?? AI's differentiation dilemma

TODAY'S MENU

?? How will AI companies differentiate?

?? How to respond to competitor launches

??? New TCN releases: C&C Pod, The Marchitect

??? More news and jobs!

WHAT’S BREWING

AI’s Differentiation Dilemma

OpenAI and Anthropic are pouring billions into training AI models like GPT-4 and Claude. But as competition heats up, their path to profitability is becoming increasingly complex.?

Why?

Because one of their primary revenue streams — selling API access to large language models (LLMs) — is rapidly becoming a “zero-margin business.”?

At least that’s what Aidan Gomez, CEO of rival AI provider Cohere, argued during a recent podcast appearance.?

The Bigger Story

We’re witnessing a classic case of commoditization in the LLM market, fueled by cutthroat competition.

At the model level, it’s a race to the bottom on pricing. Companies are slashing API fees — or offering free access — to gain market share and acquire more usage data.

Meanwhile, at the product level, we’re seeing a deep challenge arise: AI-powered chatbots are prone to what Klue’s CTO, Sarathy Naicker, calls “invisible differentiation.”

Despite different architectures and training methods, GPT-4, Claude, and other LLMs offer strikingly similar user experiences: you type a prompt, you get a text response—rinse and repeat.?

The result? A landscape where the nuanced differences between AI models are virtually imperceptible to the average user, making product differentiation a challenge.

Why You Should Care

When products offer similar features and users can’t easily tell them apart, brand becomes king.?

Here’s the deal:

• Brand Drives Early Adoption: In emerging markets where products evolve rapidly but differentiation is minimal, brand becomes a catalyst for user adoption. This is why OpenAI is ahead.?
• Brand as a Quality Shortcut: When users can’t easily spot the differences between products, they face a choice: spend hours testing tools, wade through reviews, or simply trust a well-known brand. Most will take the path of least resistance.?

??Go deeper: Check out last week’s Coffee & Compete podcast to hear Sarathy’s thoughts on “invisible differentiation” in the AI era.

TODAY’S CUP OF WISDOM

How to Respond to Competitor Launches

Last week, a Klue competitor dropped a major feature release ??? Hunter, our competitive enablement manager, had to respond fast.

Now, we’re excited to share Hunter’s key takeaways for handling surprise competitor launches. Here’s what he recommends:

• Dig Beyond the Marketing: Don’t just read the press release. Understand what the new feature actually does (and doesn’t do) relative to your product
• Tap Your Product Team’s Expertise: Connect with your product team to get their technical perspective. They can provide invaluable insights into functionality and approach.
• Align on Your Response: Collaborate with product marketing, marketing leads, and product leaders to craft a direct and honest “quick dismiss” message.
• Share and Enable: Update your competitive intel tools (like battlecards), create walkthrough videos, and use internal channels to disseminate your aligned message.
• Connect with Sales: Book time with your sales team to ensure they understand and can effectively deliver the new messaging.?

?? POLL: Hunter Wants Your Take!

Hunter’s curious:

• How fast do you arm your sales team after a competitor’s release?
• What’s your speed vs. accuracy strategy?
• What goes into your competitive response?

Take Hunter’s quick poll here, and we’ll share the insights in our next newsletter and pod.?

This is your chance to help level up the whole community ??

TAKE POLL!

POWERED BY KLUE

Guess what?

Compete Week is back and bigger than ever ??

Wait, what’s Compete Week??

Compete Week 2024 is a two-day conference where product marketers, competitive intel pros, and sales enablement teams come together to:

• Connect with industry peers
• Learn cutting-edge strategies
• Elevate the compete community as whole

When and where:

• IN-PERSON: Oct 28-29 in Vancouver (limited spots, apply now!)
• VIRTUAL: Oct 29-30 (pajamas welcome)

Don’t miss out — you can bet your competitors won’t ??

REGISTER NOW

FROM THE NETWORK

New Episodes: Coffee & Compete Podcast, Power Half-Hour

Coffee & Compete Podcast | How AI Companies Are Competing & Responding to Competitor Releases

Last week, the C&C crew sat down to talk about Air’s disruptive marketing and discuss how to bring Win-Loss to your leadership team.

The Marchitect | Mastering B2B Product Launches

UPCOMING LIVE PODCAST: Join Rowan Noronha and guest Julien Sauvage as they explore how product marketing drives successful B2B launches, with insights from Beth Caplow and Tamara Grominsky.

CI Masterclass | The Myths and Reality Behind Competitive Insights and Al

UPCOMING WORKSHOP: Don’t let AI hype scare you—this workshop will tech you how to blend human insight, AI, and CI platforms to dominate your market.?

SIPS N' CLICKS

Other Compete News

Amazon acquires legacy film studio MGM for $8.5 billion, dramatically expands Prime Video catalog.

Salesforce’s Mark Benioff roasts Microsoft-OpenAI accuracy, calls Co-Pilot another “much-maligned Clippy assistant.”

TikTok pens open letter accusing Facebook of producing “copycat” products, asserts “competition makes us all better.”

DOJ wraps up evidence in Google adtech trial, industry leaders doubt tech giant’s defense

HIRING

Compete Jobs

Sales Enablement Manager @ Kibo

Senior Product Marketing Manager @ Etsy

VP, Product Marketing @ Amperity

Sr. Sales Enablement Consultant @ CDK Global

POWERED BY KLUE

We are ON THE ROAD AGAIN for Klue’s WORLD TOUR ???? Next Stop: London, UK ????? Here’s what’s going down:

• Klue CEO, Jason Smith, will be sharing his insights on Competitive Intelligence, AI, and Win-Loss
• Roundtable discussions with your peers (come network with fellow compete pros!)
• Coffee on tap (it’s not on tap, but it sounds weirder to say ‘on machine’)

Come get caffeinated and learn how to compete with the Klue crew ???

REGISTER NOW

Craving more compete action?

?

Join?The Compete Network community.

• Connect with 5,000+ other product marketers and GTM leaders
• Binge hours of on-demand content
• Keep sharpening your compete skills

P.S. — all typos are intentional. It’s how we make sure your paying attention.?

?Stay caffeinated.

– Niko