Impact of AI Across Real Estate and Various Sectors: A Discussion at The Annual Columbia Business School Real Estate Symposium

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March 21, 2024

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I joined my alma mater, Columbia Business School to give a talk at The Annual Columbia Business School Real Estate Symposium. I was invited by the Paul Milstein Center for Real Estate and decided to discuss the impact of AI on the real estate industry and various sectors. During the talk, I delved into the potential of AI across various sectors, including its convergence with augmented reality, robotics, and quantum computing. I point out how these advancements could transform not only industries but also national security. In the context of real estate, I highlighted the challenges and opportunities AI presents, urging listeners to adapt to this rapidly changing landscape.

Ultimately, I believe it's crucial for us to approach AI with responsibility, recognizing its potential for both good and harm. I'm grateful to Columbia Business School for the platform to share my insights, and I hope my talk encourages others to navigate the evolving technological landscape effectively.

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TRANSCRIPT (this is an automated transcript):

Welcome, everybody. I'm Mark Peter Davis, Managing Partner of Interplay. I'm on a mission to help entrepreneurs advance society. And this podcast is definitively part of that effort. Today, we're gonna do something a little different. I had the great honor of going back to my alma mater, Columbia Business School and giving a talk.

Now, when I was at CBS, I focused on entrepreneurship and venture capital. I was actually invited to go back and speak by the Paul Milstein Center for Real Estate at the Business School. And they host a conference every year, the annual Columbia business school real estate symposium. Which took place this past December, and this brings together hundreds and hundreds of real estate executives across the whole stack of the industry.

Columbia also just launched, just opened up this incredible new campus around 130th Street in Manhattan. It's unbelievable if you haven't been up there, it's worth it, it's almost worth just going up there just for that, just to see it. The architecture is incredible. And they invited me to come in and speak at this real estate conference where I'm a little bit of a sore thumb.

I'm an outsider talking about AI and the impact of AI on the real estate industry. Now, I did that. And there were a lot of people in the audience, I want to say 250 people, something to the tune of that. And I took a little bit of a different slant. So instead of just going in and giving them an update on AI, I actually tried to get them to wake up.

My goal was to scare everybody. And so you'll hear the way I deliver this presentation. We're going to play for your recording of it as the episode today, I try to scare everybody a little bit into paying attention to the AI. I do this for a couple reasons. One, I want people to be vocal and thoughtful about what's happening in their world.

I want them to be thinking about how it might impact them as in their businesses. And I want them to put pressure on society and the community to be thoughtful about the applications of AI. Now, in reality, I don't share too much in this talk. I'm very optimistic that AI is the next butter knife.

It's going to end up being wildly positive for society. There are risks with it, and I think we're going to overcome them. But I'm an optimist. I'm a little pessimistic that the government is going to regulate AI. I think it's just out of their wheelhouse and skill set, and the government is designed to move slowly.

So I don't think that's going to work out, and I don't clarify that in the presentation, because I'm trying to create questions for the audience. But I thought it was an interesting talk. We talk about a baseline for AI, so if you're not super familiar with AI, other than some loose language, you're going to get up to speed pretty quickly, if you listen to this.

You're going to hear how AI is really evolving a bunch of markets broadly. And then we're going to dive into what it's doing in real estate. Last thing I want to say is there's a couple of companies I mentioned in here that are adapting the world through AI that uses case studies to try to create a little bit of fear.

Reality is I love the companies and they're really excited about what they're doing. I think they are the frontier. So anyway, this is an interesting chat. Thanks I hope it's helpful and insightful for folks and big thanks to Columbia business schools, Paul Paul Milstein center for real estate for having me.

It was a big honor. And with that, without further ado. Enjoy.

Let's baseline a little bit. There's a lot of jargon used around AI. I've actually cut this down to two topics just so we have language and a framework when you are reading the news to understand what people are saying. AI, everyone can read this, is a simulation of human intelligence and its machines that are programmed to think like humans.

