Is Generative AI the Future of Marketing?

Disruptive technologies are those that overturn the status quo and change the way businesses operate. In today’s business landscape, there is no technology more disruptive than artificial intelligence (AI). AI is already being used to create new products and services, and its impact on marketing is just beginning to be felt. Leveraging generative AI (GAI) tools will be critical for every organization, and founders need to understand how this will change the game in marketing.

Welcome to the age of mass personalization

Every organization is asking marketing to do more with less today. But the true power of GAI for marketing is getting more throughput from their teams and covering the “long tail” of marketing more efficiently and effectively. To be clear, GAI isn’t simply about creating more content; it is about creating content that talks to your target markets, ICPs, verticals, and geographies with a more personalized approach that will drive deeper engagement.

[…]the true power of generative AI for marketing is getting more throughput from teams and covering the “long tail” of marketing more efficiently

As GAI becomes a common tool in marketing, integrated campaigns targeting specific verticals, target personas, or use cases will be assembled with incredible speed and quality. In the past, content was the limiting factor, but with GAI covering more targets, more completely will become the norm. That means you will have a white paper, a landing page, email campaign, digital ads, landing pages, SDR cadences, and more, constructed more completely and in-market with unprecedented speed.

Personalization happens at every point of the customer journey. That journey often begins at your website. Mutiny is an Insight portfolio company that offers a no-code AI platform that leverages OpenAI’s GPT-3 to personalize website content. It drafts high-converting changes fast with AI content suggestions. AI enables your website to deliver the right message to the right audience, seamlessly.

What happens to SEO?

In the age of generative AI, SEO is more important than ever. While AI can certainly help generate more content, it’s important to remember that quantity alone isn’t enough to rank high on Google (or Bing, or whatever is next). What truly matters to the search engine, now and in the future, is great content that is focused on context and quality. This means that businesses still need to create content that is relevant, informative, and engaging for their target audience. By doing so, they can improve their search engine rankings, which will get them cited in the GAI response and ultimately attract more traffic to their website.

[…] the best SEO strategy will involve a combination of AI-generated content and high-quality, human-written content

It’s also important to keep in mind that AI can assist in creating content, but it can’t replace the human touch. The best SEO strategy will involve a combination of AI-generated content and high-quality, human-written content. As always, the key to success is to stay focused on providing value to your audience and creating content that they find useful and engaging.

Marketing roles will change

As with every disruptive change, roles evolve as well. Every area in marketing will be impacted, from demand generation to digital marketing to product marketing. While it is early days, it is worth considering where GAI will change roles and begin to adjust the organization to accommodate this evolution.

Content writers are likely to evolve from pure writers to editors and prompters.
Do you have people with both the will to change and the capacity to learn new skills?
Will you need as many digital advertising people as AI tools begin to pick up much of the repetitive work associated with the role?
Will AI marketing tools optimize integrated campaigns automatically, and who will drive this new strategy?

These are just some of the questions yet to be fully answered in this fast-moving and fluid environment. Once you have the GAI strategy in place, you must create a culture within your organization that encourages experimentation and data-driven decisions. This will ensure that generative AI can be used to its fullest potential and allow it to live up to both its hype and potential.

A new age of MarTech is upon us

To start leveraging generative AI in your marketing strategy, you must first invest in the right technology. And for the foreseeable future, this will be a moving target as the capabilities advance at lightning speed. Most solutions like marketing automation, chatbots, account-based, sales engagement, and more will infuse a level of GAI into their solutions, but that is only part of a successful approach. Your org will need tools that don’t simply improve the existing approaches but take full advantage of the new paradigm that GAI promises.

Your org will need tools that don’t simply improve the existing approaches but take full advantage of the new paradigm that GAI promises

The key will be to develop new enterprise workflows that combine the power of GAI with new tools that create more bespoke solutions that match your company’s voice, brand, and guidelines. Insight portfolio companies such as Writer and Jasper are creating enterprise-ready solutions that help organizations manage new teamwork processes and compliance issues, creating a new level of consistency across the organization. They are a major step up from the one-size-fits-all ChatGPT.

Don’t stop with text

Yes, the first use case for many is around generative text, but no organization will unlock the full potential of GAI if they don’t also explore both image and video capabilities for marketing. Technology is advancing rapidly here to provide customized and humanlike artistic images. Creative teams should begin to utilize these tools to reduce costs and drive output.

One of the most common uses of generative AI in B2B is personalized product and creative imagery. This allows businesses to create realistic images to fit a particular segment or group. With this technology, businesses can easily adapt visuals for different channels, such as social media platforms or websites.

Insight portfolio company Hour One is an AI-based synthetic video platform that specializes in leveraging AI technologies to create realistic synthetic video.  Hour One produces digital clones of people that can move and speak realistically for synthesized videos and interactive avatars usable in the real world and the virtual workspaces of the metaverse. With Hour One’s AI avatar technology, you can generate premium video from text, automatically and affordably, allowing you to keep pace with your audience’s need for rapid reporting. There are many use cases for this technology which include product videos, website videos, support videos, etc. Organizations can now quickly and cost-efficiently power a true video-first marketing strategy.

Leading generative AI adoption

The marketing organization structure of tomorrow will be driven by AI. The CMO’s role in this new structure will be twofold.

Founders and CMOs must ensure the right organizational structure and processes are in place to enable AI-driven marketing. This includes investing in the right technology and creating a culture that values experimentation and data-backed decisions.
Marketing leaders must become AI evangelists within their organization, advocating for the use of AI-enabled solutions and inspiring others to seize the opportunities presented by these technologies.

