How to Invest in AI while Avoiding the Hype - AI Expert Venture Capitalist Panel

today on the show I'm happy to have a great group of panelists we're going to be talking about AI Tech investing so today I have Sam Simon he's the founder of theim and a published author I have Susan Lind dicki the founder of the BC firm of vestic she's had 34 years in the finance industry and Jac nudc founder of Cortex he has a PHD and Ai and he's also a published talker thank you guys for coming on the show today thanks thanks chess great be here so we're GNA start with Shan how do you actually ass an AI tech company before making invest what kind of the key factors you look at oh yeah I think there's many you got to look at the Technology Innovation differentiators par entry there a bunch of things around that scalability as well but and that leans into the kind of Market opportunity as well so what is the size and growth potential of that Target Market is it a crowded Market does the startup have a clear path to dominate in the niche area though those kind of things are important I'm personally quite interested in kind of platform place as super platforms if you can get that right there's a bunch of opportunities to actually do that another thing is product Market fit I I would say very important obviously is the teams the people and the leadership there do you have people that's really passionate and driven and conviction and and all of those kind of things I've invested uh in a few um startups where where it was almost mainly when I saw this is um a Founder that really want to take it to the next level it's incredibly determined and understands the market very well and can also um inspire a team uh as well so it say all of those kind of things are pretty important very important is the business model the monetization and it might evolve over time we see many stories of that IP data ownership especially think about AI machine learning can you get always a interesting thing there can can you create a niche with your IP and and data ownership the other thing that's going to be important is Regulatory Compliance I think is going to be super important and then risk management so those are some of the the key things and yeah love to hear what others have to say if I can jump in here I think for us the key ingredient is opposite the founder in a team so we're really looking at a team we're looking at incredibility what have they done in B how much experience do they have in the product everyone says that my company that's getting created every single day so you're really looking for people who come up with experience who's got a lot of yeah just basically a lot of experience in the field so that's really important then second I think dark what you said is really important is in terms of what is the business model how do you monetize that and can it be scalable so for for the vtic we're looking at where's the next unicorn going to come we're not going to go through hundreds and hundreds into our portfolio we very selective we mightbe have 20 into our VC fund and that's why we really looking at scalability where's the next unique born going to come from what is the team and the founder behind them and is it monetizable and can I take it to the next level absolutely course having two extra in the domain I will add only that I think in the new era we need to emphasize on the aspect of ethical AIU how we can emplo human augmentation in the new startup and avoiding the hype because a lot of people are using hype give it to Ai and instead we need really to emphasize on core human values inside the AI development ethical AI responsible AI I think it's an important thing to look at at this phase because the last thing we want is people not happy with the let's call it AI Revolution and start fighting back because we are not giving power for human let say inside the new AI Revolution absolutely when evaluating a startup in AI or a company you're about to either start yourself or invest in are there some red flags common pitfalls you see that kind of change your mind mind on oh this is something we should stay away from yeah I I think it's very much what Susan said I think especially now there's a lot of hype or over Reliance on hype everybody's just putting in they're just putting the word AI there automation we just a plug everywhere and um so one needs to be super careful there so it's like buzzwords without clear differentiation they just think that AI is this magic one just by by mentioning it and clearly that's not a a differentiator in itself it's becoming I think AO will be everywhere so it would be completely integrated another important I think pit for I think about a weak business model if they rely solely on investment without sustainable Revenue stream that is very risky um talent you have to look at if you've got an inexperienced team Susan also mentioned that it helps if you've got experience if you young Founders helps have Board of advisors or some experienced people helping and backing them up as well especially in the business world I'm thinking about even C my first eye company um we were coming out of University and okay was a few years like a professor at University senior lecture professors and but you had to learn hard way about what's business and we had to learn very quickly and you make a lot of mistakes and everything but there's no substitute for that kind of experience that you build build up and I think s mentioned the ethical stuff if there's especially now as the field becomes more mature there's more going to be more regulation compliance those kind of things as well if you think about data privacy IP rights ethical considerations those kind of things as well that it's almost like with this this the 25 plus years that I've been entrepreneur smallart technology entrepreneur yeah it it's been the wild west initially because there was not a a lot of players especially in the in the early 2000s another really a lot of AI players and we went straight there I did my PhD and AI so I was comfortable in this space and I know we can add value and do things but now it's becoming a more mature it's still Wild West right now you think about llms and generative AI what's happening now and but clearly that is a a pitfall kind of red flag issue and then the big thing around data as well you got to be careful about B biased data or incomplete data if you don't acquire the data with proper consent those kind of things are very important for II startup I think for us it's really about II dis is a tool so we really looking at what is the commercialization that's happening and where