In today’s episode, you’ll learn why competitive advantages in the AI world are short-lived. You’ll discover how open-source code is rapidly leveling the playing field. You’ll understand why companies shouldn’t rely on technology alone to stay ahead. And you’ll gain insights into the truly defensible advantages in the age of AI.
Can’t see anything? Watch it on YouTube here.
Listen to the audio here:
- Take my new Generative AI course!
- Got a question for You Ask, I’ll Answer? Submit it here!
- Subscribe to my weekly newsletter for more useful marketing tips.
- Subscribe to Inbox Insights, the Trust Insights newsletter for weekly fresh takes and data.
- Find older episodes of You Ask, I Answer on my YouTube channel.
- Need help with your company’s data and analytics? Let me know!
- Join my free Slack group for marketers interested in analytics!
Machine-Generated Transcript
What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for watching the video.
Christopher Penn: In today’s episode, let’s talk about moats. One of the most fascinating parts of AI evolution is how fast software development happens. So many of the building blocks of today’s AI are—and should be—open source and open weights models. That is, you can go on to GitHub or Hugging Face or any of the other technical sites that host code, and you can download the code for these projects or download the models for them and run it yourself. Which means, given the speed at which generative AI enables things like code writing, no company has a moat for long.
Now, if you’re unfamiliar with the colloquialism, a moat refers to some defensive capability that you have in your product or service that allows you to hold a position of advantage for some time. For example, Google, by virtue of the fact that it’s had search engine capabilities for decades now, has a substantial moat—really in the data that they’ve collected and how their systems use it. If you are running Google ads, Google’s got twenty years of data that they can use as a strategic advantage that prevents a competitor that’s just getting started today from being as effective at running ads as Google is. In the world of AI, this isn’t nearly as true. Take, for example, perplexity. If you aren’t familiar, it’s the AI-enabled search engine.
We’re perplexity.ai. It’s a pretty cool product. You type in queries, and it will process that, turn it to search results, and then extract out and digest down what it thinks. Suppose you like this product, and it goes away, or its pricing model changes to be untenable. What would you do if you’ve come to rely on this tool? Well, it turns out there’s actually an open-source project that replicates the perplexity environment. If you have the technical skills to deploy it, you can build and run your own perplexity for the cost of electricity and the computer to run it on.
Now, you might say that is an awful lot of work to replicate a free tool, and it absolutely is. But you might want to do that if you love the idea of owning your own AI-enabled search history—maybe there are things you’re searching for that you don’t want logged by a third party. And there are an awful lot of search engines and search tools that collect data and make use of that data for things like generative AI and ad targeting. Maybe you don’t want that; maybe you want to be invisible. Maybe you might want to do that for a very specific document catalog inside the walls of your company. Think about how useful AI-based search would be with your data—not stuff that’s on the web that’s public, but your stuff. Maybe it’s plans and strategies or decks of PowerPoints that you’ve got. Or maybe it’s things like transaction data, financial data, or even healthcare data.
Imagine how useful a tool like perplexity would be, but with your own data. And that’s the value of having that open-source solution. To the extent that a company has a moat like perplexity, it’s mainly because they were there first, but you could start up your own competitor if you wanted with that code, as long as you had the compute power to do so.
Christopher Penn: Look at the discussion that’s been happening in recent weeks about OpenAI’s voice matching software that they claim is too dangerous to be allowed in public. With fifteen seconds of audio, you could create an accurate clone voice. Oh, I mean, that technology already exists in the open-source world. It’s not a secret. It’s out there. You can use it today. You can download it today and use it today if you have the technical skills. If you’ve got the chops, it’s yours right now. Just go out and download it. There are so many of these projects.
So many of these projects that give you capabilities that you can run on your computer. And I will say as a personal thing, I like having access to tools locally on my computer because, yeah, things go away. Things get discontinued all the time. Things get canceled. If you have something that is mission-critical, or that is so wonderful that you’ve got to keep a hold of it, find a local version of it.
Christopher Penn: For example, if you really love generative AI, and you’ve got a beefy enough laptop, like a really good gaming laptop or the equivalent in the corporate world, if you would like the way that the GPT-four class of models behaves, you can actually download a GPT-four class model. There’s one called Command R, that is really good—like, it is as good as GPT-four in some use cases, and it’s close to it in most use cases—and it runs on your laptop. That is mind-boggling. A year and a half ago, we were just starting to figure out that generative AI was a thing with ChatGPT. That’s when it came out—a year and a half ago. For those who are nerds like me, we’ve been working with it for a little bit longer, about three years now. But the reality is, up until six months ago, a GPT-four class model was something you needed a server room for; you needed tens of thousands of dollars of hardware to spin it up. Now, you run on your laptop. There’s no moat.
The technology isn’t the moat. Here’s the reality. To the extent that any company has a moat, it is because of something other than technology, something that my CEO and co-founder Katie talks about all the time. Within the Trust Insights five-P framework, technology isn’t the focus; technology cannot be the moat. Technology is so easy to copy now, that you got to look in other areas. So purpose, people, process, platform, performance—of those five Ps, platform—where technology is—is the easiest to copy.
The hardest things to copy? People. The people who do the thing and have skills and knowledge are the hardest to copy. Which also means, by the way, if you are just going to go and fire all your employees and use AI instead, probably a bad idea from a competitive safety perspective, because someone else is going to be able to copy your technology really, really easily. Copying your people? A lot harder. The purpose—why we do something—and the people—who does the thing—those are the defensible moats. Those are the moats that you can defend in an age when technology makes it easy to copy any other technology. So give that some thought.
If you enjoyed this video, please hit the like button. Subscribe to my channel if you haven’t already. And if you want to know when new videos are available, hit the bell button to be notified as soon as new content is live.
You might also enjoy:
- Almost Timely News: Recipes vs. Principles in Generative AI (2024-03-03)
- You Ask, I Answer: Reliability of LLMs vs Other Software?
- Mind Readings: Generative AI and Addition vs Substitution of Jobs
- Mind Readings: You Need Passwords for Life in the Age of Generative AI Fraud
- Almost Timely News, January 7, 2024: Should You Buy a Custom GPT?
Want to read more like this from Christopher Penn? Get updates here:
 Take my Generative AI for Marketers course! |
Leave a Reply