91ɫ��Ƭ

David Burt  00:00

When you use the latest AI tools, it means that a smaller number of humans can take more responsibility for things. If you're not experimenting with these tools, you are rapidly getting left behind.

Professor Fahim Khondaker  00:15

It used to take a team to build a successful startup. You needed the big idea, the people to turn it into a business: engineers, marketers, accountants, and managers. But what if you could do it all yourself? Because AI can write your code, build your website, and create your marketing. That's raised a pretty extraordinary possibility: the one-person unicorn. Is this the future of startups, or are these lean business models built to break? And in a world where AI can do almost everything, what still needs a human? This is The Business Of: AI explained. I'm Fahim Khondaker, Partner in Data and AI at BDO, and Professor of Practice at 91ɫ��Ƭ Business School. Joining me is David Burt, Director of Entrepreneurship at 91ɫ��Ƭ. Welcome, David. Great to have you here.

David Burt  01:05

Great to be here. Thanks.

Professor Fahim Khondaker  01:06

Look, AI has obviously made it easier to be a solo operator and a solo founder and running, doing the work of five or 10 people. Big question to kick us off. How realistic is this one-person unicorn concept?

David Burt  01:20

Not realistic, but fun to talk about. And what I mean by that is, the idea that a single person with no other human help is going to create a company worth a billion dollars or more. I don't think that has happened yet. I don't think that's going to happen anytime soon. And there's a couple of reasons for that, but I think it's it's also true that what one human can achieve with these technologies, I think, is is both astounding, and most people have no idea what's possible. One really good example that comes to mind is, there was a person called called Paul who rang me up and and said his dog his dog had just been diagnosed with terminal cancer. And the vet said, "hey, there's really nothing more that I can do, so enjoy the time you have left with your dog." Paul didn't didn't want to accept that. He didn't have a background in medical science, but he was a software engineer, machine learning engineer, and so he, through a friend, got to me and said, "hey, I need to do a genomic sequence of my dog's cancer," which is very weird phone call to get. I then picked up the phone to someone who, I'd actually never spoken to before, and said, "hey, I have a really random question." This is Martin, who runs the Ramaswati Centre. I said, "can you genomically sequence a dog's cancer?" And he was like, "yeah, it's possible." So I connected them together. He paid commercial rates, so Paul paid a few $1,000. A few weeks go by. He gets back a hard drive with several gigabytes of data on it, and then he kind of disappears into a cave for six months and uses these technologies, in particular a tool called AlphaFold, to basically understand what's causing the cancer. How might we kind of therapeutically prevent, slow it down, and cure it. Long story short, he went down several dead ends, but came came back with the idea of what's called immunotherapy, which is essentially can you train the dog's immune system to target that specific cancer. He used these tools to design an mRNA therapeutic, sort of like an N of one, just just for his dog. And again, came back to 91ɫ��Ƭ and using the expertise of the RNA Institute was able to synthesise that. And I could show you some photos of a dog with some big tumours, and then four weeks later, much smaller tumours, and so was able to really substantially increase the healthspan, like the lifespan and the quality of life for his dog Rosie, by like six months. Now, unfortunately, yes, then passed away, but the purpose of that story is, it would be unheard of for a single human who had never had any scientific training in biology to achieve that. But also, he didn't do it alone and could not have done it without the other humans in that story, the expertise they have, the infrastructure of a university. However, once that story broke, he got some very interesting phone calls. He got a flood of people whose dogs had cancer saying like, "hey, can you help me?" And he's like, "I'm just a dude." But, he also got a lot of phone calls from investors. So he got on a plane to San Francisco, and he recently raised about $4 million US to do a company in this space, and has a big long waiting list of people. So now he's trying to help other people through this. So the point of, the point of the story is not you have to start a company, but what's achievable as one person is radically different. And I think a lot of people are, kind of, missing a little bit of that at the moment.

Professor Fahim Khondaker  04:26

And whether we stay on this example, or any other example about, he obviously did a lot by himself.

David Burt  04:41

Yeah, with an astounding amount of, again, being really focused. What are you trying to achieve? Taking responsibility for it. And then using these technologies, which is essentially like mechanical intelligence. I think a lot of people are not paying enough attention to how they might do this for themselves.

Professor Fahim Khondaker  04:59

Are we seeing more people doing more by themselves with one person than ever before? And I guess the other question is, is that now the norm in terms of the startup world?

