NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

Digital Driver’s License? Apple and Illinois Get It. Your Business Should Too

Business owners should expect Apple’s New Digital ID technology to spread nationwide and expand to provide additional functionality.

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

Nov 25, 2025

 

 

Just in time for holiday trials, travels and other tribulations, Illinois Secretary of State Alexi Giannoulias announced that Illinois has teamed up with Apple to be the largest of more than a dozen states to date to fully implement a statewide program enabling its citizens to quickly add their Illinois driver’s licenses or state IDs to the Apple Wallet on their iPhone. A few simple steps and you’re good to go. Quicker, more convenient, and much safer, it’s a huge step forward—especially for anyone who’s ever left their wallet at home or lost their license.

Forget about grabbing your wallet while both of your hands are already full; you’re holding up the TSA line; and you’re getting dirty looks from everyone in line behind you including your own family. Now you just tap your phone, and the job is done. Same deal while you’re freezing your butt off standing in line and trying to get into a concert or sporting event. And proving your age at bars and restaurants will now be a piece of cake. For the college kids with fake IDs, life just got a lot tougher.

If you own or operate a consumer-facing retail enterprise, entertainment venue, or other age-gated institution, get ready. You can expect this technology to spread pretty quickly nationwide and expand to provide additional functionality and benefits. The Illinois arrangement with the TSA already covers more than 250 airports across the country.

Google and Samsung wallets will also be covered in the near future so that even those using Android devices will be able to use the program. It’s important to note that the digital license is not acceptable for any interactions with law enforcement, so you still need to carry the real thing when you’re driving. Lots more to come down the road including, I would guess, systems that will eventually enable digital identification for voters.

In any case, for a guy who just took office in 2023 after his predecessor spent 30 years in the job, Giannoulias has moved rapidly to address the structural problems, hidebound procedures, and ancient code that he inherited and also to implement the changes and updates he promised when he ran for the position. It’s not easy to balance the need to clean up the past messes and move the machine forward at the same time, and a lot of the burden falls on the crack IT team that he’s assembled. He has been very diligent in giving credit to his IT team and following some of the directions I set out in 2016 for IT professionals. These ideas are just as critical and relevant today as they were a decade ago for every tech-centric business and, by the way, there are no longer any businesses that aren’t tech-centric.

By far the most important idea I suggested was to focus on the future and stop patching the past. I suggested that it was crucial to build new bridges on top of old code rather than just adding more patches and bandages. Eventually, if you keep at it, you can toss the old stuff and move entirely to new structures. One of the smartest choices that Giannoulis made at the outset of the digital license project was to partner with Apple for three main reasons.

·         First, he didn’t have to try to find and attract the right audience for his new innovation. Everyone who has an iPhone has immediate access to the Wallet as well, so there were literally millions of folks already equipped to use the new feature on the day it was released. It saves enormous amounts of time to ride someone else’s rails who has already built a user base.

·         Second, by partnering with Apple, he gained access to their existing technology, avoided substantial development and resource costs, and was able to rely upon all of the already installed devices nationwide which were capable of connecting to and communicating with the iPhone. Rather than trying to reinvent the wheel and ending up with a less robust and reliable offering, he was able to incorporate all of Apple’s years of investment and expertise into the Illinois system.

·         Third, because there were substantial issues and discussions with various interested parties about privacy and security and because this was one of Giannoulias’s primary concerns, he was able to partner with the nation’s leading advocate for privacy and one of the most security conscious tech companies in the world and make those important attributes part of his program. No one has a better reputation in these essential areas than Apple.

While this is simply the latest improvement that’s been implemented in a relatively short time, the real message for change agents, new business builders and, frankly, for seasoned business owners as well who don’t want to get left behind is that everything today in service sector—whether you’re a government agency or a private entity—is about three things: speed, convenience and security/privacy.

This has been Secretary Giannoulias’ mantra from day one—attacking the “time tax” that we all pay every day for inefficiency, incompetence, and simple bureaucratic and procedural friction in our interactions with government agencies as well as with plenty of other institutions. I call this the business necessity of being there when the buyer is ready to buy—ready, able, prepared, properly equipped, and fully engaged. Today, our time is more valuable than our money, and it’s the scarcest resource we have.

