# The AI Grifter Test

> Five red flags that catch more bad AI deals than any technical due diligence — spotted in a single week, by a non-technical CEO. 12 slides, 30 minutes.

*WS·05 · Module WORKSHOPS — Workshops · The CEO AI Playbook by Stephen Forte*

Canonical: https://academy.buildclub.com/workshops/grifter-test

## Thesis

The CEO is the last line of defense. Five red flags, spotted in a single week, will catch more bad deals than any technical due diligence ever will.

## Key Takeaways

- The CEO is the last line of defense. Five red flags, spotted in a single week, will catch more bad deals than any technical due diligence ever will.
- 10% of AI value is the algorithm — the model itself. This is the part vendors love to demo.
- 20% is the data — preparation, access, permissions, pipelines. The unglamorous, unavoidable middle.
- 70% is process and governance change — interviewing operators, redesigning workflows, training people, rewriting policy. The part that actually pays.
- Pull the last AI proposal in your inbox and run the five-flag scorecard on it before lunch. Twenty minutes, not a project. The first proposal you score will tell you whether you have a vendor problem or a process problem.

## The Playbook

1. **One capability bar** — Define what good AI vendor work looks like — the same five red flags applied as positive criteria. This is the qualifying bar every vendor must clear before they can quote a workload.
2. **One contract template** — Staged payment, exit/portability clause, named data-preparation scope, IP ownership, audit rights. Write it once, sign it five times with five vendors. The legal work is amortized; the negotiation is structural.
3. **Multiple vendors qualified** — Don't pick a vendor — qualify three to five. Each can quote any workload. The competitive market does the price discovery. The framework does the quality control.
4. **Workloads portable** — Every contract requires the work product to be portable — data formats, integration code, model artifacts. A new vendor signs and gets work; a laggard falls behind and gets de-prioritized. No emergency board meeting required.
5. **Renewal is the lever** — Use-case scoping and portability go into the contract at renewal, not into a policy document nobody enforces. Renewal is the only time you have leverage. Use it.
1. **How will you map our workflow before scoping?** — Listen for named operators, ride-alongs, a process artifact. Vague answers mean templates, not diagnosis. Templates are the grifter's tell.
2. **Which proven platform are you integrating, and why that one?** — Listen for a named platform with a real integration story. 'We'll build you something custom' is a 2x failure rate dressed up as innovation.
3. **In one sentence, how do we leave you and what do we keep?** — Listen for a real migration path. Pivots to features or 'we'll cross that bridge' mean the lock-in is the product.
4. **How is payment staged against verified deliverables?** — Listen for milestone gates — 'phase 2 starts when you verify phase 1.' Front-loaded cash and vague milestones are the structural grift.
5. **Show me the data-preparation line item.** — Listen for a budgeted, staffed 60–80% scope. 'We'll leverage your existing data' means they haven't priced the actual work.

## What to Do Monday

- Pull the last AI proposal in your inbox and run the five-flag scorecard on it before lunch. Twenty minutes, not a project. The first proposal you score will tell you whether you have a vendor problem or a process problem.
- Add three clauses to your AI procurement template at the next renewal: staged payment against verified deliverables, a one-sentence exit and portability clause, and a named data-preparation line item with a budget.
- For the next AI vendor conversation, ask for the workflow process-change plan — the 70% — not the model demo. If they can't produce it, you have your answer before the proposal arrives.

## FAQ

**What is the core idea of The AI Grifter Test?**

The CEO is the last line of defense. Five red flags, spotted in a single week, will catch more bad deals than any technical due diligence ever will.

**What does the data say a CEO should pay attention to?**

10% of AI value is the algorithm — the model itself. This is the part vendors love to demo. 20% is the data — preparation, access, permissions, pipelines. The unglamorous, unavoidable middle.

**What should a CEO do Monday morning after reading The AI Grifter Test?**

Start here: Pull the last AI proposal in your inbox and run the five-flag scorecard on it before lunch. Twenty minutes, not a project. The first proposal you score will tell you whether you have a vendor problem or a process problem; Add three clauses to your AI procurement template at the next renewal: staged payment against verified deliverables, a one-sentence exit and portability clause, and a named data-preparation line item with a budget; For the next AI vendor conversation, ask for the workflow process-change plan — the 70% — not the model demo. If they can't produce it, you have your answer before the proposal arrives.

**What are the steps in The AI Grifter Test?**

1) One capability bar; 2) One contract template; 3) Multiple vendors qualified; 4) Workloads portable; 5) Renewal is the lever.

**Where do the claims in The AI Grifter Test come from?**

The playbook cites MIT Project NANDA — The GenAI Divide: State of AI in Business 2025; Fortune — MIT NANDA 95% report; HBR — Beware the AI Experimentation Trap; Trullion summary — Gartner 40% canceled.

## Sources

- [MIT Project NANDA — The GenAI Divide: State of AI in Business 2025](https://fortune.com/2025/08/18/mit-report-95-percent-generative-ai-pilots-at-companies-failing-cfo/)
- [Fortune — MIT NANDA 95% report](https://fortune.com/2025/08/18/mit-report-95-percent-generative-ai-pilots-at-companies-failing-cfo/)
- [HBR — Beware the AI Experimentation Trap](https://hbr.org/2025/08/beware-the-ai-experimentation-trap)
- [Trullion summary — Gartner 40% canceled](https://trullion.com/blog/why-over-40-of-agentic-ai-projects-will-fail/)
- [MIT NANDA — The GenAI Divide](https://fortune.com/2025/08/18/mit-report-95-percent-generative-ai-pilots-at-companies-failing-cfo/)
- [BCG 10-20-70 — via 'The AI Hire Everyone Is Getting Wrong'](https://www.bcg.com/publications/2023/the-ceos-roadmap-on-generative-ai)
- [MIT NANDA — internal builds fail at 2× the rate of vendor-led integrations](https://fortune.com/2025/08/18/mit-report-95-percent-generative-ai-pilots-at-companies-failing-cfo/)
- [Gartner — 40% of agentic AI projects canceled by 2027](https://trullion.com/blog/why-over-40-of-agentic-ai-projects-will-fail/)
- [Anthropic — Why data preparation dominates AI project time](https://www.anthropic.com/news/claude-for-enterprise)
- [Forbes — Klarna reverses on AI](https://www.forbes.com/sites/quickerbettertech/2025/05/18/business-tech-news-klarna-reverses-on-ai-says-customers-like-talking-to-people/)
- [Customer Experience Dive — Klarna rehires humans](https://www.customerexperiencedive.com/news/klarna-reinvests-human-talent-customer-service-AI-chatbot/747586/)
- [Eight AI Vendors, One Customer — YPO Technology Network AI Daily Brief](https://www.ypo.org/technology-network/)
- [Anthropic — buying AI services well](https://www.anthropic.com/news/claude-for-enterprise)

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