CVC Unplugged: Best way to do AI is kill bad ideas early – Pioneer Square Labs

The story of the past year or so has been an explosion in demand for all things artificial intelligence. Every company in the world is thinking about how their business, processes or products can be improved with the addition of AI across all levels.

The problem is that large companies don’t always have the resources to develop and test the viability of a range of new AI tools for themselves – the corporate structure can be slow and not agile enough for trial and error at scale. Even if they do have the money and manpower to try things out internally, once it makes an allocation of resources to a particular project, it can try to turn it into a winner even when the prospects of success would otherwise be dim. Sunk costs are difficult to ignore, and when you mix in the range of competing incentives you tend to find in a corporate environment, you can end up throwing a lot of money at initiatives that will ultimately not work out.

In their search for new technologies, corporates are increasingly turning to third parties for help. Enter a company like Pioneer Square Labs, a venture builder based in Seattle focusing primarily on launching software businesses. It has bolstered its ranks to expand its work with corporates. Pioneer Square Labs recently brought on Jung Lee, who has experience with innovative initiatives at companies like Alphabet, Amazon and Visa, to head up its expanding corporate studio.

In this first episode of 2024, I spoke to Lee, and Pioneer Square Labs managing director T.A. McCann, a founder and investor, to talk about the process of venture building, the rising tide of corporate innovation around AI, and the dangers of not killing suboptimal ideas early enough.

We talk about how resource allocation can be optimised across a number of ventures, how important it is to have the right talent onboard, and McMann – a former sailing champion – describes how launching a company is much like racing in the America’s cup.