The Challenges of Startup Management and AI

How Startups are Paving the Way to AI

“Artificial intelligence is the future, not only for Russia, but for all humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world,”

– Vladimir Putin, President of Russia.

All the news channels exploded! Elon Musk alone had 33K retweets for quoting Putin. From young children to scholars, politicians and industry titans, our social media timelines are flooded with news on the latest AI breakthroughs, accompanied with strong mixed reviews and opinions. Both sides bring strong arguments when stating that AI will be either our great liberator or our reckoning.

The Russian President taps into a popular theme and this quote appeals to our collective, global fear of Skynet. However, Mr. Putin and his advisors are dangerously wrong. The road to achieving a general, sentient AI that will easily pass the Turing Test and Wozniack’s Coffee Test is filled with too many unknowns and black swan events. If the history of tech has showed us anything though, is that:

• such a piece of technology will find its way to be democratized
• numerous and highly diverse parties will capitalize upon it by filling currently-unfathomable market gaps
• it will not have a single leader
• regulators will be forced to act decisively; action will still most likely take place painfully slow though
• startups will make the most important and most profitable leaps forward

These are especially true because of the following two arguments.

1. The way AI currently is and will keep being built around the world mixes the complementary strengths of humans and machines. This occurs while slowly nullifying each other’s weaknesses. It’s a form of symbiosis that gives us superpowers and gives emotionally intelligent startups tremendous market openings.
   
2. Similar to how numerous companies started or expanded by filling a specific market gap with a specific type of app, we’re now seeing the same with AI. For example, the recruitment startup Wavely deploys its own novel AI and a beautifully-simple chat interface to solve a specific pain-point: online recruitment in the US is still too costly and time-consuming. Wavely will not, for example, be able to also predict anytime soon if you should visit a doctor. That is left in the capable hands of healthcare experts who can and know how to build an AI specifically for that.

The most successful startups have leaders who understand these two factors and leverage this novel symbiosis between human and machine to the max by incorporating it across all departments.

They may not realize it, but anyone who’s part of management in an AI startup has a tremendous opportunity and responsibility: to shape the future of this symbiotic movement in their particular field. That’s why it is concerning, to say the least, that 90% of startups fail.

In this first article, we will look at the general problems startup leaders must overcome, as well as how a stronger foundation can be set to help the entire team navigate through tough waters.

The second article will focus on an additional and novel problem that startup management is struggling with around the Globe: AI.

The 7 Questions for Startup Leadership

In his hit book Zero to One, investor and entrepreneur Peter Thiel lays down a comprehensive guide to why most managers are leading their startups into the ground.

To lead a successful startup, anyone at or above manager level needs to know how to confidently answer the following seven questions.

1. The Engineering Question: Can you create a breakthrough technology instead of incremental improvements?
   
2. The Timing Question: Is now the right time to start your particular business?
   
3. The Monopoly Question: Are you starting with a big share of a small market?
   
4. The People Question: Do you have the right team?
   
5. The Distribution Question: Do you have the right way to not just create, but deliver your product?
   
6. The Durability Question: Will your market position be defensible 10 and 20 years in the future?
   
7. The Secret Question: Have you identified a unique opportunity that others don’t see?

Apple, Facebook, Tesla and other household names succeeded as startups because they could easily answer all seven. Wavely does a fantastic job at answering the first 6, but it was the answer to the 7th that got our team 110% hooked – the US is alarmingly falling behind in recruitment tech. Other industrious nations are moving towards instant-messaging directly between hiring managers and candidates and mobile-first approach to job search and recruitment and it is having a positive impact on their economies. Especially with belief in a stable and static workforce crumbling as younger generations are more ambitious at moving to new companies every few years.

The Comfort Problem

Even after an entire management team confidently answers Thiel’s questions in pursuit of stratospheric growth, they will be plagued by another issue. 

To not fail, everyone above manager level must be comfortable in a constant state of discomfort. They must be the first to shout when a fire starts and will have to take the hardest twists and turns to create their own unique recipe for success.

There is no such thing as a perfect business or a perfect plan, because massive screw-ups will undoubtedly happen. If management is not comfortable with that or if they can’t adapt and embrace the struggle, the entire team will suffer, from the junior developer to the CEO and investors. Just ask Ben Horowitz about his journey as a Silicon Valley entrepreneur and then co-founder of Andreessen Horowitz. In his book The Hard Thing About Hard Things he emphasizes that most successful business leaders attribute their success primarily to the fact that they never gave up.

Pitch Deck Magic

We all know the classic Silicon Valley story. First, a few people come up with an idea and move into their garage to build a Minimum Viable Product. They then test the product and start to improve it to get traction. In parallel, they work on mapping their competition, building their vision, value proposition, go-to-market and business model. 

All the data obtained is put into a well-crafted and simple pitch deck of usually 10-11 slides. This pitch deck, as well as a demo, are their main weapons when they proceed to have numerous meetings with angel investors and venture capitalists, so they can get that first round of funding. 

What happens after that investment is a much-too-common, unfortunate and illogical scenario. All the months poured into building the pitch deck are discarded and the deck is shelved. 

That pitch deck is actually one of the most important and powerful tools a startup has. It’s a living and constantly-evolving document that management should often refer back to. It helps everyone on the team: 

• remain on the same page
• deliver the same message, both internally and also to the outside world
• bring the company back to its core values when things become too hard and complex.

It is as simple as this: having a unified message as well as constant clarity over the company’s core values will allow management to stay motivated and choose the best possible course of action when the world turns upside down (which happens on a daily basis).

Maintain Unity on the Company’s Vision

Within a startup, it doesn’t matter what job function a person has. They have to be aware that they sell the company’s vision (sometimes unknowingly) on a daily basis:

• on a small scale (friends, family, colleagues)
• on a larger scale (social media users, other businesses)
• both of the above

Whether a team lead directs Marketing, Engineering, Sales or Operations, it is their responsibility to ingrain a unified message within the entire company. They must be able to successfully sell it internally, before hoping to achieve any form of success in selling it externally. The road is hard and paved with numerous unknowns, but a few things remain constant in what leadership must do:

1. Know your stuff: Answer Thiel’s seven questions with the same level of confidence like Apple, Facebook, Tesla and Wavely.
2. Get comfortable with constantly being uncomfortable.
3. Have the hardest conversations and make the hardest choices. The entire team needs it and no one else will do it for you.
4. Keep everyone on the same page and come back to the company’s core values when things get too complex. Referring to your Pitch Deck on a constant basis helps a lot.
5. Be like Waze! The way this mobile navigation app works can show management how important an open and flexible mind is to achieve their goal in the most cost-effective way. Waze gathers real-time data about a user’s route and optimizes it along the way whenever needed, so the user gets there in the fastest (and thus cheapest) manner possible.
6. Don’t give up!