5 ms·

A couple other comments touch on the point I want to make, but I feel they don't nail it hard enough: if today you told me you had a website that was 100% techn

by saurik 2y ago

A couple other comments touch on the point I want to make, but I feel they don't nail it hard enough: if today you told me you had a website that was 100% technologically identical to Amazon, but you were willing to make slightly less money, you'd still have no products... as a user I'd have no reason to go there, but then without users there is no reason to sell there, so you have a circular bootstrapping issue. That is a moat. This is very different from OpenAI: if you show me a product that works just as well as ChatGPT but costs less--or which costs the same but works a bit better--I would use it immediately. Hell: people on this website routinely talk about using multiple such services and debate which one is better for various purposes. They kind of want to try to make a moat out of their tools feature, but that is off the path of how most users use the product, and so isn't a useful defense yet.

svnt 2y ago
Amazon functions as a marketplace dynamic, which is defensible if done right, as they have shown. OpenAI right now some novel combination of a worker bee and queryable encyclopedia. If they are trying to make a marketplace argument for this, it would be based on their data sources, which may have a similar sort of first-mover advantage as a marketplace as they get closed off and become more expensive (see eg reddit api twitter api changes), except that much of those data age out, in a way that sellers and buyers in a marketplace do not. The other big difference with a marketplace is constrained attention on the sell/fulfillment side. Data brokers do not have this constraint — data is easier to self-distribute and infinitely replicable.
bruce511 2y ago
I feel like you (and others) are saying what I'm saying. I said; >> There is no technical moat, but that doesn't mean there isn't a moat. Meaning that just because the moat is not technical doesn't mean it doesn't exist. Clearly Amazon, Google, Facebook etc have moats, but they are not "better software". They found other things to act as the moat (distribution, branding, network effects). OpenAI will need to find a different moat than just software. And I agree with all the people in this part if the thread driving that point home.
- swiftcoder 2y ago
  Moats don't have to be software. Amazon's physical distribution chain is absolutely a moat - trying to replicate their efficiency at marshalling physical items from A to B is a daunting problem for new entrants in the online retail game.
- pixelsort 2y ago
  They have been monitoring their GPT Store for emergent killer applications with a user base worth targeting. Zuckerberg's playbook. Nothing yet, because they've been too short-sighted to implement custom tokens and unbounded UIs.
serjester 2y ago
Look at Android vs Apple phones in the US. HN tends to really underestimate the impact of branding and product experience. It’s hard to argue anyone’s close to OpenAI on that front (currently). Not to mention they’ve created a pretty formidable enterprise sales function. That’s the real money maker long term and outside of Google, it’s hard to imagine any of the current players outcompeting OpenAI.
- bsimpson 2y ago
  Dropbox and Slack are examples of another possible outcome: capture the early adopters and stay a player in the space, but still have your lunch eaten by big tech suites that ship similar products.
  - tw1984 2y ago
    this is probably how OpenAI is going to end up with. there is no clear tech barrier that can't be crossed by competitors. openai came up with all sorts of cool stuff, but almost all of them have seen a peer competitor in just months. the recent release of deepseek v3 is a good example, o1 level model trained under 6 million USD, it pretty much beat openai by a large margin.
    - stavros 2y ago
      Where are you getting that Deepseek is at the level of o1? In my experience, it's not even as good as Claude.
      - esafak 2y ago
        Even v3? edit: Fair enough. I'm fishing for opinions too.
        stavros 2y ago
        My testing has been very limited, so I don't want to opine too much. If anyone has a differing opinion based on more testing, please share, I'm interested!
bawolff 2y ago
Amazon (the retail business not AWS) does seem to have a pretty big moat. For starters they have delivery down. In major cities you can get stuff delivered in hours. That is crazy and hard to replicate. They have a huge inventory/marketplace. Basically any product is available. That is very difficult to replicate.
- dartos 2y ago
  They have their own fleet of planes for shipping. Amazon’s vertical integration is their mote.
guerrilla 2y ago
Did we forget its called the network effect?
sdesol 2y ago
> if today you told me you had a website that was 100% technologically identical to Amazon, but you were willing to make slightly less money, you'd still have no products It is widely understood that you really can't compete with "as good as". People won't leave Google, Facebook, etc. if you can only provide a service as good as, because the effort required to move would not be worth it. > if you show me a product that works just as well as ChatGPT but costs less--or which costs the same but works a bit better--I would use it This is why I believe LLMs will become a commodity product. The friction to leave one service is nowhere near as as great as leaving a social network. LLMs in their current state are very much interchangeable. OpenAI will need a technological breakthrough in reliability and/or cost to get people to realize that leaving OpenAI makes no sense.
