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The author is president of the International Bank of America
It is always worth stepping back to assess where we stand on the historical arc of technological progress. As we enter the age of artificial intelligence, there are important parallels with the dotcom boom, which first heralded the Internet age.
Now, as then, an abundance of capital (this time thanks to a decade of ultra-low interest rates) is directed toward technological innovation by venture capital firms, corporations, and sovereign wealth funds. This is a reflection of the over-investment in start-ups that was common during the dotcom era.
The impact of this extra capital on innovation can only be felt over time: simply put, we know it will change the world, but we don’t yet know how. A central physical manifestation of innovation in the late 1990s, the iPhone, appeared only years later. AI, made tangible to the public by ChatGPT, still only offers a glimpse of the future possibilities of this state-of-the-art technology.
Will the parallel continue? The dotcom era led to significant retrenchment before the next period of growth. That is unlikely at this time. However, as we enter the ‘super disruptor’ phase of global corporate life, the full benefits may be out of reach as interest rates rise and the tide of free capital slows.
At Bank of America’s recent Advancing Technology Summit, there was a general consensus that this could be the decade in which ‘moonshot’ technologies with enormous potential to augment human intelligence arrive faster and faster than expected. It can help people working in IT programming, service industries and research to be more effective at their jobs rather than replacing them.
It is also worth considering the potential for rapid development in tracking natural language processing, gene expression, organic chemistry, and RNA structure. Admittedly, this is in the context of a technology that can lead to errors, and responsibility remains with the user for model accuracy, acceptable use, interpretation, and traceability.
For large companies, how they use this technology is a significant challenge. Without proper representation at senior and board level, businesses may not know the right questions to ask, let alone what steps to take.
That’s the sobering message from John Chambers, former CEO of Cisco and now one of the world’s most successful investors in disruptive technology. “You should ask each of your companies: What is your AI strategy today? Where is it going? How has it changed?,” he advises. “If they don’t have good answers, I won’t invest in them”. If history is any guide, we should expect market values to favor those already advanced in their AI thinking. Consolidation around the fastest innovating companies is inevitable.
Governments need to have a clear vision of how to regulate and capitalize on both the opportunities and disruptive forces of technology. Will we see more following the lead of the UAE, the first country to appoint a dedicated minister for AI?
Critically, however, many exciting new technologies will still fail. In the current high interest rate environment, it is critical that we fail fast and direct scarce global capital to potential winners. This requires a mindset shift and a willingness to believe in the true pioneer within us. Commercialization of new technologies is an expensive exercise. Innovations at the cutting edge of progress, from climate tech to materials tech, are at risk of being without the funding they need.
Amara’s Law states that we overestimate the effects of technology in the short run and underestimate them in the long run. In the case of AI it may be the other way around. In the long run, the journey to the new “super disruptor” stage will present many opportunities, including huge wins and huge losses, with unknown challenges and unexpected consequences. Capital providers should stay the course. Those who were willing and able to invest in this field at the dawn of the Internet era believed it would be transformative, and yet they found it difficult to pick winners.
Never before has a technological breakthrough been so truly transformative and investable. But the days of almost unlimited capital are behind us. Luck will happen, but will inevitably be lost. We need to be prepared for a bumpy ride ahead.