By Lance Eliot, the AI Trends Insider
Hear ye, hear ye! Start-up’s, start your engines. There’s a bonanza of AI self-driving car start-ups and likely many more soon to be birthed. It’s a sensible thing to consider, given the pot of gold at the end of the rainbow. There are predictions that the self-driving car market will be around $20 billion by 2024, $800 billion by 2035, and perhaps $7 trillion by 2050. It’s a big money opportunity.
For those of you that say you aren’t only about the money, there’s also the chance that you can aid in the emergence of something that is anticipated to radically change society as we know it today. There is the added benefit that it could save lives. AI self-driving cars are anticipated to have a slew of beneficial outcomes and thus you can either seek to make your mark on the world or go for the dough, or try to do both at the same time (a twofer!).
For my article about how developing a true AI self-driving car is like a moonshot, see: https://aitrends.com/selfdrivingcars/self-driving-car-mother-ai-projects-moonshot/
For those that are idealists about self-driving cars, see my article: https://aitrends.com/selfdrivingcars/idealism-and-ai-self-driving-cars/
In working with and for various Venture Capital (VC) and Private Equity (PE) firms, I know well what is considered viable and investment-worthy start-up’s in the AI self-driving cars realm. In addition, I’m an angel investor and incubator mentor, and perhaps most importantly herein for today’s discussion, I’m a frequent pitch judge at start-up pitches, especially in Silicon Valley (Northern California) and in Silicon Beach (Southern California).
For those of you that are budding entrepreneurs, I want to offer some sage advice about what kind of start-ups are being sought and also how to best pitch your start-up.
At the Cybernetic AI Self-Driving Car Institute, we are developing AI software for self-driving cars, and we are fostering the emergence and growth of fellow start-ups in this space.
I’ve had some entrepreneurs say to me they aren’t sure what the potential product sphere of AI self-driving cars consist of. They are raring to go in terms of applying their AI skills, but don’t know where to aim their skills at. That’s a question easily answered.
First step, take a look at my framework for AI self-driving cars.
You will need to identify some aspect as based on the framework that will be the niche of your start-up. In fact, when a start-up approaches me and says they are in the AI self-driving car space, I ask them where they fit within the framework. It’s an easy and quick way to position yourself. Otherwise, it takes a lot of verbal jujitsu to try and explain what you are aiming to do.
For most VC/PE’s, they want the short-and-sweet indication of what you do. If you can’t say it in one sentence, you’ve lost a ton of potential VC/PE’s and they’ll quickly move along to someone else that can succinctly say what they do.
For example, per the framework, these are the five of the key aspects of AI self-driving cars:
D-01: Sensor Capture
D-02: Sensor Fusion
D-03: Virtual World Model
D-04: AI Action Plan
D-05: Car Controls Activation
If you have come up with a tremendously new way to compress camera images, which you believe could revolutionize the ability of AI self-driving cars to readily cope with the voluminous data being captured by the cameras of a self-driving car, I’d say that you are squarely in D-01 “Sensor Capture” of the framework.
Take a look at my article about compression algorithms for AI self-driving cars: https://aitrends.com/selfdrivingcars/compressive-sensing-ai-self-driving-cars/
This is handy for purposes of saying what you are doing, and also for implying what you are not doing. Since in this case you are saying you are doing the D-01 of Sensor Capture, it also by silent implication says you aren’t doing D-05 Car Controls Activation or any of the other areas of the framework. For potential investors, they need to assess whether you are in an area of interest to them. If your niche is muddied, it will create confusion for those investors and they’ll likely walk on.
Now, this doesn’t suggest you can’t be in more than one area or niche. You can be. One might say that the auto firms like Tesla are in the entire framework. Same might be said for Google’s Waymo, a tech firm, not an auto firm, but that is striving to become a king of the AI self-driving car.
For most start-up’s, I’d assert that trying to claim you encompass the entire framework is a bit ambitious and likely to be viewed with a strong dose of skepticism by most investors.
You’ll likely hear that investors are typically looking for someone that wants to swing for the fences. This is true and means that they tend to prefer someone with a big vision that will layout an aim that is ambitious. Investors want to put money into something that has a huge upside potential. If they think your niche is too narrow and won’t make much money ultimately, it’s just not worth their risk or time, especially if they can find someone else that has such a vision.
At the same time, a vision that is farfetched will likely get you placed into the oddball category. There’s always at these pitch competitions someone that says they have come up with a new kind of car that will replace all other cars ever invented or conceived. My Spiderman tingling sense usually right away gets suspicious.
One of my “favorite” wild claims was the pitch that said all AI of today is like child’s play and he had invented a new kind of AI that surpasses all other AI’s. When I tried to probe as to what this magical new AI might be, he refused to say and said that only an investor that put up at least $1 million dollars would get a chance to peek at what he has. Serious or scam? Crazy or wily as a fox?
