Alliance DAO: AI has completely transformed startups, and thinking ahead about competitive advantage is more important than product-market fit
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Alliance DAO: AI has completely transformed startups, and thinking ahead about competitive advantage is more important than product-market fit
Today, thinking ahead about competitive advantages after PMF is more important than ever.
Navigating Web3 tides with focused insightsAuthor: Qiao Wang, Co-founder of Alliance DAO
Translation: TechFlow
Three years ago, when ChatGPT first launched, I wrote a small program to help myself prioritize emails and messages. Since my programming skills were a bit rusty, I chose to use ChatGPT to assist with the coding. At that moment, I immediately felt the power of AI. The project took me only half a day—something that might have taken several days in the pre-AI era.
In the following years, technical founders we collaborated with at Alliance gradually began using various AI coding tools like Cursor. I asked them how much these tools improved their productivity. On average, they reported about a 1.5x increase, with some even claiming up to 2x gains.
This week, I posed the same question to the latest cohort of Alliance members. Their responses indicated productivity increases ranging from 2x to 4x. I was stunned—not just by the magnitude, but by the speed of progress. In just three years, productivity has already quadrupled, and this trend is accelerating.
When I first used ChatGPT as an assistant, I had a vague sense that AI would permanently change the rules of entrepreneurship. Now, I believe it without a doubt.
The cost of building software is rapidly approaching zero. But this is just the beginning. Costs across marketing, sales, customer service, and operations are also dropping significantly. This shift is already visible in large companies. For startups that haven't yet achieved product-market fit (PMF), the impact is still limited—founders must handle user acquisition and support directly to stay close to customers. However, for startups that have found PMF, AI is enabling faster scaling.
This transformation leads to an obvious outcome: startups no longer need large amounts of capital or big teams to grow quickly. In other words, we may soon see more unicorns built by just a few co-founders with less than $500,000 in funding. In fact, over the past few years, we've seen increasing numbers of Alliance startups achieve annual revenue growth in the millions or even tens of millions of dollars after raising only small seed rounds from us and a few angel investors. These teams typically number fewer than 10–20 people and may never need to raise again.
This raises a critical question: if software development and business scaling are now so cheap, what "moats" can companies rely on to maintain competitiveness?
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Proprietary data: Unique customer data or hard-to-access public datasets can serve as competitive barriers.
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Network effects: While it's theoretically possible to rebuild the technical architecture of Facebook or Nasdaq, replicating their user base is another matter entirely.
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Deep integration: Enterprise software deeply embedded in workflows carries high switching costs.
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Ecosystem lock-in: Platforms with strong developer ecosystems and third-party integrations are stickier.
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Regulatory barriers: AI cannot help a company obtain licenses or relationships required to operate in highly regulated industries like finance, healthcare, or defense.
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Trust and brand: Consumers and organizations still place greater trust in well-known brands when making critical decisions.
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Physical world constraints: Physical infrastructure, robotics, and supply chains remain subject to real-world limitations that AI cannot overcome.
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Deep user insight: While AI can help execute decent ideas, true understanding of user needs isn't found in AI training data—it comes from direct conversations with users.
For startups without PMF, achieving PMF remains the top priority. But today, thinking ahead about competitive advantages post-PMF may be more important than ever.
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