Human attention spans are short, and some studies suggest they are getting shorter. The breakneck speed of AI advancement is one of those areas where the stream of information is so constant and so dense, that it’s very hard to process it all, let alone STAND OUT in the crowd.
This creates a challenge, but also an opportunity for startups in the generative AI space. They need to think creatively and figure out how can they stand out in the crowd. Case in point: this week was Ycombinator’s W24 demo day. 70% of the startups in the current batch (170 out of 243) are AI companies. Techcrunch, who covered the demo day, featured about 10…
Another example is The 2024 MAD landscape (Machine Learning, AI & Data) by Matt Turck. The landscape grew to 2,011 companies in 2024 from merely 139 logos in 2012 when it was first published. How can startups even compete against big tech, scale ups and other startups?
A final example, is this list of the 50 most popular consumer AI web products, recently published by A16Z. How many of them do you know? I consider myself an early adopter, and very interested in the field of generative AI, and still didn’t know many of these existed.
The good news is that while generative AI usage is growing rapidly, it’s still relatively in its infancy. A survey conducted in Feb 2024 by PEW Research Center showed that 23% of U.S. adults say they have ever used generative AI, up from 18% in July 2023. It’s a lot, but there’s quite more room to grow.
The need to stand out is bigger than ever
With the breakneck speed of advancements and an influx of new players, it’s easy for startups to get drowned out in the noise. However, this challenge also presents an opportunity for those who can strategically differentiate themselves and capture the attention of their target audience. App developers, and game developers know this problem well and there’s something we can learn from them.
By the way, this not just about marketing or PR. While investments to generative AI startups are red hot, founders have to battle quite a few investor biases. As Andrew Chen points out in this tweet:
Here are three concrete tips for startups to stand out in the crowded generative AI market:
1. Counter position – Kill the value-proposition of the competition with a new, superior business model, which the incumbent does not mimic due to anticipated damage to their existing business. This is the an important part of Hamilton Helmer’s 7 Powers, a solid framework for business strategy.
A good example of this is in the world of generative AI is Mistral. When OpenAI, Anthropic, Gemini and Inflection made their LLMs closed, Mistral positioned itself as an open source LLM that can run on the end device (requiring less expensive hardware) and more easily trained smaller, dedicated models. Therefore addressing several shortcomings of their competitors. Despite being less than 2 years old, Mistral is now looking to raise funding at a $2 billion valuation in December 2023.
2. Identify a Niche and Dominate It – While the temptation may be to position your startup as a broad AI solution, true differentiation often lies in specialisation. Identify a specific niche or use case where your AI technology can provide unparalleled value, and become the go-to expert in that domain. This focused approach not only helps you stand out from generalist players but also allows you to build deeper expertise and a stronger brand identity. (Related: read my VC Cafe post on “Riches in Niches” – the lessons still stand).
A good example of this is Runway ML. I believe they were able to capture mindshare in a crowded market of AI video startups partly because of their cool early demos (even before the product was fully ready) and partly by being early. While there’s no second chance to make a first impression, waiting until the product is fully ready is almost always going to be too late.
3. Leverage Strategic Partnerships and Integrations – In a highly competitive market, strategic partnerships and integrations can be a powerful way to amplify your reach and visibility. Collaborate with established players in adjacent industries, integrate with popular platforms, or explore co-marketing opportunities. By tapping into existing ecosystems and customer bases, you can gain instant credibility and exposure while offering a more comprehensive solution.
ChatGPT deserves a mention in this category as they pushed the envelope by letting anyone create Custom GPTs, which became the company’s app store. The idea was, other LLMs might be able to catch up to the features developed by OpenAI, but it will be hard for them to replicate all the use cases created by third party developers in the form of customGPTs.
In practice however, CustomGPTs have not been a home run, to say the least.
4. Prioritise Exceptional User Experiences – In the world of AI, where technology is rapidly advancing, exceptional user experiences can be a significant differentiator. Focus on creating intuitive, user-friendly interfaces that seamlessly integrate AI capabilities into existing workflows. Prioritise factors like ease of use, personalisation, and continuous learning to ensure your AI solution becomes an indispensable part of your customers’ daily lives or businesses.
Case in point, in its recent AI Ascent event, Sequoia found that the biggest driver of churn in AI apps is the gap between the expectations and reality. So it’s very important that the cool twitter demo video and the actual usage of the product are closely aligned.
5. Create a dialogue with your audience and never stop thinking creatively – In a landscape where information is constantly flowing, it’s essential to engage your target audience in a creative and interactive way. Instead of simply broadcasting your AI capabilities, develop a dialogue that sparks curiosity, invites participation, and fosters a sense of community around your product or service.
One company that did a good job in this space is text to video startup HeyGen (disclosure: I’m an investor in HourOne, a competitor, but credit should be given when due!). They created a video of Argentinian President Javier Milei, by cloning his voice and using their translation feature, making it sound like he spoke in fluent English.
Standing out in a crowded market is not just about having a great product or technology; it’s about effectively communicating your value proposition, building strategic relationships, and delivering unparalleled user experiences. By implementing these tips, startups in the generative AI space can cut through the noise and position themselves for long-term success.
Shameless plug, at Remagine Ventures, we’re looking to back founders that have internalised this. As pre-seed investors, it’s never too early to have a conversation. Please reach out and we will be happy to share our candid feedback.
I’m a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google’s first physical hub for startups.
I’m also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we’ve built 11 schools and 50 libraries in the developing world.
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