But any successful service strategy must be combined with a sincere demonstration of interest and concern. My impression is that this EQ component is the secret sauce that Secretary Giannoulias has brought to his work and to his team. He radiates this commitment and energy every day. While technology is a powerful tool to assist in this process, the real key to consistent improvement and service success is to educate, energize and excite your team about the importance of delivering the right information, the appropriate solutions, and an emotional experience that demonstrates a real interest in and clear empathy for every individual they interact with on a daily basis.

No one cares how much you know until they know how much you care.

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

How Apple Is Quietly Crushing the Retail SIM Business

Millions of iPhone users worldwide will now have to use eSIMs and download SIM profiles digitally.

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

Sep 16, 2025

 

I’ve always resented Apple’s consistent strategy of screwing millions of consumers from time to time when a new Apple product requires the abandonment of prior Apple products and the purchase of new accessories for no good reason other than to squeeze out extra profits. This started way back when in 1984 when the Macintosh was introduced and every Apple II gamer in the world quickly discovered that their entire library of games was useless because they wouldn’t run on the Mac. Apple decided to simply kiss off those dedicated users and didn’t build any backward compatibility or emulation of any kind for the Apple II in the new machine.  

Even if you weren’t around back then or playing games, you haven’t escaped the doctrine of “douching the dumbbells” because you’ve discovered that power cords, headphone jacks, USB connectors, cases, and other accessories (including all those made by Apple itself) have, over the years, been superseded or outmoded and, as a result, consigned to the junk heap or abandoned in some drawer and retained for no good reason.   

And the upgrade and decommissioning process has never stopped—all allegedly in the name of progress and new technology—but ultimately in the service of the almighty dollar. Just as an example, in the newest wave of iPhones that are just about to be released, the power cord that’s included won’t actually plug into any electrical outlet in the world. Surprised? If you want to charge your phone, you’ll have to supply or purchase an adapter with the appropriate openings and prongs and, by the way, all your old USB adapters won’t work.  

I’m not sure about the charging cords for the new Apple watches (the early pictures look similar to the old units), but Apple certainly wouldn’t be above requiring a new charging cord for the new watches as well. Shameless doesn’t begin to describe these guys, although watching Tim Cook say “thank you” eight different times to the Orange Monster in the recent techbros White House meeting was certainly an indication.  

But, as always, there’s another surprise around the corner—the infamous Steve Jobs’ “one more thing”—and this time the guys getting gored aren’t just the consumers and end users. The new iPhone Air has quietly disappeared the SIM card tray and gone all digital globally which means that millions of iPhone users worldwide will now be forced to use eSIMs and download SIM profiles digitally rather than buying physical SIM cards. Could this be the beginning of the end of “burner phones” for drug dealers and other criminals? If so, it’s another stake in the heart of online and digital anonymity.

This new “mandatory” approach (the technology has been around since 2018 and U.S.  iPhones became eSIM only in 2022) will prove to be easier, safer and far more convenient for consumers in buying and managing their connectivity, but it’s likely to kill the entire retail-driven channel that sold physical SIMs. We won’t see airport kiosks, 7-11 card displays next to the lottery tickets, or nearly as many other counters in retail outlets for much longer. Consumers won’t have any reason or incentive to leave home. They’ll welcome the digital-first online experience, and will be happy to avoid the unnecessary travel, pushy middlemen, and, of course, the extra fees. More importantly, this approach will make it much easier for users to switch carriers, change their plans without visiting a phone store, and acquire service and connectivity when travelling outside of the U.S. far more easily.  

Although this new digital-first solution is going to completely change the way cellular service plans and connectivity in general are sold, we can expect that the telephone companies themselves will take their sweet time in reacting and adapting their approaches and offerings and moving from a retail emphasis to digital distribution. And the pressure on them is likely to increase as the other phone manufacturers like Google and Samsung quickly follow Apple in offering eSIM-only models.   

