← The Last Invention is AI
The Last Invention is AI
Examining Strategic Tech Mergers in The Hidden Cost of AI Acquisitions
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Today on the podcast, I want to talk about the downside of AI acquisition. So very often I'm talking about all of the top companies, who's buying who. We see these, you know, $100 million payouts. We see how the. The world of mergers and acquisitions and AI has been completely different, I think, than any time in the past where you see all of these kind of acquirers. You hire the top talent, you leave the company gutted. It's left a really messy playing field, and so much so that customers themselves are actually demanding things change. So I want to get into two specific cases in the last few days that have raised money and some that one that has just been acquired and basically the outcome and what customers are saying, because I think this is a really fascinating story. People do not always love it when a company they're using gets acquired for a lot of reasons, but in some cases, the customers are demanding, before becoming customers, that these companies don't get acquired. We're going to get into all of that. Before we do, I wanted to mention, if you ever want to try the top AI models that I talk about all the time on this podcast, I'd love for you to try out my platform, which is called AI box. So a box has the top 40 different AI models on there. You can try them all for one subscription price. So, you know, OpenAI, Anthropic, Google, you know, Grok, all of them. One cool feature that we built into it is the ability to regenerate a prompt with multiple AI models. So I recently asked a question, you know, I asked, you know, generate an image of a LinkedIn influencer traveling to Japan with some fans. I asked it on Flex 1.1 Pro. I got it to regenerate that same image with ideogram, with flex 1 chanel, and also with chatgpt image 1. And the cool thing is you can actually click a Compare tab and pull up all of the images side by side to see what all of the different models are actually able to generate, what it all looks like, and compare them all side by side, which is a really cool feature. Now, you can also do this with audio, and you can also do this with, with text as well. So generate, you know, blog posts or emails and compare what different models are able to output. So if you want to try it out, there's a link in the description to AI box. AI. It's currently in beta and it's $20 a month. I'd love to hear what you have to what you think about it. All right. I Want to get into the first company, which is that Axios just wrote an article. Basically, Data Site has just purchased Blue Flame AI and basically this is in the finance sector. So Data Site is a, is a SaaS company. They help automate, you know, make automated solutions for mergers and acquisition, investment and like. So they're kind of in the finance sector. Right. And they've just acquired Blue Flame. Now what's interesting to me, well, okay, I'll give you the quote from, from their CEO because you always got to get the acquisition quote of, you know, why the companies are the perfect match for each other, but basically said this acquisition continues Data Site's mission to improve the velocity and outcomes of our client. Project Blue Flames Agentic AI Solutions will expand the collective capacity of our user base, automating complex workflows and enabling full scope analysis. Okay, basically what they're doing is they have a good thing going, they're a solid company and they're going and acquiring probably a little bit more of a cutting edge, a little bit more modern company that has some, basically in this case, they have some like agentic workflows in the finance space. They're acquiring them, pulling them in, adding them to the product. But what happens to Blue Flame or any company in this particular scenario when they get acquired, you know, what's the outcome and what happens to all of Blue Flame's customers? Like, how does this work? Now, there's a couple of different ways that this can go. In some cases you'll see, you know, the company get acquired and basically it just keeps operating as an independent company. I typically actually kind of like this and maybe the two companies collaborate, they share technology and sometimes people. But I think this is kind of cool and it basically leaves the customers the least impacted. There's a terrible outcome in my opinion, where essentially you acquire the company and you take their technology, shove it into your product however you can, and shut down the old company. The reason I don't like this in particular is, you know, for one, all the customers of the original product may not need the full end to end solution that the new company acquiring has. They might just need a narrower scope and maybe not all the features get pulled over accurately. So it's kind of messy and it doesn't have a great conversion rate. Customers usually will drop, find something different and that's difficult. And this is happening more and more. So recently there's another company that I want to cover is an industrial AI startup and I'll talk about what they do because it's kind of interesting, but they are literally winning over their customers. They're able to gather new customers by saying they will not get acquired. This is a, a pledge they basically have to make whenever they go and get a new customer. Now who are, you know, the, the, the customers that they're talking to. This is, by the way, this is called C Vector. This is the startup just like the letter C Vector. And they said that when they're talking to customers, the number one question they get is are you guys going to be acquired? Are you guys going to be here in six months? And that is because they're talking to people in the energy sector in basically manufacturing kind of in this industrial sector. So they work right now, I think they have a national gas utilities company that's using them. They have a chemical manufacturing company in California that's using them and they basically create software to manage and improve the industrial operations. Actually do some really cool things. I want to share, but here's a quote from, I believe their CEO said. When we talk to some of these big players in critical infrastructure, the first call on the first call, 10 