Opportunities for Intelligent Systems in Consumer Markets
Written by Matt Hayes
At PJC, we are always thinking about how new trends are impacting markets. In this piece I want to lay out some of our ideas relating to where there may be opportunities to apply AI and machine learning technologies to consumer markets.
While AI is a long-term secular trend, it is different from previous trends in that in many cases it favors incumbents who already have large data sets and strong distribution. The last wave of tech — mobile, cloud, and social media — all consisted of new models for distribution and operations that allowed upstarts to take on consumer giants. AI is a more powerful technology, but it is also a trickier technology when analyzing market opportunities.
Here are some areas we are watching.
1. Recommendation systems and hyper personalization. Existing recommendation engines rely primarily on a technology called “collaborative filtering.” It basically says people who bought/watched/listened to the same things that you did previously also liked these things, so you will probably like them too. That is a good start, but it doesn’t work well to capture unique, or less popular things that a consumer may enjoy. AI has some opportunities to learn from interactions with consumers to personalize these algorithms beyond collaborative filtering. The key is finding areas where the data sets are not already dominated by the big consumer web companies.
2. Personal automation. Life continues to get busier, so having AI agents perform tasks for you and lift some of the burdens that we encounter day to day seems to be more feasible every year. Once this technology gets real, we may see a return of fee-for-service consumer models from the packaged software days due to the fact that this type of software most likely will not be ad supported.
3. Synthetic Media and Ecommerce. My partner Rob wrote about our synthetic data thesis last year, and we have continued to refine our views on where synthetic data is going based on that experience. We are seeing more opportunities for synthetic media — characters, songs, movies, articles, all created by AI systems. And we see opportunities to use synthetic media for ecommerce applications to automatically generate more information about products and to engage customers to help them navigate an increasingly complicated buying environment.
4. Automated financial systems. Roboadvisers have become a real business and we believe that the financial industry will continue to use more and more AI over time. With all the data available, the large sums of money running through the system, and the needs of users for very personalized plans based on their income, goals, and risk vs reward tolerance, there are opportunities for AI in almost every layer of the consumer financial stack and every area of the market.
5. Mental Health, Wellness, and Coaching. As AI agents get better at conversation, and develop more reasoning capabilities, we believe the opportunities for mental health, wellness, and coaching applications is broad. These are areas that are very expensive for a lot of individuals and families today, and AI has the capacity to make them available on demand and at a lower price, which will drive adoption and increase the total available market.
The key to all of these is in finding opportunities to use intelligent systems to deliver value in new ways that are difficult for incumbents. If you are working on a startup that involves AI applied to consumer markets, please reach out. We are thinking a lot about this and would love to chat with you.
