AI Is Not a Business Model (Issue 201)
Your business plan better go deeper than that
Your business is in trouble if it is 100% based on repackaging another AI service.
We are in the early days of the AI gold rush. So, the first movers are leaning hard into using AI to create products and services they can sell to the companies that are moving more slowly and people who don’t understand technology at all.
It reminds me of the early days of the web. The Dot Com Boom exploded with companies creating goods and services for the new online wild, wild west world. There were a few useful things that lasted (e.g., eBay, Amazon, Priceline). But a lot of silly companies died when the bubble popped (e.g., Pets.com, WebVan, Kozmo).
This AI bubble will be the same. Lots of silly crap will and should die. A few solid services and companies will survive. AI is an enabling tool, but you had better not build your entire business foundation on someone else’s rented land. That may fool a few customers into buying what you sell, but it won’t last.
Let me share a couple of stories about recent experiences with two companies providing a product fueled by AI. They illustrate the problem I’m describing.
One new platform offered to helped me operate my coaching practice. So, out of curiosity, I gave it a spin. The results were okay, but certainly not customized 100% for my needs. I had to do a lot of tweaking to make it good enough to share with my clients. It seemed problematic for something that would cost me over a thousand dollars/year on top of my existing AI service subscription.
So, I decided to spent a little bit of time comparing and contrasting the service with what I could do myself using my existing AI service. My results were better. So, guess what? I sure as heck wasn’t going to pay some new company a monthly subscription to get something worse. I stopped using them. I wish them luck, but anyone who has a decent grasp of technology, AI, and how to tune prompts will be able to create their own solution.
The next example was a service for self-help (e.g., therapy, meditation, growth). I signed up for a short trial, which turned into a costly monthly fee to continue. So, I asked myself, “Could I build an equivalent service using my existing AI service?”
The answer was yes. I created a project that researched that type of therapy, the current peer-reviewed research, existing experts, etc. I crafted a few prompts to do what the app did. Guess what? It was pretty damn good! So, I canceled that other subscription.
Soon, I imagine it will be hard to find any modern business that isn’t using some sort of AI service or tool for various operational tasks. But that is different than building your core offer on another platform’s service.
Sure, maybe you can sell to people who are absolutely clueless about AI. Maybe people who don’t get technology won’t realize how easy it is to replicate your service. But that will be a dying market. Younger folks are AI natives. They won’t need your help.
Repackaging someone else’s product or service isn’t a great, lasting business model. You’re taking advantage of people who don’t realize what you are doing. And the people who understand what you’re doing will simply use that service to create their own solution.
Why in the hell would I buy an AI-generated book? I can just ask my AI service to write a book like that for me.
Why would I buy AI-generated music? Again, I could create it myself if I wanted audio AI slop.
Why would I buy your AI-generated art? It’s easy enough to generate visual AI slop in a few seconds.
Why would I buy your AI service if I can replicate it myself by taking some time to tune prompts, evolve my project, and customize it 100% for my needs?
AI can be a useful tool. Lean into it to streamline your operations, save time, automate boring tasks, and get stuff done that you would struggle to do otherwise. But, resist the urge to repackage it to sell to the clueless. That’s not a sustainable business model.
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From corporate exec to entrepreneur, Larry Cornett is a coach who helps you leverage your existing expertise to design a self-employment business that funds the life you want. Escape the 9-to-5 grind by creating your Exit Blueprint to freedom!
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