Startup Project

Tag: strategy

  • #68 Why the new AI button on your keyboard is inevitable? (Above Average Newsletter)

    This episode is the audio version of Nataraj’s newsletter Above Average.

    Welcome to 49th edition of the Above Average Newsletter. Your bi-weekly source of Above Average takes on the business of big technology written by Nataraj.

    1. Why the new AI Button on Your Keyboard is inevitable?

    Microsoft is adding a new AI button to your PC keyboard. This is the first time Microsoft changed the PC keyboard in last 30 years. If you are a regular user of ChatGPT or its competitors you will notice your own behavior, that you use it repeatedly and it might get lost in the 10s of chrome tabs you have opened.

    You also realize that its a constant companion on your daily work. Microsoft already realized this and jumped head on into creating Copilots for all its products.

    The next step in this strategy is to have a dedicated button that will launch bing copilot which uses gpt-4 and is currently free.

    The move highlights couple of things:

    Copilots are going to an enduring form factor

    We will use copilots so often that it requires its own button

    Its a great use of Microsoft’s distribution power to create a new user behavior

    If this new behavior works its acts as counter to Google search. Your first step for any answer would be to tap that button and start asking the question. A better interface potentially to transition from a search dominant world to answer dominant world.

    2. Who is the biggest AI VC in town?

    As some one who closely works with a venture fund and interacted with lots of investors and invested in 20+ startups its important to note that the unseriousness of ZIRP era was prevalent in VC industry as much as it was in any other industry.

    This meant higher valuations that defy the gravity of the business became common. Chasing each others and asking the question “who else is investing” became the most important criteria. Deals closed faster than ever. Crypto as a sector suck more oxygen in the room that it should. Mostly because too much capital was chasing too few deals and in the process new & some old investors lost track of what is important. Its important for a VC to invest in important things in tech.

    Now with AI era on us, the biggest investors in AI are not the VC firms but its the fearsome foursome – Microsoft, Google, Amazon & Nvidia.

    The amount of investment commitments from these 4 companies has already exceeded $20B with a conservative estimate.

    Big tech companies never really invested in crypto like they are investing in AI.

    So what’s the take away here – if you think AI hype cycle is similar to crypto hype cycle, you are wrong. AI is an enduring cycle worthy of hype, unlike crypto which was propped up by VCs with out enough depth.

    3. My Experiments with AI:

    One of the reason this newsletter is less frequent than usual (from now on it will be twice a month) is because I am working on writing more on AI as part of a series I am calling 100 days of AI. If you are interested in gen AI experiments, ideas & trends follow along here. Here are some posts I have written about AI.

    – Design Thinking using Semantic Kernel – Get Insights from YouTube Podcast Video using Open AI’s GPT 4 – Build Your Own Chat with Data App

    Till next time, stay above average.
    Nataraj

    —

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    https://podcasters.spotify.com/pod/show/startupproject/episodes/68-Why-the-new-AI-button-on-your-keyboard-is-inevitable–Above-Average-Newsletter-e2f9nl1

  • What Netflix Really Missed? Not Earnings

    Netflix missed earnings recently, but in my opinion they missed something bigger. They missed building a moat.

    When ever you stumble upon a castle, you have to start building a moat around it.

    Netflix’s castle was it’s early entrance to streaming. They recognized it, did interesting deals with media companies to get more content (pay for Friends, The Office, Seinfeld etc,) and get users adopt the new way.

    But as the adoption for streaming grew, it was also clear the technology behind streaming is easier to replicate. Thanks to Azure, AWS & GCP. Even Netflix is built on AWS. A combination of cloud technology adoption, increased internet speeds, and companies like Roku & Hulu’s success were clear signals.

    At this point in time, there were couple of years where Netflix adopted their strategy is going to be about spending highest to create original content. That was good strategy and also reflection of the fact that Netflix is now mainly a media company and not a tech company.

    Even during these last 5 years where they essentially were spending gigantic sums on content, I never understood why they didn’t do other things.

    Some of these other things include:

    • Buying an old movie studio (like MGM by Amazon), my understanding was, yes you could spend $20B to create original content, but you can save time to get a good catalogue for cheap by leveraging Netflix’s equity. And their equity was soaring. Its just good capital allocation.
    • Get into Audio streaming
    • Get into merch (they did recently)
    • Experiment with Audio streaming product, user generated content product like YouTube. These might sound ridiculous but here me out. When Google stumbled upon success with search they protected it with Maps, YouTube, Chrome and more. Most of their experiments failed but some succeeded and that’s what matters.

    They do seem to do new things like gaming, which I think could be potentially huge for them. Specially when you consider their DNA in creating new code. But doing this on a high ride is usually easier and tougher when your equity gets crushed and your employees start leaving.

    But again Netflix has been in such situation before and came. In fact their current situation is not nearly as bad as they had seen before. They still have the most important streaming product with great revenue.

    But somethings should change.

    • Netflix should not spend so much on new content, they should aquire large and cheap catalogues. It’s tough now that every one has a straeming service. But worth a try. More money doesn’t mean more creativity. Look at HBO Max. Find great content curators, take interesting bets.
    • They should explore more experimental products/apps.
    • Consider acquisitions to compete against YouTube, Spotify and AMC.
    • Consider theatrical releases via own theatres (yes acquire them if possible) or just using status quo. Hit series on Netflix could also premiere in theatres, honestly will avoid future churn.

    There are many interesting ideas, but the bottom line is “when you stumble upon a castle, build a moat around it”.

    Finally I will leave you with this picture of how Disney built a moat around its castle.

  • Find and Deploy Maximum Leverage

    Find and Deploy Maximum Leverage

    Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.

    Archimedes said this 2000 years ago, but it is more applicable today than ever. The quote underlines an important aspect of the economy that we live in.

    Leverage is a striking thought paradigm to employ in almost all calculation of effect of a person, idea, technology or a company.

    Leverage.

    The economy we live in is a leverage economy.

    It means to be successful in this economy, you need to use the maximum leverage at your disposal and the economy is giving the opportunity for a single individual to employ more and more leverage.

    It is also not a coincidence that all the trillion dollar companies are software companies. Because software has the most leverage than any other product ever produced.

    This is the reason why the number of people needed to create a billion dollar company as well as the time needed is reducing.

    Another way to put it is to say is a single individual’s capacity to put a dent in the world is increasing.

    So it is up to individuals to make sure they employ maximum leverage at their disposal.

    Leverage can be anything from capital to code. But there are some products with more leverage effect than the other.

    Find and deploy your maximum leverage.