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The AI Wrapper Problem and the Case for BYOK

Why the current AI wrapper market is stuck between value and UX, and how bring-your-own-key could become a competitive advantage.

ai product business-models

A tension I’ve observed recently when developing tools that use AI as a significant part of the workflow:

  1. AI wrappers actually do add value through prompts, workflows, etc.

  2. Any wrapper app is not as good of a chat experience, generally, as Chat GPT, Claude, etc. in terms of the overall UI, context management, document management, etc.

  3. There is no seamless “bring your own API key” experience right now, probably because the main players would prefer you use their main chatbot. This means that all the wrapper apps use the API (which has the problems mentioned in [2]) and they also need to charge money to pay for that API use, rather than what I imagine could be a fairly seamless backend revenue share with BYOK setups.

I actually think that at some point, one of the big players is going to lean into BYOK and it’s going to end up being a competitive advantage for them. Sure, it’ll be less chatbot direct usage, but if they can gobble up the whole wrapper market… 🚀 🚀 🚀