Name: Brainstorm Tech 2024: Winning with Consumers in AI
Uploaded: 2024-07-17
Duration: 14 min 59 s
Description: Kirsten Green, Founder and Managing Partner, Forerunner

Kirsten Green, Founder and Managing Partner, Forerunner

Brainstorm Tech 2024: Winning with Consumers in AI

Conferences

Good afternoon. I'm thrilled to be here and grateful for the opportunity to talk about winning with consumers in A I, I've got 15 minutes and 50 slides so and a big topic. So I'm going to power through the slides to tell a narrative. Some of the slides are dense. I'm going to do my best to pull up the key takeaways. If something piques your curiosity, I'm more than happy to share the slides following the talk. And also worth noting that to the extent we reference consumer feedback and preferences in the materials that's out of some survey work that our team has conducted over the last couple of months. So with that, um so there are two major shifts that we care about as investors and people tracking the market. The first are value shifts which drive demand and the second are technology shifts which underpin adoption. When we talk about value shifts, we talk about major movements that are fueling mass adoption over time. And with tech shift, we're talking about inflection points that unlock new capabilities, both value shifts and tech shifts are rare and defining for the future. And when they intersect, it's even more rare and these are a place where businesses get built that can change categories and become new industry giants. We're at one of those inflection points today with generative A I powering a shift of a new generation of companies playing into the trend of access, moving to edit. What do we mean? Well, let's start with talking about access. So the last couple of decades, it has really been about unlocking access to experience to products and services. This has been an incredible place to build from with huge consumer pull and industry giants have been built. The social web has been a catalyst for this access. Here. We have familiar social networks that have tens of millions, 100 million active users. Similarly e com and digital services have hit huge penetration with the major companies having a billion dollars, tens of billions of dollars of annual revenue, device adoption has reached full penetration. And for the last 10 years, we've been in a steady state with some shifting you're seeing between device types which we understand as consumers buying 2nd and 3rd devices and the appetite for technology has been so great that consumers have been readily embracing products built for the enterprise for their own personal use. So for reasons we're gonna get into in a few minutes, we believe that at this point, we've reached peak access. It's a time when more is no longer more and people are feeling overwhelmed if not burdened by the level of information and hyper connectivity they have. And it's becoming counterproductive. If you ask consumers today, they'll reference this. The majority of them are saying that they want to engage less with technology, less with their social media, less with news headlines, with notifications, with games, their devices in general. In fact, we see this hyper connectivity as an underpinning for stress people. This year report elevated stress levels to the tune of 40% just year over year and 75% of people report they've walked away from decisions or purchases simply because they felt overwhelmed by the abundance of choice and input. We see these stress levels as a harbinger for what tech can solve for going forward to make things better enter gen A I which we feel has the opportunity to power the shift from access to edit. What do we mean when we talk about edits? So rather than give me more options, show me the option. That's uniquely right for me rather than give me the tools to do something myself, do it with me or better yet do it for me rather than make me productive, be productive for me, outsource the work, give me the output and let me leverage that a powerful way to think about edit is personalization, which has been a topic that we've talked about a lot in tech, but it really hasn't come to fruition. In fact, the thing that I think about is the most personalized experience I have online is in my Instagram ad field or in the Tik Tok algorithm. So we see A I being uniquely suited to make personalization a reality through these mechanisms, being able to deliver on your preferences, taking action on your user's behalf, having context and situational awareness and obviously doing that while you're maintaining privacy and the consumer is here for it, they're already in tune. There's an incredible awareness around A I and the power of A I so much so that in two years, chat GPT mindshare is touching the levels of Instagram. This slide is dense and that's the point. So when asked users on what dimensions do they want to use A I, there was a significant response 40% plus across a wide range of tasks that span career finance, personal services and health. And you see here at the bottom, there's a few that are kind of ranked in the 20 below 20% and those are really ones where the human element or the emotion element is the product. So think of coaches and therapists when consumers make decisions they do so on a three part paradigm, looking for advantages on price, convenience and quality. The business cycle of the past when it was delivering access is really focused on setting new standards in price and convenience. And even with parody on quality companies were able to take mindshare. These are some of the biggest winners of the last generation in comparison to the prior gen alternative. And you can see here that in many cases they won on price and convenience. If you think about what it takes for a consumer to trade out of an existing product and service in adopting a new one. Yes, you have to maintain an eye on price and convenience. But with A I and introducing that into the conversation, we're seeing an expectation for higher quality, moving into the driver's seat of a decision making process. The journey, there is a journey ahead to building out A I to be a full expression of what it can be. But we do see a path and we do see the opportunity for better quality. So instead of just access to information, more health care data, more data on your wearables device, taking you to a place where you can take action from it and you can get better health