🚀 0-$1M ARR in 7 months! | The AI Arbitrage

New arbitrage opportunities that have emerged because of the ongoing breakthroughs in AI.

🚀 0-$1M ARR in 7 months! | The AI Arbitrage
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Do you understand arbitrage?
Arbitrage in lay terms means buying something cheap in 1 market, and selling it for a profit in another market.
It’s a financial term, but can be broadly applied to many industries as a framework.
In fact, it can very nicely be applied to our goals of building small, profitable businesses.
I’m planning to make this a repeat feature in this newsletter. Every few weeks I’ll try and find new arbitrage opportunities in different markets.
Today I’m starting with new arbitrage opportunities that have emerged because of the ongoing breakthroughs in AI.

The AI Arbitrage

AI and ChatGPT are all the rage these days.
Everyone’s building an AI app or starting an AI newsletter (me included), it feels like we’re in the middle of a 21st century gold rush.
The obvious advice in a gold rush is that you should be selling picks and shovels to the people who’re digging for gold.
But it’s been repeated so many times that it feels like there are more people are trying to sell picks and shovels than there are people who’re digging.
I think there’s an opportunity in actually digging.
In using AI to deliver faster and cheaper results compared to the competition.
Great example of this is a company called HeyGen - an AI video generation tool.
They are a SaaS product, but they didn’t start out like that.
To validate demand, they first setup a gig on the freelancing platform Fiverr. The gig was to deliver on demand videos to clients, recorded by a human spokesperson.
They offered this gig for 10% of the cost and a turn around time of 10 minutes.
And they used their AI tool on the backend to create those videos for clients.
Here’s a snippet from their blog post -
notion image
Great way to do idea validation as well as price discovery.
This inital spark led to HeyGen going from 0 to $1M ARR in just 7 months.
(Read the full blog post)
Crazy growth!
After I read this, I did a little poking around on the Fiverr platform. And tried to figure out which were the most in-demand gigs there.
I found these 25 to be the most popular -
notion image
You go down that list and you realise that each one of those gigs can be done faster and cheaper by AI.
So there’s potential to build a niche SaaS product around each one of these ideas. But…
If you don’t want to play the SaaS game right away, you can still do any of these gigs manually, use AI to do them cheaper, faster and beat the competition.
You can build internal tools and systems to deliver quality results for clients. (We discussed more about this in Standardized Personalization)
And once you’re processes are spohisticated and repeatable, you can partner up with a developer to build a software product around them.
This is a very practical way to arbitrage AI right now.
And will remain so for a while, even as AI gets better, because we will always need some human oversight in matters that are business critical.
That’s where you have to fit yourself in.
So buying 100 ChatGPT prompts from a Twitter influencer isn’t going to completely change your life.
But arbitraging the power of AI to do something that people are already paying money for, can give you an extra stream of income. And that, can change your life a little.
This also resonates with the idea of leveraging marketplaces and going where money is already changing hands. (Discussed more in Money Making Ideas - Where to find them?)

Final word

The meme of our times is - “AI will not replace you, a human using AI will”.
You see it everywhere on Twitter, LinkedIn, YouTube.
The real question is - can YOU be the human who uses AI to replace other humans who’re not using AI?
If you think you can, then will you take action on it?
That’s my question to you.

Thank you for reading.
Hope you found this useful, arbitrage is a Superframework that keeps repeating in multiple contexts in business, I will keep coming back to it in the future and bring in more examples and ideas on how you can apply it.
Do let me know what you think of it.
Cheers 🙌

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Eternally Curious. Writing, Learning, Building in Public. Writing about Ideas + Inspiration + Insights for creators, solopreneurs and indie hackers | Simple tips and frameworks to help you build a sustainable solo business

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