Podcast #160 Alpha Connector

TRANSCRIPT

Ken: This is Ken Forster, Executive Director of Momenta. Welcome to our Digital Thread podcast produced by, for, and about digital industry leaders. In this series of conversations, we capture insights from the best and brightest minds in the digital industry- their executives, entrepreneurs, advisors, and other thought leaders. What they have in common is like our team at Momenta; they are deep industry operators. We hope you find these podcasts informative, and as always, we welcome your comments and suggestions. Good day, and welcome to episode 159 of our momenta Digital Thread podcast series. Today, I'm pleased to host Robert Marcus, CEO of ALPHA10X. Specialized in AI, Robert is a former Silicon Valley venture capitalist, investment banker, public company CEO, Microsoft Manager, and founder of several successfully exited companies. His two books, "The Fifth Wave" and "Collective Knowledge," both on knowledge management, describe the Alpha 10X thesis. Robert, welcome to our Digital Thread podcast today.

[00:01:13]

Robert: Hi, Ken. Thank you very much for having me. I'm excited to have this conversation with you. There are so many exciting themes that we have to cover.

I look forward to this conversation.

[00:01:20]

Ken: As well. I could probably parse your whole intro there of everything you've done. We could do an episode on each of those roles that you played, but today, we'll focus a little bit on your digital thread. I'm interested in what you guys are doing in ALPHA10X, so I'm looking forward to that conversation. Let's start with the digital thread. What would you consider to be your digital thread? In other words, the one or more thematic threads that define your digital industry journey?

[00:01:49]

Robert: Well, I think if I were to be entirely honest, I would say that my digital thread started on an ashram many years ago, rather more of a search for meaning than for a digital future, and I've somehow managed to combine the two at this stage in my life. I was deeply interested in philosophy, spirituality, better world-building and have somehow woven my technology background into this venture within ALPHA10X today. But across this entire digital thread as you describe it, which I think is a very poetic way of phrasing a lifetime spent in this industry. It began in AI- in the very early days of AI, primarily in expert systems in healthcare and evolved into ownership of the rights back of what is currently SIRI- open agent architecture that SRI International had developed in the Valley, and a great passion that I developed very early on for AI and the opportunity that is AI, and the belief that AI could and would ultimately change the world. The common thread has been AI; it's been deep technologies, complex technologies. I'm fascinated by complexity, whether in literature or technology or just an understanding of life and philosophy in general. It passed from AI into knowledge management, which has now evolved into something way beyond what was and is still referred to as knowledge management- but is the search for knowledge, the search for ontologies and taxonomies and meaning and context. AI, through knowledge, into an understanding of the value and what is valuable, and I think value has changed and it's rapidly changing in this time where it is not all about financial value. We live very much in a post-capitalist world- at least, I believe we do. And I think human values are changing, and the world that supports those of us involved in technology is moving away from a purely technological basis. Although it is increasingly technology-based, there's also a strong movement and a generational push towards meaning and lifestyle choices. I'm very passionate about that aspect of where this thread has led me to today.

[00:03:56]

Ken: What a holistic journey you've just walked us through there. One of the things I would want to deep dive into is this idea of- as you say, post-capitalistic and how in some sense, we're ESG as we're starting to think about the term as really guiding a lot of things that we're doing. Let's back up. I wanted to go back to this- you being at the vein of digital technology investments, acquisitions, company leadership. Three decades. That's quite impressive. Let me ask- this is one of those kinds of industry mentor questions you might ask, and that is really- what were the three most impactful tech-enabled business trends that you saw in that time?

[00:04:35]

Robert: It certainly began with the mobile revolution- where I began to see in the early 2000s that mobile was coming, that it would change everything. I had moved from living in Europe to living in Seattle and, ultimately, working at Microsoft. The mobile world was far advanced and far further advanced in Europe than in the US, and I began to see how mobile and mobility would change our world- how everything would become connected. I think the mobile revolution, which is essentially the fifth wave of computing- which was the topic of my second book- was the first major revolution that I watched and became excited about. And especially in the sense of how I saw it ultimately connecting the entire world as more and more people became connected over mobile and the amount of information that became available to people and communications in general, this first connecting of the entire world in terms of communications. Secondly, the next large wave that has attracted my attention- that is attracting my attention- is the way that I live on right now, which is the sixth wave, which is everything related to AI and machine learning but extends out into nanobiotechnology. The intersection between the biological and the technological and the emergence of quantum computing and this movement towards what some people refer to as the "singularity." I am not particularly keen on some aspects of what the singularity describes in terms of the extension of our physical bodies into technology. Still, at this point, technology becomes pervasive- essentially operating in the background when search becomes a passive experience. The potential emerges for solutions to many of our deepest problems. Whether they be healthcare-related or climate change-related, I think we'll talk more about that later. The third big wave which evolves out of these two mobiles into the sixth wave of AI and ML is the current wave of impact whereby we see the positive impact of all these technologies beginning to emerge. We see the emerging generations very much focused on impact, driven by values that were not the values of 20 years ago, 30 years ago. A new generation or several generations, looking to do something meaningful that is impactful- to apply these different incredibly powerful asymmetrical technologies to solve many of the deepest issues in the world. The combination of moving through mobile into AIML and now impact are the three big waves that have attracted my attention, defined my digital journey, and attracted my interest and passion over the years.

