(Report producer/author: Guosen Securities, Xiong Li, Zhang Lunke)
1. Open AI open plug-in builds an ecosystem, and the big model opens up a new business model
OpenAI open plug-in construction ecosystem: monthly subscription payment + potential traffic monetization model
On March 24, 2023, OpenAI released ChatGPT Plugins (ChatGPT plug-in set), which can connect ChatGPT to third-party applications, equivalent to the APPStore app store in Apple products. On May 13, OpenAI tweeted that it would open up networking features and numerous plugins to all ChatGPT Plus users next week, allowing ChatGPT to access the Internet and use more than 70 third-party plugins. Plug-ins currently available include hotel flight booking, takeaway services, online shopping, legal knowledge, professional Q&A, text generation and so on. The combination of the plugin's professional capabilities and ChatGPT's natural language human-computer interaction and general knowledge base greatly enhances the functionality of ChatGPT.
OpenAI business model: 1) The C-end is charged according to the monthly subscription model: the existing ChatGPT 3 is free and open to users, GPT 4 is open to users according to the $20 monthly subscription payment model, GPT4 is more reliable and creative in answering than GPT3, and can receive multimodal input. 2) Side B can call the API interface of GPT and charge according to usage. 3) In the future, OpenAI can potentially open the interface fee to the plug-in vendor through model user traffic. OpenAI business model: 1) The C-end is charged according to the monthly subscription model: the existing ChatGPT 3 is open to users for free, GPT 4 is open to users according to the $20 monthly subscription payment model, GPT4 is more reliable and creative in answering than GPT3, and can receive multimodal input. 2) Side B can call the API interface of GPT and charge according to usage. 3) In the future, OpenAI can potentially open the interface fee to the plug-in vendor through model user traffic.
Plug-in case introduction: It mainly includes real-time information retrieval, code compilation, literature retrieval and other functions
OpenAI Open Plugins service mainly brings four new features: Web retrieval: plugins allow ChatGPT to get the latest answers by retrieving real-time information on the Internet to solve the problem of outdated data in ChatGPT training sets; Code compilation: The main function of this plugin is to solve quantitative and qualitative mathematical problems; Conduct data analysis and visualization; Convert file formats quickly. And the code can be called at any time without interrupting communication; Literature search: Allows users to get the most relevant document fragments from data sources such as files, notes, emails, or public documents by asking questions or expressing needs in natural language; Third-party plugins: These plugins are supported by functions provided by external companies permitted by OpenAI, and the specific functionality is described by the third-party plugins in the manifest file, which includes a machine-readable description of the plugin's functionality and how to invoke it.
2. Overseas generative A I unicorn combing
Overseas generative AI unicorns: 13 startups valued at more than $1 billion
ChatGPT has sparked a global generative AI investment boom, and unicorn companies continue to emerge. At present, the global capital market focuses on the field of generative AI, and its investment in it continues to increase, and many unicorn companies have emerged, including OpenAI, Cohere, Runway and other projects in various tracks. At present, OpenAI has the highest valuation, reaching $29 billion, and the lowest valuation of ADEPT, Character.ai, Glean and other companies is also valued as high as $10. The application field of generative AI has been continuously expanded, and landing scenarios have been realized in dialogue, programming, drawing, video production, etc. In addition to OpenAI, the parent company of the traditional dialogue generation software GPT series, replit focusing on collaborative programming, stability.ai in the field of drawing generation, and runway in the field of video generation have all realized scene landing in each track, and the common feature of these products is that they can recognize natural language and output the results of corresponding modalities.
Character.AI: Personality character generators with more downloads than ChatGPT in the first week
Character.AI is an AI model-based chatbot app founded by a former LaMDA team from Google. Users can create avatars through Character, AI, shape their personality, set specific parameters, and then post to the community for others to use and chat, with social attributes. Many characters on current platforms may be based on fictional media sources or celebrities, while others are entirely original, with some characters made for specific goals, such as assisting with creative writing or becoming text-based adventure games. Users can contact a single role or organize a group chat with multiple roles that can talk to each other or users at the same time. The beta version of CharacterAI was made available to the public in September 2022 and reached 1.7 million downloads in its first week of launch.
