The Rise of Artificial Intelligence Spending in the United States and the Unbundling of LinkedIn

Kazuki

Hatched by Kazuki

Jul 22, 2023

4 min read

0

The Rise of Artificial Intelligence Spending in the United States and the Unbundling of LinkedIn

Artificial intelligence (AI) has become a significant force in shaping the future of various industries. According to a new IDC Spending Guide, spending on AI solutions in the United States is expected to double by 2025. With a compound annual growth rate of 26.0% over the forecast period of 2021-2025, AI spending is projected to reach $120 billion. This growth indicates the increasing recognition and adoption of AI technologies across sectors.

Among the industries in the United States, retail will continue to be the largest spender on AI solutions throughout the forecast period. However, banking is set to become the second largest industry in terms of AI spending. Together, these two industries will account for nearly 28% of all AI spending in the country by 2025, contributing around $20 billion to the overall total. The rapid growth in AI spending in these sectors highlights the potential for transformative applications in areas such as customer experience enhancement, fraud detection, and data analytics.

While retail and banking take the lead, other industries are not far behind. Professional services, media, and securities and investment services are expected to experience the fastest growth in AI spending, with compound annual growth rates exceeding 30%. These industries recognize the value of AI in optimizing operations, improving decision-making processes, and driving innovation.

The growth in AI spending reflects the increasing reliance on advanced technologies to gain a competitive edge in the market. AI offers businesses the ability to leverage vast amounts of data, automate routine tasks, and uncover valuable insights. Companies that embrace AI can enhance their operational efficiency, deliver personalized customer experiences, and drive revenue growth.

In a parallel development, LinkedIn, the professional networking platform, is undergoing significant changes. It is being compared to the unbundling that occurred with Craigslist, as new platforms emerge to address specific job categories that LinkedIn fails to cover sufficiently. One of the limitations of LinkedIn is its inability to cater to blue-collar workers who are unable to showcase their work history and find suitable opportunities. This presents an opportunity for startups to create verticalized labor marketplaces that focus on specific industries or job categories.

The key to success in this space lies in identifying a vertical with frequent repeat usage. By focusing on a specific industry, startups can provide a more tailored and efficient experience for both job seekers and employers. Furthermore, creating value-add tools or services for one or both sides of the marketplace can help build a strong value proposition and drive rapid growth. For example, Uber has successfully disrupted the transportation industry by providing a platform where riders trust the marketplace rather than individual drivers.

Disintermediation, the removal of intermediaries, is a challenge that these vertical labor marketplaces must address. In industries where there is a high degree of trust or loyalty between job seekers and employers, it becomes crucial to establish the marketplace as a trusted intermediary. This can be achieved by implementing measures such as background checks, reviews, and feedback systems to build trust and credibility.

Data moats also play a significant role in creating defensibility for these marketplaces. By collecting and leveraging data on worker performance and feedback, startups can create a competitive advantage that makes it harder for new entrants to replicate their success. The more feedback a worker receives from demand-side participants, the more easily they can secure future jobs, creating stickiness and loyalty to the platform.

In conclusion, the rise of AI spending in the United States reflects the growing recognition of its potential across industries. Retail and banking lead the way, but other sectors are catching up quickly. Simultaneously, LinkedIn is experiencing the unbundling phenomenon, with startups creating vertical labor marketplaces to address specific job categories that LinkedIn fails to cover sufficiently. By focusing on a vertical with frequent repeat usage, providing value-add tools or services, and establishing trust and credibility, these startups can achieve rapid growth. The incorporation of data moats further strengthens their position and makes it harder for competitors to replicate their success.

Actionable Advice:

  • 1. Embrace AI: Businesses should explore the potential of AI technologies to enhance operations, improve decision-making, and deliver personalized experiences. Invest in AI solutions that align with your industry-specific needs.
  • 2. Identify Niche Opportunities: If you are a startup looking to disrupt an industry, focus on verticalized labor marketplaces that address specific job categories. Identify industries with high repeat usage and build tailored solutions for job seekers and employers.
  • 3. Build Trust and Credibility: In industries where trust and loyalty are crucial, establish your platform as a trusted intermediary. Implement measures such as background checks, reviews, and feedback systems to build credibility and differentiate yourself from competitors.

By leveraging AI and addressing the limitations of existing platforms, businesses and startups can unlock new opportunities, drive growth, and shape the future of their industries.

Hatch New Ideas with Glasp AI 🐣

Glasp AI allows you to hatch new ideas based on your curated content. Let's curate and create with Glasp AI :)