Special Report – Backdoor Play on AI
Special Report – Backdoor Play on AI
S&P may be boring, but it's also a great business
This is the second in a series of “backdoor plays...”
If you’re like me, you’ve had your fill of anything having to do with artificial intelligence, better known as AI.
It's everywhere you turn – TV, radio, news articles, investment newsletters, and more. Heck, according to S&P Market Intelligence, the mere mention of "AI" among companies in the S&P 500 Index skyrocketed by 10 times over a year earlier.
Not that AI hasn't been around for years... But the rollout of generative AI, with ChatGPT probably the best-known example, ignited interest and a euphoria not seen since the early days of the Internet.
Before you say you don't want to hear another word about ChatGPT, let me assure you that's not what this is about...
This is about how – as they're evolving – ChatGPT, Google’s Bard/Gemini and other forms of generative AI scrape the Internet for news stories, text, images, audio, and video to build their so-called "large language models," which is where the magic happens.
Much of that is readily available on the Internet, leading some folks to question whether some of what ChatGPT uses violates copyrights.
That’s such an issue that on Substack I clicked a button that doesn’t let generative AI use my copy for training purposes.
If that’s a big issue with text, imagine what it means for data, which supposedly is a big part of the generative-AI story…
No wonder “data” was top of mind during a recent discussion I was having with Matt Ober. (We were actually walking on a path alongside the Pacific Ocean in the San Diego beach town of Encinitas.) He’s a partner at Social Leverage, a VC firm that invests in tech startups.
He knows a thing or two about data…
We first met a few years earlier when he was chief data scientist at the hedge fund, Third Point, which he had joined after being co-head of data strategy at WorldQuant.
When our discussion rolled around to AI, he mentioned that he was actively looking for companies that will somehow springboard off of generative AI technologies...
That led to data, because one thing all of these companies will need, he said, is data. And not just any data, but the good stuff that's mostly behind paywalls.
Extend that to investing, finance, and business in general – and we're talking a need for loads of data... loads of proprietary data.
That led to which companies are best positioned to benefit from the data they own. He mentioned a few, but at the top of the list coincidentally was a company that has for years been a top idea of another friend, who always says the same thing about it whenever we speak: “It’s such a great business.”
A Data Juggernaut
Lightbulbs went off, and I decided to dig in.