How early-stage investors are trying to find AI winners

Harnessing artificial intelligence was once a daunting task. Engineers were also involved, and the company had to find a big company-wide reason.

not anymore. Speaking at the CNBC Technology Executive Council Dinner in San Francisco earlier this month, Sequoia Capital partner Constantin Buehler said narrow use cases for AI have given way to pervasive technology.

Buehler says the biggest difference in today’s AI landscape is technology accessibility. “For me, if AI is the equivalent of a personal computer, large language models are the equivalent of a graphical user interface,” he said in his CNBC follow-up interview. He added that LLM “didn’t change everything under the hood, it changed the interface and the way people interact with AI.”

This difference influences the types of startups Buehler is interested in. Almost any company can integrate his AI into any application, so he invests in start-ups that put his AI to practical use. “We want to see if these companies are getting more out of this business or if it’s just a peripheral part of the business,” he says.

Buehler likens it to the changes brought about when personal computers became mainstream. “If you were a typist when PCs started coming out, your job would be very different,” he said. “If you were running a laundromat, your job would have changed a bit. Which store would you like to fund? I would think.”

This way of thinking has spread beyond venture capitalists to companies. In a recent CNBC Technology Executive Council survey, nearly half (47%) of companies said AI will be their top technology spending priority over the next year. In fact, the AI ​​budget is more than double that of the second largest spending area, cloud computing, at 21%.

Nearly two-thirds of respondents say their investments in AI are accelerating, but they also acknowledge that AI is a larger piece of a smaller pie. Just over half (53%) of tech executives said higher interest rates are slowing overall spending.

Buehler believes generative AI will have the greatest impact on companies and jobs that involve a lot of writing and content generation, such as media, legal, consulting, and marketing.

But he is quick to point out that this disruption will create a variety of jobs. “There’s a lot of eschatology and the end of humanity out there, but I don’t agree with any of that,” he said. “I didn’t come up with the words, but I believe that ‘AI won’t replace you. Someone using AI will replace you.'”

That sentiment was echoed in the TEC survey, where 47% of respondents said they believe AI technology will create more jobs than it will destroy. But a further 26% said it would destroy more jobs than it created, and another 26% said it was too early to know.

“We always underestimate the social impact of any new technology,” said Diogo Lau, chief information and digital officer at Eli Lilly. “Can you think of a technology that hasn’t changed the way people interact with each other? From cars to radios to the internet to phones, what really changed was social interaction.”

Like Buehler, Lau is more concerned about companies shying away from AI based on employee use and privacy concerns, but that concern can be addressed with appropriate guardrails, Buehler said. rice field.

CNBC TEC member Lau said, “What excites me is whether machines can come up with things that humans couldn’t have imagined, such as new molecules for pharmaceuticals.” “Maybe we should launch a fund that shorts companies that ban ChatGPT and longs companies that encourage it.”