Deep Takes #3

DeepTakes #3 celebrates Boxing Day with a dive into Google's AI dilemma and why the behemoth is searching for answers to its own Innovator's Dilemma (come for the AI, stay for the Ricky Bobby memes). As always, we also serve up actionable examples of AI in action, and end with our biggest AI-driven business idea yet.

Google's AI Predicament

Search giant Google puts up crazy numbers.

Analysts expect over $300 billion dollars of high-margin annual revenue in 2023. That is about the GDP of Pakistan (population 225 million).

Search is a huge market, and has been practically winner-take-all (RIP AskJeeves).

It is no surprise that ChatGPT's ability to serve up near-perfect answers with a single click is drawing concern from the top brass at Alphabet. Counter-arguments that state AI is a feature and not a product are strong, but for today let's assume Google's golden goose is at risk.

Put simply, ChatGPT is a solution like Google's own "I'm Feeling Lucky" button where choice is removed and the consumer is serviced a single answer. But it works, impressively well. As a result, the consumer is never serviced those pesky blue search ads that drive Google's profits.

A research paper (shared by OpenAI's Boris Power), showcases that despite not being trained for search, ChatGPT already outperforms Google in many tests.

CEO Sundar Pichai has taken note and issued a Code Red, redirecting teams to focus on fending off threats from ChatGPT.

But Google is dominant in AI research, right? Between DeepMind and Google Brain, Alphabet is arguably years ahead of anyone. ChatGPT was even built on tech that Google PhDs literally invented.

The key here isn't technology. It's the ability to move fast and break things.

That is why it is notable that Google's Trust & Safety team has been directed to focus on AI tools. You can't just push changes to production in arguably the most society-influencing product, used by billions around the world.

ChatGPT has been called out for a plethora of issues- spitting out racist and sexist responses, and even confidently presenting completely made up answers known as hallucinations.

The willingness to ignore this and push forward despite negative externalities is where the upstarts like OpenAI thrive, and maybe win.

They have almost nothing to lose, and everything to gain.

AI in Action

• Deep dive into OpenAI's history, business model, products and future.

• Resurrect your deceased friends and relatives with Korean startup Rememory.

• High-end product photography, without the expensive photoshoot.

• Co-write Oscar-winning scripts with Dramatron, from Alphabet's DeepMind.

• Create stunning storytelling content- AI-generated pitch decks, advertisements, resumes and more with Tome.

• AI for email is coming, and here are some key early players.

• White Lotus intro, but make it Home Alone, by Runway.

AI-Generated Startup of the Week

Free idea of the week: SchoolPhotos.ai

SchoolPhotos.ai turns your boring school photos into exciting hero shots.

• This week we're serving up a simple yet defensible AI-generated image business.

• 20-40% of students purchase school photos every year. That is ~15M students purchasing $15+ photo packages purchased every year.. In the US alone the market is over $1 billion.

• But, school photos are boring! Kids do not want them, parents do... but kids DO love Pixar characters, superheroes and princesses.

• With SchoolPhotos.ai, we would build a white label software product with a simple API that empowers independent school photographers to upsell AI-generated hero images that will have students begging their parents to purchase school photos.

• You wouldn't want to be the only kid without a superhero avatar at school, would ya?

• Indie photographers struggle to compete with industry giant Lifetouch (50%+ share), and any incremental monetization helps them stay competitive. We're arming the rebels! Selling shouldn't be a problem, so long as the product is easy to implement with automated customer service and no privacy concerns. This should be truly TAM-expansive for the industry.

• As you succeed, you'll go viral, and Lifetouch will either copy or buy you. To be competitive, every school photographer will need to offer a product like yours.

• With a 20% attach rate to photo-purchasing students and a $10 average ticket, SchoolPhotos.ai would generate $20M+ in annual revenue from independent photographers alone, at a 25%+ net margin (schools, like the mafia, take a big pizzo).

• This is a far better business long-term than the viral personal avatar generators because of the implementation lift and high switching costs- no race to the bottom!

AI-Generated Tweet of the Week

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