The Year of the Mask?

The Year of the Mask?

For each of the past three years, there have been predictions that Apple was about to release a mixed-reality face mask, oops, sorry, mixed-reality headset.

The rumors are stronger this year and seem plausible; although I am still slightly skeptical that Apple will go in this direction, I am ready to stand corrected if true.

My skepticism is that of a product thinker. Apple has been a world leader in building human-centric products. Products for the ears (airpods and music services), eyes (phones, screens, and video services), mouth (microphones with echo cancellation), and hands/arms (watch, keyboards, mice, phones). It has not yet addressed the brain or the legs (car?).

To release a single device that covers the eyes and head and serves the ears and enables the mouth (microphone), and requires solitude seems counter to its past decisions. If it does, I hope for a compelling problem that this solves. I do not see it.

Meta (Thursday morning Pacific time) announced that Quest 3 is a $399 mask positioned as a competitor, adding credibility to the rumors of Apple's plans. And it reduced the price of Quest 2 to $250. Rumors say Apple's device will be over or about $3000.

If it comes, I will probably buy one (I just have to know what it does ;-) ), but I suspect it will soon sit idly on a shelf because there is nothing I want to use it for. Gaming is the only real use case, single and multi-user. And as it is mixed reality, it can extend to the real world, placing images and action there. Meta's new device promises the same. And then there are enterprise uses.

If Apple can cannibalize the Xbox and Playstation markets, then this may be a large enough business to move the needle for them, but again I am skeptical. And Meta's failure to get traction, at any price, on the Oculus-based headsets suggests I am right.

But this is Apple. If they do it, I will probably be wrong because that will suggest they have figured out some use case and model that will work. It will be interesting to watch.

The second thing that grabbed my attention this week was a couple of articles about the use of AI in investing. JP Morgan trademarked IndexGPT, hinting at an AI-led public markets portfolio. And the FT penned a piece about the rise of venture investments leveraging AI. Towards the end, they quote Anne Glover, chief executive at venture capital firm Amadeus Capital Partners.

She said generative AI tended towards bias, adding that the tools used limited and historical data:

"It is impossible to assume that you should be making that kind of human decision based on what an AI is doing," Glover said. "For someone like ourselves, where we are investing at the cutting edge, there isn't a lot written about what we are looking for."

This week, Moonfire started investing out of an AI-aided appraisal process, and Angel List announced that its quantitative investing fund was doing likewise.

Most of these approaches in venture use company-specific data for predictions. For example, profiles of founders or hires. That is why Anne Gover's instinct makes sense. Company-level data tends to be very poor as a predictor of outcomes until much later in the company's life. SignalRank has a fundamentally different approach.

Here is the table of companies SignalRank AI selected at the Series B round in 2023. It shows the company, the investors, the amount raised, the implied valuation (estimated), and the number of investors. Only 29 of the 646 Series Bs in 2023 were selected. Based on backtests, we can predict an average return of 600% at the 5-year mark and 20-30% unicorns.

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AI in venture capital is definitely real at the selection stage.

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