Essay Readout: 3 Waves of Successful Generative Tech Startups by James Currier

This is an essay readout using an AI voice clone of NFX general partner, James Currier. Every 14 years there’s a tech revolution, and we have now entered the Generative Tech revolution. Anything you’re interested in, anything you’re working on is going to be impacted by generative tech and generative AI. In addition to the AI model companies, many unicorns and decacorns will be built, starting now. We’re already seeing three types of winners. If you can wrap your mind around what is happening with these new capabilities and see the future better than others, there is no better time to build something huge.

Episode Transcript

(00:04):
This is James Currier, general partnered in FX,as investors and builders were optimistic about
the future of AI.
One experiment among many we've done is we'vetrained AI avatars of our own voices to read
out the essays we write.
So this is my real voice you're hearing, butThis is now my AI voice.

(00:24):
I've been created by NFX to provide essayreadouts moving forward.
As you'll hear, I am still a pale imitation ofthe real James Currier, but I'll get better
over time.
And if you have suggestions for me, please letus know.
This week's article is called 3 waves ofsuccessful generative tech startups and was
first released in February of 2023.
Let's get started.
Beller 14 years, there's a tech revolution,internet browsers in 1994 smartphones in 2007

(00:50):
to 2008.
And toward the end of 2022.
We entered the generative tech revolution.
It's the fast moving water after a pre placiddecade, and we're just in the 1st wave of it.
There are at least 2 more waves to come.
Here, we aim to convince founders to thinkharder about what you wanna do with this short
window of extreme opportunity.
It's going to affect every industry.
Anything you're interested in.
Anything you're working on is going to beimpacted by generative tech and generative

(01:14):
AIache.
It's not just that you're going to be able totake what you're doing and get some
productivity gains it's that many areas will becompletely rethought and new things that
weren't done before will start happening.
In addition to the AI model companies, manyunicorns and decacorns will be built starting
now.
We're already seeing 3 types of winners, 1stwave, wrappers around AI models.
I wrote in 2022 that generative tech would haveunusual market dynamics because it is already

(01:36):
consensus.
There isn't the level of skepticism we normallysee with new technologies.
That means everyone gets it, and there is aflood of competition from other startups,
incumbent and all the huge platforms likeGoogle and Microsoft.
In the first wave of generative tech, you getthe fast movers.
They are selling the benefits of AI andaddressing the more consensus customer pain
points.
They are repackaging the AI into userinterfaces.

(01:58):
Companies in this wave can win with speed,sales, knowing their customers, and service.
Companies like Jasper are the poster childrenof this space.
They don't focus on having a better AI, butrather they focus on having a better sales and
onboarding process They have been amazing atsales and marketing and have taken an early
lead in this market from that position.
They have many options to build an enduringcompany as long as they bring excellence all

(02:19):
aspects of their business as larger competitorsstart to enter the market.
This would be the template for nearly anycompany in this phase, as you can see in the
NFX generative tech market map.
With over 500 companies now listed, we arefirmly in the first wave right now.
A lot of companies have similar ideas.
Few have started looking around the corner tothe second wave.
Second wave, generative AI inside, in thesecond wave, or the companies that aren't

(02:41):
pitching AI, but rather using it inside theirbusinesses to make them faster, cheaper, and
higher quality than competitors.
They'll use it to gain a competitive edge fortotally normal businesses like renovating
apartment buildings, doing security checks withsoftware vendors or exchanging legal contracts.
In this wave.
The customers don't care that you're using AI.
You're not selling the AI to them.
You're simply selling something better thanother offerings, 3rd wave, visionary, and non

(03:04):
obvious the 3rd wave will be the visionarystuff, the stuff that we can't imagine yet when
you first saw the smartphone.
You didn't think that's really gonna change thetaxi industry.
It took a few years before we got some of themore revolutionary stuff like sidecar and Lyft
and Uber.
3rd wave companies will be built by visionaryPete who aren't afraid to reinvent something as
native to AI.
They will find new transactions that weren'tpossible before.

(03:26):
They will find new experiences in both consumerand in business settings that weren't little
before.
We are all privileged to be here right now tosee it and build this.
This is a unique time that only happens aboutevery 14 years.
If you can wrap your mind around what ishappening with these new capabilities and see
the future better than others.
There is no better time to build somethinghuge.
If you can jump into wave 2 or 3 typecompanies, you will have an advantage.

(03:49):
Most companies are still focused on wave 1thinking.
As you see in NFX's open source map of 500 plusnew companies in the generative AI space,
typically, the wide open times to create newstartups only last a few years.
This transition is a big deal, and we areprivileged to be here.
Not just to see it, but to build it.
Thanks for listening to this week's essayreadout of 3 waves of successful generative

(04:12):
tech startups.
As a reminder, this is still an AI imitation ofJames Currier speaking.
We are having fun experimenting with new tools,but would love to hear your feedback.
Email us at [e-mail].
Subscribe to the NFX podcast on your favoritelistening platform.
Share with your network and founder friends andstay tuned for weekly essays and much more.