Avoid Using AI: Why Some Investors Recommend Startups to Steer Clear of the Trendy Term

AI startups are currently booming, with AI accounting for 40% of total venture funding in May. This makes it tempting for startups to include AI as a key part of their pitches to investors. However, caution is advised when it comes to over-branding AI, as it can make a company appear unserious. According to Vivek Ladsariya, managing director at Pioneer Square Labs, overstating the role of AI can lead serious investors and customers to see through the facade. Heather Redman, co-founder and managing partner at Flying Fish, also stressed the importance of not overemphasizing AI in a company’s strategy to maintain credibility.

Vikram Chalana, CEO of Seattle startup Pictory.ai, jokingly admitted to going against the advice of investors by including AI in his company’s domain name. However, Chalana emphasized that AI should be about solving customer problems rather than just a trendy buzzword. Anoop Gupta, CEO of SeekOut, highlighted that having AI experts is not necessarily a requirement to benefit from generative AI. He mentioned that a smart engineer or computer scientist with a strong sense of conceptualization and problem-solving skills can go a long way in utilizing AI effectively, without the need for specialized machine learning expertise.

Flying Fish has placed a strong emphasis on AI since its inception eight years ago, with Redman mentioning that the firm specifically targets founders and teams with AI backgrounds. While having a PhD on the team is not mandatory, it is considered a nice-to-have. Redman emphasized the importance of focusing on what a company can do for customers rather than simply showcasing a general technology like AI. Ladsariya echoed this sentiment, advising companies to highlight their abilities and solutions rather than just their technological prowess.

Chalana shared that the core of Pictory’s product is AI, which is used to automate video creation. Despite the centrality of AI in their operations, Chalana stressed that the focus should always be on addressing customer needs. He also noted that even individuals with advanced AI experience can struggle with implementing generative AI, as seen in his own team where a 26-year-old software developer excelled in this area. Overall, the key takeaway is to approach AI strategically, focusing on solving real customer problems rather than simply jumping on the AI bandwagon for the sake of appearances. This approach will not only attract serious investors and customers but also build a strong and credible brand in the long run.