- lupusreal 2y ago
  > It is widely understood that you really can't compete with "as good as". Sure you can, that's why there are hundreds if not thousands of brands of gas station. The companies you list are unusual exceptions, not the way things usually work.
  - terminalgravity 2y ago
    Im not sure a gas station analogy really works. I use a gas station out of convenience (i.e. its on my route) and will only go out of my way for a significant difference in price. This means i go to the same gas stations even when there are others that are “as good as” around just because it’s convenient for me. Similarly if i already setup an account with Amazon and currently use Amazon i won’t move to an “as good as” competitor just because its an inconvenience to setup a new account, add billing info, add my address, etc… for no real improvement.
cm2187 2y ago
Amazon as in AWS is possibly a better analogy. What AWS sells is mostly commodity. Their moat is the cost of integration. Once a company has developed all its system around AWS, they are locked in, just because of the integration cost of switching. OpenAI only sells a single component, so the lock in is weaker. But once you have a business a company depends on which has been tested and relies on OpenAI, I can see them thinking twice about switching. Right now, I doubt we are near that stage, so my vote is on no moat yet.
- dartos 2y ago
  Many cloud native companies have realized they his and are actually moving off of public clouds. It’s slow and painful, but the expense is driving some customers away.
- esafak 2y ago
  I think any decent company would be using LLMs through an interface, so they can swap out providers, same as any API.
  - cm2187 2y ago
    That's fair, but different LLM behave differently, so you would have to redo your testing from scratch if you were to swap the model. I think that would be the primary problem.
    - esafak 2y ago
      Testing for LLMs is an evolving practice but you need to have tests even if you stick with one provider, otherwise you won't be able to swap out models safely within that provider either.
mnky9800n 2y ago
Perplexity costs less and lets you use more models.
ascorbic 2y ago
Why would they have no products? While Amazon Marketplace is important, they'd still have the greatest selection of products if they only had first-party sales. It's a bad analogy. eBay is a better example, as a purely a marketplace.
netdevphoenix 2y ago
Missing the point though. Amazon isn't Amazon because of its tech (speed, reliability, etc) doesn't matter as much as: inventory (tons of things you can only find there), delivery speed (you can reliably get 99% of the things in a week or less and some of the items get delivered in HOURS) and customer service (you are right by default, you will refunded and get free delivery if you encounter issues). That's the ultimate killer. If a competitor managed to do this, a little marketing to get installed in the customer base's phones will definitely eat Amazon's lunch. Temu has shown big strides but its ethical problems will prevent them from becoming a true threat. A local Temu-like competitor would be a formidable adversary
- htrp 2y ago
  > Temu has shown big strides but its ethical problems will prevent them from becoming a true threat. Does the average Temu user care about the company's ethical problems? Does the average Amazon user?
htrp 2y ago
>you had a website that was 100% technologically identical to Amazon, but you were willing to make slightly less money You've basically described Temu
OJFord 2y ago
I agree it's a bit weaker, but you're still paying $20 + tax for ChatGPT on a monthly subscription (or more). You could switch next month, you might regret it and switch back the month after. You might anticipate that faff and not switch to begin with. (Sure you might say I'll subscribe to both, $20, $40, it's no big deal - but the masses won't, people already agonise over and share (I do too!) video streaming services which are typically cheaper.)
billylb42 2y ago
Amazon retail is a marketplace with marketplace dynamics which what you are describing. They are connecting buyers and sellers. OpenAI is a SaaS company, can’t compare them. More interestingly to your thread is how does Craigslist supplant print classifieds, which then is challenged if not supplanted by Facebook Marketplace. Both the incumbents had significantly better marketplace dynamics prior to being overtaken.
nothercastle 2y ago
If Walmart made a slightly better website you wouldn’t shop there? Cause that’s really all that’s holding me back
cyanydeez 2y ago
You spelled monopoly weirdly.
sirspacey 2y ago
That’s how it is today, but that was also the case at the birth of e-commerce. Amazon was a large eCom store but many others were successful and switching for price was common. Not so much anymore. Defaults are powerful over time.

