Building AI Products for the Enterprise - With Saurabh Suri of CerraCap
this is Daniel Fidel. And you're listening to the AI and business podcast and this episode. We're GONNA be talking about building. Ai Products for the enterprise. Which for any of you who've been tuned in for a while now is not easy to be able to build an AI. Product that delivers a meaningful business result is one thing to be able to deploy that with existing. It systems is quite challenging to have to retrain staff to understand existing workflows. And that's going to be the focus of this week's episode some of the most exciting facets of our own research work here at emerge when it comes to our work with large enterprise clients is around understanding the build to buy ratios for different kinds of AI. Applications it's interesting to see if you look within let's say banking let's say life sciences. What kinds of applications may be drug? Development MAY BE PAYMENT FRAUD. Detection are being acquired primarily from outside vendor providers in which you're actually being built in house by the companies themselves sometimes. There are a application areas. Where really the company understands their own. Unique nuance needs at such a deeper level. That any vendor could that they have to build it in house so for this episode. Where the your vendor selling into big enterprises or whether you work within an enterprise and you're thinking about build by decisions you WanNa stay tuned all the way through our guest this week soared story is the CIO and managing partner at Cara Cap Ventures. He goes deep on what he's seen work and not work across his portfolio of investments. When it comes to their interface with the enterprise if you'd like to learn more about what we do here at emerge including how we balance and understand the build by ratios across different business categories of AI applications in major sectors. You can learn more at E. M. E. R. J. dot com slash. Hey I o l. That's a opportunity landscape. That's our core research service here to merge that's emerged dot com slash Ai. I O L and you can learn more there without further. You're gonNA roll right in. This absorbs Uri managing partner at Karak ventures here on the AI and business podcast. So I wanted to start us off by asking about what you consider to be. The biggest success factors when it comes to building. Ai PRODUCTS FOR THE ENTERPRISE. Adoption is obviously very hard. What happens when it's done right right and left? And that's probably one of the most oft ost questions are around in my role Especially on the venture capital side. We have a lot of conversations with people on both sides. Which is the enterprise leaders the? Cio's if you would Trying to adopt a into the enterprise. Dig It off. The startup. Seals are building these products for the enterprise. Right and looking at that when we look at the success factors. I can pretty much make it down into the first and most important one being domain domain domain now what does that mean the domain and understanding the nuances that. Come around with it right. Companies and startups. That can demonstrate a strong domain understanding and clearly articulate the problem. They're solving than to have the biggest success when building these products for the enterprise. There's a funny example. I often use. And that's the word slim right by Stephen. Somebody's bidding products around. Nlp Now the word Flam has a very different connotation in retail as it doesn't healthcare right in retail. You have a problem in healthcare. That's a symptom and does a slight over simplification. Of course by as you're building these products for the enterprise that domain on the understanding of the nuances that the domain is really one of the critical success factors. The second is looking at outcomes and not the CAC of the process right. There's a huge difference between a company saying that they would leverage to help with customer acquisition as as many state versus saying that. Hey Mr Cio. I will increase your overall customer acquisition by X. Percent and reduce your cost by white percent. And that's the difference of focusing on the outcomes right and the companies that do their research and build the products whether it's internally or buying something externally focused on that outcome really win right and the last and final thing I'll go on is the integration of the deployment which is products that are built with business users in mind right up seen always have the biggest adoption across the industry right unfortunately seem to many technologies amazing products. Completely fail because they were just too complicated to use so those two things if you come down to it it's don't mean outcome and east of us are the way we look at it. In terms of the biggest success factors. Got It okay. So let's poke into these themes these are great places to start. I think domain is a really interesting one. Because you know you can see so many startups that you know. They'll raise all the way up to twenty million bucks with you know a homepage that the solutions tab has fifteen things in it you know. Maybe that's a little bit of an exaggeration but will have eight different things in six different industries. You know what I mean. And then in order for those to raise fifty mil they normally boil that down to maybe two industries and then if they don't go out of business oftentimes it's only gonNA be one so it's weird that they have to start. So broad is just a consequence of this tech