Keeping Up With Data #116
5 minutes for 5 hours’ worth of reading
Many private equity firms rely on spreadsheets or a static report sent via email to monitor their portfolio companies. According to PwC’s “Next in Private Equity” survey, thirty-six percent of portfolio company respondents simply respond via email. This manual process is not only inefficient, but also slow. As the saying goes, “nothing is older than yesterday’s newspaper.”
However, there seems to be a shift in this trend. Progressive fund managers are establishing data warehouses, implementing portfolio management systems, defining metrics with consistent meanings across the portfolio, automating data pipelines from portfolio companies, and creating dashboards for their own investors.
All companies, including private equity investors themselves, strive to make better decisions, streamline operations, and generate new revenue streams. These happen to be three main ways how data and analytics add value.
Fortunately, there is an abundance of data available to private equity. It just has to be organised and approached strategically. And no, it does not have to arrive in an email.
Today’s reading list looks at artificial intelligence and chatbots from R&D, industry, and personal angles.
- The race of the AI labs heats up: The rise of artificial intelligence has been transforming how the tech industry thinks about innovation. Just look at the boom around ChatGPT triggering actions from both Microsoft and Google (with varying success so far you might say). The large tech corporations produce the majority of research on big AI, which requires a lot of computing power. It is often the smaller challengers triggering the change by bringing the new technology to the public. In a pub fight, we often see the thinner patrons forcing the action, while the heavyweights wait and only get involved later to restore the order. We will likely see the large tech emerging — yet again — as winners of this shake-up. (The Economist)
- Big Tech was moving cautiously on AI. Then came ChatGPT. “When you ain’t got nothing, you got nothing to lose,” sings Bob Dylan. And that’s the situation for many start-ups who can be much less risk averse than incumbent technology leaders. Companies like Meta, Google, or Microsoft, are scrutinised by public, regulators, and governments. They have much more to lose. Not only reputation. Profits and whole business models are on the line too. (The Washington Post)
- Allen & Overy introduces AI chatbot to lawyers in search of efficiencies: Around twenty years ago, I did something stupid — I entered law school. During the studies I worked as a paralegal at Allen & Overy. It was forming six months of my life. After working on one particular legal due diligence I concluded the work is not for me and went to explore the world of data science. And now, fifteen years later, the firm has their own AI chatbot using the underlying GPT technology. I hope makes the legal due diligence work much less dreary. But since the lawyers are still the ones accountable, it’s not a surprise that Allen & Overy said their chatbot “would not replace any of its workforce, and would not reduce billable hours or save money for the company or clients.” (FT)
Enjoy the weekend and remember that keeping up with data is easier than catching up.
