AI Isn’t the Enemy

A real-life Iron Man explains why AI isn’t the Boogeyman

When I started writing this issue I was going to say this week has been super chaotic with everything happening, then I took a beat and realized that so many things that aren’t great have been normalized over the past few months and years in our society. I just want to stress to everyone that a lot of things happening right now ARE NOT NORMAL. We are in extraordinary times so do whatever you need to do in order to retain some semblance of normalcy in your life. I hope everyone can find some great ways to self-soothe and calm your brain down when times are like these.

And with that lil’ woo woo pep talk done let’s dive into our regularly scheduled programming…

Roses & Thorns

(I’m adding this new section to the newsletter where I can talk about the good things and the bad things happening in my life or things I’m mad or happy about…consider this to be muh general ranty mcranty section for your enjoyment 🙂)

Roses:

• I started training my brain. I know this sounds insane…but I promise it’s not. One of my friends has successfully been doing brain training and recommended I try it. I’ve got a few gymnastics-related concussions and I’m getting older so my brain isn’t what it used to be. I want my brain to be the souped-up sportscar it’s designed to be versus a mini-van stalled in the middle of the highway. Thankfully, the brain is malleable so we can all improve its performance. I am working with Dr. Andrew Hill of Peak Brain Institute and I highly recommend it to everyone interested in neuroscience. You get to start with a cool brain assessment (swim cap with weird nodes and all) and see what your attention looks like compared to other folks your age. The team you work with sets you up with a full training program and you get to play cool brain games. (In my case I’m a big fan of the games that show you pictures of baby animals.) Anyway…I loves it.

Thorns:

• The Writers Guild of America is now on strike. And while the tech industry is in love with AI, let’s just say WGA members don’t quite feel the same way. One point of contention is that the WGA would like to restrict the use of artificial intelligence in writing film and television scripts. Meanwhile, studios are struggling to make a profit in the face of rapidly shrinking ad revenue. This has led to a stalemate with studios saying that they would be open to discussing new technologies on an annual basis. Some of y’all might not know this but a few of my family members have written films as a way to supplement their paltry novelist salaries, so it’s about to be an angry time with shitty entertainment options in our household if this situation isn’t brought to a close. Feel free to take a look at the WGA statement to learn more about what’s happening and what they’re trying to accomplish with the strike.

First Republic’s ‘Hold My Beer’ Moment

OOOOOOOF. So here we are again. More banks failing. In the past few weeks First Republic became the next victim and has now taken the mantle as the second-most costly bank failure in United States history. Sorry, SVB you’ve been bumped down to three now.

The good news for FRB is that they failed up with their acquisition by J.P. Morgan. The bad news for everyone else is that we are watching the last few gasps of regional banking. This is no bueno. As regional banks fail at an increasing rate, expect to see the underbanked population in the US increase again, as well as less innovation uptake in the space for both institutions and consumers (small banks have been frequent customers for fintech infrastructure companies, not big banks.)

Each day regional banks are continuing to slip downward. As I write this, we’re all on a deathwatch for PacWest. By the time I hit publish, that might already be a foregone conclusion. I hope that the banking system manipulation investigations happening get taken seriously because these banks deserve a fighting chance.

On a related note…let’s talk about what the FDIC has to say…

Powell has already said a rate cut shouldn’t be expected in 2023. Almost 80% of chief economists surveyed by the WEF recently said that central banks face “a trade-off between managing inflation and maintaining financial sector stability.” This means that high-interest rates, inflation, and financial-industry instability might be here for a while. With all that in mind, the FDIC finally decided to say some words.

FDIC Chairman, Martin Gruenberg put out a statement this week on updates to our system of insuring bank accounts. Gruenberg acknowledges that technology will most likely be a contributing factor to bank runs in the future. (Boo!) He also acknowledges that insuring deposits needs to be done in the spirit of what the FDIC intended. (Sorry to the sweep account products that launched touting astronomical FDIC insurance figures 😢) I would encourage everyone to read the statement and the accompanying 70 page report, as I think it gives us a good direction for what the FDIC is thinking right now around protecting assets during a period of more frequent bank failures. But yeah…either way the FDIC as we know it is in for a big change.

It’s Finally Time for the SEC to Address Buybacks…

The SEC has just passed a rule that requires companies to provide much more information about share buybacks. Now, companies need to issue daily updates on repurchases during the previous quarter, as well as the reasoning for those repurchases. Companies will now also need to detail their policies to limit insider trading during buyback programs. These rules are addressing a few things that have caused a lot of turmoil in the past. I also think this extra transparency will also help the markets price companies more accurately so I’m excited to see these measures put into place!

…While Also Changing Their Mind About Digital Assets

In what is either a shock or wholly unsurprising move (depending on who you ask) the Securities and Exchange Commission has deleted their definition of “digital asset” in a final rule. If the definition had stayed in past the draft, the U.S. could have started formalizing crypto’s role. But, alas, this was not to be. After FTX, most crypto companies got scared away from working with the SEC. And the negative effects of this are being felt across the US crypto regulatory landscape.

I’m going blue in the face saying this so many times, but if you are a crypto company you need to keep your nose clean and stay in the good graces of the SEC, now more than ever. Godspeed y’all!

The FTC isn’t feeling great about the Metaverse

The FTC has just proposed new restrictions on Meta platforms. (Quelle surprise!) The agency has accused the tech giant of misleading parents and violating a 2020 privacy order more times than it can count. Big yikes for Zuckerberg & Co.

The proposed sanctions would prohibit the company from profiting off data it collects from users under 18 years of age. It would also limit the use of facial recognition technology and require Meta to provide additional protection for users.

This could be a huge buzzkill for Meta and would likely hamper any efforts they would undertake in the AI space.

