Venture capitalists are backing development of artificial intelligence (AI) tools as the intense focus on generative AI and the wide-ranging impact AI technology could have is dominating conversations in the business technology community.
A report from Productboard found a whopping 90% of VC-backed companies plan to launch generative AI in their products, with nearly two thirds (64%) planning to do so before the end of the year.
The survey of more than 300 CEOs, founders, chief product and technology officers and VPs of product from startups to public companies, found nearly 30% of companies will be hiring new AI team members.
While most companies are allocating some staff to support Generative AI, the survey found allocations are still on the smaller size relative to overall team sizes–most early-stage startups are allocating under two team members, while mid-size companies allocating under five team members and the biggest companies allocating under ten.
The broader survey data on research and development (R&D) trends indicated many companies are cutting spending but preserving or increasing R&D investments, with innovation as the top priority when it comes to R&D investment.
Hubert Palan, founder and CEO of Productboard, explains given the major economic hurdles the tech industry has seen lately, it’s understandable that the survey found more than 30% of companies plan to cut overall spend this year.
“However, nearly 50% are planning to increase their overall investment on R&D, which shows businesses are betting on their product and engineering teams to drive success in the coming year and propel them through this economic downturn,” he says. “In turn, this means that the pressure is on for R&D teams to live up to expectations and deliver strong ROI in the coming year.”
He adds there is “incredible promise and opportunity” ahead of generative AI.
“We’re seeing companies across the board throw their hats into the AI ring,” Palan says. “But as with any new tech trend, leaders need to weigh the pros and cons.”
He says it’s important for businesses to weigh the benefits of investing in the technology right now, consider what customers are asking for and determining how it improve their day to day lives.
“The companies that ask themselves these questions and apply a thoughtful approach will be the ones to see true success with AI in the long-term,” he says.
He cautions that in their urgency to catch on to the AI wave, many people might race to get something out the door, cutting corners and shipping something that doesn’t align with their core vision or truly meet customer needs.
“To make a real impact on revenue and find success with AI in the long-term, companies need to rely on sound product management principles and listen to customer needs and usage, build strategic product plans, align across the business and execute effectively,” Palan says.
Ilya Fushman, partner at Kleiner Perkins, explains the foundational model infrastructure for Gen AI is incredibly robust and readily available for companies to leverage for improved and novel customer experiences as well as the optimization of their internal operations.
“We expect to see businesses become more efficient by leveraging AI capabilities to speed up engineering and product development, optimize their sales, marketing and customer service interactions and leverage products to intelligently prioritize what they build,” he says.
He adds while he’s excited to see new use cases that are uniquely enabled by AI, he’s equally excited to see companies with existing products in market deliver better experiences to their customers and accelerate their business.
“Ultimately, every company has the opportunity to become AI-enabled, and we’re on the lookout for those that intelligently leverage this to build the best businesses in their category,” Fushman says.
The survey also found that for companies who enacted layoffs this year, R&D headcount was cut less than other departments.
With competition for generative AI talent tight, Palan says businesses lure top minds in this field by focusing on the key benefits that employees are looking for today.
“The traditional methods – such as high salaries, annual bonuses, raises and stocks – are always going to be important, but today’s employees want flexible work hours as well as options to work remotely several days a week,” he says.
He notes some employees will opt for higher pay over flexibility, but in general, people are more focused on better maintaining a healthy work/life balance, which in turn will also make them happier and more successful employees.
“Often just as important as these benefits are opportunities for career growth,” Palan says. “Having clear lines of growth and mentoring and training options within your business will help potential employees envision not just a single job and the company but a long-term career.”