Cheryl Edison

I was in sf recently, talking to this VC about the insanity of this AI paradigm shift he had a funny take - "it's the best time to invest, but nobody knows what's going to win" while it might seem impossible to tell what will win, I actually think there are about 8 archetypes of companies that are consistent from one paradigm shift to the next: 1. the pigs with lipstick the companies that don't really have any meaningful use cases for AI, but they slap it on there any way for the hype remember that one public iced-tea company that added blockchain to their name? they changed their name from Long Island Iced Tea Corp to Long Blockchain Corp in 2017 and got free PR these companies might get in the news for integrating new tech, but over time they fall off the wagon and adapt to new trends. 2. the cool grandmas extremely slow-moving (usually large and old) companies that skeuomorphically jam the new tech into their products without reimagining the product for the new world from the ground up. this is the Innovator's Dilemma at work. their existing business and tech stack prevents them from competing with companies more native to the new paradigm. salesforce, gmail, and even AI darlings like superhuman fall into this category none of them are reimagining UX from first principles they're just slapping on obvious AI features like conversational search and summarization. 3. the right place right timers companies whose existing product is fundamentally enabled or accelerated by the paradigm shift, which usually drives their business through the roof. this is not to be confused with companies who can just add a couple of nice-to-have features - this is about complete transformation. nvidia is the best recent example. 4. the eager beavers companies that thinking too far ahead of where the technology or users are today. they often employ UX paradigms that people just aren't ready for (though these UX paradigms might be more natural in 5-10 years) or they try to stretch a technology/stack too further the AI hype cycle in 2014 saw a lot of this - people were building chatbot/concierge businesses when the AI tech just couldn't support it as of March 2024, I think agent-based products that are not solely focused on internet research are in this category as well tech isn't there and people don't know how to interface with agents yet, though companies like Cognition Labs are showing promising initiative 5. the low-hanging fruit pickers companies leveraging the new technology to build extremely obvious products despite some of these turning out to be real opportunities in the near term, it's a net red ocean. recent examples are AI photo editors, AI friends, canva with their magic features, marketing content writers like jasper AI, and most GPT wrappers 6. the levis strauss' companies that build the picks and shovels for the builders and creators of the new paradigm shift. this is usually one of the biggest opportunities and can ignite entire sub-industries. AWS and stripe enabled the startup ecosystem more than any other two products. beehiiv did the same for newsletter businesses. it's unclear what tools OpenAI and the other major players like Anthropic & Google will build in-house (LLMs) and what will be an opportunity for a startup to own. 7. the skeuomorphic translators companies who leverage existing user behaviors and UX patterns to bring users into the new world. these companies are usually extremely inventive and visionary but extremely pragmatic. apple is my favorite example here - I think translation is their most underrated competency. when the iPhone came out, they used skeuomorphic design (e.g. books app looked like a bookshelf, contacts app looked like a leather-bound directory) to teach users what apps were and how to use them. a few years after iPhones were in wide circulation, they shifted to flat design which did away with the literal imagery, and stuck with that style. but recently they shifted to neuromorphic (flat mixed with 3D elements) design in anticipation of... AR/VR. 8. the timely natives companies whose products are uniquely native to the new paradigm but aren't so early. these companies usually emerge several years after the new paradigm has hit the mainstream, after companies trying the exact same strategy fail because they were too early (see eager beavers). snapchat and uber are the shining examples here since both were fundamentally mobile-native companies. they capitalized on smartphones and app-based growth. -- so whether you're a startup founder, a VC, or simply an observer of this transformative era, understanding these archetypes can help you see where the real opportunities lie, where the gold is, and where the fucking landmines are hidden.