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Previous Tech Revolutions Rewarded the Builders — This AI Revolution Will Reward the Users. Here's Why. Why the value in the AI market will ultimately accrue with the end users.

By Stephen Estes

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

The biggest winners of the early internet era were the social media and search platforms; the biggest winners of the mobile technology era were the app developers; the biggest winners of the cloud computing era were the streaming platforms.

The AI era may be different.

This time around, it may not be the creators of the foundational technology or those who build products and solutions on top of them but the end user — those who use these solutions to streamline processes, create new value for customers and exponentially grow their business — that will be the biggest beneficiaries of AI.

Related: 2023 Is the Era of Generative AI Like ChatGPT. So What's in it for Entrepreneurs?

Working in the tech industry these days, it feels like just about everyone has become an AI investor or entrepreneur, while every non-AI company is desperately trying to figure out how to become one. Myriad stakeholders are jockeying for their piece of the AI pie, and investors are watching the field like a roulette table, trying to determine where to place their bets.

Andreessen Horowitz just put out an insightful breakdown of various players in this emerging field in a report titled "Who Owns The Generative AI Platform?" In it, they argue that market value often fails to live up to the hype that surrounds the development of new technologies — think Blockchain and the "internet of things" — but suggest AI will be the first in recent memory to drive significant market value in relatively short order. Like every other investor and entrepreneur in the AI era, they are thinking critically about how to position themselves to capitalize on this emerging field.

Some are placing bets on cloud computing providers — like Microsoft, Google and Amazon — whose servers will soon host thousands of new AI apps and platforms. Others are betting on the platforms with APIs (referred to as "middleware") like OpenAI, Stability AI, etc. Others still are focused on consumer and business-facing products that will be optimized with AI, like new AI-powered productivity apps, marketing solutions, financial services, enterprise solutions and much more.

The rush to create and capture value using AI solutions has been wide-ranging and rapid. Many of these new AI-based innovations will fail, but some will succeed, and if history is any guide, some will most certainly emerge as new industry giants. The Google, Facebook, Amazon, Microsoft and Apple of the AI era are out there, waiting to be founded, and they will create billions in value.

Related: 3 Entrepreneurial Uses of Artificial Intelligence That Will Change Your Business

But the value captured by these new tools will pale compared to the value their users can realize. This is where the AI revolution differs from those that came before it. The solutions that generative AI enables will likely be worth billions; the value they generate for their users could be worth far more.

Generative AI is rapidly becoming commoditized, putting potent tools in the hands of everyday users. Today builders could spend years building an AI app, but now the technology exists for other entrepreneurs to dissect it — using their own AI solutions — in a matter of hours, and replicate it on their own. If everyone had a tool to dissect Google's algorithm when it first gained search market supremacy, that supremacy wouldn't have lasted long.

Instead, the builders of AI solutions will need to put up more creative competitive barriers like network effects and proprietary or voluminous data to prevent others from replicating their innovations. In other words, in the AI era, competitive advantages are much harder to come by — at every layer of the value chain — thanks to the democratization and widespread availability of the technology.

Related: Why AI is Changing the Future of Personal Branding

Those building AI infrastructure, platforms, middleware or tools will almost certainly change the world and deliver near-immeasurable value to society, but these entrepreneurs and companies likely won't capture the greatest share of the value that AI creates over the long run. I believe that will instead fall into the hands of the end users, i.e., the companies that can exponentially increase their productivity or capacity thanks to these new tools.

Consider an enterprise company that discovers 90% of its administrative work can be replaced by an AI solution. They might multiply their gross margins by 10x by dramatically reducing administrative costs while significantly increasing productivity. Then they do the same with their marketing strategy, logistics and inventory network, legal department, financial services, and so on — each corner of the business rapidly becoming exponentially more efficient and cost-effective.

That is what makes this revolution different from those that came before it. I'm sure there will be plenty of big successful AI companies that emerge over the coming years, but I believe the biggest winners of this latest tech revolution will be those that best utilize the technology.

The focus on AI tools and tool-builders today is akin to living through the Industrial Revolution and focusing on the new machines and production processes people were creating — rather than what they were building with those machines.

While there are endless newsletters, Twitter accounts, LinkedIn accounts and journalists covering the many new AI tools people are creating, I think the most interesting and valuable part of this AI era lies in how people are using these tools and what they're using them for — that is where the real value can be found and captured.

Stephen Estes

Entrepreneur Leadership Network® Contributor

Co-Founder & Growth/Media Strategist at Outlier Partners

Stephen Estes is a Partner at Outlier Partners, a PR-driven growth strategy firm whose clients include some of the world's fastest-growing AI companies and a plethora of public companies, unicorns, VC firms and startups of all stages. Formerly co-founder/CEO of VC-backed health-tech platform Wendi.

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