Proof of Work: AI Value Creation
00:39:18 · Stuart Willson, Yann Magnan
[00:39:18] S0: Yeah. Uh as we come to a close, I have a few questions, but I want to ask you two. Is there something critical that the audience should know about the intersection of AI and portfolio monitoring that we haven't yet discussed? Anything you want to share with the audience before I get to my closing questions? [00:39:39] S1: Uh I'll give it a start. I I would say what we've discussed today. We have the same discussion in six months' time, and we'll we will be in a different world. Things are moving like really, really fast. Really, really fast.
00:39:51 · Joe Zein
[00:39:51] S2: Yeah. Yeah, things are, I think I I agree. I think I think things are like even for us, you know, where we're we we work with this stuff day in, day out, and and we, you know, we've barely been catching up. I think people still need to be a little bit cautious because now building a UI is extremely easy, building a system that works reliably uh is not, and a lot of people have been trying to build skyscrapers on top of wooden foundations. So that's also probably the time to really focus on solidifying your foundations because I don't see as fast as we're going, I don't see a world where AI is able to just take your whole mess and completely understand it because you can't even understand it. And we're working towards AGI and being as good as humans, if not better. But you know, even humans, you just like you know, you hear stories about associates joining funds and not knowing where things are and still struggling to navigate the file system with six months in. So I would say I think you know, people need to really start worrying about their data foundations and making sure that they have the right tooling in place and and vendors that they're willing to stay with for you know the the critical vendors, whether it's you know the the 73 strings of the world, your accounting system, because those are not likely, in my opinion, or too high impact to one get replaced and two be migrated from. Because even if you're able to build a portfolio monitoring system, I'm gonna give you the assumption that you're so smart that you were able to build that portfolio monitoring system. Migrating from your existing portfolio monitoring system to the new one is also another crazy topic. So yeah.
00:41:39 · Stuart Willson, S3, Joe Zein
[00:41:39] S0: You both spoke to the pace of change and the speed with which this technology is evolving. Where is portfolio monitoring in 18 months? What does the state of the art look like in 18 months? [00:41:52] S3: What's possible that's not possible today? I'm asking you to speculate. [00:42:02] S2: I mean, I think it's it's again, anyone who tells you they know what's gonna happen is either crazy or delusional. But I think it's not too far-fetched to imagine a world where there's an ability from those tools to ingest data that is being uploaded by portfolio companies or by teal teams or by the you know the portfolio monitoring teams that is also ingesting signals from the web and from the world, basically, and are able to produce the reports that you need automatically, and are able to mark your portfolio to market on a daily basis, and are that are able to surface insights for you without you having to do anything. So waking up to an inbox of like, hey, this thing happened in the world, you happen to have an investment in that place of the world, but your investment is has a high you know debt to equity ratio, you gotta be careful. Look into that specific lause of your covenant. Um I don't see, I mean, again, they've built the the building blocks, right? And I think the speed of of like uh you know, if LLMs keep developing at the pace they've they've been developing at, they'll be able to you know perfect the envelope around it so that uh you know it's really uh seamless where you're not doing anything anymore. People are able to do that.
00:43:26 · Yann Magnan, Joe Zein, Stuart Willson, S3
[00:43:26] S1: Yeah, but same thing. 18 months down the line, I see the same thing that uh you wake up in the morning, um, open up your laptop, and the popular monitoring system has run in in the background and provide you feedback, alerts, everything that you need to know. Same as uh if you had had the team working overnight and and getting everything ready. So all of that is on your laptop, and then it's on you to make the irrelevant decisions. And I think that's going to happen pretty fast, yes. [00:43:58] S2: But that's also using the assumption I I think to going on the assumption that you have that portfolio monitoring system, which which means that you have the data layer ready. Because assuming that you're not going to need a portfolio monitoring system, you're just going to upload all of your credit agreements and the internet and the LLM is going to figure it out, it's it's not something I see happening in the next 18 months. So I think I think it's it's if you have the foundation, this is what you can expect. If you don't have the foundation, you can't expect that. That's a great caveat. [00:44:32] S0: Yeah. That's a great setup for my last question, which is for funds that are exploring AI-powered portfolio monitoring tools for the first time, whether they are from 73 strings or they are bespoke or custom-built solutions, what's the one thing they should start doing right now to prepare? [00:44:54] S3: Call Leon? Yeah, I mean, I said that multiple times.
00:44:54 · S3, Yann Magnan, Joe Zein
[00:44:54] S3: Call Leon? Yeah, I mean, I said that multiple times. [00:44:59] S1: Think about your data model. Think about your data model. Reflect on that and get get that get that really squared and ready. And then you can move on from there. [00:45:10] S2: Yeah. And my opinion is, you know, go and figure out the vendor because that will bootstrap. Go and figure out which vendor you feel the most comfortable working with, the vendor that is adapting to the change. Because there's also in this world of portfolio monitoring, right? There's a lot of dinosaurs. There's a lot of companies that have been there for forever, that have been rolled up multiple times, that have been sold from a sponsor to another sponsor. Depending on who you are, I personally don't like to work with companies like that. I would much rather work with a young company moving fast, like 70 T Strings. But I would say my first thing is like if you're just exploring it, go buy it first. Then let's don't even think about building it. Like thinking about building it needs to come from a very specific observation or very specific, like you know, you figuring out that you don't need something, you need very something very precise. And the only way to know that you need this something that is very precise and a much lighter version is by actually using a portfolio monitoring tool first. So I think this is really the first step, right?
00:46:13 · Stuart Willson, S3
[00:46:13] S0: Great. Well, thank you, Yann and Joe, for the time. And to everyone who joined today, this is the kind of conversation we want to keep having at Pluris and with our podcast, Just Curious. If you're working through any of these questions at your own firm, contact information for our panelists will be in the follow-up. And if this content interests you, you can subscribe to our podcast. That's on Spotify under Just Curious. And if this work is of interest, uh work related to AI and data at the fund level or the portfolio level, please get in touch. I'd love to chat. And we'll see you next time. Thank you. [00:46:51] S3: Thanks for having us. Thank you. Bye bye. Cheers.