Artificial intelligence is slated to have a profound impact on the future of business. We’re seeing evidence of that every day. But the manner in which AI will change business is not always straightforward. H2O.ai CEO Sri Ambati, who has given the matter some thought, recently filled us in on the radical ramifications of the looming AI transformation.
The way Ambati sees it, we are on the cusp of a new era, one that’s born largely out of the power of data and software. With limitations in storage and compute quickly melting away thanks in large part to the cloud, the key differentiator becomes how companies use AI to transform data into competitive advantage.
“Algorithms plus data has a lot of value,” Ambati tells Datnami. “If you can inspire a small band of technologists in a company, you can transform the overall company into a powerhouse of innovation.”
There are a multitude of ways that companies can adopt AI to improve aspects of their business. They can tackle smaller pieces, such as increasing the clickthrough rate of an email campaign or reducing customer churn, which can provide an iterative boost to the bottom line. But those are table stakes compared to the big, macro-level changes and entirely new business models that can be unlocked with data and AI. The former might help pay the bills, but Ambati has his sights set on the latter.
“In a sense, if you don’t embrace AI, you’re not opening your mind up to new business models,” says Ambati, who was one of Datanami’s 2019 People to Watch. “The learning rate for an organization is dependent on how quickly they can take a hypothesis and prove or disprove it. If organizations can learn quickly and act on it, they can unlock completely new business models.”
Sri Ambati is the founder and CEO of H2O.ai
We are seeing the first trillion-dollar companies in Microsoft, Amazon, Apple, and Alphabet, the parent company of Google. It’s no coincidence that each of these mega-companies is a technology company that has invested heavily in AI. But this is just the beginning, we’ll soon see a new generation of much smaller startups driven by one or two people hit that threshold, according to Ambati.
“By 2030, we’ll see a one- or two-person trillion-dollar company,” Ambati says. “A one- or two-person billion-dollar company will happen by 2025, and they’ll be using AI.”
When data and AI are at the core of the business model, the limitations to scale is no longer how quickly you can staff up or expand physically. Instead, the limitation is how effective you are at wielding data and AI to drive the business forward. Scaling data and AI is a breeze when you’re on the cloud (although the fact that Big 3 public clouds are trillion-dollar outfits may tell you something about the high cost of scaling in the cloud).
“If you look ahead, you’ll see technology and AI powering [large companies] without a huge army of people,” Ambati says. “Large companies are adopting AI today and smaller companies are using it today but not innovating with it. You’ll begin to see some dramatic shifts in efficiencies of scale, and that means that you’ll see lone entrepreneur with a billion-dollar outfit very, very soon. So that’s going to be powered by AI.”
Amazon is the poster child for the transformative power of data. The company started out selling books, but eventually shifted its business model to take advantage of new opportunities that presented themselves. This lesson is an important one for today’s businesses that want to leverage AI to unlock new business models.
Amazon leveraged data and AI to transform itself from vertical bookseller to horizontal behemoth disrupting multiple industries
“We all went to Amazon to buy books and also to read reviews of the book that we didn’t read or didn’t know of,” Ambati says. “That was new data. Amazon then went past just being a book-selling company to this ability to get community reviews and using that data to power an ecosystem of innovation.”
Of course, not every company will be able to transform itself from a strictly horizontal play, like the bookseller Amazon.com from 20 years ago, into a $1-trillion horizontal powerhouse that’s disrupting multiple industries. But this is the sort of power that’s tied up in the combination of data and AI, and many companies are taking notice.
“That’s roughly how we envision a Procter & Gamble, a Pepsi, a Coca-Cola, or a Walmart to transform themselves into not just being [niche] players, but building on their strong loyalty and trust in their brand to go and change other portions of their customers’ lives,” Ambati says.
The lesson here is that AI is greasing the wheels for radical business transformations the likes of which have been extremely rare occurrences up to this point. But in the future, these transformations are likely to be much more common, because they will be dependent on how adept companies are at adopting and scaling data and AI, rather than traditional corporate-building activities.
Clearly, H2O wants to be the company that sells businesses the AI tools that allow them to achieve their transformative goals. The 225-person company from Mountain View, California has plenty of competition in this space, from the big cloud vendors themselves to other firms looking to create the industry’s first enterprise AI platform. H2O has invested heavily in its Driverless AI software, which provides an automated machine learning experience, and has big hopes for enabling users to create their own AI with H2O Q, which it launched in the second half of 2019.
AI will remake business over the next 10 years (metamorworks/Shutterstock)
“’Make your own AI.’ That’s kind of the core mission that we unleashed in the second half of 2019,” Ambati says. “Every company needs to be an AI company. I think that’s where protecting one’s brand with data and AI is kind of the core theme we’re seeing across all customer and communities.”
The combination of data and AI will drive much decision-making in the future. But that’s not to say that intuition no longer plays a role. As Ambati views it, companies that can leverage the power of AI and data along with established business experience will have an enviable advantage in the new data- and AI-driven business environment that’s emerging.
“It’s [moving] from classic Moneyball, where data trumps experience, to data plus experience that can lead to better and more custom intelligence that no one else has,” Ambati says. “Somebody asked me, What does it mean to be an AI-first company? It’s the idea is that you essentially build business models that are data-driven, and you are very much able to make new data.
“The companies that will thrive in the years ahead are the ones that are able to create new data that no one else has and use that to build valuable applications that are sticky for their customers,” he continues. “That’s it.”