It's Better To Leverage AI Than To Be In The Business Of AI

AI is a bad business and everyone will lose money

I’m a frequent listener of Prof G Markets. It is a daily podcast providing news, insights, and interviews regarding the stock market, private companies, and economic signals.

Yesterday, the host Scott Galloway made a point that has stayed with me. He said ….

“it is better to leverage AI than it is to be in the AI business.”

Today, I will highlight the important implications of this statement and also show you how you can take this mindset to build a business or improve your current business.

LFG. 🔥

ChatGPT Is A Bad Business

I am both bullish and bearish on AI.

I am bullish because it is obvious this technology will have huge implications for our lives and society. I do not think anyone questions that. However, executing on AI is far more intense than many realize.

The electricity costs alone will create huge barriers for major LLM companies to become fully integrated into our society.

In short, there is no way ChatGPT will be a profitable company. Open AI earnings reports show a yearly loss of $16 billion. That is billion with a B.

There are other problems with OpenAI that are not worth getting into right now. Between electricity costs, data center expenses, and the environmental implications, I actually do not think OpenAI will exist in another ten years.

Now, Let’s Look At Meta

The Meta earnings are staggering. Meta is not presenting itself as an AI company. Instead, it is a company that leverages AI to improve its core product: advertising. Meta’s total revenue is up significantly year over year. Almost all of that increase comes from the ad stack through Facebook and Instagram.

The Meta ad platform is superior to any other social media ad platform. I spend a lot of money on Meta advertising, and I can attest that AI improvements have increased both targeting and the efficiency of the click through rate.

Meta has absolutely increased their CapX, and they are certainly spending money on AI. But at its core, Meta is riding the coattails of the investments that Nvidia, OpenAI, and other foundational companies are executing. They use AI for leverage rather than trying to be the foundational AI business.

There Is Huge Opportunity For You To Create An AI Company

Chase and I are doing this with Theshop.ai. We are creating a service suite that comprises three layers.

• We are building our own AI products. Directorly.app is doing well, and we see opportunities to create AI products that are highly specialized in certain industries.

• We are building AI products for clients. For example, we can increase the efficiency of current software by adding AI functionality on top of the existing code base.

• We are leveraging current AI to increase operations efficiency. Most service based businesses are incredibly inefficient. There is a huge service play for us to help companies implement AI into their operations to increase efficiency.

I do not want to build an AI company. I want to build a company that leverages AI.

Depending on your tech skills, you can do the same. You could easily create a service business that consults with companies and implements AI leveraged products into their workflow. In this case, you do not need to understand the mechanics of AI as much as you need to understand how to use the products.

That is what I am doing. I will keep you posted.

Love you guys. Talk to you tomorrow.

Tim

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