This is limited by the framework and the programming of the technology. It's not creative. AGI, Artificial General Intelligence, you should pay attention when you read the news and you see that extra word in there, can perform tasks basically as well or better than you, and can adapt and learn and be creative.

And this is what we really all think about when we watch movies. AGI. You're not thinking about AI. But the only thing we're using today is A. I. So the good news is A. G. I. Does not exist yet. The reason people are scared is because it might exist very soon. So let me give you a way. I think about the significance of this technology in particular.

I think it belongs on this chart when you think about the milestones that have been defined.

It's a couple of dozen things. I think it's on the sheet. So we are at the very beginning of a major moment that people will look back on in history books and say that's the date when that happened. And the reality is that curve looks a hell of a lot more like this than the curve you just saw. Modern man is estimated to be on this planet about 80, 000 years.

But all of the innovation that we count as relevant happened in the last couple of hundred years. When we think about our history, we think about a very myopic period of time. Reality is it's all changing very fast in ways we're not ready for and frankly most of us are not biologically adapted to. Okay, so what's the big deal about AI?

Why does the tech community care about it? To have an understanding of that, you have to have a little context. In 2000, we had the internet and market we're in the tech boom, and we're producing a lot of data. Anyone who wants to get on and write a blog or anything else is doing that. Emails are flying around the internet.

In the last 20 years, we've 1, 000x'd that. It's a huge amount of change. So the amount of data that is available on the planet earth far exceeds any other time that you can imagine. And it's way more data than we can use what we are doing today and all of our business decision making geopolitical decision making your political decision making.

is based on simple, small data sets that you can read in a newsfeed or consume from friends. Reality is every transaction, every inch of the global map, it's been documented, it's been considered. You just can't process it. You're not smart enough. And that's where AI comes in and why it's a big deal. Now, we're in the very beginning, when you think about that, take a step back, if you can think about AI as the first brain that can actually make sense of the data that we now have.

That's the missing piece. We're in the very early days of this journey. Chat GPT only really launched a year ago. I feel like it's common vernacular for most people in the room, I read the news, but reality is most people haven't even heard of it, or not most, but a lot of people haven't even heard of it yet.

And even fewer have used it. Who in the room here is logged on and asking questions? Okay, good. You're in the minority. What's that? Students have a high percentage. There you go. There's a fancy business school curve here which I'm not going to get into for the phases of innovation. Suffice it to say from this diagram, AI is in the very very beginning of its curve.

And the data it's processing is going way up. Just in the course of the last three years, the amount of data ingested and being leveraged by these models is five X and things tend to not change linearly. Look at the slope. There is a way that we can all make sense of to appreciate how much more powerful this technology has become in just a short period of time.

Chat GPT 3. 5. Scored a 1260 or so on the SAT, six months later, 1400.

How many of you lose to chat GPT now? Okay, here's how I think about the opportunity and this will help frame for those who are building a kind of frontier, this is a little bit of our investment thesis around where AI fits into the world. If you look at cloud computing, there's two buckets.

This is an oversimplification, any tech nerd would scream at me, but that's, Helps you see the signal within the noise. There are platforms and applications. The platforms are the heavy tech that everything else is built on. And so if you look at cloud computing, you've got Amazon web services, Google, Microsoft, they all have products as well.

Those are hugely capital intensive, hard to build. And then everyone else builds tech on top of that. And so almost every application today is built on a cloud computing backend. Same paradigm in mobile software. Reality is there's two platforms. You got Apple's app store. You've got Android, maybe a couple of others, more or less.

It's a pretty concentrated, huge development task. Most startups, the way the institution that I'm in venture capital is set up they're not set up to fund those types of scale of companies. So they're owned by big tech and then everyone else enters and builds application layer technologies. And that's the stuff we all think about and use.

Here's the fun thing to think about. It's a real long tail game. It's just a lot of, very little of what's built actually is relevant for our lives and what generates real yield. So just to give you a little context, 2 million ish apps on the Apple app store. It's really a hundred apps that matter.

