The Business of AI Startups

Abstract

New machine learning techniques have led to an acceleration of "artificial intelligence" (AI). Numerous papers have projected substantial job losses based on assessments of technical feasibility. But what is the actual impact? This paper reports on a survey of commercial AI startups, documenting rich detail about their businesses and their impacts on their customers. These firms report benefits of AI that are more often about enhancing human capabilities than replacing them. Their applications more often increase professional, managerial, and marketing jobs and decrease manual, clerical, and frontline service jobs. These startups sell to firms of different sizes, in different industries and nations, but the distribution of activity is distinct from that of larger firms. Firms serving EU customers appear to use higher levels of data protection.

Keywords: artificial intelligence, automation, technology, labor-saving technological change, entry barriers, data protection

JEL Classification: O33, J21, L10