DeepSeek made it abundantly and nakedly clear that the models have been commoditized. If there was any doubt before, that doubt is now over.
So, what is the moat right now?
For me, I love Hamilton Helmer's "Seven Powers." If marketing is the art of decommoditizing your product, the 7 Powers are the best known ways to do it.
???? Scale Economies
???? Network Effects
???? Brand
???? Counter positioning
???? Cornered resources
???? Switching costs
???? Process Power
But companies get too much attention. In a world where people say that AI is going to commoditize everyone, how do you de-commoditize yourself? If you’re a software engineer, if you’re a sales rep, if you’re a people manager - how can you apply these 7 powers to yourself?
Let’s start with examples from companies and translate that to you.
You have to give Sam Altman and OpenAI credit, they have an incredibly strong brand. Why? They didn’t invent LLMs, they didn’t even perfect them. They were first to put an LLM online and show it to the general public. How could a software engineer do the same?
If we wanted to talk about network effects, the undisputed king is Meta. Imagine if someone made a bit exact copy of WhatsApp, Facebook, Instagram, etc., and you logged in, and no one was there. Would you use it? They’ve built network effect businesses with billions of people. Meta didn’t become successful accidentally, they invented the concept of the centralized growth hacking org. Can you learn from how Meta did what they did to build your own personal network?
Have you ever heard of the Toyota Production System? Toyota is famous for having one of the most efficient car manufacturing systems in the world. Surprisingly, if you ask they’ll give you a tour and explain everything they know about it. After decades of people trying to replicate it, no one has succeeded. Is there anything that you do, that even if you explained everything you knew about it, others couldn’t copy you?