In the second quarter, venture capital firms have been stingy with their checkbooks. Global funding plunged by nearly 50 percent to $65 billion, according to Crunchbase. But there was a bright spot: generative A.I.
The impact of ChatGPT has been seismic and the momentum is showing few signs of fading. This app has shown millions of people the amazing powers of generative A.I., such as constructing seemingly humanlike content, engaging in sophisticated reasoning, and even being whimsical.
There is no sure-fire formula to build a generative A.I. startup, but there are guidelines to keep in mind.
1. Choose an industry you have experience in.
There are already market segments that are getting saturated. For example, I would be wary of developing a marketing tool. There are already many on the market.
Yet there are still lots of other opportunities to pursue. However, focus on those that allow you to leverage your experience. Do you have a background in law or medicine or energy? These are just some of the industries that could benefit from next-generation automation.
2. Create a minimally viable product (MVP).
I recommend testing the market. Do people really want your app? This is not easy to determine because generative A.I. is still in its early stages. So expect lots of trial-and-error to get to product-market fit.
The good news is that there are quick and low-cost ways to come up with a minimally viable product (MVP). Low-code and no-code systems like Bubble make it possible for non-technical people to create professional apps. In fact, Bubble has ways to integrate the LLMs of OpenAI.
You can also use open-source frameworks that streamline the process of building generative A.I. apps. One is LangChain. It allows for integrating many large language models (LLMs) -- even those that are free -- as well as providing access to data sources, such as Google and Wikipedia. You can even connect with popular apps like Notion.
3. Find a technical co-founder.
Once you have validation of your MVP, you will need to ramp up the sophistication of the app. If you do not have a background in coding or data science, then you should look for a technical co-founder who has these skill sets. This will help take you to the next level.
True, it's not easy to find a technical co-founder. But then again, if you have a standout idea and can show traction, then you will have a better chance of getting their interest.
This is what Christopher Pratt did with Silatus, which is a generative A.I. app for market research. Before starting the business, he was a product manager at Microsoft. He then recruited two software engineers to become cofounders.
With a minimum outlay of $5,000, the team has been able to grow its monthly active user base from none to 10,000.
"You won't succeed in building a generative A.I. startup if you don't have someone with a strong technical skillset," Pratt said. "Success in a nascent market requires constant iteration and creative technical discipline."
4. Use generative A.I. for operations.
Generative A.I. apps can be a force multiplier. This can mean having virtual assistants to help with building the company. This could mean producing blogs and tweets, using sentiment analysis from customer feedback, or researching competitors.
You'll also learn about what successful companies are doing with generative A.I. It can inspire new ideas for features for your own app.
5. Market, market, and market some more.
Even if you target a category that has little competition, this probably will not last for long. This is why you need a rock-solid marketing strategy. Again, generative A.I. can be a big help. It can suggest marketing angles that will catch the attention of potential customers.
"You need to find marketing channels that can reliably drive leads for you," said Josh Bluman, who is the co-founder of Hoppy Copy, a generative A.I. writing tool for email marketing. "This could be SEO, social media, marketplaces, partnerships, and a ton of other options. Pick just one to start that you feel has the best growth opportunity, and go from there."
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