being nascent is that consequence of AI. Being hot and so even people without a great focus can sometimes raise money. Why we we see so much of that so there are a couple of reasons around that but the one that I look at in working with a lot of these startup. Ceos in these amazing entrepreneurs is I think sometimes they make the mistake of focusing on the most visible and not the most valuable use cases right. And it's a little bit of okay deserves by six most visible use cases across the industry. Let me just throw a lot of them on a wall and see what sticks and the often fall into that trap because as they train their engines as they put in the right kind of deep learning etc. Because they've gone so broad then never able to get to that point of outcome or the point of focus so that's one side of the coin. The other side is yes. You're absolutely right. Sometimes you have to look and sound way cooler by saying I can solve the world's problems by amazing algorithms and platforms than learning learning. Whatever it be. And it's a combination of those two and a lot of CEO's fall under that trap. But I loved what you said that when they move on into this series B. O. C. C. They actually get penalized for that. You get penalized for trying to be everything for everybody. As opposed to being that one thing that solves one problem completely yet to find find a domain like. You said you know you said three times. Is it like domain domain demand and I think those of us who want to see these products mature. I think really long to see more of that for you. Does that require a combination of beginning with the right? Founders and team members that domain or does it often start with just people who were good generalists who get the tech and then who throw themselves at a couple of spaces really find what sticks in other words. Do you see that steering of domain domain domain begin with founder ship in initial skill sets. Or do you see it with people. Developing laser focus after getting a team together. Or is it pretty even fifty fifty? It's pretty I'd say there's more of entrepreneurs who get the tech and then approach the domain. They're just a personal preference. I'd like to see the other way around. I mean we love working with entrepreneurs who been in a domain long enough who understand the nuances and then who wants to break that down. Well we love seeing that because they come in with a very different focus that come in with a very different approach as well however I have been fortunate enough to back some very successful entrepreneurs who came from outside the domain. That actually was a bit of an advantage. Because you know. They came with a clean slate and tried to break that apart but they focused on that one problem right. That's being the key. I don't really care what side you come from. I do care a little bit. I liked the newcomer the inside out. But that's just a personal preference of obscene at work. The other really well as well so it doesn't matter which way you approach it but as long as you can focus on really south that one problem and find out right problem. Don't find the most visible problem but find the most valuable problem right. I had this great entrepreneurs who said the best way to build a billion dollar companies. Find a hundred billion dollar problem and just a one percent marketer really great way to think about an approach. That is a wonderful thought experiment. That is just a wonderful experience. So it's tough to do that in the hurly-burly of trying to get a I to stick in the enterprise. But if you can I guess that's probably the low hanging fruit way to reach a billion dollar company if one could even say such a thing last little question on this sort of domain specific area here. Do you believe that the key to making this work is purely interacting with customers? A lot of you made a really important distinction. Not the most visible problem the most valuable problem. That's really hard to distinguish because of a problem isn't visible enough. Then you can't really use it as your value prop to sell because people don't even realize it's a problem. How do you find that middle ground between visible and valuable in this kind of rough and tumble startup world? Really the answer. The Dad is conversation constant conversation immersion if I might add so constantly talking to customers and immersing yourself into the domain and the problems will spark one of the most valuable use cases as opposed to the most visible right. And I've seen a lot of entrepreneurs do it in different ways but the emotion within the problem set of that domain set tends to produce the best results when I say in Marshon on a this amazing portfolio company which was using its using deep learning and a I in visual recognition and the food quality industry and The Entrepreneur Co actually went and sat and Firearms for over seventy eight months and went to quality. Testing of places. Did that research in marched us out in that almost sixty seven months before coming out and saying this is the problem and this is the problem I want assault one behold one year since she Said that this company is doesn't really have to do outbound. Sales anymore did getting inbound requests left Brighton Center because they immerse themselves on the fund. That one problem. Which is the most valuable problem to solve? Yeah so I like the shortcut are the short answer is conversation and you also used immersion. I guess there's no there's no way around the necessity