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Betting on AI? You must first consider product-market fit

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Betting on AI? You must first consider product-market fit

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The AI boom isn’t going to plan. Organizations are struggling to turn AI investments into reliable revenue streams. Enterprises are finding generative AI harder to deploy than they’d hoped. AI startups are overvalued, and consumers are losing interest. Even McKinsey, after forecasting $25.6 trillion in economic benefits from AI, now admits that companies need “organizational surgery” to unlock the technology’s full value. 

Before rushing to rebuild their organizations, though, leaders should go back to basics. With AI, as with everything else, creating value starts with product-market fit: Understanding the demand you’re trying to meet, and ensuring you’re using the right tools for the task. 

If you’re nailing things together, a hammer is great; if you’re cooking pancakes, a hammer is useless, messy, and destructive. In today’s AI landscape, though, everything is getting hammered. At CES 2024, attendees gawped at AI toothbrushes, AI dog collars, AI shoes and AI birdfeeders. Even your computer’s mouse now has an AI button. In the business world, 97% of executives say they expect gen AI to add value to their businesses, and three-quarters are handing off customer interactions to chatbots.   

The rush to apply AI to every conceivable problem leads to many products that are only marginally useful, plus some that are downright destructive. A government chatbot, for instance, incorrectly told New York business owners to fire workers who complained about harassment. Turbotax and HR Block, meanwhile, went live with bots that gave bad advice as often as half the time. 

The problem isn’t that our AI tools aren’t powerful enough, or that our organizations aren’t up to the challenge. It’s that we’re using hammers to cook pancakes. To get real value from AI, we need to start by refocusing our energies on the problems we’re trying to solve.

The Furby fallacy

Unlike past tech trends, AI is uniquely prone to short-circuiting businesses’ existing processes for establishing product-market fit. When we use a tool like ChatGPT, it’s easy to be reassured by how human it seems and assume it has a human-like understanding of our needs. 

This is analogous to what we might call the Furby fallacy. When the talkative toys hit the market in the early 2000s, many people — including some intelligence officials — assumed the Furbys were learning from their users. In fact, the toys were merely executing pre-programmed behavioral changes; our instinct to anthropomorphize Furbys led us to overestimate their sophistication. 

In much the same way, it’s easy to wrongly attribute intuition and imagination to AI models — and when it feels like an AI tool understands us, it’s easy to skip over the hard task of clearly articulating our goals and needs. Computer scientists have been wrestling with this challenge, known as the “Alignment Problem,” for decades: The more sophisticated AI models become, the harder it gets to issue instructions with sufficient precision — and the greater the potential consequences of failing to do so. (Carelessly instruct a sufficiently powerful AI system to maximize strawberry production, and it might turn the world into one big strawberry farm.) 

The risk of an AI apocalypse aside, the Alignment Problem makes establishing product-market fit more important for AI applications. We need to resist the temptation to fudge the details and assume models will figure things out for themselves: Only by articulating our needs from the outset, and rigorously organizing design and engineering processes around those needs, can we create AI tools that deliver real value.

Back to basics

Since AI systems can’t find their own path to product-market fit, it’s up to us, as leaders and technologists, to meet the needs of our customers. That means following four key steps — some familiar from Business 101 classes, and some specific to the challenges of AI development. 

  1. Understand the problem. This is where most companies go wrong, because they start from the premise that their key problem is a lack of AI. That leads to the conclusion that “adding AI” is a solution in its own right — while ignoring the actual needs of the end-user. Only by clearly articulating the problem without reference to AI can you figure out whether AI is a useful solution, or which types of AI might be appropriate for your use-case.
  2. Define product success. Discovering and defining what will make your solution effective is vital when working with AI, because there are always trade-offs. For example, one question might be whether to prioritize fluency or accuracy. An insurance company creating an actuarial tool might not want a fluent chatbot that flubs math, for instance, while a design team using gen AI for brainstorming might prefer a more creative tool even if it occasionally spouts nonsense. 
  3. Choose your technology. Once you understand what you’re aiming for, work with your engineers, designers and other partners on how to get there. You might consider various AI tools, from gen AI models to machine learning (ML) frameworks, and identify the data you’ll use, relevant regulations and reputational risks. Addressing such questions early in the process is critical: Better to build with constraints in mind than to try to address them after you’ve launched the product. 
  4. Test (and retest) your solution. Now, and only now, you can start building your product. Too many companies rush to this stage, creating AI tools before really understanding how they’ll be used. Inevitably, they wind up casting about in search of problems to solve, and grappling with technical, design, legal and other challenges they should have considered earlier. Prioritizing product-market fit from the outset avoids such missteps, and enables a process of iterative progress toward solving real problems and creating real value.