But a far better bet for a near-term solution are young players and first movers in the space like Saily which is creating one-stop apps that permit consumers to effectively and instantly access a connectivity marketplace and choose their plans and solutions right on their phones and on the fly from wherever they may be. Saily is a travel-focused eSIM app founded in 2024 that allows users to purchase and activate local data plans instantly via eSIM, eliminating the need for a physical SIM card. The founders had a lot of prior experience with VPNs and made sure to incorporate security features that are implemented on a network level (rather than on each device) in order to deliver maximum protection and secure connectivity. The primary initial targets were international travelers who no longer needed to find and purchase local physical SIM cards as they moved from country to country.  

It will take a while, but the die is cast, and, thanks to Apple’s aggressive move, the retail SIM business is dying right before our eyes. More importantly, if the telco providers don’t move quickly to reconfigure their offerings and their marketing strategies, the little guys like Saily will take over and control the direct-to-consumer channels. The one thing we have all learned about the Internet is that it absolutely hates and ultimately destroys every middleman.    

 

Set a Good Example, Or Your Team Will Follow the Bad One.

 

Set a Good Example, Or Your Team Will Follow the Bad One.

Your team will always be looking for clues about how to behave toward customers, vendors and each other. Right now, they’re getting nothing but bad advice from the highest level.

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

 

May 27, 2025

 

As a young lawyer, I was introduced to a custom in our firm in which the rookies had to handle the many strange and simple lawsuits regularly initiated by one of our most litigious clients. This gent was in the towel-and linen rental business and whenever a customer failed to pay their bill or to return all of his items, he would insist that our firm immediately file a lawsuit.

These were not substantial dollar claims, and it quickly became apparent that filing them made no financial sense because the hourly legal costs far exceeded the value of the claim. The older attorneys in the firm believed that the client was more than a little nuts and each had their own war stories about their time in the “towel tank” as it was called.

In truth, the “honor” of handling these largely frivolous cases was halfway between helpful (learning the ins-and-outs and the arcane procedures of Chicago’s civil trial courts) and hazing (making sure the newbies knew their place), which bordered on harassment. To be slightly fair, learning to cultivate friends in low places at the clerk’s offices and begging them to help you learn the ropes was an invaluable life lesson. More importantly, even though young lawyers quickly concluded that this work was just slightly above ambulance chasing, the client loved every battle and happily paid for the privilege.

In fact, he absolutely prided himself on his reputation as a lunatic who would sue anyone who crossed him. He wasn’t stingy or frugal in the rest of his affairs and, in fact, he owned a great deal of property and bought and sold many businesses over the years, which was clearly why the firm’s senior partners were happy to appease him. But he relished his reputation – well-known across the city and his industry – as a guy who would sue you for a song.

If this propensity to sue everyone for little or no reason sounds sadly familiar these days and reminds us of the daily, illegal threats and extortionate practices of a certain Orange Monster, it’s not an accident.

But the point of the tale isn’t about the stupid or ugly actions of the client. What’s interesting is the impact on his customers and how it changed their behavior. In the very same way that Trump seeks to have the entire country bend a knee and obey his every demand, the Towel Tyrant made sure that every single customer knew that he wasn’t someone to be trifled with, put off, or stiffed. Result: his accounts receivable balances and bad debts were a wonder to behold.

Unfortunately, it’s not easy or often even possible to control the scope, distribution or reach of these actions and philosophies, or the messages they send, or exactly whose behavior they impact. Suffice it to say that there were plenty of prospects who happily found other vendors rather than having to deal with this guy. And others in the industry who – taking a page from his playbook – treated him just as shabbily as he treated his customers.

Enough has already been written about the direct results of Trump’s illegal orders, actions, and schemes.  But we’re just beginning to see how his in-your-face actions and constant outright grifting have begun to change the behaviors of millions of consumers and customers. Any day now you can expect to start seeing the costly and unfortunate behavioral changes in your own businesses that we’re already seeing all over Chicago.

The Trump rot is spreading, and it seems that millions of aggrieved individuals – especially the younger generation of inner-city kids – have decided that, if Trump can do whatever he pleases and get away with it, then why should they follow the rules, obey the laws, respect their neighbors? Why shouldn’t they simply take whatever they can get their hands on?

