Every combines a newsletter, AI-powered apps, and training into one subscription targeting a niche of sophisticated AI early adopters. The strategy is to serve a small but influential market that bigger companies can't, betting this audience will become the largest market in the world within a decade.
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When evaluating AI startups, don't just consider the current product landscape. Instead, visualize the future state of giants like OpenAI as multi-trillion dollar companies. Their "sphere of influence" will be vast. The best opportunities are "second-order" companies operating in niches these giants are unlikely to touch.
Today's dominant AI tools like ChatGPT are perceived as productivity aids, akin to "homework helpers." The next multi-billion dollar opportunity is in creating the go-to AI for fun, creativity, and entertainment—the app people use when they're not working. This untapped market focuses on user expression and play.
Instead of trying to convert skeptics, AMP focuses exclusively on users already at the frontier of AI adoption. They believe that building for someone who doesn't know how to prompt well forces them to build simplistic features and fall behind the pace of innovation.
Individuals will use AI to build bespoke software for personal use. A subset of these tools will find a niche market, creating entrepreneurs who operate outside the VC-funded, subscription-SaaS model, potentially favoring one-time purchase models due to low development costs.
An app bundling various LLMs into one interface is making $300k/month. Replicate this success by targeting a specific professional niche like lawyers or teachers. Stitch together models and workflows to become the default AI assistant for that vertical.
Most successful SaaS companies weren't built on new core tech, but by packaging existing tech (like databases or CRMs) into solutions for specific industries. AI is no different. The opportunity lies in unbundling a general tool like ChatGPT and rebundling its capabilities into vertical-specific products.
YC Partner Harsh Taggar suggests a durable competitive moat for startups exists in niche, B2B verticals like auditing or insurance. The top engineering talent at large labs like OpenAI or Anthropic are unlikely to be passionate about building these specific applications, leaving the market open for focused startups.
Don't start with a broad market. Instead, find a niche group with a strong identity (e.g., collectors, churchgoers) that has a recurring, high-stakes problem needing an urgent solution. AI is particularly effective at solving these 'nerve' problems.
Similar to how mobile gave rise to the App Store, AI platforms like OpenAI and Perplexity will create their own ecosystems for discovering and using services. The next wave of winning startups will be those built to distribute through these new agent-based channels, while incumbents may be slow to adapt.
An AI application can be a powerful business, even as a 'wrapper,' if it serves a niche audience that is unlikely to use a frontier model like GPT directly. The defensibility comes not from unique technology but from a deeply tailored user experience for a specific market, such as language-learning for children.
