20VC: Benchmark's Sarah Tavel on Are Foundation Models Commoditising | Why Frontier Models Will Be Closed Source | Why the Value is in the Application Layer | The Future of AI is "Selling the Work" Not the Tools
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
AI as a Sustaining Technology vs. Disruptive Opportunity for Startups
AI is often seen as a sustaining technology benefiting established companies, allowing them to innovate easily and improve existing workflows using AI technology. This leads to significant market cap growth for incumbents. However, there are disruptive opportunities for startups in leveraging AI by changing the traditional mental model of software. Instead of focusing on productivity improvement like traditional software, startups can sell the outcome of the work enabled by AI, resembling a services business. This disrupts the incumbents' seat-based pricing model, offering a new disruptive avenue for startups.
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