Google’s $500m purchase of UK-based DeepMind this morning – see Google goes deep into machine learning– has raised a number of issues.
Today I have been asked “Is DeepMind yet another UK company selling out too soon’” and “Surely $500m for a company that probably makes minimal revenues let alone profits, is yet another indication of a ‘bubble’?'.
DeepMind was a long, long way off an IPO – whether in the US or UK. I’m a great supporter of ‘strategic acquisitions’. I’m less keen on the ‘bulk up’. Indeed, Google, Microsoft and the like have very successfully employed strategic acquisitions over many years. Often paying what appears to be ‘over the odds’ to get technology sooner or even to buy in expertise that they couldn’t have done using conventional recruitment.
I also think, on balance, that this Deepmind acquisition is ‘Good for the UK’. It shows the value of our home-grown technology. It will encourage more early stage investment. At $500m, it shows that the UK can build tech companies of real value. Ultimately that will be good even for London IPOs. The proceeds could easily fuel many more start-ups in the UK.
Are we in a bubble? If DeepMind was a crazy crackpot fad of an idea, I might agree. But AI is serious stuff. Indeed, ‘He who wins in AI may indeed conquer the world”. Clearly DeepMind and its founders were pretty much up there with the Gods when it came to their chosen subject. If Google can turn this to their business advantage, $500m will look like a veritable bargain.
So, all-in-all, I think today’s news is out-and-out ‘Good’. Just wish I’d been invited to invest three years ago!
Footnote - See my views in Murad Ahmed's article in The Times today/28th Jan 14 - The man with his fingers on the future. I got the 'last word' too!
