Hard Constraints Drive AI Adoption

The rise of ChatGPT as a new distribution platform represents a rare growth opportunity that follows predictable platform cycles. Companies that recognize and capitalize on this early will gain significant competitive advantages.

The Four-Step Platform Cycle

Step 0: Market Conditions

Consensus emerges about a new category (AI chat platforms)
No clear winner yet established
5-7 major players battling for dominance (OpenAI, Claude, Gemini, etc.)
Fierce competition with massive capital investment

Step 1: Identifying the Moat

Platform identifies its key defensibility mechanism
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"
Platform needs to press this advantage as quickly as possible

Step 2: Opening the Platform

Platform creates a third-party ecosystem to accelerate growth
Offers developers access to distribution in exchange for building on the platform
Provides incentives to bring more users and use cases to the platform
Creates a "gold rush" period of opportunity for early adopters

Step 3: Closing for Control and Monetization

Platform eventually restricts access in predictable ways:
- Shutting down third-party access entirely
- Developing first-party applications for high-value use cases
- Suppressing organic distribution to push toward paid mechanisms
This cycle is accelerating: "The cycles seem to be getting shorter and shorter"

Strategic Implications

You Must Play the Game

"It ends up being a prisoner's dilemma - there is no opting out of the game"
If you don't participate, competitors will gain advantage on new platforms
Customer expectations will shift to include these new experiences
Better to be early than late, especially for startups

How to Choose Which Platform to Bet On

Prioritize retention over user count: "The better signal is retention and depth of engagement than pure MAU"
Consider user quality and monetization potential: Like iOS vs Android - fewer users but higher revenue
Analyze the value exchange: What are they giving you to incentivize development?
Evaluate scale: All else equal, choose the platform with greater momentum

Different Strategies Based on Company Stage

Late-stage companies: Can afford to place multiple bets and wait to see which platform wins
Startups: "For startups it's a totally different ballgame - you have to choose one and go all in"
All companies need an exit strategy: "Immediately need to move towards figuring out what's my exit plan"

Building Long-Term Defensibility

Own important parts of the user experience or workflow
Accumulate specialized data and context the platforms don't have
Create micro-network effects that aren't dependent on the platform
Plan for the inevitable closing of the platform from the beginning

Why ChatGPT Will Likely Win

First to implement memory features
Investing heavily in context connectors
Shows superior retention metrics compared to competitors
Demonstrates 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

This emerging distribution opportunity represents the first major new growth channel in years, creating space for startups to potentially disrupt incumbents before they can adapt.