That being said, often the source of an initial investment in your start-up is via the so-called “FFF” which stands for Family, Friends, or Fools. The last of those three F’s, Fools, refers to people that sometimes put their life savings or their college fund into a speculative start-up and don’t have any clue as to what they are doing. I believe that the pitch about the “new kind of AI” was aiming toward that third F (I asked him too whether any Family or Friends had yet invested in his startup, and the answer was no, which I think says enough right there about his wacky claim).
For a radical departure of conventional AI and self-driving cars, see: https://aitrends.com/ai-insider/starting-over-on-ai-and-self-driving-cars/
For those that believe in conspiracy theories about AI self-driving cars, see: https://aitrends.com/selfdrivingcars/conspiracy-theories-about-ai-self-driving-cars/
If you aren’t sure what area of the framework you could best contribute toward in terms of doing a start-up on the matter, you should consider researching more so what’s happening in the AI self-driving car industry.
For example, I’ve predicted that the Internet of Things (IoT) will be a significant allied emergent technology to AI self-driving cars. Thus, if you are already versed in IoT, you can consider shaping your IoT expertise into an AI self-driving cars niche. Another hot high-tech is blockchain. If you have expertise in blockchain, consider applying it to AI self-driving cars.
And so on – take a look at my 150+ posted columns and see if any of those topics covered resonate with your interest and expertise.
See my article about IoT and AI self-driving cars: https://aitrends.com/selfdrivingcars/internet-of-things-iot-and-ai-self-driving-cars/
See my article about blockchain and AI self-driving cars: https://aitrends.com/ai-insider/blockchain-self-driving-cars-using-p2p-distributed-ledgers-bitcoin/
Decide Whether to Focus on the Core or on the Edge
You might also consider whether you are most interested and suited for a main “core” aspect of AI self-driving cars, or whether you’d aim at an “edge” part of the AI self-driving cars space. The edge of any problem area is considered something not necessarily prime or at the core of the matter, and instead something that is secondary. For a start-up, you don’t need to be at the core of the AI self-driving car space. There are numerous secondary or edge problems that are emerging and will ultimately have great potential and value.
The upside for picking an edge problem is that there are likely less competitors duking it out in that space. You have a chance to be the first, or at least be able to stand out among what otherwise will potentially be other small competitors. If you pick a core topic, the odds are that the big guns are already pursuing the matter. Those big guns are large auto firms and tech firms in the AI self-driving car space. They have more money than you, and can readily possibly surpass whatever you can come up with. That being said, often times the big firm’s mess-up trying to do something core, perhaps due to their own bureaucratic ways or some other internal snarl, and so there is a chance you could solve something they cannot.
For more about the edge problems in AI self-driving cars, see my article: https://aitrends.com/ai-insider/edge-problems-core-true-self-driving-cars-achieving-last-mile/
If you pick an edge problem, it often means that there are less understood ways of solving it and so you’ll have a higher burden of proof that you have indeed found a means to solve it. What makes you so special that you found a solution that no one else has? Is what you’ve come up with even practical?
The other difficulty can be finding an investor that sees the edge problem as something worthy of attention, especially so in the near-term. I say this because suppose your edge problem won’t really blossom in the marketplace until let’s say the year 2030. That implies that an investor needs to pump money into something that they presumably won’t see much return until a decade from now. Few investors have that kind of time horizon in mind. Most have a much shorter time horizon for which they want to cash out, and so want to see whatever you’ve got come to fruition in the next few years, and not wait for a decade or more.
This then brings us to the ways in which you should be putting together your start-up and also how therefore you’ll want to pitch it.
I show herein a handy diagram from my book on “How to Win a Startup Pitch Competition: Successful Insights from a Topnotch Judge for Boosting Your Startup” by Lance Eliot, available on Amazon and at other booksellers. See https://www.amazon.com/How-Win-Startup-Pitch-Competition/dp/0692793933
Here’s your most important tip about your start-up and also about pitch competitions – you need to be able to articulate what your start-up is about regarding each of the 20 factors listed.
The reason I mention this is because many if not most entrepreneurs only consider a handful of the factors, and then they get stuck because they weren’t considering the full range of factors. They get stuck in the sense that their start-up doesn’t get off the ground. They get stuck in the sense that when they pitch to investors they get fried and peppered with questions about their start-up that they cannot answer. Don’t be one of those kinds of entrepreneurs. Don’t be one of those kinds of most-likely-to-fail start-ups.
Time and again, I serve as a judge at pitch competitions and the pitches are inadequate. It’s not necessarily because the person wasn’t a good speaker, which is the aspect that many entrepreneurs worry about and assume will get them dinged the most. I assure you that most of my fellow judges know that high-tech entrepreneurs are bound to be mediocre speakers. We accept that fact. It’s acceptable as long as the entrepreneurs can otherwise address the 20 factors.
