Goodwater Capital's Chi-Hua Chien says the real AI winners won't be selling AI itself
Tags AI · Enterprise
Chi-Hua Chien, a venture capitalist with over two decades of experience at Goodwater Capital (and who early-backed Facebook), argues that the companies capturing the most value from AI will not be the ones building and selling AI models. Instead, he believes the biggest winners will be companies that use AI to transform existing industries — applying the technology to create new products and services rather than competing in the increasingly commoditized model layer. His thesis draws parallels to the early internet era, where the most valuable companies were not the infrastructure providers but the application-layer businesses built on top of them.
Technical significance
Chien's thesis has significant implications for how venture capital flows into the AI sector. If the model layer is indeed commoditizing — as suggested by the proliferation of capable open-source models and aggressive pricing from major providers — then the returns will accrue to companies that build defensible applications on top of these models. This framing is particularly relevant as AI companies face questions about the sustainability of their business models and the path to profitability.