Alex Calder, In a recent article from my visit to the home of the European Union , I wrote about the potential for the world to become two-tiered in the adoption of AI - the regulation-light approach of the US, contrasting with the more heavy-handed approach of the EU.
Well, that reality came even more into focus last week, and if the President-elect’s picks for Healthcare, Attorney General and Defense are indicators of anything, it’s that there’s not going to be much effort placed on government intervention or shoring up public trust in the measured deployment of these tools. Historically the ‘Brussels Effect’ has informed regulatory efforts across the globe - but certain stars in the incoming US administration have expressed impatience with this arrangement.
In a world where disruption feels to be the guiding principle of the new heads of these institutions, how should businesses approach growth and innovation in ambitious but deliberate ways?
An uncertain world makes it even more vital to keep up to date with what’s changing, and limiting beliefs and the same old ideas are even more dangerous as norms disappear and the established order crumbles.
So on that cheery note, let’s take a look at what you should be thinking about right now.
AI Agents
A common theme from the last few days has been the increasing news of using AI tools to perform actions above and beyond the text/voice interaction that we’re familiar with from LLMs.
From Bloomberg ^1 : ‘OpenAI is preparing to launch a new artificial intelligence agent codenamed “Operator” that can use a computer to take actions on a person’s behalf, such as writing code or booking travel, according to two people familiar with the matter.’
This comes off the back of Anthropic’s updates last month that enable their tool, Claude, to interact directly with a user’s computer.
This really is where AI becomes more integrated into the day-to-day work for organisations and starts to achieve what we talk about a lot in our AI consultancy: the shift from a working day that focuses on task work, to one that allows for more high-cognition work.
Sam Altman, CEO of OpenAI, said recently in a Reddit AMA, that this development of agents is what will really feel like ‘ the next giant breakthrough ’ ^2 rather than new models.
I’ve been speaking to our CTO, Luke , and he’s particularly excited about the integration of ChatGPT into the coding tools he and his team use daily: ‘it puts the advantages of an LLM directly into my (and many other’s) code editor of choice, VS Code, bringing benefits of dedicated AI code editors like Github Copilot or Cursor without having to pay for additional tools and licences.’
AI Disruption
The opportunity for existing businesses can be driven by ambition and new ideas, but it can also be driven by existential risk.
I wanted to look at two organisations this week and examine one where that risk has spurred on new opportunities, and one where it seems to signal the end of their business.
The two companies in question are Getty Images and Chegg.
Getty Images, the stock image library, was founded by Mark Getty, who famously described intellectual property as the ‘oil of the 21st century.’ And he would know, being the scion of the Getty family whose money was made in the petroleum industry of the early 20th Century.
Chegg, although a less illustrious origin story, has an equally clear mission: to support students with access to digital and physical textbooks, homework help and other student services. By 2020 they had a market capitalisation of over $16 billion.
Why have I chosen these two companies? Well, they are both in industries that are readily disruptable by AI.
When AI can produce images based on just a brief prompt, what place do stock photo and image libraries have? Although, the content produced from Midjourney, Stable Diffusion or DALL-E can look a bit uncanny at the moment (or just simply not have the right number of fingers…) the tools are improving all the time.
And, why would a student pay $20 per month for a subscription to a textbook provider when ChatGPT can give them the answers in a couple of clicks, summarise it for them and help them integrate it into their work?
Now, there’s a reason I’ve gone back to 2020 for a view on Chegg’s financial health. As of this month, they’ve lost 99% of the company’s value as students abandon them for free AI alternatives . ^3
Why has that happened? It seems to me that an antagonistic attitude to ChatGPT and Google’s changing business model is partly to blame here.
CEO Nathan Shultz specifically called out Google’s AI Overviews, as being part of the problem. These overviews pull information from various sites in order to answer the user’s question in a more rounded way, and crucially for marketers, pushes ads down below the fold. Schultz said that Google is ‘ shifting from being a search origination point to the destination ’. ^4
This is a challenge for all businesses and requires a rethink in their Search optimisation and customer acquisition strategies, not simply resisting the change and laying off 25% of your workforce.
It seems like the end of the road for Chegg in it’s current iteration, and despite a late attempt to adopt AI into its products it appears to have suffered irreparable financial and reputational damage.
Now, let’s look at an example of a business that has seized upon new ideas and partnerships to drive growth.
Stock photo libraries appear to be an easy casualty for AI solutions, but Getty have taken the front foot and rather than resist the change have embraced it.
They recently announced a partnership with TikTok to ‘ pull in content from Getty Images when using the platform’s AI ad creation tool ’. ^5
To me this is a perfect partnership - what’s the risk of AI image generation to Getty: the destruction of any reason to use its services. And, what’s the risk of the same thing to TikTok: the stripping away of authenticity, which for a platform that’s all about connecting real people together, is a huge challenge.
By coming together and using real images with AI layered over the top to create more engaging content, it’s a clear win for both brands.
So what lessons can we learn from these examples? AI is a disruptive technology. It’s impact will be unfathomable and come for many different industries. And we mitigate this risk by being conscious of the opportunities and learning from what others are doing.
We need to remove the limiting beliefs of our traditional business models and think about new partnerships and opportunities to succeed.
Thank you for reading, if you have any questions or want to find out more about the Jagged Edge, get in touch below.
See you next week.