Artificial intelligence is one of the hottest topics in software right now, but its progress “has been consistently overestimated since 1956”. That was the provocative statement from leading technology investor Rory O’Driscoll on day 2 at SaaStock 2017 in Dublin.
Irishman O’Driscoll is a co-founder of US investment firm Scale Venture Partners which has raised $1.5 billion to invest in dozens of companies, including some with European operations in Ireland, such as Lumension, Hubspot and Jaspersoft.
As an investor constantly looking out for potential startups, O’Driscoll has a keen interest in the field. AI is an industry trend that is “exploding right now”, thanks to the confluence of data, computing and algorithms. The rise of deep learning in the past five years has helped to push what’s possible.
O’Driscoll cautioned that the entire tech industry is prone to “constant cycles of over-promising and under-delivering … What’s unique is that you have people predicting things in AI 50, 40, 30 years ago that still haven’t happened yet,” he said. While investors chase companies with a good AI story to tell, he warned: “It will result in a lot of less than successful software startup companies.”
Defining artificial intelligence
He defined AI as less a technology than a set of computing disciplines and techniques that make computers think and feel like humans. Today, that makes it suitable for consumer internet services that are often free, like Google Translate, or Amazon’s recommendation engine. It’s a different story for enterprise businesses that still rely on systems of record. That software needs to be accurate, not based on guesswork.
O’Driscoll believes AI has a bigger potential role to play for systems that predict, analyse and forecast. Potential uses for AI in the near term in fields like analysing credit card fraud, manufacturing, sales and marketing, cybersecurity, and trading, he said. Other interesting use cases include AI ‘reading’ visual information like medical images, satellite images, security camera footage or video advertising.
Setting customer expectations
He said AI adoption will vary widely by industry sector, customer need, and the technology’s ability to do what it’s claimed to. For this reason, he urged SaaS companies to work with their customers to set their expectations correctly and understand what level of accuracy those customers are prepared to accept.
“What we see over and over again is, one of the keys to investing is understanding what is possible and what is not,” O’Driscoll said. “It’s not a single S curve for adoption and for each curve, there’s going to be issues around completeness. As a result, it’s going to be harder to pick winners and harder to identify early.”
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