NfX: “Water is three things. Necessary. Ubiquitous. And the same. f##king. thing. inside every bottle. AI is like water. Or more specifically, generative AI applications are like bottled water. Over the last year and a half, we’ve looked at hundreds of generative AI companies on the application layer. Many of them are the exact same under the hood. This is just the reality: there will be 100 teams trying to make the same generative AI application as you are right now. Plus there will be incumbents gunning for your market. For a long time, tech has been a differentiator among software startups. We thought that if you could build something no one else could, that would be enough to protect you – definitely not forever, but at least for a while.But what we’re seeing with AI is that tech provides you basically no protection from the start. Tech differentiation in AI is a shrinking moat. (Unless you have something that Karpathy would find enlightening, and if that’s the case, let us know).For most founders right now, you have to build an entirely new point of view around what differentiation means to you. You are going to need a clear and aggressive perspective on how you’re going to win. Think distribution. (But incumbents will eat your lunch here too, so the old rules don’t apply.) Think brand. Messaging. Marketing. GTM. Pricing. Customer service. You can’t graft all this on at the end anymore. You’ll need to develop a key insight about how you will be creating value for your end users in a way that no one else can. You’ll need to focus on the heartbeat and emotion of the people you’re building for.You’ll need to give them a why. Or something they need… or at least something they think they need…”