Joseph Bou-Younes's Website

Tag: digital products

  • Be YouTube, not Qwest

    Today, no amount of model training is too much. No price for that training is too high. The builders bet is that inference will be orders of magnitude cheaper in 5 years. Build for that. Be Netflix or YouTube, not Qwest.

    This year, American tech companies will spend $300 billion to $400 billion on artificial intelligence, which is in nominal dollars more than any group of companies have ever spent to do anything. Notably, these companies are not remotely close to earning $400 billion on artificial intelligence.

    That’s why you’re starting to hear some people wonder whether the AI build-out is turning into the mother of all economic bubbles.

    The prospect of an AI bubble should scare us. Roughly half of last quarter’s GDP growth came from infrastructure spending on AI, and more than half of stock market appreciation in the last few years has come from companies associated with AI. If the AI spending project blows up in the next few years, as our next guest says it might, the implications for technology, the economy, and politics would be immense.

    – This Is How the AI Bubble Could Burst – Plain English with Derek Thompson

  • Distribution in digital products

    Distribution in digital products

    This was a great story about how Google’s search distribution deal dramatically increased cost of entry for Neeva, a putative competitor.

    This also reminded me of the Monster/AB InBev deal mentioned in “The Little Book that Builds Wealth:”

    To be fair, it is occasionally possible to take the success of a blockbuster product or service and leverage it into an economic moat. Look at Hansen Natural, which markets the Monster brand of energy drinks that surged onto the market in the early part of this decade. Rather than resting on its laurels, Hansen used Monster’s success to secure a long-term distribution agreement with beverage giant Anheuser-Busch, giving it an advantage over competitors in the energy-drink market.

    Anyone who wants to compete with Monster now has to overcome Hansen’s distribution advantage. Is this impossible to do? Of course not, because Pepsi and Coke have their own distribution networks. But it does help protect Hansen’s profit stream by making it harder for the next upstart energy drink to get in front of consumers, and that’s the essence of an economic moat.

    Once you find product-market fit you need to quickly scale distribution to own as much of the market as possible and preempt new entrants.