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Advantages of AI / By: Arushi Chauhan


Technological changes like AI and big data are greatly impacting how startups are developed and run in the U.S. and will continue to do so in the future. A 2020 study by Mckinsey found that 50% of working adults in the US randomly surveyed reported that their companies had adopted AI in at least one area of their business (Mckinsey 2020). Entrepreneurs need to learn about the impact of this technology on the business world.

According to marketing expert Diego Pienda, AI will make hiring and recruitment more effective by using large amounts of data to match an applicant’s experience, knowledge, and skills to the job’s requirements automatically thus saving time and money. Because of this, many startups began using automated HR right away, but there are drawbacks. According to Yan Huang, an assistant business technology professor at Carnegie Mellon University, algorithmic bias is a major risk with automated HR: “[A] hiring algorithm Amazon used in the past was found to favor applicants whose résumés contained words that were more commonly found on men’s resume and therefore was systematically biased against female applicants.” This would be detrimental to the company's reputation and cause them to miss out on hiring valuable employees.

Operating costs of startups may be significantly reduced because of AI as well. As of 2018, 97% of startups in the U.S. have cloud-based products (CORE 2018). This can reduce costs for non-labor intensive businesses. Companies that do create physical products could still reduce operating costs because manufacturing will be more efficient with machines. Economic technology professor Dr. Christine Ries from Georgia Tech explained that “An example would be cutting wood from a tree to make many pieces of the wanted size in a way so wood is not wasted. This will help companies save time and resources.” With this advantage, startups can become more successful at a faster rate than large companies.

Entrepreneurs must consider the impact of AI and technological advancements on the business world so they can take advantage of the resources available to them. As technology changes, the way businesses are developed and run needs to change as well.


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