As the age-old proverb says, “Don’t build your house on someone else’s land.”
While it may seem obvious, many entrepreneurs and businesses fail to heed this advice. They build their products on top of other companies’ platforms and APIs, hoping to ride the wave of their success.
However, as recent events have shown, this approach can be risky at best and devastating at worst.
At its core, “building your house on someone else’s land” means that you’re relying on someone else to provide the foundation for your business.
In other words, you’re building on top of someone else’s platform or API.
This can be a great way to get started quickly, as you don’t need to build everything from scratch.
However, it also means that you’re at the mercy of that company. They can change their rules, and pricing, or even shut down their platform altogether.
For those trying to grow a massive Twitter following many have turned to the many Twitter apps out there that claim to help you grow your account.
Most of these applications have been created by indie developers using the Twitter API.
Elon Musk recently announced a change to the pricing of their Twitter API. The API used to be free but now there are 3 tiers:
For these Twitter applications that have a decent number of users, the basic tier doesn’t cut it.
The Enterprise tier however starts at $42,000 a month!
There is no tier between Basic and Enterprise. You either have a small application that can serve a few users or you have half a million bills each year.
For example, the following businesses have either been forced to shut down or require users to provide their own Twitter API key.
In the last few weeks, thousands of AI businesses have all spun up. All of them are using OpenAI APIs which at the moment are incredibly cheap.
Some of the most popular AI writing tools such as Jasper.ai and the AI built into Notion are all using OpenAI under the hood.
Currently, OpenAPI has the following pricing for their API:
At the moment it is significantly cheaper to use the OpenAI API than it is to pay for ChatGPT Plus. On top of that, you only pay for what you use.
Unless you are generating around 100,000 words a month the API is a better option.
With all these companies building on top of OpenAI, what is going to happen if they increase their prices drastically as Twitter did?
If you are out to make a quick buck then of course using someone else’s platform is one way you can do that.
Many of the Twitter tools managed to make millions before Elon increased the price. If OpenAI doesn’t change its pricing then it certainly is cheaper than running your own AI model in the cloud.
However, if your business is simply an API call to another platform then what moat are you creating for your company?
What is to stop a competitor from coming along and doing exactly the same thing?
Many of these companies that are simply a wrapper around OpenAI are likely to find themselves replaced with ChatGPT plugins in the near future.
Where you can you should always try and build products that don’t rely on other platforms to work. Obviously, there is a limit to this. I am not suggesting that you shouldn’t use AWS or Azure and host your own infrastructure.
Don’t build your core business around someone else’s product that you can’t host yourself or there aren’t other options available.
Luckily on the AI side, there are a few alternatives that can be used commercially which can be hosted yourself.
I am looking forward to these open-source models becoming more advanced in the future so that OpenAI doesn’t have as much of a monopoly as it does at the moment.
📥 Newsletter - How I Write and Grow Refactoring in 2023 ✏️. I think writing is incredibly important for software developers, and one of the best ways is to write in public with a blog or a newsletter. Luca who runs the Refactoring newsletter recently wrote about his process for note-taking and writing which is worth a read.
🐦 Tweet - How does a Large Language Model like ChatGPT actually work? I have been trying to wrap my head around LLMs and Neural Networks and this tweet explains it so simply. For anyone who wants to understand them this is worth a read.
📝 Article - What Is ChatGPT Doing … and Why Does It Work? If you want the in-depth version then this is it. Written by Stephen Wolfram who is the creator of Wolfram|Alpha. I have started reading this but I need to take some notes!
📥 Newsletter - What does Gen Z really think about work? I saw this shared on Substack Notes, it’s an interesting view on how people’s relationship with work is changing. Especially given the example is from a fellow software engineer.
🎬 YouTube - 10 Questions You MUST Ask in Your Next Software Engineering Interview I am always surprised at the end of conducting the interview when the candidate hasn’t got any questions for me. Surely if they were interested in the position they would want to ask me something. In a lot of cases, our minds just go blank due to the stress of the situation. I am hoping this video will help those who struggle with things to ask.
The final form of leverage is brand new—the most democratic form. It is: “products with no marginal cost of replication.” This includes books, media, movies, and code. Code is probably the most powerful form of permissionless leverage. All you need is a computer - you don’t need anyone’s permission.
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