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πŸ’‘ Software is no longer a moat

Derek Watson
Derek Watson
N2 Blog

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What Is FinTech? The Basics

πŸ’‘ Software is no longer a moat, Startup investing in the AI Era is going to have to change big time.

πŸ’‘ In the AI era, software is no longer a moat, necessitating a significant change in startup investing. While software revolutionized the world, AI advancements are reducing software’s value. The new breed of startups will require creativity and business acumen, focusing on quality data, AI agents, and APIs. The startup ecosystem’s evolution may benefit venture builders and studios, but will they adapt?
βœ… Marc Andreessen famously wrote in 2011 a claim that β€œsoftware is eating the world.” and he was right, what he failed to mention is that it would also eat itself.
Software has been revolutionizing the world with its incredible benefits:
➑️ Speed and accuracy, it brings unmatched efficiency, making goods and services more affordable and better.
➑️ It’s reusable and expandable, making investments in its development a smart move.
❌ However there is a paradigm shift as AI continues to advance, software moats are going to vanish for the most, as software can be generated on the fly and the value of software investments will plummet towards zero inline with the cost of development.
It is no secret that we are heading in this direction, if not already there. Many years ago openAI said this “your grandparents will be able to build a website by just describing it”
βœ… YC has also recognized this massive paradigm shift and shut down their continuity fund for later-stage investments
➑️ We are going to see huge growth in startups. But a new breed that no longer have to be engineering geniuses; instead, they’ll require creativity and business acumen to establish sustainable startups.
βœ… AI is fueling exponential growth in repeatable tasks: Sales and marketing can be hyper-personalized at scale.
βœ… Data queries will no longer demand complex processes, just simple user-intended messages.
The startup ecosystem is evolving at breakneck speed. The new sustainable models will pivot from building software to focusing on: 1. Quality data 2. AI agents 3. APIs
Link them all together, and the possibilities are endless.
I feel Venture builders and studios can really benefit from this shift … but will they?

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