10 AI Business Ideas From The Queen of AI ft. Sarah Guo

Sarah, an AI expert and investor with a $100 million fund, discusses the vast potential of AI startups and business ideas. She emphasizes the transformative power of AI in generating significant revenue, citing examples like video generation and digital companionship apps. Sarah highlights the importance of distribution and product depth for scaling businesses. She also explores the future of AI in automating various tasks, including e-commerce management and voice services. Despite concerns about AI's potential risks, Sarah remains optimistic about its capacity to create substantial economic value and improve sectors like education and healthcare.

• Discusses the potential of AI business ideas that can scale from generating millions to billions in revenue.
• Emphasizes the importance of internet distribution and powerful AI models in creating successful businesses.
• Draws parallels between the rise of AI capabilities and the earlier trend of drop shipping.

"There are like ways to make a million bucks and then ways to make a million bucks that could turn into a billion bucks."

• Highlights the distinction between businesses that generate significant revenue and those with potential for exponential growth.

"You can figure out internet distribution and then get super powerful models getting increasingly powerful to just do something useful in a niche."

• Stresses the importance of leveraging powerful AI models and effective distribution channels to create impactful businesses.

• Venture capitalists often dismiss businesses with modest growth projections as "lifestyle businesses."
• Entrepreneurs can achieve wealth and a balanced life through lifestyle businesses.
• High-growth ventures often start small but have the potential to scale significantly.

"Anyone who actually is an entrepreneur, including anyone who's a VC, they know that you can oftentimes get richer and have a less stressful life if you have a 'lifestyle business.'"

• Acknowledges the value of lifestyle businesses and their potential for personal wealth and reduced stress.

"A lot of things that have become very interesting start very small."

• Indicates that many successful high-growth businesses initially start on a small scale.

• AI models can generate reasonable copy for marketing and other purposes.
• AI companionship apps, such as digital girlfriends or boyfriends, fulfill basic human needs and generate significant revenue.

"You can do not amazing but like reasonable copy generation with these models today."

• AI models are capable of producing functional, if not perfect, marketing copy.

"I have several friends who have shipped AI companionship apps... some of those people are generating a million dollars of cash flow for themselves."

• Highlights the financial success of AI companionship apps despite their creators not being deep AI experts.

• Replica, a digital companionship app, generates significant revenue with minimal funding.
• Character AI attracts massive user engagement and has substantial traffic, indicating high demand for AI companions.

"Replica... doing like 50 million a year in revenue and I believe she had bootstrapped it for a while at least or raised very little money to get there."

• Demonstrates the potential for high revenue with efficient capital use in AI companionship apps.

"Character AI has 310 million monthly uniques... more than the Wall Street Journal."

• Indicates the massive user base and engagement of Character AI, showcasing the high demand for AI-driven companionship.

• AI capabilities drive word-of-mouth growth due to their novelty and uniqueness.
• User-generated content and inbuilt virality contribute to the rapid growth of AI products.

"These AI capabilities are so novel and unique that they do drive word of mouth."

• Novelty and uniqueness of AI products naturally generate user interest and sharing.

"With character, you can make new characters, and people share them right so there's inbuilt virality there."

• User-generated content and sharing contribute to the viral growth of AI products.

• Haen creates high-quality video avatars indistinguishable from real videos.
• The company generates significant revenue without paid marketing, leveraging the quality and shareability of its content.

"You can make a video avatar of yourself you cannot tell the difference... now Haen is in tens of millions of revenue."

• Highlights the advanced capabilities of Haen's video avatars and their commercial success.

"They've never spent a dollar on paid marketing."

• Emphasizes the organic growth and success of Haen without relying on traditional marketing.

• AI-generated videos for product advertisements can create realistic and engaging content without physical production.
• Influencers can create digital twins to automate branded content creation, enhancing scalability and authenticity.

"You have a UGC very authentic looking ad for an influencer... looks super real."

• AI-generated videos can produce highly realistic and engaging advertisements.

"He's letting popular Instagram people... create my digital twin that will be able to do my brand like branded content."

• Influencers can use AI to create digital versions of themselves for scalable and authentic branded content.

