🗞 What's New: What OpenAI's new updates mean for AI founders

OpenAI's new updates offer tons of potential for founders:

• There are no more embeddings, it's cheaper, and it's more reproducible. Focus on a niche and a specific use case instead of general tools.
• Thinking about going for VC funding? Misconceptions, like you'll lose all control, or they will tell you what to do, shouldn't stop you.
• $23K MRR from a design agency. Tom Garcy is using revenue from his agency to fund his side project, and invest in crypto projects.

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by Farez Rahman

On Monday, OpenAI announced another mind-blowing list of updates. What does this mean for founders?

No more embeddings

GPT-4 now has a 128K context, and you can now upload files with the API. This means that, for most “chat with document” cases, you can just upload the file and ask questions.

Or, you can feed all your data to the new Assistants API and let it do the retrieval. Just give it your file, and it can do its own vector search on it, if required. It also remembers the chat history so you don’t need to save that, either.

This also simplifies your architecture.

Better math

Assistant API can now run sandboxed Python. Math hasn’t been GPT’s strong point, until now.

Combine this with retrieval, and you have a really powerful data analysis tool.

Multimodal

You can start building true multimodal apps with new Vision, DALL-E, text-to-speech endpoints.

Read a table, output a chart. Add an image, and read a summary of it out loud. Brainstorm design ideas verbally, and have it iterate on a design.

Cheaper

GPT-3.5 and GPT-4 are three times cheaper. Fine-tuning is four times cheaper. If you’re a SaaS competing on prices, I think this is the time to reconsider your business model.

This is great news for bespoke builds. The ongoing maintenance cost for your clients will be much more attractive.

Faster

Multiple function calling in a single message means less round trips to the API. This is great for the user’s experience.

And, the rate limits have doubled with GPT-4.

More accuracy, more reproducible

There’s a new “JSON mode” that will instruct the API to always return valid JSON. This is really useful for returning structured output in a chat session. JSON mode is available in GPT-3.5, too.

There is also a new “seed” parameter to make outputs reproducible. It's useful if you’re integrating your data into a workflow that requires a high level of repeatability.

Tips

• It's harder to build and grow general purpose AI tools now. Focus on a niche and a specific use case.

• Continue to innovate on pricing and UX.

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from the Growth Trends newsletter

🎁 Meta adds more tools for creators ahead of holiday campaigns.

💲 Get $100 off an In the News section ad with code MINUS100.

🔎 Amazon ads for lead generation.

🤯 Can AI handle a customer service crisis?

🧵 Threads rolls out new updates.

💀 Bringing bankrupt brands back from the dead is big business.

Check out Growth Trends for more curated news items focused on user acquisition and new product ideas.

by Stephan Brüggemann

Having raised VC money before, I wanted to clear up some misconceptions. Hopefully this helps other founders who are deciding on whether to pursue VC funding!

You will lose all control of the company

That's not really true at the beginning. For pre-seed, you will often sell 10% of your company for $100K-$500K. Often, they do not take a board seat.

At seed stage, you will sell another 20% of the company for $1M-$3M. You're still the majority shareholder, at ~70%. The lead investor will take a board seat, but if you're two or more founders, you still have most control.

If you cannot reduce your losses or become profitable, it may get dangerous around series A or B, especially if you have bad VCs. For example, if you're a marketplace, and you're losing $100K-$500K a month, you need to raise every two years.

You need to continue to grow at a certain pace (at least ~100% YoY), then raise more. At this point, the success of your company depends on VC money. You own a decreasing piece of the pie.

They will tell you what to do

I have not experienced this. Most of the time, they are not operators, and they let you do your thing. They might make suggestions, but ultimately, you decide.

You have to keep raising

This is only true if you are not profitable, or close to it. I have friends who have raised $1M+, are now profitable, and hold majority share.

There will be a lot of pressure

I think it's great that you have to set milestones for yourself, and that there is accountability. When bootstrapping a company, there's much less accountability. So, learn to see the added structure as a good thing. Just because you have structure doesn't mean you'll have pressure!

Having said that, VC expectations can sometimes be unrealistic. It can be a balancing act, but only you can decide whether the give and take is worth it!

If you're interested, check out my new project, The SEO Copilot.

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from the One Page Love newsletter

Strengthen your landing page with these design, development, and conversion tips:

Don’t take shortcuts on website hosting.

Cheap, shared hosting will end up costing a lot more: Downtime, hacks, sluggish speeds, slow support, and frustrated customers aren't worth what you may save. Spend more on a reliable host.

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by James Fleischmann

Tom Garcy is building Kyugo, while running a design agency and raising three kids. He launched Kyugo a month ago, and he's currently preparing for his first marketing campaign.

The numbers

So far, Tom has spent ~$8K on Kyugo. As a designer, he's outsourcing development, paying $1.2K per month.

The first 30 days is a free trial, so there's no revenue yet. But, he's got 140 trials in progress, and he expects that 40 will convert.

Here's what he's bringing in:

• Kyugo revenue: $0.
• Design agency revenue: ~$23K MRR.

Everything is being funded by his design agency, This is Garcy, and by his savings.

Personal costs:

• Rent and utilities: $2K per month.
• Food: $1.7K per month.
• Family (clothing, hobbies, etc.): $1.2K per month.
• Car: $200 per month.
• Total: $5.1K per month.

Burning money

Tom is totally self-funded, thanks to his design agency. He's not opposed to investment. In fact, he was looking for an angel investor in the beginning, but the terms he received were unrealistic: The investor insisted that he relocate to another country and bring on a cofounder.

Tom's main goal was to put the idea out there and make it a reality. So, he was okay with “burning” money on it, just to make it happen. He set a limit for how much he would allow himself to lose in order to release Kyugo: $25K. Thanks to the positive feedback he's received so far, he increased that budget by $15K to really see what his product can do. He plans to use the increased budget for additional development, and the marketing campaign.

Strict budgets

Tom is big on budgeting. He has a strict monthly budget for his needs: $5.7K. Knowing this number is important, because it gives him a very clear idea of how much he needs to make in order to keep the same standard of living. After needs are met, he invests 20-30%, then sets aside 20-30% for unexpected expenses.

He invests in ETFs, stocks, and crypto. He believes that there are a lot of crypto projects right now that could be the future of currency. His favorites are ETH, SOL, PYR, DOT, and CRV.

When he invests, he doesn't invest in a coin itself; he invests in the team and its plan. He likes to study what they're doing, and the real-world use cases for it.

Tom also invests in things that pay dividends in his life, including travel, education, health, family, housing, and time.

He's always buying books, and he supports multiple science podcasts. He listens and studies, then implements his findings into his daily life. He also happens to be a foodie, so spending a lot at a nice restaurant is a not-so-guilty pleasure!

He lives in the Czech Republic, and pays a lot for rent; more than most of his peers consider to be wise. But he has a garden, and it's quiet. Having a great work environment and a great place to live affects your mood, energy, and overall positivity, so he doesn't hesitate to pay more for a place where he can be in direct contact with nature and the sun.

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Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to Farez Rahman, Darko, Stephan Brüggemann, Rob Hope, and James Fleischmann for contributing posts. —Channing