Is your marketing team ready to join the generative AI revolution? Now is the time to begin experimenting with new approaches in your organization. It is clear that much will change in marketing, and it will happen quickly. Every founder needs to ensure that their marketing organization is ready to keep up and begin to get ahead of the curve. It is time to take advantage of this transformational opportunity.

Founder 101: Why and When to Invest in Brand

The term “brand” is wildly misunderstood. Many people perceive brand as colors, pictures, logos, and fonts – and that’s it. This is far from the truth.

While brand absolutely encapsulates the look and feel of your company, visual identity is just one slice of the pie.

Brand is your company strategy; it sets the direction for years to come while providing every stakeholder a North Star of what you stand for, your ultimate goal, and how you get there.

Brand serves as the foundation for all your communications, shaping how stakeholders perceive your business and the value you create. For this reason, brand must be consistent across every touchpoint from your website to your pitch decks, and BDR calls. Brand impacts the success of every stakeholder’s experience with your company and their likelihood of converting, and every stakeholder’s ensuing opinion of that experience impacts your brand’s reputation.

Your brand is what enables you to rise above the noise to drive awareness, build affinity to convert, and influence decision to purchase. Brand is what allows you to meaningfully connect with your buyers again and again.

Why should I invest in brand?

We know what you’re probably thinking: “Why should I invest in brand if I need to drive pipeline NOW?” Investing in brand is critical for every company looking to build sustainable growth and profitability. Strong brands:

Drive company focus and set vision
Facilitate organizational alignment
Build competitive moat
Lower cost to acquire customers (CAC)
Increase pricing power
Improve customer lifetime value (CLTV)
Drive higher valuations

Companies go wrong in assuming that if they are focusing on brand, they are diverting resources from generating demand. Brand and demand must co-exist to drive sustainable growth.

Bottom line: there is no demand without brand.

When should I invest in brand?

Within Insight’s portfolio, companies early in their ScaleUp journey drive new bookings via demand-focused tactics (e.g., paid digital marketing) due to lack of focus on brand. Founders and CEOs tend to put brand on the back burner to prioritize more urgent initiatives, which results in a game of catch-up in the later stages of growth.

So, when should you start focusing on brand to avoid playing catch up? The simple answer is the earlier, the better. However, three core readiness factors must be in place before you begin. You’re ready if you can confidently answer “yes” to all three questions below. Keep in mind that you will also want dedicated resources to execute your strategy.

Brand Readiness Checklist

Do you have established product market fit?
Do you have a clear definition of your Ideal Customer Profile (ICP) and Buyer Personas?
Are you confident your core product and go-to-market (GTM) strategy won’t change course for at least 6 months?

If you already have a brand established, but are experiencing growth or efficiency challenges, brand could still be the culprit. Check out signs and symptoms that you need to revisit your brand below.

Signs it’s time to dedicate more resources to brand

Your messaging is focused on features and functions instead of how you solve buyer pain points.
Your messaging speaks to only one buyer persona instead of the entire buying committee.
Your competition is heating up, and your win rate is declining.
Your performance marketing ROI is quickly approaching diminishing returns.
Your category is being disrupted by the “cool kid,” and customers are churning.
Your product doesn’t fit into an existing category, so you need to figure out how to position yourself.
Your product’s value has expanded or shifted.
Your business wants to target a new market segment, industry, or region.
Your employee attrition is up, and you are struggling to attract top hires.
Your reputation is suffering due to poor reviews or negative press.

Now that you know it’s time to build or double down on your existing brand, keep in mind that the best-kept secret to success is simple: be intentional! No one accidentally stumbles on a billion-dollar brand. Beloved brands require thoughtful progression with participation from the entire organization.

What are the elements of a strong brand strategy?

There is no single activity that builds a brand. Fruitful brand building is an umbrella approach made up of a series of tactics, each aligning to and delivering on your brand strategy.

Insight has developed a four-step process to help you think through the building blocks to drive awareness and affinity for your product. Each of the below terms is linked to our Brand Glossary.

Brand ROI & Measurement

Insights — Capture customer, market, and competitor insights.
Buyer Foundations — Leverage insights to define your TAM, ICP, buyer personas, and buyer’s journey so that you know your audience and can drive hyper-targeted tactics.
- TAM
- Ideal Customer Profile (ICP)
- Buyer Personas
- Buyer’s Journey
Strategy — five brand essentials that make up a successful brand strategy:
1. Mission, Vision, and Values
2. Point of View (POV)
3. Messaging & Positioning
4. Category
5. Brand Identity
Activation — Arm your GTM team with enablement, content, and campaigns to drive awareness, engagement, and conversion. Ensure your website reflects your differentiated value proposition and visual identity. Test and iterate tactics to learn what works.

Building a brand doesn’t mean you have to break the bank. Plenty of activities cost nothing and drive exponential value (e.g., defining your ICP, aligning your messaging to how you uniquely solve your best customers’ pain points and articulating this value on your website). Brand is not a one-size fits all. Every company should right-size brand investment to their stage of growth.

The Insight Brand Glossary

Use this guide alongside our brand content for founders and ScaleUp leaders at every stage. Skip to each step:

Insights
Buyer Foundations
Strategy
Activation

Brand Strategy

The umbrella approach that defines how your company shows up in the market and the plan of integrated tactics needed to achieve its objectives.

Insights

Actionable learnings about your buyers, competitors, and target market. The best approach is to leverage both qualitative and quantitative research to inform these insights. Study your existing data, but make sure you go beyond what you already have. Collecting and analyzing this information is critical to building a successful brand. Without knowing your buyers, your competitors, and your target market dynamics, you are flying blind and run the risk of wasting time and money on a brand project that goes nowhere.