• AI technology allows for the creation of digital twins to generate ads without manual effort.
• Digital twins can be used to create ads, and if approved, the creator gets paid without further involvement.
• AI-generated actors can promote products, making it hard for consumers to distinguish between real and fake endorsements.

"It uses my digital twin to make the ad. If I'm cool with the ad, I get paid, and that's it."

• Simplifies the ad creation process for influencers and content creators.

"These women that you see on the thing that are like promoting stuff, these people do not exist. This is an AI-generated woman who looks like a real person that is promoting some product."

• Highlights the potential for AI to create realistic, yet entirely artificial, promotional content.

• AI models can be fine-tuned for various commercial use cases, such as creator videos for e-commerce or interior design renderings.
• AI-generated content can reduce costs significantly, making high-quality visuals accessible.

"You can use this category of models, they're open source, to be fine-tuned for different use cases that are super commercial."

• Emphasizes the versatility and cost-effectiveness of AI models in commercial applications.

"Those renderings AI-generated cost like thousands of dollars, right? And now if you can give it to people for very little incremental costs, like that's an interesting wedge."

• AI can democratize access to high-quality visual content by reducing production costs.

• AI can be used to create professional headshots without the need for physical studios or photographers.
• Potential for profitable business models by leveraging AI to automate the headshot creation process.

"You could run that same funnel just without the San Francisco studio and without the guy taking the picture and without any of the cost."

• AI can streamline the process and reduce overhead costs, making it a viable business model.

"Look at this company Aragon doai. They just have a sidescrolling Carousel and it's the befores and then there's a line and then they just that same photo becomes the after."

• Effective use of AI-generated visuals to create compelling marketing content.

• Successful AI startups often leverage strong internet marketing skills to scale rapidly.
• Jasper is an example of an AI startup that scaled to $50 million in ARR within a year through effective marketing.

"The reason they were able to do that is because their background as Internet marketers as guys who are like as soon as I have anything that works I will just plow the maximum amount of cash into Facebook ads as I can."

• Highlights the importance of marketing skills in the rapid scaling of AI startups.

"Most people in Silicon Valley don't ever run paid ads. That's just like a pretty crazy thing."

• Contrasts traditional Silicon Valley approaches with the aggressive marketing strategies used by successful AI startups.

• Scaling from initial success to massive revenue requires deeper product capabilities and expanding scope.
• Traditional business growth strategies become essential after initial AI-driven success.

"The challenge for any one of these companies that gets this wedge... the next 999 million of Revenue has to be more traditional."

• Emphasizes the need for traditional business strategies to sustain long-term growth.

"If you think about companions, it could be like what are the arguments for why somebody gets to dominate that business."

• Discusses the potential for AI-powered companions to become a significant market.

• Personal motivations and the desire to work with special entrepreneurs can drive career choices.
• Investing allows for repeated involvement in zero-to-one phases of startups.

"I am really motivated by working with people that are entrepreneurs that I like and respect and I think are super special."

• Highlights the personal satisfaction derived from working with talented entrepreneurs.

"Doing investing and being able to contribute to other people being successful that are really special and then the competitive nature of being right with skin in the game."

• Discusses the appeal of investing and the competitive aspect of being involved in multiple startups.

• Collaboration with technical partners can accelerate the development of AI projects.
• Finding an engineer with a shared vision can make the process more efficient.

"You'd have to have a partner to speed you up. You learning to code to be able to do these things would be the slow way of doing it."

• Suggests that collaboration is key to efficiently building AI projects.

"The easy way is you find an engineer who's excited about this and doesn't have clarity of vision around it."

• Emphasizes the importance of finding the right technical partner to bring AI ideas to fruition.

• Conviction's website lists various startup ideas and requests for AI-driven innovations.
• Personal seller concept: AI to automate the management of online stores, from listings to pricing.

"There are a bunch of things that are probably not related to let's say it's a Shopify Drop Shipping Store for like a particular type of sock."

• Highlights the potential for AI to automate non-core tasks, allowing entrepreneurs to focus on their passion.

"Can you take a bunch of these tasks that require skills in all these different domains and just automate?"

• Discusses the broader theme of AI automating diverse tasks to simplify entrepreneurial efforts.

