Archive for May 2016

There’s an article going around the internet that is reporting that Apple could be the next BlackBerry as it gets left behind in the AI arms race. But as Public Enemy said, “don’t believe the hype.” In many respects yes, good is a much better than its competitors. But how exactly does Apple use its AI today. Well for the most part it analyzes how we get places in Maps and other location based platforms within their network. In addition they can recognize faces in Photos. In order to understand what you’re saying with Siri and lets you interact with various apps. This learns what kind of applications you are going to want to use and at what time you do in relation to your location. Its a big part of their platform right now, but what is surprising about this fact is that for the most part they are not very good in this field.

Apple is also in the works of deals to patch over the areas where its AI is weak. Asks Siri. Apple has deals in the works that can hopefully rectify this glaring weakness and hopefully cure their ailing networks. This is all happening in the face of the mounting tech bubble. 

As we know AI became a field in the broadest sense 60 years ago but at that point it was more sci-fi than sci. Ever since that time researchers have tried to achieve human level smarts or better.

“Computers are just starting to be able to hear and starting to being able to see images. Those are tremendous improvements in the field in the last five years. Were doing that by having computers read millions of texts and pages from the web by hooking them up to cameras and moving them around human environments.”

AI is going to be the new normal when we consider the infrastructure  of the future and the way we move through the world, but not in the way you may be thinking. Think more predictive or connection making model based solutions. “Reasoning will be improved as we develop systems that continuously sense and interact with the world, as opposed to learning systems that continuously sense and interact with the world, as opposed to learning systems that passively observe information that others have chose.” 

To put it bluntly if Apple is going to really hedge their bets on AI and their place in the global market is largely dependent on if they can bridge this gap. In may respects Apple has been a company without an identity since the passive of CEO Steve Jobs. Jobs was the person that was able to determine their moon shots and give them an identity not only today for a decade from now. Today however, Cooke does not have that same foresight that Jobs had. They have been able to coast for the last few years but we are in the midst of a trans formative moment in the tech industry and for the large part the world in general.  When we are going to look at what 2020 will look like we can relate it to how it is being engineered today.

Considering many people still haven’t found financial stability after the financial crisis of 2007 hit the American and global economy, rumors that the super star growth of Silicon Valley businesses may be more of a tech bubble than a tech boom are, to say the least, worrying to the general population.

tech bub4Is it a tech bubble? If so, how did it get to the point that it is today? When will the bubble burst, and what will be the consequences? Not all of these answers are widely agreed upon, but there are plenty of highly-esteemed economists and investors who are coming out today and affirming that the tech bubble is indeed a tech bubble. As to when it will burst and what the consequences will be, people have predictions but no one knows for sure. What there’s more tangible information about is how the tech industry got to its current, bubbly circumstances, and what factors can be attributed to where we are today.

It’s difficult to know where to begin in this narrative, but as decent place as any would be when Doug Leone of Sequoia Capital gave a famous presentation titled “R.I.P. Good Times” in 2008, i.e. in the midst of the financial crisis. Leone warned entrepreneurs to save and spend conservatively due to a predicted major recession in venture capitalist funding. While his presentation ended up being defined as overly alarmist as time went on, older industry players are now counseling younger batches of rising entrepreneurs to follow that advice.

“The main thing we’re trying to impress on our CEOs right now is that the market is saying, ‘We want to see growth, we want to see geographic expansion,’ but that may not always be the case.” explains Scott Kupor, a managing partner at Andreessen Horowitz. “Investors change their priorities. Soon, they may be telling you, ‘We want to see profitability even at the expense of growth.’ So you need to think about the levers you can pull in your business to make that happen.”

chichiWhat does this all have to do with the bubble bursting? Kupor’s advice contradicts the logic of a technique that tech moguls like Microsoft and tech startups like Slack have been commonly utilizing for years: seeking the highest possible valuation for their companies. They do this with a number of positive outcomes in mind. High valuations minimize dilution and generates publicity, which then attracts talent, clients, and even more capital. The two-year-old, hugely successful startup Slack famously raised $160 million upon being valued at $2.8 billion, for example. And it’s not just new startups that profit from high (and potentially inflated) valuations. Uber was valued at $50 billion this year and AirBnb at $50 billion. In both cases, the companies were valued at extremely high multiples of their actual revenues. According to investors, this is because their enormous potential makes it illogical to put a ceiling on their growth.

When these overly-valued companies come back to earth (as they must inevitably do as a result of rising interest rates), founders who have overreached must then struggle to defend their valuations. In cases when founders have managed to finagle an extra 10 to 20 percent value to be attributed to their company by granting investors aggressive downside protections (which enable VCs to make reckless bets without risking real consequences), founders can lose control of their businesses all together.

So because so many tech companies have been valued not based on their revenue but on their projected revenue, a fair amount of investors have been conned into pouring money into places that aren’t equipped to generate more.