That's where all the value is created economically for investors. And those are the same hundred apps on almost everybody's phone here. We think that's the framework. To think about A. I. And that should say a. I. I'm mobile software for clarification. So no one gets confused. You've got a handful of platform companies that are investing hugely in developing extremely capital intensive technologies, right?

We're all talking about open a. I. There are a handful of others. My background Intel is that a lot of the big tech companies had AI in development long before open AI showed up on the market, but their market entry catalyzed the need for those big tech companies to start exposing their underlying software.

They already had it and we're using it. It was just not publicly accessible. There's really little in the way of the application layer that we're currently using. Maybe you're logging into chatGPT to ask a question. That's it. It hasn't shown up in any material mobile app that you're using any application in your computer anywhere that's affecting your life yet.

These are the earliest of days. We're all talking about the infrastructure, the platform layer. Still, we're not really talking about relevant applications, but they're at the gate. There's a lot going on, and it's going to penetrate your work life. Just a little quick glance here. I'm not gonna run through this, but there's a lot of companies.

This is the impression I want to give you here already targeting FinTech, a bunch thinking about healthcare, and a hell of a lot thinking about content.

To understand where this is going, let's take a second and talk about convergence. Because AI is a ubiquitous platform, and the most interesting applications of it are not going to be what we would consider AI specific. They're going to be changing the way we do other things that we're already engaged with.

It's an undercurrent that's going to affect a whole lot of industries. An easy one that I think everyone can see because everyone's watched a lot of Marvel movies. AI plus AR. If you imagine Tony Stark's visor in the Iron Man suit, that's what we're talking about. An intelligent visual overlay on what in the real world.

And there's a lot of real applications coming with this. They're not commercially viable yet. We don't have the hardware in place. But this is coming. And so imagine anytime you need to make a decision, if the world was color coded, if you're popping the hood of a car, and you've never fixed an engine in a car before, and there's an instruction manual integrated into your line of sight, or we found this one because we thought it was real estate y.

If someone's like carving up one of those model things. Here's a digital one. I don't know if that's actually gonna happen. Okay, here's another one. AI plus robotics. Who in the room has heard of Andruil? They were in the news last couple of weeks. Okay, that is scary. Just of the couple hundred folks here, maybe ten hands would up.

The founder of the Oculus, a gentleman named Palmer Luckey, has started another venture. It's already worth billions of dollars. And what he is building are drones that can fight in wars on land, air, and sea. Real drones, land, air, and sea. There was a big press announcement this week. They have a drone that can fly up into the air, smack into another drone, and if it doesn't, fly back and land.

The nature of warfare is 100 percent changing.

And when you mix that with AI, it's the background for a plot of a movie we've all seen too many times. Doesn't mean it's going to happen, but these are the ingredients for this story. All right, who's seen Tesla's in house robot? Okay, if you haven't, worth a minute, go to YouTube at some point, click on Tesla robot, and you will see something uncanny.

There will be a humanoid looking robot standing in a room sorting blocks. intelligently and some human will come up and scramble the colored blocks around and the robot will figure out that they've moved and sort them appropriately. It's worth three minutes of your life. That's coming. We will have robots in our homes.

There's another movie plot.

All these things are happening now. These are no longer sci fi. These are in development. Okay, here's another one. AI plus quantum computing. All of us have heard the phrase quantum computing. It's a daunting, physics-y sounding word. I assume no one understands it really. I probably don't. But here's what you need to know.

This is basic English. Today's computers are 10, 000 times faster than computers 20 years ago. Huge progress.

Quantum computers are expected to be 158 million times faster than the computer you own today. And they are in development. They do not exist yet. They're in development. To put that in context, what will take your computer 10, 000 years to do, this computer can do in 200 seconds.

If you're not scared yet, keep listening. This is Jack Hittery. He's also a Columbia grad. If you don't know his name, you should. He has been a very successful entrepreneur in New York. I believe he ran for mayor of New York at one point. He took two companies public and then joined up with Google.

