How to start using AI to make decisions in your company in under one hour?
Are you a CEO that is tired of listening about AI and haven't done anything yet with it? You are not alone! We understand how noisy and confusing AI is at the moment. There are so many tools and products launching every week. It’s hard to keep track of it all.
Today we want to share with you the story of Emprelatam, and how its founder, Juan, started on his journey to make his company AI driven. Emprelatam is one of the main anti-unicorn incubators in LATAM. They insist in building profitable companies from the get go and has emerged as one of the go to accelerators in this category. He helps hundreds of startups per year with mentoring, coaching and networking.
Like many of you, Juan came to us knowing how important AI is, but not knowing how to get started. He believed that much of the hype is probably just hype, but was also genuinely curious… what if there's more to it?
I want to walk you through the EXACT process we did to start helping him adopt AI. It took less than an hour… Baby Steps Only!
Step 1 - Problem Definition
David: “AI has the potential to reason better than 95% of your employees, and costs a fraction of what they cost. You can literally offload massive amounts of work to the AI and see your business thrive…”. I said.
Juan - Emprelatam: “Ok, so what do I do?”
David - Patagon.AI: “Well, think of your company today as a sequence of black boxes. Each of those black boxes is trying to solve one thing only, and they have clear inputs and outputs. Is there a particular black box that is particularly costly, or slow, or done a lot of times in your day to day operations?”
Juan - Emprelatam - Emprelatam: “Well, handling new applications is a bit of a pain. I pay someone $12 USD an hour to review each application and grade them on wether they should or should not enter into our program.”
David: “OK, thats great! What makes a company a great fit for Emprelatam?”
Juan - Emprelatam: “Multiple things… its a complex criteria we follow…”
David: “OK, but imagine if you could answer any question, what would be ONE question, that if you had perfect information about, would make it easy for you to decide if that company should enter into Emprelatam or not?”
Juan - Emprelatam: "Well, if I have to think about it, I would say if you can tell me what is the probability of a company to grow 5X in 3 years, and be worth at least 2 MM USD, I could easily make a decision.”
Step 2 - Simulate the Use Case Manually
David: “Great! We can easily work with that. What is your workflow today?”
Juan: “We use google forms for each application. We connect them with a main email. Once we have all the forms filled out, our application reviewer grades each of them in this excel. Based on that, we send a rejection email or a congratulations email basically”
David: “Amazing, lets see it in practice. Can you give me a raw form submission in text format, as well as the result your grader gave them?”
After grabbing an example, we removed all the personally identifiable data and we went into ChatGPT4 and asked it. Bear in mind, we sent the information directly in spanish!:
Estimate their current valuation based on their current annual revenue and assume a multiple valuation of 10. You must produce the probability as a number and the provide reason behind your assessment.
Here is the startup information (REDACTED):
¿Qué tienes para aportarle a otros emprendedores de nuestra comunidad?
Response: Soy una persona muy joven aún (28), pero con mucho entusiasmo para hacer crecer el negocio que hasta hoy en día tenemos. Creo que puedo aportar ese ímpetu de trabajar fuerte por aquellas cosas que nos mueven.
Origin of Startup: Nació bajo el diagnóstico de que había que democratizar el acceso al material ... para los alumnos en ..... Luego notamos que dicha falencia también se encontraba en los ... y quienes administraban los ..., por lo que el objetivo era crear una plataforma en donde todos los usuarios pudiesen interactuar de manera completa.
Startup Description: Software de gestión ... y aprendizaje que ayuda a los ... a enfocarse en lo que mejor saben hacer: ayudar a ....
Cual es el mercado, tamaño, y tipo de cliente: Actualmente en ... hay X ... activos y vigentes. Cerca de un 80% son ... potencialmente elegibles, lo que hace que un número cercano a Y ... sean potencial mercado. Principalmente nuestro usuario clave son los ..., lo que nos permite facilitar mucho su quehacer y sobre todo ayudarlos a enfocarse en dar ... de calidad y no perder tiempo en otras burocracias propias de la ....
And the answer from ChatGPT was already exciting! Remember, we changed absolutely nothing of how the data was already coming in!
1. Current Situation:
- Market Penetration: X is already used by around ... out of a potential ... eligible ... in Country .... This represents around ... of the potential market.
- Revenue: Their current revenue seems to be increasing, with a projected 1MM USD annually, but a slowdown can be noticed in the last quarter (from an average of 100K USD per month to $90K USD per month).
