It's a dog-eat-dog world out there, some argue. However, some dogs grow bigger than others. Nevertheless, each and every canine out there starts out as a puppy. 

Likewise, every big business out there begins as a startup.

Okay, it's not a perfect analogy, but here's my point: In the world of AI, there needs to be some way for AI startups to grow and thrive without the threat of being perpetually overshadowed by big-tech companies—corporations who have the advantage of years of experience, armies of engineers, and an incredible supply of money.

That's where defensibility comes in. (See image below.)

The definition of "Defensibility" in a business context, according to Google.

The definition of "Defensibility" in a business context, according to Google.

Yes, yes. The idea of defensibility sounds like Business School 101. Of course startups need to find a way to differentiate themselves from their competition. That's what makes companies sustainable in the first place. Why talk about such an introductory concept in such a cutting-edge space? 

Well, the more experience we gain in a particular domain, the farther removed we become from the fundamental concepts that make up the foundation of that domain. For example, you know how professors can sometimes struggle with explaining certain concepts to students? Part of the reason for that phenomenon is the fact that those professors have become so accustomed to that concept in their years of experience that they forget how difficult it is to encounter that concept for the first time.

So yes, defensibility is a basic concept in the business world. But it's basic because it's so important. So let's go over a few reasons why Defensibility is critical, especially in the AI space.

💰 Defensibility prevents monopolies

Let's assume that even though big-tech companies like Google and Amazon exist, it's possible to create a startup that gives them a run for their money. This assumption is fair because it's true. After all, Google attempted to counter ChatGPT with their model Bard. And as many people can attest—or, in the case of James Webb, would attest—things didn't go as planned for the tech giant.

Of course, nowadays, OpenAI is a tech giant in its own right. After all, you don't just create the world's fastest-growing product and outperform Google without garnering both industry and mainstream attention.

So is that it? Is OpenAI now the supreme ruler of the AI industry?

Of course not. Yes, they're a big player, but they surely won't be the only ones. The concept of defensibility ensures this. Whenever a large company creates something cool like ChatGPT, a few resourceful and clever people outside of that company know that they can iterate on the existing product.

Startups that are skilled at defensibility—that is, startups comprised of people who know how to build a defensible product, how to market that product, and how to sell that product—will grow over time to give the big companies a run for their money, thereby preventing any chances of a monopoly.

You can be first, or you can be smarter.

Google earned the public eye first, but OpenAI built AI that was smarter. Likewise, OpenAI is the first to build mainstream artificial intelligence, but perhaps a lesser-known startup is in the process of creating a product even smarter. 👀

🔭 Defensibility promotes innovation

In order to build a stand-out product, you have to build something that's way better than what currently exists in the market. That is, you have to innovate.

Again, the connection between defensibility and innovation feels a bit basic. Some might call it self-evident. But to illustrate and appreciate the importance of defensibility, it remains crucial to point out a few examples of defensibility-bred-innovation:

In the world of AI art, StableDiffusion, Dall-E, and many more are always neck-and-neck to see who can produce the better images. In fact, the creation of GANs in 2014 arose from the University of Montreal in an effort to improve generative modeling. And the results, clearly, have been incredible.

In the world of text-to-speech (TTS), companies have clearly improved. From the first Macintosh saying a robotic "Hello" to TikTok's trendy voice, we can see that companies for whom TTS is relevant, innovations yield more visibility and more growth.

In the speech-to-text world, well, we have an article on that 😉

🌍 Defensibility provides direction

One early mission a startup team should aim to accomplish is to find two things:

  1. Product-Market Fit (PMF)

  2. Differentiating factors

PMF is crucial because you need both a product and a market in order to build a business. Without a product, you have nothing to sell. Without a market, you have nobody to sell to. You need both to thrive. However, PMF and the techniques required to achieve it are outside the scope of this article. Let's talk about (2).

Very early on, if a couple of co-founders want investors, they need to find what differentiates their new company from others in that space. If you're building an AI chatbot, what differentiates you from ChatGPT, Houston, Llama-2-chat, and even Cleverbot? Are you faster? Does your chatbot hallucinate less? Does your chatbot specialize in a certain topic like finance or geography?

To build a defensible startup is to build a product that's better than the rest in some particular way. And whatever way you choose—whatever part of your product you wish to make the stand-out selling point—is the direction your team will move in for the foreseeable future.

Do you want to make your AI product faster than the current alternatives? Great, then your team should aim for speed and efficiency optimizations.

Do you want to make your AI product more ethical than what's already out there? Amazing, then your team should gather and label data that's diverse and minimally "toxic."

Do you want to make your AI product cheaper to use than existing models? Fantastic, then your team should consist of financial and technological experts who know how to build cheap, scalable technology.

The point is, the idea of defensibility gives your team some goal to aim towards. Your team should focus on building a product that's exceptional in some particular domain. And the domain you choose determines the direction your company should move towards. Without defensibility, you're essentially aimless.

🙏 Conclusion

Hopefully this article has refreshed your memory on the importance of defensibility in business. This single, basic-yet-fundamental concept prevents monopolies, drives innovation/competition, and provides new startups with a goal to aim towards.

Now the question becomes, how can we build a defensible startup? What steps can founders take to guarantee defensibility? And how can current startups—whether you're pre-seed or Series C—maintain defensibility in the long run?

Keep an eye out for future content on these questions 👀

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