Over the last six months, I have spoken with many startups that claim to have artificial intelligence (AI) as part of their solution. The reality is that many of these companies added AI to their pitch decks and materials without being able to showcase its impact. We are in a cycle in which lies and hopes are sold as the future. An incumbent, Amazon, has showcased the first example of an AI solution with financial impact.
We are in the early days of AI’s impact. Google has tried and removed its AI summaries as the outcomes were undesirable due to the volume and accuracy of searches consumers do. What is clear to me is that consumer AI solutions are years away from being relevant and financial drivers. That said, I believe business AI solutions are closer due to the specificity of solutions.
Use Cases
AI requires computing power and access to large data sets and chips to create new data. Few companies can currently do this inside their own ecosystems. Amazon, Meta, and Google own the three parts of AI. Every other company or startup is either directly or indirectly paying one of these companies fees to offer AI services. The question then becomes – can new services or solutions outlive the services offered by the incumbents?
We have already seen AI startups have to downsize their teams or struggle to raise funding to stay operating. To be successful, startups must offer unique solutions, which incumbents cannot do. Everything I have discussed so far is capital-intensive, with little to no financial benefit for the companies building these solutions. As I said we are in the early stages of AI.
Amazon’s Solution That Has Financial Impact
Amazon announced its PI model, which the company uses to scan goods and determine whether they are damaged. The combination of computer vision and AI acts as a private investigator to detect defective or broken products before they leave an Amazon warehouse. If an item is flagged as defective, it is sent to a warehouse associate, who determines whether it will be donated, resold at a discounted price, or for another use.
Why is this important? Amazon wants to ensure that it does not ship broken items to consumers, which will lead to returns. This saves capital, as replacements do not need to be shipped to consumers, saving Amazon carbon fuel usage and saving it money. Humans are unable to scan the volume of products AI can. Technology is not replacing staff but doing tasks that humans cannot do well. Humans are still able to make decisions that technology currently cannot.
AI and Business Impact
What should executives and operators do? How and why are you using AI? Is there an actual benefit being delivered by the solution? Automate labor-intensive tasks but understand that the cost-benefit likely is small, if not nothing. AI is a buzzword, but it can negatively impact your team without your awareness.
Agencies, I see many of you offering AI strategies to customers. What does that mean? Your customers want solutions that will drive financial impact. Newsflash—this is not likely to be found currently. Yes, you can offer creative and advertising copy AI creates, but how does that compare to staff-generated content?
Investors are looking for 10x opportunities and likely are investing in early-stage startups that will not survive due to incumbents offering similar solutions. Investing in solutions that are B2B-focused is likely to have an earlier impact than consumer-focused companies.