David Burt  05:11

Yeah. So I think about it in a few different ways, and again, in my work at the university, I lead a philanthropically funded team that helps people start companies. So thinking about the moment of incorporation, we are their best friends shaping up. Is this a good idea? And if this is a good idea, how do you find your first customer? Find your first investor, get some media, get get your story out there. And so each year we'll see about 10,000 people show up to to do that with us, and we'll get about 100 new companies. So that kind of gives you an idea of the conversion rate. Because my first advice to people is like, don't start a company. You're going to get tortured, and if they ignore me and still want to do it, great, I can help you. But what this gives me is a really good flow into the data and numbers. I've been doing this for over 10 years, and so what I can tell you is, for each stage of company, you need about a third of the humans. So, if you take a, sort of, a normal software company, maybe they have a few million dollars in revenue. They might have raised 10 or $20 million of venture capital. That company, pre these technologies, needed about 20 humans. Now you need about five. The other thing is looking at that founding team, and the number of credible, effective solo founders has gone through the roof. That's not just with us. Y Combinator, which is a really important, and successful startup accelerator and, sort of, pre-seed investor. They historically have shied away from funding solo founders just because it's so hard. They released some stats that, I think in their latest round of investments, solo founders had gone from like 5% to 20% So they're seeing, and and we're seeing a similar a similar effect because, when you use the latest AI tools, it means that a smaller number of humans can take more responsibility for for things producing outputs. And again, what's maybe, sort of, pushing back on that narrative of the one person unicorn is, you still need a couple of other humans, like no, no one human can take responsibility for everything, and especially if you're taking on investment cash. Me as investor, it's pretty risky if if you're worth a billion dollars and it's just you, you might get him by a bus. Like you're still mortal, and so investors actually don't want a one person unicorn. I did a little bit of research before before talking with you about could I find any example of a billion dollar of a company worth more than a billion dollars, that had been created in the past 20 years, that had no investment capital in it, and I couldn't find an example. Doesn't mean it doesn't exist, but just this notion of how do you grow quickly, usually involves investor cash. It's very risky for an investor to put capital into a one person company.

Professor Fahim Khondaker  08:07

So, is anyone saying I'm not a one person company? I've actually got 10 AI agents that work with me. So, you as an investor wouldn't be investing in me alone. And then, how's the IP being treated of the AI in these companies, as the investor, do you own the IP? What happens there?

David Burt  08:24

So I think the version of that we are seeing is when you run a business, often, especially when you have employees, people will come to you and say, "oh, there's too much work. There's there's all these things that need to be done. I'm at capacity. We need to hire another person." Smart business owners and founders today being like, well, "maybe we should do that, but let's give AI a go first." And so, there's no standard for this yet. Frankly, we're still at the frontier trying to figure stuff out. Frankly, I think the best founders are just rolling their own, and just running lots of experiments. To the extent that that reduces risk for investors, I haven't personally seen that to be sort of a big deal for investors. They just, they frankly just want to see usage and growth go up. I think the the purpose of that, sort of, story I shared was, if you're not experimenting with these tools, you are rapidly getting left behind.

Professor Fahim Khondaker  09:18

Do you think AI has changed the nature of startups, and if so, how?

David Burt  09:24

I think AI has changed the nature of what one human can accomplish. And so again, I come back to this notion that, what is a startup founder? And on day one, and let's just run with the example of a solo startup founder, they are essentially taking responsibility for everything. Every single thing that needs to get done is on that person, and that was true before AI, and that's true after AI. What's changed is that, is their level of ambition, of how much they can take responsibility for, and so whether you're a startup founder, whether you're a doctor, whether you're a teacher, whether you're an accountant or a plumber, what you can take responsibility for if you adopt the tools is astoundingly larger than than you think. Now, there are some consequences that come with that, which is the cognitive load on people goes up, and so the stress and pressure you're under can rise as well. And I think that's something that, I don't think many people are talking enough about. I think a lot of people are just sort of saying like, "well, either I sort of do or don't want to use these tools, and especially in Australia, which is a market economy, some people are going to maximally adopt these tools in their life, and they are going to outcompete everyone else. And so, I think my kind of practical advice for people is, even if it feels a little uncomfortable or it's hard to learn, dive in and start integrating it into whatever your practice is, whether you're a startup founder or not. Because if you don't, someone else in your profession will, and eventually, that's that's not going to be a good outcome for you.

Professor Fahim Khondaker  11:08

Let's say I've got a very big idea right now. What would you recommend I go do with that idea in the world of AI now that it's there at my fingertips, like you just said?

