AI Agent Pricing Requires Data Moat

The emergence of ChatGPT as a new distribution platform represents a rare growth opportunity that follows predictable cycles seen in previous platforms like Facebook, Google, and mobile app stores.

The Four-Step Platform Cycle

Step 0: Market Conditions Are Met

There's consensus about a new huge category (AI chat platforms)
No clear winner yet, with 5-7 major players battling for dominance
Fierce competition with huge capital investments
We are currently in this phase with OpenAI, Claude, Gemini, and others competing

Step 1: Identifying and Building the Moat

A player identifies what will create defensibility and help them reach escape velocity
For ChatGPT, the moat appears to be context and memory
- "The actual difference maker is which one has more of your context"
- "The more you use it, the more it's able to store memory around you which feeds more personalized context"
They press this advantage as quickly as possible
They need an ecosystem to gather more of this moat

Step 2: Opening the Platform

Companies establish a third-party platform with incentives
The value exchange: developers build on the platform, adding use cases and engagement
In return, developers get distribution for their applications
This creates a gold rush of developers and rapid growth
"There's a bunch of signals that they're about to launch a third-party platform"

Step 3: Closing for Control and Monetization

Platforms eventually lock down to monetize and maintain control
They either:
- Shut down third-party access entirely
- Develop their own first-party applications for high-value use cases
- Artificially depress organic distribution to push toward paid mechanisms
"The cycles seem to be getting shorter and shorter, so you actually have a smaller amount of time"

Why You Can't Opt Out

It becomes a prisoner's dilemma - if you don't participate, your competitors will
Customer expectations change as they start using these new platforms
"There is no opting out of the game"
This is the opportunity to disrupt an incumbent or be disrupted

How to Place Your Bets

For Late-Stage Companies:

You can afford to place multiple bets and spread your chips
Wait to see who the winner is, then throw your muscle behind them
Risk: waiting too long and missing the opportunity

For Startups:

You must choose one platform and go all-in
"You have scarce resources, scarce attention from the market"
Higher risk, higher reward

Criteria for Choosing a Platform:

Look at retention and depth of engagement rather than MAUs
Consider user quality and monetization potential
Analyze the value exchange being offered
Consider scale, but don't be fooled by vanity metrics

Planning Your Exit Strategy

Immediately after entering, start planning how to exit when the platform closes
Build ways to own important parts of the user experience
Accumulate specialized data and context the platforms don't have
Create micro-network effects that persist beyond the platform

Why ChatGPT Is Likely to Win

First to implement memory features
Investing heavily in data connectors for context
Shows superior retention curves compared to competitors
Displays the rare "smile curve" in retention (usage increases over time)
Already forming preferred partnerships with major companies
Has approximately 10x the MAUs of competitors like Claude

The key insight: This is not just an opportunity but a necessity. The companies that recognize this emerging distribution channel and move quickly will be the ones that reap the most rewards, similar to how companies like Zynga grew on Facebook or how early adopters thrived on iOS.