minutes in, 99% of the time we're going to get that question. And, and they want real assurances. Like they really want you to prove you're not going to get acquired, you're not going to go anywhere. They need to use like if they're going to implement you into this big huge software or into this big huge company, they want to know that you're going to be around. So see, Vector just raised a $1.5 million pre seed round. So it's a pretty small company. But I would imagine you get this from companies all up the stack in size because we're seeing these kind of acquisitions happen, you know, at every single level. Even companies like let's say Inflections Pie that got kind of Aqua hired, but the company kind of got left and it was kind of a crazy thing but they previously raised $1 billion, spent it on GPUs. Even those bigger cases, a lot of people, customers of that may have been sad that, you know, the company is basically kind of the shell of its former self without its leadership and Aqua Hire taking Mustafa Sulaiman over to Microsoft. So in any case, I think this is very interesting. Zhang and Rugels are the two people that have basically founded this. They have a, a great team but they, they shared a bunch of really interesting use cases that basically are, that they're helping to solve. So one of them, they said, so they're just talking about all the different ways that they're using AI inside of basically adding AI inside of the industrial complex and how they're helping with that. So one thing they mentioned was changing weather conditions can have an impact on how high precision manufacturing equipment equipment works. I know this from a very micro scale with for example our 3D printer that, that I have. We bought it in Arizona and as you know, Arizona super dry. So the filament, it prints quite well. We've now moved to North Carolina which is super humid and it's been really interesting. I kind of read this online but also seen the print quality can actually drastically change depending on the humidity in the room. If there's a fan going or blowing on it, it also can make impact. So there's all these like really interesting impacts. That's on a very small scale for 3D printing. When you do high precision manufacturing it's on a, it's on a huge scale. So dust, humidity, wind, all sorts of things can, can impact this. So in any case they're talking about changing weather conditions and they said, and, and they said, you know, that's one thing that a lot of high percentage of manufacturing is prepared for is these kind of like big weather changing things. But there's a lot of knock on effects that are not taken into account for and it kind of makes the company struggle in the future. So one example they gave is like let's say that there was a huge snowstorm. That means that these surrounding roads and parking lots are all usually going to get salted and salt getting carried into the factory on workers boots can have a really tangible impact on high precision equipment. So operators might not have previously noticed or been able to explain that. But basically they built this AI system that depending on the circumstances around them it's giving, it's, it's taking all this like data in and it's basically feeding alerts for what people should be aware of in these manufacturing environments. So they're doing this with gas, they're doing this with chemical manufacturing, a whole bunch of other areas. Rugals about all of this said quote, bringing these kinds of signals into your operation and your planning is incredibly valuable. All of this is to help run these facilities more successfully and more profitably. You know, these kinds of things you don't realize until it happens. Once there's you know, some sort of big shipment was ruined and has to be redone and all of a sudden they got to redo it. So if they can catch that ahead of time with AI, some of the things that we're not anticipating is very, very, a very powerful tool that is helping to save a lot of money. So in any case, I think this is a very interesting company. It's doing some, some interesting things. One other just interesting use case that I heard of this, these are just, I love the interesting new AI use cases so I'll bring this up. But basically the other one is they said with energy providers they're working with one in particular and one of the really common problems is that their grid dispatch system is written in really old coding languages, so COBRA or like Fortran. And so if you're trying to make real time management of all of this code, it's super difficult. So what they've, one of the things that they've built to help this sector and the solution is they've created an algorithm that sits basically on top of the old system and will give operators better visibility into the system. So it's got really low latency. So it's basically really hard to use these old code bases. They've taken AI and stuck it on top and it's able to look into it or manipulate or get the data that you need on top. Which I thought was just so interesting. Of course the, perhaps the real solution is to like rewrite the code or something but maybe it's tied into old hardware and it could be super, super difficult, it's not always possible without making a huge system wide upgrade. So this is a very interesting solution. In any case, they have some very you know, unique, interesting, novel use cases of implementing AI into this kind of industrial sector. But I just thought that it was so fascinating that their customers are literally demanding they do not, they cannot get acquired. They want guarantees that they're not going to get acquired basically before they can can use them. And on the other hand we have so many because we have so much turnover and so many companies getting acquired. So it's a very fascinating time. But that was a really interesting story. For that reason, if you're interested in learning more about AI, I have a AI school community. It's called the AI Hustle school community. Every week I release a unique video breaking down basically the different AI tools I use to grow and scale my businesses. How you can do the same thing. And I have over 60 videos. I make a video every single week. So I'll leave a link in the description for that as well if you're interested. Thanks so much for tuning in and I will catch you in the next episode.