is it going also one thing j did not mention is competition and that's a big thing so everyone's coming up with II but really what is the competition in the field how many are there out there enough and how many is going to be there so I think that's really important to look at that because that can be a huge red flag out there and the team is really important as well you need to have a mature team any person who starts a company or a new idea it's a very lonely road out there and they need to have a really good solid team and a good solid Board of advisors as well which is really important for us I agree with the with with you of course but I would add something maybe that red flag for me as a as a small investor is overemphasizing on speed and time to Market and not considering ethical issues in terms of I data in terms of lack of Representative data set and testing of the model and that can can create really a sitb back so you have a very talented people very aggressive people but maybe if they are going too Speedy to the market before enough and robust um data and um testing for their former models they can have a sitb back and a lot of hallucination of a lot of amazing things coming out of the llm because they didn't test it enough so for me this is a red flag yeah I maybe just want to add there I think it's a a fine balance because of the competition you want to move quickly so the minimum viable product is very important and the feedback to get the feedback in a controlled way from the from your customers or Target markets but you obviously as you rightly say what is that meum valuable product it needs to have at least especially now I think one needs to make sure that you address all those ethical risks and stuff so that definitely comes into play so next I want to jump into how you guys manage risk so we know there's a lot of Buzz around Ai and that's inflating valuations in some scenarios and also creating startups that maybe are just here to jump onto that Trad and there's also a lot changing in the regulatory environment so how do you guys build that in when once again putting that time or or money towards AI this is where it gets interesting I think where there's an opportunity I've mentioned at the start one of the things that I'm looking at is AI driven sustainable technology Venture Capital funer funds but where you can use AI or smart Tech to also help facilitate the investment process itself autom make certain parts of due diligence tools sourcing engines that can help with the filtering as well so that's one thing so you want to do a thorough due diligence assessed technical market and business risk before you invest and if you've got tools small Tech tools that can assist and help understand the general Trends and then so there's a lot of opportunity there I don't think we've got really funer funds that's doing that yet properly and the tools are now there so it's more mature especially with the use of L language models multim model it can help you quite a bit also with the documentation and all of that at Financial models and evaluations and all of those kind of things the other thing is portfolio diversification if you spread your Investments across as sub sectors to mitigate specific Market risks and you obviously need to look at the market trads I think things are we're sitting on exponential curves you see the fusion of these bunch of smart Tech curves and it's so interesting because even if you look at the whole thing around generative AI where it was almost like if you can get into the foundational model layer open source or proprietary I prefer obviously open source but but it could become a commodity as well and is Extreme expensive and there's more opportunities on the application side of things and then when you get to the application side you have to look at the risk around data and how do you create create differentiation and and all of those kind of things so so there's a lot to think about because it's evolving landscape it might be a year ago two years ago it might have been fine to invest in in say foundational models but it's maybe less attractive two years later three years later so one needs to be just very smart and move with the trends understand the Dynamics of what's going on around these things I think the definite knowledge of any AI specific um technical team are extremely important they really need to know what are they building really understand J was saying the open source really understanding the code and what is the in or and what is the the product Market fit going to be that I think is really going to be a differentiation in terms of what product they're going to bring to Market out the end and Sam has touched on that as well in terms of the technical um and the ethical propriety propriety rights and then obviously the patents we're really looking strong in terms of certain patn um and patn that I can actually um go and register out there that's really important for us I would add the perspective of let's call it an owner of a startup and I would say the risk is huge because every day we have a new technology coming in and sometimes you invest some time in developing a small application and suddenly it's handled in a new update of open AI or Microsoft so I think we need to concentrate a lot on applications because even a small integration of these large language models into the everyday Paradigm of work in Enterprises will provide h huge and impressive changes and from my perspective I think we don't need to go to very call it difficult or elusive application it's enough to make a Delta and it's impressive how a small data usage of generative AI in the everyday of the Enterprise can make differences it's it's I think the right way for startups today is to limit their ambition somehow because it's amazing we think we can have robots tomorrow or data from Star Trek tomorrow what it's not the case at least have reasonable limited targets with reasonable application because even very small software Improvement can create complex impact in in in companies well would you say are some of the most promising opportunities or even challenges within the sector right for for me I think the ones I I wrote this book democratizing a to benefit everyone and I talk about how can we optimize quality of life for as many people as possible and if you think about Emerging Markets I think especially in terms of Education and healthc Care it's some of the most positive uplifting type of applications we can democratize access to Smart Tech and just the capabilities of what this can bring to that space it will make a huge difference in