)

Cheers,
Justin Jackson

PS: I continue to be concerned about AI, and that the pace of its development will outpace our ability to consider the ethics and ramifications on society.

If you're excited about AI, I'd urge you to check out some of the warnings being issued from long-time AI researchers:

• On Twitter, I recommend following Professor Emily Bender​
• Dr. Stuart Russell (UC Berkeley): Are we living in an AGI world?​
• Gary Marcus: GPT-4’s successes, and GPT-4’s failures​
• Dr. Stuart Russell: How to get AI right​
• Gary Marcus: Deep Learning Is Hitting a Wall​
• ​Interview with Gary Marcus and Dr. Stuart Russell​
• Dan Shipper: Awe, Anxiety, and AI​

PPS: I have some exciting Transistor news to announce soon. 👀