Fireside Chat with Ullas Naik

AI+ 2018 Forum Fireside Chat with Ullas Naik, a Forbes Top 50 Angel Investor

According to Forbes recently released list of top 50 angel investors, Ullas Naik, founder and partner of Streamlined Ventures, is in the top 50 with 48 angel investments. For the closing event of our 2018 forum, Naik participated in a fireside chat moderated by Safa Rashtchy, founder and general partner of Think+ Ventures, who is also known as the “Founding father of Chinese Internets on Wall Street.”

Ullas Naik, founder and partner of Streamlined Ventures

Safa Rashtchy, founder and general partner of Think+ Ventures

Highlights:

1.     Success for investors is often found at the intersection of startups with top founders and  a strong drive for success, and a large market potential for its product

2.     Ullas’ investment philosophy into AI is that the AI technology must bring value to consumers in specific user application scenarios

3.     Ullas dislikes the phrase AI because it is a phrase with little meaning and wants it to be more specifically defined

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Fireside Chat summary

 Safa Rashtchy: Ullas, what is the secret to your success?

 Ullas Naik:

First of all, we always work hard, regardless of if we are succeeding or failing at the moment.

Secondly, Silicon Valley is an excellent location for investors and it has provided numerous high-quality investment opportunities for Streamlined Ventures.

Finally, we always abide by our investment philosophy, no matter what the circumstances are.

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 Safa Rashtchy:

What is your investment philosophy for investing in AI?

Ullas Naik:

I dislike the word AI because the phrase has little meaning. It needs to be more specific, such as AI robotics. My investment philosophy is to invest in AI technology that brings value to consumers in specific user application scenarios.

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Safa Rashtchy: What is the future for AI venture capital?

Ullas Naik:

In the past:

Seed Round Financing → A Round Financing → Product

In the present:

Seed Round Financing → Product → A Round Financing

In the future:

There are two prerequisites for AI projects to obtain financing:

• Has a team of engineers

• Has already brought basic value to the consumer

Safa Rashtchy:

Can you please tell us about Streamlined Ventures' investment philosophy?

 Ullas Naik:

1. Investment is about investing in people. Simply put, it is about investing in top founders who can create value from our capital.

2. Invest in startups whose target market segments is a “blue ocean” market; otherwise there is no need to invest capital in it. It would be more logical to let your capital appreciate naturally.

3. Invest in founders who have to drive for success. I had previously invested in a founder who was unable to support himself or his family, so he had a strong drive to succeed, which eventually led to success for the both of us.

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Safa Rashtchy:

What has your experience taught you about investing?

Ullas Naik:

1. The disintegration of the team is fatal to the startup; reasonable ownership structure and incentives are the best “precautionary measures.”

2. Timing is crucial, because the same market on the upturn is quite different from when it’s on the downturn.

3. External CEOs and managers are often unfamiliar with the company's vision and mission.

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Currently, AI is quite overhyped, inflating the valuations of AI startups. However, investors should not be worried as long as they evaluate a startup’s success based on its ideas, products, and business models. AI is the future and we will continue to invest in AI technology because it will drive humanity’s progress and development.

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In conclusion, we believe while its true that AI is quite hyped up and valuations have been inflated, investors should not be worried as long as we remain focused on our investment thesis and continue to scrutinize thoroughly each and every idea, product, and business model. Together with Ullas, Constellar Ventures will continue to invest in AI because we believe AI is the future and the force behind the next wave of technology advancement.

AI+ in China vs. in US

AI+ 2018 Summit “AI in China vs. in the US” Panel: What are the similarities and differences?

For the last panel of this year’s forum, Victoria Slivkoff (Head of Global Strategic Partnerships and APAC General Manager for Innovation & Entrepreneurship for the University of California system) moderated the “AI in China vs. in the US” panel, in which Richard Yan (Chief Operating Officer of Vited Labs Limited), Qing Lu (Cofounder and Chief Financial Officer of JingChi.ai), and Song Cao (Cofounder and Chief Executive Officer of Turing Video) participated.