by saurik 2y ago

svnt 2y ago

Amazon functions as a marketplace dynamic, which is defensible if done right, as they have shown. OpenAI right now some novel combination of a worker bee and queryable encyclopedia. If they are trying to make a marketplace argument for this, it would be based on their data sources, which may have a similar sort of first-mover advantage as a marketplace as they get closed off and become more expensive (see eg reddit api twitter api changes), except that much of those data age out, in a way that sellers and buyers in a marketplace do not. The other big difference with a marketplace is constrained attention on the sell/fulfillment side. Data brokers do not have this constraint — data is easier to self-distribute and infinitely replicable.

bruce511 2y ago

I feel like you (and others) are saying what I'm saying. I said; >> There is no technical moat, but that doesn't mean there isn't a moat. Meaning that just because the moat is not technical doesn't mean it doesn't exist. Clearly Amazon, Google, Facebook etc have moats, but they are not "better software". They found other things to act as the moat (distribution, branding, network effects). OpenAI will need to find a different moat than just software. And I agree with all the people in this part if the thread driving that point home.

swiftcoder 2y ago
Moats don't have to be software. Amazon's physical distribution chain is absolutely a moat - trying to replicate their efficiency at marshalling physical items from A to B is a daunting problem for new entrants in the online retail game.
pixelsort 2y ago
They have been monitoring their GPT Store for emergent killer applications with a user base worth targeting. Zuckerberg's playbook. Nothing yet, because they've been too short-sighted to implement custom tokens and unbounded UIs.

serjester 2y ago

Look at Android vs Apple phones in the US. HN tends to really underestimate the impact of branding and product experience. It’s hard to argue anyone’s close to OpenAI on that front (currently). Not to mention they’ve created a pretty formidable enterprise sales function. That’s the real money maker long term and outside of Google, it’s hard to imagine any of the current players outcompeting OpenAI.

bsimpson 2y ago
Dropbox and Slack are examples of another possible outcome: capture the early adopters and stay a player in the space, but still have your lunch eaten by big tech suites that ship similar products.
- tw1984 2y ago
  this is probably how OpenAI is going to end up with. there is no clear tech barrier that can't be crossed by competitors. openai came up with all sorts of cool stuff, but almost all of them have seen a peer competitor in just months. the recent release of deepseek v3 is a good example, o1 level model trained under 6 million USD, it pretty much beat openai by a large margin.
  - stavros 2y ago
    Where are you getting that Deepseek is at the level of o1? In my experience, it's not even as good as Claude.
    - esafak 2y ago
      Even v3? edit: Fair enough. I'm fishing for opinions too.
      - stavros 2y ago
        My testing has been very limited, so I don't want to opine too much. If anyone has a differing opinion based on more testing, please share, I'm interested!

bawolff 2y ago

Amazon (the retail business not AWS) does seem to have a pretty big moat. For starters they have delivery down. In major cities you can get stuff delivered in hours. That is crazy and hard to replicate. They have a huge inventory/marketplace. Basically any product is available. That is very difficult to replicate.

dartos 2y ago
They have their own fleet of planes for shipping. Amazon’s vertical integration is their mote.

guerrilla 2y ago

Did we forget its called the network effect?

sdesol 2y ago

> if today you told me you had a website that was 100% technologically identical to Amazon, but you were willing to make slightly less money, you'd still have no products It is widely understood that you really can't compete with "as good as". People won't leave Google, Facebook, etc. if you can only provide a service as good as, because the effort required to move would not be worth it. > if you show me a product that works just as well as ChatGPT but costs less--or which costs the same but works a bit better--I would use it This is why I believe LLMs will become a commodity product. The friction to leave one service is nowhere near as as great as leaving a social network. LLMs in their current state are very much interchangeable. OpenAI will need a technological breakthrough in reliability and/or cost to get people to realize that leaving OpenAI makes no sense.