Buyer Insights: Learnings established from research (e.g., customer interviews, surveys), sales reps, and social listening channels (e.g., peer reviews, community forums) that define buyer pain points and why they aren’t being solved with existing solutions. Buyer insights provide the ability to educate sales, customer success, marketing, and product teams on prospective buyers and their behaviors. With this knowledge, go-to-market teams can focus on the touchpoints during the buying cycle that are most critical.
Competitor Insights: Understanding your competitors’ strengths, weaknesses, threats, and opportunities will help identify the unique white space that your brand can own, differentiate your value from the competition, and objection handle so that that you can win ultimately win more deals.
Target Market Dynamics: Having a clear understanding of your current market and where it is going will help ensure you align your product and positioning to both todays and tomorrow’s buyer needs. These insights include elements such as analyst predictions and economic shifts that impact the industries you sell into.

Buyer Foundations

Foundational inputs to your brand and go-to-market strategy that describe your target market, your ideal customer, what they care about, and how they purchase. Aligning your organization on your Total Addressable Market (TAM), your Ideal Customer Profile (ICP), Buyer Personas, and your Buyer’s Journey gets everyone on the same page around who your best customers are and how they like to engage with your brand. These foundations impact everything from target account lists to messaging and product roadmaps.

Total Addressable Market (TAM): Total addressable market for your end-state product at 100% market share. Note that it is also important to understand your SAM (Serviceable Available Market), share of the market that you can attain based on your business model – your targets, and your SOM (Serviceable Obtainable Market), or the percentage of your SAM that you can realistically attain.
Ideal Customer Profile (ICP): Documentation of the attributes that make up your “best” or most valuable customer accounts. Having a clear definition on the characteristics that make up these accounts allows you to better attract, engage, close, and retain business within those accounts. These attributes should include firmographic (e.g., employee count), environmental (e.g., technology traits), and behavioral data (e.g., has remote employees).
Buyer Personas: Generalized representation of buyers, influencers, and users at your ICP that informs your GTM strategy, messaging and where to find them.
Buyer’s Journey: Map encompasing a customer’s entire buying experience from pre-purchase to post-purchase.

Strategy

See the 5 core brand essentials that make up a successful brand strategy below:

1. Mission, Vision, and Values

Documenting these core building blocks provides not only a focal point for internal alignment and roadmap for the path ahead, but they are also an effective guide for making decisions. Everything you do should align with these statements.

Mission: A mission statement focuses on your purpose today and what your organization does to achieve it. What is your reason for being? Keep in mind that it doesn’t just describe the organization’s output or who it wants to help… It captures the soul of the organization.
Vision: A vision statement focuses on tomorrow and what your organization wants to achieve.
Values: Your core values support your vision. These are your beliefs as an organization. When making a big decision, ask yourself if it is consistent with your values. Your values should stand out as uniquely yours.

2. Point of View (POV)

Your brand story. It tells the market how you’re different, the problems you solve, and why it matters to your target audience. Since we live in an attention-driven world and humans love stories, it’s no surprise the attention winner is the company that tells the best story. Your POV is your key to doing that. The POV is what gets your employees excited about going to work each day and the inspiration behind a first-time buyer deciding to purchase. The POV is made up of 4 parts:

Challenge: The problem you solve (e.g., data is dirty and disconnected).
Consequences: The pain the buyer feels because of your problem (e.g., lack of visibility leads to inefficiency, slowed revenue growth, and more closed lost deals).
Future State: How your solution resolves the buyer’s pain and provides a different path forward (e.g., a single view into all data with actionable insights).
Outcomes: The benefits made possible by your solution (e.g., greater team alignment and ROI, higher growth rates, and innovation that leads to more won deals and lasting competitive advantage).

3. Messaging & Positioning

Your Messaging & Positioning Framework (M&P Framework) clearly maps the value you deliver through a hierarchically organized set of words, terms, phrases, and statements. It is designed to align your organization and should be made centrally available. It ensures that your story is conveyed in a consistent manner and the differentiated value you deliver is positioned correctly across every interaction with the market. The M&P Framework has 5 parts:

Problem Statement: The unique problem you solve, described in buyer language.
Positioning Statement: How you are solving the problem in a competitively differentiated way. Clearly articulate your value prop and how it solves meaningful pain points.
Core Message: What you want to be known for. The message that brings your positioning statement alive.
Benefit Pillars: Succinct descriptions of the key customer benefits and product attributes you deliver.
Proof Points: Examples that offer irrefutable evidence of the outcomes of your Benefit Pillars.

4. Category

Categories help people navigate a world of too many choices; they compartmentalize similar items to facilitate discovery and decision. A category strategy enables you to take the reins and position yourself versus the market positioning you. (Note: category design can be a distraction if done too early.)

5. Brand Identity

Brand Identity includes all visual elements of your brand, including the colors, fonts, logo, imagery, and design, that distinguish your brand in the consumer’s mind. Your brand identity should also include brand personality elements, such as tone of voice. Keep in mind, everything from the color of your logo to the curvature of your font will appeal to a certain emotion.

Brand Book

Clearly documents the rules, standards, and guidelines for bringing your brand to life. This is an important step to achieve consistency as your organization grows.

Brand Activation

The integrated campaign plan that you execute in order to get your brand out in the market. It is the compilation of tactics that will drives audience growth, engagement, and conversion. Continuous testing will help narrow in on the tactics that drive the greatest impact with your target audience. If activation isn’t prioritized, your entire brand strategy crumbles. Make sure this is a priority!