care. For example, that said the consumer expectation is high, they set a high bar for what is better. Their patience isn't exactly abundant and that makes the window for experimentation, quite narrow. All the more important to get it right? When you're just getting started as a business to that end, we propose the business, this business idea to focus on two fronts. One is delivering magic and the other is building trust. We think about these on two dimensions. So magic from delight to relief and building trust from do it with me to do it. For me in the context of delivering magic delight is more of a novelty. It's that moment that evokes a sense of joy or a sense of surprise versus relief, which is about taking something that's in the red. That's a burning challenge for a person and solving for it. Over the past decade, magic experiences have predominantly been anchored in delight. In fact, when you look at the winners of the past decade and you go back and talk to some of their earliest users about their first impression of the experience. They say delight at a high, high rate in terms of what underpins that moment of magic for them. Yet, when you talk to consumers today and you introduce the possibility of A I or the power of A I powered, we hear consumers saying they're looking for a sense of relief. This suggests a powerful place to build on the top half of this two by two graph and it's a zone that hasn't been as penetrated as the delight part. Again, here's a dense chart, but it says that same task list. And we said when you, when you, when when offered the opportunity to have A I powered, what do you imagine as your experience? And they by large sighted relief and the good news is that's a really powerful place to build a business from. It offers a better chance for retention and engagement over time. But how do you craft a magic experience? So the next two slides are deserving of a talk in and of their own, right? But to give a nod to the idea, we see four main jobs to be done on this front. The first solve a red hot problem two have a high quality output, three be efficient while you're doing it. And four make something affordable that previously was out of reach. And with respect to the technology, we have some philosophies and some early product ideas that suggest that it's important to be anchored in transparency to be upfront about where the A I is creating the advantage to show users that they're going to get more than they give and to bring them along in that journey. Here's a sample of some early movers in A I that are already performing well on these dimensions of relief. Now moving on to trust, let's start with the reality that we're up against some hurdles. So getting back to that idea that there's sky high consumer expectations and patience for experimentation is quite narrow. We can see in the headlines today, there's plenty of critiques on the products that are out there. So with trust and building it, it really starts with engaging with collaboration with the user, allowing them to have some agency and starting with a do it with me journey. We see an opportunity and an openness when talking to people on the almost wanting to embrace the do it for me but not, not unexpected. Most of these things today are more conceived to be in the do it with me phase. And probably that's because it's early in the A I journey, we haven't totally proven out the power of it yet. But when we do, we imagine that there's going to be a shift to an autonomous format across a lot of these tasks being possible. And when you think about this in the context of the two by two graph, we're now talking about the upper right quadrant, which is a relief, you know, delivering relief and doing it for you is a really powerful place to build a business from. And it may sound crazy to think about taking your hands off the wheel and letting A I do something for you. But remember how foreign or even inconceivable, it felt to get in a stranger's car or to get in some stay in someone's house, um We've clearly moved beyond those spheres. And so in addition to designing with user sensitivities, most companies have ramped up their controls and protections. And that plus a consistency and experience and generally a lot of this is powered by user, really wanting these tech enabled products has allowed us to build enough trust to get to where we are today. Um That said there's new layers of confidence and trust that will need to be built as A I reaches its full potential. So how do you build trust? So some starting points that we suggest with on the delivering it on the do it with me, do it for me. Scale is don't over promise, be realistic about what you can do and ensure you deliver on it. Confirm that your service is really satisfying a need and that you're moving things forward from what already exists and really understand what the cost is of missing the mark, be in tune with what the downside is. Understand the perceived versus the actual risk and protect against disappointing the user. We're already seeing some developments here. You've got some industry leaders like Adobe making a forward step to honor the IP rights of creative and you've got some early movers like perplexity introducing the idea of citations into their search results. There's a lot of building going on right here and this is what we're calling the trust stack. It's an emerging foundation of tools and technologies that will underpin the ability for A I to become autonomous. There's lots to be done. They will need to be leveraged across many things to deliver on that experience, but there's work being done and there's a path forward on it. So in closing, we see a consumer that's generally eager and optimistic about A I 50% of the people we talk to have engaged with it already in some way and 80% plus of the people imagine it being a positive lever in their life. The intersection of a growing desire to move towards edit or personalization with the actual possibility that A I can deliver on that offers a step change for consumers and for business. And we see a winning formula in delivering magic. So solving a red hot problem, delivering quality, being efficient while doing it, making something possible or affordable, that wasn't before while building trust in the form of managing your expectations, providing transparency, encouraging collaboration and mitigating risk leading to a path of adoption of loyalty and of scale.