A marching band, a red carpet and a DJ who codes her beats are all things you can get before coffee (and a business card) at the Upfront Summit, one of venture’s most awaited conferences. But not even a marching band could pull focus away from the true star of the show: AI.
Upfront Summit founder Mark Suster and partners Kerry Bennett and Kobie Fuller even performed a sketch centered around AI. The takeaway? AI is a tempting sector to invest in, but it’s too still early to trust blindly.
This isn’t new; hyped-up technologies often get outsized interest. But the atmosphere is different from what it was in 2021 when investors were throwing billions of dollars at 15-minute grocery delivery companies and web3. Venture dry powder is locked up, deals are getting done slower, and some investors are still licking their wounds from the downturn thus far.
AI is feeling it. According to a TechCrunch analysis of PitchBook data, “generative AI companies aren’t going to even set a local quarterly maximum for fundraising in Q1 2023.” Understanding how recently humbled check-writers are thinking about AI will help tech better understand how to execute moonshot visions.
“I am convinced that this is not just a fad,” Alexis Ohanian said on stage. His venture firm with Katelin Holloway is reportedly raising a $776 million fund to back new startups. “I do hope to give solace to the folks who are upset or angry or scared about our AI overlords — I do think we are still a very long way away from any sort of significant tectonic shift in the way that we work and the way we live.”
Dick Costolo, the managing partner at 01 Advisors and former CEO of Twitter, said “it’s hard not to be hyperbolic” when it comes to talking about artificial intelligence. He pointed toward the challenges ahead for the space, specifically calling out the potential cyberbullying that could occur when teenagers get their hands on AI.
And there may be lessons from the past that could be applied here. “We have not learned from examples like Facebook; they may have started as optimistic, idealistic businesses, but at no point [was it thought] that things could actually go wrong,” investor and tech columnist Om Malik said during one of the panels.
“It’s the job of the technology industry to do a better job of policing itself; the less we do the more we let others define the destiny of our technology,” Malik said, describing AI as “software softwaring.”
“The ethicists in here tend to be in the academics, not in the organizations,” Costolo said. Stanford Internet Observatory’s Renee Diresta, one of the leading researchers on disinformation, said she was thinking about “the balance of the technologically feasible point of view and socially desirable point of view” when it comes to the regulation of AI.
The gravity of the sector’s second-order effects isn’t detracting from the ambition. While Kleiner Perkins said on stage that its investment strategy is not as thematic as it used to be, partner Mamoon Hamid said that it feels like a “seminal moment for technology.” He compared this moment to the launch of AWS or the iPhone in terms of how consumers are being exposed “to the possibilities and potential of AI.” Ilya Fushman, another Kleiner Perkins partner, said that “it’s almost an introduction to electricity.”
“It’s fear of the unknown and fear of the thing you haven’t yet experienced,” he said. “The onus is on all of us to keep a moral compass while we invest … this will be a big dislocation in the jobs market and finding ways to bring folks up the learning curve who might be left a little behind.” Hamid dodged the question around negative impacts of the tech, however, saying that “he is a techno-optimist.”
Kapor Capital, which recently closed its largest fund to date, is one of the outliers: The firm’s not rushing to back AI companies. “We are inching our way into AI, not jumping in,” partner Brian Dixon said on stage. “With web3, our big thing was how does this actually impact people who need it the most.” The firm, as a result, made zero crypto investments. AI might be different, but cautiously so.
“Our sweet spot is at the intersection at tech and racial and social justice,” Mitch Kapor said. “There are going to be some big AI plays on that theme.”
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