Deeper insight: Founder 101: Why and When to Invest in Brand

Driving Meaningful DE&I Strategies in 2023

2023 presents a challenging economic environment for ScaleUp leaders. Many face difficult human capital decisions even as they seek to preserve financial capital to weather the uncertainties 2023 has presented. The shift from hiring frenzy to hiring freeze has become commonplace as companies extend cash runway by reducing costs. Insight’s Onsite team advises companies during this time as they transition from offensive to defensive people strategies to support their long-term vision.

One area requiring human capital leadership is awareness of the potential for the adverse impact of economic downturns on underrepresented communities in your team. For example, in 2020, many women left the workforce as COVID-19 forced families to reassess child care. During the 2008 recession, Black and Hispanic/Latine communities saw an outsized impact on their employment opportunities and earning potential. More recently, as layoffs continue across the U.S. tech sector, research again suggests that women and people of color are disproportionally at risk of losing their jobs.

Whether you’re considering a reduction in force or continuing to scale your team, people strategies that center equity and inclusivity can remain consistent.

How can ScaleUp leaders ensure that diversity, equity, and inclusion (DE&I) remain central to your approach? Here are a few considerations.

If you’re considering layoffs

Review policies and programs to ensure an equitable process

In consultation with their leadership teams, founders and CEOs have the difficult task of determining how to downsize if that’s the appropriate short-term strategic decision. Those companies that have a comprehensive and objective approach to deciding which positions to eliminate have an easier task of ensuring fairness, as well as the perception of fairness — which is as important from a retained employee morale perspective as well as a company brand perspective.

In determining the selection criteria for a downsizing, consider factors such as tenure, skills assessment, and functions that are aligned with the strategic roadmap of the company. Prior to decision-making, it’s important to understand and remove any potential bias, either conscious or unconscious. For example, a “last in, first out” approach is commonly referenced as a framework for layoffs, but given the effort in tech over the last few years to increase diversity, this can disproportionately impact underrepresented employees who recently joined the team.

Another example would be asking managers to identify a list of underperformers. If your company hasn’t had a recent objective performance review cycle, the list becomes subjective and could reflect manager biases. An adverse impact analysis will show any adverse impact to any Equal Employment Opportunity Commission (EEOC) underrepresented demographics to mitigate disproportionate layoffs among underrepresented communities that are not associated with underperformance.

Be transparent

Employees need clear communication, honesty, and transparency during this time and will expect their leaders to acknowledge the hardship and offer support. Explaining the rationale behind layoff decisions, demonstrating accountability, and ensuring that employees understand the next steps can go a long way to avoid mistrust among impacted employees and boost morale with the retained workforce.

Offer impacted employees guidance and support

Entering a job market during a tough economic time is not easy. Offer support resources to impacted employees, such as outplacement services or career counseling, to help them transition to their next opportunity.

If your company continues to scale

Make sure you hire equitably

A slowdown in recruiting is a great opportunity to increase diversity given of the availability of candidates in the market. It’s even more important to maintain this focus when there are fewer opportunities to hire. As you open new positions and launch new searches, allow sufficient time to build diverse candidate slates and make this a requirement before moving to selection processes and hiring decisions. When interviewing candidates, use objective selection criteria — such as scorecards — to drive consistency and avoid subjective hiring decisions based on “fit.”

Be sure pay equitably, too

Employees who feel they are compensated fairly for their work are more likely to be engaged, productive, and committed to the company. During a downturn, companies should continue to review their pay equity policies to ensure that guidelines for pay are being upheld and refreshed where necessary. With the labor market less competitive, avoid bringing in new hires at lower comp bands than current employees, which can create pay disparities across your organization.

Read: Co mpensation 101: Building Consistent Salary Ranges and Bands from Scratch

Maintain your competitive advantage by having a clear DE&I strategy

The most diverse companies financially outperform non-diverse companies, and if you want to attract top talent, they want to know you take DE&I seriously. 86% of candidates globally say that DE&I is an important factor when considering an employer.

CEOs and people leaders can use this time to build on your DE&I strategy by (re)-assessing your current state, clarifying 2-3 focus areas, and reinforcing accountability for outcomes with your leadership team. During town halls and company updates where you’re motivating your teams to achieve the long-term company vision, this is also an opportunity to be vocal about your commitment to a diverse and equitable culture – one that employees are excited to work in, and candidates attracted to.

Focus on experience and inclusion

Employees crave job security in this market and want opportunities to grow and thrive in their organizations. Find new ways to develop, engage and support them – whether it’s offering career development programs, establishing employee resource groups (ERGs), or engaging in community outreach as a joint team project. You can also use this time to better understand the experience of underrepresented groups and individuals in your organization to develop valuable and relevant programs to support them.

DE&I is a central tenet of talent and culture for many next-generation ScaleUps. Teams with different voices, ideas, and backgrounds who work collaboratively and equitably to achieve your ScaleUp’s potential have a strong chance of problem-solving and succeeding. Incorporating the above strategies and tactics can ensure that when the market improves, you have sustained momentum and have positioned your organization to model meaningful action.

The Next Stack: Generative AI from an Investor Perspective

For over a decade, Insight has invested in artificial intelligence (AI) applications and the infrastructure underlying AI/ML development and deployment. The firm’s investments have spanned the ecosystem — from leading applied AI companies like dental AI platform Overjet, AI-driven lending software Zest AI, AI-powered care coordination Viz.ai, to generative AI like content writing tools like Jasper and Writer, data generation/mimicking tool Tonic, human avatar generator Hour One, entertainment content localization tool Deepdub, and AI infrastructure Run:AI, Fiddler, and Weights & Biases.

