How do you create a moat if your product is based on a LLM API?
I have many ideas on how to use LLM to make something existing more efficient or to just create a new way of doing things.
All my ideas depend on using a foundational LLM such as GPT4 or Claude API which anyone has access to.
What are some ways to create moats for products that rely on foundational LLM APIs?
You either need:
- distribution: have some community effect, where the more users you have, the more valuable the product is (and the harder it is to replicate)
- a proprietary dataset: so that it can't be replicated
- a cost model others can't afford to replicate
- something incredibly catchy (luck!)
There is little to no moat for this given that any large company can recreate your business as a feature with the best LLMs (GPT-4/4V/4o) being available for close to free with the second best one (GPT-3.5 turbo) being $0.
Moat against what? OpenAI and the big guys in AI? You can't.
Against other small biz creating LLM wrappers you need a loyal audience.