Happy Friday! It was impossible to feel like an overachiever this week, thanks to Elon Musk. Not satisfied with launching new robots and robotaxis, he also made impressive steps towards his dream of occupying Mars when SpaceX caught a massive rocket in mid-air. Meanwhile, the UK government launched its new Industrial Strategy discussion paper, Citibank acknowledged a data skills gap and Air Street Capital published its latest State of AI Report... Let’s get into it!
The layout and premise of the newsletter is simple: an end-of-the-week sheep-dip of tech, culture, policy and research stories, which I hope you enjoy. If you think friends or colleagues would benefit, please share with them so they can subscribe on Substack or LinkedIn.
Best wishes, Alex.
1. Tech innovation
For seven years now, tech investor Nathan Benaich and his firm Air Street Capital have been producing an annual review of the hype and reality surrounding artificial intelligence. It’s refreshingly geeky and non-corporate, published on shared Google Slide deck with a little digest each year, which makes predictions about the next 12 months and assesses how right (or wrong) the predictions were the previous year.
The State of AI Report 2024 was published last week and considers the following key dimensions:
Research: Technology breakthroughs and their capabilities.
Industry: Areas of commercial application for AI and its business impact.
Politics: Regulation of AI, its economic implications and the evolving geopolitics of AI.
It also this year includes a new section, Safety: Identifying and mitigating catastrophic risks that highly-capable future AI systems could pose to us. The UK government receives a rare hat-tip in an international policy piece as the authors recognise the reason for including this section is that ‘governments around the world [are emulating] the UK in building up state capacity around AI safety, launching institutes and studying critical national infrastructure for potential vulnerabilities’.
Key takeaways from the 2024 report include:
‘Frontier’ lab performance has begun to converge and proprietary models for generative AI are losing their edge, as the gap between GPT-4 and the rest closes.
Planning and reasoning are taking priority in LLM research, as companies start combining different types of learning and evolutionary algorithms, to unlock the long promised ‘AI Agent’ capabilities.
Foundation models are demonstrating their ability to break out of language, working across mathematics, biology, genomics and neuroscience.
U.S. sanctions aren’t impacting China’s ability to produce capable generative AI models, though the country’s ability to build a domestic semiconductor industry remains challenged.
The enterprise value of AI companies has hit $9Tn, as public companies experience a bull market for AI exposure.
A handful of AI companies have begun to generate serious revenue, including foundation model builders and start-ups working on video and audio generation. However, it is unclear how long profitability will last.
The full report can be seen here.
2. Culture
Citibank has struggled to adequately train employees in risk, compliance and - importantly - data roles, despite billions of dollars being spent on its digital transformation over the last few years, according to the bank's own assessment.
As reported by Reuters, Citi’s internal analysis shows the bank has been grappling with a shortage of skilled personnel, finding at times that it did not have the right training and assessment tools to fix its regulatory challenges.
Since 2020, the American bank has been operating under two ‘consent orders’ (regulatory wrist slaps) which cannot be removed until these issues are resolved. According to sources at the bank, this hasn’t been made any easier since CEO Jane Fraser decided to reduce the number of management layers and lay off thousands of employees a year ago.
"We continue to invest heavily in talent and training to ensure we have the right people and expertise in critical areas such as data, risk, controls and compliance,” said the bank in a statement. It added that it is continually working to assess "the evolving skills needed so that we can hire" and enhance skills accordingly.
Citi is not alone in dealing with these issues: Data Strategy Alliance analysis last year identified that major banking and financial services firms on average were 149 years old, employed 20,621 in the UK, spent £9.8m per year on technology R&D and were struggling to overcome particularly complex transformation issues, due largely to embedded legacy data and systems.
Citibank, which has around 230,000 employees globally, has spent billions on its transformation project already and has around 13,000 people working on overhauling its approach to regulatory and data management. U.S. regulators say the bank's widespread risk and data flaws imperil its financial safety and soundness.
3. Policy & Research
To coincide with its global investment summit this week, the UK government published its new Industrial Strategy green paper (discussion document), setting out a roadmap to growing the economy to 2035.
There’s some good stuff in there. Along with classic governing greatest hits about encouraging innovation and inward investment, and a lot of well-intentioned sections about empowering the regions and nations (which may actually yield fruit with ten of the 11 mayoral combined authorities now being under Labour control).
The green paper says eight growth-driving sectors will be prioritised across services and manufacturing, based on both existing and emerging strengths:
Advanced Manufacturing
Clean Energy Industries
Creative Industries
Defence
Digital and Technologies
Financial Services
Life Sciences
Professional and Business Services
… all of which depend on enhancing the way industries learn to handle, use and manipulate data. The paper recognises that ‘measuring emerging technologies is also challenging as they are not linear and predictable, and they interact with each other’.
But the section I zoomed in on, aligning as it does with all the research DSA carried out in the last year with the UK’s biggest firms, was the piece on data skills and maturity: ‘Improving data maturity in businesses to help businesses to do more with data – both as users and producers. This includes improving competition in data-driven markets, and collaborative government and private sector arrangements on consistent standards, data-sharing infrastructure, and supporting businesses in the way data is used across supply chains.
On innovation, it goes on to say that: ‘Accelerating the rate of innovation and increasing the adoption and diffusion of those ideas, technologies, and processes is an essential step for growing the productivity of our growth-driving sectors. This must include ensuring that data is created, handled, and shared in a way that both unlocks economic opportunities and is safe and ethical across the economy’.
4. Watch/read/listen
Not a book this week, but a play! I went to see A Raisin in the Sun at London’s Lyric Hammersmith and it was genuinely such a wonderful piece of work, I can’t recommend it highly enough.
Ground-breaking in its time and still pioneering and challenging, Lorraine Hansberry’s powerful play broke barriers as the first play by a Black woman on Broadway. Directed here by Tinuke Craig (Jitney, The Color Purple), this classic family drama full of humour and heart, remains relevant and powerful in a world still divided by inequality. The New York Times called it "A play that changed American theatre forever.”
Running until 2nd November – book your ticket here.
5. Playbook picks & worthy clicks
Top female CEOs are out-earning male CEOs for the first time (Conference Board)
The Welshman who accidentally recycled a hard drive containing 8,000 bitcoin back in 2013 is suing his local council for half a billion (Wales Online)
A fascinating deep dive on Silicon Valley’s U.S. political lobbying tactics (New Yorker)
How everyone got sucked into Netflix’s endless library (NYTimes)
A data bottleneck is holding AI science back, says new Nobel winner (MIT Technology Review)
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Wishing you all a fab weekend!