Large language models (LLMs) are on the precipice of accelerating fundamental disruption at both the application and infrastructure levels. It has the power to transform nearly every industry and business.

Read: 8 Tech Investors Share Predictions for 2023

The recent breakthroughs of transformers and few-shot models in unsupervised learning have allowed model parameters and corresponding accuracy to grow exponentially without degradation in loss function. For the first time, AI can create. This is a market inflection perhaps profoundly bigger than the rise of the internet, mobile, or the public cloud. We are in the early innings of the next generational shift.

AI as the enabler of transformative software

That said, the rising attention on generative AI and its seemingly limitless potential and applicability means it’s important to consider where in the stack value will ultimately accrue. The rise of the public cloud drove a platform shift, but the public cloud was an enabler, not a product itself. Like the public cloud, generative AI, and AI more broadly, is an enabler of transformative software, especially at the application layer. Some of the most exciting opportunities will emerge where AI is a more efficient and effective way to solve a core business problem and drive durable value long-term.

A step change in AI capabilities

Before 2017, AI was mostly about prediction tasks like classification or recommendation. With the release of Attention is All You Need, the world was introduced to a new form of neural network called the transformer model. Transformer models are created with significantly larger datasets, enabling them to make more accurate predictions and, importantly, enabling them to create.

Over the last five years, we have seen three major developments democratizing access to these models and enabling more complex use cases:

New and free-to-use LLMs have emerged, e.g., OpenAI making GPT-3 open-source to developers.
Computing costs have become cheaper.
Innovations in MLOps technologies and infrastructure have accelerated.

As a result, developers have the infrastructure to build new, disruptive applications on top of cutting-edge, open-source LLMs.

The rise of GPT-3 and public foundational models

Some of the most important publicly-released models in the past two years include GPT-3 (and the recently released GPT-3.5 family), DALL-E, and Stable Diffusion. These foundational models are among the current super enablers for new AI as they enable text and image generation. ChatGPT, in particular, stands out as producing remarkably accurate and detailed human-like text that is finding its way into a plethora of everyday use cases. The recent launch of GPT-4 will take GPT-3’s ability to contextualize and fill in language using NLP to a new level.

New large language model capabilities, combined with higher data quality and availability and declining computing costs, create favorable market conditions for the rise of applications that will fundamentally change how we work. Many existing applications will also be retrofitted with generative AI superpowers. And we are excited to see companies emerge that solve the gaps in the infrastructure stack needed to support this growing suite of applications.

The evolving generative AI stack

Generative AI has been picking up steam in VC and tech circles – but where will durable value accrue? Here’s how Insight believes the generative AI stack will evolve and where we see the most immediate and exciting investment opportunities.

generative AI Insight Partners investor perspective

Foundation models

Generative AI models are emerging along a wide range of data types, including text, images, audio, and video. Some examples of popular generative model techniques and the types of data they can generate include GANs, VAEs, Flow-based models, and language models. While applications based on LLMs have captured our imagination and demonstrated the rapid progress of AI, this is just the start. We think of foundational models as more than LLMs.

New types of generative models will likely continue to be developed as research in this area advances. The foundation models are progressing at a rapid pace and are already often as good or better than the human generation of content.

Domain models

As data becomes king and more foundation models proliferate, the demand for AI-first applications will drive the emergence of many highly specialized domain or vertical-specific models. The models may chain foundation models or be trained in specific data or curated styles and tailored for specific industries (e.g., e-commerce, insurance, logistics). Some of these models may become Model as a Service or will likely become full-stack offerings with applications and tooling that sit on top.

Tools

We believe tooling will be a critical layer in the value chain, with different types of tools arising across many dimensions. While some infrastructure needs will become more acute with the rise of LLMs (e.g., the growth in image and video data, higher query and data volume), in other cases new gaps in the stack or net new problems will emerge entirely. Included below are four key segments where we believe new infrastructure tools will evolve:

Playgrounds: allow non-technical individuals to interact with and explore the capabilities of foundation or expert models; this will typically enable prosumer use cases.
Programming Frameworks: streamline and automate AI-specific workflow needs to access and build applications on top of LLMs (i.e., enable the programmability of models). Key workflow needs include but are not limited to state management, instrumentation, and chaining).
Model Lifecycle: support the training, deployment, and performance management of models relying on complex, unstructured data (e.g., MLOPs stack for unstructured data as laid out in our Scale Up presentation here).
Management & Safety: manage the safety, compliance, and security concerns and requirements surrounding LLMs.

Applications

The next generation of software applications will emerge with AI as a first-class citizen. While data-driven applications will enable a more personalized and improved customer experience, like successful traditional software, AI-first applications must solve an acute need and have attributes that suggest long-term durability (e.g., being embedded within a workflow, access to proprietary data, network effects, etc.).

Investor POV: What we’re excited about

Tools

The rise of foundational models, specifically LLMs exposes many unserved and underserved gaps in the current infrastructure stack. New tools will need to emerge for developers, data scientists, and non-technical users to leverage LLMs within an enterprise. Hence, we are excited about products that improve the accessibility and usability of large language models. There are numerous challenges for new infrastructure technologies to address, including the raw, unstructured quality of image and video data, the static nature of existing LLM interfaces, the fragmentation of different models (which we believe will only continue as models become increasingly industry-specific), or the need for effective governance to ensure unbiased, responsible results.

Companies are already beginning to develop new frameworks that re-imagine prompt engineering used in the design and deployment of LLM apps and enable LLM applications to be built through composability. Model lifecycle management solutions will take on even greater importance as LLM creation, deployment, and collaboration become more complex. Emerging solutions in the management and safety of datasets will construct important guardrails and processes against bias in line with new regulations and expectations in the ethical uses of AI.