[00:07:11]

Ken: When you hit the singularity at point two, I said, 'Where is he gonna go from there'? It's kind of like infinity and beyond.

[00:07:19]

Robert: It is. You see people like Masa Son obsessed with the infinity and seeing it coming closer and closer. Ray Kurzweil has spoken about it at length and written about it for many years now. This moment when technology can effectively begin to serve as- begins to help build a better world. I see this as the obvious destination if we don't do something tragically crazy along the way, which is also possible. The history of the human condition is one of taking these extraordinary technologies and using them perversely. My hope, passion, and life experience are about trying to define what these technologies can do and direct them towards causes and purposes that are meaningful and positive in the world.

[00:08:01]

Ken: Excellent. We'll get to that in a minute because that is the crux of our discussion. I'd like to touch on and understand one more point- you wrote two books on knowledge management. As we said, "Collective Knowledge," which you wrote in 2002, and "The Fifth Wave: A Strategic Vision for Mobile Internet Innovation, Investment and Return" in 2012. How would you define knowledge management, and how has this definition evolved over time since that first book?

[00:08:29]

Robert: I would say that these books were not about knowledge management per se; they were about AI and our ability to extract knowledge from data. If you think about it, we have data, and we have a tsunami of data that we live in today. A slightly higher abstraction of data is information slightly more manageable, and understandable abstraction is information. Both books have bridged this common direction or aspiration to ontologically extract knowledge from data, highly coherent data- and based on these data, on this knowledge- being able to create insights, predictions, and all manner of further instantiations of other knowledge that can be positively used. The collective knowledge was much more about traditional knowledge management as we began in that era of around 2002 to begin to understand the enterprise's world that we were generating massive volumes of knowledge. These were not being shared; there was no collaboration. I was at Microsoft at the time, and you had two parallel organizations working on the same topic, the same technology without any real sharing. I think the first wave of this evolution began with the process of creating order and some structure around knowledge. But now we're moving into an altogether different domain where it's a different level of innovation and progress in the sense that it's not just about managing the knowledge which has been relatively well-handled by a number of companies, including Microsoft. But it's much more of going to the next level, like what is the knowledge we want to extract from the knowledge that has been well-managed? We have these well-ordered systems, but what are we looking for? You're searching for something, and you're researching something. You're in the world of life sciences; you're trying to cure cancer, whatever it might be. How do you search through billions of- what we call entities- within the knowledge to find precisely what it is that you're looking for. And then, of course, the ultimate objective of nirvana over here is finding new knowledge. If you think about all scientific breakthroughs, whatever they might be- whether it's in the field of vaccine research, healthcare, whatever it might be- it's always finding the hidden knowledge, new knowledge. And this new knowledge is typically discovered by finding hidden connections between known knowledge. You have known knowledge that is well understood, which can be searched for, and there is all manner of AI algorithms and systems and methods and models that allow you to do that. But then finding the new knowledge that you did not know was out there is how you shape the future. What I'm very passionate about right now, what I do in ALPHA10X; what we are about here is about shaping the future and shaping a better future.

[00:11:10]

Ken: That is a great lead-in then to discussing ALPHA10X. You founded the company in 2018, described as an impact investing AI start-up connecting people, capital, and ideas that promised to solve the world's greatest challenges. Tell us a bit about the company and your inspiration for creating it.

