Why customers don’t want to pay for AI features
Why customers don’t want to pay for AI features
Your BitBakery update for October 2024
New technologies have always been accompanied by a lot of hype. But over the last decade, there has been an exponential increase in the hyperbolic hype surrounding virtual reality headsets, blockchain, Web3, and generative artificial intelligence.
The hype surrounding generative AI tools like ChatGPT, Midjourney, and Microsoft Copilot is something to behold (see the chart above). But that hype doesn’t always translate to success for companies adding AI features to their applications.
Mike Kirkup has some thoughts on this. Mike is the CTO of EnPowered and Arlo and a former colleague from UW Velocity. He was on a recent episode of Communitech’s Tech About Town podcast discussing fundraising with MaRS Discovery District’s Vartika Manasvi when the topic of startups adding AI features came up.
“I think the part that we're getting frustrated with is that people aren't thinking about what to use AI for. They're like, ‘If I could just slap AI onto this, then it's better.’ And the market is correctly saying, ‘I'm not going to pay for that.’ Slack spent a ton of money adding AI functionality. Most people aren't paying for it. Salesforce added a ton of sale AI functionality. Most people aren't paying for it. Notion they wanted to charge extra for AI now they've just rolled it into the main product.”
I’ve known Mike for a long time, and he understands what markets are genuinely looking for. He says that the real value of AI is not in additional features but in native AI applications and services. He gave an example that illustrates this point well.
“A really great analog is GPS. There were very clear examples of apps that couldn't exist on mobile before GPS. Turn by turn navigation was not possible. You could have a map. It could tell you, I want to go from A to B, but where are you? What's missing was enough that you would carry around an actual portable GPS puck that would tell you where you are. Then we put it in the phone and Uber comes along and completely redefines how you get around in a car, because they know where you are and where you want to go, where the driver is, and this whole experience was amazing. No one ever thought of it like that. That still has to happen with AI, and I think that's the frustration by consumers right now is that AI is only making an experience 10% better. We just have to be patient.”
Have you had a native AI experience that has wowed you? I’d like to hear more about it.
- Wes
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