We are excited about tooling platforms that make the lives of the “prompt engineer” or LLM-focused data scientist easier. They will form the backbone of next-gen model creation, deployment, and orchestration. The MLOps toolchain will continue to thrive as LLMs continue to multiply. For instance, Weights & Biases is a significant beneficiary as the hyperparameter tuning and version control solution for most LLM builders.

Horizontal applications

We believe every function in an organization with repetitive and/or skill-based work will be reshaped by foundation models, whether it is the democratization of coding, generating sales, supporting customers with virtual agents, or creating content for design and marketing. Just follow the Jasper.ai story to understand how disruptive a new entrant can be. That said, some of these functions will be reshaped more effectively by agile and innovative incumbents. Identifying where large language models are better suited to enable a better feature instead of a standalone platform will be critical when investing in this space. In addition to this, it will be important to find problems that require solutions deeply embedded into business workflows and access to unique data sets.

Two areas where we believe new standalone platforms will arise are developer productivity and security.

Developer productivity: We see significant opportunities in the creation of coding automation tools that accelerate the delivery, development, and testing of software code. Developers spend hours per day on debugging and test/build cycles which computer-generated code and code-review tools can significantly reduce. An estimated $61B can be saved per year from these tools in reduced inefficiencies and costs for software development. Moreover, democratized access to product and tech development for non-coders holds the potential to open the doors of entrepreneurship and software development for non-developers, sparking innovation and value creation in the economy.

Security: One of the most exciting applications of generative AI to security comes in auto-remediations where computers can predict and effectively address security vulnerabilities. Moreover, AI/ML models already power fraud detection for major software and fintech companies – however, the lack of quality data is a major issue. With generative AI, businesses can create more complex and widespread fraud simulations using synthetic data (i.e. fake photographs, fake PII) that solve for the lack of real-world data and enable more accurate detection rates.

Vertical Applications

Vertical-specific applications present some of the most significant opportunities for durable company creation, given the existence of proprietary data sets, tailored GTM motions, and the ability to embed deep into business workflows. We have been excited about sizable verticals with large and complex data that is mission-critical to businesses, in many cases combined with labor shortages and regulatory or compliance requirements.

Two examples of industries where exciting developments have emerged and where there continues to be significant headroom for innovation are life sciences and supply chain and logistics.

Life sciences: Generative AI offers many interesting use cases, from synthetic data creation for clinical trials to generative protein designs based on protein folding models to accelerate drug discovery to research summarization of academic papers. While adoption is in the early innings, the potential to accelerate drug discovery and approvals, improve patient outcomes and deliver cost savings in healthcare is massive. Generative AI applications building in life sciences will have access to critical and hard-to-access clinical and patient datasets which create barriers to entry and enable better results; as more patient data becomes accessible -> models become better -> results and outputs become better -> flywheel starts again.

Supply chain and logistics: 3D modeling and blueprint generation offer promising methods to automate product development, including design and component substitutions, leading to new products at lower costs with higher performance and sustainability. Generative AI will also enable document automation and contract generation to allow for better sales and negotiation insights and streamline workflows.

Questions for founders

Insight is excited to partner with the next generation of AI founders from the earliest stages. And we believe that long-term category leadership will come from a few key ingredients: problem, data, and product. Companies must solve a problem with a clear and material ROI, where there is a tangible data flywheel and where the product is highly embedded into the customer’s day-to-day operations, creating material customer stickiness.

Here are some key questions Insight investors ask when evaluating a startup. We hope these are helpful for founders beginning to ideate in the space.

Value Proposition/ROI: Is there a quantifiable ROI with quick time to value being delivered?
Product: Is the product deeply integrated into the customer’s day-to-day operations, and so valuable to the customer that it is very difficult to rip out?
Data Flywheel: Does your product rely on proprietary data and benefit from a data flywheel? E.g., flywheel between user engagement, data collection, and model performance → more engagement = more data = better models = more users and revenue.
Incumbent & Other Threats: Is there a flexible and agile incumbent that can easily launch this product as a feature?

Getting Into More Sales Opportunities, Earlier

Are you in all the deals you could be? Probably not, says data recently published by 6sense.

Just 9-11% of buyers are in-market in each quarter, according to the 392 B2B marketers surveyed.

Of those buyers, the typical medium-sized B2B tech firm has opportunities in their customer relationship management (CRM) system for just 12% early in the buying cycle, and 25% later.

So, for the typical mid-stage company with a total addressable market (TAM) of 100 accounts:

About 10 of their target accounts are in-market in each quarter.
Of those 10, the company would have open opportunities for just one account early in the buying process and two later in the buying process.

target accounts with opp in crm

Your go-to-market team must get into more opportunities, and earlier, especially now. The average win rate is continuing its precipitous drop from 29% in 2021 to 17% at the start of this year, per Winning by Design’s latest read.

Get on a buyer’s “day one” list

Brand awareness counts for a lot. But you might be surprised by just how much it impacts the likelihood that a target account will evaluate your solution.

In a September 2022 survey of 1,208 buyers by Bain and Google, ~90% of buyers have a list of preferred vendors from “day one” of their search; 90% of those will go on to buy from their “day one” list.

target accounts day one vendor

How do you get on buyers’ “day one” list?

Build brand awareness among target buyers

Get buyers to know your solution before their search by building a presence where they can learn and connect. This could be at events, in trade journals, within communities, etc. Have a clear and differentiated value proposition to stand out at these industry intersections.

