2018 Startup Trends: Artificial Intelligence Everywhere

It’s no secret that out here in the valley, VC’s like to work themselves into a frenzy over this or that trend. Often, it’s just irrational marketing hype, but sometimes, it’s just that magical moment of timing where technology meets demand and huge opportunities arise.

You need to be aware of the trends if you’re going to be raising a round or investing, but getting ahead of the trends is even better. If you can predict what people will be buying in the future, you’re going to get rich.

We’re already two months in and startup season is quickly arriving, so I’m starting this series to examine some of the trends I think we’re going to be seeing in 2018.

Artificial Intelligence investing had its strongest year in 2017, with hundreds of startups raising rounds on the promise of AI tech.

The academic research into AI has recently seen a resurgence in investment, steadily rising over the last few years. So-called Deep Learning, Recurrent Neural Networks became all the rage and started showing some really impressive results on a variety of use-cases.

The behemoths like Google and Amazon have been investing in AI tech for years, and really began releasing production-ready products to make their AI capabilities available to average developers in 2017. They are doing this for two reasons:

• Both players are trying to differentiate their cloud computing offerings, and both are competing in the smart home category with Alexa and Google Home. Tech Entrepreneurs are actually fairly loyal to their favorite tools, so having a big draw in AI means more players in the ecosystem.
• AI requires massive amounts of computational power, and Google Cloud and AWS sell computational power by the hour. By making AI easy to use and understand, they can sell more CPU hours.

While the chatbot rush of 2016–2017 was thoroughly underwhelming, we did see some maturation with a few players coming to form in late 2017. I’d expect to see their success lead to a whole host of copycats, and further investment in the space. Google’s new Rich Communication Standard format, and the rise of ubiquity for Facebook Messenger both also lead credence to this being a major application of AI.

Self-driving cars will continue to see success, and hopefully we will have large-scale self-driving operations by the end of the year, which will inevitably lead to one of the great social revolutions of our age.

Medicinal applications for AI are also showing promise, and I would expect to see more and more of these grow in feasibility, but I just don’t think people are ready to relinquish control to machines for this just yet, so I think doctors will be safe for a while.

Replacing some low-skill engineering roles will be possible, but I think major disruption in this arena is still several years out, as the technologies required to convert human ingenuity to machine language are out of reach for the time being.

There is a dark side to all of this. For every 10 companies that will raise money in 2018 on the promise of AI, only 1 will actually use (or at least need) AI. The vast majority will be marketing hype.

The Business Intelligence space has been doing a good job marketing itself as whatever big-name technology is popular for years, and we will continue to see entrepreneurs leveraging the hype of Artificial Intelligence to raise money around traditional business-oriented data analytical functions.

The business folk know that AI is hot, and they know that they need it, but they don’t know what it is. And that’s an information asymmetry that is ripe for exploitation. Expect to see a lot of hype, some of which might actually be viable products simply marketing themselves as AI, others sufficiently worthless to be labeled vaporware.