Investing in Artificial Intelligence (AI) with Vicarious
Many disruptive technologies have been first thought up by science fiction writers whose technology inventions were only limited by their imaginations. One of the most pervasive themes in science fiction has been the portrayal of computers or robots that demonstrate artificial intelligence or AI. Perhaps the most publicized form of artificial intelligence at the moment is IBM’s Watson, a cognitive computing platform that made headlines in 2011 by beating 2 humans in a Jeopardy game.
Cognitive computing is a subset of AI. Specifically, it is the ability for a computer to learn more over time based on experience, something the human brain does naturally. The need for cognitive computing has arisen from the prevalence of “big data”, a term which refers to the increased “digitization” of everything around us (e.g. the Internet of Things). This in turn creates massive datasets which then need to be analyzed to provide actionable information. Cognitive computing solutions like IBM’s Watson are one method used to analyze these large datasets and start to establish patterns and connections that lead to better business decisions. With an estimated CAGR of 38.0% from 2014 to 2019, cognitive computing is just one high-growth application of artificial intelligence that is now being commercialized to create value.
Investing in Cognitive Computing
While you can buy shares of IBM in hopes of receiving some exposure to cognitive computing, the reality is that you are investing in a company with 2014 revenues of $97 billion, of which very little currently comes from Watson. The same holds true for other industry leaders in the AI space like
When evaluating the merits of any investment, a lot can be said about who the current investors are. In the case of Vicarious, you have names like Elon Musk, Peter Thiel, Dustin Moskovitz, Mark Zuckerberg, Vinod Khosla, Jeff Bezos, and Marc Benioff, all of whom have contributed a total of $72 million in funding so far to Vicarious. Corporate investors include Samsung, Wipro, and ABB Robotics. Here’s what Bloomberg had to say about these corporate investors:
Wipro plans to use Vicarious’s AI technology to look at crumpled or ripped paper and identify the text on it, Phoenix said. Samsung is looking to add AI technology to its smart-devices initiative, which includes phones, televisions and cars. ABB has already co-developed a robot with Vicarious.
So what does Vicarious do exactly? According to their website, they are “building the next generation of AI algorithms” using modern software engineering practices and familiar languages like Python and C++. In simpler terms, they are looking to create software code that replicates the human brain while using relatively minuscule amounts of data and computing power. In October 2013, Vicarious solved their first Turing test, CAPTCHAs, which included Google’s reCAPTCHA, the world’s most widely used test of a machine’s ability to act human. The Company’s current focus is on visual perception problems, like recognition, segmentation, and scene parsing.
Not many updates are made available by Vicarious as they currently operate in stealth mode. The CEO has been quoted as saying that their technology has a “10-year plus time horizon” and their website states that they “are not constrained by publication, grant applications, or product development cycles”. Like quantum computing, artificial intelligence requires a great deal of time to develop, and any pressure to focus on commercialization instead of pure innovation is counter productive. This doesn’t mesh well with an IPO which would subject the company to pressures from shareholders who want to see a return on their investment.
With the technology in very early stages of development, the likelihood of any artificial intelligence company looking to IPO soon seems low. Retail investors will just have to be patient.
Update 8/15/2018: Vicarious took in an additional $50 million in July of last year from a round led by Khosla Ventures, with participation from more big-name investors like Samsung’s Q Fund. In addition to that new website they have now, the money will be used to expand the research team and build smarter robots. So far, Vicarious has taken in total funding of $122 million.
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