Regulation will hit the AI industry hard, believes Michael Borrelli co-founder of AI & Partners, but won’t derail technological development.
Drinking a cup of coffee – with “plenty of sugar” to set himself up for a day “hustling” for business for his start-up, Michael Borrelli seems perfectly at home, returning to an old haunt at the Lyric Theatre in Hammersmith, west London.
“I have an emotional attachment to this place, being involved in productions here, growing up as a kid,” recalls 32-year-old Mr Borrelli, co-founder and director of Amsterdam-based AI & Partners. The business he is building, already working with 15 people, focuses on advising companies on compliance with the forthcoming EU AI Act. This European legal framework to address rights and risks related to artificial intelligence systems is expected to come into force during the first quarter of 2024.
“Performing on stage is a very good metaphor for running a firm,” he suggests. “I asked a friend in the venture capital business about what determines his ability to invest in a founder. He told me that only 20 per cent is the business model and 80 per cent is about faith in the founders.”
Mr Borrelli talks confidently about the inspiring personalities he meets at tech industry and investment forums and what he learns from bosses of both start-ups and conglomerates. “You should never be afraid, if you are an entrepreneur,” he says, while admitting pitching can be a nerve-rattling experience in the early days.
“I’ll go up to anyone and shake their hand, whether it’s Bill Gates or Joe Biden, you can’t afford to be intimidated and you’ll always learn something,” says Mr Borrelli, who each evening reads at least 10 pages of a book about business, economics or geopolitics, with the intention to always be processing ideas.
“As we know, America innovates, China imitates and Europe regulates,” he says, describing the world view he shares with other tech leaders, and how it will be shaped by looming EU regulations. These rules, designed to facilitate a single market for “lawful, safe and trustworthy AI systems” are what spurred him to launch the business, together with his co-founder Sean Musch, a Dutch entrepreneur and tax auditor.
A keen student of laws and regulations, Mr Borrelli expects a last minute wave of panic from companies using AI, similar to the corporate chaos surrounding the GDPR deadline around use of data back in 2018. “My business is about psychology and I saw this one coming,” he says. “People are wondering, ‘oh my goodness, what do I have to do? We’ve spent two years getting our ducks in a row for this, at a time when companies have many other priorities: recovery from Covid, the war in Ukraine, the Israeli crisis, China’s influence and Germany’s economy crumbling. There are so many things for them to consider.”
Only the beginning
While regulation will hit the AI sector hard, the industry’s technological journey has barely begun, he believes. “I hold very similar views to Sam Altman, who says we are still at a very early stage and it takes seven years for full adoption of a new technology,” even though its impact is already significant.
Hundreds of leading scientists, OpenAI CEO Mr Altman included, recently wrote an open letter asking for a pause in AI innovation, believing we are approaching the ‘Oppenheimer moment’, where the inventors of a technology such as nuclear power are beginning to regret having made a major discovery, which could prove an existential danger to our species.
“I think we have already reached that moment,” he says, taking a purposeful sip of his coffee and mentioning the retirement of former Google vice-president and AI ‘godfather’ Geoffrey Hinton, amid soul-searching about the technology’s societal transformation.
“These are people in the coal mine. They know we are unleashing something which is going to have a profound impact, so it needs to be regulated,” he says, shaking his head about a need for any pause in AI’s development.
“Taking a break is counterintuitive to human progress,” says Mr Borrelli, previously a business development manager at blockchain specialists Convex Technology. “We have a duty to our future ancestors to keep innovating, which is part of the natural instinct of humanity. It would be selfish to stop innovating. If we have a problem, we need to determine how to work within a safe environment. Humans are explorers, we’re not meant to just sit in a box.”
First mover advantage
But not all businesses are innovating at the same pace, with only a handful of wealth managers forming the digital vanguard. “Whether you’re a wealth manager or law firm, you will always have the first movers who are more pioneering,” says Mr Borrelli, with pace and motivation determined by a firm’s culture and financial incentivisation of senior leadership teams.
“Taking a break is counterintuitive to human progress”
“Business models are changing and wealth managers need to deliver more specialised, tailored and personal advice,” he says, picking up intelligence from contemporaries who work in the industry. “They need to deploy technology to empower employees, to deliver recurring revenue, better value and enable people to live better lives.”
Rather than belonging to a joined-up community of entrepreneurs, working together in a tech hub, Mr Borrelli describes himself as a “lone wolf” who learned to code in his Chiswick bedroom, although he sees the benefit of networks, working in innovation friendly cities, including Edinburgh, Cambridge and Barcelona.
“I’m a non-conformist, I don’t like the status quo, so I’m very self-driven and motivated,” he says. “I’ve always struggled to fit in with nine-to-five structures, which have never sat well with me. What I like about free thinking is that it means anything is possible. I am a believer in liberalism, but not without restraint,” he says, with a final respectful nod to the European legislation enabling his business idea. “Humanity needs safeguards, otherwise it always runs amok.”
