How to build AI products that make money

Every day thousands of AI tools are launched, 99% of them fail to make sizeable revenue. Most of them are wrappers that use a bunch of API calls and often lack any kind of MOAT but, there are tools that make much more recurring revenue than a lot of established startups

• PhotoAI: $77K MRR
• Chatbase: $70K MRR
• InteriorAI: $53K MRR
• PDFai: $30K MRR
• SiteGPT: $17K MRR

So, Why are these tools successful?

Users don't care whether you are building a wrapper or not, as long you solve a problem for them - Users will use your product. Some of these have had an early mover's advantage.They have a good product and they have cracked distribution, Are these Venture Scaleable?

In their current form - most likely, No. Tech is of course not the moat here. Anyone can build but their distribution and deep consumer insight can become a moat helping them transform their current product into a highly defensible product or their B2C product becomes their segue into B2B SaaS. Worst case - these can be great Internet businesses to run :) Are you looking to build a tool that leverages Generative AI?

Early mover advantage is prominent - If you can build something novel, Go build it but make sure you focus as much on distribution. If you're building something that already exists (or something similar exists), build only if you can distribute the product well enough.

Here's a framework that we use to pick ideas

1. Product can be built out in 3-4 weeks. The generative AI landscape is volatile, with new innovations happening very fast.I don't think there's any point in building out complex workflows after spending months only to realize that a large model solves your use case out of the box.

2. Clear Path to first 10-100 paying customers depending of the price you define. No point in building if you don't know who your user is and if they can't pay. Always build for users who have paying propensity and to whom you have clear access.

3. The Idea shouldn't be operationally intensive, Just so that you focus more on the product and growth.