Investing in Artificial Intelligence, with Ash Fontana – [Invest Like the Best, EP.90]

My guest this week is Ash Fontana, a managing partner at venture capital firm Zetta, who invests in companies which build software that uses artificial intelligence methods like machine learning to predict and prescribe outcomes. Ash’s combined experience as a founder, entrepreneur, and investor give him the perfect background to discuss with us one of the hottest topics in business and investing.

This conversation is useful for anyone trying to evolve their own way of dealing with data. Of particular interest are the ways that Ash and his team evaluate data sets and how they think about competitive advantage in this new world—where he advocates a new term to replace the concept of moat: loops.

If we can use data to do things better than humans, or if we can supercharge our intuitions with predictive models, we can harness the power of this new technology. What Ash has taught me is that data itself is dumb. But great data sets can represent the fuel for incredible companies. Let’s dive into how that may be. Please enjoy this conversation on how AI is changing business, and how we might profit from that change. 

Books Referenced

The Most Important Thing: Uncommon Sense for The Thoughtful Investor

Links Referenced

Jerry Neumann Podcast Episode

Ali Hamed Podcast Episode

Show Notes

2:25 – (First Question) – A look at their very specific investment strategy

3:35 – Future of competitive advantage in the SaaS industry

6:45 – How startups and new companies can compete against software giants that are pretty well entrenched in the market

8:38 – How do copies with narrow focuses attract VC money which is looking for massive returns

12:28 – The stages in which AI will be enabled

15:55 – Framework of an AI company

18:49 – Importance of the feedback in the AI company framework

20:56 – Examples of AI companies

23:50 – Why companies that are AI from the start will have a significant advantage in the space

26:21 – How do companies change their thinking about compiling useful data

32:18 – Regulation of AI

35:03 – Preventing other companies from leap frogging you in the AI space

37:57 – Some of his favorite AI companies

40:43 – How much has he seen in the finance world

41:07 – Jerry Neumann Podcast Episode

43:10 – Why the focus on B2B AI companies

45:34 – Major components of the enterprise stack that he focuses on for AI

49:30 – What impact will all of this AI have the daily lives of people

51:38 – Biggest problems that he is excited to see AI tacklet

53:04 – How do you value the intangible asset of an AI model

57:13 – How Ash thinks about getting other investors into firms they seeded

1::00:27 – Other investors that Ash really respects

1:01:15 – The Most Important Thing: Uncommon Sense for The Thoughtful Investor

1:03:29 – Ali Hamed Podcast Episode

1:04:04 – Where would Ash invest outside of AI

1:07:11 – More about his family nut business

1:11:18 – Favorite macadamia nut story

1:12:05 – Kindest thing anyone has done for Ash