[00:11:28]

Robert: The inspiration. Thank you. The inspiration is one of impact. I think one reaches a point in one's life where having lived in the tech world and seeing all the best and the worst of tech. Having lived in the world of finance and having seen both the noble and the dark heart of finance and want to see how I can apply this knowledge and all this learning over all this time to a cause that I can believe in. What Ray Dalio refers to as meaningful work and meaningful relationships- doing something that's meaningful in terms of ALPHA10X as an organization and that generates something meaningful as a product. So making money for sure, if one can converge the world of historical or mainstream capitalism was the new world of capitalism or the post-capitalist world, we see much more focus on impact and what good can be generated and societal impact. These were all fringe topics or talking points for corporate CEOs until about four or five years ago. And now I think it is entirely true; you hear people like Satya Nadella constantly talking about better impact. You hear CEOs of very large and well-known tech organizations talking about shaping the future, talking about tech for good. I think this evolution is happening, and ALPHA10X is all about using AI to analyze trillions of entities in the context of what we refer to as a knowledge graph, which is essentially a map of the entire world of innovation and investment. Finding the connections, relations, and intersections between these entities- these trillions of entities- to extract knowledge, insights, and predictions and look into the future. To use predictive analytics and various AI tools to see into the future to understand how large organizations can innovate more efficiently, compete more effectively, change the world more progressively and equally how investors- whether they're private equity, venture capital, hedge fund investors, corporate VC investors- can do the same thing. They can apply their capital towards technologies that have the most potential in terms of impact. Therefore obviously, if they're most impactful, they're going to generate asymmetrical returns or alpha, as we say in the world of finance. So ALPHA10X is really about bridging these two worlds; understanding deep technology, deep tech, where it's headed, how these deep technologies will ultimately change everything on the planet. And when I talk about the singularity, it's not in terms of transhumanism- it's dealing with these deep, pervasive problems. As much as many of us, you and I live in a world of wealth and comfort, the vast majority of the world lives in misery with many diseases that could be solved that are now being solved. We're approaching a cataclysmic event when it comes to climate change. We have run the clock; there is no time left to use social movements or to galvanize social movements to address the level of the crisis coming towards us. Many of these issues can only be solved by deep technologies of one sort or another. Be it quantum computing, be it nanobiotechnology- and we're involved in identifying these technologies, our AI identifies these technologies in order to allow investors to see higher than expected returns and corporate innovators to innovate more efficiently at the rate and pace of start-ups and compete more efficiently and ultimately increase their returns.

[00:14:46]

Ken: That is quite an aspirational goal that you have and multi-facet as you say, highly complex problem set that you're tackling with that. You wrote an article recently called "The Sudden Mainstreaming of Impact Investing." In it, you discussed the role of AI in contributing to sustainability, very much along with the themes you've just talked about. Tell us a bit about the thesis behind this article and, more importantly, how ALPHA10X is addressing these opportunities, specifically, as you say, for the investors and the corporate innovators.

[00:15:18]

Robert: I think COVID has served us in many different ways, as tragic and difficult as it has been and continues to be. It has caused many of us in the world to wake up, and I think that that wake-up call which is currently definitely focused on the pandemic, has also extended into climate change and a recognition that the world the way we know it has to evolve, has to change. I think we see more leadership in that respect coming out of Europe than we do out of the US or certainly out of China. It makes me proud to live in the European Union, where we see a strong focus in that direction. But over the last three or four years, as I mentioned, we see these very well-known financial organizations- may be a BlackRock, other large banks- J.P. Morgan and others heavily concentrated on healthcare, heavily concentrated on curing these very difficult to cure diseases but diseases that can be cured by many of the emerging technologies that are out there. And then, of course, underlying all of this, the need to pivot the entire global economy towards green and sustainable technologies. I mean, think about the magnitude of that challenge. The world has never faced a bigger challenge than that, and the days that are left between where we are now and potentially irreversible climate change are becoming fewer and fewer by the day. In some respects, it remains remarkable to me that the whole world is not obsessively focused on that because of the level of crisis that we face. I think that's changing. We'll see COP coming up very soon, and I think that's going to intensify the focus on climate change. We heard Joe Biden speaking; we hear China pulling out of some coal production plants at least globally. The world is beginning to shift, and the only way to see into this future is through these deeper technologies. Otherwise, we are making investors, and large corporates are making bets on insanely complex technologies that are all interrelated. And if you think about where- for example, venture capital came from in the 1980s in Silicon Valley, we were in the first wave of computing. These were very simple technologies, a bunch of bright people who were highly educated or had good insights could predict more or less where the world was going, take bets, and prosper. We're no longer at that point. In the sixth wave of computing, the interrelationships between all of these technologies are such that it is impossible to do it without the support of machines. Trillions of dollars are traded every day on capital markets via AI and quad systems, hedge funds, derivative traders, and that type of thing- are all using machines because the level of complexity has reached a point where you could not set to the notepad and make those types of investment, make those bets. We see that happening now more globally when it comes to innovation and investment and the desperate need for technologies, not removing the role of the investor. The investor will always make the investment by providing data-driven support so that these investments will yield better results. And if they yield better

results either to the corporate or the investor, they're going to change the world more efficiently and faster. And I think that that need in terms of odd changes is progressively more urgent. We live very much at that very urgent edge of the change process, which is dragging with it the mainstream of finance and certainly, the mainstream of the tech world.