If you’re in a consumer-facing business – food, entertainment, education, medicine or government service – you’ve already seen dozens of social media videos and news stories showing stores robbed and trashed by hordes of teens. They smash display cases and throw registers around malls, refuse to pay for fast food meals and attack staff.  At big box and warehouse stores, security teams have been overwhelmed, outnumbered and beaten by thieves and other troublemakers.  

Making it okay to behave badly.

In a word, Trump’s overt and shameless lawlessness has given permission – if not direct approval – to every kind of deadbeat, bad actor, teenage wannabe gangbanger, malingerer and criminal to act out, cheat, steal and attack people and property with an inflated, unfounded and arrogant sense of grievance, entitlement and reparation. Trump will never be a good example of anything, but at least his corruption and narcissism can serve as a horrible warning of where we’re headed.

As the videos convincingly demonstrate, these aren’t people to be reasoned with, appeased or placated. The turmoil and the thefts are all an intended and important part of the exercise and the entertainment. They start with the proposition that “what’s mine is mine and what’s yours, we’ll talk about.” Chicago’s own racist mayor tells these fools that they’re entitled to take back what was stolen from their ancestors centuries ago and that he’s happy to lead the charge.

So, what exactly is any business owner or manager supposed to tell their team about how to respond to these growing threats to their operations? Customer service takes a backseat every time to server safety. The last thing any employer wants is to have their employees injured as they unsuccessfully try to protect the company’s property and merchandise. This chaos and loss of control plays into the hands and demented plans of an aspiring autocrat who would love nothing more than to invoke martial law and send troops into our major urban centers.

We’ve already seen that major retailers like Apple have instructed their employees (for insurance and liability reasons) to just stand by and let the thieves abscond with whatever they can quickly grab. No one thinks that this policy makes sense, but other than intensifying their onsite security and securing their doors, it’s not clear that any vendor has come up with a better solution. Some of the high-end jewelry and clothing stores in major cities are reconfiguring their entries to resemble the sally ports that traditionally limited direct access to prisons, banks, and other secure facilities.

CVS has addressed its “shrinkage” issues by locking up the store’s expensive merchandise inside plastic cases which – as you would imagine – has adversely impacted the shopping experience for actual paying customers. The high security approach gives their own staff another set of distracting duties—they have to open the cases for customers– and time-consuming responsibilities. And, in those areas where things are really out of control, we’re seeing stores simply closing.

It’s easy to lose faith and feel that things are hopeless and getting worse and, worse yet, that there’s no solution in sight. But that’s not the way that good people and great entrepreneurs think. We’re able to see and honestly admit that the challenges ahead seem daunting, if not overwhelming, and that our current leaders clearly aren’t up to the task of making things better.

But we still put our heads down every day and move forward with the heart, the critical energy and the determination that it’s going to take to make changes for the better. Chicago has been reborn many times over its resilient history and it’s up to all of us to do it again.  

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

Sales Is Storytelling: Here Are 5 Keys to Mastering It 

The sale is in the story, not in the product or in the seller. That’s true about being an entrepreneur, too. 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

DEC 24, 2024

The basic attitudes and skill sets that make for a great entrepreneur, I’m convinced, are exactly the same life skills that we need to be teaching our kids and our team members. That is, if we want them to be successful.

Everyone has their own favorite list of the essential qualities and talents that new business builders require. Here are mine: passion, preparation, perspiration, perseverance, and principles. But I’d say there’s no question that one capability primes these attributes and ranks far above the rest. And that’s the ability to tell an effective story.

Stories are the way we sell ourselves, our products and services, and how we build connections with others as well. No one ever made an informed purchase decision because of a number. They need a story.  An authentic one. If the stories aren’t honest and authentic, then the whole process falls apart.