A savvy pitch judge and investor looks to see whether the high-tech entrepreneur has seriously thought about what they are doing. Has the entrepreneur just jumbled together some ideas, or have they really considered what it takes to make something into a business? If you seem to have written something on the back of the napkin, and you’ve put no other effort into your start-up, it leaves a bad impression. And so unless you really have discovered how to create a perpetual motion machine or have a Noble Prize invention, you’ll need to be ready to showcase the full gamut of considerations.
Let’s briefly walk through the factors herein (more details are available in the book).
01 Solvable Problem
02 Viable Solution
03 The Customers
04 This Similar To
05 Core Business Model
08 Startup Funding
10 Unfair Advantage
11 About the Presenter
12 About the Team
13 Accomplished To-Date
14 The Ask
15 Cost Structure
16 Exit Strategy
18 The Competition
19 Prior Pitches
20 The Pitch
These are numbered for ease of reference, rather than due to priority. The ones shown in the diagram as darkened are the key six that you need to make sure you cover in any pitch. Sometimes for a pitch they do super fast rounds like speed dating, and you get only 30 seconds to say something, in which case, cover at least the key six. Believe it or not, a standard pitch competition is about 3-4 minutes for the pitch and you can actually cover all 20 factors if you know how to do so.
Indeed, what usually happens at a pitch competition is that if you fail to cover all of the 20 factors, the judges are likely to pound at you about those omitted aspects during the Q&A portion. If you want to avoid those kind of crushing blows, cover the full set of 20. This will then cause the judges to perhaps dig more deeply into a particular area already covered, but at least it means that they won’t attack you about the aspect that you left out something crucial.
Here’s an even scarier secret that most entrepreneurs don’t realize about their pitches – if you omit something crucial, and if the judges don’t have time available to ask you about the topic, many judges will assume that you are “clueless” and don’t even know that you omitted a crucial factor. This makes them queasy as it implies you haven’t done your homework and you aren’t really serious about your startup. Just thought you’d like to know.
Well, let’s start with the how you usually should begin, in terms of both what you start-up is about and also how you should pitch it, namely what is the problem that you are trying to solve?
Notice that it’s entitled “Solvable Problem” and shown labeled as item #1. I admit that even though the list of factors is not necessarily in sequence of priority, as mentioned earlier, I did nonetheless purposely put the nature of the problem at the beginning of the list. This is vital as a factor. You need to be able to explain that your start-up is going to solve some kind of problem. Furthermore, it needs to be a solvable problem.
I’ve seen several start-ups that said they were aiming to provide common sense reasoning for AI self-driving cars. I think we can agree that common sense reasoning is really more of a solution than it is a problem. Thus, they were telling me the solution, rather than the problem to be solved. When I asked them what good would it do for an AI self-driving car to embody common sense reasoning, they explained that it would enable the AI to drive the car in a manner more akin to how humans drive a car.
I then pointed out that if that’s the case, they are then trying to solve a problem consisting of trying to get AI to be able to drive cars more like humans do. Of the myriad of ways to solve that problem, they have chosen to develop common sense reasoning. Therefore, they should begin by indicating that there is a problem that AI cannot yet achieve true self-driving because it lacks common sense, that’s the pain point, and they are asserting that a means to solve this problem is to develop software that embodies common sense reasoning.
Do you see the important distinction there? They had a hard time seeing it.
Notice that this also intertwines the factor 01 and the factor 02, namely that your start-up should have a relatively crisp Solvable Problem and a relatively crisp Viable Solution.
Let’s consider these two peas in a pod, the solvable problem and the viable solution.
If the problem is that self-driving cars cannot climb up walls, I’d wonder right away whether this is a solvable problem or not. Is it feasible to make a car that climbs up walls? I’ve not seen one as yet, and maybe it is possible, but it verges right now on the unsolvable side of things. If you say that the problem is lack of common sense reasoning, it seems like it is potentially solvable in that there is a lot of ongoing work on trying to achieve common sense reasoning capabilities in AI. I’d believe that this can be a solvable problem (though, not everyone would agree with me on this point, and some believe we won’t ever be able to produce common sense reasoning – sad face!).
See my article about common sense reasoning in AI self-driving cars: https://aitrends.com/selfdrivingcars/common-sense-reasoning-and-ai-self-driving-cars/
Investors are leery of an unsolvable problem since they figure investing in trying to solve it is going to either never lead to a solution or be a long time and costly to get there. If you said that your problem is world hunger, I’d question that you could solve such a problem. It is just too large and insurmountable to think that some lowly start-up is going to be able to solve it. I’d say it is “unsolvable” in any practical everyday meaning of being able to solve something (now, don’t get upset and say that I’m claiming world hunger will never be solved; I’m just saying it’s a big nut to crack and going to likely require more than a solo person starting up a company in their garage to get there).
