Value Capture, AI and Crypto

Some thoughts on value capture and AI

Value Capture, AI and Crypto

I’ve said this before but it’s becoming increasingly clear from other thinkers in the space:

The people who create LLM/AI models won’t be the ones who capture the value they create.

This is in stark contrast to crypto where the people who create the technology capture a good chunk of the value (be close to the money, and you’ll be good).

olaf @zxocw

in crypto nearly 100% of value accrues to start-ups and outsiders, not existing establishment interests value capture in AI technologies will be primarily by incumbants. there will be valuable startups, but for example even openai realized they needed to align with legacy tech

OpenAI already knows this and has deployed a multi-pronged approach to capture the value that it creates:

1. Get people hooked on their API and develop network effects with it

2. Invest in other startups that use their tech (not perfect but still pretty good)

3. Work directly with brands who might benefit from the value they provide

Jim Fan @DrJimFan

OpenAI is now helping Coca-Cola improve its marketing & operations. I find this move highly consequential. It signals OpenAI’s strategic shift away from a horizontal provider (ChatGPT, DALLE, Codex) towards capturing massive values from verticals. Thin-wrapper startups should… https://t.co/skK4Kfzifd

Does that mean that all startups who build thin-wrappers could be destroyed? Not necessarily but the key highlight is that everyone should be thinking about AI.

If the people of a revolutionary new technology aren’t going to capture all the value, that means you should probably keep your eyes and ears open to how you could capture part of it. A great example of this is machine vision. The creators of it were very smart engineers and researchers but ultimately security companies were the ones who benefited the most from it.

The other weird part about AI is the fact once someone open sources their approach, everyone has the same technology in their hands. Meta recently open sourced their LLM. Now, literally anyone can start experimenting with their own LLM models which takes things to a whole new level.

Sure OpenAI has unique tech that is good, but you have 10000 new competitors that have their base and a large design space to create new things from.

There’s no tactical advice from me on this topic except for don’t fade AI, there could be some fantastic opportunities that lie ahead for you.

Peace!