AI's iPhone Moment with GGV's Hans Tung at Collision 2023

TL;DR

AI is a rapidly growing field with tremendous potential and a long-term impact on various sectors. Investment opportunities exist in different layers and industries, with companies leveraging AI to provide innovative solutions.

Transcript

foreign great to be back in Toronto talking about AI because what else does anyone care about right now that seems to be the What's called the iPhone moment for AI right now so what do you think AI is it over Heights adequately hyped under hyped I mean what were we at in the hype cycle here uh I'll try to answer a question with uh um so two respons... Read More

Key Insights

• 🌗 AI is the "iPhone moment" for technology and has the potential for significant and long-lasting impact across sectors.
• 🈸 Investment opportunities exist in the foundational, middleware, and application layers of AI.
• 🐕‍🦺 Companies with accumulated data before recent AI advancements have a competitive advantage in providing valuable services.
• 🥺 Mergers and acquisitions are expected to increase in the AI space, leading to the emergence of homegrown giants.
• 👶 The exact impact of AI on the job market is uncertain, but new jobs are expected to be created alongside any job displacement.
• 🐎 The race for AI dominance between the US and China will drive innovation, and cities like Silicon Valley and Toronto are prominent AI markets.

Questions & Answers

Q: How does AI differ from the previous hype around cryptocurrencies and web3?

While cryptocurrencies had their moment of hype, AI is seen as a 50-year overnight success story. It has been in development for a long time, and recent advancements like GPT-3 and GPT-4 have made it more popular. The impact of AI is expected to be much broader and longer-lasting.

Q: How do investors vet companies claiming to be AI-focused?

Two trends are observed: companies incorporating large language models like GPT-3 and GPT-4 as interim tools, and companies that have been applying AI before these models existed. The latter group, like otter.ai, has an advantage by utilizing their accumulated data to provide specialized and valuable services in real time.

Q: Do you expect an increase in mergers and acquisitions in the AI space?

Similar to the internet boom in the 90s, there will likely be more M&A and strategic investments in AI-related businesses. Big players will acquire interesting concepts and tools to expand into new areas. However, some AI companies may face scrutiny and crash, which is a natural part of the business cycle.

Q: How do you see AI impacting the job market?

While there may be some job displacement in certain areas, AI also creates opportunities for new jobs and tasks. For example, customer service roles may change, but individuals can utilize AI tools for other value-added services. The exact impact on the job market is uncertain, but overall, new jobs are expected to be created alongside any job losses.

Q: How do you view the race for AI dominance between the US and China?

The advantage in AI comes from having access to large datasets for training models, and currently, the US has the lead due to data availability. China aims to catch up and become more self-sufficient. The competition is beneficial for innovation, as it pushes companies to work harder and come up with more creative solutions.

Q: Which cities have a strong AI market?

The US, particularly Silicon Valley and areas like Boston and New York, have strong AI markets due to the presence of big tech companies and top universities. Additionally, Canada, especially Toronto, Edmonton, and Vancouver, is emerging as a hub for AI innovation, leveraging talented graduate students and competitive programs.

Q: What sectors do you believe will be most impacted by AI, and are there disruptive investment opportunities?

AI will impact almost every sector, both functionally and industry-wise. Examples include AI solutions for customer service, financial services, accounts payable automation, and intelligent learning of consumer behavior. Investment opportunities lie in companies addressing specific functions or vertical problems in different industries.

Summary & Key Takeaways

• AI is currently in a hyped phase similar to the early days of the internet, and its impact is expected to continue growing across all sectors.

• Three layers of AI investment opportunities have been identified: foundational layer (hardware and language models), developer tool middleware layer (APIs and devops tools), and application layer (vertical solutions for different industries).

• Companies applying AI for a long time, even before recent advancements, have a competitive advantage by leveraging their accumulated data to provide more valuable services in real time.