Is Your Company Engaging in AI Washing? Insights from Rippling Founder Parker Conrad Suggest It's Possible.

Parker Conrad, the founder of Rippling, an HR startup valued at an impressive $13.5 billion, shared his insights on AI during a recent episode of our Found podcast.

“No one truly desires to interact with their HR software beyond the initial novelty of it responding,” he stated.

He also expressed concern that numerous software companies are inundating their platforms with AI features that lack real utility. “The AI landscape is filled with a lot of superficial offerings,” Conrad remarked, clarifying that while he believes AI holds transformative potential, he remains unimpressed by many current implementations.

Conrad understands why businesses are resorting to AI washing—misleadingly portraying their products as AI-driven when they aren’t. He highlighted the frantic race among tech firms to add “AI pixie dust” to their offerings. “Companies think, 'If I’m a SaaS provider, my valuation is 7x, but if I rebrand with .ai, it sky-rockets to 50x,’” he explained, referring to how investors assess startups based on revenue multiples.

His viewpoint is not unfounded. In the first half of this year, AI companies accounted for 41% of all U.S. deal value, according to PitchBook. Specifically, AI and machine learning startups raised $38.6 billion out of a total of $93.4 billion invested in U.S. startups during H1. Furthermore, more than 40% of new unicorns are AI-focused. Last year, AI companies raised $27 billion, much of which came from major tech firms investing heavily in generative AI startups, according to the Financial Times.

“AI influences nearly every facet of our existence,” stated Nekeshia Woods, a managing partner at Parkway Venture Capital, a venture firm dedicated to AI. Her perspective aligns with the prevailing sentiment in Silicon Valley: AI is rapidly becoming essential for automating everyday tasks, with AI assistants and general-purpose robots on the horizon. “From a consumer standpoint, demand will gravitate towards higher-quality, hyper-personalized products and services that enhance efficiency, such as self-driving cars,” she added.

Conrad’s skepticism stands out amid this enthusiasm. He emphasizes that while he questions the effectiveness of AI agents, he recognizes that AI's true power lies not in its ability to generate content but in its capacity to analyze vast amounts of unstructured data. This capability could significantly enhance a company’s operational insights.

“That addresses the limitation of current AI models being probabilistically accurate rather than definitively so,” he pointed out. “This is acceptable if these systems merely flag anomalies for management to prioritize, allowing them to focus on what truly matters.”

The ongoing trend of AI washing—along with the doomsday predictions surrounding it—can be overwhelming, leading to a phenomenon dubbed AI fatigue. However, Woods challenges this notion.

“I perceive it more as a shift in questioning about AI,” she noted. Like Conrad and others in the field, she is eager to learn: When will the significant investments in AI yield tangible results?

“It’s hard to foresee that from our current perspective,” Conrad concluded.

AI, Found Podcast, Parker Conrad, Rippling, Startups