VCs think, 'Apps are risky, infrastructure is safe,' so they invested in AI infra. "infra is safe" Hmm, but that wasn't a good idea. because if an open source infrastructure project like TensorZero gets shut down this quickly, won't they start to realize that those investment theories are also risky? The difficult thing about AI infrastructure is that, unlike other industries, it will not become fragmented. It will l…
I also believe the same. Many VCs are obsessed with moat that they clearly got wrong. To me the value created at app layers are so much that gives them the flexibility to diversify their infra layers. Good harnessed do not depend on a specific model provider or memory layer or etc that when it is taken down like anthropic fable they get no risk exposure. Many even after growing train their own model like what cursor…
I agree that most people misunderstand the concept of a 'moat' and become obsessed with that misunderstanding. People tend to think that only technical 'coding skills' which they can easily understand constitute a moat. But in reality, the moat is the entire workflow across the product's lifecycle, including coing skills. In that sense, infrastructure workflows are nothing more than 'the most easily replaceable consumables.' The essential purpose of infrastructure is to pursue 'standardization,' which paradoxically means a state of 'zero switching costs' where customers (app developers) can switch at any time to a better API or a big tech built in feature. Pure technology that doesn't latch onto the messy real world domains of customers will inevitably be absorbed without resistance by massive capital.
In some ways, customer lock in at the application layer, or even the fan culture around a product, creates emotional lock in. The end user app that provides a specific workflow integrated into users' daily routines can overcome even technical inferiority through 'experience' and 'emotion.' Technology can be copied, but the user identity attached to a tool is what I think a real moat is.(That is also the reason I love Windows.)
The example you gave, Cursor's Composer, is exactly the case I'm talking about. I think Cursor is inferior, and I don't think its Composer model feature is all that great either. But Cursor has a passionate fan base, and users who choose Composer as the best value for money no longer care about absolute technical performance or benchmark scores. They are captivated by the 'speed of experience' of code being completed quickly as they intended, and the 'frictionless workflow' the tool provides.it's not the company that builds the best AI model that wins, but the company that wraps 'good enough technology' in 'great UX' and dominates users' habits. That is how apps dominate infrastructure, and that's the moat you and I are thinking about.
That said, this conclusion is probably too hasty and has many flaws. Still, your thoughts are so similar to mine that I'm leaving this reply. Thanks for the great comment. Have a good day