Category: Tech news

The global industry potential of artificial intelligence is well-documented, yet the vision of this AI future is uncertain.

AI and automation trends are generating significant debate among economists and governments, particularly around employment impact and uncertain social outcomes. The mainstream attention is warranted. According to PwC, AI “could contribute up to $15.7 trillion to the global economy in 2030, more than the current output of China and India combined.”

AI is at a crossroads, and its long-term outlook is still hotly debated. Despite social media giants, automotive companies and numerous other industries investing hundreds of billions of dollars in AI, many automation technologies are not yet directly generating revenue and instead are forecasted to become profitable in the coming decades. This creates additional uncertainty of AI’s true market potential. The realistic potential value of AI is unknown, yet, as the technology advances, the ultimate impact could be of great consequence to virtually every economy.

There are many reasons to view AI’s future from an optimistic lens, however: chatbots provide significant evidence for AI’s positive impact on both business growth and employment markets. Today, chatbots are increasingly capable of mimicking human interactions and conversations to assist business-to-business, business-to-consumer, business-to-government, advertising audiences and other diverse groups. The evolution of the cognitive computer science behind conversational chatbots is perhaps one of the best examples of AI technologies driving revenue. Further, chatbot technology shows some of the greatest promise for augmenting, rather than replacing human workers.

AI is driving value while augmenting human workers

Chatbots are delivering real revenue today for some of the world’s leading financial services (Bank of America), retail (Levi’s), and technology companies (Zendesk) . We’re seeing more consumers taking the next step in a transaction or even making a purchase decision based off conversations with chatbots. Beyond driving sales, chatbots have numerous applications to a wide range of organizations. Nonprofits, NGOs, and even political campaigns find value in deploying chatbots to help handle the influx of inquiries from stakeholders and relevant audiences.

Rather than these chatbots replacing human workers, organizations are finding chatbots to be a helpful and value-creating opportunity that frees employees to focus on more strategic tasks. Apple’s Siri, Amazon Alexa and Microsoft Cortana aren’t replacing executive assistants today, but these technologies are all capable of supporting the executive assistant function in the workplace.

Gartner predicts AI augmentation, defined as a “human-centered partnership model of people and AI working together to enhance cognitive performance,” could generate $2.9 trillion of business value by 2021. Many industries see potential for chatbots to augment functions like sales, customer support and IT, enabling workers to create value in more strategic ways. Bain & Company finds chatbots to be among the most notable examples of artificial intelligence and automation in practice: “Companies use AI applications to understand industry trends, manage their workforce, address problems, power chatbots and personalize content to enable self-service.”

Clearly, the implications of scaled, human-like engagement are stunning in their capacity to carry out tasks. A chatbot’s ability to simultaneously hold tens of thousands of conversations — pulling from many millions of data points — is comparable to what a human customer service rep could accomplish in more than 1,000 years of nonstop work. Scaling customer service via AI allows service professionals to focus on big picture and more complex issues, and it provides rich data on customer interactions. We anticipate seeing more companies look to build better customer service experiences through chatbots, as Google and Salesforce announced in April.

The transformative impact of chatbots across industries

From our research and work with leading global companies, it’s clear that enterprises are finding that chatbots bring about tremendous value while supporting both people employment and long-term business growth opportunities today. Ultimately, chatbots are on track to showcase some of the most optimistic examples of AI augmentation. Consider three examples:

Hello and welcome back to our regular morning look at private companies, public markets and the grey space in between.

This morning we’re digging into the current IPO market, asking ourselves how much damage WeWork really did to other companies hoping to go public. Is the IPO window closed, and if not, what sort of companies can still get out?

There’s some good news out today for late-stage startups looking to debut — along with a few impending tests regarding the market’s appetite for risk that we should understand as we head into 2020.

Bill.com’s good news

In terms of IPOs, Bill.com’s felt comfortably standard for 2019. Bill.com was a heavily venture-backed company that had raised just under $350 million while private across myriad rounds, and by the time it wanted to go public it still lost money.

At the same time, the company had a number of strengths. These include historically slim losses as a percent of revenue ($7.3 million in its most recent fiscal year, against $78.4 million in revenue), differentiated revenue sources (subscription income and rising interest payments), and improving gross margins (74 percent in its most recent quarter, up from a little under 72 percent in the year-ago period).

Those factors combined were sufficient to entice investors to price the company’s IPO far above its initial expectations of $16 to $18 per share. Instead, Bill.com raised its range once and then priced above the higher interval. At $22 per share, the company’s value rose by about 60% compared to its most recent private financing. (You can read more on the debut here.)

This matters as WeWork was said to have closed the IPO window for companies more focused on growth than profits. The way the market reality was discussed in venture circles seemed to indicate that WeWork’s implosion had slashed investor interest in growth, with public market players now favoring profits, or something close.

Bill.com’s most recent three-month period featured far-larger losses than its year-ago quarter, which mattered little in the end. The firm’s solid growth and moderate losses, it seems, were more than enough to secure a strong welcome to the public markets.

Yes, but…

You may be wondering why we just spent so much time explaining why a healthy company managed to go public. The goal, simply, was to point out that not only can companies still losing money and burning cash go public, they may even get a strong reception.

But what about companies in slightly less good shape? What does Bill.com’s IPO pricing indicate for Sprout Social, a company of similar size that’s going public this week which is also unprofitable, but growing more slowly (29.5% year-over-year in Q3 2019, compared to Bill.com’s 57%)?

Its pricing and debut will be a more interesting test. And luckily for us, it should price its shares this evening. (Even more fun, it targeted the same $16 to $18 per-share initial IPO price range that Bill.com initially had in its own sights.)

If Sprout Social manages to price in-range, we’ll have another data point in favor of the IPO window being comfortably open. It’s not surprising that Bill.com’s IPO priced well, but Sprout Social’s slower growth rate likely make its losses less palatable; if it can debut all the same we’ll know that the band of venture-backed companies that can public post-WeWork in the dead of December is wide.

That’s good news for illiquid unicorns and their backers, provided that their companies are at least as healthy as Chicago’s Sprout.

WeWork 2.0

Finally, we have one more test of the IPO market ahead of us.

China-based Ucommune is a co-working company with self-described “global impact and ambitions.” Claiming to be the “largest co-working space community in China,” Ucommune espouses “sharing, innovation, responsibility and success for all.” In its F-1 document, filed yesterday and setting in motion a possible US-listed IPO, Ucommune details comical levels of unprofitability and growth.

If all that sounds familiar, it should. It should feel similar to WeWork, which makes the timing of Ucommune’s IPO filing all the more amazing. WeWork’s pulled IPO was minutes ago, and here we are, staring down the filing of yet another coworking IPO?

The situation gets even better. Observe the following results:

• Ucommune Q1, Q2, Q3 revenue: $122.4 million

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