Earn customer advocacy

84% of B2B decision-makers start their solution search by asking for referrals from colleagues, according to Edelman Trust Barometer. How can you ensure customers tell new buyers to “put you on the list?”

The best advocacy is inspired by excellent user experience and “above-and-beyond” customer support. But you can exponentiate your fans’ reach. Give them prominent roles in your customer community. Feature them in case studies and media pitches. Secure speaking opportunities for them at trade events or invite them to host a discussion at your own webinars. If appropriate, extend discounts or gifts for referrals.

Understand buying signals

For many companies, their go-to-market (GTM) team should go beyond passively cultivating demand to seeking it out. The goal is to know when buyers will begin their search for a solution.

Prospect and build relationships

The most direct way you can gather buying signals is by building relationships with buyers ahead of their purchase. Your sellers can do this by offering value, “no strings attached:” delivering helpful content, inviting buyers to events, connecting buyers with influencers and experts, etc. You can also participate in third-party communities or build your own, monitoring the conversation for signs buyers need a solution. This might be as simple as attending industry events and “working the room.”

Renewals, requests for proposals (RFP), and 10-Qs

In some markets, you can gather explicit information about when a buyer might enter a solution search. For example, some data providers offer IT contract renewal intelligence. You might also watch aggregators of RFPs — wherein companies put out an explicit call for purchase. For public companies, financial filings might offer clues about investments leading to a purchase, such as 10-Qs in the United States.

Intent modeling

Several data and software providers will provide data analytics that tell you which of your target accounts are surging in interest for your solution (and when). In the best case, you can incorporate this intent data into a model which predicts the location of each account in their buying cycle. This will help your sellers identify accounts where they should aim to open opps early on; they can also catch accounts that are about to buy.

Get into more deals

Few of your target accounts are in-market in any given quarter. Especially in the face of softening win rates, you must source as many opportunities as you can, as early as you can.

To do this, know who’s buying and get ahead of their search. Generating brand awareness and customer advocacy are powerful means by which you can secure your spot on buyers’ “day one” lists. But, as you build those long-term investments, also seize demand by gathering buying signals from the market.

Disclosure: 6sense is an Insight Partners portfolio company.

[Upcoming Virtual Event] Real Talk from the Top

Female leaders are switching jobs at the highest rates we’ve ever seen, and ambitious young women are prepared to do the same. To make meaningful and sustainable progress toward gender equality, companies must go beyond table stakes, understand inequities and develop programs to sponsor women leaders across their organizations.

To celebrate Women’s History Month, we invite you to join a panel discussion led by an Insight Partners Managing Director and three portfolio company CEOs who will share their personal journeys for how they got to where they are in their careers.

Register Here

Speakers

(Moderator) Whit Bouck, Managing Director, Insight Partners

May Habib, CEO and Co-Founder, Writer

Paige Robinson, CEO and Founder of Will Reed

Brownwyn Spira, CEO & Co-Founder, Force Therapeutics

A Former Credit Suisse and Verizon CIO Reveals Her Top 3 Pieces of Career Advice

This post is a special feature of Insights Distilled, a weekly tech-focused email briefing for busy financial services executives. Learn more and subscribe.

Twenty years ago, Radhika Venkatraman received invaluable advice that served as a catalyst for her successful career trajectory and leadership style. At the time, she was working at Verizon, where she became the CIO of its Network and Technology organization. After that, she went on to become CIO at Credit Suisse’s investment bank and a CIO-in-residence here at Insight Partners.

Back then, Venkatraman found herself drawn to only the most challenging problems. She was less interested in ones that didn’t challenge her and did not exert herself to enable co-workers who were focused on those other problems.

“I would almost always be willing to work on only the super hard problems with the super smart people,” she recalled in an interview with Insight IGNITE exec Elizabeth van den Berg.

While her superiors admired her problem-solving skills and passion, her disinterest in other projects often manifested as condescension.

Words of wisdom that changed her outlook

A mentor recognized this and offered some words of wisdom that changed her outlook: “They told me, ‘You cannot reach the mountain and stand there by yourself, Radhika – you’ve got to make sure your team comes with you. You’re not accomplishing anything alone on top of that hill.’”

This advice was a wake-up call to how she could be more successful by embracing a collaborative approach to working across teams and projects. Venkatraman took this on board and quickly realized there was so much she could learn from her colleagues. Uplifting her teammates, she found, could reap far greater rewards than working alone.

“You cannot reach the mountain and stand there by yourself”

This simple advice turned her into a better coworker and leader and has enabled her to succeed in various roles at Verizon and Credit Suisse – and now as a board member at Brightspeed and an advisor at Insight Partners’ portfolio companies Quantum Metric and Writer.

Now, she has cultivated a leadership ethos around broad collaboration, and her genuine interest in her colleagues and teams translates into satisfied workers, more significant opportunities, and more cohesive organizations.

“Today, people always tell me, ‘You’re excellent at selling the value of your team,’” she said. Good leaders “can inspire people to go to places where people wouldn’t normally go,” she said, by showing genuine interest and appreciation. “It cannot be that you provide a vision and ask people to march up some hill: You’ve got to be with them every step of the way.” By being the biggest cheerleader for her team, she can accomplish what she couldn’t have imagined when she first provided her vision.

Her advice for career growth

Venkatraman also shared three pieces of advice for people looking to grow in their careers:

1. Keep pushing your boundaries.

Get comfortable being uncomfortable because all your opportunities will not come from sitting in place. Keep doing things you don’t think you can, and you will become more comfortable doing them.

