There is a name that almost never comes up in competitive analysis decks for vertical AI startups. It does not show up in the "alternatives" column on their pricing pages. It does not get mentioned on earnings calls or in investor memos when founders talk about the market they are going after. And yet, if you sit in on enough customer conversations, if you really listen to the moment a deal stalls or the moment a pilot quietly gets abandoned, you hear it every single time.
The name is OpenAI. Or Anthropic. Or Google.
The real competitor to almost every vertical AI company being built today is not another vertical AI company. It is a $20 to $200 per month subscription to ChatGPT or Claude. And the reason founders refuse to name it is not ignorance. Naming it out loud makes the problem feel impossibly hard. If the thing you are competing against is the most well-funded AI research organization in the world, with a product your customer already has open in another tab, what exactly is your pitch? So instead, founders point at each other. They track feature releases, study competitor landing pages, debate positioning against companies with similar demos. It feels like competitive intelligence. It is almost entirely the wrong fight.
Who Your Customer Is Actually Comparing You To
Let us walk through the actual decision your customer makes when they evaluate your product. They are not sitting in a room comparing your demo to a rival vertical agent's demo. That is rarely what the conversation looks like on their end. What they are actually weighing is something far simpler and far more brutal: "Do I pay for this custom thing, or do I just open Claude and figure it out myself?"
This is the default alternative sitting in your customer's head. And increasingly, it is winning. The general-purpose lab products (ChatGPT, Claude, Gemini) are genuinely good now. They are flexible, fast to get started with, and require no procurement process, no integration work, no onboarding call. A knowledge worker can spin up a workflow in an afternoon and feel productive by end of day. The switching cost to not buy your product is essentially zero, because your customer already has a subscription they are paying for.
This is the comparison you are losing, or not winning clearly enough. And most founders are not even aware they are in this fight.
Labs Are Your Enablers and Your Competition, Both at Once
Here is the tension that very few people in the vertical AI ecosystem talk about honestly: the same companies whose models you are building on top of are also the companies your customers are defaulting to. OpenAI and Anthropic are your greatest enablers. Their models make your product possible. Their research raises the ceiling of what agents can do. Without them, the entire vertical AI wave does not exist.
And yet they are also, structurally, your most dangerous competition. Every time a base model gets more capable, with better reasoning, better tool use, better instruction following, the gap between "custom vertical agent" and "I just use the API with a good system prompt" gets a little narrower. Every time a lab releases a better consumer product, the default alternative for your customer gets a little more compelling. The thing that makes your product possible is also the thing that makes your product harder to justify.
Labs are not trying to compete with you in any direct sense. They are not building for your vertical. But they do not need to. All they need to do is keep getting better at the general case, and the burden of proof for why a customer should pay you instead keeps rising. This is not a criticism of labs. It is just the structural reality of the market you are operating in, and it deserves to be named clearly.
There is a name that almost never comes up in competitive analysis decks for vertical AI startups. It does not show up in the "alternatives" column on their pricing pages. It does not get mentioned on earnings calls or in investor memos when founders talk about the market they are going after. And yet, if you sit in on enough customer conversations, if you really listen to the moment a deal stalls or the moment a pilot quietly gets abandoned, you hear it every single time. The name is OpenAI. Or Anthropic. Or Google. The real competitor to almost every vertical AI company being built today is not another vertical AI company. It is a $20 to $200 per month subscription to ChatGPT or Claude. And the reason founders refuse to name it is not ignorance. Naming it out loud makes the problem feel impossibly hard. If the thing you are competing against is the most well-funded AI research organization in the world, with a product your customer already has open in another tab, what exactly is your pitch? So instead, founders point at each other. They track feature releases, study competitor landing pages, debate positioning against companies with similar demos. It feels like competitive intelligence. It is almost entirely the wrong fight.
Who Your Customer Is Actually Comparing You To Let us walk through the actual decision your customer makes when they evaluate your product. They are not sitting in a room comparing your demo to a rival vertical agent's demo. That is rarely what the conversation looks like on their end. What they are actually weighing is something far simpler and far more brutal: "Do I pay for this custom thing, or do I just open Claude and figure it out myself?" This is the default alternative sitting in your customer's head. And increasingly, it is winning. The general-purpose lab products (ChatGPT, Claude, Gemini) are genuinely good now. They are flexible, fast to get started with, and require no procurement process, no integration work, no onboarding call. A knowledge worker can spin up a workflow in an afternoon and feel productive by end of day. The switching cost to not buy your product is essentially zero, because your customer already has a subscription they are paying for. This is the comparison you are losing, or not winning clearly enough. And most founders are not even aware they are in this fight.
Labs Are Your Enablers and Your Competition, Both at Once Here is the tension that very few people in the vertical AI ecosystem talk about honestly: the same companies whose models you are building on top of are also the companies your customers are defaulting to. OpenAI and Anthropic are your greatest enablers. Their models make your product possible. Their research raises the ceiling of what agents can do. Without them, the entire vertical AI wave does not exist. And yet they are also, structurally, your most dangerous competition. Every time a base model gets more capable, with better reasoning, better tool use, better instruction following, the gap between "custom vertical agent" and "I just use the API with a good system prompt" gets a little narrower. Every time a lab releases a better consumer product, the default alternative for your customer gets a little more compelling. The thing that makes your product possible is also the thing that makes your product harder to justify. Labs are not trying to compete with you in any direct sense. They are not building for your vertical. But they do not need to. All they need to do is keep getting better at the general case, and the burden of proof for why a customer should pay you instead keeps rising. This is not a criticism of labs. It is just the structural reality of the market you are operating in, and it deserves to be named clearly.
Read more: https://x.com/niveditjain/status/2047424262332657892