2. Growth Trend Analysis:
- The revenue has been on an upward trend, but with a slight slowdown in the last quarter.
- The company has a clear mid-term vision focusing on product improvement and a long-term goal of market leadership and expansion.
3. Challenges and Risks:
- Scalability: This is identified as their major risk. The technological infrastructure should be robust enough to handle an increase in users.
- Competition: While they mention a unique selling proposition (X management + materials), competitors in the X management sector could potentially expand their offerings.
4. Opportunities and Potential:
- B2C Approach: They've identified a potential for growth by consolidating their presence in ....
- Expansion: The curriculum alignment across culturally similar countries offers a chance for international scalability. The vision for expansion to L signifies an ambition for regional growth.
- Unique Selling Proposition: Offering both management software and academic materials makes them unique in the X market.
5. Internal Factors:
- Team: A fully committed team with a full-time focus on the project can drive growth.
- Financials: Their past investment and future projections seem to be reasonable, and their plan to fund future investments using internal resources indicates a healthy financial status.
6. External Factors:
- The X sector's digital transformation, accelerated by events like the COVID-19 pandemic, presents a growing demand for platforms like ACME.
Estimating the Probability of 5X Growth:
- Given that they currently have a X MM USD annual turnover and considering the potential market size, it's conceivable that they can grow to a 5 XMM USD annual turnover in 3 years.
- Assuming they maintain their B2B approach and manage to make a strong foray into the B2C sector, they can potentially tap into a larger chunk of the ... eligible ...
- However, achieving 5X growth would also require successful international expansion, technological scalability, and the ability to fend off competition.
Probability Assessment: Considering the above points, I'd estimate a probability of 60% for ACME to achieve 5X growth over the next three years, given that they successfully navigate the scalability and competitive challenges. The deceleration in growth, potential competition, and technological challenges are the primary reasons it's not a higher percentage.
Recommendations:
- Focus on Technological Scalability: It's essential to ensure the platform is robust and can handle the growth they're aiming for.
- Expand the B2C Approach: While B2B offers a bulk addition of schools, a B2C strategy can provide steadier and more diversified growth.
- International Expansion: A successful foray into countries like X can provide a significant boost to their growth trajectory. They should invest in market research and localization to achieve this.
- Differentiation: As competitors could easily replicate the academic materials offering, ACME should continuously innovate and improve its content quality and usability.
- Engage in Partnerships: Collaborate with X institutions or governmental bodies to further penetrate the market and gain credibility.
We thought that our own assessment was a bit lower than 60%. We replied back:
ChatGPT's answer this time was much better:
Estimating the Probability of 5X Growth with a Pessimistic Approach:
- Scalability Challenges:
- Achieving scalability, especially while growing, is a significant challenge. The tech stack needs to be robust, secure, and efficient to handle thousands of schools, potentially millions of users, without any downtime or data breaches.
- While growth is an exciting phase for a startup, it can also expose vulnerabilities in the platform. If there are any technical deficiencies, rapid growth can exacerbate them.
- New Channels Capture:
- Penetrating new channels, particularly B2C, requires a different sales approach, marketing strategies, and customer support mechanisms than B2B. Establishing a foothold in a new market segment is often a time-consuming and expensive endeavor.
- The B2C segment, which involves targeting individual X or Y, might have longer sales cycles and require more customized solutions compared to the B2B segment.
- Decelerating Growth Rate:
- The decreasing rate in their revenue growth (from XK in the past 6 months to AK in the last 3 months) is a red flag. While it's common for growth to decelerate after the initial explosive phase, this rate seems to be dropping at an alarming rate.
- Competition & Differentiation:
- If competitors in the X management sector decide to expand their offerings or if a new entrant introduces similar services, it could greatly hinder ACME growth.
- Maintaining their unique selling proposition will require continuous innovation, which might strain their resources.
Probability Assessment: Given the technical and market-entry challenges and the signs of decelerating growth, I'd revise the estimate to a probability of 30-35% for ACME to achieve 5X growth over the next three years.
Success, this was exactly matching our own estimation! Juan at this moment was really getting surprised at just how much better ChatGPT was than his own team with almost no training whatsoever.
To finish it, I asked ChatGPT to give me the prompt itself that best reflects this exchange:
And its answer was just what we needed:
Prompt for ChatGPT:
"Using the data provided in STARTUP_INFO, please assess the startup based on the following criteria:
- Product & Solution: Evaluate the uniqueness and scalability of the solution. Determine if the product/service is essential for its target audience.