I don’t expect to see Meta retain much excitement for AI after this. However, it could be interesting for Meta’s leadership and their ability to make shareholders happy. Is this finally the inflection point that Metaverse naysayers have been waiting for?

AI Isn’t the Enemy by Marc Ward (CEO & Founder, Socian Technologies)

Today, I asked one of Vol. 1 Ventures portfolio founders, Marc Ward - CEO/Founder of Socian Technologies, to talk about why we need to be bullish on developing ethical AI tools. I think it’s very interesting to think about how regulations help or hamper AI development. Right now there is so much uncertainty and in certain camps people are scared about what AI means for their place in the world.

Ethical AI is a hot topic and there’s no one better to discuss it than Marc. I describe Marc as a “real life Iron Man”—he’s a rocket scientist and deeply experienced technologist, building an amazing AI-led drone defense and security company that will change how we ethically protect our communities. I was able to meet Marc from another founder we know, and Vol. 1 Ventures was lucky to invest in his preseed company early. Now, Socian is working with local, state, and federal governments to implement safe and secure technologies that protect and serve communities alongside existing security.

So now without further ado, I’ll let Marc take it away…

Steve Wozniak has been hitting the talk show circuit, expressing his deep concern that AI could lead to job displacement, privacy violations, and other negative consequences. He's doing so without anyone to argue that AI has the potential to revolutionize many industries, improve efficiency and safety, and create new opportunities—ethically and safely. He needs solid counterpoints. Let me tell you how a great engineer (like myself!) can use artificial intelligence to improve your day-to-day life.

1. Improved Healthcare: AI can help doctors and healthcare professionals make better diagnoses and treatment decisions. I'm developing AI algorithms that can analyze medical data and identify patterns that can help doctors make more accurate diagnoses. Additionally, AI-powered hardware tech can assist with surgeries and other medical procedures, reducing the risk of human error.

2. Safer Transportation: Self-driving cars powered by AI are already reducing the number of accidents caused by human error. AI can help these cars make better decisions and react faster than humans to minimize potential hazards on the road.

3. Increased Efficiency: AI-powered automation can help businesses and industries become more efficient by streamlining processes and reducing the risk of errors. This can lead to increased productivity and profitability, as well as a safer work environment. I hate to say it, but can you think of a more efficient automated system than Amazon warehouses? Top tier in logistics.

4. Improved Communication: Natural Language Processing (NLP) technology can help people communicate more effectively with machines and with each other. For example, AI-powered translation tools can help people who speak different languages communicate with each other in real time, improving cross-cultural understanding.

5. Enhanced Security: Our advanced AI can help improve security by detecting and identifying potential threats before they occur. Additionally, our drone/AI solution can help law enforcement agencies by analyzing data to identify potential criminal activity and assist in investigations (but you knew about that didn't you? You sly devil...)

The fear-mongering around AI has to stop before it spirals out of control because Steve Wozniak is touting that the bad guys will get it and take over your computer, smartwatch, and your Tesla. In actuality, we know that AI will evolve and change based on the builders in the ecosystem that can make this new world a reality. It is up to individuals, businesses, and policymakers to ensure that AI is used in a responsible and ethical manner, taking into account both the potential benefits and the potential risks because, yes, there are both!

I’m saying that we should build better technology that can “protect” you from the bad guys. Think of it like this; bad guys used FIRE when it was first discovered. Bad guys used guns when that tech was created. However, we now have fire extinguishers and bulletproof vests—because counter-tech is always engineered by the good guys.

The solution isn’t to let AI be a toy for those in elite circles. This is tech that can save lives and create processes for a more prosperous world. Let's get back to building.

Marc Ward is an expert in AI and robotics engineering. He is also the CEO and Co-Founder of Socian Technologies. Marc can be reached via Twitter (@socian08) or email ([email protected])

Sí or No

Now that we’re entering peak tech social szn, the question is: how truly helpful, useful, or necessary is a packed professional social calendar?

I was a founder during the height of a frothy market. I had some serious FOMO about anything and everything. From my perspective as an outsider breaking into tech, the entire tech world made it seem like it was critical to my business that I attend these things.

After attending a few of these things, I quickly realized that going to all these Tech Week’s and galavanting to parties held by cartoon JPEG apes is diametrically opposed to what you should be doing as a founder. It’s actually a really big negative signal—it’s like being a Z-List actor going to every single movie premiere and event in LA in hopes of getting cast in a Marvel movie…that’s not the way to get noticed (positively at least.)

As a founder, if you are going to these things to actually help your company or meet VCs to raise from…that flat out won’t happen. Hard NO. If you’re a VC looking to go meet founders, again, Hard NO—the founders you want to invest in won’t waste their time with these events. And if you’re an operator…what are you thinking? With tech layoffs not subsiding anytime soon, that gets an Absolutely Hard No from me.

If you are going to these things for a hybrid networking-kind-of-vacation then Sí, by all means, go. Have fun. Meet new people. Do not tell people you’re there for work though, because that’s patently untrue on all fronts. If you’re coming to LA Tech Week, it’d be a much better look to say you’re in LA on vacation and your friend dragged you to an event, versus going to a party hoping to pitch an a16z partner.

I think we need to stop the facade of telling people these things are helpful or important. You can build a great company from any city and you don’t need to be surrounded by parties or people focused on optimizing for clout to be a successful builder in the startup space.

The Great Gatsby era for startups is ending. And honestly, I’m excited to see what an ecosystem of people focused on building game-changing technologies actually looks like.

Thanks, everyone for the read this week! Let me know your thoughts on AI regulation or anything else that piques your interest.

Have a great weekend!

xoxo

Stevie