• E-commerce platforms like Shopify and Square are integrating native assistant products to streamline usage.
• Managing an e-commerce store with extensive SKUs involves significant software and human resource investment.
• Example: A store might spend around $10,000 monthly on software and apps, plus additional costs for transaction fees and personnel.

"I have an Ecom store and we spend probably like five or six grand a month on just Shopify Plus or whatever like the Enterprise Shopify thing."

• Running an e-commerce store typically requires multiple roles: e-commerce store manager, merchandiser, and VAs for product page management.
• Current state involves a combination of human oversight and software applications.

"We then have VAs that go in and they do all the product pages, the descriptions, the templates, the tagging so that our inventory data is correct."

• Future state aims to simplify this process for entrepreneurs who can't afford extensive teams.

"The future state is for entrepreneurs who cannot recruit, manage, pay the five people it takes to run your store like what do they do?"

• Voice automation is an emerging market with significant opportunities, as demonstrated by GPT-4's capabilities.
• Companies like 11 Labs are leading in independent voice API businesses with substantial revenue.

"There are other opportunities so like there's a company called Caria that does like more realtime voice for example."

• Potential applications for voice services range from customer service in various industries to lead generation.

"I think they're going to be a bunch of interesting voice services for everything from restaurants to HVAC companies to dental reception that are just like answer the phone."

• Example of a practical application: automating phone agents for small businesses to handle customer inquiries and lead generation.

"Now you go and I built one of these in our like AI weekly tutoring session that I have basically I was like I want to build one of these."

• Many small businesses miss customer inquiries due to being understaffed or owners being occupied with fieldwork.
• Automated phone agents can address this gap, ensuring no missed business opportunities.

"Mike loses business because Mike doesn't pick up the phone. Mike also is not going to hire somebody to just sit there and wait for the three phone calls a day that he's gonna get."

• Example: Developing an AI phone agent for an offshore recruiting business to handle initial customer interactions and lead qualification.

"I built a phone agent so I built a guy who could answer the phone so that when somebody goes to somewhere and they want to hire somebody it'll be like awesome what are you hiring for?"

• Development of browser extensions that not only autocomplete text but also learn and mimic the user's writing style.
• This technology aims to assist in writing emails or blog posts in the user’s unique voice.

"It starts to learn your voice so it can write your, it can help you write your emails or your blog posts in your voice which is kind of like the next level up from autocomplete."

• Personalization in AI writing tools is crucial, as users prefer content that sounds authentically like them rather than generic AI-generated text.

"The next level of like value and impact is definitely going to be fine-tuning to specific voice and nobody wants to write like chat GPT."

• Concept of Software 3.0 involves manipulating foundation models which have extensive capabilities out-of-the-box.
• Entrepreneurs can leverage these models by providing specific business information and reinforcement.

"Software 3.0 is the idea that the next generation of software a lot of it is about manipulating Foundation models."

• Example: Using foundation models for lead capture and intake forms without needing to train models from scratch.

"He just needs to like make sure it's plugged into his schedule system and his database of candidates and be able to retrieve the right information about the business."

• Initially skeptical about the healthcare market due to slow adoption and complex incentives.
• Changed perspective due to opportunities in automating healthcare administration tasks.

"I was one of several people who were like okay we're gonna go understand Healthcare and digital health and I was like ah healthc care sucks right."

• Example: Investing in a healthcare administration automation company that addresses billing, authorization, coding, and claims processing.

"We just did a healthcare administration automation company so I'm like oops like changed my mind real hypocrite here."

• Outsourcing services in healthcare, such as medical scribes, indicate potential for AI to further streamline these tasks.

"My doctor is with my baby there and I'm sitting there and she's got her iPad on like a table and there's a video like there and I'm like who the [ __ ] is that guy and they're like oh that's just like my scribe."

• Evaluate which parts of work have already been outsourced as they are likely candidates for AI automation.
• Outsourcing indicates a recognition of the task's importance but also its potential for cost savings and efficiency improvements through automation.

"What parts of work have been outsourced Services already right because like it used to be the doctor taking the notes and they're like wow we pay this person a lot and like they should see more patients."

