The Truth About AI Products: 5 Facts that May Disappoint AI-Focused Founders (or Encourage Them)
July 20, 2021 13 min. read
According to research, 90% of companies already invest in AI-based technologies and include them in their tech stack. Needless to say, such statistics create enormous opportunities for startups that are willing to put their products on the market.
From time to time, we all come across another success story of an AI-based technology business rising from scratch and making it big overnight. But this is only what is in the public eye. We don’t know about all the rest that never made it to the front pages because they simply failed at one stage or another.
So if you are dreaming about building a successful AI startup, make sure you don’t look at this area blindly and familiarize yourself with these five facts.
1. You Need to Know Your Product
Being a founder of an AI startup doesn’t always mean that you should be a product developer. Though it’s plain as day that you need to know your product reasonably well as you will be its primary ambassador—talking to investors, potential clients, and employees (we’ll discuss this later in more detail). To make a long story short, any action will require you to explain what your company does and how your AI product works.
There’s still a lot of stigma around AI, and people don’t fully understand what it is, how it works, and, most notably, how they can benefit from it. There are many hurdles for newcomers to overcome, and you need to be the one who knocks them down.
But what exactly should I know? And how deep should my knowledge be?
First and foremost, you need to understand how neural networks work. In other words, what kind of magic happens behind the curtain of your AI product.
You don’t need to have a master’s or Ph.D. degree or enroll in a programming course. What you need is the basic technical knowledge to understand the basic algorithms, which you can easily get by monitoring your technical team’s working process and being involved in it. As soon as you can explain the basic mechanics of the solution to the client, they will get how their processes can be automated to reduce time spent on routine tasks and save on budget.
Basic technical knowledge is essential not only for the sake of talking to potential clients but also for the sake of having a product that is aligned with the entire business strategy. Let’s clarify.
Situation 1. Not Enough Support
Oftentimes AI technology advances faster than the ability of business leaders to understand its impact on their business. Imagine a CEO that turned a blind eye to the work of their AI initiatives. The outcome might be that not enough funds are put into them, proper resources are not allocated, or the AI technical team lacks valuable personnel.
Situation 2. Enough Funds, No Market Need
On the flip side, even if AI is well-funded by the executive, if they are not hands-on with the team, they might end up with a product that is challenging for the technical staff, and they will push what has no value on the market whatsoever. That means that they lose sight of the business problem that needs to be solved. That’s why it’s so crucial for a CEO to be involved early and usefully in AI initiatives so that the product is aligned to a business goal.
For example, after coming up with the product idea, the founder and CEO of Signum.AI, Artem Gladkikh, started researching the market and diving deep into AI technology and programming. Now he understands how his product works, which helps him decide what strategic steps to take—whether that’s further research and development or pursuing new sales and marketing strategies.
2. Show Results
Keep in mind that you should give your clients just the right amount of technical information. As we said, you should know the technology back to front, but there is no need to pass that level of information to your clients or competitors. Too much, and they may get bogged down in the details. Too little, and your offering may be misunderstood.
Your presentations should contain a balanced amount of information on how these algorithms can benefit customers—not too much, not too little. We mean that you shouldn’t go into every detail, but show them how your product’s technical features will help solve their problems or simplify their business processes. Show them numbers or some user cases — any tangible results that you have that might resonate with them and strengthen the message without burdening them with too much unwanted technical information.
To do that, you should know your potential customers and their traits as well as possible. Once you’ve done that, you will know exactly what problems they might be trying to solve. And the more personalized your approach in studying each client is, the easier it will be for you to find their pain points and help them.
We try not to go too deep into the details of AI technology with our clients, especially at a demo meeting. Instead, we ask what their problem is and offer solutions that are as simple as possible. We use the AI slang exclusivelyfor conversations inside the team.
Not having enough clients at the early stage also increases your desire to acquire them as soon as possible and by any means. However, keep in mind that you want the right customer, not any customer. If you fail to provide proper service to your first client, word of mouth might close all the future opportunities for the rest of the market. A bad reputation is extremely difficult to fix. That’s why you should be open with customers about what you can and can’t do.
3. Keep Networking and Be Up-to-date
Your product development and time to market are indeed important, but you can’t lock yourself off from the world working your fingers to the bone. Why? You need to plug into the AI industry.
Rule 1. Know the Right People
You need to be in the AI crowd—networking, meeting new people from the field: industry experts, journalists, investors, other startup owners, scientists, and anyone connected with the technology in one way or another. Thus you will be able to expand your network—you never know where your business will take you, so knowing people and being known might give you an advantage.
Rule 2. Get Valuable Insights
Apart from just being in the public eye, networking is a great way to be aware of the new developments and startups first-hand, from people who work on those products and start those businesses. Interacting with people who are in the same boat as you, you might get precious insights. Don’t get us wrong. We are not talking about spying but inspiration and expertise.
All members of Signum.AI, for example, are always open to any sort of professional communication. We regularly participate in offline and online events and invite other industry professionals for virtual coffee. Without this, we would have far fewer opportunities.
4. Secure the Funds
Any business costs money, and AI-powered companies, in particular, have high initial costs. Developing such a highly innovative product is impossible on a micro-budget. You can start like this, but the further you go, the more expenses there will be. Consider human resources, for instance. Talented AI scientists cost a lot, and they are at the core of your product success. As you grow, you need to expand your team with market analysts, salespeople, marketers, etc.
And even if you had the seed money, that will not last forever. So get ready to look for investments actively and in the early stages. For the record, roughly one-third of startups fail because of insufficient funding or running out of personal money. Whether you use your own savings, crowdfunding, loans, donations, shared ownership, investors, or venture capital, make sure you have long-term and consistent funding. And keep up a stable relationship with your investors and stakeholders. Otherwise, you might jump high and fall hard.
In Signum.ai, we know our strengths and our limitations. For example, we know that our product needs funding, so we take the need for investment very seriously. In summer 2020, during the pandemic, we closed one seed round, and now we’re in the process of collecting the next one. We are also trying hard to ensure that the product pays off and the revenue increases by 20-30% each month.
5. Generate, Iterate, Improve, and Stand Out
The AI market is VERY competitive and constantly evolving. That’s why to stand out, you need to analyze, generate and implement ideas 24/7. Just embrace that—this will be your permanent state: improving a product and iterating updates and changes quickly.
Changing and tuning your product is vital because it means that you are adapting to the market. Imagine, for example, that after launching your product, you analyzed user cases and discovered that customers use your product in a slightly different way. Or one of the features, due to the market changes, became more important than another. This is a risk.
Constant iterations and improvements will minimize such project issues, make stakeholders satisfied with your progress, and provide more benefits to customers. And if you talk with your clients enough (which, in fact, is crucial), this will be a no-brainer.
The Signum.AI team is always alert and ready to experiment. We analyze the market, look at competitors’ offers, adjust our UVP (Unique Value Proposition), and carry out A/B tests. And we are constantly working on the product, making both minor and major changes.
AI and data science are without a doubt one of the most exciting and promising industries today. And anyone who is getting into this domain now might have incredible opportunities. Our main goal is not to frighten but to empower you by helping you to find a balance between enthusiasm and reality.
If you are ready to start building your own AI, great. If you feel confused and even questioning your concept, that’s fine too—consider your second thoughts a probation period for your idea, which might turn it into something different.
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