terms of quality of life even if you think about Mass lows motivational framework those are some of the basic needs and you give people opportunities so I see huge potential there on that front clearly if I just think more broadly so metioned Healthcare autonomous systems the climate Tech lots of stuff with generative AI in media and creativity we just need to be smart and I'm with Susan on emphasis on tools and that's what I've emphasized my book as well we need to almost need a lot of wisdom to navigate responsibly going forward and Sam also mentioned the ethical side trustworthy AI robust AI all of those kind of things but the for me what I've actually I'm a smallart tech person but I really think it's important to be think about how would supports humans us and improve quality of life and all sorts of life so we shouldn't get ahead of ourselves just because of curiosity just because we can do it and create conscious machines and all sorts of stuff I think we are on the wrong track if we do those kind of things so it's very important to look at the right type of opportunities not just to make money think about all stakeholders it's like stakeholder economy versus this a shareholder economy uh so I think gener of AI in media creativity there's also cross industry a adoption for efficiency games I think it's incredible the opportunities and there's obviously challenges as well but you've asked for the opportunities so I'll stop there I mentioned education so obviously that's for me big one especially Ultra personalized education Jo yes I agree with you I think um environment that's still under development it's going to have a major impact on those opportunities and those challenges coming through and we will see different jurisdictions have different regulations coming through in terms of different continents and that will have different implications and opportunities as well but I basally believe the biggest breakthroughs will come through in the medical field and long longevity as well and just Automation in general if you think about how we operate today how we going to operate and how we interact with those automations is going to be fundamentally changed over the next s to nine years that a lot of people don't even think about so I think those are the biggest opportunities and I have to add in one more I think the I think the opportunities in some of the existing businesses if you for instance take private equity and you take it the if you use like logistic business and you think your margins is not so big but if you start automate all of those and you bring in Smart Technologies and Robotics you can see some of those productivities and margins going through the roof because it's all automated unfortunately the downside of it is it's going to impact on humans it's going to impact on life labor and but in terms of monetization I think it will be a huge opportunity I agree with Jack and so it of course and I will add also a perspective about a human entation first of all I think healthc care is the most let's call it attractive or nearby application for what we have because they have a great mass of papers and this great mass of papers with generative AI can be reduced drastically but we need to emphasize on empathy and human augmentation we don't want to replace the nurse that is taking notes by uh a cold AI but we want to give her the AI tools so she will be efficient she can help the doctor quicker better get rid of this great mass of papers and replace them with a a very useful machine for us so I think this is the most imminent application is healthare education all this aspect Maybe Al or you mentioned private Equity Firm and they have a lot of documents so having AI to help them but I think we need to emphasizing on human entation at this level of artificial intelligence technology and not going far be wanted and and emphasizing with empathy we don't want to lose our Humanity by to meting everything we want to empower our Humanity our empathy our love listen uh a nurse that is empowered and the she is not lost in in papers would be giving more care and empathy to to the people around her she would be more smiling because she has less work to do but we cannot avoid that speaking to the the quality of life the increased Automation and Direction but even making the lives easier of a nurse healthare what do you guys think about how Robotics are going to start to intersect and already have intersected with AI what is the future going to look like oh it's going to be interesting I just saw a recent investment N Video Microsoft there a bunch of companies participating there in embodied AI it was I think was more than a billion dollars yeah I think there's if you think about II clearly if you think about computer vision and sens of technologies that allows robots to perceive things their surroundings and currently AI is absolutely state of the art around to give high accuracy and identifying objects people obstacles all of those kind of things perception is hugely there and then if you think about are we getting better now with reasoning and planning so it can assist with decision making so you can have robots that can use machine learning to interpret data predict outcomes plan optimal paths or actions I think we're going to see more of that and then also adaptation and learning so you can help robots to adapt to new task improve over time but we have to currently there are limitations but there's more Talent more research we've got all these big biggest tech companies putting a lot of resources behind this so we can expect a lot of improvements in all regards Yan Lun of meta is also talking about various ways to to create more high level reasoning creating models that's has got better World models and understanding of the environment not just learning things from text so if you learn from text video all sorts of different things you can get systems that are better at understanding their surroundings um there's active inference from versus and others as well so there's some really interesting exciting possibilities and we will see more embodied AI we are effectively embodied natural intelligence it makes a big difference if you do that and if it's just because currently the lowest language model is just reading all the text that's available but if you provide them with lot of other types of information and data that's one thing but we also need to have breakthroughs of some of the and the architectures it's not it's the current the I think we will run into limits with what we have right now still and but anyways it's very exciting the intersection of a robotics