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For AI Startups, The Best Of Times, The Worst Of Times

It’s a great time to be a startup in artificial intelligence. It’s also a hard time to be a startup in artificial intelligence.

So it goes with startups in hot tech markets all the time, but AI is especially hot these days, thanks to big breakthroughs that have been applied to improve speech and image recognition. That’s making for lots of new opportunities, and lots of competition for those opportunities

Not surprisingly, a panel of AI startups (plus one somewhat older company called IBM IBM +1.35%) at the research institute SRI International in Menlo Park, Calif., focused on the positive, but fortunately, some of us journalists forced them to reveal the downsides too. The panel was presented by the tech forum Churchill Club on Aug. 26.

Besides the ready availability of capital, one upside for AI startups is that they have access to huge pools of computing power (such as Sentient’s network) they never did before. As a result, startups can credibly attack real problems, and not necessarily have to create their own Google-scale networks of computers. “You can solve not just the cartoon version of a problem, but the real version of the problem,” said Nigel Duffy, chief technology officer at Sentient Technologies.

And there are plenty of problems to solve, otherwise known as opportunities to exploit. Many go well beyond well-known areas such as speech and image recognition or even robots and autonomous cars such as Google’s. Lauri Saft, VP of IBM’s Watson Ecosystem & Partner Program, said IBM expected...