Time in the Age of AI
One of New Zealand’s leading AI companies, Arcanum has been leading the adoption of AI in New Zealand since 2016, but they have now propelled onto the global stage with their partnership with AWS as the only AI provider from the APJ region alongside IBM and McKinsey and PwC. And while Arcanum might be up against the world’s biggest players, they have built a foundation on their partnership with New Zealand small businesses. Arcanum founder and regular M2 AI Summit speaker, Asa Cox talks about the last year in AI, how companies are leveraging AI to save time, and what is important to him about his own time.
Not only have a few things been happening in the world of AI but also in the world of Arcanum as well.
It’s been an incredibly exciting year, both in terms of AI and Arcanum. It’s been the year of AI awakening for the masses. We’ve been to events like the M2 AI Summit, which is fantastic. And the number of people interested in figuring out how to apply the AI that they’re now seeing all around them wasn’t happening 12 months ago. So people are now awake and understanding how AI can impact their businesses, how it can improve productivity and how it can change their competitive advantage. All those meaningful strategic things are now no longer pie-in-the-sky. They are now achievable and accessible. So for us, aligning with that has been what this year has been all about. For the second quarter of 2023, we packaged up our technology into AI assistants, really focused on the business value that could be unlocked with AI in finance and customer support and started taking that to market.
Leaning into the wave of interest has been fantastic for us. And we’re super-excited about 2024, which we’re hoping will be the year of AI, as people move beyond: “This could be interesting, we believe in it,” into “Let’s start doing something about it.”
I’m interested in this parallel relationship: this macro-awakening of people’s awareness of AI and your business trajectory. Did you have to pivot?
Prior to ChatGPT exploding into our consciousness in November of 2022, part of our ongoing battle was to educate the market as to the value of AI and why people should consider it a transformational technology. That, for us, was a massive expense as part of our sales process. It meant sales cycles were a lot longer. We had to spend a huge amount of time educating executives and doing proof of concepts. It was just a lot more complicated to get people on board. Then ChatGPT allowed anybody to play with AI in a way that had never been possible before, to get interested in it, to interact with it, to educate themselves on the art of the possible. That just meant there was no longer this need for us to educate people on AI.
It is now all about application, integration, and business value. Our packaging up AI assistants made it accessible to the business market that we were moving towards. So from a market perspective, there was a pivot from technical software companies to mid-market enterprise and SMB, because that’s where we saw the chasm had been crossed. It was no longer just the tech-literate businesses that wanted AI. It was the mass market. So we positioned ourselves ready for that demand.
Did that change the culture of your business when the customer changed?
Yes, and it’s still something that we’re working through now because we have became less about being a technical AI company, we have become a lot more of a software company that is using AI and integrating AI.
It has been a little bit of a challenge because we have also moved from larger, very data-centric enterprise projects to highly scalable, repeatable processes. It did change the way that we viewed the business opportunity and for the positive, but it certainly has meant that we’ve had to think about how we build things, how we communicate things and how we market things. But it has made it more exciting because now we get a feed of all the different things our AI assistants are doing for our customers.
What is the average customer and what some of those assistants might be looking after?
We are intentionally going after the less technical organisation. Those who typically don’t view themselves as needing to have their own developer team; they’re buyers and users of technology. An example is a single restaurant in Wellington, the Wellington Boot Company – WBC, where an owner-operator wanted as much time as possible to work on the business and to also balance family time. We were able to give the AI assistant to him and now he gets hours back in his week, which he would have had to sacrifice before. And then we’ve got companies like Momentum Consulting, a recruitment company with very busy teams and lots of support requests. We are able to relieve their management teams from having to answer questions about company policies, holiday reviews, and so on. AI can now answer those questions and keep the management focused on helping to grow the business.
You’ve also had a kick-ass year in terms of partnerships and business success. Can you talk a little bit about that?
Yes, absolutely. The majority of our technical relationship has been with AWS. They’ve been supporting us from the beginning. We started off as the first AI consulting partner for them back in 2017, and now we’ve progressed to a software vendor relationship. We’ve now got global co-sell status, which means AWS is committed to selling our technology to their customers, which is an incredibly powerful situation to be in. Just this month, we got a strategic collaboration agreement signed with AWS. As one of 30 global generative AI companies and the only one in the APJ region. Alongside IBM, McKinsey and PwC, and big companies like that. There’s Arcanum out of Wellington, New Zealand, playing with the big boys. That is unlocking a lot of opportunity for us going into 2024. We’ve got a business plan to work together to grow our revenue by at least 2x, to be able to enter new markets together. Australia will be the first international market that we double down on next year. Then we may go to the United States and Europe depending on where the market goes.
AWS has given us a huge amount of support in terms of marketing budget and generating demand for generative AI in the SMB sector. One of the reasons why we’re collaborating so closely is that AWS is doubling down on using partners to grow the SMB sector globally. We are privileged to be in a position where we’ll be one of the leading partners that they’re going to use to help grow into the SMB sector worldwide.
What do you think that has enabled you to achieve that from this part of the world?
I think it is our focus away from big enterprise and the glitz and glamour of global logos, which is typically where you might focus if you’re a VC-backed company. It’s hard in New Zealand. There aren’t really large global companies apart from Xero, and maybe one would argue Fonterra to some degree. So we have to find a space that’s relevant to the New Zealand sector to start here. And whilst we’ve got global ambitions, we want to be building a product, which can be used in New Zealand. So by default, we’ve aligned with this mid-size enterprise and SMB market, which is 90 percent of the New Zealand market. Which is now, thanks to the generative AI awakening, relevant to businesses globally.
