Is Capital a Moat in AI Markets?
Sameer Dholakia believes capital is a moat in AI markets and a signal to the market. The biggest war chest, the most capital, is a necessary condition for winning the market, and in math terms the war chest is necessary but not sufficient.
Competitive breadth has not changed. The capital intensity behind the competition has, and the amounts raised create a competitive intensity unlike the SendGrid era. Legora and Harvey have both raised war chests that drive the difference. Markets pick winners, and the pick becomes a self-fulfilling prophecy. SendGrid and Twilio were the building blocks developers plugged into an application to send communications. Once developers decided, the race was over and the default became the market winner. Lots of legal tech companies and AI legal providers exist, but anyone at a big law firm asked to name the major legal AI companies would name Legora and Harvey. Capital creates both the ability to scale at an extraordinary pace and a brand. Talent flocks in, more customers follow, and the virtuous cycle continues. Excessive capital in a short time gives inherent advantages. Compute is so scarce and so expensive that a company without the most capital cannot play.
An exceptional product still has to follow. Customers have to rave about the product, love it, and tell their friends, or there is no chance of becoming the king.
