Artificial intelligence is no longer just in the realm of science fiction. It’s in the here and now, and one company, Vicarious, is looking like the real deal. I am not the only one who thinks so, either. Vicarious just picked up $40 million in a Series B VC round that saw the likes of Peter Thiel, Mark Zuckerberg, Vinod Khosla and Ashton Kutcher participating. That’s just to name a select few. This round’s $40 million was on top of prior funding, and in total Vicarious has raised just over $56 million.
The company is based out of San Francisco and is headed by D Scott Phoenix. He and his dozen or so employees were responsible for developing technology that deciphered the CAPTCHA (Completely Automated Public Turing test to tell Computers and Humans Apart). So what’s the big deal and why would anyone want to fund a company that breaks captchas, considering captchas are there to stop spammers?
Well, the ante into the game for Phoenix and his team was the captcha-busting technology; but what everyone is beating a path to the company’s door for is because getting around captchas requires either some serious computing power or world-class artificial intelligence (AI). And in this case that’s what Vicarious is developing - groundbreaking AI.
The Advances
Given enough computing power and memory, almost anyone who understands code could build CAPTCHA solving methods, but that’s not what Vicarious did. Essentially, Vicarious decided to take on the gargantuan task of replicating the natural codes that make the human brain possible, and so far it appears to have been triumphant.
Take, for example, one of Vicarious’ computers that was programed to imagine what a cow would look like, then draw it. The experiment was to show that the computer could be wired and programed to imagine. This is something computers have not been able to do yet. They can process, they can remember, but they couldn’t imagine, until now - until Vicarious.
The Founder
D Scott Phoenix is a serial innovator and daring entrepreneur. A graduate of the University of Pennsylvania, he was previously the CEO of Frogmetrics, and EIP at Peter Thiel’s Founder’s Fund, and CXO at Only Square. At Vicarious, he is joined by a handful of qualified professionals, most with PhDs from top American and British universities. And he plans to hire more to push the envelope even further. That’s why they needed this round of funding - to acquire the brains necessary to make this happen. Vicarious is a company built on human brain power to try and build artificial intelligence like we’ve never seen.
The Role of Artificial Intelligence
To understand why this company is highly-valued, the overview of the use of AI is something we need to take a look at. AI is not just about robotics and building the next human replacement. AI is about doing things that work for humans in smarter, safer and more efficient ways. For example, AI could be used to manage power generators so that the optimization is done across the entire value chain, from when a light turns on and off, to how much electricity is used, where it’s generated, and how much is transported across the grid. All that has significant impact on costs, profitability and in no small measure, on the environment.
AI could even be used in the development of auto-driven vehicles where the vehicle can make defensive moves in the face of an impending threat. Combining AI to big data will also have amazing results as that would further mimic the human subconscious and the ability to imagine solutions and create hypotheses. In short, AI development has endless possibilities.
Strengths and Weaknesses
From a startup perspective, Vicarious has the most blue sky potential I’ve seen in a long time. Like all trail blazing companies, one cannot accurately predict the potential market size for Vicarious because the market does not yet exist. That’s exciting, but also unnerving for those who want a clear path to success. Fortune favors the bold…
The first obvious strength I see for Vicarious is the company’s exceptional talent pool. The company’s development team is unusually strong. They have some serious brain power at Vicarious and that is one of the things they are going to need to make this work.
The other major strength is that Vicarious already has a track record to leverage. Unlike most startups, who are new to the scene and spend much of their early days trying to prove themselves, that won’t be an issue for Vicarious. It has already solved annoying captchas without hacking, but actually using a computer to solve it. This is impressive because even if CAPTCHA developers come up with more complex images and equations, the AI of Vicarious will learn how to solve it.
The most amazing strength that I detect from this company is so many of the smartest tech gurus and entrepreneurs have invested in it. With Vicarious’ investor list already being as potent as it is, commercialization is inevitable. Additionally, future capital, for new AI products, will be easy to come by for Vicarious given how deep the pockets are of some of its latest investors.
But there is another side to the story. There are others who are on the quest to the coveted prize of getting to AI first. I see this as a major issue. First-to-market in this case is significant. There is no second-mover advantage in this industry. The prize for first mover advantage is a huge market share and a several billion dollar valuation right out of the gates; and Vicarious’ competitors have the funds to pull it off as well.
The biggest potential competitor I see for Vicarious is Deep Mind, which was recently purchased by Google. By the way, if you think the Series B investment into Vicarious was hefty, look at what Google paid for the Deep Mind acquisition - $500 million, or so industry watchers think. The actual deal numbers are still pretty much confidential. One point to note is that Mark Zuckerberg‘s Facebook did mount an unsuccessful bid for Deep Mind. Was Vicarious a ‘plan B’?
The competitive landscape doesn’t end there. IBM is also in the game and they have been for a while. Remember back when they were building computers that could play chess? Well, that was the prelude to AI. IBM has been approaching AI from a very different angle. Facebook even hired AI experts and Yahoo did the same.
The key to success in the AI industry is not just the brains behind the program; we can agree Vicarious has the brightest working with them. It is also not the amount of money that’s driving the development; we can also all agree that all the entrants are well funded. Those factors are just the ante into the game.
The key success factor will be the company who can get to market with a product that works universally, not just drawing imaginary cows and solving captchas, but one that can learn and communicate at random. That is still a few years away, but when developed it could create a global industry worth several hundred billion dollars - if not trillions. In my view, Vicarious has jumped out to an early lead.
Stay hungry,
Aaron