For whatever the solvable problem might be, you need to then provide a viable solution. If you are saying that the solvable problem is that self-driving cars lack human driving capabilities due to not having common sense, presumably if your solution is to embody them with common sense, you need to have a viable means to get there.
One of the firms that pitched the common sense reasoning for AI self-driving cars could not describe how they are going to produce common sense. No one on the team knew much about the prior work on common sense reasoning. So, they seemed to have found a handy problem, one that might be solvable, but they had no clear path to a viable solution for it. This suggests that they might expend a tremendous amount of misguided effort and never land on a viable solution. In other words, yes, a solution might exist, but they didn’t seem to know how to viably arrive at it.
Identified Problem and Claimed Solution Need to Match
It’s also important that the identified problem and the claimed solution seem to match with each other. One of the startups that said they were going to create common sense reasoning, when I asked them what problem are they trying to solve, they said the problem to be solved is that it is arduous and unreliable to examine camera captured images for where pedestrians are.
Well, I agree that computerized visual processing techniques are not proficient yet at being able to find the images of pedestrians in captured pictures, but I questioned why common sense reasoning was needed to do so. It seemed to me that there are lots of other “non-common sense” reasoning approaches that can potentially get there. That being said, I certainly could see how common sense reasoning might help, but it’s not really seemingly the primary aspect right now.
For more on this problem of identifying pedestrians, see my article: https://aitrends.com/ai-insider/omnipresence-ai-self-driving-cars/
In this sense, it was as though the problem and the solution weren’t necessarily lining up.
This misalignment can be even more pronounced. One startup said that the problem was that people aren’t trusting of AI self-driving cars. The proposed solution was to improve the in-car entertainment capabilities by some electronic gadgetry they had put together. When I inquired as to why people would be more trusting of a self-driving car simply due to being able to say watch a live-stream movie while traveling in it, they mumbled an incomprehensible answer.
I tried to help them by suggesting that maybe the concept was that by being distracted within the self-driving car that maybe people would no longer be preoccupied with how the AI self-driving car is driving. Perhaps this would boost trust. Or, I said that maybe they were trying to provide a calming capability that would be a stress reducer. Maybe the stress reduction would somehow lead to people becoming more trusting of their self-driving car.
You can see that I was generously trying to help them dig themselves out of a hole. Not all judges will do so. Many love to help dig the hole deeper. It’s not my style. If you’ve ever watched the Shark Tank television show, you probably know that there is one member of the judges that seems to relish putting an entrepreneur on the spot. I know it makes for good TV ratings. I’d prefer to find a means to constructively help budding entrepreneurs and don’t believe that belittling them is the way to go. Of course, some of my colleagues insist that it is “tough love” that will harden the entrepreneur and also that “what doesn’t kill them will make them stronger” kind of perspective.
I’ve mainly covered the first two factors in this discussion. Please take a close look at all 20 factors. Think about your start-up and what it is doing or going to be doing on each of the factors. If you want others to think you are serious about your start-up, you need to show some kind of consideration for each of the twenty factors. You might want to find a mentor that can help. Go to pitch competitions to watch and learn from others that are pitching, plus you might find a mentor there. If you make a pitch, try to see if you can chat with the judges afterward to get their direct feedback.
One of the points I often make at the pitch competitions is that many investors are looking as much for the jockey as the horse.
The horse is the nature of the start-up in terms of what it is and the focus of the start-up. The jockey is the entrepreneur that’s founded and pushing forward on the start-up. By-and-large, start-ups are going to pivot and shift as they try to figure out the right focus. The question is whether the entrepreneur, as the jockey, whether they have the wherewithal to pivot and have the needed expertise or capabilities for the nature of the business. At times, ideas are a dime a dozen, but the entrepreneur that has the right stuff is often very hard to find. They are the diamond in the rough. Invest in them, and whatever the end-up doing will come out magnificently.
Hey, let me say that I wish you the best of luck for your start-up ambitions!
As a former university professor that taught courses on entrepreneurship, and also a seasoned serial entrepreneur (the buzzword is that a “serial” entrepreneur is one that has experience launching and running multiple start-ups over time), I can forewarn you that start-ups can be one of the greatest joys in your career, but can also shake you to the deepest depths of your soul.
You know the old line about how to get to Carnegie Hall? Answer, practice, practice, practice. How can you succeed as an entrepreneur? I always say it’s persistence, persistence, persistence.
If you have an AI self-driving car start-up underway, I’d be keenly interested to know about it. Please do drop me a line at email@example.com.
Copyright 2018 Dr. Lance Eliot
This content is originally posted on AI Trends.