Paige Finn DohertyFounding Partner, Behind Genius · Founding Partner at Behind Genius Ventures

recognizing the highly competitive nature of the AI field

2 Sept 2023 · 1 min

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In this segment, the presenter highlights incumbency risk as a dominant challenge for AI startups, emphasizing that the AI field’s intense competition pits new ventures not only against peer startups but also against well‑funded tech giants and research institutions such as Microsoft, OpenAI, Apple, and Meta. The speaker illustrates the risk with a concrete case: a mobile AI‑powered language‑learning startup that appeared promising until Duolingo—holding roughly 64% of the language‑learning app market—launched its own AI‑driven learning tool. Leveraging its strong brand, massive distribution channels, and deep engineering and financial resources, Duolingo effectively displaced the startup, demonstrating how incumbents can swiftly outmaneuver emerging companies in AI‑driven markets.

Chapters

Number 3 is incumbency risk, and by far this is the one we tend to see the most of. The highly competitive nature of the AI field means that startups will be pitted not just against other emerging startups, but also well-established tech giants and research institutions with deep pockets and extensive resources. Microsoft, OpenAI, Apple, Meta, and more. One example of this incumbency risk is months ago we analyzed a mobile-based AI-powered language learning application. Although enticing initially, Our due diligence uncovered that Duolingo, which holds over 64% market share in the language learning applications space, recently rolled out their own AI-based learning tool. An incumbent with a household name, an immense distribution advantage, and abundant engineering and financial resources essentially single-handedly overtook a startup.