Griffin on Tech: The false narrative on AI, startup funding, and a tech power couple
As New Zealand businesses jump aboard the AI bandwagon, it's becoming increasingly clear that the impact of the technology on employment is going to be more profound than almost anyone expected.
Over the last week, I’ve spoken to people at two respected Kiwi tech companies that are about to launch new AI-powered products. The features being released amount to efficiency plays, allowing time-consuming tasks to be completely automated.
But when I asked about the benefits and the return on investment flowing from that automation, both immediately spoke about the reduction in full-time equivalent roles required once the system is in place.
Software companies I’ve been talking to that are integrating AI agents into their workflows are touting cost savings and faster deployment of systems as a result. The biggest cost in software development is labour, so you can see where that’s going - smaller development teams, augmented by AI agents in everything from testing to project management. The role of AI in job creation is real, but its disruptive force as a job destroyer has been underplayed.
The Australian Financial Review just held a major AI Summit and the Fin’s tech editor Paul Smith came to the same conclusion after attending the talkfest.
“The line that’s been regularly used by tech companies and executives responsible for AI that AI’s only going to augment rather than replace work is palpably false,” Smith told The Fin podcast.
Speaking at the summit, Telstra CEO Vicky Brady said the telco’s workforce would probably be smaller in five years, thanks in no small part to AI. She said she had a responsibility to be upfront with staff about that.
“When you are a leader, that transparency, honesty is so incredibly important, and how do you do that in a way where you also don’t want to panic people?” She asked.
A new report from Oxford Economics shows that unemployment among graduates is rising in the US and suggests automation and AI is doing away with the need to hire as many grads, particularly in the tech space. Those with more experience are being tasked with wrangling AI systems and are relatively safe - for now.
We really aren’t talking about and preparing for the acceleration in job destruction that is coming. The big question, which the summit touched on, was how AI will exacerbate the growing wealth inequality in society.
The Australia Institute’s David Richardson, has calculated that “in 2004 the combined wealth of the AFR richest 200 was equivalent to 8% of Australia’s annual GDP. Now they are worth 24.5% of our annual GDP”.
The publication of NBR’s Rich List this week revealed a similar trend with the rich getting richer despite the tough economic conditions. The Rich List’s valuation is now $102.1 billion with the 119 individuals and families profiled worth the equivalent of more than 40 per cent of the nation's GDP. Whether they are in insurance, retail, or tech, AI is only going to help them increase their returns, at the expense of jobs. I’m staggered there was nothing in the Budget around AI and labour to help us gear up for what’s coming.
Big tech fundraising wins
After a reasonably slow start to the year, tech startups are announcing some juicy capital raising wins, with brand tracking software company Tracksuit raising US$25 million ($42m) Series B funding in one of the largest-ever venture capital raises for a local start-up.
The round was led by California consumer brands investor VMG Partners, supported by existing backers Blackbird, NZ’s Icehouse Ventures, and San Francisco’s Altos Ventures, and Footwork. Tracksuit is growing incredibly quickly.
“Of the 360 companies we have funded, Tracksuit has been fastest to $1m, fastest to $10m, and fastest to $20m revenue. And they don’t appear to be slowing down,” says Icehouse Ventures CEO Robbie Paul.
Last week, Wellington project management software company Projectworks raised $25 million in Series A funding with investment from US fintech investor Ten Coves and existing shareholders. These are chunky numbers and a sign that there’s growing interest in our startups from overseas investors and appetite for investment which is great to see.
Tech leaders recognised
Also great to see was a Wellington tech power couple recognised in last week’s King’s Birthday Honours. Sunit Prakash and Lalita Kasanji were honoured as Members of the New Zealand Order of Merit for services to the IT industry and the Indian community.
Since 1995, New Zealand has recognised only about fifteen recipients for services to information technology. This is the very first awarded to members from the Indian community. The husband-and-wife duo co-founded the New Zealand Centre for Digital Connections with India in 2023 to accelerate and incubate digital and tech collaboration between the two countries.
“We performed a stakeholder analysis and saw no one operated holistically in the space comprising New Zealand, India and all things digital. We took that space,” says Sunit, who has had a long association with IT Professionals NZ.
Sunit and Lalita have been integral to efforts to boost digital and IT trade between New Zealand and India, which received a major boost in March when the Prime Minister led a trade delegation ot India and kicked off negotiations for a free trade deal. Major tech outsourcing deals between Air New Zealand and Tata Consultancy Services, and Spark and Infosys, have since been signed.
India is the big current opportunity in trade for NZ, so well done to Sunit and Lalita for helping make sure it won’t just revolve around primary produce, but will see a growing focus on high-value tech-related trade too.
