By Louis Lehot, the founder of L2 Counsel, P.C. and the video blog series #askasiliconvalleylawyer
In the second half of 2020, businesses that innovate, adapt and integrate AI into their business models will improve their chances of surviving and prospering as the COVID-19 disruption is controlled (if it can be). Those that don’t will fall by the wayside. While there are innumerable uses for AI technologies across industries, entrepreneurs, technologists and smart investors are digging deep for ways to implement those technologies to disrupt established markets. Applications for artificial intelligence will enable an accelerated global economic recovery to lift us out of a crippling recession.
Here are four ways in which AI could be used to change the post-pandemic economy:
Empowered Edge
In edge computing, data collection, processing and distribution are located near the IoT devices that generate the information. As these devices proliferate, keeping data flow local and distributed, as opposed to transmitting to and from a cloud, should reduce latency. AI plays a central role in IoT devices. Training and inferencing software are tools that make the devices smart. As the number of embedded AI chips, whether inferencing or not, proliferate in IoT devices, the processing power, networking and storage at the edge mushrooms, making transfer with the cloud less necessary. According to the Gartner Group, edge computing and cloud computing are evolving as complementary models.
Edge data centers and edge computing became crucial with the advent of COVID-19 and its work from home and social distancing norms. Edge computing, supported by AI, improves network performance for end-users, whether they are streaming entertainment services or Zooming through meetings.
Smart Spaces
Smart spaces are physical or digital environments where open, connected, coordinated, and intelligent ecosystems are used by humans and technology-enabled systems to interact. Individual technologies come out of silos to combine efforts to create a collaborative environment, which leads to the development of new smart spaces. Smart cities are a great example of smart spaces. In such cities, intelligent urban ecosystem frameworks, linking to social and community collaboration, are used to design spaces that combine business, residential, and industrial communities. In the face of the global pandemic, smart spaces may be in high demand for adoption by businesses, considering how closely our everyday lives are intertwined with technology. Residential and commercial real estate will leverage this technology to redesign our living and work spaces to leverage AI to control the spread of COVID-19, informing us who can come into the office and when, and how often and when to do testing, contact tracing, regulating the healthy use of elevators, and more.
Augmented Analytics
Data scientists have never before had such an embarrassment of riches. And while it sounds promising, it would be nearly impossible to explore all the possibilities presented by the data. Unable to parse the mountains of information, businesses miss opportunities and fail to monetize in the myriad of ways that the data suggests is low-hanging fruit. Data science and machine learning platforms dramatically changed the ways businesses generate analytics insights in recent years. Augmented analytics, using machine learning?—?a subset of AI?—?helps them find crucial hidden patterns, sometimes without the help of professional data scientists. Because of the high cost and scarcity of professional data scientists, the number of citizen data scientists may grow exponentially in the near term, to help businesses scale. Augmented analytics and data scientists will make data insights broadly available at all levels of an organization.
The global pandemic is not likely to end soon. Most businesses will need to rethink their strategies and find new ways to maintain necessary cash flows. But how much cash flow will be required? This is a crucial piece of information. With augmented analytics and compiled data, companies can create cash flow simulations, plan business operations, and conduct liquidity analyses to understand what it will take.
Businesses could also streamline internal operations and track productivity by measuring individual and collective time spent on meetings and selected tasks, for example. Comparing findings to pre-pandemic performance may provide insights into areas that are doing well and areas where improvement is needed.
Blockchain
Blockchain is a list of timestamped records (blocks), linked by cryptography, and stored in a distributed ledger. Because the ledger records transactions across many computers and because each record contains something of a breadcrumb trail to the prior block, recorded transactions cannot be altered without altering all subsequent blocks. With blockchain, businesses can track transactions and work with unknown or as yet untrusted parties without going through a third-party intermediary. Blockchain helps ease friction inside business processes and its popularity has spread to other spheres, such as government, healthcare, manufacturing, supply chains, and many more.
COVID-19 disruption shows us that blockchain can be used in a multiplicity of new ways. For example, the U.S. Department of Homeland Security’s guidelines defined blockchain managers in food and agricultural distribution as “critical infrastructure workers.” In the healthcare arena, blockchains could be used to facilitate interactions between payers and providers or to allow patients to create rules regarding access to their records.
Criticism of blockchain is commonplace. Blockchain is blamed for sacrificing efficiency for security?—?current public blockchains can consume exorbitant amounts of energy?—?but this could be resolved using AI to improve algorithms. The amount of storage needed for blockchain transactions may also decrease through the use of AI. Energy consumption in other sectors has already moderated via AI application, and all industries that rely on blockchain for data transfer and supply-chain management will benefit if blockchain energy consumption diminishes. Lessened energy consumption might also accelerate widespread adoption of the technology.
