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I believe that Google Memo answered this entire line of questioning very well: https://www.semianalysis.com/p/google-we-have-no-moat-and-neither https://www.se

I believe that Google Memo answered this entire line of questioning very well: https://www.semianalysis.com/p/google-we-have-no-moat-and-neither https://www.semianalysis.com/p/google-we-have-no-moat-and-ne... "We Have No Moat, And Neither Does *" The problem with building AI products is that as long as you don't know why or how it works, your competition can just imitate the surface-visible results and it's as good as your product because they also have no clue about why or how it works, just like you.

13years 3y ago
Indeed. I have termed this the coming "AI clone wars". "Anything you create can be created without investment cost while also being unique in design as well as delivering the same function or experience" From - https://dakara.substack.com/p/ai-and-the-end-to-all-things https://dakara.substack.com/p/ai-and-the-end-to-all-things
- Apocryphon 3y ago
  The droids are clones, delicious
throwaway55905 3y ago
We've got to stop calling this a "Google Memo." That's a false narrative. It's just a random doc written by one of 140000+ employees. > Google has been contacted for comment but it is understood that the document is not an official company memo. [1] There are moats to products, but less so to pure language models trained on the same web-scale scraped data that many share. Not all data is readily available to language models, and integration can be difficult. A company that specializes in say AI for trash sorting likely still has a moat. Microsoft integrating AI into Windows still has a moat (for Windows). GPT-4 is ~200 Elo better than the next best semi-public Vicuna-13B in Chatbot Arena [2]. That is a non-zero moat - perhaps due to hosting larger models, training data, licensing, output postprocessing, etc. [1] https://www.theguardian.com/technology/2023/may/05/google-engineer-open-source-technology-ai-openai-chatgpt https://www.theguardian.com/technology/2023/may/05/google-en... [2] https://lmsys.org/blog/2023-05-25-leaderboard/ https://lmsys.org/blog/2023-05-25-leaderboard/
- dragonwriter 3y ago
  > GPT-4 is ~200 Elo better than the next best semi-public Vicuna-13B in Chatbot Arena [2]. That is a non-zero moat Its a non-zero advantage. A moat is something that inhibits someone from closing an advantage. (Also, its odd that the biggest models, outside of the big vendor centralized ones, they are testing are 13B-14B when 30B-ish and 65B-ish versions exist.)
  - throwaway55905 3y ago
    Perhaps it's not a moat. However, if the advantage is due to things like inference infrastructure to support a massive model, that isn't easy to duplicate. I would also say that the quality of these smaller models are good, but we also may not be measuring them correctly. Recent papers suggest that these smaller LMs dont fully capture ChatGPT quality in ways that may not have appeared with crowd worker ratings [1]. It's easy to have your inputs be inside a happy distribution for a paper but fail in the real world in ways that GPT-4 doesnt. Lmsys would love to compare with bigger models but have limited resources. Contributions are welcome [2] [1] https://arxiv.org/abs/2305.15717 https://arxiv.org/abs/2305.15717 [2] https://lmsys.org/blog/2023-05-25-leaderboard/#next-steps https://lmsys.org/blog/2023-05-25-leaderboard/#next-steps
    - bradleyjg 3y ago
      OpenAI doesn’t make their own hardware, even in the fabless sense of “make.” So in what way is inference infrastructure a moat?
  - kordlessagain 3y ago
    The moat (or the water/crocodiles in it) is the content that the company gathers in relation to the offering that is being defended. Microsoft has Github, which is a source of code that the model can operate upon, as well as the interactions/queries with the users. OpenAI is playing around with sharing content because of this. They want to build a moat and will use us to do it. If someone just has an approach to solving the problem, i.e. code that does this that and the other, then there is no moat.
mediaman 3y ago
I believe there is better opportunity from focusing hard on specific niche industry verticals and developing AI assisted workflows that make their operations more efficient. Those will be good businesses, and founders will do well, though they may not be billion dollar businesses. Their moat will be industry comprehension and then their integration and embedding into business operations. That does leave a question as to the purpose of VC in AI though.
goatlover 3y ago
100 million users for ChatGPT plus GPT4 with plugins seems like a pretty good starting moat.
- dragonwriter 3y ago
  Is it though? It would be a moat for social media or something with network externalities, but Chatbot’s don’t have the strong network externalities that come when the business involves many-to-many user-user interaction patterns, or even 1-1 interaction. Its a lead, but its not a barrier to competitors acquiring users even if they can offer better value for price outside of network size, nor is it a barrier to competitors development.
