AI Battle 🤖 Round 1 & The Future of Innovation

Hi

If the world feels a little lighter today, it might be because Microsoft released an Edge update yesterday on Windows 10 that finally kills off Internet Explorer for good – ending just under 3 decades of PC-user-browser hate in one fell swoop, we hope.

In this Open Letter:

• AI Wars: Microsoft’s real edge over Google.

• Amazon robotaxi, SA’s rural crypto farmers & stuff that make you dance.

• Time to thrift: Opportunities in the SA pre-loved space.

• VC funding insights: Our next Open Conversation with Will Green.

• New podcast: More on AI wars, SA diaspora and Super Apps.

TRENDING NOW

Microsoft’s Real AI Advantage over Google

It’s not what you think – and is prophetic for the future of corporate innovation

When ChatGPT3 (an OpenAI product that’s backed by Microsoft to the tune of $10b+) became publicly accessible, some were quick to label it “the Google Killer!”. But for that to be true, they’d have to connect ChatGPT to the internet. And, as it turns out, that’s where it's a bit harder for an AI to impress.

We saw it when Google launched it’s AI assistant, Bard, which immediately incorrectly stated that the James Webb Space Telescope took the first pictures of an exoplanet. (Rubbish, that honour goes to astrophysicist Grant Tremblay back in 2004.)

But what happened next was very telling for AI and corporate innovation in general…

Google shareholders panicked, which sent Alphabet (Google’s parent company) stock plummeting, resulting in an 8% drop and wiping $100 billion of its market cap. Ouch.

But was it a fair assessment? Perhaps not.

With machine learning models, garbage in-garbage out is particularly applicable. (And we all know how much garbage there is on the internet.) And, while Google is training AI to distinguish between fact and fiction in an online environment with ever-changing versions of “ the truth”, in building ChatGPT3, OpenAI pulled data from the same garbage bin, but protected us from it with an army of underpaid African workers and others to train the language model.

Effectively creating a little box that can be controlled (and is very much controlled by zeitgeist).
 

Microsoft’s true advantage 

ChatGPT also makes mistakes – and they’re well documented – but none of them has tanked Microsoft’s share price. In fact, we overlook ChatGPT’s mistakes. Why?

Because OpenAI is a startup and Google is not.

Startups are allowed to fail. Most people expect them to. So any kind of success they obtain is newsworthy. Listed companies have to manage the sentiment of loads of stakeholders and loss aversion could send many not-so-savvy shareholders running for the hills at the first sign of bad news.

What does this mean for corporate innovation? 

In case it's not clear, the lesson in this is that corporates could and maybe should be investing in savvy startups to drive their innovation. Because it protects your share price.

Ok, so how does a corporate go about this?

While every circumstance is unique, it’s clear that corporate investing in startups and corporate venture building is a viable option for corporates to stay relevant in the innovation game. But startups are risky, so how do you know who to back?

Get yourself a tech partner that knows the corporate space…

Agencies like Specno offer venture building as a service to corporates. Within venture building, the corporate has all the potential upside that Microsoft had backing OpenAI, but very limited downside in terms of reputational damage (like what happened to Google).

That said, there is a third way…

The Apple way

Apple takes a completely different approach to innovation. One could say a customer-centric approach, where the latest tech is not driving the rollout of features, but rather how something fits into the lives of an Apple customer. Examples include:

• Delays 4G launch by 2 years because 4G chips weren’t energy efficient enough.

• Delays roll-out of fingerprint scanners by 2 years to perfect the technology (beating Motorola with a superior product.

• Delays Near Field Communication (NFC) rollout by 10 years, again to perfect their technology

 And they’re doing the same with conversational chatbots

Well, Apple has been implementing AI for some time, with FaceID being a prime example. Siri also makes use of AI to understand the context and execute tasks. But in direct response to ChatGPT making waves, Tim Cook just stated that Apple has a major focus on AI and that it will impact every single part of Apple’s product offering.

He wasn’t joking. Apple is currently actively hiring more than 300 people in AI – which says a lot in an era of mass tech layoffs.

For now the verdict is still out on whether conversational AI can even provide accurate information when connected to the internet. And whilst Microsoft and Google are publicly flexing their tech muscle, it’ll be interesting to see what Apple is cooking up with AI (probably in the next few years).
 

IN SHORT

World's most expensive ad: 30 seconds during the Superbowl costs $7m, and many believe it's worth it.

137 unicorns in one: SpaceX is raising at a staggering $137 billion valuation with investors including VC a16z.

All phoned up? African smartphone sales were down 18% from last year and 80% of smartphone sales were for devices costing less than $200.

Farm to DeFi: Binance to educate 2’800 rural South African women on web3.

Good tunes: Apparently, it's not your favourite 2000s pop song that makes you want to boogie, it all has to do with inaudible bass lines.

Is it a bird? Is it a toaster? No, it's Amazon’s new robotaxi hitting the road for the first time.­

WATCH THIS SPACE

Thrift It!

Tech opportunities in SA’s pre-loved space

Clothes are expensive. With the average person buying 60% more clothes than 15 years ago, combined with retailers marking up prices by 300-400%, the cost of looking fashionable is skyrocketing.

But there is a solution: thrift it!

Thrifting itself isn't a new concept, with Hospice and Salvation Army stores selling second-hand clothes at selected outlets for years to raise money for charity. But thrifting in-person at a physical shop has always been a little less than ideal…

But with the growth of the internet, there are now specialized platforms that make buying and selling pre-loved clothes easier than ever.

Thrift online in SA

1. Online thrift space Yaga has seen massive growth, having recently raised €2.2m from international investors and is now reporting over 500k active monthly users on their platform. Importantly, Yaga is creating opportunities for the public to make money – reporting over R10 million worth of items traded in October 2022.
    

2. But it's not just about making a profit. Some platforms, like Vintage with Love, are dedicated to using second-hand clothes as a way to raise money for charity. They collect brand clothes, market and sell them, and donate 100% of the proceeds to good causes.
    

3. Another burgeoning market is that of second-hand baby clothes and gear. With children growing up so fast, parents are always in need of new clothes and gear for their little ones. Services like Pr3loved provide a platform for buying and even renting pre-loved baby clothes and items.
    

4. And it's not only clothes, hobbies have also found their way to creating niche second-hand marketplaces. Take Surfcore, a marketplace to buy and sell surf gear. Most likely a smaller audience than fashion, yet the age-old saying of “riches in niches” could very well ring true.

So, is thrifting just a way to offload our bad impulsive buys? Or can we actually make some money while doing good for the planet and our wallets? We haven’t tried, but the sheer volume of items being sold on these platforms is showings signs of a bustling industry.

­

VC FUNDING INSIGHTS

As a startup, securing the right funding and support can mean the difference between success and becoming a statistic. And, with funding a little in short supply in Africa, we connected with entrepreneurship engineers GrindstoneXL Programme Director, Will Green.

Bringing years of VC, entrepreneur support and global startup ecosystem knowledge to the table, Will joins us for the next Open Conversation happening on LinkedIn Live on 1 March 2023 – register here for free.­

THE THREAD

Renier and Bobby Sequeira of Mastercast have been testing out a new podcast format featuring local tech business insights – so there'll be more in-depth looks at some of the things you read in The Open Letter. And it's looking pretty cool.

Here's a sneak peek featuring more on ChatGPT VS Google AI, what exactly constitutes a Super App, SA diaspora (from last week) and SA's proposed new electricity minister…

Watch it here on YouTube.

ONE LAST THING

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