AI startups feel the heat as OpenAI adds ChatGPT features

October 30, 2023


OpenAI has begun rolling out new features to ChatGPT Plus users and its having a negative effect on some AI startups.

This week ChatGPT Plus users have begun seeing notifications about new features that were added to their accounts.

All ChatGPT tools like Browsing, Advanced Data Analysis and DALL-E are now available to use without switching to the specific tool. After uploading a document or entering a prompt ChatGPT understands which tool or combination of tools a user is trying to use.

ChatGPT now supports the uploading and analysis of more file types, including PDFs. The summary and analysis of PDFs was previously only available by using a ChapGPT plugin like AskYourPDF.

By adding this feature natively into its chat product OpenAI has instantly disrupted the business model of a host of AI startups that made these plugins.

Large corporates like Google and Meta have ongoing discussions about the need for a “moat” to protect their AI products. A lot of smaller startups don’t have a moat as many of them build features as products, rather than AI models.

When OpenAI sees successful applications of its technology it’s easy for them to simply add the feature to ChatGPT. Why would you buy a small startup when you could have 2 or 3 of your engineers build the functionality into ChatGPT?

The new features have sparked a lot of “the sky is falling” talk as AI startups reliant on OpenAI’s tech realize that not owning the underlying model puts them at big risk.

The popular platform charges $15/month for its PDF analyzer. How do you sell that now when for $5 more you get that as well as all the other ChatGPT Plus features?

As more people find creative ways to use OpenAI’s API they basically provide free market research and validation for the company. It’s similar to how Amazon looks at which products work well for 3rd party sellers and then adds those products to its own Amazon Basics range.

AI content software producer JasperAI felt similar pressure in July when it had to cut staff and could only raise $125M at a $1.5B valuation. Its product is powered by ChatGPT and relies on its UX and fancy editor to justify signing up for a subscription.

The more features ChatGPT gets, the harder it’s going to be to convince users to pay for a product based on ChatGPT rather than just paying for ChatGPT Plus.

While the extent of the fallout remains to be seen, expect a lot more tweets demonstrating how cool the new ChatGPT features are.

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Eugene van der Watt

Eugene comes from an electronic engineering background and loves all things tech. When he takes a break from consuming AI news you'll find him at the snooker table.


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