AI alone won’t cut it: Grove Ventures pushes founders to prioritize product over tech
No company today would boast about using electricity to run its business. The same should be said for AI
New founders are being encouraged not to let AI “speak for itself” when building a new company, instead focusing on what product they intend to build or what problem they hope to solve. Despite generative AI being the latest buzz in the VC space, building strong AI tech isn’t enough: Success depends on how well it integrates into real-world workflows, whether it solves a clear user problem, and how effectively it enables trust and adoption.
At least, that’s according to Lotan Levkowitz, General Partner at early-stage VC Grove Ventures. As the writer of ‘The Enterprise-AI Startup Playbook’, Levkowitz outlines some of the key ways that startups can navigate the “tectonic shift” felt by founders to provide Enterprise AI founders with real-world insights on how to build and scale with AI, “not just as a technology, but as a business.”
“What we are seeing over and over again is that people think AI is because it can do many different things,” he told CTech. “But I think AI, like many technologies before, is just the underlying technology. The secret is how to get it to create a value for your target consumer, user, and buyer in the end. The fact that AI can do many things doesn't mean your customer wants to do many things. So, product is even more important than ever.”
It helps to think of AI as a utility. No company today would boast about using electricity to run its business. They simply have it. The same should be said for AI. A company’s success does not lie in its sole inclusion of AI, in the same way that electricity alone does not result in the success of a business. The era of “AI for X” may be here for now, but founders must do more to achieve long-term business success.
The playbook acts as a practical guide for founders building AI-powered products for enterprise use. Rather than focusing on the technology itself, it centers on how to build sustainable, user-adopted, and defensible AI businesses. It was created based on Grove Ventures’ knowledge and hands-on experience supporting early-stage startups and addresses three main issues: how to implement AI into workflows to bring business results, how to create internal adoption in the organization, and how to build a long-lasting data strategy to achieve a competitive advantage.
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It offers two examples of how companies used AI to create meaningful solutions for customers: not just offering technology as a service, but offering it as a way to match the workflows of its customers. Israeli companies Navina and ActiveFence are highlighted among others, notably for how they help with clinical decision-making for healthcare professionals and for using AI to flag harmful content online to alleviate pressures placed on moderators and doctors.
“You need to find the right problem you want to solve, understand the life of your user, whether that's going to be a doctor or a moderator, and try to make him the hero,” Levkowitz explained. “Make him trust your data, trust your insight, trust your recommendation, then he's going to solve the thing that he doesn't want to do. Doctors don't want to go over thousands of data points in the file, and moderators don't want to see pictures of corpses.”
Much of the emphasis on the playbook is on how to build a data strategy to ensure growth over time and how to integrate that into existing workflows. Therefore, founders should be aware that their company’s success will lie in their execution, not just their technology. Then, in time, the value emerges when a network effect takes hold and data can improve as more customers use the product. “AI isn’t just the product, it can also be a tool for scaling and refining your data strategy,” the playbook states.
Despite offering insights and lessons to founders on how to steer their enterprise companies to success, the playbook concedes that we are all still at the start of the AI revolution and that most of the disruption still lies ahead of us. “There are no silver bullets in startups,” it concludes. “There is still so much more to discover.”
Grove Ventures was founded in 2017 and invests in early-stage companies across Enterprise SaaS, AI, Deeptech, Healthtech, and more. It currently has $500 million under management.
