Unlike traditional SaaS, achieving product-market fit in AI is not enough for survival. The high and variable costs of model inference mean that as usage grows, companies can scale directly into unprofitability. This makes developing cost-efficient infrastructure a critical moat and survival strategy, not just an optimization.

A key trend TinySeed observes among AI-focused applicants is extremely high churn, often 10-20% per month. Even with rapid top-line growth, this level is deemed "catastrophic," indicating many new AI products struggle with defensibility and long-term customer value, making them risky investments despite the hype.

Building a functional AI agent demo is now straightforward. However, the true challenge lies in the final stage: making it secure, reliable, and scalable for enterprise use. This is the 'last mile' where the majority of projects falter due to unforeseen complexity in security, observability, and reliability.

Enterprises struggle to get value from AI due to a lack of iterative, data-science expertise. The winning model for AI companies isn't just selling APIs, but embedding "forward deployment" teams of engineers and scientists to co-create solutions, closing the gap between prototype and production value.

The traditional SaaS method of asking customers what they want doesn't work for AI because customers can't imagine what's possible with the technology's "jagged" capabilities. Instead, teams must start with a deep, technology-first understanding of the models and then map that back to customer problems.

During a 5x growth period, Fixer's support response times went from 5 minutes to 5 hours, jeopardizing customer trust. The team had only planned for their growth strategies failing, not succeeding. This highlights the critical need to build infrastructure for best-case scenarios, not just worst-case ones.

The primary reason multi-million dollar AI initiatives stall or fail is not the sophistication of the models, but the underlying data layer. Traditional data infrastructure creates delays in moving and duplicating information, preventing the real-time, comprehensive data access required for AI to deliver business value. The focus on algorithms misses this foundational roadblock.

Many AI projects become expensive experiments because companies treat AI as a trendy add-on to existing systems rather than fundamentally re-evaluating the underlying business processes and organizational readiness. This leads to issues like hallucinations and incomplete tasks, turning potential assets into costly failures.

The excitement around AI capabilities often masks the real hurdle to enterprise adoption: infrastructure. Success is not determined by the model's sophistication, but by first solving foundational problems of security, cost control, and data integration. This requires a shift from an application-centric to an infrastructure-first mindset.