Storytelling is a remarkably powerful tool and the irreplaceable essence of great leadership, whether it’s spinning a great yarn, firing up the team, sharing war stories from the imagined good old days, or just laying out – clearly and concisely – the most compelling vision for a business or a career. That story should also include a chapter on the path forward, and the sacrifices required to make that dream a reality. A well-told story can change the world’s mind and has done so many times in the past — as long as it’s ultimately grounded in the truth.00:0001:56

Apple is one great example. At one point, Apple’s refusal to cooperate with law enforcement (which wanted Apple’s help to break into bad guys’ iPhones) threatened to damage the whole brand. Tim Cook launched a worldwide privacy campaign even changing the Apple logo to a locking image in its ads. That put the company on the consumer’s side. The story was simply that consumer privacy is more important than anything else. Apple eventually became such a strong advocate for that position that other companies were forced to assume a similar posture. Instead of being seen as a nasty and recalcitrant tech firm, Apple became a hero of the people, a company willing to stand up to the government.  

Storytelling is the way we teach and the way we learn. Stories are lessons embedded in language (written, spoken or seen) and they can bring us together or they can tear us apart.  The stories we tell others help us to share our knowledge, experience and wisdom. The stories we tell ourselves give us faith, courage, inspiration and the strength to bear on against seemingly insurmountable odds and obstacles.

But the stories we tell our teams, partners, peers and children and the ones they create and tell themselves are the most crucial of all because those stories can heighten their horizons and broaden their perspectives or, in an instant, can crush their creativity and enthusiasm and condemn them to a bleak future.

Unfortunately, storytelling talent is much like technology itself– it’s basically neutral and it can be used or abused. As Sara Bareilles sang and presciently warned in Brave: “you can turn a phrase into a weapon or a drug” and “nothing’s gonna hurt you the way that words do”.  In today’s sad and nasty meme culture, you can turn a stupid motto like MAGA into a movement – for better or for worse – and excite or inflame millions of listeners in the process.

We’ve done a great job of enabling and empowering enhanced expression, where our stories spread instantly around the world. But we’ve done a lousy job of explaining the ethical and moral responsibilities that come with the expanded power to persuade and the weight and impact the stories we now tell can have on other lives. You can’t get grace from gadgets.

No amount of technology is ever going to turn a bad story into a good one, but plenty of liars still make massive incomes online in our low information, widely distributed, and largely anonymous digital economy. Some even get elected to high office.

An important part of any leader’s job is to let everyone know that not every great narrator is someone worth listening to. And notwithstanding the MAGAt-mess we’re facing and the malicious and mendacious messaging that we’re seeing all around us from Trump, his sycophants, and his enablers (who believe that you should never let the truth get in the way of a good story), the fact is that you can’t pray a lie or ask people to ignore what’s in front of them for too long before the whole house of lies and cards comes tumbling down. At least that’s what we’ve got to believe.

The smartest entrepreneurs know that without substance, fundamental beliefs and ironclad integrity, you can’t build a solid and sustainable foundation for anything of value – not a business, a culture or a life. There aren’t multiple versions of the truth – or alternative facts – and there never were. The best storytellers put relevant, accurate, and important facts into an appropriate context and then deliver them with emotional impact.

If you’re going to teach someone how to tell a compelling sales story, don’t waste your time concentrating on the particulars of the person, product or service that they’re trying to sell. Instead, always concentrate on the five most critical considerations and keep them firmly in mind during every contact or conversation.

(1) No one cares how much you know until they know how much you care.

Establish a personal connection before you ask for the sale and make sure that you have the buyer’s interest and attention. Whatever else you’re selling, you’ve also got to sell yourself. Engage with the person before you start explaining the program. Connect and then convince.

(2)  Customers want ¼-inch holes, not ¼-inch drills.

Focus on a few critical concerns of the buyer, listen carefully, and tell a simple story about how the buyer’s needs are addressed by what you’re selling. This is about the results, not the tools.

(3) Customers buy for their own selfish reasons, not yours.

Demonstrate an immediate benefit to the buyer – how it saves time or money; how it makes the buyer more productive; or how it helps them make better decisions. Other people don’t always dream your dream.

(4) Get a Calendar.

Almost everything in life is about timing. Context trumps content – you need to plan to have your conversations at the right time. You want to be there when the buyer is ready to buy.

