Investors are obsessed with moats, but people have to realize that the entire world runs on business that have no moats.
There are no moats to being a plumber, a baker, a restaurant...
The moat concept is predominant because the idea that everything must make billions have infected the debate about businesses.
It's all about being a unicorn, a giant, a monopoly, making every body at the top billionaires, and it's like there is no other way to live.
Except that's not how most people do live, even entrepreneurs.
Even Apple, which today is the typical example of a business with a moat, didn't start with "we can't get into this computer business, we'd have no moat".
They have a moat now, but it's a consequence of all the business decisions and the thing they built after many decades.
They didn't start their project by the moat. The started their project by providing value and marketing it.
You can't blame them: gratuitous moats (like those provided by winner-takes-all dynamics) are not common in a functioning (competitive) economy so they get to be revered.
It feels unlikely that the recent period of big tech can keep the same benefits going forward. It was basically a political moat: counting on the ongoing lack of antitrust and consumer protection regulation. Even if the political dysfunction that allows that continues (quite likely), the wheels of the universe are turning.
The "leaked" report focuses on open source - a mode of producing software that is bound to become a major disruptor. We tend to discount open source because of its humble beginnings, long incubation, many false dawns and difficult business models. But if you objectively take a look at what is possible today with open source software, its quite breathtaking. I would not discount some tectonic shifts in adoption. The long running joke is "the year of the linux desktop", but keep adding open source AI and other related functionality and at some point the value proposition of open source computing (both for individuals and enterprises) will be crushingly large to ignore.
Don't forget too, that other force of human nature: geopolitics (e.g., think TikTok and friends). The current "moats" were established during an earlier, more innocent era. Now digitization is a top priority / concern for many countries. The idea that somebody can build a long-lived AI moat given the stakes is strange to say the least.
> There are no moats to being a plumber, a baker, a restaurant...
This line is interesting to me, because actually I think there _is_ a major moat there: locality. I don't disagree with the rest of your comment, but for those examples specifically a lot of the value of specific instances of those business comes from their being in your neighborhood. If I live in Toronto, I'm not going to fly a plumber from Manhattan to fix my pipes; if I want a loaf of sourdough, I'm not going to get it from San Francisco, I'm going to get it from the bakery around the corner; I might travel out of town for a particularly unique and amazing restaurant, but not every week, I've got solid enough options within a ten minute drive. Software is different because that physical accessibility hurdle doesn't exist.
What you're describing is less a statement on moats and more a statement on markets. Plumbers in one location share the market (the potential clients in that area), and as the parent comment states, there is no moat in that given market. A moat is a barrier to compete within a given market. So if something made it really difficult for a new plumber to serve an already-served clientele, that would be a moat. But individuals on the other side of the planet are by physical encumbrance not actually clientele... they're not even in the market.
Shareholders gain pennies with moats, pennies that someone else does not earn. Without moats they benefit much more, but it's not more than someone else. And that's the contentious issue. How would I benefit more than my neighbor?
Yes, but open ai is not an investor, it's the company. They don't have to follow this logic, they can build something without thinking of the moat, and succeed anyway.
The moat is a priority for rent seekers, but most successful builders didn't start by that.
Coca cola, Mac Donald, Gillet and all the Buffet favorite children didn't grow by thinking moat first. The moat was built on the way, sometimes very late.
Right now you can't, because voting has proven ineffective for that particular problem, and adding anything that would do so would be blocked by the very people that you are trying to police since they are the rule makers.
But if we had to make it all over again?
Make mandate shorts. Make lobbying illegal. Make trying to game the system be paid by extremely harsh prison sentences. Create an institution that is in charge of corruption of the government that is independent of the government.
Some sort of penalty for passing unconstitutional laws sounds good but not sure how it could be implemented in practice. They did swear an oath to uphold the constitution.
Also, the US administration didn't got it right, because Nasa didn't do it. They had spacex to do it for them, while half of american society is insulting the elon musk.
Let's not pretend any administration got it right.
Just like the french administration had nothing to do with Pasteur creating the vaccine against rabies, the German administration has nothing to do Gutenberg creating the press and italian administration has nothing to do with Salvatore Sanfilippo creating redis.
At best, administrations from the past may be somewhat credited to foster an environment favorable for something like this to happen.
And even that is a stretch, given most administrations don't design anything, but rather react politically to whatever is the current situation.
SpaceX was nearly bankrupt when NASA awarded them $1.6 Billion to deliver cargo to the ISS, saving the company when it only had one successful launch. Then later on for the commercial crew program they selected SpaceX along with the (then perceived to be) safer bet of Boeing. Not to mention all of the other launches SpaceX has done for NASA or other government organizations.
This is an important comment. Governments, politicians, love to take credit for what other people accomplish, when, in reality, at best, they might provide money.
Imagine a scenario where you start a company that solves a really difficult problem --taking years of hard work-- and then a VC who provided funding takes credit for the effort. Even worse, the news organizations give the VC credit for the results. That's what politicians do.
In general, but Kennedy set the goal for a manned Moon mission, which was a very expensive and risky undertaking. LBJ and Nixon kept what Kennedy started going, but had Nixon won in 1960, it's doubtful that he would have focused on the same goals for space.
Sure, yet, they didn't "do it". They provided the means. They can take credit for that, justly so. They cannot take credit for the work of the massive numbers of people who did the actual work that got it done.
I feel that's a very important distinction. It's like taking credit for cooking a meal at a restaurant just because you paid for it.
The other side of it is what politicians do when things go wrong: They blame the people doing the work. Well, if they take credit for the success they should be equally liable for all failure. That, of course, will never happen.
