Welcome to the first edition of Tech Dive, a monthly newsletter in which I’ll deep dive into different tech, startups, and venture capital topics. This month I'll focus on the latest evolution in the artificial intelligence world that has already caught the attention of the biggest venture capital firms out there - Generative AI. Some people are already calling it a bubble with the number of new companies and crazy valuations already popping up in the space. If it is indeed a bubble, only time will tell but it is already clear that this new technology has the potential to dramatically impact almost any business.
What is Generative AI?
To understand what Generative AI is, we must first go over the definition of traditional artificial intelligence (AI). AI can be basically defined as making computers perform tasks that usually only humans would be able to do, such as understanding and recognizing patterns in data sets, text, speech, images, videos, etc. Some examples of where we interact with traditional AI in our day-to-day lives include music recommendations provided by streaming services, “discovery” pages on social media apps, and even when we apply for a credit card. Those are all very analytical and objective processes and machines evolved to a point of doing those tasks even better than humans in many cases.
Something that machines were not very good at and for some something that made humans humans, was creative work. Producing art pieces, writing novels, composing music, or anything that involves creative thinking were all activities that only human beings could do. This has changed with Generative AI. This technology allows computers to produce new content rather than just analyze existing data sets and develop patterns. Some tools already using Generative AI technology that you might have heard of are ChatGPT, used for answering any question in a very complete and understandable manner, Midjourney, used for creating new artworks from scratch, and AI Dungeon, a game in which the experience is fully created by AI and unique to each player.
OpenAI is the company behind the infrastructure that most of these applications are using today. Founded by Sam Altman, Elon Musk, and others, the startup developed and released the art- and text-generating AI systems DALL-E 2 and GPT-3, both of which are available for other companies to use for their own use cases via APIs. It is also rumored that they will soon release their new text-generating system, GPT-4, supposedly with 100 trillion parameters (around 500x more powerful than GPT-3).
But is it good for business?
Even though much of the attention is currently going to consumer-facing applications, Generative AI has several business applications that can dramatically change how many industries operate today. Below you can see a market map that I’ve put together with projects that are tackling different business verticals using Generative AI:
Marketing
Companies of all sizes and in all sorts of industries have now realized how important social media presence is for their brand recognition and growth. This includes setting up a strategy, deciding which audience to target, what language to use, what time and where to post, and, of course, actually producing content to post. Some businesses have full in-house teams of social media strategists and writers while others opt to hire third-party companies to take care of their social media - both very costly options. With Generative AI, companies can just feed the algorithms with their previous posts or set up the tone and type of post that they want manually and the AI automatically generates the content for them.
Sales
Similarly to marketing, sales teams spend a huge amount of time writing outreach, follow-up, and support messages to their prospects or existing customers. Some Generative AI tools can help sales departments be much more efficient in this process while making sure that the entire team has an aligned narrative and language. This can have a significant impact on businesses’ topline revenue since the same amount of people can reach out to more leads, and more precise messaging can increase conversion rates. Chatbots can also benefit from this new technology and provide much more customized and human-like answers, which also increases customer satisfaction.
Software Development
If you’ve ever written at least 10 lines of code chances are you ran into an error and went to websites like Stack Overflow for answers. The days of scrolling through these platforms hoping to find the exact answer to your problem could be over with Generative AI since the technology scrapes data from all over the internet, including pre-built scripts, and autocomplete, correct or simply provide full scripts for a given ask. This will allow developers to write higher-quality code much faster and allow less experienced developers to write more complex programs.
A few companies in this vertical: Replit, GitHub Copilot, Tabnine.
Human Resources
According to the Training Industry Report, companies spent an average of $1,071 per employee on training costs in 2021. While not everything can be automated, Generative AI can significantly reduce these costs for corporations. For instance, D-ID’s platform allows businesses to generate photorealistic videos based on a single image that, when combined with GPT-3 text generation, is a game changer for employee onboarding, training, and e-learning.
Legal
Lawyers and in-house legal counsel can also take advantage of Generative AI. They can use the technology to help them write contracts from scratch or help them review clauses. People who are less familiar with the language used in contracts can also use these tools to give them a summary in more conversational language to help them understand what is contemplated in the document.
Design
One of the first things to do when starting a business is to create a logo and a website. With AI, you no longer need to hire a designer to do these since it can give you some very high-quality template options for both. You don’t even need to think about the text on your landing page since AI can give you some suggestions ready to be implemented. Generative AI also has some relevant implications in the physical design world with tools that can create full architectural plans from simple text descriptions and interior design image generation.
AI has come a long way but we are still in the early days of this new era. Current applications described in this newsletter are already providing immense value to businesses but I am sure new ones, that we can’t even imagine now, will appear in the coming years. I even believe that this technology will not only make current businesses more efficient but will also create entirely new industries, something that is much more difficult to predict how it will unfold. If you are building, investing or simply interested in discussing this further, don’t hesitate to reach out!
Very interesting!! I've already signed up to receive your monthly insights.