This is a quick reflection post. I was listening to this podcast on Spotify and here are some key takeaways. The framework introduced is good for understanding where your product is, in the face of transformative technologies.
There are three stages of product growth with respect to new transformative technologies (this time around, it is AI or more specifically gen AI)
In the initial stage, it attracts the visionaries. People who pursue novelty for the sake of novelty. They actively seek out new things, new technologies. In this stage, the product that feature the technology just has one job - creating a novelty feature and make sure that it works. That’s it!
Andrew & Fareed calls it the “it works feature stage”
Some similar example in the first mobile wave: recall the flash light products that flooded the app store. With respect to Gen AI, it’s literally the chatGPT product. It was a very bare minimal product with a shoddy banner that tells you that this is a research product. I remember back then thinking that OpenAI was just gonna continue its research focus and ditch the effort to stay true to their vision. Boy was I wrong about that.
Growth is almost free and you don’t have worry a whole lot about customer acquisition as long as you have that one product with that one feature where people would go “holy shit it works”. Again top of mind here is ChatGPT became the fastest product reaching 100 million users without any advertising.
Middle stage is where the actual functionality and the package of functionalities have to all work together to create a differentiated experience. And that experience better speak to a clearly defined user segment.
Andrew kind of characterizes this is where discovering & understanding user needs and meeting the needs with fine-tuned & optimized product functionalities are important.
In this stage, the product that takes unique and native functionality of the platform has the best chance to win (creating that fine-tuned bundle of features that’s differentiated).
Examples in this stage during the mobile era is Uber (taking advantage of the geolocation of mobile phones → this is the unique capability offered in the mobile era), Instagram (taking advantage of the greatly accessible, good enough camera feature)
In this stage, growth is still relatively cheap and this is the phase where retention really matters. Retention matters in all stages of course but I am getting the sense that you can get away with poor retention in the initial stage.
Later stages of growth, think this is briefly characterized by more mature products with sufficient competitors and each have almost similar bundle of core features from a functionalities stand point.
In this stage, the differentiation is no longer achieved through product functionality alone but instead things like brand, UX, aesthetics, vibes, distributions become increasingly important.
In the podcast, Andrew gave examples such as Discord, WhatsApp, Telegram for different apps for different audience types. All offer highly similar functionalities → messaging with individuals and groups of people.
Reflections & Opinions
From technology adoption lifecycle stand point, this has a similar take as the tech adoption curve popularized by Geoffrey Moore below:
Eyeballing this 5 stage against the 3 stage framework, the initial stage correspond to targeting the innovators, the early adopters while the middle stage correspond to early or late majority while the final stage correspond to the late majority and laggards in the market.
Irrespective the frameworks, the interesting question is nonetheless about achieving differentiation and where strength of differentiation would come from. Product driven functionalities and the therefore created differentiation is only relevant to a certain point (until virtually everyone has similar functionalities).
Now to the question in the title, applied to Gen AI as a new technology and the set of products/markets formed around it, it’s not hard to see that we are probably still in the first stage. Some may argue that this is in transition to the second stage. The question becomes “what’s unique about Gen AI that allows people to do things people couldn’t do before?” The answer to this question will become the key to unlock dominance in the second stage and of course no one has an answer (otherwise, we’d see the rise of an application like Uber/Instagram by this point. Or alternatively, the product is already out there but just waiting to take off.)
So what Gen AI as a technology that’s uniquely good at in the way that iPhone as a platform offered geolocation capability and accessible high quality photos? Here are some top of mind thoughts based on personal use:
Text summarization
Human like interactions (well there’s a ceiling of how human like the current Gen AI is)
Translations
So in theory, the next Uber/Instagram is the company that finds a use case that’s built around these new capabilities. Further in this line of thinking, the ideal use case should be: (here some quick brainstorming)
Currently it’s too prohibitively expensive to hire a person to do the job (well for the everyday lay person) and the bar isn’t super high. Think of the times that you thought man I wish there was a person that help me with this:
Personal motivator
Personal coach
Personal travel planner
Personal organizer
Personal assistant
Personal dating advisor
Personal wealth advisor
Personal appearance manager
Currently it’s too inaccessible or inconvenient
Currently it’s too dangerous or dirty to do
Currently it’s making too much money (high profit margins)
Of course the arm chair innovator thought exercise is fun but the real product / use case searching should be done the old fashioned way → get out of the building and talk to someone.
Any other ones that you can think of?