David Burt  11:20

Yeah, it depends on the domain, because I think if your idea is to create a product or service that helps the, the consumer on the street, that that's one category. If, if your idea might help people that work in a large business or work in the government in some sort of service delivery, that's another. Just yesterday, I got some had a random conversation with someone who I think has a really interesting, and sophisticated, and novel idea for how to do distributed physical autonomy really well. So think about 1000 drones, or 1000 robots in a warehouse all interacting with each other. Now that person has a pretty steep hill to climb to get attention from the right people, and so, the reason I'm telling you this story is my advice to that founder was a question, which is, what's what's the cheapest way you can demonstrate how you're orchestrating physical autonomy? Because this person has just spent about six months doing a lot of math and has a bunch of algorithms, and and and some and some papers they've published in a research journal. Now, now pre AI, that might have been enough to get into the room to have conversations with government and business and military organisations to, to talk about how they might fund you to take the next step. But given how crowded that space is, my advice to the founder was, what's the cheapest way you can fabricate or buy some very cheap off-the-shelf drones or robots and show your algorithm in in place? And I think that's the thing that AI has really transformed in startups. It's it's really compressed the time to show, whether that's a physical or a digital thing. Another example: I was speaking to someone called Miles, who's a really, I would say, leading thinker in game design. Has worked for the, kind of, leading game design studios that employ lots of people, and he's he's currently designing a game, and he's created a prototype of the game, and now he's looking for financing. And I kind of said, like, pre-artificial intelligence, how long would it have taken you as a single person to create this proof of concept? And he said it would have taken him probably about 12 to 18 months, but he said with these tools, it's taken him about six to eight weeks, as as someone who's, sort of, a single person taking responsibility for that. Now, he still needs to use this to pitch someone to get some financing to then build out a small team of experts to kind of execute it. But that's a really good example of, I think, in that creative economy space in particular, there is so much opportunity if only people can get over like the emotional friction of some of these tools. Like we're seeing some people really reject these, but we've seen this before with every single technology. Like if you go back and read the newspapers around the time the photography was invented, like there was a time in human history where you couldn't take a photo. And then, then there was a period of time when you could. If you go back and read the newspapers from that time, and the academic literature, huge negativity. And people were saying, this is going to kill art, this is going to kill human expression. And yes, there were a whole bunch of people that were employed as artists to try and create really realistic images of things. And when the, when photography came along, we needed less of those people. But if you go back and you think, well, what else changed? I'm pretty sure entire domains of art were created, like impressionism as an art category. Because suddenly you had all these people who could draw. But you can't compete with the camera, but the camera couldn't take an impressionist image, right? It just it showed you reality, and so I think, every single moment where you have these new technologies, I think, especially in the creative industries, it comes with this extra layer of emotion, and fear, and disruption. But I think anyone who can get, get past that, and just think, great, how can I use these to create delightful experiences for other humans? They're going to have a really good time.

Professor Fahim Khondaker  14:24

And you'd think the startup world is kind of suited to that disruption, you're looking for that opportunity for disruption, right? So I think, are you seeing that? Is the objection to AI, or the concerns around AI, less so in the startup world versus established businesses?

David Burt  15:42

Yeah, it's definitely less. And part of the reason for that is, anyone that has the ambition and the agency to start a company, already has to be, have a pretty high tolerance for shame and attracting criticism ,and being told no, and being told you're crazy. Like one of the startups we helped support through the university was called Breaker, which was a distributed physical autonomy software. But those were three recent engineering graduates from the university. They were a couple years into the workforce, working in robotics and software and machine learning. And they came, they came to us with an idea, and literally everyone else laughed at them. They couldn't raise any money from the venture capital industry when they were starting their company. Actually, I had the founder on stage a few years into the company, and they've they've raised millions of dollars, they have millions of dollars of revenue. It's going well. I had the founder on stage and I said, "when you were starting the company, the university supported you. We were their first angel investor." And he said, "every single one of his friends and family said, 'you're crazy, like, don't quit your job.'" And so, if your question is, does the startup community have a higher tolerance for embracing AI? The answer is yes, because they already face so much kind of shame and nose and opposition, and people just think they're crazy. Like, what's one more criticism in the bundle?

Professor Fahim Khondaker  17:09

You mentioned angel investors. Do investors now have a different way to view what they expect? Are they getting a gluttony of information, and there's just too many pitches now that it's easy to make pitches. What, what's your views on that space?

David Burt  17:25

Depends on geography. So, if we're talking about San Francisco, or we're talking about Sydney, I think if you're trying to raise funding for an AI company. Again, I try to never tell founders what to do. This is probably one of the exceptions, which is, at a minimum you should get on a plane and, and go to San Francisco and see if what you're pitching has has a home there. Because that really is the centre of the universe right now, and some of the federal government policy in place at the moment, both copyright legislation, capital gains tax changes, makes it incredibly hostile for pre-seed investing in Australia. And in fact, some of the angel investors we normally co-invest with, have told me they are not investing at the moment. And so I think, in particular,

Professor Fahim Khondaker  18:14

As in, not investing in Australia?

David Burt  18:16

In Australian startups in particular. There are also a whole bunch of tax concessions available to American angel investors that only apply if it's an American domiciled company.

Professor Fahim Khondaker  18:17

So no matter how good AI gets, what can we not pass off to AI, and what has to be intrinsically human going forward?

