The artificial intelligence (AI) business is booming. Over 250 private companies across different verticals using AI algorithms have been acquired since 2012, with 37 of those alone taking place in the first quarter of 2017. Thus, it makes sense why many entrepreneurs believe that AI is the way to go when it comes launching a new startup. Though it may be a hot market, AI is also a difficult one to crack and can be even more difficult to be successful in.
To create a groundbreaking AI product or service, you need deep talent, and that’s not always easy to find. You will also be competing against tech giants that have money, connections, and technology that may dwarf your startup business resources. That doesn’t mean that it’s impossible, though. If you concentrate on recruiting in the right places and find a niche, your startup may just be the next big AI success story.
The Struggle for Talent is Real
All startups have difficulty finding the right talent, but AI startups face an even steeper challenge. Most AI companies need those skilled in machine learning, often at a Ph.D. level. They also need engineers who can develop AI products and bring them to market. None of these individuals come cheap and they are likely already being wooed by enterprise companies like Google or Microsoft.
A tip we’ve found successful in AI startups is to focus on recruiting globally instead of limiting your efforts to the US. Not only is it easier to find the right fit when you widen the pool of candidates, but international team members can also open doors to new markets, and bring innovative skills and ideas to your company. Whether you decide to have your international staff work remotely or relocate them to your office will be based on your unique situation and financial resources.
Don’t Create Tech for Tech’s Sake
One pitfall that many AI startups make is creating products or technology simply because they can. As any startup consultant will tell you, filling a customer need always needs to be the end goal of any product or service, and AI is no different. Though technological skill and development are, of course, important, the best AI companies also prioritize social engineering and expectation management. This basically means they are creating a product or service that is actually needed and they are explaining to their target market what problems this new technology can solve. When startups lose sight of their end audience, an AI startup can easily fall flat.
A Vertical vs. Horizontal Approach: Which is the Best?
The reality is that tech giants have enormous advantages when it comes to creating horizontal products like AI-based voice recognition and imaging for broad markets. Most startups simply can’t compete with their resources and audience. That’s why your startup growth strategy should focus more on a vertical approach that solves a specific problem for customers in a given industry. Vertical markets tend to be too niche for larger companies, which leaves the door open for smaller, nimbler startups to take the lead. In addition, vertical products can be developed with less intense research and fewer funds—two areas that are vital to startup success.
The Palo Alto-based startup, Freenome, for example, focused on creating a deep learning platform for detecting circulating cancer-related markers, instead of trying to develop broader technology for the healthcare field. This led them to raise $65 million in funding to make their bold vision a reality. When you focus on a specific target industry audience and put AI to use to solve an issue, you can stand out among the increasing competition.
Startup experts know that AI is one of the fastest-growing sectors for tech-minded entrepreneurs. If your startup plans to enter this competitive arena, meet with one of our experts for new business guidance on how you can build a successful AI startup.