On May 23, CharacterAI launched its mobile app for iOS and Android users around the world, with the Android version installed more than 700,000 times in 48 hours. Character.AI claims that before the app's launch, Character.AI website had more than 200 million visits, with users spending an average of 29 minutes per visit — 300% of ChatGPT's. At present, the average time spent by core users on the platform is more than 2 hours, and the average active time of all users is 24 minutes/day.
Potential business model: In the future, after reaching a certain user base, the platform can open more high-end functions by: 1) charging a monthly subscription membership fee for C-end users; 2) UGC AI role paid subscription; 3) Advertising business with truly personalized recommendations; 4) Provide Chatbot solutions for specific industries and companies for specific scenarios on the B-side.
Character.AI: Achieve functional upgrades through user interaction scoring
Character.AI built on deep learning and scalable language models, and continuously refines responses through user scoring. The program is similar to ChatGPT in that it remembers what the user sent earlier, and when the character replies, the user can rate the response, from 1 to 4 stars. Ratings primarily affect specific roles, but also the overall behavioral choices for future roles. Users can also click the right arrow to have the AI generate a new response, and then click the left arrow to view the generated message. On November 5, 2022, CharacterAI's dialogue memory doubled its previous capacity, enhancing the model's accuracy for characterization.
In March 2023, Character.AI completed a $150 million financing with a valuation of $1 billion. There are currently about 30 team members. The financing will be used primarily to expand its computing power, improve the accuracy and inference capabilities of the model, and strengthen the size and technical capabilities of the company's team. On May 24, the software went live on the App Store and entered the top five free lists in multiple countries in less than a day. Many users currently use Character.AI because they are lonely or in trouble and need someone to talk to, but in real life they can't find someone to talk to for various reasons. There are also many users who directly publish their characters publicly, such as video game characters, therapists, etc. So Character. AI mixes the joy of experience and the dual experience of needing friends.
Replit: No threshold + collaboration + interaction, AI drives the coding revolution
Founded in 2016, Replit's core product is browser-based integrated development environment software, and in 2022 it launched the GhostWritterAI programming assistant, where users can develop, compile, run, and host applications in more than 50 languages. The product is considered the easiest place for beginners to start programming, while also allowing more experienced programmers to test and build applications, equivalent to Google Docs in programming. Replit provides an easy-to-use low-level operating system for beginners and advanced developers, and on top of that, Ghostwriter, a suite of AI features to assist with the complete code generation and trimming process, and the product is also equipped with Finetune capabilities. Ghostwriter's pedestal model is built on open source models like Salesforce's CodeGen and converted to FasterTransformer to improve latency.
Adept: NLP-based AI assistant that automates the deployment of various software
Adept was founded in April 2022 with the goal of creating a general artificial intelligence (AGI) that allows people and computers to work together, creating a universal model to help humans do their jobs as "AI teammates." In addition to reading and writing, AI can also use tools such as Airtable, Photoshop, ATS, Tableau, Twilio and other tools to do things such as "generate this month's reading report". The Adept team currently consists of 25 people, including Ashish Vaswani and Niki Parmar, authors of the classic deep learning paper Transformer, David Luan, former vice president of OpenAI engineering who helped develop ChatGPT, and several former Google and Deepmind veterans. Adept differs from ChatGPT and other AI tools in that Adept builds tools that can execute commands based on human prompts rather than giving written responses.
In September 2022, Adept released its AI assistant ACT-1, which helps users perform complex tasks across multiple software applications. The user simply types a command in the text box and ACT-1 does the rest. Case introduction: 1) To help users find data on Salesforce, manual operation usually requires more than 10 clicks, and now only need to enter a sentence to complete; 2) Help users import recruitment software on LinkedIn URLs, conduct online research and set up spreadsheets, etc. The user simply enters the command in the text box of the overlay window, and ACT-1 executes the request.
