[klntsky]

> Another view is the "loss" factor. Nobody, thus far, has has had their funds stolen or lost using ML products

Most of "AI startups" are close to scams, i.e. they are oftentimes just interfaces to proprietary APIs that monetize on impressiveness of LLMs.

[themanmaran]

Is this a scam if they still provide value? I get that most apps are a thin wrapper around GPT, but that doesn't mean they're stealing money, just offering a non differentiated product.

[zarzavat]

It’s a scam on the investors. The users might see some value, but the business is worthless.

[BoorishBears]

- and 10 other things people who have no understanding of business like to say these days.

OpenAI cannot make every product and market them to every segment. If you wrap their API and provide a novel UX with precise positioning, there's value there.

OpenAI can copy the underlying collection of features tomorrow morning, but if the positioning is precise enough, you will easily outcompete them.

For an example developers can understand, see managed SaaS: which is a collection of companies raking in billions in revenue from simply wrapping AWS/GCP/Azure in ways that the underlying platforms even end up copying anyways but succeeding because their developer experience is better, or their feature set is better focused, or they're just plain nicer to work with.

[dragonwriter]

> OpenAI cannot make every product and market them to every segment.

Even if OpenAI doesn't, if its a thin wrapper with no deep proprietary edge, someone else can; your offering is ripe for commodification, even if that doesn't come from OpenAI themselves.

[BoorishBears]

Software is a commodity, period.

That's why "technical novelty" ranks ridiculously low on scale of things that make most successful software businesses these days: if anything technical novelty is more of an albatross on most software businesses than a saving grace.

Building traction in software is more about the 100s of other concerns that apply to every business: brand recognition, communicating your value proposition effectively, being able to sell to the target customer effectively, having the correct UX, the right proofs, the list goes on.

Copying that is just as hard as ever, if not harder.

[lmm]

> That's why "technical novelty" ranks ridiculously low on scale of things that make most successful software businesses these days: if anything technical novelty is more of an albatross on most software businesses than a saving grace.

Not convinced. Why did Google beat Yahoo? Why is Facebook huge while Friendster and Myspace are jokes? At some point - perhaps further down the line than most of us are used to thinking of - technical ability matters.

[jameshart]

Are people so used to monopolies in the modern market that the idea of launching a business where there exists a possibility of competition is seen as a sign of a scam?

[zarzavat]

A lot of these new AI startups just give a plain text prompt to the GPT API with a smattering of web glue. This creates a product that looks impressive and might get funded, but has close to zero value add.

There’s a difference between having competition and having a business that can be trivially cloned. The challenge for a lot of AI startups is to show that they are adding something and are not just a dumb wrapper.

[alexb_]

If that's the standard, basically everything that comes out of ycombinator is a scam.

[TeMPOraL]

On the contrary, a typical startup is more of a scam on the users. The investors go in knowingly and willingly - this is literally how they make money. It's the users that get shorted once the startup suddenly gets acquired or otherwise "exists" - and if they do it through an IPO, then it's additionally the public that gets scammed.

[alexb_]

A "typical startup" loses unfathomably large amounts of money.

[intelVISA]

That's not entirely true, Arc is pretty good.

[DonHopkins]

Ostensibly ycombinator is investing in the founders, not the business, right?

[coffeebeqn]

Isn’t the onus on the .. investors to make sure they invest in legitimate projects ?

[fooker]

I’m surprised people don’t see this.

There is no moat. Anything even moderately profitable will be implemented in 4 hours by the whales.

[johnthewise]

there doesn't have to be moat to provide some value to some people. These are mostly indie hackers trying to build a nice UI/UX on ai workflows to actually make them usable by general population. Even with retrieval integration of OpenAI, some people will prefer askpdf or likes, or even won't know about openai integration in the first place to consider switching. Or maybe you can build a better UX than openAI since maybe they are too bloated to know what the user actually wants?

This point of view is too simplistic, not everything needs to be a billion dollar idea or differentiated. You can make an absolute good living with no moat and good product senses. Even if you get outgunned, you move on to the next opportunity.

[enjo]

If you view the LLM as a computing platform that’s not so different then saying startups built on AWS are “scams”.

I do think we’ll find a lot of these aren’t defensible companies (like Lensa) but sometimes you get instagram even when the value prop seems slim.