Why 95 of AI Startups Fail at Positioning (And How to Fix It)

In this presentation, Jordan Elkind explains why 95% of B2B AI startups fail at positioning, identifying three key failure modes: targeting the wrong audience, making AI the focus rather than the benefit, and forcing the buyer to do the work.

He shares his practical “pain chain” framework and real-world examples to illustrate how startups can simplify their messaging and better connect with actual buyers.

0:05 – Host:
“We're fortunate to have Jordan Elkind here. Today, he’ll discuss why most B2B AI startups’ positioning fails and what you can do to fix it. Although there’s a broader conversation about AI-focused startups, Jordan’s focus today is on positioning.”

1:09 – Jordan:
“This is my first time with this group. I want to express my enthusiasm and introduce myself. I spared you the embarrassment of noticing my current look—I have two three-and-a-half-year-olds now, and the aging process has hit me hard. I started in fundraising for a modern dance company and eventually transitioned to analytics. I was one of a team of predictive modelers at Cityroup—apologies if you received any credit card applications in the mail. I later led product development for an enterprise customer analytics platform called Castor and eventually joined Blue Seedling to head our positioning and messaging practice.”

2:09 – Jordan:
“Over the years, I’ve worked with data science and engineering teams and faced the concern that we were building things that weren’t driving impact in the market. I became marketing curious and shifted to product marketing, which sits at the intersection of marketing and product. At Blue Seedling, we help early-stage enterprise B2B companies nail their story so it immediately makes sense to their buyers and market.”

3:12 – Jordan:
“Having seen success stories and failure modes among early-stage companies, including numerous AI startups, I want to start with a quick poll discussion: I’m tired of LinkedIn posts praising AI as the best time to be a marketer. I’d argue it’s one of the hardest times. What headaches has AI created for you? Too many poor AI lead generation tools and a lack of understanding of customer needs are common complaints, among others.”

4:16 – Jordan:
“Technology has made it incredibly easy and inexpensive to build products. As a result, every category is a battleground with low barriers to entry. The old idea of a technical moat has lost meaning. Marketers today face outrageous expectations from their leadership because they expect AI to solve all funnel, demand generation, and staffing challenges. Yet, the tide of similar messages is creating content saturation, inbox fatigue, and diminishing returns.”

5:23 – Jordan:
“Now, what can we do about it? Today, I’ll share three common reasons B2B AI startups fail: first, positioning for the wrong audience; second, making AI the what, not the how; and third, introducing stumbling blocks that force buyers to do all the work. I focus on B2B companies in the enterprise space, but I believe these lessons apply more broadly.”

6:23 – Jordan:
“Let’s start with targeting the wrong audience. Tom Tunguz once wrote about introducing tension into your startup’s message. He noted that Box, for example, used visionary language in keynote addresses but on their website pitched a simple, reliable alternative to FTP for file transfer. Effective B2B marketing means addressing multiple audiences with the appropriate level of abstraction.”

7:27 – Jordan:
“When we mess up, we often confuse which audience we’re marketing to, resulting in a mismatched pitch. I hope nobody on this call represents companies like Jedify or War Cramp—I have plenty of examples that show opaque messaging aimed at the wrong audience. Often, they use jargon and minimalist layouts that don’t clearly define the target buyer or the actual pain point being solved.”

8:26 – Jordan:
“This scenario is common across the ad tech industry, where companies are not clear about who is buying their product. For example, a learning management system pitched with futuristic terminology might confuse HR professionals who simply need a solution for training compliance. The takeaway is to clearly define your audience and the specific problem you’re addressing.”

9:30 – Jordan:
“I was enlightened by Tom Tunguz’s post, which made me realize that at different stages the same product may have radically different messaging: one for investors focused on scale and transformation, and another for day-to-day users who appreciate simplicity. At Casor, our story varied depending on whom we asked—from investors who needed to hear about harnessing data and AI to users who compared us to an enhanced version of Excel.”

10:32 – Jordan:
“Identifying who your true champions are is essential. For instance, many companies mistakenly craft their message for VCs or technical evaluators rather than the actual buyers. Real customers will tell you that they want something that integrates into their existing workflow and improves key performance indicators day-to-day.”

11:40 – Jordan:
“Take, for example, products for HR tech or conversational analytics. If you pitch using overly technical language or boardroom jargon, you miss connecting with the buyer. Your actual competition is not a flashy AI startup—it’s the status quo, or established tech platforms like Microsoft or Salesforce that your buyers already trust.”

12:44 – Jordan:
“To address this, I recommend using a 'pain chain' framework. Imagine you’re working with a company like 'Vioideuct,' which provides AI analytics for automotive data. Start at the bottom with the technical pain: automotive manufacturers wrestle with complex, high-volume, time-series data. Ask, ‘So what?’ to reveal the deeper business impact. In this case, if data isn’t analyzed correctly, manufacturers can’t predict vehicle failures, leading to reputational risk and increased warranty costs.”

13:49 – Jordan:
“As you move up the pain chain, the messaging should evolve—from technical challenges to business outcomes, up to transformational visions. Typically, when selling to a business owner or a decision maker, the ideal message lies in the middle—focused on specific KPIs and everyday challenges rather than abstract transformation promises.”

