OpenAI is doing to the software industry what AWS did 17 years ago

Around the term of the millennium, building a website was a massive endeavor. Aside from writing software with limited access to open source libraries, it was extremely expensive to host websites. Expensive hardware, expensive maintenance, and expensive personnel to keep it running. It was not uncommon to see companies spending at least 6 digitals to get the MVP out of the door on hosting costs.

AWS came in and completely changed the game. As long as you bring the software, AWS took care of the hardware for you. The barrier to entry for starting a web product went from “I need to get investors” to “about the cost of a pricey meal”. As a result, there was a massive surge of companies that were built.

Companies that couldn’t have gotten funding were able to test the market, and oftentimes proved the early investors wrong. Airbnb is the classic example that ran on a shoestring budget for years. People used to show up to investors with just a presentation, now people are showing up with a working prototype and website.

OpenAI’s suite of products - most prominently ChatGPT - is pushing the industry in a similar direction. AI used to be expensive, you needed expensive GPU clusters, you needed to find a very large data set to run training, you needed a few ML PhDs to create models. We rarely see AI companies with less than 7 digit funding making compelling products.

Since the introduction of ChatGPT, that equation has completely changed. We are seeing new AI-powered products being shared on Reddit and Hacker News everyday. Built by people with nothing but a laptop. We are entering the era of shoestring budget AI software products. Companies that would have never been funded are now changing the industry.