- Market Assessment: Analyze the total addressable market size and the startup's current market share. Check for market saturation and barriers to entry.
- Financials: …. (shortened for brevity)
- External Factors: Identify any external factors that might impact the startup. Gauge the startup's adaptability to such factors.
Given the above analysis, please provide a probability estimate of the startup growing 5X over the next 3 years. Please return the probability estimate and the reason behind that estimation."
By structuring the prompt in this manner, you're guiding ChatGPT to provide a more detailed and comprehensive analysis based on the criteria. Once you've received the assessment, you can then use it as a basis for making more informed decisions regarding the startup's potential.
Great, we are ready to roll!
Step 3 - Set it up!
“Great, this is amazing? Now what do I have to do? Program an API or something that talks to ChatGPT and does this?” Juan asked.
David: “Not quite, we could integrate with Zapier in a few minutes and you would be ready to go!”
Juan: “Zapier? What is that?”
Lets find out!
Zapier is a very famous platform for integrating workflows. You can specify a trigger and an action over 6000 different applications. Zapier is just one of many other platforms that do the same thing, like Make.
In our case, we created an integration that worked from Google Forms → ChatGPT → Google Sheets. Bear in mind that as a first step, you must have a working OpenAI API key.
After that, we quickly created our first Zap. The trigger is a new response from Google Forms, that goes to ChatGPT for the evaluation, and finally stores it in a Google Sheets file.
There are several interesting aspects of creating this first Zap with ChatGPT.
1) You have very easy access to any field in the forms
You can stitch together any field from the form in the text format you need. In our case, we just needed to add the question each answer referred to
2) You can specify the model/prompt you want
Then you insert the exact same prompt we got from before!
There are other fields that are more advanced like temperature and top_p (nucleus sampling). We didn't change anything in this setup.
3) Set the output and run it!
The final step is the easiest one, create an action for storing the response in a Google Sheets. Define the columns you want in the document (write them in the first row) and Zapier will automatically lift those columns and let you choose what to put in them.
In our case, we just wanted to store the name, the email and the OpenAI Completion.
And that's literally it! From that moment on, we were already using AI in our day to day operations!
Step 3 - Assess the Impact
Since Juan does a sanity check of every application grading, it was easy for him to continue everything as it was. What was incredibly impactful was the difference in cost. A person doing this job costs 12 USD an hour. ChatGPT4 costs 0.07 cents! and ChatGPT3.5 costs 0.0017 cents. In other words, ChatGPT4 is 171 times cheaper, and ChatGPT3.5 is 7000X times cheaper!
Step 4 - Conclusion
“This is crazy!” Juan said. “I can easily think of 10 more processes where we could do the same!”
“I know the feeling, the moment when you realize how powerful this thing is, it makes you wonder just how much the world will change in the next years!” I replied
And Juan didn't say anything, he literally stared at the floor. I knew exactly what he was going through. That realization that AI will be used for reasoning at scales we have never used before. It will change everything we know in business, education, government. Its always exciting for me to see when someone gets that flash of what the future will look like… both its power, its awe and its massive implications. It's humbling, concerning and exciting at the same time.
Step 5 - Next Steps
So, if you are a CEO and are still not using reasoning engines in your workflows… what are you waiting for? AI is coming at breakneck speeds. If you are not using it, you can bet your competitors are. AI will unlock incredible levels of efficiency and progress. Founders and CEOs will not have to be spending time in the weeds. Let AI handle that. Instead, design your organization as a collection of thinking algorithms that make decisions in perfect harmony. Leaving you time to think longer term, bigger picture and ultimately achieve more.
If you are still unsure how to get started, book a free discovery call with us here! You will at least learn a bit more about AI, and we love helping more founders see where the future is going.
Our goal is not to sell you hype, our goal is to accelerate the adoption of AI in LATAM as fast as possible.
Because we believe this future is coming at us with full force, and if we want a chance to survive and thrive, we will need to adapt and embrace AI. If you have more complex use cases, or deeper questions, we got you covered. We have expert AI and ML engineers in our teams, and we can help you understand the scope and strategy of AI in your organization as a whole. Our rate for the time being is $50 USD per hour, which is pretty competitive against other AI consulting services.
And, if you are an employee worried about the impact that AI might have on your job, take action! Who is better than you in automating your own processes anyway? By taking action, you will show your company that you can reinvent yourself and still add a lot of value. For employees, that want to use AI, we offer a completely free mentoring of 5 meetings to get you started on your AI journey!