[00:18:25]

Ken: If you don't mind me putting you on the spot- right before we started the recording, you and I talked a little bit about the company's traction. I think that's salient. Maybe you can tell our listeners where you sit in terms of the life cycle of this big aspirational idea?

[00:18:38]

Robert: Well, I started working on this idea in the early 2000s and began to invest in AI in 2009. A lot of time, energy, passion, and capital has gone into evolving us to where we are right now. We're in the second generation of AI; we're about to release that we have our first major customers signed up in the form of Accenture, and Accenture will be providing this technology through to their end-user customers. Microsoft selected us as one of the leading AI start-ups in Europe. Very close relationship with Microsoft. Obviously, my background- and two of my co-investors and board members are former Microsoft executives who have a close relationship with Microsoft. And I think in terms of aspiration- and again, going back to what Satya Nadella is saying around impact, we're very well aligned with where Microsoft is going. I have a team of 21 people- all PhDs, all with advanced degrees from the elite engineering schools of the world, primarily European and Israeli. We're doing some insanely difficult work on the very, very far edge of AI. It's fascinating, and it's difficult. We have an unusual culture here. We run our culture according to the principles of Ray Dalio- the founder of Bridgewater Capital, the largest hedge fund in the world, author of "Principles" in which he defines a very different approach to building a business that is based on radical transparency, very little in the way of hierarchy. We have a fast-moving organization, great culture. We are based down here in the south of France of all places, and it's a great place to be for a whole bunch of reasons. We are trying to do something that is highly impactful. I think we live today in a time in which innovation has been globalized and democratized. Silicon Valley is no longer a region; it is a platform. It is a state of mind. It exists over here in the south of France as much as it exists in Tel Aviv or Helsinki. And so we're very much on the leading edge of that progression. Currently, as I mentioned, 21 people will be up at 30 by the end of the year, expanding sales and marketing organization into the United States, so we'll lead our sales and marketing business development pretty much as an American-led organization keeping R&D over here in France, somewhat in Tel Aviv and most likely in Morocco as well.

[00:20:43]

Ken: Truly global, and wow, I must say you're very inclusive of the way that you've looked at the regions of the globe and how you're building that out. I'm curious. I am proudly European as well. Switzerland's not technically part of the EU, but certainly in the middle of Europe. And you mentioned your pride in that, and I certainly see the same, especially and even on our side, the digital industry. Industry 4.0- very much technology, but the EU has already taken the leadership position on industry 5.0, and man meets machine effectively, right? And how to best augment and support workers and societal goals and environmental goals. That is far-reaching when you think about- people still saying, 'Hey, we haven't even hit 4.0 yet, right'? So I am quite proud to see the work that's going on there. But I'm curious. You founded the companies in the Provence area of France, and all of us can imagine why this would be an absolute great area to live but what inspired you to create a company there, and what's been your experience so far?

[00:21:38]

Robert: The company was created in Paris. The experience of confinement with three young sons in an apartment in Paris led me to ultimately decide that living in a smaller city closer to nature was better attuned to who I am. And so, as a family, we moved down here, and it's been an absolutely great move. As you mentioned, this is one of the most idyllic places in the world. The sun shines most days in a very similar way to the way it does in California, with 35 minutes from the Côte d'Azur and the Riviera, it's magnificently beautiful. We're very close to Marseille, an eclectic, very interesting city with easy flight connections around the world when we return to flying. But I think the primary driver for me in moving down here was and remains quality of life- looking for a quieter life closer to nature, less expensive where the quality of life means everything. We're going for a bike ride into the vines of the nearby Luberon is easily possible at the end of the day as it is to shoot down to the beach and go for a swim. I think we see a generational shift where increasingly, the emerging generations are looking for quality of life, are prepared to make trade-offs on that basis, and benefit from that. Being in France specifically, we are surrounded by incredible universities. France is very much the center of AI because of its educational foundation in maths. The basis of the educational system over here is very mathematical and scientific, so we benefit from having some of the best universities in the world and an endless stream of talent. We have so many people we could hire that are just the best of the best in our particular domain of AI and data science. Endless talent and great retention. The average retention rate of a Ph.D. in AI in Silicon Valley is believed to be about 15 months, which is nothing. It takes about a year for them- for Ph.D. to come up to speed on a particular technology. Here, as long as people are happy and well-paid and the culture is great, they tend to stay for a long time. And of course, the salaries themselves are a fraction of what you would pay in Silicon Valley. But then, as you mentioned, industry 5.0, the European approach- I think Europe is moving to the forefront of innovation. It's not that America has lost its innovation edge, but it has changed somewhat. We see very, very strong government support. We have amazing EU and French support for our innovation. We receive grants and subsidies and all manner of governmental infrastructural support for the activities that we run over here. A strong drive to create more unicorns, so it is different for sure. In terms of R&D, I could not be happier. We will never move our R&D headquarters from where we are in the south of France. Still, we want to bridge that with American-style sales and marketing, business development, engaging the ecosystem. If you can do both, it's great. And then, of course, if you can do a little bit of bridging of cultures between an R&D lab in Morocco and an R&D lab in Tel Aviv- well. You are beginning to change the world, and this is very exciting. It's part of our passion as a team over here.