is very exciting but we also need to be smart and careful here because this is exactly the area where there could be a lot of disruption um with jobs and everything so we probably need to re-engineer economy rewarding people for their positive contributions to society in different ways so it it's putting actually an emphasis on getting all those other things the whole context in terms of where Humanity live that's what I focus on in the book as well because if we've got a a massive transformative purpose for Humanity and understand what is important character building wisdom compassion all of those kind of things and just make sure the tech technology and automation that we do supporting that in a balanced way not just taking over everything this is where capitalism can just run Havoc as well so everything is a balance like a yin and the Yang so so we just need to be smart how we deploy it one of our investment portfolios is actually in humored robotics and it's quite interesting to follow their journey and one of the big things that are getting into is the medical field but I kind to intersect into every other industry that's possible so if you think of older people that's in the retirement villages those robotics will actually start helping the assistant and help helping the nurses out there for instance like heavy lifting so anything that is too heavy for people to do if you think of the building industry construction it is so hard for the Brick Layers out there so I believe robotics will come in and it will complete with some of those jobs to just build houses why would you have humans doing that why would you not have humans really been more productive more intellectually and as well as in Nursery sorry in medical Nursery or surgical rooms if you think of the amount of robots that you can use there but I think at the end of the day we will all of us will have a personalized sub that can help assist out the house help some cleaning help take your children maybe to school and I think that's the biggest Revolution that we still yet to see that hasn't happened yet that's why I said we've got a lot of tools but we haven't actually see the applications coming through that is now currently under um production robots are coming for us the world will change of course I think robotism is not yet at the same level at chat Bots and text level and generative Ai and even image processing AI but it's coming it's coming I will say it will take more time to to see the robots that we have seen in W for example as people are familiar with that Disney robot but it's coming maybe in 15 years we will have wari everywhere helping Elder PE people going into mine executing very hazardous task and firefighters robot it's coming I'm very optimistic about it we'll see it but right now we'll start with limited robotism let's say the robots that we see in the manufacturing facilities a big arm or in the construction site and it will got better and better drones um uh and hopefully only peaceful drones not militarian drones because I have seen that they are very fast in doing this unfortunately but I'm still optimistic about the future they are coming will have a great impact on uh job replacement and in my book I suggest a lot of things to avoid that because it's inevitable and maybe in 2030 years we'll have much less of these they call it basic jobs or repetitive jobs that will be given for robot and maybe instead of having just a cell phone we have a companion robot that will carry our stuff helping us and we talk with with these robots because practically it will have capacity to talk I don't think we see the robot we have seen in science fiction that will talk in a like a robot let's say we have immediately robot that talks like a human the more difficult I think approach is what we call spatial intelligence because unfortunately we don't have the same level of it's called it research and investment in spatial intelligence that we had in text or in images but it's coming it doesn't mean it will not happen it will take slower time more years and the risk we have is always social impact because I call it in my book The Rise of digital proletaria borrowing from Marxism but this time digital proletaria will help uh the capitalistic people because suddenly you have Army of robot to execute the the economy and here we need to change the economy radically I think this is the real challenges but in terms of a i on robotics oh my God the the future is amazing we need just to let's call it navigate our way through this upcoming and avoid the Shadows of the singularity CH I just maybe want to add something there as well there's some really interesting developments Sam you mentioned spatial as well in terms of the spatial web there's new protocols being designed called hyperspace transfer protocols so instead of just looking at hyper text hyperspace and hyperspace modeling language so an active influence is a diff there another AI in the smart technology or AI toolbox that is integrating directly with these kind of protocols as well which is which really provides some for exciting stuff versus actually a company in California that's that Los Angeles that's busy with that but anyway so yeah there's many interesting applications for robotics if I just think about in healthcare as well surgery with more Precision reducing recovery time if you think about Rehabilitation if you've got say robotic exoskeletons helping patients regain Mobility with personalized therapy there could be all sorts of positive applications so our listeners wanted to get in touch with any of you how could they reach out okay I've got a website Jo ling.com so they they can email there as well I've got Twitter accounts LinkedIn Twitter and I would say websites probably B I've also have a newsletter democratising AI on LinkedIn so yeah there's plenty of ways to connect so for myself is through our company ix.com that's iv.com or like can just reach me out Susan attic.com by email or on LinkedIn so we got a company website as well as my personal website for me you can reach me at san.com my personal website or at my company website theim Theo from theorm and SIM from syonic people asking what does that mean and the.com and you can follow me also on YouTube at my channel Sim I'm I'm welcoming all kind of questions from a discussion about AI in the society to discussion about the company and our product I want to thank our panelist coming on today and sharing their knowledge and everybody for listening another episode bailing success if you like the show make sure to subscribe I'm your host chaty and we'll see you next time [Music]