MiddleGround Capital

 

Podcast Links:

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On MiddleGround’s ninth episode of Executive Sessions, we invite the Dean of the University of Kentucky’s Gatton College of Business and Economics, Dr. Simon Sheather to talk all things AI. This episode covers:

1. AI Opportunities and Benefits
2. Setbacks and dangers of AI
3. AI in Manufacturing and Private Equity

 

AI Opportunities and Benefits

Artificial Intelligence (AI) has emerged as a transformative tool for businesses, enabling monotonous, repetitive jobs to be streamlined while creating opportunities for higher-paying occupations. Arguably, one of its biggest advantages is its capacity to speed up the execution of simple tasks while reducing errors. AI Programs like are easy and accessible tools that make tasks like drafting emails, writing programs in Python, generating invoices, or sifting through data to create dashboards nearly instantaneously.

With the correct guidance, AI has the potential to remove menial tasks from everyday work so that employees can focus on critical thinking. Rather than perfecting an email, sifting through data, or searching for coding errors line by line, people free up time for high value add projects.

 

Setbacks and Dangers of AI

As with the advent of any new technology, there are risks to consider and challenges to address.

• AI utilizes the internet as its library of knowledge but it can’t decipher fact from fiction. These limitations require us to confirm the accuracy of anything provided by AI since its responses can be based on unreliable sources.
• Concerns also arise about the privacy of programs like ChatGPT. Many users input sensitive information as a part of their prompts including home address and confidential work information, and once something is online it cannot be erased. There’s potential for this data to be utilized by third parties without user consent.
• There are limitations to what AI should be used for; human interaction remains crucial for the development of business relationships. Similarly, there may be a negative impact on communication skills. While AI can aid in completing writing and communication-based tasks, it’s still important to refine these skills in the next generations.
• There’s a risk of AI being exploited for malicious purposes, such as scamming people.

 

AI in PortCos and Private Equity

AI is proving to be an invaluable tool at MiddleGround and has massive potential across the financial services industry. Our portfolio has streamlined its work using AI for administrative tasks like note-taking or email drafting. AI has also helped predict customer churn and recommend strategies via CRM systems to retain customers. Our approach to AI adoption is like our approach to automation. With automation, we’re able to streamline tedious jobs, making us more efficient and therefore able to raise our wages and increase capacity.

Hedge funds have long been using proprietary models to review public data to better inform trade decisions. In private equity, we won’t be using AI to make investments, but we’re certainly exploring how AI can be used to predict market behaviors both inside and outside of our portfolio, giving us a better understanding of how we can return capital to our investors.