lupusreal 2y ago
> It is widely understood that you really can't compete with "as good as". Sure you can, that's why there are hundreds if not thousands of brands of gas station. The companies you list are unusual exceptions, not the way things usually work.
- terminalgravity 2y ago
  Im not sure a gas station analogy really works. I use a gas station out of convenience (i.e. its on my route) and will only go out of my way for a significant difference in price. This means i go to the same gas stations even when there are others that are “as good as” around just because it’s convenient for me. Similarly if i already setup an account with Amazon and currently use Amazon i won’t move to an “as good as” competitor just because its an inconvenience to setup a new account, add billing info, add my address, etc… for no real improvement.

cm2187 2y ago

Amazon as in AWS is possibly a better analogy. What AWS sells is mostly commodity. Their moat is the cost of integration. Once a company has developed all its system around AWS, they are locked in, just because of the integration cost of switching. OpenAI only sells a single component, so the lock in is weaker. But once you have a business a company depends on which has been tested and relies on OpenAI, I can see them thinking twice about switching. Right now, I doubt we are near that stage, so my vote is on no moat yet.

dartos 2y ago
Many cloud native companies have realized they his and are actually moving off of public clouds. It’s slow and painful, but the expense is driving some customers away.
esafak 2y ago
I think any decent company would be using LLMs through an interface, so they can swap out providers, same as any API.
- cm2187 2y ago
  That's fair, but different LLM behave differently, so you would have to redo your testing from scratch if you were to swap the model. I think that would be the primary problem.
  - esafak 2y ago
    Testing for LLMs is an evolving practice but you need to have tests even if you stick with one provider, otherwise you won't be able to swap out models safely within that provider either.

mnky9800n 2y ago

Perplexity costs less and lets you use more models.

ascorbic 2y ago

Why would they have no products? While Amazon Marketplace is important, they'd still have the greatest selection of products if they only had first-party sales. It's a bad analogy. eBay is a better example, as a purely a marketplace.

netdevphoenix 2y ago

Missing the point though. Amazon isn't Amazon because of its tech (speed, reliability, etc) doesn't matter as much as: inventory (tons of things you can only find there), delivery speed (you can reliably get 99% of the things in a week or less and some of the items get delivered in HOURS) and customer service (you are right by default, you will refunded and get free delivery if you encounter issues). That's the ultimate killer. If a competitor managed to do this, a little marketing to get installed in the customer base's phones will definitely eat Amazon's lunch. Temu has shown big strides but its ethical problems will prevent them from becoming a true threat. A local Temu-like competitor would be a formidable adversary

htrp 2y ago
> Temu has shown big strides but its ethical problems will prevent them from becoming a true threat. Does the average Temu user care about the company's ethical problems? Does the average Amazon user?

htrp 2y ago

>you had a website that was 100% technologically identical to Amazon, but you were willing to make slightly less money You've basically described Temu

OJFord 2y ago

I agree it's a bit weaker, but you're still paying $20 + tax for ChatGPT on a monthly subscription (or more). You could switch next month, you might regret it and switch back the month after. You might anticipate that faff and not switch to begin with. (Sure you might say I'll subscribe to both, $20, $40, it's no big deal - but the masses won't, people already agonise over and share (I do too!) video streaming services which are typically cheaper.)

billylb42 2y ago

Amazon retail is a marketplace with marketplace dynamics which what you are describing. They are connecting buyers and sellers. OpenAI is a SaaS company, can’t compare them. More interestingly to your thread is how does Craigslist supplant print classifieds, which then is challenged if not supplanted by Facebook Marketplace. Both the incumbents had significantly better marketplace dynamics prior to being overtaken.

nothercastle 2y ago

If Walmart made a slightly better website you wouldn’t shop there? Cause that’s really all that’s holding me back

cyanydeez 2y ago

You spelled monopoly weirdly.

sirspacey 2y ago

That’s how it is today, but that was also the case at the birth of e-commerce. Amazon was a large eCom store but many others were successful and switching for price was common. Not so much anymore. Defaults are powerful over time.