How large is the gap between AI technology in China and the United State?

Compared with the entire industry composition of AI in the United States, AI in China mainly focuses on the application level, with only initial development in the foundational level (processors and chip technology) and the technical level (natural language processing, computer vision imaging, and technical platforms).

Turing Video's ground security robot NIMBO

Song Cao, who is also a software engineer at security robotics company, Turing Video, has research experience in computer vision technology and robotics at Tsinghua University and the University of Southern California. He believes that the gap between China and the United States in AI research is gradually narrowing, but the United States is still the leader in AI research.

Comparison of AI between China and the US

The United States, the main driving force behind the development of AI technology, is kickstarting the developing from step 0 to 1

China, the main disseminator of AI technology, will bring it from step 1 to N

In addition, Cao believes that it is easier to obtain data in China, which is useful for developing and commercializing AI technology, due to the differences in policies regulating consumer data use and privacy protection in China and the United States.

What are the respective advantages of China and the United States in AI technology?

US’ Advantages

• The AI industry composition in the US is more reasonable, and for foundational-level AI technology like processors and chips, both the number of enterprises and the amount of financing in the US vastly outnumbers China’s.

• The US has many AI experts and professionals in the industry.

Compared with the United States, China places more emphasis on the application level, and only its developments in natural language processing, computer vision, and intelligent robots can compete with the United States on a technical level. It can be said that the Chinese AI industry is more “top-heavy” compared with U.S. AI industry, which is more “balanced” in its layout.

The competition in the field of artificial intelligence is mainly reflected in the competition for AI experts, which includes not only the competition for those working directly in the AI industry, but also the competition for those engaged in research and development involving AI. Due to the early start of the development of AI technology in the United States and its numerous world-class universities, the US is far ahead in the competition for AI talents.

China’s advantages

• China's market is unique in its large size and huge market demand will stimulate the supply side and promote the rapid growth of enterprises.

• China views the development of AI technology as important on a national level. To this end, the government has invested capital in numerous AI industrial parks and science parks, which do not exist in the United States.

China's advantages in artificial intelligence are mainly reflected at the market level. At the same time, China's huge population has produced large amounts of data, which are “sufficient and necessary conditions” for the commercialization of AI technology.

JingChi’s move from Silicon Valley to the Guangzhou Development Zone six months after its establishment is a good example of the Chinese government's interest in and investment into the development of AI.

Qing Lu said that the local government provided JingChi with support and assistance in three key areas:

1. Autonomous driving tests

2. Maps of the city

3. Office space

Lu said he has always insisted that government support and capital are “good” rather than “necessary.” However, the Chinese government is likely one of the only avenues that have could have provided such strong support for a six-month-old self-driving startup, and JingChi could not have developed so rapidly without the government’s support. Lu also thanked SVSTA and Guangzhou GoogolPark for facilitating JingChi’s move to Guangzhou.

What are the challenges of and opportunities for AI in China?

China's AI industry is currently facing the challenges brought about by the Sino–US trade war.

The trade war has placed stricter limits on the exports of American AI chips and hardware technology into China, leading to the need for China to increase its research and development efforts in the field of AI infrastructure.

In China, AI technology has the opportunity to develop in all fields. According to Richard Yan, Chief Operating Officer of Vited Labs Limited, AI in conjunction with blockchain has the most potential in areas such as  payment systems, office workflow, public services.

AI+ How to Invest in AI?

AI+ 2018 Summit “AI+ Investment” Panel: How to Invest in AI?

For the second panel of the afternoon, Tom Cole (Advisor at Translink Capital), Eric Chen (Partner of OVO Ventures), and Marc Wang, (Partner at China Economic Cooperation Group) sat on the “AI+ Investments” panel moderated by Safa Rashtchy, founder and general partner of Think+ Ventures.

Highlights from the Panel

“We're not investing in AI, we're investing in businesses with real commercial value.”

——Tom Cole, Advisor at Translink Capital

“The team needs to develop an effective solution to solve problems of consequence.”