  - sgu999 3y ago
    They still accumulate a large amount of data for training their future models that their competitors can't access.
- deleted 3y ago
  [deleted]
- kuratkull 3y ago
  That's not a moat. That's their current situation they achieved by being the first mover. But nothing is stopping someone else from doing a cheaper/better model tomorrow, next year, whenever. I'd jump ship in a few hours to a day from their Premium if something better or same-but-cheaper came out.
- bagels 3y ago
  If someone offered the same thing with better privacy for business use, I'd use it.
- kortilla 3y ago
  That’s not a moat, that’s a head start. Unless there is a network effect or good feedback from the users to improve the model, it’s not a moat.
legendofbrando 3y ago
The fact that anyone at Google wrote this memo tells you more about Google than it does about AI (or anything). What’s the moat for Apple (after all, they’re all phones and computers)? What’s the moat for Microsoft (after all Google and insert thousands of other competitors offer docs, sheets, etc)? What’s the moat for Facebook (after all, it’s just a social network)? What’s the moat for Google search (it’s just another search box)? The moat isn’t the product, it’s the business. Every one of these companies built a business that served customers well (people who want the best phone, company IT departments, advertisers, and advertisers again). The moat is a business so good at serving its customers that you can afford to offer a better/cheaper/faster product than others because you serve a well paying customer the best. Done well, your moat is then the momentum of being the default option.
- romeros 3y ago
  moat is real. And it definitely is the product. Long time back when Google first came about.. I remember reflexively switching from the default Yahoo browser to Google. It felt painful even trying out Yahoo Search Engine... I was just a kid back then and even I wondered why I was doing this.. Google's Page Rank algorithm was simply superior.. Paypal's moat was being able to handle cyber criminals/hacking.. their competitors were getting wiped out because they were losing millions of dollars due to attacks and they did not have the technical know how.. pg's viaweb's moat was being able to rapidly add features because pg grokked lisp pretty hard at that time.. Google search results were far superior. Same thing with Apple.. I never had a mac/iphone crash on me ever.. they just worked.. For Facebook.. the killer feature was the wall.. that and the network effects..
  - antoniuschan99 3y ago
    For me it was altavista to google!
  - legendofbrando 3y ago
    Yep. You have to have a product to get in the game and win customers and these are all examples of a killer product. And then you build a business serving a customer around them that - even when your features are cloned - create a sustainable moat. The wall was cloned, but the wall (ultimately moreso Newsfeed) enabled you to become one of the biggest sites on the internet - which turned out to be really valuable to advertisers. Which in turn, allowed you to invest in features, buy potential competitors and invest in AI research teams that open source models that make you competitive in AI. The sum of those things makes you a $671B company throwing off enormous sums of cash. That turns out to be a pretty sustainable moat for a while - long after your product becomes table stakes. The problem with thinking that this is impossible in AI is because it ignores all of the other times it’s been done. Facebook was JUST a social network that would “be a fad” and “never take off”. It was “just another website” that “anyone could build”. The difference is they built it. And then they built on it. Same thing will happen here. And now the question is, will it be one of the current incumbents that crack it or does a newcomer have a shot.
robotburrito 3y ago
That's OK. You are mostly only in it quick enough to make your quick buck and exit.
ma2rten 3y ago
https://arxiv.org/abs/2305.15717 https://arxiv.org/abs/2305.15717
ergocoder 3y ago
That googler has no real world experience whatsoever. Google owns several platforms used by billions. If that is not the moat, what is? Google has moats. They just suck at executing. That is why they are not dying, still making more and more money, but looking like they are losing. That is the benefit of having moats.
- pclmulqdq 3y ago
  That memo was specifically about Bard, Google's AI chatbot, not about Google in general. Google has plenty of other moats (they tend to build products with synergistic effects), and not having a moat there was really freaky to Googlers. At some point, AI people are going to learn that most AI capabilities are usually features, not products.
  - ergocoder 3y ago
    Still their moats are helpful in distributing their AI.
neximo64 3y ago
I don't know how this memo keeps coming up as an artefact. It is not written by an actual Executive at Google, who is far more aware of the moats and business at Google. Anyone more than just a casual observer knows how far from the truth that it is.

