Edition #4: One more thing in AI

Date: 20 Sep 2023

Dear reader,

Welcome to the latest edition of the “One More Thing in AI newsletter.  For Startup founders and Business Leaders like you who want to get smart on AI in less than 5 minutes. Thank you for making this newsletter one of the fastest to cross 800 subscribers!

I hope you enjoy this edition. As usual, I'd like to hear your feedback for improvements.

Best regards,

Renjit

In this Edition

1️⃣ Banking: The Future of Banking is AI, According to Nubank's CEO David Vélez
2️⃣ Wealth Management: The New Kid on the Block- AI@Morgan Stanley Assistant
3️⃣ Future of Work: Generative AI's Role in the Labor Market
4️⃣ Learn: Prompting (or getting the best out of Generative AI)
5️⃣ Defense: Helsing’s Funding and its Significance
6️⃣ Enterprise AI: Writer, a little-known Gen AI startup
7️⃣ Quirky: A Caribbean Goldmine in the AI Boom

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Banking

The Future of Banking is AI, According to Nubank's CEO David Vélez

🎯 Introduction

I got to delve into an enlightening interview with David Vélez, the CEO and co-founder of Nubank, one of the most innovative fintech companies in Latin America. The spotlight is on how Artificial Intelligence (AI) is shaping the future of banking, democratizing financial services, and serving as both the bank and the banker. I heard this interview on the 20VC podcast by Harry Stebbings.

 🤖 AI: The Next Big Platform Shift

David is bullish on AI, seeing it as the next significant platform shift in banking. He envisions a future where AI is a "private banker" in everyone's pocket. This is not just a lofty ideal; it's a practical approach to democratizing access to financial services. By leveraging AI, Nubank aims to reduce the cost of serving customers by 20 to 50 times compared to traditional banks. This cost-effectiveness can be a game-changer for financial inclusion.

 ⚖️ Ethical AI: A Priority for Nubank

Nubank is cautious about the ethical implications of using AI, especially for automated wealth management advice for customers. They are particularly concerned about aligning incentives and avoiding conflicts of interest. The goal is to ensure that AI doesn't push products to customers that aren't in their best interests.

 🏢 No Organizational Overhaul Required

One of David's intriguing points is that implementing AI has not necessitated significant personnel reduction within Nubank. The focus remains on customer satisfaction, and AI is embedded into existing operations to serve this end.

🛣️ The Road Ahead

Nubank has ambitious plans. They aim to integrate AI more deeply into their services. The bank envisions AI as the leading platform of the bank where consumers interact with them.

Conclusion

The insights from David Vélez offer a compelling look at how AI can revolutionize the banking industry. As Nubank continues to innovate, its approach to AI could serve as a model for the industry at large.

What lessons can you learn from this in your bank or financial service company?

Here is the YouTube link in case you want to dive deeper.

Wealth Management

New Kid on the Block: AI@Morgan Stanley Assistant

Picture this: You're a financial advisor swamped with research reports and client queries. Enter 'AI@Morgan Stanley Assistant', your new best friend. This AI-powered tool is designed to sift through over 100,000 research reports and documents, freeing up advisors to focus on what matters—their clients. It's like having a supersmart intern who never sleeps!

 📈 Market Reaction: The market seems to be giving a nod of approval, with Morgan Stanley's share price ticking up 0.4% on the announcement day. It's like the stock market's version of a thumbs-up emoji. 👍

🌐 Bigger Picture: This isn't just a one-off experiment. Morgan Stanley is part of a growing trend among big banks like JPMorgan and Goldman Sachs, who are also dabbling in AI.

📊 ROI Game: JPMorgan is investing a whopping $1 billion in AI and expects a return of $1.5 billion for 2023 alone. It's like investing in a unicorn startup you know will surely be the next big thing (at least that is what JP Morgan expects!).

This expectation of return on investment underscores AI's transformative potential in the banking sector. Also, it shows that for a while, the large banking incumbents will steal a lead over their smaller competitors simply by their capacity to invest in AI.

Future of Work

Analyzing Generative AI's Transformative Role in the Labor Market

Generative AI is poised to become a pivotal force in the U.S. labor market, with Forrester's forecast indicating an impact on approximately 2.4 million jobs by 2030.

🤖 Generative AI: Not a Job Killer, but a Job Shaper

Contrary to popular belief, Generative AI is about more than just replacing humans. Think of it as a co-pilot, helping you navigate through complex tasks. Forrester's report emphasizes that Generative AI is about reshaping jobs. Think about how GPS didn't replace human navigators but made them more efficient.

🚀 The Phenomenon of Hyperadoption

The term "hyper adoption" caught my eye. Generative AI is experiencing what Forrester terms "hyper adoption," with platforms like ChatGPT and Claude spearheading this rapid integration into daily operations.

🛠️ Prompt Engineering as a Skillset for the Future

Forrester advocates for the training of the workforce in the domain of prompt engineering. This skill involves crafting prompts that guide AI algorithms to generate desired outputs. According to Forrester, this skill is a critical competency for the future (we have a section on prompting in this edition). Imagine you're a conductor, and the AI is your orchestra. The quality of the music depends on how well you can direct it.

🎬 Ethical and Practical Considerations

While companies like Fox Sports are keen on leveraging generative AI for content creation, the technology has also been met with skepticism and concerns, particularly in creative industries like Hollywood. Striking writers are rightfully worried about their future livelihoods. The question is: Are they pushing studio executives to AI by their protracted strike?

🤔 Implications for Leaders

If you are integrating Generative AI into various job roles in your company, know that it presents challenges and opportunities. Adaptability to this emerging technology is not merely advisable; it is imperative.

