Using AI to Compete Against an Incumbent
I was recently re-listening to Patrick O’Shaughnessy’s interview with Des Traynor on Invest Like the Best which is a must listen for anyone interested in applying emerging technologies like AI to their product(s).
In the episode Patrick asks whether incumbents or startups have the advantage. Des uses a really good framework to illustrate whether a startup has an opportunity to compete with an incumbent.
Des argues that speed is mostly what matters and as an entrepreneur you should be asking yourself two questions:
How long will it take us to build the AI features vs. the incumbent?
How long will it take for us to build all of the incumbent’s other valuable features?
For example, if you’re building a Mailchimp competitor and you estimate that it will take you 3 months to build all of the AI features and Mailchimp 30 months that means you have 27 months to get to feature parity with Mailchimp on everything.
Some key considerations when estimating the time it will take the incumbent:
Does the incumbent have a product and engineering-centric culture?
When was the incumbent’s product architected? How big of a lift would it be to re-architect?
Does the incumbent have a lot of turnover in engineering?
Is the incumbent historically in front of relevant technology trends?
Can you get a sense of the rate of code and feature releases?
As you’re thinking about competing with an incumbent, I would evaluate opportunities through the above lens to determine the level of difficulty.