Because AI seems like magic, it’s tempting to assume that deploying any AI application in any setting will create value. That leads organizations to “innovate” by firing off flurries of arrows and drawing bullseyes around the spots where they land. A handful of those arrows really will land in useful places — but the vast majority will yield little value for either businesses or end-users. 

To unlock the enormous potential of AI, we need to draw the bullseyes first, then put all our efforts into hitting them. For some use-cases, that might mean developing solutions that don’t involve AI; in others, it might mean using simpler, smaller, or less sexy AI deployments. 

No matter what kind of AI product you’re building, though, one thing remains constant. Establishing product-market fit, and creating technologies that meet your customers’ actual wants and needs, is the only way to drive value. The companies that get this right will emerge as winners in the AI era.

Ellie Graeden is a partner and chief data scientist at Luminos.Law and a research professor at the Georgetown University Massive Data Institute.

M. Alejandra Parra-Orlandoni is the founder of Spirare Tech.

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Cristiano Ronaldo first to hit 1bn social media followers

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Cristiano Ronaldo first to hit 1bn social media followers


Cristiano Ronaldo has hit 1bn total followers across his various social media accounts – making him the first person to reach that mind-boggling figure.

The number is calculated by combining his total number of followers across Instagram, Facebook, Twitter, YouTube, and Chinese social media sites Weibo and Kuaishou.

It does not equate to one billion individual followers, as many people will follow him across multiple platforms, and some will be fake accounts, known as bots.

Nonetheless social media expert Paolo Pescatore, from PP Foresight, described it as a “staggering number” that media and brands would pay close attention to.

“What an achievement, and it further underlines the fundamental shift taking place in media.”

It showed “the power to reach new, younger audiences thanks to technology”, he told the BBC.

On the pitch, Ronaldo was famed for his rivalry with Argentinian star Lionel Messi.

But off it, there is no competition for who is winning the social media contest – Messi has a mere 623 million followers.

Some of the other celebrities with the biggest presence on social media are:

  • 690m: Selena Gomez, actor/singer
  • 607m: Justin Bieber, singer
  • 574m: Taylor Swift, singer

Other notable names the BBC looked into include The Rock (557m), Kylie Jenner (551m ) and Ariana Grande (508m).

MrBeast, the top YouTuber in the world, has 543m total followers, while WWE, often considered to have an enormous social media presence, can only point to reaching a quarter of the audience of Cristiano Ronaldo with 268m combined followers.

The footballer will have reached this milestone thanks to his decision to join YouTube last month, where his channel rocketed to 50 million subscribers within a single week.

So far, the channel consists mainly of conversations between Ronaldo and his wife Georgina Rodríguez, as well as his former Manchester United colleague Rio Ferdinand.

He announced the news in a post shared across his various social media platforms.

Cristiano Ronaldo has made a career out of breaking records.

His successes include being top scorer in Uefa Champions League history, having the most goals in the European Championship, and making more international appearances than anyone else.

Last week he became the first footballer to score 900 top-level career goals.

As with his playing career, he still has scope to improve his numbers on social media too, as unlike some of his rivals, he is not on TikTok or Threads.

All of which is likely to add to another figure he dominates: earnings.

According to Forbes, his total earnings now stand at $260 million – the highest of any athlete.



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Musk and Zuckerberg have ‘polluted culture’

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Musk and Zuckerberg have ‘polluted culture’


Meta boss Mark Zuckerberg and X owner Elon Musk are “the worst polluters in human history”, Stephen Fry has said.

The actor and comedian made the claim during a lecture at Kings College, London.

“You and your children cannot breathe the air or swim in the waters of our culture without breathing in the toxic particulates and stinking effluvia that belch and pour unchecked from their companies into the currents of our world,” he said of the pair.

The BBC has approached the two men’s companies for comment.

Mr Fry has a track record of being an early adopter of technology – and was once a regular poster on X, when it was known as Twitter.

He stopped posting in 2022, a few months after the platform was purchased by Mr Musk, but has retained his account. He is no longer active on any social networks.

