In 2023, everyone built a "Chat with PDF" app. By 2024, OpenAI released that feature for free, wiping out hundreds of startups overnight. This is the danger of the "Wrapper Startup"—a company that is just a thin UI layer over a foundation model API. Before building, you need to validate your idea to ensure you're not just creating a feature that will be absorbed.
The "Sherlock" Problem
Apple used to "Sherlock" apps by building their features directly into macOS. Now, OpenAI and Google are "Sherlocking" entire industries with every model update. If your startup's core value proposition can be replicated by a single prompt in ChatGPT, you are living on borrowed time. A thorough risk assessment should evaluate platform dependency risks.
Wrapper Startup
- Relies 100% on 3rd party APIs
- No proprietary data
- Easily copied by competitors
Deep Tech / Value-Add
- Proprietary fine-tuning or RAG
- Unique workflow integration
- Vertical-specific data moat
How to Build a Moat in 2026
Proprietary Data
Data is the new oil (cliché but true). If you have unique data that OpenAI doesn't have (e.g., private medical records, proprietary manufacturing logs, real-time sensor data), you can build a model that no one else can.
Workflow Stickiness
Don't just generate text; integrate into the user's daily workflow. If your tool connects to Salesforce, Slack, and Jira, and automates a complex 10-step process, it's much harder to replace than a simple chatbot.
Verticalization
General purpose models are good at everything but great at nothing. Build a "Vertical AI" that is deeply specialized for a specific niche (e.g., AI for patent law, AI for dental practice management). Use market opportunity analysis to find underserved verticals.
The "Cognitive Architecture"
The future isn't just calling an API. It's about building "Cognitive Architectures"—systems where multiple AI agents work together, use tools, access memory, and plan complex tasks. This orchestration layer is where the new IP is being created. Document your architecture in a solid business plan that articulates your moat.
The Litmus Test
Ask yourself: "If GPT-6 is released tomorrow and it's 10x smarter, does my product become useless or more powerful?" If the answer is "useless," you are a wrapper. If "more powerful," you are building software. Use competitor intelligence to understand how others in your space are positioning.