I have been talking to a lot of VC firms lately and I thought of something that I would love your feedback on. Do you think AI is going to create a wave of ideas that are similar in nature?
Here is my simple definition of Venture capital (VC) firms for those that are not aware. A VC is an entity that invests in companies in exchange for equity in that company. What they invest can be anything from money to people and time. The goal is to have a successful exit, which in most cases is defined by increasing that companies value X times their initial investment. An exit can be when the company goes to another round of funding, when it goes public, or when it is sold.
In working with some VCs and startups I have realized that they have really embraced AI and ML. They have a lot of data to go through and the help of AI/ML is very helpful in consolidating information and presenting it in a meaningful way. Startups have also leveraged this, even if the startup is not concentrating on AI it is part of their strategy every step of the way. I think that companies that start with the right approach to their data will have a serious advantage to those that don’t.
But what has me really thinking is the future impact of AI on the startup ecosystem and how that will impact VC firms. I remember brainstorming with friends once a week on startup ideas. What were we going to do next, what was the next market, the next big idea. Coming up with the right idea is all about the customer first. “Who needs help with something?” And the next question is “How much are they willing to pay for it?”. Doing the research, finding the right customer, and finding the right product to give them what they want or need. These are all difficult questions to answer uniquely.
A lot of times the ideas you come up with are not already thought up, they are out there making money already! Side note: if you have felt that way with your ideas, just remember this: you came up with an idea that was successful. That means you are asking the right questions, so keep trying.
In the future if people are using AI to come up with ideas and strategies there is a very high chance that a lot of startups with very similar ideas will be popping up at the same time. What happens then? It will be like Hollywood where people are like “you want to go see that asteroid move?” and the only way you can identify which one they are talking about is by naming the actors because there are two or three movies with the same premise.
Experiment in ChatGPT and in Claude2.
Prompt: Identify ten possible markets within this age range 22-35
Here are 10 potential market segments for people aged 22-35:
- Young professionals – Recent college graduates starting careers, likely in entry-level jobs. Interested in business attire, professional development, networking.
- New parents – People having their first children. Interested in baby products, family vehicles, childcare services.
- Renters – Younger people living in apartments/rented homes. Interested in furniture, household goods, rental insurance.
- Health & fitness – Active young adults interested in gym memberships, sports gear, nutrition products.
- Travelers – Young people without kids who have more flexibility to travel. Interested in hotels, flights, tours.
- Foodies – Interested in dining out, meal delivery kits, kitchen appliances, unique ingredients.
- Tech early adopters – Eager to buy the latest gadgets and apps. Interested in electronics, gaming, subscriptions.
- Home buyers – Starting to purchase first homes. Interested in mortgages, home goods, home improvement.
- Experience seekers – Looking for entertainment, courses, activities. Interested in concerts, classes, adventure sports.
- Social causes – Wanting to support certain issues. Interested in charitable giving, socially conscious brands.
Sure, here are ten possible markets within the age range of 22-35:
- Fitness and wellness: This age group is generally health-conscious and interested in fitness, making them a potential market for gym memberships, workout equipment, supplements, and healthy food options.
- Technology: This age group is tech-savvy and interested in the latest gadgets and software. They are a potential market for smartphones, laptops, gaming consoles, and other tech products.
- Travel: This age group is adventurous and interested in exploring new places. They are a potential market for travel agencies, airlines, hotels, and vacation packages.
- Fashion: This age group is fashion-conscious and interested in the latest trends. They are a potential market for clothing brands, accessories, and beauty products.
- Entertainment: This age group is interested in movies, music, and other forms of entertainment. They are a potential market for streaming services, movie theaters, concert venues, and other entertainment-related businesses.
- Education: This age group is often pursuing higher education or looking to improve their skills. They are a potential market for online courses, tutoring services, and educational software.
- Food and beverage: This age group is interested in trying new foods and drinks. They are a potential market for restaurants, bars, breweries, wineries, and food delivery services.
- Finance: This age group is starting to build their careers and may be interested in financial planning services or investment opportunities.
- Home goods: This age group may be starting to settle down and looking to furnish their homes. They are a potential market for furniture stores, home decor brands, and home improvement retailers.
- Automotive: This age group may be looking to purchase their first car or upgrade their current vehicle. They are a potential market for car dealerships, auto repair shops, and car rental companies.
I hope this helps!
So we just got some ideas for verticals we can work in. Notice how they came up with some similar results in their responses.
Now lets prompt: You are now an entrepreneur and want to find an area for improvement in the Health and fitness (Claude2)/fitness and wellness space (ChatGPT). Come up with ten ideas
Here are 10 entrepreneurial ideas for improving the health and fitness space:
- On-demand personal training app – Matches users with certified personal trainers for workouts via video chat.
- Digital fitness tracker – A wearable device that tracks fitness metrics and provides personalized insights and recommendations.
- Healthy meal delivery service – Provides freshly prepared nutritious meals tailored to customers’ dietary needs and goals.
- Meditation studio franchise – Brings guided meditation classes and workshops to communities through studio locations.
- Fitness equipment rental service – Allows customers to rent high-end fitness equipment to use at home vs buying.
- Corporate wellness program consulting – Helps companies develop comprehensive wellness plans for employees.
- Activewear clothing line – Focuses on innovative performance fabrics and flattering fits for workout attire.
- Health and wellness retreats – All-inclusive getaways that focus on fitness, nutrition, stress management and self-care.
- At-home biofeedback device – Tracks physiological signals like heart rate to help users manage stress and sleep better.
- Online nutrition coaching platform – Connects users to qualified nutritionists for personalized meal planning and accountability.
Sure, here are ten ideas for areas of improvement in the fitness and wellness space:
- Personalized fitness plans: Create a platform that generates personalized workout plans based on the user’s fitness goals, body type, and other relevant factors.
- Virtual personal training: Offer virtual personal training sessions with certified trainers to make fitness more accessible and convenient.
- Nutrition tracking: Develop an app that tracks the user’s daily food intake and provides recommendations for healthier eating habits.
- Mental health support: Offer mental health support services such as meditation classes, therapy sessions, and stress management workshops.
- Fitness challenges: Organize fitness challenges that encourage users to achieve their fitness goals while competing with others.
- Fitness retreats: Host fitness retreats that offer a combination of workouts, healthy meals, and relaxation activities.
- Eco-friendly fitness products: Develop eco-friendly workout equipment and accessories that are sustainable and environmentally friendly.
- Fitness for seniors: Create workout programs specifically designed for seniors to help them maintain their health and mobility.
- Fitness for kids: Develop fun and engaging workout programs for kids to promote healthy habits from a young age.
- Fitness for people with disabilities: Create inclusive workout programs that cater to people with disabilities and help them achieve their fitness goals.
I hope these ideas help you in your entrepreneurial journey!
The first thing that stood out to me in this experiment was that the responses had some similarities in the order of which they were presented. Personal and virtual fitness first, then mental health, then fitness. These were two totally different LLMs and they had a very similar response. As one drills down further into each the possibility of coming up with something very similar seems high.
Ultimately the market decides what is successful and what is not, but I wonder if these advances are going to create a lot of junk startups or if they are going to bring a new wave of innovation that we could not have imagined. What does this mean for VC firms? Are they going to get bogged down with dozens of the same type of company? Recently I spoke to a VC partner that was complaining about the number of chat-bot ideas that people want to pitch him and how they were all the same exact idea.