13years 3y ago

Indeed. I have termed this the coming "AI clone wars". "Anything you create can be created without investment cost while also being unique in design as well as delivering the same function or experience" From - https://dakara.substack.com/p/ai-and-the-end-to-all-things https://dakara.substack.com/p/ai-and-the-end-to-all-things

Apocryphon 3y ago
The droids are clones, delicious

throwaway55905 3y ago

We've got to stop calling this a "Google Memo." That's a false narrative. It's just a random doc written by one of 140000+ employees. > Google has been contacted for comment but it is understood that the document is not an official company memo. [1] There are moats to products, but less so to pure language models trained on the same web-scale scraped data that many share. Not all data is readily available to language models, and integration can be difficult. A company that specializes in say AI for trash sorting likely still has a moat. Microsoft integrating AI into Windows still has a moat (for Windows). GPT-4 is ~200 Elo better than the next best semi-public Vicuna-13B in Chatbot Arena [2]. That is a non-zero moat - perhaps due to hosting larger models, training data, licensing, output postprocessing, etc. [1] https://www.theguardian.com/technology/2023/may/05/google-engineer-open-source-technology-ai-openai-chatgpt https://www.theguardian.com/technology/2023/may/05/google-en... [2] https://lmsys.org/blog/2023-05-25-leaderboard/ https://lmsys.org/blog/2023-05-25-leaderboard/

dragonwriter 3y ago
> GPT-4 is ~200 Elo better than the next best semi-public Vicuna-13B in Chatbot Arena [2]. That is a non-zero moat Its a non-zero advantage. A moat is something that inhibits someone from closing an advantage. (Also, its odd that the biggest models, outside of the big vendor centralized ones, they are testing are 13B-14B when 30B-ish and 65B-ish versions exist.)
- throwaway55905 3y ago
  Perhaps it's not a moat. However, if the advantage is due to things like inference infrastructure to support a massive model, that isn't easy to duplicate. I would also say that the quality of these smaller models are good, but we also may not be measuring them correctly. Recent papers suggest that these smaller LMs dont fully capture ChatGPT quality in ways that may not have appeared with crowd worker ratings [1]. It's easy to have your inputs be inside a happy distribution for a paper but fail in the real world in ways that GPT-4 doesnt. Lmsys would love to compare with bigger models but have limited resources. Contributions are welcome [2] [1] https://arxiv.org/abs/2305.15717 https://arxiv.org/abs/2305.15717 [2] https://lmsys.org/blog/2023-05-25-leaderboard/#next-steps https://lmsys.org/blog/2023-05-25-leaderboard/#next-steps
  - bradleyjg 3y ago
    OpenAI doesn’t make their own hardware, even in the fabless sense of “make.” So in what way is inference infrastructure a moat?
- kordlessagain 3y ago
  The moat (or the water/crocodiles in it) is the content that the company gathers in relation to the offering that is being defended. Microsoft has Github, which is a source of code that the model can operate upon, as well as the interactions/queries with the users. OpenAI is playing around with sharing content because of this. They want to build a moat and will use us to do it. If someone just has an approach to solving the problem, i.e. code that does this that and the other, then there is no moat.

mediaman 3y ago

I believe there is better opportunity from focusing hard on specific niche industry verticals and developing AI assisted workflows that make their operations more efficient. Those will be good businesses, and founders will do well, though they may not be billion dollar businesses. Their moat will be industry comprehension and then their integration and embedding into business operations. That does leave a question as to the purpose of VC in AI though.

goatlover 3y ago

100 million users for ChatGPT plus GPT4 with plugins seems like a pretty good starting moat.

