The world of AI tech is evolving at breakneck speeds. Among the frenzy of innovation and the explosion of Large Language Models (LLMs), a huge industry is being created in the shadows. The frequency of model updates and new open source GPT models released almost daily is staggering. It’s an exciting time to be in tech, and it’s about to get even more thrilling with the rise of AI as a Service (AIaaS).
What is AIaaS: The New Paradigm Shift
AIaaS represents a paradigm shift in how businesses leverage artificial intelligence. Tech titans like OpenAI, Google, Microsoft, and Amazon are turning to AIaaS, selling AI and GPT services at premium prices. Over the next five years that increase in demand is expected to skyrocket. However, this high demand comes with a caveat – small businesses may struggle to afford these high-end models from large corporations. One of the best ways we can make a big impact, is with the clients own data stores. Big data engineers will fine-tune a model to maximize the response. These kinds of services will not be available to small business owners. At least from the big box stores
This challenge paves the way for a whole new sector within the tech industry. Companies offering AI as a Service can fill this void by providing model tuning and hosting services at accessible prices. This concept is reminiscent of the early days of Software as a Service (SaaS). Back then, as it is now, the best time for first-time founders to grab market share was at the birth of an industry
Case Study: Stead Port AI
One such example of a company seizing this opportunity is Stead Port AI, a member of our portfolio at SaaS Labs. They’re an AIaaS targeting a modest 2000 clients at an average MRR of $450 each, which translates into a potential ARR of $10M for this ambitious startup. That’s an easy $50M acquisition if their growth numbers make sense
Back in 1993 (I just graduated highschool), there was a sense of excitement that surrounded the internet. But only a handful of people truly understood what it would become. With the birth of these AI models, it also feels strikingly similar to the early 2000s, right before the Software as a Service model took off. These moments of new technology provide amazing opportunities for forward-thinking entrepreneurs. The best time to plant a tree was 15 years ago, but what’s the second best time? It’s today
The Impact of AI Tools on Workflows
Even if you’re not aiming to create the next big AIaaS company, this trend is worth your attention. Companies that incorporate GPT into their workflows are primed to outpace their competitors. For instance, AI tools like GitHub’s Co-Pilot are already helping developers write code. AI can generate persuasive marketing copy, create stunning visuals, and connect to tools like Zapier. They’re already transforming workflows and the speed with which we create top-tier work. We haven’t even scratched the surface of what these tool are capable of doing.
The Need for AIaaS
However, with this rapid adoption, it is also essential to consider a separation of concerns. We need to be thoughtful about how we connect these tools to our products. This is another challenge that companies like Stead Port AI are trying to address, but we’ll delve into that topic in another post.
The internet and SaaS revolutionized the tech industry, AIaaS will do the same. As AI, GPT, and LLMs grow, the demand for accessible AI services is going to skyrocket. Whether you’re a start-up founder, an investor, or a tech enthusiast, it’s an exciting time to be in the game. Keep your eyes on AIaaS (and Steady Port AI) – it’s more than just a trend; it’s the future.
