Investment Banking in the Age of Artificial Intelligence | Shawn Flynn | TEDxCSTU — Transcript

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1. 0:00[Music]
2. 0:08What if I told you the biggest value an
3. 0:10investment banker brings to a deal is
4. 0:13not the ability to look through
5. 0:15financials or analyze a lot of data.
6. 0:18Artificial intelligence is able to do
7. 0:20that. The biggest value an investment
8. 0:23banker brings to a deal. Well, it's kind
9. 0:27of a secret to even many people in the
10. 0:29industry. What it is is the ability to
11. 0:33communicate, to build rapport and trust.
12. 0:38But before we dive into that more,
13. 0:42let's ask what is an investment banker?
14. 0:46What does an investment banker do? How
15. 0:49is artificial intelligence being used
16. 0:51with investment banking? and then let's
17. 0:54dive into that secret.
18. 0:57So, what is an investment banker? Some
19. 1:00say it's an angel with golden wings
20. 1:03coming from the heavens
21. 1:05or a phoenix rising from the ashes or a
22. 1:09Greek god or goddess, but no, an
23. 1:12investment banker is none of those.
24. 1:17An investment banker,
25. 1:19simplest, is a translator. They're able
26. 1:22to speak entrepreneurism
27. 1:24and they're able to speak finance and
28. 1:27they're able to translate between one to
29. 1:30the other. And because of these
30. 1:32translations, these conversations,
31. 1:34transactions are able to take place.
32. 1:37Now, these transactions,
33. 1:40we are all familiar with them in our
34. 1:41everyday life. But bankers add
35. 1:44complicated names to them. mergers,
36. 1:47acquisitions, growth capital, secondary,
37. 1:49reverse mergers, spaxs, IPOs.
38. 1:54But let's look at some of those.
39. 1:57First one,
40. 1:59a merger.
41. 2:02You have that special someone.
42. 2:04You're walking hand in hand and one day
43. 2:06you decide, let's get married. Two
44. 2:08equals become one. You get married.
45. 2:10Well, that marriage is a merger.
46. 2:13And now you're walking and you see a
47. 2:15puppy in the window and you think, "Oh
48. 2:17my gosh, I want to buy this puppy, this
49. 2:19little puppy, and bring it into our
50. 2:20house. You buy that puppy. You acquire
51. 2:23that puppy through an acquisition."
52. 2:27Now, that puppy, it needs food to go
53. 2:29from this little puppy to this big dog.
54. 2:32Well, you have to invest money in it. It
55. 2:34needs growth capital. All those
56. 2:36transactions that happen in everyday
57. 2:39life, that's what bankers do with
58. 2:41businesses.
59. 2:45Now, each of those transactions, there's
60. 2:47a process.
61. 2:49And that's another thing we're all
62. 2:50familiar with. For example, that couple
63. 2:53that got married, that merger, well,
64. 2:55that gentleman, he probably started day
65. 2:58one thinking, okay, I need to put all my
66. 3:01information, all my data in this app.
67. 3:04And that app will create my data profile
68. 3:07for marketing. And that profile will
69. 3:11then be shown to a lot of people. And
70. 3:12after a while, it'll be selected down to
71. 3:16one person. And well, at that point,
72. 3:18investment bankers would say you're in
73. 3:20the confirmatory due diligence part, the
74. 3:23exclusivity period. But really, they're
75. 3:25just dating and maybe at the end they
76. 3:27merge.
77. 3:29But in that very beginning, that that
78. 3:31part that data gathering, well, this is
79. 3:34when right now we'll start by
80. 3:36implementing artificial intelligence.
81. 3:40For years, people would sit there for
82. 3:42hundreds of hours and look at the data
83. 3:44of companies. They look at the financial
84. 3:46models and they would say, "Okay, what
85. 3:49is the margins for this company? Is it
86. 3:51with industry average, better, worse? Is
87. 3:54it growing with the market trend?" But
88. 3:57now they use AI agents to analyze that
89. 4:01data and give them the responses for the
90. 4:03questions they put in like that. Same
91. 4:06with legal documents. Instead of
92. 4:07spending hundreds of hours going through
93. 4:09them now with AI agents, tell us where
94. 4:11the yellow flags are, the red flags.
95. 4:13Where should we take notice?
96. 4:15Intellectual property, org charts,
97. 4:18everything. Everything that spent
98. 4:20hundreds hours in the past now could be
99. 4:21done in instant. And the entire process,
100. 4:24all those steps I mentioned, there's
101. 4:26different AI agents that can be used to
102. 4:28help.
103. 4:30So with this, the investment banker gets
104. 4:34to use their time for what
105. 4:37their value is.