David Burt  18:37

If you're flying into or out of a major airport in a modern plane; those planes can technically take off and land themselves. So, pilot, copilot, not actually necessary. And if you dig into the data on crashes in the last 5,10, years, 20 years, even. And when the regulators say, like, why did the plane crash? The, the most dominant reason is human error. So, one could construct an argument that says, because we still have humans in cockpits, like planes are less safe. But yet, most people would not step onto a plane without a pilot, and so that's that's kind of the way I want to answer your question, which is there are some things which, we feel a lot more comfortable doing if there's human accountability in the loop. I think, in terms of anything to do with I think robotic surgery is a really interesting one, even if the robot can technically do the surgery at a more precise, less error rate than a human, I would still feel more comfortable if there was a human standing next to the robot, and if for whatever reason something gone wrong, like that person's medical licence is on the line. And so I think, any time that there's an element of harm or risk, having a human in the loop is super important. I think the other thing that comes to mind is computers, artificial intelligence have been able to crush humans at the game of chess for at least 15 years. And yet there are hundreds of people that, as a job, play chess against each other and and find a way to make that work. And there are hundreds of 1000s of people that watch them. There's still a role for that. And so again, I think, especially from the Australian perspective, that opportunity in the creative economy is somewhere we can play at the global game. Because, if you look at the conditions you need as a country to create great entertainment products, you kind of need freedom of expression. And Australia is one of the few places in the world where we have almost unlimited freedom of expression, which is both great politically, but also great because it gives you, like we have such a big creative economy here. Those are the things where the AI and again predictions about the future are very hard. I find it very hard to imagine a world where AI is buying entertainment products for itself. So humans are still going to still going to be there wanting to buy entertainment products, and I think the sort of counterposition to investing in AI is investing in physical experiences. So, if you look at some of the live music or live sport, there's so many opportunities for commerce, that still require humans as part of either the delivery or the consumption. That I think, we have a lot of reasons to be optimistic about the future. Humans want to be with other humans. Like at the end of the day, we're incredibly social animals, and that biology is impossible to unwind.

Professor Fahim Khondaker  21:46

We've talked a lot about startups, and startups are in to disrupt businesses and industries and create new solutions. Let's go the other way. If I'm an existing business, how much more of a threat is a startup to me now in the world of AI than it was before, I guess?

David Burt  22:06

The reason a startup is a great vehicle to do something new is because it's not worth anything. And so if you get it wrong, you've lost nothing, just your time. So the reason large businesses find it hard to innovate is because they have real assets at stake, and if they make a mistake and get it wrong, there's a big chance they're going to destroy value. It gets even worse if you're a publicly listed company because then you have a shareholder lawsuit on your hands. And so, for anyone who's in a leadership position in a large business, the cultural change component of integrating AI into a business is the most important thing. Because the worst thing you can do is go to your team or your employees and say everyone has to use AI now. You're guaranteed to get a bunch of friction and sadness. I think if you have a a good culture, then you have a bunch of people inside your organisation that are showing up to work on whatever the mission or purpose of that company is, and then the cultural change of, hey, there's been a whole bunch of new technology invented. How might we use this to better achieve our mission? And that's where I'd recommend leaders inside inside of large organisations or government approach it. Because if you've recruited the right people to work in your organisation and they actually care about the purpose of why that company or government department exists. Then if you kind of frame it as a how question, and you give people permission to be creative and experiment, then you're going to be on a much better path than someone who rocks up and just says, everyone has to use AI now. That's not going to work.

Professor Fahim Khondaker  23:50

In the context of innovation broadly, whether it be startup or in an existing business. What's your top tip to everyone today after listening to this episode? What should they be doing?

David Burt  24:01

I think the top tip is to ask yourself a question, which is, how much time are you spending learning, being creative, being curious, practising integrating AI into some part of your life? It could be at work, it could be a hobby. If you're spending a few hours a week doing that, you're much more likely to benefit from what happens next. Because what happens next from a technology, and economic, and political point of view is largely out of control of of most people. But the biggest takeaway from what's happening right now, if I come back to this notion of things that just one person can take responsibility for, it's an incredibly great time to be someone that has agency. And that's, again, something that we spend a lot of time at the university, not just teaching students, but anyone who wants to be a startup founder is is to believe in yourself. Have more agency, and I think I would I would extend that to having agency of how you're trying to use these tools in your life.

Professor Fahim Khondaker  25:08

What a wonderful note to end on! So thank you so much, David, for coming in today.

David Burt  25:11

Thanks for having me.

Professor Fahim Khondaker  25:13

David Burt is the Director of Entrepreneurship at 91ɫ��Ƭ. If you want to hear more about startups, listen to our episode with Roby Sharon-Zipser, the founder of Hipages, an online marketplace for tradespeople and people who need them.�� You'll find the link in the episode description. The Business Of is brought to you by the University of New South Wales Business School, and produced with Deadset Studios.