This is James Currier, general partnered in FX, as investors and builders were optimistic about the future of AI. One experiment among many we've done is we've trained AI avatars of our own voices to read out the essays we write. So this is my real voice you're hearing, but This is now my AI voice. I've been created by NFX to provide essay readouts moving forward. As you'll hear, I am still a pale imitation of the real James Currier, but I'll get better over time.
And if you have suggestions for me, please let us know. This week's article is called 3 waves of successful generative tech startups and was first released in February of 2023. Let's get started. Beller 14 years, there's a tech revolution, internet browsers in 1994 smartphones in 2007 to 2008. And toward the end of 2022. We entered the generative tech revolution. It's the fast moving water after a pre placid decade, and we're just in the 1st wave of it. There are at least 2 more waves to come.
Here, we aim to convince founders to think harder about what you wanna do with this short window of extreme opportunity. It's going to affect every industry. Anything you're interested in. Anything you're working on is going to be impacted by generative tech and generative AIache. It's not just that you're going to be able to take what you're doing and get some productivity gains it's that many areas will be completely rethought and new things that weren't done before will start happening.
In addition to the AI model companies, many unicorns and decacorns will be built starting now. We're already seeing 3 types of winners, 1st wave, wrappers around AI models. I wrote in 2022 that generative tech would have unusual market dynamics because it is already consensus. There isn't the level of skepticism we normally see with new technologies.
That means everyone gets it, and there is a flood of competition from other startups, incumbent and all the huge platforms like Google and Microsoft. In the first wave of generative tech, you get the fast movers. They are selling the benefits of AI and addressing the more consensus customer pain points. They are repackaging the AI into user interfaces. Companies in this wave can win with speed, sales, knowing their customers, and service.
Companies like Jasper are the poster children of this space. They don't focus on having a better AI, but rather they focus on having a better sales and onboarding process They have been amazing at sales and marketing and have taken an early lead in this market from that position. They have many options to build an enduring company as long as they bring excellence all aspects of their business as larger competitors start to enter the market.
This would be the template for nearly any company in this phase, as you can see in the NFX generative tech market map. With over 500 companies now listed, we are firmly in the first wave right now. A lot of companies have similar ideas. Few have started looking around the corner to the second wave.
Second wave, generative AI inside, in the second wave, or the companies that aren't pitching AI, but rather using it inside their businesses to make them faster, cheaper, and higher quality than competitors. They'll use it to gain a competitive edge for totally normal businesses like renovating apartment buildings, doing security checks with software vendors or exchanging legal contracts. In this wave. The customers don't care that you're using AI. You're not selling the AI to them.
You're simply selling something better than other offerings, 3rd wave, visionary, and non obvious the 3rd wave will be the visionary stuff, the stuff that we can't imagine yet when you first saw the smartphone. You didn't think that's really gonna change the taxi industry. It took a few years before we got some of the more revolutionary stuff like sidecar and Lyft and Uber. 3rd wave companies will be built by visionary Pete who aren't afraid to reinvent something as native to AI.
They will find new transactions that weren't possible before. They will find new experiences in both consumer and in business settings that weren't little before. We are all privileged to be here right now to see it and build this. This is a unique time that only happens about every 14 years. If you can wrap your mind around what is happening with these new capabilities and see the future better than others. There is no better time to build something huge.
If you can jump into wave 2 or 3 type companies, you will have an advantage. Most companies are still focused on wave 1 thinking. As you see in NFX's open source map of 500 plus new companies in the generative AI space, typically, the wide open times to create new startups only last a few years. This transition is a big deal, and we are privileged to be here. Not just to see it, but to build it. Thanks for listening to this week's essay readout of 3 waves of successful generative tech startups.
As a reminder, this is still an AI imitation of James Currier speaking. We are having fun experimenting with new tools, but would love to hear your feedback. Email us at qed@nfx.com. Subscribe to the NFX podcast on your favorite listening platform. Share with your network and founder friends and stay tuned for weekly essays and much more.