of that kind of deep dive. And hopefully you come up with a treasure. They're you also mentioned talking about outcomes again really really really challenging. Because particularly with a I in some use cases it's really hard to measure for example. Enterprise search like to find where it fits into a specific workflow and say like we'll save. X. Amount of time on this like if there aren't metrics that already measure that that it becomes tough to maybe sell to metrics but you really emphasize the importance of outcomes. Talk a little bit about i. Guess how have that mindset from the start had through that lens from the get-go building a product right now again whether you're entrepreneurs trying to sell the product into an enterprise or you're an enterprise. Ceo Trying to build a new product if you're not hitting will be called the CEO's cross ridges revenue cost qualities state ability if you're not hitting that off revenue costs quantity and risk. If you're not hitting that what impact that you really have it right in terms of the outcome. Dutch need drives to that. If you can focus on one of or better still all four of discord parameters right. Revenue Cost Quality Risk and engineer your product to provide and focus on the outcome against it your chances of success and adoption and overreaching that you'd start as a company as a product that Cetera goes up exponentially I completely get the problem of obscure metrics are metrics that don't even exist but if you engineer viper in a way that you're hitting again you WANNA hit one of these four metrics with. Let's not overcomplicate right. If you're trying to hit one of these four metrics how'd you engineer the product to drive towards that even when you come about an enterprise search absolutely very obscure? How do you measure pot activity of search right? I've seen a few companies who've done a great job and they started with a specific problem in search. Which is and the price search for field sales folks? Gandhi provide the right data the right time to the customer while they're sitting in front of them to increase customer acquisition of close rate. Something of the sort that again. You're solving that problem. And those companies tend to have a much higher viability for success than more genetic one's behind. Yeah you know the the the shortcut that we see and I hate to call it that but in the enterprise search world has one random example we see that when we really have a hard time articulating. Roi In these really obscure use cases. Like you don't like in mortgage. Everybody's use to search sucking. They're just used to it. Nobody's like Oh my goodness the time it takes like everybody's used to it. It's not it's not really different and instead of selling to efficiency because they're not measuring the time now anyway and it's GonNa take a lot of time to integrate these systems and get them set up. It's really complicated. Instead what they do. Is THEY SHORTCUT IT? By selling to risk they kind of paint this this fearful fairy tale. They say they say imagine. If this could help you wonder if this little tiny bit of stuff that would help you with regulation you know. They don't say it like this. But here's what they mean. I don't have our numbers for you. I can't tell you how much money you're making. I can't tell you how much money saving you'll never measure it after the fact and you don't measure it now but you know what I'm GonNa tell you that you'll be able to find the right kind of things that will keep the regulators from slap in your wrist. And that's why you should give us a meeting and the we see that as like the you know. I hate to say it's like the cheesy answer because it works like we see it working but I see a lot of that. I don't know if you see people using these weird little shortcuts like that option near the fear base out right and it always works to get through the door but not always closed the deal one of the things that we use with a lot of our portfolio companies. Is We try and help them get that anchor? Client the accurate client. Is that first initial client that you know you sometimes do heavily. Discount the work for them but actually work with them to measure out numbers so mortgage industry is a good example. If I just say that right and you say yes people are used to doing it. But if I stopped focusing and get that anger blind and I stopped focusing on throughput right. How many mortgages can I help you process with the twelve people? You already have on board as an example right and if the answer is right now you're doing five thousand a month. I don't even know if that's the right ball. Who knows you're doing five thousand the if I can get that up to seven thousand or eight thousand and I can actually. While I'm helping you do that. I can engineer my product towards it as well and in return on providing you this highly discounted amount to use my product that Cetera et Cetera. That's where sometimes anchor plant becomes critical and sometimes even more critical than the revenue base. Clients that you get a little rock and early stage companies can do that. You can't do that as a later. Stage Company or a mid stage company. Because then you just have a whole different set of problems you have to deal with. So that's why it's critical to focus engineer. Not just your product but the company around that mindset the billet sustainment think. That's what everybody wants right. Everybody wants their pilots to turn into something so successful with such collaboration