There’s a half-life for any new technology where founders and investors spot a new market and rush to fill it.
As a result, in an effort to capture as much of they can in the gold rush, venture capitalist investors will flood the space with funding. The game is to take a short-term hit in order to capture the market.
For example, if an Uber ride costs $10, and a taxi costs $15, then you’ll probably take an Uber. But if Lyft costs $10, then it’s a toss-up which one you take.
To make sure Uber becomes the first one you think of, the founders and their investors want their name in your head to be synonymous with “rideshare” the same google is a synonym for “search.” To do this, they’re going to make taking an Uber to be a no-brainer by subsidizing it.
So now the Uber costs $5, the Lyft is $10, and a taxi is $15. Taxis are dead on arrival, Lyft may retain some marketshare, but Uber will take a firm lead.
Of course, this strategy only lasts exactly as long as you can take a loss on the rides you offer. Money doesn’t last forever (unless you’re the Fed) so you have to ease up on the losses eventually.
This is Happening Now, but with AI.
We’re in a gold rush now with AI, as we know. Why that’s relevant for the entrepreneurially-minded readers is because unlike Uber, this is a tool to potentially open another stream of income on top of whatever else you’re doing,
Even if you have a non-AI business idea, or even a non-tech idea, your speed to market, to research, to any of that is way shorter now. But it may not last.
I use Claude a lot to code. It’s pretty neat, especially using it right from the terminal. I still have a Cursor subscription but I almost never touch it. Unfortunately, Claude has an inherently unsustainable business model. They’re playing the same game as every other SaaS business: spend at a loss, subsidize the product cost as much as possible, and capture as much market as possible before having to creep prices up again.
Like the tweet below implies, they very likely won’t jack up prices 10-fold, but more likely just limit your use a ton (and then jack it up 2–3x).
Remember: you win the fiat game by using other people’s money to take risks. This includes loans and grants, yes, but also investments. The investments aren’t always in your business directly, but maybe in a tool you can use to build your business for much cheaper than before—AKA the AI boom.
If you have an idea you’ve been waiting to work on: do it now.
Do not wait another couple of weeks. Do not wait for prices to get even cheaper. Do not wait until XYZ is done so you can focus more on it.
Start now, start small. The gold rush may not last as long as you think.