(5)  It’s only a “No” for now.

The best and most successful salespeople don’t take “No” for an answer – especially from people who can’t say “Yes.” It’s all about persistence. Start with what you have, build from there, and don’t quit until you cross the finish line.

At the end of the day, I always remember what an old cosmetics salesman once told me. He said that, in the factory, they make make-up, but, in the stores, they sell hope.

 

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

  

Apple is All Ears-- How It Made Hearing Aids Affordable.

Hearing loss affects millions of people, but hearing aids have been expensive and sales have been dominated by a few companies. The new AirPods are going to challenge the status quo. 

 

Expert Opinion By Howard Tullman, General managing partner, G2T3V and Chicago High Tech Investors @howardtullman1

Sep 17, 2024

When you reach a certain age, the content and frequency of the topics in your day-to-day conversations change dramatically. They shift to matters like insurance, social security, vaccinations, driver's license renewals, downsizing, medical and dental professionals who are retiring, recommended mechanics, gardeners and such. 

And of course, medications: especially those miracle-working, OTC drugs which promise to restore your memory, lubricate your joints, and put new pep in your step. Sleep aids, digestive relief and diapers of all kinds are less overtly discussed, but nonetheless central to these ongoing considerations. Whatever your age, these are matters you always expected would be subjects for your parents to have to deal with rather than you. Alas, age creeps up upon us all.  

No small part of these conversations is driven by the endless, omnipresent, and inescapable network TV ads for every conceivable and newly invented or imagined disease or condition related to skin, eyes, heart, lungs and you-know-what that can be abbreviated by two or three letters or simulated by a vegetable. Honestly, I'll never look at a carrot the same way again.01:49

And it's not just aimed at seniors. The latest rage also seems to be ads that encourage parents to dose their kids with various preventative shots and medications to avoid the prospects of medical problems that may or may not occur decades down the line. One series of ads warns against Pneumococcal disease which may not be active for many years. A smaller dosed variation of the COVID shot is also now being pushed by the CDC for kids aged 5 to 11. Don't even get me started on the pitches being made on both coasts to start teenage children on the new generation of weight loss drugs, so that slightly porky Pete or chubby Charlotte won't be shunned forever by their peers.

And there's very little prospect for millions of us to escape the onslaught without paying for the privilege. This is the latest form of buying peace. The pain of advertising is just another tax on the poor. When you consider that an average professional football telecast runs more than three hours with only about 12 minutes of actual, on-field, action, and the rest of the time jammed with ads, it's easy to understand why streaming without ads continues to explode as we all attempt to flee the flood of indiscriminate promotion and marketing. In fact, streaming viewership is actually closing in on broadcast and pay TV and I'd expect the competitive contest to be quite close or even by the end of 2025.  

One of the products that has largely been absent from broadcast advertising (although a huge presence in direct mail) has been hearing aids. That's because the manufacturers and providers, having enjoyed a government-protected oligopoly that prohibited over-the-counter sales and required prescriptions, could literally wait until the customers came to them. After the barriers began to erode in 2017, and OTC sales were eventually permitted for people who had moderate hearing loss, the retail marketplace was still modest even with players like Costco moving aggressively into the space because the FDA did nothing to implement the new rules until the Biden administration demanded action.

But that safe harbor ended entirely last week when Apple announced that--in combination with the iPhone -- the new AirPods Pro 2 will function as a hearing aid, approved by the FDA. Consumers will be able to self-administer a test run by an application on the iPhone to check their hearing. Far more importantly, these new AirPods will sell for less than $300, as opposed to $4,000-to-$5,000 for traditional devices.  Apple isn't alone in the new space - Sony and Jabra and others will have similar solutions.  But, as always, Apple's entry makes the market.

Not only is it about time, it's also only fair. Because they're the ones whose iTunes blew out our ear drums for years with the same ubiquitous little white devices.

HOWARD TULLMAN JOINS LISA DENT ON WGN RADIO TO DISCUSS A.I.