Here is the link to the full report. 

Learn

Prompting (or getting the best out of Generative AI)

Prompt engineering has quickly become an essential skill for using Generative AI models. So what is Prompt Engineering, and what are the different approaches?

Prompt Engineering: Prompt engineering refers to methods for communicating with a Large Language Model to steer its behavior for desired outcomes without updating the model weights or retraining the model.

Think of Prompt Engineering as teaching a dog new tricks without changing its personality. You're just finding the right way to ask it to do something so it understands you better.

Example: Imagine you have a pet dog named Fido. You want Fido to fetch the newspaper. Instead of saying, "Fetch the newspaper, Fido," you find that saying, "Fido, can you bring me today's news?" works better. You didn't change Fido; you just found a better way to ask.

Zero-shot Prompting: This refers to feeding the task text to the model and asking for results on the first try.

This is like asking Fido to do something new without showing him how to do it first.

Example: You say, "Fido, turn off the lights," and hope he understands what you mean immediately, without any prior training.

Few-shot Prompting: As the name suggests, this is about giving multiple prompts to an LLM and working your way to the desired output. As the model first sees good examples, it can better understand human intention and criteria for what kinds of answers are wanted. Therefore, few-shot learning often leads to better performance than zero-shot.

This is like showing Fido a few examples of what you want before asking him to do it.

Here's an example: You show Fido how to fetch the newspaper by doing it yourself several times. You say, "Look, Fido, this is how you bring the newspaper," and then you do it. After a few examples, Fido gets the idea and does it himself.

Chain-of-thought Prompting: This method involves generating a sequence of short sentences, known as reasoning chains, to lead to the final answer eventually. The benefit of chain-of-thought prompting is more pronounced for complicated reasoning tasks when using large language models.

This is like giving Fido step-by-step instructions for a complicated task.

Example: Let's say you want Fido to fetch the newspaper, but only if it's not raining outside. You'd give him a series of steps like, "First, look out the window. If it's raining, stay inside. If it's not raining, go fetch the newspaper.”

Homework: Try the different prompting approaches on your favorite AI chatbots like Bard, ChatGPT, or Claude.

Defense 

Helsing’s funding and its implications 

📈 Strategic Investment and Valuation

Helsing.ai, a European startup specializing in Defense AI, recently secured a record-breaking $223 million Series B funding. The round was led by General Catalyst, with Saab, a Swedish defense group, joining as a strategic investor. This investment catapults Helsing's post-money valuation to over €1.7 billion, positioning it as a potential leader in the European AI and defense tech sectors. For stakeholders in venture capital, this signals robust investor confidence in AI-driven defense technologies.

🤝 High-Profile Partnerships

Initially backed by Spotify founder Daniel Ek, Helsing has demonstrated a knack for forming strategic alliances. Ek's investment firm, Prima Materia, had invested €100 million in the startup.

🌐 Real-World Applications and Global Reach

Helsing's AI platform aims to enhance defense capabilities and national security through data analytics. The company has already secured contracts with the German government to provide AI-enabled electronic warfare systems. Moreover, Helsing's active role in Ukraine since 2022 adds a layer of geopolitical relevance to its operations.

🔮 Key Takeaway

Helsing is a harbinger of what's to come in the interconnected worlds of AI, defense, and global security. AI has become intertwined with geopolitical considerations and national security.

Enterprise AI

Writer, a little-known Gen AI startup

The generative AI startup Writer Inc. has closed a Series B funding round of $100 million. This underlines the current VC focus on A startups operating in the B2B space.

Key Stakeholders 🌐

Iconiq Growth spearheaded the funding, with noteworthy contributions from WndrCo, Balderton Capital, and Insight Partners. Accenture and Vanguard Group, existing clients of Writer, also participated, underscoring the startup's credibility. For founders of AI startups that are reading this, it is a good idea to create a list of VCs from these funding announcements,

What They Do 🛠️

Writer Inc. is not your run-of-the-mill AI company. They offer 14 different AI models tailored for various industries, including healthcare. Think of it as a Swiss Army knife for businesses.

Why It Matters 💡

For those in financial services, consider this: Writer's models are trained on over 1 trillion tokens of formal and business writing. That's like having a library of Wall Street Journals at your AI's disposal. They claim their models outperform competitors on multiple benchmarks. Usain Bolt of the AI world?

Quirky

A Caribbean Goldmine in the AI Boom

🌴 Picture this: a tiny Caribbean island, Anguilla, with a population of just around 16,000, is set to make a whopping $30 million this year. No, they haven't struck oil; they've struck digital gold with the ownership of the ".ai" domain name.

🔑 The Domain that Pays Dividends: Anguilla owns the ".ai" domain, and anyone wanting a URL ending in ".ai" has to go through it. Think of it as owning beachfront property in Palm Jumeirah; everyone wants a piece, and you're the gatekeeper. Big names like Elon Musk's xAI, Facebook, Google, and Microsoft already own .ai domains. The number of .ai registrations has nearly doubled in the past year to 287,432.

💬 The ChatGPT Effect: The public launch of ChatGPT last November has been a game-changer for the domain. It's like when a new Metro station opens in a neighborhood, and suddenly property values soar.

💰 Economic Impact: To put it in perspective, Anguilla's annual GDP was $288 million in 2021. The .ai domain could contribute around 10% of its total domestic product.

🎯 Why Should It Matter?

Owning a domain is not just about having a web address; it's a strategic asset. Anguilla's story shows the importance of diversifying revenue streams.

This is a lesson in how a seemingly local asset can have global implications.

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