106. 4:39One thing they don't tell you in school
107. 4:40and all the books you'll read is during
108. 4:43these processes,
109. 4:45the emotional ups and downs, the peaks
110. 4:48and valleys that happen throughout these
111. 4:50transactions that at any time can derail
112. 4:53the whole thing.
113. 4:55I'll give you two examples.
114. 4:58I was working with this one founder.
115. 5:01We were in a meeting with a publicly
116. 5:03listed company, Fortune 500,
117. 5:06multi-billion dollar company, and they
118. 5:09were asking some tough questions.
119. 5:11And I looked at the founder and I saw
120. 5:14his hand start tensing.
121. 5:16I was like, "Oh, I've seen that before."
122. 5:20The last time I saw that was right
123. 5:22before he exploded at the COO and they
124. 5:24had an argument.
125. 5:26I paused the meeting. Hold on. Let's
126. 5:28talk.
127. 5:30What's going on? Are you okay? Why are
128. 5:32they asking me that? How are they
129. 5:34attacking me? Like, whoa, whoa, whoa.
130. 5:37They're not attacking you. They're
131. 5:39learning about the business. They're
132. 5:41interested in the business. They want to
133. 5:43invest, but they have to know a little
134. 5:45bit more. These aren't personal attacks.
135. 5:50I had never been with the founder for
136. 5:52the nights and weekends, for the hours
137. 5:54that he sacrificed to build this
138. 5:55company. I was never there. I wasn't
139. 5:58able to feel the emotions he was at that
140. 6:00moment. But he paused. He took a breath.
141. 6:04We talked some more. And then we were
142. 6:06able to continue with the meeting, move
143. 6:09forward to the next steps in the
144. 6:10process.
145. 6:12Could AI have helped with that?
146. 6:16Another example, I was working with this
147. 6:18one founder and I was looking through
148. 6:20his financials and everything looked
149. 6:22pristine. I couldn't believe it. I mean,
150. 6:25we're talking about a company,
151. 6:27generational wealth, the value of this
152. 6:29company, but yet he was acting like it
153. 6:31was going to close tomorrow. He urgently
154. 6:33wanted to do this transaction. And I
155. 6:35didn't understand why.
156. 6:38What was I missing? Where was the red
157. 6:40flag? What would I see suddenly to
158. 6:42uncover that he was hiding?
159. 6:45And I got to know him. And then finally
160. 6:48one day he opened up.
161. 6:50Sean
162. 6:52and I could hear the fear in his voice.
163. 6:55I'm scared.
164. 6:58Couldn't believe this. What? I'm scared
165. 7:01that one day I'll wake up to find out a
166. 7:04competitor
167. 7:06has come in and taken my company out.
168. 7:11I don't sleep at night because of this.
169. 7:15I want to sleep again.
170. 7:18Can you help?
171. 7:20That time I took his hand and walked him
172. 7:22through the process. Would AI have been
173. 7:24good with that?
174. 7:28AI is fantastic in the background doing
175. 7:31all these things so that you can work
176. 7:33with the client, get to know them, build
177. 7:35the relationship.
178. 7:37There's one more example.
179. 7:39that I'd like to to share that I just
180. 7:41thought of right now.
181. 7:44About a year and a half ago, I was on a
182. 7:45panel for my alma mada school I went to
183. 7:50to undergrad for and the panel was made
184. 7:53up of investment bankers.
185. 7:56And one of the students asked, "What
186. 7:58skills should I learn right now if I
187. 8:01want to become an investment banker?"
188. 8:04and a very senior investment banker that
189. 8:07was sitting next to me took the mic and
190. 8:09immediately said, "Excel,
191. 8:12we're always looking for people that are
192. 8:14good ex at Excel. It'll open the doors
193. 8:17for you."
194. 8:20I just started shaking my head.
195. 8:22I thought that's the wrong answer.
196. 8:26No,
197. 8:28the right answer.
198. 8:30Learn to ask questions.
199. 8:33Learn to listen,
200. 8:35learn to be present,
201. 8:38learn to communicate.
202. 8:41All these things
203. 8:44because right then and there, Excel AI
204. 8:48can create the macros, can create the
205. 8:51formulas, can do everything. It can do
206. 8:53everything in the background.
207. 8:56And your client doesn't care about what
208. 8:58happens between point A and point B.
209. 9:01They just want you to get from point A
210. 9:04to point B.
211. 9:07And it's through the power of taking the
212. 9:11time to talk, to communicate, to hold
213. 9:15their hand to get them from where they
214. 9:17are to where they want to go.
215. 9:19That is what
216. 9:23investment bankers and other
217. 9:25professionals in the era of artificial
218. 9:28intelligence
219. 9:30through taking the time to communicate
220. 9:32to build a relationship.
221. 9:34That is the most valuable thing they'll
222. 9:36bring.
223. 9:38Trust.
224. 9:42[Applause]
225. 9:49[Music]