——Marc Wang, Partner at China Economic Cooperation Group

“AI startups need a way to obtain data.”

—— Eric Chen, Partner of OVO Ventures

Is there too much investment hype in AI? Is the valuation of AI reasonable?

Moderator Safa Rashtchy began by presenting the technology hype cycle and technology adoption lifecycle as a launching point for discussion among the panelists.

The panelists agreed that AI technology is currently in the late second stage of the technology hype cycle—the peak of inflated expectations. This indicates that AI is receiving a lot of attention from the public, giving the illusion of “success,” when in reality, many AI startups are unable to cope with the high expectations of both investors and consumers.

At the same time, the panelists placed AI in the early part of the second stage in the technology adoption lifecycle—the early adopters stage. This reflects that current consumers of AI only account for 5% of the total number of people who will eventually use AI. In other words, AI technology is far from prevalent.

How should you invest in AI?

• The first thing to keep in mind is that AI is extremely broad and the technology can be applied to various fields. To invest successfully in AI, an investor first needs to define a narrower purview within the field of AI.

• An investor should invest in AI businesses that generate real commercial value rather than investing in businesses because of their AI technology.

• When evaluating early-stage ventures, an investor should look into the entrepreneurial experience, past startup successes, and other skills of the startup team. Moreover, the team needs to have defined a solution for consumer pain points in specific user application scenarios.

• Investors should determine if these startups have the appropriate AI technology that will enable them to solve the problem(s) they set out to solve.

• Finally, these startups need to have some way to obtain data, particularly 2C projects, which need enough data to compete with industry giants in a specific segment of the market.

Where are the investment opportunities in AI?

• The panelists believed that there was a bright future for AI investment in fields such as autonomous vehicles, internet of things (IoT), financial technology, healthcare, and education.

• Among those, AI will most likely disrupt the healthcare industry, because of the high demand as well as AI’s ability to reduce healthcare-related costs and improve the quality of service.

• At the same time, the panelists also advised investors that due to the particularities of the healthcare industry, they should consider the impact of relevant policies and regulations on the application of AI technology in the healthcare industry.

AI+ Know Your Customer

AI+ 2018 Summit "Know Your Customer” Panel: Using AI to Understand Consumers

The first panel of the afternoon saw Jack Wu, founder and CEO of Nightingale Security, Eric Rosenblum, managing partner at Tsingyuan Ventures, Savan Devani, CEO of BioTrillion, participate in the “AI + Know Your Customer” panel, moderated by Vivian Li, Director of Cognitive Science at Megagon Labs.

The panelists began by describing how AI must develop to achieve commercialization: first, it must understand the consumers’ needs and thus identify customer pain points for specific user application scenarios; then, it must solve these pain points; and finally, the continued and ever-improving application of AI technology in these situations will drive changes in consumer behavior rather than force consumers to accept solutions proposed by AI. Throughout this process, AI technology must deliver cheaper, faster, and more effective results. Most importantly, AI must allow for customization, for consumers to tailor the solutions to their own needs, since they best understand their specific pain points and needs. Wu explained that Nightingale Security exemplifies this last point: their technology supports the pre-programming of their security drones to allow for flexible monitoring of different environments.

“AI needs to anticipate and understand the needs of consumers and must also deliver better, faster, and cheaper results.”

——Jack Wu, founder and CEO of Nightingale Security

Diagram of Nightingale Security drone following a scheduled autonomous patrol

One cannot mention artificial intelligence without also mentioning the problem of data collection. The panelists identified the two main limitations with our current data collection methods as the lack of continuous data and lack of objectivity in data. To this end, Devani introduced BioTrillion’s data collection method for medical health data to the audience. BioTrillion collects data from the consumer’s ambient sensors and wearable sensors to ensure the data is continuous and uses statistical hypothetical testing to ensure the data is objective. With continuous and objective data, BioTrillion can thus predict the probability of developing common diseases and suggest preventive care to consumers. Devani helped clarify the idea of ​​data collection for the audience and we believe that BioTrillion’s data collection method can be applied not only to the health industry but also to other fields.

