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Is your company engaging in AI washing? Rippling founder Parker Conrad thinks it might be.

TechBrunchBy TechBrunchAugust 20, 20243 Mins Read
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Parker Conrad, founder of Rippling, an HR startup valued at $13.5 billion, recently appeared on our Found podcast and shared some interesting thoughts on AI.

“Nobody really wants to chat with HR software outside of the novelty of, 'Oh my gosh, it responds to me,'” he said.

He also believes that too many software companies are adding novelty AI features to their products that don't provide much use.

“There's a lot of stuff in the AI ​​world that's really intangible,” Conrad said. “I'm not saying AI isn't transformative. There are a lot of really important capabilities. I'm just not impressed with a lot of the capabilities that I've seen.”

Still, it's understandable why companies have engaged in AI-washing — claiming their products are AI or using AI effectively when in fact they aren't. Right now, in the desperate scramble to harness AI, the entire tech industry wants to “sprinkle AI magic dust” on all of their products, he said.

“They said, 'If I'm a SAAS company, I'll be a 7x multiple, but if I change my name to what it was before, [with] “My multiple is around 50,” he said, referring to how investors value startups on a multiple of revenue.

His perception is not necessarily wrong. According to Pitchbook, AI companies accounted for 41% of all U.S. deal value in the first half of this year alone. AI and machine learning companies specifically raised $38.6 billion of the $93.4 billion invested in U.S. startups in the first half of this year. Additionally, more than 40% of all new unicorns are AI startups. AI companies raised $27 billion last year, much of which was driven by big tech companies pouring money into AI-generation startups, the Financial Times reported.

“AI is impacting nearly every aspect of our lives,” says Nekeshia Woods, managing partner at Parkway Venture Capital, an AI-focused firm. Her take is one that's common in Silicon Valley right now. She believes AI will quickly take off as a way for companies to automate mundane tasks, followed by AI assistants and, in the not-too-distant future, general-purpose robots. “From a consumer perspective, engagement and demand will be centered around high-quality products and services that can be hyper-personalized to make better use of time, like some sort of self-driving car,” she continued.

All of this shows how unusual it is for Conrad to be so openly skeptical. He has said before that while he's unsure about the value of AI agents, he thinks AI will be powerful not because it can write, but because it can read. That means it can absorb large amounts of unstructured information, helping companies better understand their businesses, he said.

“This solves the problem of these things only being probabilistically true, not deterministically true,” he said of current AI models. “That's fine in a world where the system can flag anomalies to managers and they can decide, 'I don't have time this month to comb through everything in the company, but if I'm only going to look at five things, these are the five I need to look at.'”

There's no doubt that AI-washing (or, for some, apocalypse-thinking) can get tiresome, and the result is known as AI fatigue, though Woods disagrees with the term.

“I think it's less a case of fatigue and more a question that people are starting to ask about AI,” says Woods, who, like Conrad and others, wants to know when big investments in AI will pay off.

“It's kind of hard to see from here,” Conrad said.



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