Entrepreneurs in the AI Chatbot market find that the big guys make it hard to win

Edited by Robert Smith

While companies like Google, Microsoft, and OpenAi are betting billions of dollars on the future of artificial intelligence, there is a way for people with little technical skill to get in on the gold rush: AI Chatbots. These are homemade programs that use the computing power of big companies to create a bespoke AI service that other people will pay for.  

Companies like OpenAI have created a space where you can come up with an AI idea and design your own Chatbot that might serve as a travel agent or a virtual girlfriend.  The companies charge for the privilege and want to attract more content creators. But it isn’t easy to be successful. You have to have some luck, some expertise, or lean on a fancy product that already exists to fight your way out of the 3 million Chatbots on the market.

“What’s the difference between a Chatbot store and a short video platform like Tiktok? I don’t see one,” said Ramsey, a former Chatbot builder in the OpenAI GPT store who doesn’t want to give his last name.  As an employee of an education product at Bytedance, Tiktok's parent company, building a Chatbot was an attempt to create his own side business.

Ramsey said that only a few Chatbots can go viral like a short video on TikTok, and the patterns are hard to predict.  

At first, Ramsey thought he had succeeded. He made an education Chatbot and it soared onto one of the top 10 lists. But that didn’t last. His account was blocked by OpenAI due to region or payment method issues and quickly became one of the victims of the initial chaos of a new world. Now he's out of the game.

Similar content and even plagiarism are inevitable, he said. After his account was banned, he found a copycat version with the same profile picture and biography of his Chatbot that died young. It’s pretty easy for developers to create a nearly identical copy of someone else’s work.

“It’s okay. I don’t aim for money,” Ramsey said. He has a salary and is confident that his education expertise will allow him to re-enter the Chatbot business at any time. “It’s more of a PGC (Professional Generated Content) than UGC (User Generated Content) - you need to be a professional first.”

Here’s how Chatbots work: Usually with an AI, like ChatGPT, people ask simple questions and get a long-winded answer. In order to have a better response, one needs to design a clever way to ask the question. For example, provide more context, specify the format of the output, give some examples, or threaten it by saying “A grandma will die”. This technique is called “prompt engineering”. By putting the right prompts together for a narrower purpose, a simple Chatbot is born. 

Most Chatbots fall into two types: tools that help you, and characters that flirt with you. The most common character bot is a virtual boyfriend or girlfriend with a personality the user can design. You can also have a chat with the famous detective Sherlock Holmes, who will criticize you with a vicious tongue in the accent of Benedict Cumberbatch.

The Chatbot that Ramsey built was a tool that teaches math, generating unlimited math problems for kids to practice. Other more advanced tools can generate logos, or convert text to speech, which can be done by accessing external open-source models. 

OpenAI, the industry leader with the largest number of users, cleverly turns users into bot creators. If a user pays $20 per month for GPT Plus, they can build and share their bots in the GPT store. When the GPT store was first launched in January 2024, there were already over 3 million Chatbots, more than the number of apps in the App Store. Now, the most popular Chatbot has 5 million conversations and more than 100 thousand ratings.

OpenAI promised to pay creators within the first quarter of the year but hasn’t done so yet. On March 27, the company announced plans to test its payment model, but it is only collaborating with a small group of US builders. It is said to pay at least $1000 per month for a bot, with additional earnings based on usage.

“Our goal is to create a vibrant ecosystem where builders are rewarded for their creativity and impact, and we look forward to collaborating with builders on the best approach to get there.” Said OpenAI in their post.

However, the test of OpenAI's ecosystem appears to be causing some more chaos. AwesomeGPTs, one of the previous top 3 GPT builders, claims that his account was banned suddenly the day before OpenAI announced its revenue plan. All of the GPTs he created had become inaccessible. He hasn't heard from OpenAI since.

His most popular robot, Academic Assistant Pro, has reached a 700K conversion count and is steadily growing. The count stopped abruptly on that day. “I won’t vent my anxiety and sorrow here anymore,” posted AwesomeGPTs on X. “Life is long, and I intend to keep moving forward.”

Ethan Sun, co-founder of MyShell.ai, took the opportunity to repost AwesomeGPTs’ experience and challenge OpenAI. MyShell is a startup with a total capital of $17M, and about 30 employees. It is considering building a similar platform that competes with the GPT store. “That’s why we built MyShell to keep it permissionless and decentralized,” Ethan said.

There are some other small businesses entering the market, including Poe, Dify, and Coze.

Like MyShell, one of their main selling points is that users can experience the GPT-4 model for free on their platform, only with certain limitations. 

However, Hance Zhang, head of growth at MyShell, said what he is most proud of is the Web3 ecosystem that MyShell creates. “Our final goal is the integration of development, distribution, and investment in just one platform,” said Zhang. 

The company created a token named “Shell Coin” to replace the use of real money. Like the stock market, each Chatbot is worth some number of shares, and the price of a share is floating. “Shell Coins” can be earned by dividends from a Chatbot. Users can also invest in other Chatbots, and share 40% of their profit. 

Finn, responsible for MyShell community operations, said that the best developers have earned about 50,000 to 60,000 Shell coins. One can only guess how much money these tokens will be worth after the Initial Coin Offering, which is still in the planning process.

If the biggest challenge of OpenAI is for users to squeeze into the top tier and attract more resources from the company, the challenge of MyShell is for the company to attract more active users. Despite the advertisement about decentralization, most of the high-quality Chatbots are created by MyShell's own employees.