Watching AI Companies Trash Talk Each Other

The computer technology industry can get wickedly competitive and there are times when the odd snide remark is made in public. But the newest wave of the artificial intelligence crowd seems to be going at it with a vengeance.

Normally, it’s the sort of thing for other industries to ignore, but there’s a power play going on for market dominance. And that’s exactly what users, including those in CRE, need to see for what it is when deciding where to go with new technology.

For example, a few months ago Sam Altman of OpenAI, makers of Chat GPT, talked about steamrolling other startups basing products on large language model, or LLM, software. James Wang, general partner at early-stage venture capital firm Creative Ventures, wrote that almost all AI startups going forward are “doomed.” At least the ones built as wrappers around the tech of others.

Technically, probably true because most new companies in any industry don’t survive in the long run. Either they run out of money, don’t have competitive enough products and services, lack competent management, and so on. The same problems creep up in various mixes and degrees everywhere. He has a point about a startup needing defensibility and differentiation. Again, though, that’s ultimately true in any industry.

Wang admits that even LLM technologies can be replicated by any large internet company. What would be defensible, he argues, is having real-world proprietary data that can’t be scraped off other sites online. Complex data has to be developed out of effort. “Places where you can’t simply decide to go collect the data without prohibitive cost, time, and simply physical world messiness,” he wrote.

Eric Olsen, CEO of AI startup Consensus, disagreed in ways in a Fortune post. He said that tech has examples of companies that have become big being wrappers: Salesforce over an Oracle database, Box over Amazon’s AWS cloud, and Zoom over PC and Mac cameras. For that matter, how much software is effectively a wrapper around a PC or Mac?

Over time, he argues, it’s possible to extend and develop a wrapper. That may be true and has been done. It’s likely to happen in the areas that CRE covers. The types of data necessary for creating more effective strategies aren’t as easily available as publicly available websites but they are available from companies that trade in collecting and licensing it. And then startups that find smart ways of using and combining it will have something of value to offer. That can help CRE companies better tell which services are going to be of use and whether the vendors might have staying power.