Louisiana entrepreneurs are both intrigued and anxious about the power of artificial intelligence.
That’s one key takeaway from the 2024 Greater New Orleans Startup Report, an annual survey conducted by the Albert Lepage Center for Entrepreneurship at Tulane University that's become a temperature check on the state of startups in the region.
Roughly 60% of more than 100 respondents said that AI, machine learning and generative AI represent the biggest threat to their business. But 61% of the respondents, made up of entrepreneurs in 10 southeast Louisiana parishes, said the technologies also represent their biggest opportunity.
Since the release of Chat GPT in November 2022, AI has led to a computing arms race, massive changes to search engines, big leaps in software and fears about how the technology will change computing, jobs and the world at large.
AI-driven innovations have brought market gains for the “Magnificent 7” tech giants: Microsoft, Amazon, Meta, Apple, Alphabet, Nvidia and Tesla. And new companies like OpenAI — creator of ChatGPT — have raised billions at a time when venture capital funding is down overall.
Locally, AI has inspired new companies and new courses at local colleges and universities. Rob Lalka, Tulane professor and executive director of the Lepage Center, said it was important for the annual survey to gauge how entrepreneurs viewed the technology and its practical implications.
“We wanted to know if business owners think of AI as ‘doomsday,’ upending everything and taking jobs even in startup land, or are they moving more quickly and effectively because they have access to these new tools,” he said.
The survey results suggest that many business owners haven't grappled enough with the technology yet to be sure of its implications.
“There’s a lot of work to be done to bridge the knowledge gap,” said Emily Egan, Lepage Center director of strategic initiatives and a contributor to the report. “Most business owners see its potential but may struggle with understanding the benefits and specifically how and when to implement the tools.”
Bigger than 'blockchain'
In recent years, the tech industry has confronted a number of emerging technologies and products, such as the blockchain, which underlies cryptocurrencies and NFTs. The so-called metaverse and virtual reality headsets also generated hype that didn't last.
AI may be different, according to the survey. Thirty-seven percent of the GNO Startup Report respondents said AI will have the “largest long-term impact on their company.” Lalka said respondents did not feel the same way about blockchain technology when asked about it a few years ago.
In his intro to the new report, Lalka name-checks several local startups already using AI to innovate.
These include Ingest, a data management and analytics platform for restaurants; ProdOps, a product management platform; and Informuta, a Tulane University startup that uses AI to fight antibiotic-resistant diseases.
“We’re not building ChatGPT here, but we’re using the tools in really cool ways,” Lalka said.
More takeaways
The Startup Report is based on data from respondents who are running for-profit businesses. Taken together, the 2024 responses reveal area entrepreneurs who are:
- More conservative about hiring this year than last
- More likely to stay in their current workspaces
- More open to working from home
- Less optimistic about revenue growth compared to last year
- And more likely to have raised the majority of their funding from outside of New Orleans.
There are some notable trends within the survey’s sample group.
Business owners in the health care and finance categories expect significant growth in 2024, but the hospitality entrepreneurs who responded are expecting a decrease in growth after several years of post-pandemic recovery.
Transportation companies report the biggest increase in hiring while manufacturing companies experienced the biggest drop.
There’s an increase in women employees at startups and small businesses but a decrease in women leaders at the vice-president level or above.
Bootstrapping is still the most common source of funding, but there’s an increase in the number of companies — 69%, according to the survey — raising more than $1 million. That number is the highest in the history of the survey. Funding gaps persist for companies with minority and women founders.
AI in action
One survey respondent, Daniel Meth, has embraced AI at Ingest, his data management and analytics platform for restaurants and food and beverage retailers.
Daniel Meth
The company, founded in 2018, has raised $4.5 million from a seed round in 2022 and another in 2023.
Ingest uses machine learning in its data models and uses AI to power an "insight engine" that tells operators how they can control labor and inventory costs.
Meth said good data is the key to good results from AI.
“It doesn't matter how good the financial model is if the quality of the input is subpar,” he said. “Then it’s ‘garbage in, garbage out.’ There’s lots of bright, shiny, AI-wrapped snake oil out there that's capitalizing on a groundswell of interest and awareness.”
Meth believes there's a lot of “really exciting, substantive stuff” going on right now but said, "this is the very beginning of the journey.”
He said hospitality businesses have an ever-growing suite of third-party tools and systems that manage the point of sale, labor, inventory, invoicing, reviews and accounting.
“All of these create data entry points, but none speak to each other,” Meth said. “It’s like if you have a village of really smart people with important things to say but no one speaks the same language.”
Longer runway
Lalka is excited to see how AI affects the city’s startups and small businesses. He believes smaller companies will move faster than the big ones, especially if access to AI technology remains affordable.
“It’s 20 bucks a month for ChatGPT or Claude.ai,” he said. “There are opportunities for companies to engage with these tools and they don’t need huge sums to use them.”