AI: AI is helping launch new businesses and not just AI businesses

Ammirati, a professor at Carnegie Mellon University, has groups of students, mostly graduate students, who begin… business from scratch throughout the spring semester. Some of the Startups The projects its 49 students created this year are classic examples of the format: a dating app for couples in long-distance relationships, a personalized fitness app.

But Ammirati also noticed something unusual.

“I have a pretty good idea of ​​how quickly students should progress in a semester,” he said. “In 14 years, I’ve never seen students progress as much as they have this year.”

And he knew exactly why that was. For the first time, Ammirati had encouraged his students to use generative AI as part of their process: “think about Generative AI “As your co-founder,” he recalled telling them.

Students began sharing their ideas for use cases in a dedicated Slack channel. They used generative tools. AI tools like ChatGPTGitHub Copilot and FlowiseAI to help them with tasks including marketing, coding, product development, and recruiting early customers.

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By the end of the class in May, venture capitalists were arriving at Carnegie Mellon’s Pittsburgh campus. “It felt like the mid-2000s, when cloud and mobile technology emerged at the same time,” said Ammirati, who is an entrepreneur. Generative AI, he believed, could similarly change innovation “by an order of magnitude.”

For all the excitement about the potential impact of generative AI tools like ChatGPT, it’s still unclear how and when this technology will begin to measurably impact economic activity. Many businesses, especially smaller ones, are still trying to figure out how to use it effectively.

For some entrepreneurs, however, generative AI has already been a game-changer. It helps them write complex code, understand intricate legal documents, create social media posts, edit texts, and even answer payroll questions. The result, they say, is that AI allowed them to launch their businesses more quickly and efficiently than they could without it.

The implications could be profound. Startups are a crucial source of job growth and economic resilience. By helping to drive innovation, they also contribute to greater productivity, one of the key promises of generative AI.

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The technology “is like giving you stilts to get through an obstacle, a minefield,” said Steven Bright, who recently founded Skittenz, a company that makes colorful covers for mittens. “You can get from A to B faster.”

Bright said he got the idea for Skittenz in late 2022 during a ski trip with his wife when they noticed everyone wearing regular black ski gloves. Wouldn’t it be cool, they thought, if they could attach a trail map or other colorful fur over their gloves?

Bright, an emergency room doctor from Golden, Colorado, thought he had a good idea for a business, but had no idea what to do next. “Most of my colleagues and friends are doctors or work in the medical field,” he said. “I didn’t even know where to start when it came to getting help.”

Instead, he turned to ChatGPT, which was gaining widespread attention. At first, he used the technology to answer basic questions, such as how to use a particular type of dye for glove leather, and then asked the tool to handle more complicated tasks, such as creating a survey to gauge customer feedback, translating patent documents into understandable terms, and deciphering legal agreements for trade shows.

Although the company is not yet profitable, Bright said using ChatGPT gave him the confidence he needed to launch Skittenz without having to pay lawyers or other experts. “It’s scary when you take your savings and invest it in a new idea when you have no foundation,” he said. “But being able to harness all the power of the Internet in a small conversation gives you some confidence.”

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Right now, there is little data on how many startups are using AI and whether the technology is helping them move more quickly on the path to hiring and, ideally, profitability. That’s partly because the intersection of entrepreneurship and generative AI has only recently emerged as an area of ​​study for economists.

But research suggests that newer companies are, at the very least, more inclined to experiment with technology.

According to a working paper published in April by the National Bureau of Economic Research, AI use was highest among young companies. Applications such as generative AI may be attractive to young and small companies, the paper’s authors wrote, because they are “general-purpose technologies” that are not expensive to use.

And Gusto, a payroll and benefits platform for small businesses, found that about a fifth of companies created last year said they were using generative AI to more efficiently carry out tasks such as market research, contract review, accounting and job posting. Liz Wilke, chief economist at Gusto, believes its use could transform the startup landscape.

“There are many reasons to believe that this is the most likely path: that companies will reach profitability more quickly, grow faster and, in fact, be a little more stable in the end,” he said.

Jamie Steven, a businessman from Greenwater, Washington, appears to be on this path.

Steven used generative AI to learn some of the basics of running a business when he was trying to get an app up and running last summer that would show users the quality and condition of their internet connection in an easy-to-interpret interface. He asked ChatGPT questions about topics like startup equity and payroll. Though the technology sometimes produced suspicious or nonsensical answers to the point where he adopted a mantra, “Don’t trust and verify,” its ability to provide concise summaries helped him feel more informed before speaking to experts.

“I feel like I can ask stupid questions in the chat tool without feeling embarrassed,” said Steven, who previously held senior positions at Ookla, which runs the popular sites Speedtest and Downdetector.

He and his engineers have also used GitHub’s Copilot to more quickly write code for the app, called Orb.net, a move he says was instrumental in accelerating the business’s growth. He has recently hired several people, raised $700,000 from angel investors and plans to roll out the app to the public in the coming months.

“Would I have been able to do it if I didn’t have access to those tools?” Steven said. “Probably not.”

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One aspect of the startup landscape that is showing more measurable signs of change due to artificial intelligence is the rise of AI-related new businesses. Investors are pouring billions of dollars into AI startups, and some research has shown that companies that originated from AI-related new business applications over the years had greater potential than others for job creation, payroll, and revenue.

But many entrepreneurs are also using AI to turn their ideas into viable business concepts. Erik Noyes, a professor of entrepreneurship at Babson College in Massachusetts, said the technology is, in effect, offering startup founders the opportunity to multiply their intelligence at low cost.

“Entrepreneurs never have enough resources,” he said. “We could think of this as startup technology: doing more with less.”

E. Darren Liddell worked for years in financial counseling for nonprofits, helping low-income people make good financial decisions. He had always wanted to start a business, and he finally did it last summer: he created My Money Story, a financial counseling firm for lower-income people of color.

One of the company’s programs pairs users to help each other achieve their financial goals. At first, the matches were done manually, but about six months ago, Liddell, who lives in New York City, got curious about using artificial intelligence to make the matches, which he and his small team would then review before making them final.

While there were some privacy concerns to work out regarding how the AI ​​technology would incorporate user information, the idea was a success, Liddell said. Most of all, the tool saved the company time and allowed it to avoid having to hire an intern or entry-level employee to do the matching.

“We’re a startup, so our money is pretty tight,” he said, “and every dollar really counts.”

This article originally appeared in The New York Times.