Market Trends in AI
The PwC/CBInsights MoneyTree report for Q1 2020 notes that VC firms invested more than $4.0 billion of fresh capital into 148 AI deals. Among these, five companies were identified as receiving at least $200 million in so-called “mega-rounds”: pony.ai, Netskope, Berkshire Grey, SambaNova Systems and SentinelOne. These companies integrate many of the applications mentioned previously in this article. SambaNova Systems focuses on building machine learning and big data analytics platforms. Pony.ai is developing a fully autonomous car. Netskope provides a computer security platform. Berkshire Grey combines AI and robotics to automate omnichannel fulfillment, and SentinelOne markets an autonomous cybersecurity platform.
Applications for AI
Healthcare employs AI to let users analyze health data to find any possible anomalies, diagnose disorders and prescribe solutions. The automotive industry uses AI to make autonomous driving possible. AI is widely used by fund managers to deploy assets and harvest dividends and returns. E-tailers use AI to predict and offer products that consumers will be interested in buying. Cyber-security uses AI to aid in identifying and eliminating threats. Lawyers use AI to quickly crunch terabytes of data, find discoverable evidence, and identifying potential liabilities while maintaining due diligence. In the gaming industry, AI predicts player behavior, identifies anti-social conduct, and increases the sale of virtual goods. The military uses AI to identify threats and improve security. AI is seemingly omnipresent.
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Innovating Inside and Out
If you are searching for examples of companies that failed to implement new technology to innovate and evolve their business models, look no further. Bankruptcy courts’ archives are filled with cautionary tales. If you still doubt, compare the value of a New York taxi medallion in 2010 (before Uber and Lyft entered the market) to its value now. Or, consider the number of smartphones that used the once-widespread Symbian operating system, and contrast that number to smartphones using it today (hint, close or equal to zero).
To be successful companies, need to expedite their own digital transformation plans and enhance internal innovation and venturing initiatives. Among the most successful tech companies, dual innovation platforms are normal. To make this process organic, companies establish internal skunk labs and R&D programs. Famously, in 2004, Google Founders Sergey Brin and Larry Page encouraged employees to spend “20% of their time working on what they think will most benefit Google,” in addition to their regular projects.
Innovation can be imported, as well as homegrown, by implementing licensing programs, accelerator and incubator initiatives, commercial agreements, joint ventures, and strategic investments. During the last ten years, many corporations formed their own venture groups to look for new technologies, invest minority seed-stage capital, and advance go-to-market strategies by connecting the recipient with the investing corporation’s internal business units. Such groups look for new technologies, invest minority seed-stage capital, and advance the recipient’s go-to-market strategy by connecting it with the investors own business units. Corporate development arms look for adjacent or complementary technologies or teams of engineers to acquire in strategic acquisitions and “acqui-hires.”
Our economy may benefit from the infusion of new products, partnerships, distribution channels, revenue streams, and higher-paying, value-added jobs from these combined internal and external efforts to innovate.
We can achieve “singularity” if potential AI applications?—?automating processes, developing operations, improving security, promoting commerce and protecting against fraud?—?accelerate.
AI technologies and applications aimed at revamping business models may be the key to recovery from this global crisis, for struggling companies and economies. Marc Andreesen recently wrote, “it’s time to build.” To his stirring manifesto, we would add, “it wouldn’t hurt to do it with AI.”
Louis Lehot is the founder of L2 Counsel, P.C. , an elite boutique law firm in Palo Alto, California, established to serve a gap in the market for innovators, disruptors, entrepreneurs and their investors with strategic solutions that make sense. Whether your company is two people just getting off the ground, or a large publicly traded company, Louis Lehot’s team has the experience and expertise to serve your interests. L2 Counsel specializes in representing high growth, innovative companies, helping them at all stages of development. From assisting with formation to financing, from seed or venture capital investors, to preparing for an exit, a public financing on a major international joint venture, Louis takes pride in assisting companies as they grow. Helping a business get big, go public, or get acquired, is his specialty. Louis has worked across sectors, from artificial intelligence, cybersecurity, fintech, enterprise software, real estate, life sciences, to clean energy technologies and projects. His broad experience uniquely positions him to provide tailored advice to drive outcomes for his clients. Louisis widely known for his expertise in cross-border transactions and has been a prominent business and legal leader in Silicon Valley. L2 Counsel is positioned to serve innovators across a wide range of sectors and Louis welcomes conversations to help ideas reach their growth objectives.
Public and private companies, financial sponsors, venture capitalists, investors and investment banks seek out Louis Lehot for smart counsel and skill in forming, financing, governing, buying and selling companies. He uses his extensive experience to benefit a wide variety of businesses at all stages of development?—?from two founders and a laptop through venture capital financing to IPO and beyond. Drawing on his background advising non-US multinationals looking to access US capital markets, he is also uniquely positioned to assist companies with cross border transactions.
About L2 Counsel, P.C.
L2 Counsel, P.C. is an elite boutique law firm designed to serve entrepreneurs, innovative companies and strategic investors with sound legal strategies and solutions. We serve businesses in all stages of growth, from the garage to global, utilizing best-in-class technology-enabled services and vendors that allow us to remain nimble and effective. We have significant expertise and experience working with technology, healthcare, and clean energy companies at all stages of growth.
