The Drawing of the Three

In my last post, I talked about assembling a series of filters to use to view the startup landscape, which led me to a few conclusions about what opportunities I should pursue.

What did I see through those filters?

What I saw through the moire pattern of those two lists overlaid by one another is what I think will be the third great monetization strategy for the internet, matching the pattern of:

• web1 => Ad monetization
• web2 => Subscription monetization
• web3 => For AI, neither of those work anymore, which demands something new.

But what? Well that’s the important part, isn’t it? Should I just up and tell you? Yawn. The climax of a movie is at the climax, if they tell you the crux at the beginning, it’s a lot less fun (usually).

The standard bearer for web1 and ads was Google (with countless followers), and essentially every website adopted that model for their first pass at content monetization. Google has been… let’s call it fairly successful… so it’s not a bad way to look at things. How many websites live and die by selling advertising?

The standard bearers for web2 and subscriptions were Salesforce (for B2B SaaS) and Netflix (for B2C SaaS), with countless followers, to the extent that SaaS has been the dominant startup monetization thesis for the last 15+ years. It’s more old and tired by now than most American politicians, but how many websites live and die by people entering payment details for a monthly or annual subscription?

Evidence proves those models for web1 and web2 worked well enough that countless businesses depend on them, and countless fortunes have been made and lost surfing the waves, or crashing against the shorelines, of ads and subs.

But it’s also apparent (to me, at least) that now that AI is the dominant startup thesis, neither ads nor subs are going to prevail in an AI-centered world, and for one simple reason: Those monetization strategies are for humans, and AI bots are not humans.

Changing Environments Require Changing Strategies

Every so often, there’s a fundamental shift that demands everything in the ecosystem adapt to a new habitation strategy to survive. We’ve seen this repeatedly across Earth’s ecology (for instance, introducing free oxygen to the atmosphere, producing respiration while destroying all the life forms that existed before oxygen permeated the atmosphere), and across human society (for example, how nuclear bombs changed war, and how drones are changing it again, for less violent examples, consider the adoption of computers and the subsequent adoption of smartphones).

Now the ecosystem of the internet has changed irrevocably, opening up countless new and interesting niches to occupy.

Humans may see an ad and buy something stupid (or, occasionally, not-stupid), but an AI won’t unless its programmed to. And subscriptions are designed for humans to consume content at a human rate, not for an AI that can choke down an entire database of content (whatever it may be) at whatever speed the servers can manage.

Changing conditions require changing strategies. It was clear to me that:

The introduction of AI bots to the internet ecosystem was, is, and will be massively disruptive for a very long time

The internet population of bots already exceeds humans and is growing faster than the human population

The two dominant monetization strategies are not relevant to bots

That disruption of expectations across the ecosystem demands a third strategy, a new strategy to handle a massive change in an existing system. And that strategy needs to accommodate, support, and monetize the new demands from the vast armies of new participants in the internet ecology.

Therefore, a method that converts bots from an expense into a revenue source would become a dominant monetization strategy, and therefore whoever owns that strategy will be a dominant player in the internet ecosystem.

Set the realization of semi-practical, semi-useful AI against a backdrop of technology cycles that have, in the distant past (in internet terms) produced ads and subs, and more recently produced enormous investment into fintech and crypto, I started to see a path that felt like it would grow over time to become a new monetization strategy that works in the AI ecosystem.

Sun Tzu had a couple drinks, saw a couple things…

There’s at least, and possibly only, two things I know about fighting: You cannot fight the tide, and it’s much harder to fight an uphill battle.

If my whole thesis on this go-around was to go with the flow, and that trickle of insight was leading me from my overlook along a roaring flow of cash coursing through a valley filled with AI startups, where exactly would it lead me?

Most rivers lead to the sea eventually, but they can take winding paths, and sometimes the quickest route from the mountain to the sea isn’t to follow the river, but to understand where the river leads and go there instead. Getting a view from on high can save you a lot of time on your journey.

But before I get to where the path has led (or is leading) that will explain the objective I’ve identified, and the deliverables I have to produce to reach it, let’s talk about a few of the steps on the path I’ve been taking that highlight the process I followed.

I figure if I explain the steps I’m taking, as I’m taking them, it may be easier for people who haven’t trod this route before to follow me and understand how to carve their own course towards their own objectives.

And maybe the real treasure will be the friends we make along the way.

Let’s pause here for now, and continue the journey shortly.