Jul 17, 2025
Don't get me wrong, I'm all for AI. I think it's a great tool and will be highly influential in the future of the economy and startup ecosystem. I think nearly every company can benefit from some form of AI-implementation, especially automation and gen-AI for reports/emails. My problem is when startups base their whole company around an AI agent or chatbot.
I don't have a problem with companies that have a chatbot feature or use an actually original (or at least heavily fine-tuned) AI/ML algorithm. The issue arises when these companies develop what is essentially a nicer looking ChatGPT UI with some minor fine-tuning or prompt engineering.
The main problems I have are, firstly, "custom built" AI chatbots are quickly becoming hyper-saturated and almost "mass-produced", this creates a commoditizing effect, making truly innovative AI startups harder to distinguish or value. Secondly, this recent surge in AI startups is causing a feeding frenzy for VCs and other existing companies to hop on the "AI train". I mean just look at Google, they are one of the, if not the, biggest players in AI right now, and their global search market share dropped below 90% for the first time since 2015, and their YTD stock price is down over 3%, right when they launched 2.0, 2.5, Veo 2, and Veo 3. Companies that are already alive and thriving (like Google) should not be developing gen-AI tools, they should focus on doing what they are already good at (being a search engine) and stop sinking billions into a service that's not profitable.
In conclusion, my advice to founders looking to create an AI startup is to do one of two things. Either, create an AI company with a specific and mostly untapped use case and invest time and resources to ensure you have a genuinely new and previously unseen product. Or, consider building a digital product or SaaS company instead of forcing AI into your product. With tools like Claude for AI-assisted development and no-code platforms like Bubble, launching a functional SaaS or digital product has never been easier.