3. Taking the office scenario as an example, I drives the increase of payment rate and ARPU value
Microsoft: Released Microsoft 365 Copilot, an always-on AI office assistant
On March 16, 2023, Microsoft released Microsoft 365 Copilot, an AI service. Simply put, Copilot is a chatbot that combines giant language models (LLMs) with data from all of your Microsoft offices — calendars, emails, chat rooms, files, meetings, etc. — so that you can communicate with it in natural language, give instructions to help you complete summaries, organize work, and even output content or answer your questions in any office software. Copliot is currently available on all Microsoft 365 office software, including Word, Excel, PowerPoint, Outlook, Teams, OneNote, etc. Microsoft is testing new product features with about 20 enterprise users. Earlier, Microsoft announced that the new version of Bing search will be equipped with ChatGPT, and the web browser Edge will also have built-in OpenAI technology to help users browse the web.
Microsoft Copilot is integrated into Microsoft 365 in two main ways: 1) directly embedded in Microsoft's applications; 2) Microsoft announces a new experience: Business Chat. Business Chat can be used in Microsoft 365 applications and programs such as calendar, email, chat history, documents, meetings, and contacts, and in some natural language, it can generate status updates based on earlier meetings, emails, and chats.
Microsoft 365 is currently priced at $6/10/$22 per user (Business Basic/E1/Premium), and according to SignHouse, the number of Microsoft 365 users has reached 345 million in 2022.
Microsoft: Copilot in PowerPoint: One-click generation, intelligent modification
Copilot in PowerPoint : 1) One-click conversion generation: It can realize one-click conversion of PPT and Word and other files. You can directly say to it "help me generate a PPT file for the content in the Word document" to quickly generate 10 slides; 2) One-click compression: use Copilot to compress pre-existing presentations and streamline the content of the presentation; 3) Voice command modification: through natural language instructions to achieve slide content modification, slide effect call and reformat text, etc.;
Notion AI: AI function increases overall customer unit price by 50-100%
Notion is an all-in-one productivity tool that combines notes, tasks, knowledge bases, and more, consolidating most of your daily work into an integrated workspace. Notion has three main applications, of which (1) Wikis: used to build a personal knowledge base; (2) Projects: Strong project management capabilities, suitable for collaborative work between teams; (3) Docs: Simple and powerful document editing capabilities. On February 22, 2023, the Notion AI function was officially launched. Within two months since the AI feature was officially launched, more than 4 million users have used Notion AI. (Previously, the overall number of Notion users was about 30 million, and the number of users of push tests exceeded 10%; Previously, Notion had about 4 million paying users. ARPU value change: The addition of AI functions is actually expected to increase Notion's ARPU by about 50%~100%.
4. Traditional S A S S company fast access A I
Duolingo: C-end high user stickiness exam learning APP
Duolingo is an American education technology company founded on August 18, 2011, mainly providing language learning applications and providing language certification. Duolingo offers courses in over 40 different languages, ranging from popular languages like English and Spanish to less frequently studied languages like Welsh, Irish and Swahili. Duolingo also offers a Duolingo English Test certification program and a children's literacy app called Duolingo ABC, and the company has also released a beginner math app called Duolingo Math, which is currently only available for iOS.
Duolingo has high user stickiness, driving revenue guidance upwards. The 2022 annual report will mention that 3 million users use the Duolingo app every day for 1 consecutive year. 23Q1 Duolingo products have 20 million daily active users, and the proportion of daily active to monthly active is 28%, and the conversion rate continues to rise. At the 2023 Q1 results meeting, the CEO raised his 23-year full-year revenue guidance by 10%, and expects the company to achieve revenue of $5.5-560 million in 2023, a year-on-year growth rate of 48-55%.
Gamified learning + high-quality content has driven Duolingo's user stickiness to continue to rise. Meet the needs of the public + build Duolingo's gamified learning model with practice and algebraic learning + breakthrough gameplay + diverse design elements, and the gamified learning method also makes young users further addicted to Duolingo learning mode. According to the 2020 Duolingo Learning Assessment Team Effectiveness Report, an average of 30 hours is equivalent to one semester of language courses at university.
