OpenAI’s recent update to its ChatGPT feature has the potential to significantly impact startups that rely on PDF interactions. This beta feature allows ChatGPT users to upload PDFs and extract information from them through interactive questioning. While this is a useful addition for ChatGPT Plus users, it poses a challenge for other startups offering similar services.
Startups that have built their businesses around ChatGPT’s limited interaction with PDFs may now find themselves competing with the enhanced capabilities of ChatGPT itself. These startups, known as wrapper startups, wrap their services around APIs like ChatGPT to provide unique functionalities not directly available from the API. However, with ChatGPT now able to interact with PDFs, the question arises: what can these wrapper startups offer that ChatGPT cannot?
Sahar Mor, product lead at Stripe, expressed his concerns on LinkedIn, stating that OpenAI’s move could wipe out numerous AI companies, particularly those in the wrapper startup space. However, it should be noted that these startups are not necessarily exploiting a weakness in ChatGPT. OpenAI opened its platform to developers earlier this year, allowing them to integrate ChatGPT into their own products and applications.
One prominent example of a wrapper startup is Jasper AI, valued at $1.5 billion at the start of 2023, with support from major venture capital firms. Jasper AI developed an AI copilot tailored for enterprise marketing teams by wrapping around OpenAI’s GPT model. However, the company has faced challenges, including a decrease in internal valuation and layoffs.
Another example is Alex Reibman’s ChatOCR, a ChatGPT plugin that reads text from PDFs, including scanned documents and handwritten text. Following the recent ChatGPT update, Reibman conducted a poll to gauge the potential impact on his plugin. Out of 210 respondents, a staggering 72.4% anticipated decreased usage for the plugin.
Startups that rely on offering user interactions with PDFs through wrapper tools like ChatGPT will need to differentiate themselves significantly from their competitors to avoid being overshadowed. Investors may need to reassess their bets and consider whether they have placed their trust in the right companies.
OpenAI’s update to ChatGPT reflects the rapid evolution of AI technologies and the challenges that arise for startups operating in this space. It also underscores the importance of continuous innovation and finding unique value propositions to thrive in the competitive AI market.