And he spun a company out of Google. And I think Google's only spun a handful of companies out. And that company is called Sandbox AQ. And they were seeded with a 500 million dollar check to connect AI and quantum computing and make it real. And this is a big deal for technology, it's a big deal for national security, it's a big deal for everything that you guys are thinking about or worried about or losing sleep about.

Because when this technology is out, every form of cyber security currently in market today is hackable, instantly. Everything you've password protected is visible to someone with this technology. Every document at the Pentagon for Zoom is visible, and the world changes.

And Their first client, the Pentagon.

This is a good one. I think it's likely that drug discovery won't require clinical trials. There's something called synthetic data. When you can run models powered by supercomputers enough, you can create enough data to actually figure out probabilistic outcomes without actually doing experiments.

And so it should accelerate all types of medical benefits. That's the good side of it. The good news is these computers don't exist yet.

The problem we have is we've outsourced all of our manufacturing, more or less, in the States. Manufacturing of semiconductors and chips is so capital intensive that it's too expensive for a single country to fund more or less a real program. Basically, the whole world is aggregating all their demand to a couple of locations, the hub of which is Taiwan.

Taiwan produces 60 percent of the semiconductors, but what matters is they produce 90 percent of the advanced ones. And to make matters more fun, it'll take the U. S. 10 plus years to build an equivalent technology set in the, on our ground. And policies are being put in place and things are happening. You can see a lot of these geopolitical conversations have a very powerful undercurrent, because we're talking about whoever gets AI plus quantum computing first gets to see everyone else's stuff.

Okay, so that's a little primer on AI. I'm going to spend a couple minutes on real estate and then answer questions. They brought me here to talk about this, and I was like, I don't know anything about real estate, so I'll just do this quickly. This is actually one of our portfolio companies, a company called Onset IQ.

They have folks walk through properties around the country wearing these devices. They take 360 video images of the space, AI then weaves the video together to create a viewable floor plan that someone can actually navigate, and then it intelligently identifies changes. So that the idea is a lender or a developer who's building a building across the country, across the world and monitors progress remotely.

So for all of you who are gas guzzling with private jets, maybe you don't have to do that anymore. Check out on site iq. There's a bunch of these, but just lemme give you four quick examples. Real time AI video analytics. So maybe in properties, you'll be able to identify threats, like someone's carrying a gun, okay, into your building.

They're painting walls now with AI and computers, so no humans are required.

There's tons of ways to communicate customer service. This is the area that the barbarians are hitting first, customer service jobs. Your chat and intelligent AI identifying using cameras, unforeseen risks that can cause human harm. I share with these just to give you these, just to give you a few anecdotes of how to think of AI.

It's going to affect everything that you guys are touching. It's the headline, not one piece. And so the questions I'll leave you with is, are you minimizing costs accordingly? Are there tools out there that can help you in your version of the real estate market? Are you maximizing quality? I don't believe all of you are incentivized to do that, but wish you would.

Okay. How will you invest differently? And I don't just mean which properties. How will your investment decision making process change? Right now, how many variables do you take into consideration when you determine the highest and best use of a property? Or what region you're going to operate in? It's whatever you can make sense of or stuff in an Excel sheet.

What are there something a little bit more intelligent helping you? And how will you hire differently? Using Excel is becoming an unnecessary skill set. There's AI now where you can talk to the Excel and it builds the charts and diagrams. You just need the data and the intelligence to talk to it. The shape of teams and skills required from institutions like this is going to change.

Last thought I'll leave you with is I think the store, the history of technology is riddled with a phrase I use is the butter knife. To me a butter knife is a tool that a man, mankind has made that can be used to spread butter or kill somebody and it all, it all depends on what the holder chooses to use it for.

AI is for sure a butter knife. The question is how we use it.

Alright, if you made it this far, you're a patient listener, so thanks for getting all the way through it. Big thanks to CBS for letting us reuse the content. That wasn't a no brainer. Obviously big fans of the school, but great collaborative partners and content production. And most importantly, hopefully it's educational to folks to help people do better.

Thanks again for listening.

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