Do you think that gives you a unique advantage as well – the fact that you’ve been forged in the fires of those smaller logos?
I think you’re right because the companies we’re dealing with are not early adopters of technology. They don’t have the patience. If you’re a small business owner, you’re like, “I want this to work. I want this to add value. I don’t want to get frustrated that it doesn’t work because it’s kind of a new technology.” So I think the barrier is higher in terms of expectations with SMB owners and decision-makers. Whereas if you’re working in the world of fast-moving, emerging technology, selling a SaaS product to other fast technology companies, it’s a very different set of expectations, a very different set of criteria.
Working with smaller businesses, you learn how important what you’re bringing them is to their business. It’s a significant time saving, it’s a significant outcome in terms of productivity. So that has helped us focus in that way. I think also that we are focused on people who need to buy software because they don’t have developers. Whereas the vast majority of partners with people like AWS are focused on targeting developers because they’re technology consumers and technology integrators. We have always maintained a more business-centric approach. Now, thankfully, the business market now understands AI and wants to start using it. So we’re in a really good position.
You see so many startups coming through that are based around an AI function, and they just get completely wiped out when ChatGPT does some sort of update. But what you’re talking about seems to be more of a partnership with the businesses that you’re working with. Is that a fair assumption?
It is. And it was being shaped pretty early on when we were talking to investors at the beginning of last year, when everyone was getting interested in generative AI, but nobody knew how it was going to work out for the rest of the year. One piece of advice we were given was: “Make sure you’re building something, which an expert in ChatGPT couldn’t build themselves in a day.” If it’s a thinly veiled over OpenAI API, then you haven’t got a sustainable business. And that’s been proven. As OpenAI released the custom GPT marketplace; there are probably a thousand startups that suddenly went out of business.
The one thing that we’ve been focused on is finding the enduring value that we can bring to the market that’s defensible – that’s going to accrue value over time. The other thing is our vision to give SMBs autonomous back office operations. All of the administration, all of the repetitive tasks, all of those things that you do, not just in finance and support, but broader in operations, supply chain, sales, human resources – all of these things which we believe can and should be automated, so the humans can do much more meaningful work. That means we are going on a journey with our customers, and finance and customer support are just the two functions that we’re starting with.
As you’ve gone further into this relationship with SMBs, have you been surprised at some of the things that are bottlenecking productivity?
It’s not surprising but it’s still a little bit overwhelming how much is still manual in so many companies. How many reports are still being written from scratch every time. How many people are still running off manual data entry. How many people are still writing meeting notes instead of using transcription technologies. There’s so much wasted time. And so that is the market opportunity we’re going after. But it’s like, “Wow, if only you lent earlier into technology, how much further forward could your business be?” I think what people have been woken up to, is the fact that technology is so capable now. These SMBs realise that they haven’t been investing appropriately, but now they want to go from zero to 100 miles an hour as quickly as possible.
One surprise is how many humans actually want to do some of that repetitive work. You may get the business owners going, “Right, I want to reallocate this person’s time to do this other stuff” but the staff member might enjoy doing that brain-dead data entry task on a Monday morning. There is sometimes a little bit of comfort in some of that repetitive work. I think that is a change that’s going to happen in the workplace in terms of going from repetitive work to more meaningful work.
Is there an element of fear within that inertia as well?
There is still some allergic reaction to it in terms of the technology taking jobs. I think there’s also a little bit of, “Oh, wow, if I don’t have that part of my job, am I as valuable an employee anymore? I’ve wrapped up my economic value with doing these different things and now part of it has been taken away.” I think a little bit of it is fear or lack of confidence potentially. Again, I think it’s going to be a constructive and positive journey for people to go through. As we move out of the industrial revolution where every task is a process, and we just repeat and punch out work into something more valuable, I think that’s going to be a transition that is ultimately very positive. But we’ve just got to go through the forming phase of the next few years.
Has all of this insight and perspective on other businesses made you reflect on your own?
Yes, we have to be drinking our own Kool-Aid first. We’ve got to automate ourselves, and we’ve got to try and use our own technology and other technology as much as possible to be our own best-use case. So that has shined the spotlight internally, which has been good. It has also changed the currency that we’re dealing with. We used to talk about the technology all the time. We wanted to be a leader in technology, and we wanted to engage with other leaders in terms of technology adoption. Whereas now, we’re just focused on time. How do we give humans time back to be better humans? And so that is a much nicer environment to be focused on, rather than selling technology. We’re selling time, which all of us appreciate getting back more of.
If one of your children came to you and said, “Dad, I want to be a founder”, what would your advice be?
IT would be to start with prioritisation ability. As we are focused now on time, I think I could have spent my time better when I first started out on my entrepreneurial journey. Being able to get that right at the very beginning is important. I’ve spoken to founders, even very recently, who burnt out after the first 18 months because they couldn’t regulate and modulate their time. And I’ve seen others who are 20 years into their journey and don’t feel like they’ve got any further forward in terms of their work-life balance. So having that upfront understanding that it’s going to be a grind, it’s going to be hard, but you’re going to need health, friends, and family along the way is important. So, it’s moving beyond the stereotypical entrepreneurial mindset, or at least the perception that the public might have, or the perception we’ve generated ourselves as entrepreneurs, and understanding that it’s okay to have a good balance. That doesn’t mean you’re less productive. It should mean the opposite. You just have to focus on impact. It’s not about how many hours in the day, it’s what you do with the hours.
At the recent M2 AI Summit, Asa unveiled his AI adoption framework called PIMP IT. People, Ideas, Money, Prize, Impact and Time. Check it out here:
arcanum.ai/support-documentss/pimp-it