These notes cover the key themes and ideas discussed in the transcript, providing a detailed and comprehensive overview for study purposes.

• AI is increasingly taking over specific tasks rather than entire jobs.
• The trend is visible in medical scribe businesses and other sectors.
• AI's role is to handle tasks that can be separated and outsourced.

"Everybody worries about AI taking your job, but that's not the right way to think about it. It's AI will take your tasks."

• AI will handle specific tasks within jobs, leading to job transformation rather than job loss.

"There was a scribe in that outsourced BP that had that job and so it's not taking the doctor's job but it's taking the piece of the job like the doctor's job that already got separated out."

• AI's impact is more about task reallocation rather than complete job replacement.

• The speaker is primarily focused on AI-related investments but remains open to other tech opportunities.
• Interest in AI stems from its potential to revolutionize technology and create significant value.

"I'm also here to just, you know, invest in great tech companies."

• The focus is on finding valuable tech companies, even if not directly related to AI.

"If an entrepreneur that I think super highly of or that I've worked with before comes to me and says they have a great idea with nothing to do with AI, I'm still definitely going to be really interested in that."

• Quality of the entrepreneur and the idea is crucial, regardless of its connection to AI.

• The shift from traditional workloads to AI workloads is transforming data centers.
• This transformation involves changes in chips, memory bandwidth, networking, and energy storage.

"If you just reimagine the entire Data Center around big AI inference, I think you end up with totally different needs."

• Reimagining data centers for AI will create new specialized solutions and significant market opportunities.

"The amount of AI capacity or and chips like currently created right now we need to create like another like four trillion dollars in market cap in order to satisfy like the amount of capacity that we have."

• The demand for AI capacity is expected to drive substantial market growth and investment.

• Significant capital expenditure (capex) is required for AI infrastructure.
• The comparison is made to previous large-scale investments like broadband.

"We spent about 2 trillion on broadband to date; like we're not there yet. That was worth it."

• High capex in AI is seen as a necessary investment for future value creation.

"I think we're gonna get a lot of value."

• The expectation is that AI investments will yield significant returns.

• The discussion covers both optimistic and pessimistic views on AI's future.
• Potential risks include a massive gap between the wealthy and the poor and extreme scenarios like AI causing human extinction.

"The very bad situation is that there's just going to be this massive gap between the haves and the have-nots."

• AI could exacerbate existing inequalities if not managed properly.

"The bad situation is AI kills us all. That's the Doom situation."

• Extreme risks, while considered, are seen as less immediate compared to more tangible issues.

"I am much more concerned about abuses we actually do understand."

• Immediate concerns include misinformation, hacking, and fraud using AI.

• Examples of AI misuse include creating authentic-sounding media for fraud.
• There is a need for better tools and education to protect against such misuse.

"What happens if you can create really authentic sounding media? Like, are your parents going to not pick up the phone if it's a spoofed phone number and it sounds like you?"

• AI-generated media can be used for deceptive purposes, posing significant risks.

• AI has the potential to revolutionize fields resistant to cost improvement, like healthcare, education, and government.
• Emphasis on exploring and realizing AI's positive impacts.

"When people talk about the Doom scenario, it's really fun and scary to talk about the dystopian Doom scenario, but I think the opportunity cost of not exploring the ways in which you can have an economy of abundance, we need to talk about that."

• The focus should be on the potential benefits and opportunities AI can bring.

• AI can provide personalized education experiences, making learning more effective.
• Notable figures like Andrej Karpathy are working on AI-powered education solutions.

"Andrej Karpathy is trying to create an experience that is AI-powered in education where the most amazing expert in a domain is like a personal tutor taking you through the material interactively."

• AI can democratize access to high-quality education through personalized tutoring.

• San Francisco remains a hub for innovation, particularly in AI.
• The community aspect is important for fostering new ideas and commitment.

"What you have in San Francisco are people who are optimistic and then like work-oriented. They believe lots of things are possible, they're learning about what's going on at the frontier."

• The collaborative environment in San Francisco is crucial for innovation and growth in AI.

"If you're 22, young and single, and you're into this [stuff], I would just say two words: Go West."

• San Francisco is recommended as the place to be for young, ambitious individuals interested in AI and tech innovation.