“Increased data collection and computing power have promoted the use of AI in various fields.We should make use of the respective advantages of AI in China and the United States, and from there, adopt a development strategy tailored to local conditions.”

——Savan Devani, CEO of BioTrillion

Biotrillion adheres to the philosophy of "data comes from life, data for life"

During the dialogue, the panelists also shared their views on the differences between Chinese and American artificial intelligence. They believe that China's advantage in artificial intelligence technology is its ability to achieve low costs, whether in R&D, production, or manufacturing, whereas the US has the advantage of being the leader in computer vision technology. At the same time, the panelists believe that the implementation of AI has to be tailored to local conditions. For example, since the number of hospitals and doctors per capita in China is less than that of the United States, certain AI technology would be more suitable for mobile platforms rather than in the hospital’s network. By utilizing the respective advantages of each country’s AI technology and implementing technology tailored to local conditions, multinational companies and others can gain a competitive advantage.

 The future workplace is predicted to be composed of three types of employees—human, robot, and artificial intelligence—just as thirty years ago, the workplace consisted of human employees and computers. Rosenblum illustrated the synthesis of these three elements by explaining a common scenario encountered by DoorDash and similar food delivery services. DoorDash utilizes robots to deliver food but when it is late, DoorDash’s AI network detects this and reports it to customer service, where a human employee then handles the situation. All the panelists agreed that AI will co-exist with humans and robots; in particular, robots with artificial intelligence will be capable of performing tasks that humans are unwilling to do or unable to do well, thus increasing productivity and efficiency.

“AI will not replace humans; in fact, the synthesis of human and robot workforces will lead to better user experiences. Additionally, we can learn from the way AI thinks.”

——Eric Rosenblum, managing partner at Tsingyuan Ventures

Tsingyuan Ventures focuses on using technology to bridge the gap between China and the United States

Ever since AlphaGo defeated Lee Sedol, the idea that AI will replace humans has been discussed endlessly. In response, the panelists contended that self-learning AI will not become the reality of our future, because it will be difficult for AI to transcend human capabilities. However, this does not preclude humans from learning from AI in order to change our lifestyles and how we learn. For example, some of AlphaGo's chess move are novice moves that chess masters know to avoid, but the fact that AlphaGo still wins means we can still learn from AI.

Keynote: How did AI transform the services industry?

Keynote: Bob Bauer on the Role of Robots and AI in the Service Industry

Thursday October 4, 2018 — Over 250 people gathered in the Computer History Museum for the second annual Silicon Valley Science and Technology Forum. This year’s theme was “AI+ 2018: A World Reimagined.” The event commenced with a keynote given by Bob Bauer, Chief Strategy Officer at Savioke, on how AI and robotics is transforming the services industry, complete with a demonstration of Savioke’s service robot.

Bauer began by explaining the historical development of service robots, dividing this process into three stages: the perception stage that began in 1956; the neural network stage that began in 1991; and the deep learning stage that began in 2010. With the integration of AI software, robotic models have been undergoing gradual improvements, from robots that can only perform mechanical motion to robots that have observational, computational, and analytical behavior.

Bauer then explained that their strength lay in the fact that AI service robots can perform tasks that humans are unwilling or unable to perform. The integration of robots into the service industry could thus greatly enhance the quality of services provided.

Izumi Yaskawa with service robot

Co-Founder& Business development, Savioke Inc.

During his presentation, Bauer included a demonstration of Savioke’s hospitality service robot, Relay, which delivered a bottle of water to where Bauer was standing on stage.

Current robotics technology is improving at an exponential rate, which will lower the costs of research, development and production of robots. The earliest use of service robots was in the military; it was then used in the industrial sector for around 10 years, and is now expected to play a transformative role in the medical field. At the same time, ever-increasing processing speeds is one of the major trends that we’re going to see in the field of robotics.

The market for service robots will be affected by regulation, but the larger the market grows, the likelier it is for it to obtain advantageous regulation and government support.