Be Careful About Investing In AI

Bradenton Industrial Webinar

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I’d like to invite you to learn more about an exciting opportunity located in Bradenton Florida. Bradenton is next to Sarasota for those of you who are familiar with Florida. This market has an industrial moratorium that is driving one asset class to new heights, specifically light industrial. This 35 are property, right in the middle of Bradenton has an existing Charter School on 11 of those acres and 24 acres of land that we are developing.  We are hosting a webinar on Wednesday October 8 at 7PM Eastern time. This opportunity is only open to accredited investors residing in the US in compliance with SEC regulations. To learn more, click on the link in the show notes and we will see you on Wednesday evening at 7PM. 

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On today’s show we are looking back in history for some of the narratives that surrounded the adoption of new technology. 

The year was 1999. At the time, it seemed like the internet was the answer, what’s the question? Companies were spending hundreds of millions burying optical fibre anywhere they could. After all, the internet would need lots of fibre to carry all of that traffic. There was tons of investment in the core of the network to carry all of this traffic. I personally was an executive in the tech industry. I left Nortel in 1997.  The next company I was at was Tundra Semiconductor. We were designing microprocessor core logic chips that were used in all kinds of applications. One of our customers was Motorola who was shipping 250,000 cellular base stations a year. These would eventually be upgraded from the GSM base station to the Edge  base station and then eventually the 3G base station. Back in those days, the emphasis was on building out the core of the network.

Later in my career I took progressively more senior positions in the tech industry. By 2004 I was VP of Engineering at AMCC that was headquartered in San Diego. I was also President of AMCC Canada.  My company had raised about $1B in the public markets at the height of the Dotcom frenzy. As a result, we had all kinds of startup companies parading through our board room with the hopes of getting acquired by a company with a ton of cash.  

I learned to ask three very simple questions of every startup company. The answer to these questions revealed more than anything else. The technology, the features, the cool factor, none of it mattered.

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Episode Transcript

(00:01):
Welcome to the Real Estate, a special podcast, your morning
shuttle. What's new in the world of real
estate investing? I'm your host, Victor Minash.
On today's show, we're looking back in history for some of the
narratives that surrounded the adoption of new technology.
I'm going to arm you with three important questions, but first,
I'd like to invite you to learn more about an exciting
opportunity located in Bradenton, FL Bradenton is next

(00:22):
to Sarasota. This market has an industrial
moratorium that's driving the need for one asset class in
particular, and that is light industrial.
We have a 35 acre property rightin the middle of town.
It has an existing charter school on eleven of those acres
and we're developing the remaining 24 acres.
We're hosting a webinar on Wednesday, October the 8th, 7:00
PM Eastern Time. The opportunity is open to

(00:45):
accredited investors only residing in the US in compliance
with USSEC regulations. To learn more, click on the link
in the show notes and we'll see you on Wednesday evening,
October the 8th at 7:00 PM. If you can't make it, register
anyway and we'll send you a recording of the webinar.
Now, today's show, we're lookingback in history for some of the
narratives that surrounded the adoption of new technology.

(01:05):
The year was 1999, the time it seemed like the Internet was the
answer. What's the question?
Companies were spending hundredsof millions burying optical
fiber anywhere they could. After all, the Internet would
need lots of fiber to carry all that traffic.
There was tons of investment in the core of the network to carry
all of this traffic. I personally was an executive in
the tech industry now. I left Nortel in 1997, just

(01:28):
before the peak. The next company I joined was
Tundra Semiconductor, which we took public in 99.
We're designing microprocessor core logic chips that reason all
kinds of different applications.One of our customers was
Motorola, who is shipping a quarter million cellular base
stations a year at the time. These would eventually be
upgraded from the GSM base stations to EDGE and eventually
3G. Back in those days, the emphasis

(01:50):
was on building out the core of the network.
Now you might be wondering how the core of the network is going
to need all of this capacity if nobody's making any major moves
at the edge of the network. Well, that's a great question.
The limiting factor was the amount of data that you could
carry on a copper twisted pair phone line, which was coming
into your house at the time. Coaxial cable to carry cable TV

(02:10):
was designed as a broadcast network.
It would only take signal to your house, but not the other
way. It would take a long time to
figure out how to change out that infrastructure to make it
work in both directions. It seemed like nobody did the
math to figure out that the emphasis on the capacity of the
core of the network was somewhatmisplaced when the business case
for the demand in the broader population was being largely
ignored. Now I see a lot of parallels.

(02:31):
Today, there's tons of money going into artificial
intelligence data centers. That's the core of the network.
But what about the actual use cases?
For AI to truly proliferate, it needs to exist in millions of
autonomous robotic devices in the real world.
Will they have a connection to the data center?
Well, maybe, but I'm not convinced.
So the true roll out of AI capability on a global scale

(02:53):
goes far beyond ChatGPT or Gemini.
We need to be cautious as investors when looking at
promising solutions or later in my career, I took progressively
more senior positions in the tech industry.
By 2004, I was vice president ofengineering at AMCC that was
headquartered in San Diego. I was also president of AMCC
Canada, which is where I live. My company had raised about a

(03:14):
billion dollars in the public markets at the height of the.com
frenzy. As a result, we had all kinds of
startup companies parading through our boardroom with the
hopes of getting acquired by a company with a ton of cash.
Now, I learned to ask three verysimple questions of every
startup company. First question is, what problem
are you solving? In today's environment, I'm
pretty confident that no venturecapitalist would fund a startup

(03:36):
without a solid answer to that question.
But so often founders will come into the boardroom and talk
about how cool their technology was.
We often didn't get good answersto that question.
What problem are you solving? Naturally, they walked out of
our boardroom empty handed. Now if you can't answer the
first question, there's no pointasking the 2nd or the 3rd.
The next question is, is the problem acute enough the

(03:57):
customers willing to spend moneyto have that problem solved?
Now of course that second question cascades into a whole
series of questions that unpack the value proposition.
What is the solution worth? How will the customer value the
solution? How will they pay for it?
Do they want to pay for it in a lump sum upfront or as a
recurring costs? There's all kinds of business
model questions related to establishing the value

(04:17):
proposition. And then the third question,
assuming the value proposition is well established, is are they
willing to buy the solution fromyou?
Now, if your solution has a low barrier to entry and your
company only solves this one problem, then will they buy that
solution from you if the customer already has a
commercial relationship, say with Amazon or Microsoft?

(04:38):
And one of those companies easily can add that capability
to their offering versus requiring a separate commercial
relationship with your startup company that no one's heard of.
They may choose to go with the established player like Amazon
or Microsoft. Now, as private investors,
you're going to be approached byall kinds of startup companies
to invest in all kinds of AI initiatives.
You might even be approached to invest in data centers.

(05:00):
And this is where you need to perform proper due diligence and
ask yourself these questions andmore.
It's that third question that often trips people up in a world
that has not consolidated from thousands or maybe hundreds of
companies to a few dominant players.
Remember, consolidation will happen.
It happens in every industry. It happened in automotive, it's
happened in television. It happens in every industry.

(05:22):
When a startup company is using an open source model to create
their solution, the barrier to someone else copying that
solution is extremely low. Just look at how quickly
DeepSeek in China was able to come up with a competitive AI
solution. In a very short period of time,
these companies will deliver a working product, but bridging
the gap between a working product and something that's
going to work commercially is a huge leap.

(05:44):
So be extremely cautious when your approach to invest in AI.
As you think about that, have anawesome rest of your day.
They'll make some great things happen.
We'll talk to you again tomorrow.