dragonwriter 3y ago
Is it though? It would be a moat for social media or something with network externalities, but Chatbot’s don’t have the strong network externalities that come when the business involves many-to-many user-user interaction patterns, or even 1-1 interaction. Its a lead, but its not a barrier to competitors acquiring users even if they can offer better value for price outside of network size, nor is it a barrier to competitors development.
- sgu999 3y ago
  They still accumulate a large amount of data for training their future models that their competitors can't access.
deleted 3y ago
[deleted]
kuratkull 3y ago
That's not a moat. That's their current situation they achieved by being the first mover. But nothing is stopping someone else from doing a cheaper/better model tomorrow, next year, whenever. I'd jump ship in a few hours to a day from their Premium if something better or same-but-cheaper came out.
bagels 3y ago
If someone offered the same thing with better privacy for business use, I'd use it.
kortilla 3y ago
That’s not a moat, that’s a head start. Unless there is a network effect or good feedback from the users to improve the model, it’s not a moat.

legendofbrando 3y ago

The fact that anyone at Google wrote this memo tells you more about Google than it does about AI (or anything). What’s the moat for Apple (after all, they’re all phones and computers)? What’s the moat for Microsoft (after all Google and insert thousands of other competitors offer docs, sheets, etc)? What’s the moat for Facebook (after all, it’s just a social network)? What’s the moat for Google search (it’s just another search box)? The moat isn’t the product, it’s the business. Every one of these companies built a business that served customers well (people who want the best phone, company IT departments, advertisers, and advertisers again). The moat is a business so good at serving its customers that you can afford to offer a better/cheaper/faster product than others because you serve a well paying customer the best. Done well, your moat is then the momentum of being the default option.

romeros 3y ago
moat is real. And it definitely is the product. Long time back when Google first came about.. I remember reflexively switching from the default Yahoo browser to Google. It felt painful even trying out Yahoo Search Engine... I was just a kid back then and even I wondered why I was doing this.. Google's Page Rank algorithm was simply superior.. Paypal's moat was being able to handle cyber criminals/hacking.. their competitors were getting wiped out because they were losing millions of dollars due to attacks and they did not have the technical know how.. pg's viaweb's moat was being able to rapidly add features because pg grokked lisp pretty hard at that time.. Google search results were far superior. Same thing with Apple.. I never had a mac/iphone crash on me ever.. they just worked.. For Facebook.. the killer feature was the wall.. that and the network effects..
- antoniuschan99 3y ago
  For me it was altavista to google!
- legendofbrando 3y ago
  Yep. You have to have a product to get in the game and win customers and these are all examples of a killer product. And then you build a business serving a customer around them that - even when your features are cloned - create a sustainable moat. The wall was cloned, but the wall (ultimately moreso Newsfeed) enabled you to become one of the biggest sites on the internet - which turned out to be really valuable to advertisers. Which in turn, allowed you to invest in features, buy potential competitors and invest in AI research teams that open source models that make you competitive in AI. The sum of those things makes you a $671B company throwing off enormous sums of cash. That turns out to be a pretty sustainable moat for a while - long after your product becomes table stakes. The problem with thinking that this is impossible in AI is because it ignores all of the other times it’s been done. Facebook was JUST a social network that would “be a fad” and “never take off”. It was “just another website” that “anyone could build”. The difference is they built it. And then they built on it. Same thing will happen here. And now the question is, will it be one of the current incumbents that crack it or does a newcomer have a shot.

robotburrito 3y ago

That's OK. You are mostly only in it quick enough to make your quick buck and exit.

ma2rten 3y ago

https://arxiv.org/abs/2305.15717 https://arxiv.org/abs/2305.15717

ergocoder 3y ago

That googler has no real world experience whatsoever. Google owns several platforms used by billions. If that is not the moat, what is? Google has moats. They just suck at executing. That is why they are not dying, still making more and more money, but looking like they are losing. That is the benefit of having moats.

pclmulqdq 3y ago
That memo was specifically about Bard, Google's AI chatbot, not about Google in general. Google has plenty of other moats (they tend to build products with synergistic effects), and not having a moat there was really freaky to Googlers. At some point, AI people are going to learn that most AI capabilities are usually features, not products.
- ergocoder 3y ago
  Still their moats are helpful in distributing their AI.

neximo64 3y ago

I don't know how this memo keeps coming up as an artefact. It is not written by an actual Executive at Google, who is far more aware of the moats and business at Google. Anyone more than just a casual observer knows how far from the truth that it is.