Business Models for AI startups
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![Page 1: Business Models for AI startups](https://reader035.fdocuments.us/reader035/viewer/2022081515/5a64ef3e7f8b9aa2548b4b2b/html5/thumbnails/1.jpg)
Business Models for AI Startups Taipei AI Forum, 2017/08/13
Albert Y. C. Chen, Ph.D.Vice President, R&D
Viscovery
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Albert Y. C. Chen, Ph.D.
• Experience 2017-present: Vice President of R&D @ Viscovery 2016-2017: Chief Scientist @ Viscovery 2015: Principal Scientist @ Nervve Technologies 2013-2014 Computer Vision Scientist @ Tandent 2011-2012 @ GE Global Research
• Education Ph.D. in Computer Science, SUNY-Buffalo M.S. in Computer Science, NTNU B.S. in Computer Science, NTHU
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Any pie left for AI startups?
(BCG AI Report, 2016/10)
appl.layer
techlayer
infralayer
solution
platform
libraries
modules
data
machine computing power
data accumulation via open API
AI/DNN library AI/DNN library
gen purposeplatforms
gen purposeplatforms
app-specificplatforms
app-specificplatforms
app app app app app
HWco.
Verti
cal A
I Sta
rtups
agri. manu. med. fin. retail trans.
E.g., 1: Google, Amazon, FB, 2: IBM, 3: Walmart, 5: NVidia
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Vertical AI StartupsSolving industry-specific problems by combining AI and Subject Matter Expertise.
• Full Stack Products
• Subject Matter Expertise
• Proprietary Data
• AI delivers core value
(Bradford Cross, 2017/06/14)
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Why Go Vertical?• Don’t get ripped off—don’t get disconnected
from key customer/providers.
• Tasks get commoditized
• Software is eating the world—every company in every industry needs to be a tech company.
• Enterprise exits come in cohorts
(Bradford Cross, 2017/06/14)
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(Bradford Cross, 2017/06/14)
So, which vertical?• choose large TAM
with high margin • avoid 1% fallacy • avoid confirmation
bias
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(Bradford Cross, 2017/06/14)
AI startups total investmentUnicorn tally
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Technical vs Market Risk
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Examples of Vertical AI beating General Purpose AI
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Examples of Vertical AI beating General Purpose AI
TOP 5 TAGS COMPARISON
TAG AD PLACEMENT VALUE TAG AD PLACEMENT
VALUE
Person Low Coulee Nazha (actress) High
Anime Low Sean Sun (actor) High
Screenshot Low Back of smartphone High
Cartoon Low Female Medium
Adult Medium Young Medium
“FIRST LOVE” DRAMA SERIES SCENE
Competitive Analysis Baidu vs. Viscovery
TOP 5 TAGS COMPARISON
TAG (Man’s Face) AD PLACEMENT VALUE TAG AD PLACEMENT
VALUE
Age: 32 Medium Necklace High
Asian Medium Baseball cap High
Male Medium Bracelet High
Not smiling Low (inaccurate) Ziwen Wang High
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Top 5 Factors in Success (across >200 startups with successful exit)
(Bradford Cross, TedX, 2015/03)
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Timing, timing, timing.
Rule of Thumb: • Customers within the target vertical having
immediate unmet needs. • VCs scouting that vertical ready to invest.
2000
.com bubble burst
2002 2004 2006 2008 2010 2012 2014 2016
housing bubble burstbroadband penetration > 50%
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Your Idea• Are you passionate about it? • Is it disruptive enough? • What is your business plan?
• What is it? • Can it make money? • What is the future of the idea?
• What is your competitive advantage? • How do you build up your entry barrier?
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Building up Competitive Advantage for Vertical AI Startups
Business
DataTechnology
Speed
Team
Speed
Speed
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Some Hard Decisions
• 2C vs 2B? Hit the Jackpot vs long and steady?
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Some Hard Lessons Learned
• Swallowed alive by giants (Speed, Timing)
• Aiming for a narrow exit. (Business)
• Failing to disrupt the market (Technology)
• Everybody in the field is lying (Data)
• Don’t underestimate the cost of going long in any vertical.