This has become like a plague. Whenever OpenAI releases new features to ChatGPT, it is often linked to affecting startups that were built around similar functionalities. OpenAI recently introduced two new features to ChatGPT, namely ‘Upload many types of documents’ and ‘Use Tools without Switching.’ 

This new ‘multimodal’ update, according to many, is expected to kill over thousands of startups, if not dozens. Some of the popular names include ChatPDF, AskYourPDF, and PDF.ai, and many more. 

With the latest update, ChatGPT now  not only reads PDFs, but it also supports a variety of document types within the same conversation, including PDFs, images, CSVs, and more. Previously, users were limited to uploading images in the default mode, but now they can seamlessly upload documents and immediately begin asking questions, expanding the platform’s versatility and usability.

Moreover, users are no longer required to specify the ChatGPT mode they want to use. Browsing, Advanced Data Analysis (formerly known as Code Interpreter), and DALL-E 3 will all be available within the same conversation. GPT will determine the appropriate time to activate each mode, such as invoking DALL-E when the user intends to create an image.

PDF.ai’s founder Damon Chen was one of the first ones to react, and humorously shared on X: 

“Last night, I had a conversation with my wife on ChatGPT news. I asked, ‘What if PDF.ai doesn’t succeed in the end?’ To which, she casually responded, ‘It’s just one project. Start a new one.” 

Not all is lost for GenAI Startups

Despite the development, Chen is still optimistic about PDF.ai. “I don’t think ChatGPT will ever implement small PDF-related features that customers desperately ask for.” However, he believes that small players will go away or not even want to get started and big players with VC money will die once they burn all their money soon. But about his own startup he is pretty much assured. 

“PDF.ai is bootstrapped and profitable with a very healthy margin. We don’t have a mission to become another unicorn; several million dollars in ARR is good enough for me, and that’s my goal in the next 1-2 years. I’m 1000% confident we can make it!” he added. 

ChatGPT has been in the market for almost a year, and OpenAI will continue to add new features gradually. OpenAI’s ultimate goal is to achieve AGI, and small features like the ability to read PDFs are just a small part of that larger objective. 

Sahar Mor, product lead at stripe said “UI and ease of use are still valid propositions so vertical startups targeting specific segments can still prevail. Those are the horizontal AI startups that are at risk.”

Mark Zahm, Founder, Glass Acres LLC said “GPT wrappers will exist and thrive as long as GPT exists. Parent platforms can’t fill every niche and use-case. See every extension and plugin..ever.” 

Rowan Cheung  shared on X, “Why is nobody talking about the people getting filthy rich on GPT wrappers right now?” 

According to him, some startups are outperforming billion-dollar companies in web traffic. The list was almost evenly split between wrappers, fine-tunes, and proprietary models. This means that some GPT wrappers are receiving more monthly visits than companies with billion-dollar valuations.

Source: a16z

GPT wrapper-based startups often offer a cost-effective and efficient approach for businesses looking to incorporate AI capabilities without the complexities of building a model from scratch. 

OpenAI is not alone 

Besides OpenAI, numerous startups are emerging, and generative AI businesses are playing a significant role in the rise of unicorns. According to a recent report from venture capital firm Accel, 60% of these new unicorns belong to the Generative AI sector.

Investment in GenAI startups based in Europe and Israel amounted to nearly $1 billion in the past year. This figure, however, is significantly lower than the funding received by U.S. Generative AI startups, which exceeded $14 billion during the same period. 

However, it’s important to note that this data is influenced by a substantial $10 billion funding received by OpenAI alone, as highlighted in the report.

Moreover, as per the recent reports there are several photo AI apps and even other AI chatbots are actually making more money than ChatGPT. In September, both ‘Chat & Ask AI‘ and ‘ChatOn — AI Chat Bot Assistant‘ generated substantial revenue, raking in almost $3.38 million and $2.11 million, respectively. 

Additionally, ‘AI Chatbot — Nova’ and ‘AI Chatbot: AI Chat Smith’ were not far behind, earning approximately $1.44 million and $1.72 million during the same period. Moreover, Character.ai, a chatbot startup backed by a16z, is making waves with 2.39 million downloads recorded as of September.

OpenAI might be ten steps ahead of its competitors with its multimodal capabilities, but that doesn’t mean other startups should simply give up. Instead they can take inspiration from it to make a better product.

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