Lemon Markets & AI
Is the current breed of AI products headed for what economists have termed “LEMON MARKETS”?
The number of people talking about AI in general & “FREE AI TOOLS” in particular today is just mind boggling. I can speak for myself & the AI that we worked on about a decade & a half back is transformed into something much larger & totally sophisticated as of today. Yes, there was ML, DL, NLP back in the day just as much as there is today when one refers to the topic of AI. But, the TECH itself has seen & weathered many a wave of transformation so as to iteratively adapt, mold, transform into a better version of its previous self. It’s more like REINFORCEMENT LEARNING only that the element in question is the whole TECH itself.
We see how every second person on the street talks about AI whether they come from a TECH background or not, which is the level of popularity it has reached right now. When one could easily hop on that bandwagon of the user community, realize the value it has to offer & get totally sucked up into the euphoria, on the flip side somewhere one is also (well almost) turning a blind eye to the problems that it brings with it.
When the number of players over a given market segment increase to insurmountable levels everyone just hops on & is eyeing that one slice of the pie without paying too much of a heed to the nitty-gritty of the product / service offering. Earlier it used to be the Boilerplates, the APIs, the seamless integrations that made it easier for the DEVs to build, debug & maintain software. But today Gen-AI makes it all possible to put up an App within a matter of minutes by way of prompts & there are tons of NoCode / LowCode tools like say LOVABLE in the market today that can build the whole WebApp in a few clicks.
👉 FACT: According to the graphic, ~ 12% of the workforce are using AI extensively at work‼️
And nobody wants to be left behind in the race. The FOMO kicks in somewhere & tends to rule, which explains why they queue up to check out newer trending Tech & try their hand at it, find a suitable use case fitting their workflow & stick to that for what could be a whole lifetime or until such time that the hype around it fades away or something else replaces it. And as confirmed by the PIE Chart above, there’s no doubt about the role HYPE plays & rather peddles its way into the market space & capturing a significantly large portion of it as well.
With an exodus of options in the AI market space, is it possible that we are heading towards what economists have termed “LEMON MARKETS”?
What are LEMON MARKETS?
DEFINITION:
“Simply put, it is the asymmetry created due to buyers not having the complete information about a product giving the opportunity for sellers to pass off sub-standard products at premium prices”.
So, such a market could often be characterized by total dissatisfaction at the consumer’s end given how they may feel duped about the product itself & the capabilities they were promised when the reality which they now have come to terms with seems the staunch opposite. Also, given how the market has an exodus of sellers selling similar kind of products, the genuine ones whose names are synonymous to impeccable quality get overshadowed.
Think about this. You are browsing for the best AI vibe coding tool (which seems to be the latest trend) & running a Google search brings up a few results on the top with of course a minute “SPONSORED” tag at the bottom. Clicking on it lands you on to something of a tool which doesn’t necessarily have to be the best vibe coding tool out there.
What’s next? With the search algorithms fronting it as a prime choice to more & more people given how the CTRs are accounted for across sessions could bump up the page ranks to dizzy percentages week-on-week, all of it still looking absolutely genuine. Not to mention, the retention strategies & pricing algorithms at the tool’s end kicking in & looking towards further conversions thereof, showing a healthy acquisition rate & of course revenues bumped up significantly over a short period of time. STATS suggest that users landing on the tool would hit a comfort zone if they were to find even a single use case going for them leading to their first A-ha moment.
⚠️FAIR WARNING: Nobody can blame any org. who finds themselves at a Lemon Markets situation for that never is deliberate. Also, retention is a factor of the feature / the product resonating with the users, otherwise they wouldn’t stick on.
How does one steer clear & avoid falling prey to a Lemon Market?
As an org. it could take a lot to steer clear of the common things most of the competition is getting their heads into & think different, think bigger, think better so as to avoid the rate race. But that could be easier said than done for most. If you find yourselves in such a situation as an org. here are some things that you ought to shift focus to & begin the first-principle-thinking.
1) Periodic Research at Short Cadences
if an org. got into research activities at a monthly cadence then it could be a pretty good idea to reduce that window to a week today given the rapid changes in the Tech marketspace & also keeping pace with the world, maintaining relevance to the user groups & markets. It’s all moving so fast & has become very dynamic. What’s relevant today in terms of both the technology & the problem could lose it all within a span of a week given how leading orgs. in the market have rooted innovation as one of their essential pillars.
2) Leveraging Tech to solve Problems
There are tons of problems out there & things aren’t any different given the current AI & Tech marketspace. When one could come across a multiverse of problems when they undertake research, it is imperative to understand how trending Tech could be leveraged to solve for major problems so as to build relevance whilst not completely ignoring the minor ones entirely. This isn’t about leading the thinking from the Technology standpoint & then matching it to use cases across the board. It is rather about empathetically looking at problems, envisioning how Tech could help carve a unique solution & then ideating towards how the best of experiences can be offered.