 LISTEN TO THE SHOW HERE

LISTEN TO THE SHOW HERE

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

You Need to Get Real With AI and LLMs

Trying to harness all the world's knowledge to create a sales lead or a new product will only send your company down a variety of rabbit holes. Industry-specific models are emerging that will help you narrow your focus. 

 

Expert Opinion By Howard Tullman, General managing partner, G2T3V and Chicago High Tech Investors @howardtullman1

Sep 10, 2024

Everyone is talking about ChatGPT, LLMs, and AI, and they all want to know about the opportunities and risks these new tools and technologies represent to makers, markets, and, of course, mankind. Most of the conversation seems to be quite high-level and mainly strategic. You don't hear much about the practical, operational, and tactical concerns that any entrepreneur who's thinking about building a new business based on these tools should be addressing. You can spend your time building castles in the air, but, as Thoreau said, the most essential task is to put solid and sustainable foundations under them. Otherwise, you've built nothing of substance or value.

There's an enormous wave of new AI-focused startups enabled by chat-derived interfaces, but they suffer from two debilitating deficiencies.

First, they are sitting on top of too much, rather than too little, information. Even if you employ the world's best prompt engineers, they aren't miracle workers, and will soon report back that there is little likely to be gained by attempting to broadly interrogate vast and largely irrelevant stores of information. You need to fish where the fish are, rather than in the entire ocean. The fact that access to the generalized Large Language Models (LLMs) has been commercialized and simplified isn't a reason to waste your time and effort, because it won't get you to where you need to be. It's exactly the same as the old story about the man looking for his lost keys next to a streetlamp--because the light was better there. 01:49

The somewhat encouraging news is that at least a portion of the latest entrants are now starting to offer, market, and fundraise based on variations of a single theme--the successful implementation of industry-specific inquiry systems designed to interrogate one or more of the LLMs that have been built by the four or five tech major players. The idea is that they will build inquiry tools that limit and focus their tasks only to those portions of the universal datasets that relate to a given industry, and use and incorporate distinct terms and particular language.

Building these "industry-specific" overlays is actually one of the first cases of a grudging recognition of the obvious fact that asking any general LLM a detailed question about your specific business is a fool's errand, very much akin to attempting to boil the ocean. You'll get back vague, broad, and useless pronouncements (with the occasional hallucination) and not much else. A proprietary LLM built upon an underlying dataset that relates to your specific area, interest, business, or industry is the only smart approach. This will save time, money, and your technical resources, and will be far less costly and much easier to develop in-house rather than through third-party vendors.

The second major concern for many of these new players is that they don't remotely have control of their own destinies because, at best, they're mere renters of the powerful LLMs that underlie the entire industry infrastructure. These, unfortunately, can be altered, limited, withdrawn, or priced in ways that effectively destroy the operation and the value of the businesses that depend upon them.

We have seen this movie many times in the past, perhaps most recently and glaringly in the various sectors of the digital ad economy. That's where startups and even well-established companies awoke one morning to discover that Facebook or Google or Amazon or Apple had abruptly shut off their oxygen, and their vital traffic, by shifting some criteria, algorithm, or other categorization, rendering them effectively invisible on the web.     

But a far more telling and direct example of the "platform" problem is the computer gaming industry, where what began with hundreds of startups aiming to build computer games ended up a few years later completely dominated by Xbox (Microsoft), Nintendo, and PlayStation (Sony). They became the only players in the space because they built and owned the gaming platforms on which every game (regardless of who built it) needed to be licensed, with fees and royalties paid to the platform owners.

Today we're seeing virtually the exact same thing happening with LLMs. The main LLMs are controlled by the four or five usual tech suspects, who have already become gatekeepers and toll takers for user access. There's really no way to avoid or escape them--but, as noted, there's some modest consolation in the fact that, for many years to come, most businesses won't need access to such enormous and unwieldy datasets.

The bottom line is pretty clear. Every new AI startup that is dependent on, and sits upon, one of these tech giants' platforms for its operations is a tenant at best, running a business subject to the whims, competitive considerations, extortions, and other demands. These startups can be cut off in an instant. It's never smart to build your business on someone else's real estate.