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Tokyo, Japan – February 12: SoftBank’s Masayoshi Son (Photo: Tomohiro Ohsumi/Getty Images)
The internet has become a major source of unicorns for entrepreneurs and VCs, and artificial intelligence (AI) is expected to play a similar role. SoftBank’s Masayoshi Son is also said to be eyeing AI after licking his wounds in the catastrophe. $32 billion loss. His company is considering whether to adopt a more aggressive VC fundraising role in the emerging field of AI. According to Yoshimitsu Goto, the company’s chief financial officer (CFO), the company evaluates its AI technology to determine “whether it should be defensive or balanced with offense.”
VCs in Silicon Valley and elsewhere are increasing their investment in AI tenfold. last 5 years.
The popular assumption is that AI will create unicorns, just as the internet has done for the past 30 years, and ChatGPT is considered just a small part of that jackpot. But will this happen?
This is the main reason why AI will become more difficult for entrepreneurs and VCs.
revolutionary versus evolutionary
The Internet was a revolutionary technology that made existing business models obsolete. This has enabled and often required new business models, skills and assets to do old things. The Internet has made existing assets, business models, and skills obsolete, thus helping start-ups with new business models disrupt giant corporations.
Amazon.com: Mr. Bezos entered online retail, where he could sell a wider range of books, and because he could sell them without having a store, he could sell them cheaper, giving him a competitive edge over incumbent giants such as Borders and Barnes & Noble. to gain a competitive edge. The existing big companies didn’t know how to sell online, so they created an excel online.
Netflix: Hastings is using the Internet to dominate and defeat Blockbuster, which has been held back by existing investments in brick-and-mortar stores, a reluctance to eliminate late fees, and outdated skills in brick-and-mortar retail. He took advantage of free online streaming and the lack of late fees in his business model. , and executives who did not receive threats.
· Airbnb: Cesky’s advantage over incumbent hotel giants is that it allows anyone to rent a home or a room in their home over the internet. Large established companies could not jeopardize their own investments or those of their affiliates in existing hotels.
This is similar to the once revolutionary technology of the personal computer. PC companies killed many giants of the old mainframe computer industry, such as Control Data and IBM. The PC enabled a new business model where anyone could build and sell a PC without the need for capital-intensive manufacturing or manpower-intensive infrastructure. PCs have also opened up new markets where incumbent players are uncompetitive, such as small businesses and consumers. The new market had different needs and required a new business model involving software and hardware.
But AI is different. AI is more advanced than being a revolutionary technology that requires and enables new business models with significant advantages that can disrupt old business models. Enabling incumbents to improve their competitive edge Leverage your current assets, products, services, organization and skills. AI has extraordinary potential, but it is an evolutionary innovation that makes existing businesses more competitive. IBM’s Chief Commercial Officer said: Managers with AI will be replaced by managers without AI”
AI unicorns are getting tougher.
This means that it will be more difficult for entrepreneurs to build unicorns and for venture capital to fund unicorns to replace old giants. They may build companies in niche markets and take over incumbent giants, come up with better products and be bought by incumbent giants, or build new tools that will become unicorns. . But replacing the old giant will be even harder. So this evolutionary innovation will never come easy for venture capitalists, and Son will face tougher challenges from incumbents that can add AI to their product lines and operations.
My take: Those who don’t understand the difference between evolving and revolutionary technology are paying the price for new AI trends. Rather than replace incumbents, venture capitalists and entrepreneurs will find themselves having to find growth where incumbents cannot or cannot easily enter.
