Hope or Hype: AI Not Paying Off Outside of Tech

People are always asking me, "Jake, what are the economic implications of AI adoption if you remove the top 7 tech companies from the S&P 500?" Thankfully, Torsten Slok, Partner and Chief Economist for Apollo Global Management has just that answer. In his recent article, Slok indicates that AI isn't paying off for anyone other than the Magnificent 7. Furthermore, the use of AI isn't showing any tangible boost to productivity growth, or companies' bottom lines. This is coming from one of the largest private equity firms in the world.

These insights are interesting to consider in light of Anthropic's announcement that they've officially filed to go public. The Claude maker is poised to make a big impact on the market even amid questionable returns, a fact huge investors like Apollo are starting to recognize publicly. So what does this all mean for AI use in businesses big and small?

1) Consider the actual ROI on your use of AI.

If you can't say that X dollars or X licenses gave you a cost/time savings of Y, then why are you using AI? I know this seems controversial to say as we've already been conditioned to think that if we aren't using it we're somehow behind, but like any other business expense, overhead, or non-working budget, you need to consider what the ultimate return is. If you can't do it in dollars or person hours, then how are you measuring your investment?

2) Do you have internal use cases where AI can actually benefit you?

This is a bigger one for small businesses than larger organizations. A prime example of this is copy and creative testing. If you're a smaller business without the benefit of an in-house creative team or agency relationship, this is a genuine area where AI can help you ideate more quickly and at scale.

For enterprises, I believe those resources are better spent on people who developed a true expertise in a field. True, AI can also help these folx with rote tasks, but their added layer of expertise helps prevent churning out slop and irrelevant creative that could harm their brand.

3) Is AI Core to your company's values?

This, for me, is the biggest question. If you're in a tech or tech-adjacent company I'm not going to convince you not to use AI. For companies that use it regardless, is it to the benefit of your brand and your people? Does your use of AI say "innovation" or "laziness" when it shows up in your advertising, website, CRM, and customer service?

For your employees, is AI used to truly save them time in their role, or is it to add more to their plates because they should be able to do it faster? Is it a way to reduce headcount, or to enhance your workforce? Does it make it easier for employees to access the information they need for their career? I've seen firsthand what happens when the majority of a company's HR department is replaced by AI; let's just say the experience was less than stellar (I had to try to calculate my own severance package). We all know what companies tell us, but what are the real, human-centric answers to these questions? If AI is being used for "me too" vs. "core need" it could be time to reconsider how you're using it.

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But Jake, you're wrong. We're on the edge of a revolution and if you aren't tokenmaxxing you'll be left in the dust.

I'd love to be wrong. I do believe AI has myriad uses for individuals: helping moms manage the physical and emotional labor of the household, helping neurodivergent people remember and communicate more easily, speeding through rote tasks that would normally take hours, just to name a few.

As a consultant, I use AI for both personal and business reasons, but I can also candidly answer all of the questions above when it comes to professional use. I know the time Claude saves me in summarizing notes, creating briefs, and drafting outlines. I also have slower periods were I don't use Claude as much, so I actually pause my subscription as needed. It may only saved me $20 here and there, but that's money towards travel for an upcoming event. As far as values, I try to minimize my use of AI because I'm conscious of the environmental and economic impact it makes. I thoughtfully choose when and where to use AI based on my need and the trade-offs.

As far as enterprises are concerned, I still think organizations are going to be left with a whole storeroom of snake oil until they can better define their use cases and expectations. AI still isn't a replacement for true human connection and ingenuity, especially in the B2C and CPG space. Until then, let's agree on how to apply it responsibly, not randomly.

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Something to chew on: What are some instances where you've seen AI truly help or hurt a company?

-JB