that they can actually track numbers. But how does this stuff really work out right? A lot of these pilots just flop flop so hard that you just break your teeth on the cement like flopper really really hard. Because we can't access the data we might make a little bit of money. But it's just so hard to get the integration done. And even if we can maybe they're not friendly enough with us to go ahead and do all this tracking and help us build a use case that we can brag about to the rest of the world but I guess in an ideal world. What you're saying is you would get that you get the good anchor client to sink in. Who really likes you? And they're happy to be able to kind of measure the success and then you can leverage actual Roi numbers instead of just a fear story or just an excitement story exactly and I. I hate to ban but now now you see the reason why I prefer entrepreneurs who come inside out than outside in because entrepreneurs will come from that domain already have existing relationships and the understanding to land the right kind of anchor ply. I don't want it to get out away from the entrepreneurs will go outside because some of them have done fabulous jobs right of landing that anchor client and building the right use case but rebounded for the inside out. Guys understand the domain. Have the relationship and know the right kind of anchor to start off with but more importantly you brought up a very good point even if I get nine car. I'm GONNA hit so many roadblocks so many issues after with maybe I can communicate or whatever else and that's where I've seen on some really really good seals do that when they get the anchor client. They literally packed their bags and sit either outside her inside the office building. Poc isn't done. Because that I could almost mean make-or-break stage company. Yeah Oh man I have so many more things we could fly into. But I'm wary of where we are. I'm going to end on a tiny question. I'll try to keep it brief. How would you translate some of these ideas that you've picked up in the startup world to the enterprise in other words you know? You talked about domain. You talked about focus on outcomes. Is there any little tidbits? You'd like maybe business leaders to listen to if they want to be able to breathe those concepts into a bigger business absolutely and it's really funny because a lot of these concepts translate over and I'll be honest with you a lot of these concepts. I learned the other around writing. Been within a the the enterprise world and coming out. And they're too when I'm trying to sell might internal stakeholders all of the Donald business leaders in our large I of move a have to focus on the outcomes right. The chief marketing officer. The chief financial officer is not going to understand that. I've got you know there's amazing deep learning capability and five guys being whatever half a million dollars a year in salary to but would they are going to understand. This is what I'm going to do. I'M GONNA solve for customer acquisition. I'M GONNA solve procurement etcetera. So focusing on that outcome for the business leaders is critical and not go down the TRAP FOR IAE SAKE. The fundamentals hold true and that's the called fundamental because they hold true whether you're a startup building for the enterprise world or an enterprise CIO billing for the company and having those measurable metrics against the success and managing stakeholders. That's the key translates across the board managing stakeholders. Will we try to do with this show sore of as we try to educate the stakeholder so that they can be more easily managed because unless you have expectations about how this stuff works and what all the challenges are you really can't be managed? You're going to think all the wrong things and so hopefully for those of you who are tuned in. We're all a little bit smarter by the end of this episode sore. I know where we are for time. Super respect your time so. Thank you for joining us here in Industry today Dan. Thank you very much. So that's all for this episode of the AI in Business. Podcast as many of you know a lot of my work. Here at emerge involves flying around the world and speaking and also meeting with and interviewing in addition to servicing our clients not that long ago about a month and a half back. I was in Paris for the CD'S LAUNCH OF THEIR AI policy. Observatory on our episode are bonus. Episode in just two days is with the deputy. Cto Of the White House for Technology Policy so lean. Parker is going to be our guest in two days for Special Bonus episode here on the business. Podcast if you're interested in AI. Governance were balancing regulation between innovation and understanding what that looks like at a national level. This is going to be a really interesting peek into the. Us's AI priorities if you are a vendor or you're a company that sells into the government for anything AI related. This'll also an interesting episode to stay tuned in Fourth. So we've got a special bonus episode for you which I recorded live at the OECD in which is going to be live in two days to be sure to stay tuned in for this Thursday. We've got an episode and next Tuesday. We're going to BOOT BACK INTO OUR INDUSTRY. Themes are we talking about the future of logistics and supply chain which given all this crazy hubbub of the corona virus is going to be. I think more relevant than ever and so without further ado. We'll wrap this up. I'll catch you next time on the. A and business podcast.