From online retailers to car manufacturers, many companies rely on artificial intelligence (AI) to create better products, increase sales, and dominate the market. And as the appeal of AI-powered products and services increases, so does the value of this market, which is estimated to grow to $89 billion by 2025. Of course, investors also want to get a piece of the AI action, and they’re eager to finance promising projects and startups. Realising that AI is poised to shape the future of modern business and maximise their chances at securing investments, startups are increasingly placing this tech not only at the centre of their product and service offerings, but also at the heart of their business models. Unfortunately, some startups implement AI in projects they’re not qualified or equipped to handle, or that don’t necessarily require such complex tech.
This mistake can lead to many potential challenges for startups, such as the reluctance of investors to provide funding. Second, startups can go bankrupt if their large-scale AI projects don’t increase revenue. And finally, companies that work on smart algorithms without having AI experts in their team are likely to fail in their venture. It’s important for a business to decide whether AI is a critical factor in delivering their product or service.
While technology – in this case, artificial intelligence – can help companies grow faster, it’s not the be all and end all, so companies have to be smart about implementing it.
What exactly is the appeal of AI and why should startups use this tech?
A huge part of AI’s appeal is that it can help companies achieve long-term market domination. But for that to happen and for AI to work optimally, this technology needs proprietary, regularly produced, company-owned data. For example, the reason why Google is the undisputed ‘King of Search’ is that it collects more search data than anyone else and uses it to provide relevant search results. And since it delivers the best service, people will keep using it, feeding Google’s AI with even more data. Startups can also exploit AI in a similar way, but prior to that, they need to fulfil two key criteria.
First, AI needs to play an essential part in delivering their product or service, and second, the founding team needs to have at least one AI expert on board. For instance, if a startup plans to develop software that’ll diagnose cancer by analysing medical images, it’ll most likely invest heavily in AI. And if an AI expert who previously worked at companies like Google or Amazon is part of the founding team, investors are more likely to provide funding.
Companies that don’t necessarily rely on AI to develop their product or service should still prepare for a future in which AI can provide a competitive advantage in one way or another. They’ll need to know, for instance, which data they can use to improve their product and how to collect more proprietary data. Armed with unique datasets and powerful AI, they’ll be able to attract more customers and increase their chances of getting ahead of their competitors.
Using AI to improve day-to-day operations
Entrepreneurs don’t have to stand idly by while waiting for big datasets and large-scale AI projects of the future. They can use the technology to improve day-to-day operations like customer service, advertising, human resources, or website building. For example, AI-powered chatbots can interact with customers and handle increasingly complex requests. Smart algorithms can analyse customer behaviour and predict the outcome of advertising campaigns, while innovations such as the Artificial Intelligence Design Assistant (AiDA) can build websites in a few minutes. Even the complex process of hiring and dealing with employees can be transformed by this technology.
Gal Almog, the CEO of the AI-based recruitment company Talenya, claims that “Artificial intelligence and machine learning is disrupting the 60-year-old $200 billion recruitment industry.” This tech is used in many stages of the recruitment process, starting with the initial application screening process, where it helps managers decide who goes through to the next round. And once new employees are hired, AI can guide them through the onboarding process and answer their questions. But entrepreneurs such as Thomas Seoh, the CEO of the advisory firm Kinexum, have an even more ambitious vision for AI.
Will smart algorithms eventually create companies on their own?
Seoh claims that this technology can radically speed up the process of creating startups. Many tasks, such as identifying customers’ pain points, developing ads, and manufacturing will eventually be done by AI. What’s more, he envisions a future in which smart algorithms create and develop companies entirely on their own. Tasks usually done by entrepreneurs – like securing funding or developing products – might eventually be done by AI. And although this scenario sounds farfetched, Seoh explains that “Whatever the future may hold, emerging AI is making indelible marks in financial markets to healthcare to marketing to education to elections to science to popular culture and art. It should be no surprise that entrepreneurial startups will be radically impacted as well.”
Never lose sight of your ROI
AI is permeating many industries, and it affects everything we do. Companies rely on it to improve their product offerings and gain a competitive edge, among other things. Following this trend, many startups place AI at the centre of their business model to secure funding. But for startups to be able to benefit from artificial intelligence and possibly achieve market dominance, it needs to be essential to the delivery of their product or service, and the founding team must contain at least one AI expert.
The key to success is really being able to spot and analyse pain points, developing solutions in the form of a product or service, and finding or creating innovative ways to get to know and attract customers – with or without the use of AI.