What is the “moat paradox” and how does artificial intelligence help create competitive advantage?

“Ditch” is a defense mechanism that dates back thousands of years; But why do we use it today in new concepts such as startups and artificial intelligence? At first glance, a moat protects a city or castle in its center and gives the defenders a great advantage; But this is only one side of the coin, and if we take a closer look at this competitive advantage, we find that the people who are in the center of the moat, their connection with the surrounding environment is minimized, and this issue creates challenges for them.

Warren Buffett, the famous American economist and capitalist, first proposed the theory of the “Moat Paradox” and declared that in order to survive, startup businesses need a competitive advantage to make it difficult for other competitors to enter, and at the same time, they should note that Don’t get caught in the trap of this advantage and don’t lose your creativity and dynamism.

Artificial intelligence; A sustainable advantage for start-ups

Although the need to take advantage of competitive advantages is not hidden for companies and startups, what makes them hesitant is the constant fear of the obsolescence of this advantage. Today’s world is a world of sudden changes, and just as a product or technology becomes famous and sells exceptionally overnight, it is quickly overtaken by other technologies and forgotten.

This problem occurs when businesses pay attention to only one aspect of customer problems, and if this problem is solved in another way, startups also face serious challenges. With the advent of large-scale linguistic models (LLM) and machine learning, it has become possible for startups to simultaneously target multiple customer “pain points” and expand their reach. By using this strategy, the damage to one of the competitive advantages of the business group does not pose a threat to the overall work, and the business does not get caught in the ditch that it dug with its own hands.

open source artificial intelligence services; A change that startups were waiting for

With the third and fourth versions of ChatGPT making their way into the daily lives of millions of users last year, some believe that this artificial intelligence-based chatbot is the beginning of the technology’s explosion; But in fact, the real transformation in this field occurs at the hands of open source models. These resources, which are freely available to the public, are taught by various developers, and this makes us witness the creation of numerous and practical products that have no limits on their development path. For example, the open-source LoRA model allows developers to train their desired model with specific data and access a product tailored to their needs at high speed and low cost, and even share it with others.

Finally, another solution that can keep the flow of the ditch for businesses on one side; So that they only benefit from its competitive advantages and avoid the paradox of this theory, it is synonymous with customers. A business must be able to put itself in the shoes of customers to get to know their needs and desires. This is more accessible than ever thanks to artificial intelligence, and businesses can analyze a wide range of customer data in a short amount of time to come up with dozens of different solutions. This requires organizations’ ML/AI teams to update their models in very short cycles in order to achieve reliable long-term insights.

According to the stated issues, the question arises that with the existence of artificial intelligence technology, can a moat be made of competitive advantages? In response, it can be said that the agility and creativity of startups allow them to use the full potential of artificial intelligence and, with the help of the wide scalability of this technology, gradually go to war with the big market leaders; But what should be noted is that the moat that protects the interests of businesses does not only protect their jewelry; Rather, the protection of the entire empire is involved!