[00:24:37]

Ken: It certainly has also been a bit of the new normal post-COVID, as you said earlier. And I love this thought. As you said, Silicon Valley is no longer a region but more a state of mind. We see the same thing in Switzerland, the move from city centers to the mountains because we live up in a ski resort and all of a sudden, you've got a lot of remote workers now who are up here just for the lifestyle element of it. I think there is a permanent reset that we're going to see. I think the World Economic Forum referred to it in many different ways, is again at the leading edges. Throughout your career, you seem to have been so really cool and very excited to see what's next for ALPHA10X. In closing, I always like to ask, where do you find your inspiration? In some sense, it started at an ashram, so I'm probably closing the loop on it now.

[00:25:25]

Robert: I think that's true. I think I'm definitely driven by meaning. I'm driven by a sense of contributing to the world in some small and hopefully, not so small way- using my life in a way that leaves a legacy that is beyond that of just making do, which is what most of us end up doing. If you look at the types of technologies we deal with; we really can impact the lives of billions of people positively. And so, this excites me. If you think about that, and you go into the types of books that I like to read, they're going to be reasonably esoteric, philosophical, spiritual. But also books by revolutionaries, people who challenge the status quo, not revolutionaries with chips on their shoulders that I don't find particularly interesting. But people who have, in enormous ways, asymmetrically impacted the world. Whether it is a Nelson Mandela- I was born in South Africa, although I have lived most of my life in the US and I live in France, but he is and remains my- I guess you could say, my hero. What he did in South Africa was extraordinary. Others like him- Winston Churchill, Mahatma Gandhi. In the tech world, Steve Jobs's revolutionary nature was extraordinary to watch and read about. I mentioned Ray Dalio; he is a mainstream finance guy, could not be more mainstream- who began to develop principles, who meditates, who is very much focused now on meaning, very much focused on impact. This inspires me. People like Malcolm Gladwell, people like Viktor Frankl that many probably have not heard of- he's an Austrian psychiatrist who survived Auschwitz and came out with the most extraordinary view on man's search for meaning and how meaning in the most indescribably terrible conditions can emerge and can be sustained and held because that individual chooses to remain true to themselves and to who they are in these circumstances. I'm inspired by so many people who read a lot and are just very passionate about life in general and the hope that, as you mentioned earlier, having started in an ashram- I can connect the dots in this stage of my life. So something meaningful spiritually also connects with meaning in terms of how these technologies can help to build a better world and hopes that some of these guides that I follow, whether a Mandela or Churchill or a Jobs- can help me do a better job of this small part that I play in contributing towards a hopefully better world.

[00:27:40]

Ken: Very impressive list of people and equally impressive, I must say, in the work you've accomplished and are accomplishing as well. Robert, thank you for sharing this time and these insights with us today.

[00:27:51]

Robert: Thank you so much.

[00:27:52]

Ken: It has been a real pleasure. So this has been Robert Marcus, CEO of ALPHA10X, and if I may say so, an alpha connector, in and of himself. Thank you for listening, and please join us next week for the next episode of our Digital Thread podcast series. Thank you, and have a great day. You've been listening to the Momenta Digital Thread podcast series. We hope you've enjoyed the discussion, and as always, we welcome your comments and suggestions. Please check our website at momenta.one for archived versions of podcasts, as well as resources to help with your digital industry journey. Thank you for listening.

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