Why Most AI Startups Are BAD Businesses

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The unit economics behind LLM compute, 2% paid users, and 30-60% margins.

This episode breaks down why many AI-native apps (GPT wrappers, agent tools, “AI SaaS”) struggle to become real businesses. I compare classic B2B SaaS (70–90% gross margins) with GenAI’s 30-60%, unpack ongoing per-user costs (API, compute, model licensing, moderation), and explain how price caps, freemium, and “dead subs” distort the picture.

Chapters
00:00 Intro
00:30 Classic SaaS vs AI SaaS margins
01:56 “Dead subscriptions” and AI bundles
03:55 Why AI unit economics break
05:48 All-you-can-eat usage
06:39 The shocking math of ChatGPT
09:02 Claude, Gemini, Copilot
12:15 AI price wars, metering, and profitability paths
13:26 How to build a sustainable AI business
15:12 $1,000,000,000 problem
16:52 Bottom line