If you missed it, Jasper.ai announced they have a new CEO and they are cutting revenue targets by 30% (from $140M) and their internal valuation by 20% (from $1.5B).
I've never met the founders, but I've read plenty of interviews and by all accounts they sound like good people. I'm bummed for them.
This is also going to reverberate HARD through the investment market.
Eighteen months ago, if you hard early access to OpenAI, you could skin their APIs and seemingly do magic. A number of companies raised big investment rounds and used those dollars to build meaningful revenue. Jasper was one such company.
By early this year, investors began to realize that *anyone* could get access to those same APIs and do their own magic. There was no technical moat for companies leveraging OpenAI, Llama, Bard and others.
But at least you could still raise on traction.
Cut to this week, and Jasper's announcement. And Meta's unveiling of their 28 chatbots. And OpenAI rolling out voice to voice interaction of ChatGPT. Things are going to get ugly.
Straight up, if you are a startup building a B2C product that reskins LLM APIs:
* You are competing against every other founder who has access to the same APIs, PLUS
* You are competing with the whole FAANG/MANGA gang, plus Microsoft, TikTok, Snap and others. They have more developers than you. They have more money than you. They have better access to tech than you. And they have WAY more eyeballs than you do.
At the same time, if you are a startup building a B2B produce that reskins LLM APIs:
* You are competing against every other founder who has access to the same APIs, PLUS
* You are competing against the same company who is providing you those APIs. They have more developers than you. They have more money than you. They (obviously) have better access to tech than you. And they've grown from $28M in revenue for all of 2022 to a $1B run rate by Q3 of 2023, driven by enterprise offerings.
Is what you're doing impossible? Hells no.
Is what you're doing venture fundable? It just got way less likely. Because traction doesn't seem to matter that much at the moment.
If you are selling products and services that skin AI APIs, two concepts matter more than ever right now:
1) REVENUE NOW. VCs are going to continue to move to the sidelines, so expect to bootstrap. That means you you have to fund yourself with immediate revenue.
2) Only start a company if you will be happy five years from now even if you don't make a penny.
Such weird times.