2. Support others without expectations.

Deposit your network credits. In other words, go and help people unconditionally without expecting anything in return. You will be surprised at how much the same people, or some other people, will return to you (with interest) over your lifetime.

3. Maintain your network.

It’s all about relationships. We’re all building products for humans. We rarely do things for pets and dogs or nonexistent creatures on Mars. Mostly, we’re building products for people, and people buy from people they know and trust. People do business with people they know and trust. People enjoy being with people they know and trust. And so, it’s all about your relationships and networks.

Join Insight Partners’ celebration of powerful female leaders throughout Women’s History Month. For more, tune into our Real Talk from the Top session later this month.

Creating a Winning Customer Feedback Strategy

Key Insights:

A culture of customer feedback can align your product roadmap with customer needs to help you scale even in tougher economic climates.
Include solicited and unsolicited feedback from as many channels as possible for the richest picture of your customer experience.
Create a culture of feedback across the business and build a central repository where everyone feels empowered to input feedback they’ve received.
Follow up with your customers to let them know you’ve received their feedback and how you intend to utilize it – even if you’ve chosen not to.

As a scaling business, your customers are your best critics. Customer feedback can provide you with the insight you need to make informed decisions about optimizing your product or service, developing new features, and guiding the growth of your company. Done properly, a customer feedback strategy can support everything from product development, to customer service, to the marketing team. It can aid repeat purchases, boost retention, foster loyalty, and even increase profits.

In broad terms, a customer feedback strategy should follow a continuous cycle:

Receive
Analyze
Act
Follow up
Repeat

But what does that look like in practice, and how can it best be implemented?

Receiving customer feedback

Customer feedback can be roughly split into two groups.

Solicited feedback

This is product feedback you ask for via surveys, NPS scores, focus groups, interviews, or review pages. Solicited feedback can be qualitative or quantitative and allows you to ask specific questions, but it can also lead to bias and low reply rates.

Unsolicited feedback

This is the feedback you gather either from customer success, helpdesk tickets, or more abstract sources like sales calls or social media listening. Unsolicited feedback tends to be qualitative and difficult to organize, but can also be powerful – flagging issues you didn’t realize existed and that people care enough about to bring to you. What’s more, it can be used strategically to help you prioritize fixes or feature requests on the roadmap.

Example: A customer asks customer support for help adding a team member to their account, as they can’t work out how to do it.

We’ll run with this example throughout the rest of the guide.

Creating a culture of customer feedback

For a rich picture of your customers, include feedback from as many channels as possible. Then, regardless of origin, organize all customer feedback in a central repository. This could be a spreadsheet, but also consider product management platforms and customer insight platforms. There are even analytics platforms that offer AI-driven thematic and sentiment analysis.

Whatever platform you choose, the key is to avoid creating a culture where people dismiss unsolicited customer feedback. Instead, everyone in the company should feel empowered to submit any feedback to that central repository, safe in the knowledge it will be followed up on.

Example: The customer success manager documents feedback in the central repository, giving the product team instant visibility.

Analyze and synthesize

Regularly go through that repository of feedback, group the things together that are similar, and look for patterns and themes.

Here are a few considerations:

If you choose to analyze feedback manually, keep an eye out for bias. Don’t create categories based on what you expect your customers to say but instead on what they actually say.
Be consistent with the categories and themes you use with each round of feedback. It will make it easier to find relevant answers and insights moving forward.
Link each piece of feedback to as much additional data as possible (think demographic or CRM data).
To help you identify which insights are relevant to which team, introduce sub-categories such as ‘marketing feedback,’ ‘customer service feedback,’ ‘major product bugs,’ and ‘feature requests.’
Prioritize your actions around your business priorities. Consider what generates the most new or expansion revenue, what’s causing people to cancel, and things that align most closely with the ideal customer.

Example: The founder prioritizes consistent feedback for a feature request/bug fix, which the product team prioritizes in their next sprint.

Deploy and follow up

When sharing insights, agree on a regular cadence with the product team. As well as embedding the customer feedback loop in the product development process, it also makes it easier to keep track of changes made in response to feedback and follow up with customers promptly.

As you start to change your product, it’s vital to have a hypothesis on what you’re trying to achieve by implementing the feedback and then measure success against that hypothesis.

Once you’ve done this, it’s important that you know who the feedback came from, internally and externally.

When you make a change and implement something on the basis of feedback, proactively reach out to those people. This is still the case even if you disagree with the feedback and choose not to act on it. There’s always value in engaging with the customer who made the comment. It’s one of the most effective ways to turn feedback into advocacy and makes it more likely that they’ll continue to share their thoughts in the future.

Example: The product team decides to make adding team members a more prominent part of the app, with the hypothesis that encouraging customers to invite team members will increase engagement and retention, and thus reduce churn.

AWARD: GrowthCap Top 25 Growth Equity Firms of 2022

Insight Partners has been named a Top 25 Growth Equity Firm of 2022* by GrowthCap Advisory.

Read the article and complete list of winners on the GrowthCap website here.

* The award referenced herein is the opinion of the party conferring the award and not of Insight Partners. GrowthCap, LLC (“GrowthCap”), an independent third party that is not affiliated with Insight, issued the award. The time period upon which the award was based was 1/22 – 12/22. The award was given on 1/26/23. After being notified by GrowthCap of Insight’s selection for the award, Insight paid a fee to secure award receipt. In general, the receipt of compensation influences, and is likely to present a potential material conflict of interest, relating to any granted award. GrowthCap’s recognition is not indicative of Insight’s future performance and was not based on evaluations of clients or investors of Insight. There can be no assurance that other providers or surveys would reach the same conclusion as the foregoing.