Member Exclusive   //   June 20, 2023

DTC Briefing: How startup executives are experimenting with generative AI, ‘the topic of the moment’

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

Whether it’s writing product descriptions or generating new wholesale contracts, the question that’s top of mind for many startup executives as they grapple with the daunting amount of tasks their teams have to get through each day is: “Can I use ChatGPT for this?” 

Artificial intelligence is “definitely the topic of the moment across teams,” as Ranjan Roy, vice president of strategy at Adore Me put it. Generative AI tools in particular — which is a subset of artificial intelligence that can create text, images or other content based on prompts — have exploded in popularity since the introduction of ChatGPT in November. 

Now, startup dinners and happy hours are dominated by executives chatting about which new AI app they tested out today. And multiple executives I spoke with said that they have created task forces to figure out how they can best use AI within their organization. 

Still, among the half dozen executives I surveyed, many of them said their usage of AI was still in experimentation mode. While they might be able to point to a few different tasks where using ChatGPT or Midjourney has helped them save multiple hours a month, it’s still not something that’s core to their everyday routine. They are still figuring out what types of tasks generative AI tools are good for — mostly repetitive work — and identifying what parameters they need to set in order to get AI tools to generate something actually useful. But, nearly all agreed that as AI gets better, it will become a more critical part of their business. 

“For us, this is a daily conversation,” Judah Abraham, founder and CEO of beauty and fragrance incubator Slate Brands said. “It’s constantly [discussed] on our Slack threads and other areas getting shared within the company being like, hey, we could use [this new tool].”

Our expectation is that AI will touch every aspect of our business within the next twelve months, if not sooner,” Kyle Widrick, founder and CEO of Win Brands Group, said in an email.

Alexandra Zatarian, co-founder and vice president of brand and marketing Eight Sleep, said that her teams have tested ChatGPT and other AI tools for design and copywriting and right now are using it to complement, not replace, the work of internal teams. “They are a way to do some types of work faster, but don’t necessarily do it better,” she wrote in an email. 

Still, she echoed a similar sentiment to Widrick. “We are confident that the tools will improve and that every professional will need to learn how to use them to be more effective in their fields of work,” she wrote. 

How executives are actually using AI in their day-to-day
Incorporating AI tools into day-to-day work has required a mindset shift, first and foremost. As Aman Advani, co-founder and CEO of Ministry of Supply put it, his team’s first instinct, when approaching a task like generating wholesale contracts or putting together the company’s holiday catalog, is “to do it the old way.” And then the second instinct is, “oh, maybe we could have some fun with that [by using AI].”

There are a few different ways Ministry of Supply, a Boston-based apparel company is using AI today. The first is to speed up the generation of wholesale policies.

When Ministry of Supply gets a new inbound inquiry from a potential wholesale partner — say, a boutique — previously, someone on the team would evaluate whether or not that partner was a fit for Ministry of Supply. 

Then, that person would go back and forth with the wholesale partner to generate a contract. 

Now, Ministry of Supply has used ChatGPT to develop a guide for members of its team to more quickly evaluate whether or not an inbound lead is a fit. And, to then generate a wholesale guide based on parameters like, “make sure it is a one pager.” 

“It took me probably 15 minutes to edit the output,” Advani said. “In the old world, that might have been a three hour task.” 

Advani is cautious to note that what ChatGPT spits out isn’t perfectly usable from the get go — and indeed, what parameters to set have been a hot topic of discussion among executives. Abraham of Slate Brands said, for example, that his company recently came up with a company policy that no sensitive or confidential information can be fed into AI tools.

Another way that Advani has experimented with AI is in using ChatGPT to generate potential interview questions for job candidates. For example, one of Ministry of Supply’s core company values is empathy, so Advani asked ChatGPT to essentially, generate three interview questions that would help him evaluate a person’s ability to be empathetic on the job.

The first questions that ChatGPT generated, “were pretty generic,” he said. So he asked ChatGPT to generate something that was a little more “lighthearted, offbeat humorous… and it came up with three wonderful additional questions.”

Most recently, Advani’s co-founder, who is also Ministry of Supply’s creative director, gave a presentation on how the company could potentially use Adobe’s new AI generative fill tool, which allows designers to fill in part of an image based on text prompts. 

Advani describes these uses of AI as “nonthreatening,” and “amplifying” his team’s existing work. But the big question he’s still grappling with right now is, “how does this become a part of my daily and weekly routine?”

One of the most common ways that DTC startups are using AI today is by using ChatGPT to generate and iterate upon copy, with Ministry of Supply, Eight Sleep, Win Brands Group, Adore Me and Slate Brands all reporting that that’s how they’ve been testing it out. This can include everything from social media posts to copy for holiday catalogs. Win Brands Group, for example has been testing AI to develop custom messaging for affiliate outreach. 

Adore Me has been using an AI tool called Writer since last year to help its copywriters generate product descriptions, among other tasks. “It saves a copywriter almost 30 hours a month,” AdoreMe’s Roy said.

Other executives have been digging more into AI tools in their personal time for inspiration. Widrick said that he’s used ChatGPT to come up with bedtime stories for his four-year-old. 

Alex Song — the CEO of brand holding group Innovation Dept, who has now pivoted to AI himself and is working on AI-powered customer acquisition startup called Proxima — said that in the group messages he is in with other founders, they’ll often drop new AI tools they are experimenting with. 

For example, he uses one called Tugan that helps write up newsletters, tweets or other social copy based on, say, an article or YouTube URL. 

What gets most startup founders excited about AI is the potential to use it to speed up tasks, to iterate upon creative more quickly and, in theory, help them more easily compete with larger companies. 

Abraham of Slate Brands said he has a of 10 full-time employees, along with multiple part-time consultants and freelancers. He says that he’s more bullish on AI than any other technology “because we use it currently.” In contrast to, say, the buzz around Web3, where Abraham felt like there weren’t a ton of use cases that were currently applicable to his business. 

“A larger company, they might have four or five copywriters,” Abraham said. “For us, where we don’t necessarily have a full time copywriter on staff, we outsource some of it. This just helps us improve efficiencies.” At the same time, he still sees it being very early days for AI.

“It’s the tip of the iceberg for [how we use it] as a brand,” he said.

What I’m reading

  • Stitch Fix has a new CEO; Matt Baer, formerly Macy’s chief customer and digital officer. Baer will join Stitch Fix effective June 26, while the company’s founder, Katrina Lake, will remain on the board as executive chair. 
  • Andy Dunn is rejoining Bonobos as a brand advisor after the menswear brand was sold off by Walmart earlier this year to WHP Global and Express. 
  • Gorgie, the new energy drink brand from Michelle Cordeiro Grant, has closed a $6.5 million “pre-seed” round of funding. It’s indicative of the types of founders getting funding right now – that is seasoned, repeat founders. The entire board of Lively backed Gorgie. 

What we’ve covered

  • How Goodles, Sea Monsters, and Ffups designed their packaging to help them stand out on retail shelves
  • Amazon will once again start accepting applications for Seller Fulfilled Prime later this year, which could pave the way to making Amazon more amenable for direct-to-consumer brands. 
  • As it nears $250 million in sales, Kizik is prioritizing retail expansion; the slip-on shoe brand opened its first store in Salt Lake City this spring and hopes to open four to five more stores by the end of 2023. 

    Correction: The “What I’m reading” section of this story has been updated to note that Gorgie raised a $6.5 million pre-seed round; a previous version of this story incorrectly stated that Gorgie raised $5.6 million.