The barrier is the customer, not the data. We predict that the best generative AI companies can generate sustainable competitive advantage through a data flywheel: more usage → more data → better models → more usage. While this is still true to some extent, especially in areas with very specialized and hard-to-obtain data, the “data barrier” is in a precarious position: data generated by application companies does not create an insurmountable barrier, and the next generation of foundational models may well destroy any data barriers generated by startups. Instead, workflows and user networks appear to be creating more durable sources of competitive advantage.
Generative AI has become a reality. Suddenly, every developer denmark mobile database is working on generative AI applications, and every enterprise buyer is demanding it . The market has even retained the name “Generative AI.” Talent and venture capital money are pouring into the market. Generative AI has even become a pop culture phenomenon in viral videos like “Harry Potter Balenciaga” or the Ghostwriter-penned parody of Drake’s song “Heart on My Sleeve,” which has become a No. 1 hit.
The first killer apps are emerging . ChatGPT is well known to be the fastest app to reach 100 million MAUs (monthly active users) — and it did so organically in just 6 weeks. By comparison, it took Instagram 2.5 years, WhatsApp 3.5 years, and YouTube and Facebook 4 years to reach that level of user demand. But ChatGPT is not an isolated phenomenon. Character AI’s deep engagement (average session time of 2 hours), Github Copilot’s productivity gains (up 55%), and Midjourney’s path to profitability (hundreds of millions of dollars in revenue) all indicate that the first killer apps are here.