Season 6, Post 48: AI in NY
Your author is just returned from a brief business trip to the US. During three days in New York he met with executives from eight companies, appeared live on TV and felt the pulse of the city. The streets were full with festive shoppers, restaurants packed and there was a pervasive sense of optimism. There is, of course, a fine line between confidence and hubris, as our insights below reveal.
AI “will unlock more value than anything that’s ever come before” was the messaged shared by one executive with whom we met. Another described its potential as “tectonic”. “Everyone’s jumping into it”, said a third. As a counterbalance to these observations, we were at least told by one business leader that “we don’t want to get ahead of our skis [with this technology].” However meaningful AI may prove to be in the future, none of the businesses voicing the above comments was able to quantify just how AI might contribute to their forward profitability.
More encouragingly, we heard at least three real-world use cases where AI is already delivering tangible benefits. Begin with Mastercard. In its New York innovation hub, we saw demonstrations of how the technology could help detect fraud (the company’s model analyses over 7bn different inputs when assessing whether a transaction may be fraudulent), drive product recommendations based on prior purchasing history and know when it may be most optimal for retailers to send alerts to interested customers. At Match Group, AI can help improve dating experiences through superior profile building, matching and effective coaching for daters who may be struggling. Early trails have shown increased adoption of Tinder and Hinge services, especially among women. Finally, GXO Logistics told us that AI projects had been rolled out in around 40 of the warehouses it manages, with some yielding productivity improvements of more than 100%.
Beyond AI, the other key discussion topic that occurred with regularity was what impact the new President would likely have on the business environment. Arguably, expectations are even more elevated here than regarding AI. “Animal spirits are very real”, we heard in one meeting. Specially, we were told, the Republican administration would help “unclog the logjam” and “accelerate decision making.” In another meeting, there was a clear message that “things are accelerating” and that 2025 could bring “a flurry of new activity.” Other similar views voiced to us may speak to wishful thinking, but it was notable that not a single person with whom we spoke – at least in the world of business – voiced any caution on the Trump team. Perhaps the closest anyone came was in the messaging that “we’ll have to see.”
12 December 2024
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in GXO Logistics, Mastercard and Match Group. The author of this piece has no personal direct investment in either business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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