“I’m the chump who thought social media could change the world,” he told his audience at the Digital Futures Institute.

He said he was at first enthusiastic about the potential of social media to unite people around the world and bring about positive change in society, citing the Arab Spring protests which were coordinated online as an example – but added that he had been proved wrong.

He described what he considered to be a fatal flaw in attempts by early Facebook algorithms to “maximise engagement”, saying nobody had predicted that engagement would be “most maximised by… the worst passions” such as anger, shock and horror.

“We are decidedly hopeless at knowing where technology will take us or what it will do to us,” he said.

He returned to the theme several times throughout his one hour speech, in which he also considered the future of artificial intelligence.

Mr Fry argued that AI was “poised to disrupt every space we have”.

He said he hoped corporate greed would not corrupt the development of AI tech at the expense of safety.

“The best I can do is this – Einstein and Russell said in their manifesto on nuclear weapons – we appeal as human beings to human beings, remember your humanity and forget the rest,” he said.

Mr Fry’s broadside was not the only attack on Mr Musk.

Earlier on Thursday, senior Meta executive Sir Nick Clegg, talking at Chatham House, in London, had been similarly scathing of Mr Musk’s platform X.

The former deputy prime minister called it “a tiny, elite, news-obsessed, politics-obsessed app” and added that in his view the social network had become “a one-man hyper-partisan hobby horse.”

In March 2024 X claimed to have 550 million monthly visitors. Facebook has just over 3bn.

Additional reporting by Liv McMahon



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Vodafone clashes with UK’s competition watchdog over Three merger

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Vodafone clashes with UK’s competition watchdog over Three merger


Vodafone and Three have rejected claims by the UK’s competition watchdog that their proposed merger would lead to higher prices for millions of mobile users.

The Competition and Markets Authority (CMA) has “provisionally concluded” the deal would weaken competition between mobile networks.

It has particular concerns that customers who are least able to afford mobile services would be most affected.

The findings are the latest from the CMA’s ongoing probe into the merger, which it launched in January.

The regulator will now consult on its findings and potential solutions to its worries over competition.

These solutions could include legally binding investment commitments, and measures to protect both retail and wholesale customers.

Vodafone’s CEO for European Markets, Ahmed Essam, told the Today programme, on BBC Radio 4, that he still believed the merger would make a better network for customers, and add to the competition in the market.

“We’ve made a significant commitment to an £11bn investment,” he said.

“We’re willing to make sure that this is legally binding, and we undertake a commitment to deploy this.”

He also said the firm had already traded part of its radio spectrum with a competitor.

But the CMA said it is “not convinced” that it would be good for consumers.

“The main knockback to the merging parties is that the CMA considers claims of superior network quality post integration to be “overstated”,” said Kester Mann from analysis firm CCS Insight.

But he said the regulator was not shutting the door on the deal.

“Vodafone and Three should be encouraged by the tone of the CMA’s report, which appears more open to the merger than I was expecting.”

But Rocio Concha, director of policy and advocacy at consumer group Which?, took a different view.

“The regulator’s finding has set a high bar for the merger to proceed,” she said.

“It is clear from those findings that the planned merger between Vodafone and Three could have a negative impact on millions of consumers.”

But she warned it would be “challenging” for the regulator to find remedies for its concerns.

Vodafone and Three revealed plans to merge their UK-based operations in June last year, creating the biggest mobile network in the UK with around 27 million customers.

But the CMA provisionally concluded on Wednesday that such a deal would lead to a “substantial lessening in competition”.

In addition to worries over price and service levels, the regulator is also concerned that the deal may make it more difficult for smaller players such as Lyca Mobile, Sky Mobile and Lebara – who rent space from the bigger operators – to get a good deal.

Vodafone and Three have said the tie-up would lead to an additional investment of £11bn in the UK.

The CMA found that a merger of the two could improve the quality of mobile networks and accelerate next generation 5G networks and services, as claimed by the companies.

But it considered these claims were “overstated”, and that the merged firm would not necessarily have the incentive to carry out planned investment after the merger.

In a statement, Vodafone and Three said they disagreed with the CMA’s findings.

“By all measures, the merger is pro-growth, pro-customer and pro-competition. It can, and should, be approved by the CMA,” they said.

The CMA will issue a final report into the deal in December.

The firms added they would be working with the regulator to secure approval for the tie-up.



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