This document discusses strategies for building a successful artificial intelligence startup. It notes that the market is dominated by a few large players and it is difficult to compete directly with them. It recommends that startups (1) focus on specific vertical industries to create unique data sets and market leads, (2) solve specific customer problems rather than just providing technology, and (3) leverage new technologies and business models to get to market faster with a focus on customer value over software. The key is to have world-class expertise in a narrow vertical domain.

1. BUILDING AN
ARTIFICIAL
INTELLIGENCE
STARTUP
A NEW PLAYBOOK ?
Yuval Baharav
State of Mind Ventures

2. “TRADITIONAL” VALUE CREATION

3. ARTIFICIAL
INTELLIGENCE IS
HERE

4. artificial intelligence
(also AI)
“The theory and development of computer systems able to
perform tasks normally requiring human intelligence, such as visual
perception, speech recognition, decision-making, and translation
between languages.”
Oxford Dictionary

5. TOP INVESTMENT AREAS
Semi-conductors Process Automation
Marketing
Technologies
Text Extraction &
Analysis
Predictive Analytics Cyber Security Computer Vision
Robotics Process
Automation

7. MARKET IMPACT: AI AND THE CLOUD
AI IS PUSHING MARKET CONCETRATION TO RECORD LEVEL
CLOUD PROVIDERS DELIVER CORE TECHNOLOGY TO EVERYONE
COMMODITIZING AI & COMPUTE, IN RETURN FOR DISTRIBUTION &
PRESSURE ON TECH STARTUPS MARKET THROUGH EARY TECH ACQUISITIONS

8. MONEY MATTERS: HARDER TO COMPETE
10 COMPANIES DRIVE OVER 90% OF AI
STARTUP ACQUISITIONS, MANY IN EARLY
STAGES
SOARING HR COSTS CHALLENGING
FOUNDERS AND INVESTORS
QUANTITY = QUALITY: DEPENDENCY ON
DATA & COMPUTE

9. MARKETS ARE BEING
“FLATTENNED”
BREAKING SUPPLY CHAING APART BY
BECOMING SW & HW SHOPS
CONTROL OF CONTENT DISTRIBUTION IS
KILLING PUBLISHERS
AQCUIRING THE EMERGING LEADERS IN
THE CONSUMER SPACE

10. WHAT SHOULD
WE DO?

11. GO VERTICAL
MEGA-PLAYERS MODEL IS BASED ON GENERALIZATION
VERTICAL OPPORTUNITIES IN MULTIPLE INDUSTRIES
CURRENT VERTICAL LEADER WILL ACQUIRE TO STAY CURRENT
OPPORTUNITY TO CREATE A UNIQUE DATA SET AND MARKET LEAD

12. GO THE LAST MILE
SOLVE THE PROBLEM, DON’T JUST PROVIDE TECHNOLOGY:
UX, REPORTING, VISUALIZATIONS
DATA PREPARATION
INDUSTRY/USE CASE SPECIFIC KNOWLEDGE & MODELS
LEARNING & ONGOING OPERATIONS SERVICES

13. NO-SOFTWARE
SW IS A MEAN TO AN END. FOCUS ON
THE END
DELIVER VALUE TO THE CUSTOMER. HIDE
THE REST
ON DEMAND, LOW-TOUCH, FROM THE
CLOUD
TALK TO NEW STAKE-HOLDERS IN THE
CUSTOMER

14. BUILDING LONG RELATIONSHIPS IN A LOW
COMMITMENT WORLD…
MICRO-SERVICES AND OTHER CLOUD PLATFORMS REDUCE COGS
LOW TOUCH INITIAL CUSTOMER ENGAGEMENT IS NOT BAD
LAND AND EXPAND: START SMALL AND GROW $LTV AND VALUE
ACCESS TO NEW CUSTOMERS: BD, CLOUD CHANNELS

15. ANALYZE, THEN SELL
TRADITIONAL ISV APPROACH:
BUY => INSTALS => ANALYZE
CUSTOMER DATA
NEW APPROACH?:
ANALYZE => SELL => REPEAT

16. NEW VALUE CREATION MODEL
X XX
TEAM IP BRANDUNIQUE DATA

17. SUMMARY OF INSIGHTS
1. UNLESS YOU JUST REINVENTED THE WHEEL, GO
VERTICAL, YOU MUST
2. LEVERAGE NEW TECHNOLOGY FOR FASTER GO-TO-
MARKET USING NEW MODELS
3. SOLVE THE LAST MILE TO THE CUSTOMER’S
BUSINESS NEED
4. BUILD A WORLD-CLASS TEAM WITH UNIQUE DEEP
VERTICAL KNOWLDEGE

18. Good luck!!