Parker Conrad, the founder of Rippling, a HR startup valued at $13.5 billion, recently expressed his thoughts on AI during an interview on our Found podcast. He highlighted that while some people may find novelty in the idea of chatting with HR software that responds to them, in reality, most users do not actually desire such interactions.
Conrad also criticized the trend of software companies adding superficial AI features to their products, describing them as insubstantial. He acknowledged the transformative potential of AI but expressed his disappointment with many of the AI applications he has encountered.
However, Conrad acknowledged the reasons behind AI washing, where companies falsely claim to incorporate AI significantly into their products. He attributed this phenomenon to the current rush within the tech industry to capitalize on AI. He humorously remarked that companies believe they can enhance their valuation by simply adding “.ai” to their name, as investors tend to assign higher multiples to AI-focused startups.
Conrad’s perspective sheds light on the challenges and hype surrounding AI adoption in the tech industry.
His viewpoint is supported by data. PitchBook reports that in the first half of this year, AI companies accounted for 41% of all deal value in the United States. Out of the $93.4 billion invested in U.S. startups during this period, AI and machine learning companies raised $38.6 billion. Additionally, over 40% of new unicorns are AI startups. The Financial Times noted that in 2020, AI companies raised $27 billion, with significant investments coming from major tech companies in the emerging field of artificial intelligence. These figures highlight the substantial investment and attention AI startups have been receiving in recent years.
Nekeshia Woods, a managing partner at Parkway Venture Capital, shares the prevailing sentiment in Silicon Valley that AI is permeating almost every aspect of our lives. She believes that businesses are increasingly using AI to automate routine tasks, with AI assistants on the horizon and general-purpose robots not far behind. Woods predicts that consumers will demand higher-quality products and services that can be hyper-personalized to save time, such as self-driving cars.
In contrast, Parker Conrad remains skeptical about the value of AI agents but recognizes the power of AI in reading and understanding vast amounts of unstructured information. He believes that AI can help companies gain better insights into their businesses and flag anomalies for management attention, even though current AI models may not always provide deterministic results.
The prevalence of AI washing and doomsday discussions can lead to AI fatigue, but Woods argues that it is more of a growing questioning about the return on investment in AI. Conrad acknowledges the difficulty in predicting when the substantial investment in AI will truly pay off.
The perspectives of Woods and Conrad highlight the ongoing debates and uncertainties surrounding the true impact and potential of AI in various industries.