16:50 – Jordan:
“Here’s a cheat sheet for positioning by audience. For investors or VCs, your message should secure funding by outlining transformative market shifts—even if it ignores use cases. For technical teams, the focus should be on technical approval and practicality, not necessarily on everyday benefits. But your primary focus must be on the actual buyer—the person driving the purchase decision. They are the ones who compare you against doing nothing or sticking with familiar technologies.”

18:53 – Jordan:
“Failure mode number two is making AI the focus instead of a tool. Rather than leading with ‘Everything powered by AI,’ you should let your core value proposition shine and only then reintegrate AI where it supports your key benefits. Buyers do not buy AI; they buy better outcomes enabled by AI, which means your message must articulate that clearly. Studies, like one from Irational Labs surveying 800 enterprise buyers, show that overemphasizing AI decreases trust and does not increase willingness to pay.”

20:01 – Jordan:
“The message should be specific. Instead of saying ‘Everything talent powered by AI,’ which sounds vague and may even imply that you’re replacing jobs, articulate the precise benefits and the familiar challenges your audience faces. In practice, good messaging reintroduces AI to enhance a clearly defined, relatable story—one that answers problems that buyers already experience daily.”

22:14 – Jordan:
“Let’s look at some live examples. In a knockout round for site search, one example focused on delivering ‘relevance on day one’ by addressing the cold start problem. That message is clear, tangible, and speaks directly to the buyer’s daily pain. Similarly, in HR tech, a well-crafted message points directly to a familiar job-to-be-done, rather than using buzzwords that fail to connect.”

26:28 – Jordan:
“The key takeaway here is that overemphasizing AI without reference to the buyer’s specific needs dilutes your message. Instead, frame AI as a supporting tool that enhances outcomes clients already value. Remove excessive hype from your headline and balance it with concrete details that buyers understand and appreciate.”

27:42 – Jordan (responding to a comment in chat):
“It’s important to focus on tangible benefits for the people using the technology. A messaging approach that promises to do ‘everything’ can come off as meaning that the human team is no longer needed. That risk of job displacement can create resistance among potential users, so clarity and specificity are essential.”

29:43 – Jordan:
“The next point is that no matter how advanced your AI, you must communicate its value in terms of real-world outcomes. Buyers do not need to be impressed by futuristic visions—they need to see how your product will improve their quarterly results or their daily operations.”

31:48 – Jordan:
“Let’s talk about forcing the buyer to do the work. I recall my time at SC Johnson working on Scrubbing Bubbles, a toilet cleaner that turns blue upon use. The color change acts as a visual cue to assure users that it disinfects effectively. This is similar to marketing: you need to present storytelling and cues so that buyers quickly understand the real benefit of your product without having to piece it together themselves.”

32:49 – Jordan:
“In today’s market, buyers struggle with information overload. Your job is to bridge that gap with familiar analogies and cues—a kind of digital skeuomorphism that ties innovation back to something they already understand. Rather than overwhelming your audience with far-fetched futuristic imagery, anchor your brand in tangible, relatable benefits.”

34:56 – Jordan:
“Bringing it all together:
1. Your buyers don’t want revolutionary change—they want relief from daily challenges so they can improve their work-life balance.
2. Nobody buys AI for its own sake; they buy the outcomes it enables.
3. Your goal is not to impress but to clearly articulate value using familiar mental models, categories, and jobs-to-be-done.”

35:58 – Jordan:
“Here are three recommendations:
• Build a pain chain to define the right level of messaging targeted at your actual buyers—not just VCs or technical evaluators.
• Focus on outcomes first, then carefully integrate AI to support your story.
• Avoid clever jargon; be crystal clear about the benefit you deliver, much like the blue dye in Scrubbing Bubbles reassures users of cleanliness.”

36:59 – Jordan:
“Now, I’d love to open the floor for questions. I appreciate all your comments and insights. Feel free to reach out via my email; it’s in the chat. For example, someone asked for the process chain slide—I can share that as well.”

37:52 – Q&A – (Question from an attendee):
“Jordan, when you develop the pain chain, how do you involve cross-disciplinary peers to capture their perspective?”

38:05 – Jordan:
“When working with early-stage companies, I usually build the pain chain with a small, focused leadership group: the founder, CEO, and key department heads like VP Sales, VP Marketing, or product leaders. Keep the group lean and treat the session like a working whiteboard session. Then, validate the framework by sharing it with trusted customers and prospects to ensure it resonates.”

39:10 – Q&A – (Question from Kate):
“Hi Jordan, thank you for this session. I work as a consultant on AI implementation and education. My question is: To what extent is this a marketing challenge versus a sales enablement challenge?”

40:10 – Jordan:
“Kate, that’s an excellent point. There are no silver bullets here. Positioning is a company-level strategy that should involve product, sales, and customer success. While marketing kicks it off, sales enablement—helping the sales team communicate the story confidently—is equally critical. I’ve noticed that companies are increasingly investing in sales and customer success enablement post this initial positioning phase.”

41:19 – Jordan (final remarks):
“Thank you all for your insightful questions and participation today. Remember, your messaging needs to address the core pain points of your buyers. Strive to make their decision obvious by connecting your value with their everyday challenges. Thanks again for joining, and please feel free to reach out with any further questions.”