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Mitchell Hamilton's avatar

"There is practically no uncertainty. Building on top of ChatGPT kills Novelty Uncertainty. I think everyone agrees on that. But the wild early success of so many generative AI products also kills Complexity Uncertainty! If you build a generative AI product that starts to take off, you’re going to be attacked by other startups, bootstrapped companies, solo builders, and incumbents all hungry for your users."

I think this is fair if you're talking about Right Now but not if we're talking about The Future.

In the context of building moats, Right Now is probably all that matters in this case because of your examples of Jasper/Mutiny and others in other industries when they were early in their hype cycles. That said, there's no way to predict what the AI landscape will look like next year, much less in 5 years. You mention a 7-10-year time horizon for a startup exit -- what could happen in that time? It's not out of the realm of possibility that we could have paradigm-shifting advancements in AI land or, alternatively, some version of a Butlerian jihad. To me, the Complexity Uncertainty question isn't just, "Can we make a business out of this idea?" It's really more like, "Can we create a lasting business that can adapt to whatever the future holds?"

Complexity Uncertainty comes from the adaptation and emergence that make predicting the behavior of complex systems impossible (maybe not in a few years with advancements in AI??). In my view, these companies are dealing with massive amounts of complexity, which will inevitably lead to uncertainty & unpredictable outcomes. Can a short-term moat really protect Gen AI startups and the funds investing in them from complexity uncertainty? I don't think so, but who knows.

Would love to know your thoughts (and Jerry Neumann's)!

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Jamie Green's avatar

This is the best explanation of moats I have ever read, for sure. That point about the diminishing uncertainty is so important

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