AI Wave Initial Applications

A framework for identifying early, obvious applications of new technology waves, using the example of how basic internet applications evolved into more sophisticated solutions.

The "Menus on Internet" Principle

• Every major tech wave starts with obvious, simple applications
• These initial use cases are stepping stones to more sophisticated solutions
• Early applications tend to be direct digital translations of analog solutions

Historical Examples by Tech Wave

• Internet Wave (Web 1.0)

  • Started with putting restaurant menus online
  • Eventually evolved into complex food delivery platforms like DoorDash

• iPhone/Mobile Wave

  • Started with basic utility apps
    • Flashlight apps
    • Beer apps
    • Calculator apps
  • Evolved into sophisticated mobile applications

Current AI Wave Applications

• Two types of companies in AI (per Sam Altman):

  1. Companies that can't wait for new AI models

     • Embedded in specific workflows
     • AI improvements enhance their core product
     • Example: Healthcare companies using AI for specific doctor workflows

  2. Companies that fear new AI models

     • Pure AI feature companies
     • Risk being made obsolete by better models
     • Example: Basic transcription services

How to Identify Good AI Opportunities

• Look for companies that:

  • Build around specific workflows (90% of value)
  • Use AI as enhancement (10% of value)
  • Have defensible moats beyond AI capability
  • Aren't purely dependent on AI features

• Avoid companies that:

  • Rely solely on AI capabilities
  • Compete directly with major AI platforms
  • Can be easily replicated by better models

Investment Strategy for AI Wave

• More cautious approach to AI startups
• Focus on established companies benefiting from AI
• Look for companies with:
  • Clear workflow integration
  • Strong existing customer base
  • Defensible market position
  • AI as enhancement, not core product