Big AI Platforms vs. Specialized Tools: Why the AI Arms Race is a Head Fake

Introduction

In this episode, Benjamin Shapiro interviews Tom Chavez, Founding General Partner at super{set}, a venture studio that builds and funds data-driven AI applications. As a serial entrepreneur who has sold companies to Salesforce and Microsoft, Chavez brings a wealth of experience in using AI to solve complex business problems. The conversation cuts through the AI hype to explore what's actually delivering value in the AI landscape and why specialized AI tools might be a better investment than the tech giants dominating headlines.

The AI Platform Valuation Bubble

Tom Chavez makes a compelling case that the massive valuations of companies like OpenAI may be disco ected from their path to profitability. He points out that while these platforms have achieved remarkable technological breakthroughs, the economics remain challenging. "The cost of compute, the cost of electricity are just staggering," notes Chavez. The fundamental question he raises is how these companies will generate the free cash flow needed to justify their astronomical valuations, especially when the path to $10-20 billion in free cash flow remains unclear.

The Wi er-Take-All Gamble

The current AI platform strategy appears to be a high-stakes gamble on becoming the dominant player. Chavez describes it as "a wi er take all kind of game where they just have to keep betting that they can get enough money from the Saudis or whomever to keep it going such that the other players get washed out." While acknowledging this approach has succeeded in tech before, he remains skeptical about investing at current valuations, suggesting that the real opportunity lies elsewhere.

The Case for Specialized AI Applications

Rather than chasing the giants, Chavez is putting his money and effort behind early-stage AI startups that solve specific business problems. These companies typically have more reasonable valuations and clearer paths to profitability. For marketers, this insight is particularly valuable—specialized AI tools designed for specific marketing functions (like Yellow Pad for contract review) may deliver more immediate ROI than attempting to leverage general-purpose AI platforms.

Practical Business Impact

The super{set} approach focuses on AI applications that drive real business impact and streamline operations. This pragmatic perspective aligns with what marketing leaders need: tools that solve specific problems rather than generalized AI capabilities that require significant customization. By focusing on specialized applications, marketers can implement AI solutions that address their unique challenges without the overhead and complexity of building on general-purpose platforms.

Investment Strategy for AI in Marketing

When asked directly whether he would invest in OpenAI or an early-stage AI startup like Yellow Pad, Chavez was unequivocal: "I am betting with my own money and my time and my own sweat on the early stage startups." This perspective offers a valuable framework for marketing leaders considering their own AI investments. Rather than being distracted by headline-grabbing AI platforms, marketers might find greater success by identifying specialized tools that address specific pain points in their marketing operations.

Conclusion

The conversation with Tom Chavez reveals that the AI arms race dominating tech headlines may be misleading for marketers seeking practical applications. While general-purpose AI platforms have captured public attention, the real opportunity for marketing leaders likely lies in specialized AI applications built to solve specific business problems. By focusing on tools with clear use cases and reasonable valuations, marketers can leverage AI to drive measurable results without getting caught up in the hype cycle. The key takeaway is to prioritize practical applications over platform potential when evaluating AI investments for marketing technology stacks.