Same thing with the economy. When things get better, they did it. When things are bad, the prior administration was at fault. They all do this, regardless of which political party they might align with. You know, just like three year old kids.
> Let's not pretend any administration got it right
Well allowing and encouraging commercial space missions to unlock private sector was politically challenging and a huge win; not something you’d see in many other jurisdictions
The Obama administration should be credited for ending the government's monopoly on leading the direction of space endeavors. And Trump's administration mostly followed that course and stayed out of private aerospace's way. It's only been the current administration (ironic given Biden's connection to Obama being his VP) that's tried to reverse course and return to the cost-plus MIC paradigm that entrenched players loved so much.
Lets also not forget that even then, much of the administration had to be dragged kicking and screaming into opening things up for private space enterprise. It took a lot of effort from a handful of people to make the government even give it a chance.
Recently I learned that the opposition to the idea was so harsh that an FBI investigation lasting 4 years was even kicked off based on a theory about how Obama, Musk and NASA's deputy admin Lori Garver were conspiring with foreign powers to destroy the US space program.
messages=[
GPTMessage(
role=GPTMessageRole.SYSTEM,
content=SYSTEM_PROMPT,
),
GPTMessage(
role=GPTMessageRole.USER,
content="Text: I love this product. It's the best thing ever!",
)
]
Try:
messages=(
("system", SYSTEM_PROMPT),
("user", "Text: I love this product. It's the best thing ever!")
)
Or:
messages=(
SystemMsg(SYSTEM_PROMPT),
UserMsg("Text: I love this product. It's the best thing ever!")
)
Love the idea, but it seems right now very much tied to their platform.
If I can't install it and run it on my machine, including in prod, it's a hard sell.
But given the tone of their articles, they seem passionate about it, and genuine, so I want to believe Mojo will be released as a FOSS project in the future and they will make money with the service itself.
While I applaud the attempt, stating it's "performant" is misleading, as any calculation that could happen client side means a call to the network with Pynecone.
What makes you think open ai won't look at the FOSS improvements, include them in their tech, and make their GPU farm way cheaper, rendering their service even more competitive?
Not to mention it's easy to run stable diffusion, but midjourney is still a good business. I can run sd on my laptop, I still pay for midjourney because it's convenient, the out of the box experience is better than any competition, and it keeps improving.
The reason why proprietary software ever had a moat simply comes down to: software startups could dump investment capital onto the development process and achieve results much faster, with better user interfaces, allowing them to achieve path dependence in their customer base. Thus we had a few big application verticals that were ultimately won by MS Office, Adobe Photoshop, etc.
If the result here is as marginal as it seems - a few months of advantage in output quality and a slightly more sleek UI - the capital-intensive play doesn't work. The featuresets that industrial users want the most depend on having more control over the stack, not on UI or output quality. The open source models are stepping up to this goal of "cheap and custom". Casual users can play with the open models without much difficulty either, provided they take a few hours to work through an installation tutorial - UI isn't a major advantage when the whole point is that it's a magic black box.
> Casual users can play with the open models without much difficulty either, provided they take a few hours to work through an installation tutorial
That can be quite a barrier for entry for non-powerusers. I wouldn't underestimate serving casual users, considering that the alternative is OSS i.e. giving your shit away for free.
that's like saying that apple and MS can look into linux and steal ideas. Yes they can do that but it doesnt make linux any less useful. If anything they learned to contribute back to the common pile, because everyone benefits from it. It would be a problem if this was a one-way relationship , which it doesnt seem to be. If Open source is making them more money, why kill it
You are making my point: linux, mac and windows coexist, despite the overwhelming strength of open source, and the proprietary platforms are quite profitable.
I mean, read the article, the author is concerned about that, and wants Google to open source more so it's not just Facebook's lama that gets open source building on it.
And ChatGPT has a super low barrier to entry while open source alternatives have a high one.
Creating a service that can compete with it on that regard implies you can scale GPU farms in a cost effective way.
It's not as easy as it sounds.
Meanwhile, openai still improves their product very fast, and unlike google, it's their only one. It's their baby. It has their entire focus.
Since for most consumers, AI == ChatGPT, they have the best market share right now, which mean the most user feedback to improve their product. Which they do at a fast pace.
They also understand that to get mass adoption, they need to censor the AI, like MacDonald and Disney craft their family friendly image. Which irritate every geeks, including me, but make commercially sense.
Plus, despite the fact you can torrent music and watch it with VLC, and that Amazon+Disney are competitors, netflix exists. Having a quality service has value in itself.
I would not count open ai as dead as a lot of people seem to desperately want it to be. Just because Google missed the AI train doesn't mean wishful thinking the market to be killed by FOSS is going to make it so.
As usual with those things it's impossible to know in advance what's going to happen, but odds are not disfavoring chatgpt as much as this article says.
Agreed, even the best open source projects, like Linux or Firefox, in their wonderful success, didn't render proprietary competition unable to have there piece of the market share.
And even in markets with very dominant free offers like video consumption, programming languages or VCS, you can still make tons of money by providing a service around it. E.G: github, netflix, etc.
OpenAI has a good product, a good team, a good brand and a good moving speed.
There are no moats to being a plumber, a baker, a restaurant...
The moat concept is predominant because the idea that everything must make billions have infected the debate about businesses.
It's all about being a unicorn, a giant, a monopoly, making every body at the top billionaires, and it's like there is no other way to live.
Except that's not how most people do live, even entrepreneurs.
Even Apple, which today is the typical example of a business with a moat, didn't start with "we can't get into this computer business, we'd have no moat".
They have a moat now, but it's a consequence of all the business decisions and the thing they built after many decades.
They didn't start their project by the moat. The started their project by providing value and marketing it.