Shopify: The world's leading e-commerce SaaS service company
Founded in 2006 in Ottawa, Canada, Shopify is currently the world's leading e-commerce SaaS company. Shopify's main business is to provide e-commerce merchants with websites and build online stores. And covering omni-channel marketing, sales, payment and logistics services. At present, the total GMV size of Shopify's merchants in North America is only lower than Amazon's. In the first quarter of 2023, GMV reached US$49.6 billion, up 15% year-over-year, operating income reached US$1.5 billion, up 25% year-over-year, and net profit attributable to parents turned into profit to US$68 million in the quarter, driven by more merchants joining the platform and adopting more merchant solutions to drive revenue growth.
Shopify's profit model is diverse, mainly including merchant subscription revenue, platform transaction commission, application and theme sales commission, advertising revenue, POS hardware sales, Shopify Capital, etc. Currently, 70% of Shopify's revenue comes from subscription revenue, which is the cost of merchants to create a store on the website, which is currently divided into three plans: $29/month, $79/month, and $299/month.
Gitlab: All-in-one secure DevOps platform
Founded in 2011, Gitlab is the world's most comprehensive DevSecOps open source project platform. As software projects grow in size, feature design, and the number of participants, project managers need to use DevOps platforms for project management to ensure the quality and efficiency of project development, and DevSecOps puts software security at the core of the overall software delivery process. GitLab provides all the important DevSecOps tools in one DevSecOps platform, including planning, creating, identifying, packaging, security, monitoring, and deploying end-to-end services, GitLab helps teams reduce cycle times from weeks to minutes, reduce development costs, accelerate time to market, and deliver more secure and compliant applications.
Due to the improvement of AI functions and the improvement of user demand, the company's 23Q1 revenue continued to increase. In 2023Q1, Gitlab's operating income was US$127 million, a year-on-year increase of 45.98%, net profit attributable to the parent was -US$52 million, and Non-GAAP operating margin was -12%. The main driving factors for performance improvement are: 1) Gitlab provides more complete AI capabilities than other DevSecOps software, covering the entire software development cycle, greatly improving the efficiency of customers' digital transformation; 2) In the context of macroeconomic uncertainty, users' demand for artificial intelligence platforms to accelerate work efficiency has further increased, and the number of customers with ARR exceeding $5,000 and $100,000 reached 7,406 and 760, respectively, an increase of 43% and 39% year-on-year, and the company expects the market space to reach $40 billion.
Gitlab currently offers three paid plans. The plans are priced at free, $29/month, and $99/month, respectively, and differ mainly in terms of functional integrity, access to customer onboarding, and transfer storage.
5. Investment analysis
Application investment ideas in the AI era - looking for overseas mirrors and paying attention to the landing speed
AFTER THE TECHNOLOGICAL BREAKTHROUGH OF THE LARGE MODEL, WE OBSERVED THAT AI PROJECTS IN THE OVERSEAS PRIMARY MARKET SHOWED A HUNDRED FLOWERS, AND AT THE SAME TIME, THE LISTED COMPANIES OF U.S. STOCK SOFTWARE SAAS ARE ALSO ACTIVELY EMBRACING GPT AND SUCCESSIVELY LAUNCHING THE APPLICATION OF AI FOR SEGMENTED BUSINESS SCENARIOS. We believe that AI application software can find investment directions by observing the following indicators: 1) Product landing speed: whether relevant AI applications have been launched in existing business scenarios, whether AI functions can meet the needs of existing scenarios, and drive the increase of payment rate and ARPU value; 2) Data advantages in segmented scenarios: For the same scenario, it is important whether the data of the application vendor is scarce. By comparing Chegg and Duolingo, this Report provides examples of how the scarcity of data in the education sector can be identified; 3) Explosive breakthrough of user indicators & financial indicators: after accessing the big model, can an explosive increase in the number of users or financial indicators be observed; 4) Reform of business model: whether to achieve a full opening of income space through the introduction of AI functions, for example, American female Internet celebrities by launching their own digital human self, opening digital human chat services, charging by the minute, is expected to increase their annual income by 60 times.
Excerpts from the report:
(This article is for informational purposes only and does not represent any investment advice from us.) For information, please refer to the original report. ）
Selected report source: [Future Think Tank]. 「Link」