Technology

1. Rogo’s rising tide
2. Marc Lore’s AI bet
3. China data center debate
4. What AI can do for metals
5. Digital Silk Road
6. Cuddly robots

Why AI companies’ efforts to build enterprise AI are unlikely to succeed, and ChatGPT won’t talk about goblins.

Corporate America is incinerating billions of dollars trying to build AI tools that white-collar workers actually want to use. Most of these efforts will fail.

The gap between what a well-funded IT department can offer and what an inspired intern can vibe code over a weekend is closing. Actually, the intern may already have won.

Shadow IT emerged 15 years ago when workers started using their iPhones and cloud applications for daily tasks and ditched the clunky internal networks their employers had spent a fortune building. Corporate IT departments tried to block these efforts, but failed. They eventually relented.

Today’s version is much more potent. The utility-to-risk ratio has shifted so far toward utility that companies have already lost control. Workers aren’t thinking about data governance, security, or the 100 other things that can go wrong when freelancing in software development. They just want to move fast — and now they have the tools to do it themselves.

To take back control, companies have to give up on walled gardens and build gateways. The goal can’t be forcing employees into a one-size-fits-all coffin of enterprise software. It’s figuring out how a sea of vibe-coded apps can securely plug into corporate data, where new employees who arrive with their own software can interface with the company’s systems on day one.

Not only will that reduce the friction, allowing employees to work with tools that actually match how they think; it will also boost productivity and unlock a lot of latent human creativity in the process.

The investment banking AI push is a rising tide

Frontier Al labs are slowly encroaching on well-funded startups that have served companies’ industry-specific AI needs. But making inroads is slowgoing and some corporate clients are locked in by existing products.

Take investment banking, for example. OpenAl hired more than 100 former investment bankers to train its financial products last year, and Anthropic this week launched agents for reviewing balance sheets and drafting pitch decks. Similar products are already live in investment banks via companies like Rogo, the buzzy $2 billion startup automating much of the junior analysts’ and associates’ workload at firms like Tiger Global, Jefferies, and Lazard.

One banker at a firm who uses Rogo told Semafor even if OpenAl released a better product, Rogo is already integrated in employees’ workflows. Rogo, which operates with models from OpenAI and Anthropic, among others, has dozens of bankers working with its customers. For companies like OpenAl and Anthropic, competing in that limited space is human- and capital-intensive, and it means playing catch-up.

“There’s so much to build outside of the core model intelligence,” Rogo CEO Gabe Stengel told Semafor recently, when asked about competing more closely with the frontier labs. “That’s not the core competency of these labs who, frankly, don’t understand investment banking.”

More competition is always good though, yielding quicker product releases and better customer service.

— Rachyl Jones

Wonder CEO leaves food decisions to AI

Part of the promise of AI is removing the time-sucking tasks from daily life. Food preparation and delivery platform Wonder is betting that people want to automate the decisions on choosing what to eat every day. The company, which owns Grubhub and Blue Apron, is launching a service in the fall that will autonomously plan and send meals to users based on their health data, personal goals, and budget, CEO Marc Lore said on Semafor’s Compound Interest show this week.

Lore has already handed the reins of meal planning over to AI. “Every meal I eat when I’m not eating at a restaurant is AI-directed,” he said. “Breakfast, lunch, and dinner. It tells me exactly what to eat, keeps me healthy, keeps my blood biomarkers in check.”

Those who don’t want that level of automation can still discuss their budget, health, and personal food preferences with Wonder’s AI bot — or any of the similar tools from competitors.

“What happens after a while is AI is smarter than you,” Lore said.

China’s stronger hand in AI debate

China is playing a growing role in US discourse over domestic tech growth and regulation, with Beijing’s ambitions held up as a reason for Washington to not ease off in the global AI race. Some US tech industry insiders criticized Sen. Bernie Sanders for hosting an AI safety panel alongside two Chinese scholars, while a group backed by US tech figures reportedly paid influencers to cast Beijing as a threat. One emerging theory suggests Chinese propaganda is tied to the US backlash to AI data centers.

The idea that Beijing is meaningfully driving populist AI pushback is far-fetched, a US-China tech scholar told Semafor. Instead, China tends to “take advantage of narratives” already underway in the US. It’s unclear how much traction this specific argument will get, but analysts expect the threat from China to be a growing factor — and bogeyman — in US tech debates, especially ahead of the midterms.

— J.D. Capelouto

Future of AI is not all about flash

Like most tech journalists these days, I have an inbox overflowing with PR pitches from the many Silicon Valley companies raising enough money to buy a small country so they can do some magical, possibly very lucrative thing within the vast AI software stack.

Maybe that’s why I appreciated this one: Intalus offered Semafor the exclusive on its $11 million seed round to expand production of ceramic-infused metals. Intalus has been making this stuff for years, using waveform energy (think: lasers) to change the internal structure of metals and make them more resistant to heat and corrosion.

Metal is great for a lot of things, but it melts and warps when it gets hot, and water can corrode it. Ceramic doesn’t mind water and it’s very heat-resistant (which is why it’s used to protect SpaceX rockets reentering Earth’s atmosphere). But it isn’t as strong as metal. You can sandwich metal and ceramics together, but fusing them into one material is even better.

Companies like Intalus don’t get a ton of attention, despite the fact that more than half of the teams in Formula 1 are using its materials, its CEO told Semafor. So are the US military and NASA. This is the kind of invention that is going to become increasingly important in an economy that is asking more of the physical world. We need new ways of producing energy, and building chips and manufacturing novel new product categories like robotic actuators and data centers destined for space.

There is, of course, an AI tie-in. Intalus couldn’t have created this product without machine learning, and materials science is on the verge of a boom, thanks to new datasets, algorithms, and massive compute resources.

— Reed Albergotti

China dominates tech in Africa

Building digital infrastructure in Africa is easy to announce, but difficult to do: That’s the takeaway from comments by Kenya’s president that confirm Semafor’s scoop, reported last year, that a $1 billion data center project backed by Microsoft and UAE firm G42 won’t go ahead. President William Ruto’s remarks crystallize the challenges faced by non-Chinese actors in the world’s least-connected countries.

It’s hard to provide financially viable alternatives to the Chinese model: Western developers face heightened credit costs due to the perception that Africa is inherently risky, while Beijing’s policy banks offer strategic lines of credit, enabling Chinese firms to provide equipment, services, and financing at significantly lower prices than Western competitors.

The US, meanwhile, has long warned that Chinese technology poses a strategic risk by enabling surveillance, data theft, and large-scale disruption of critical infrastructure. But American alternatives to Chinese firms are few and far between.

iRobot founder faces Chinese market again

The new, polar bear-esque robot by the inventor of the iRobot vacuum was all over the internet this week — eyelashes beating and tail wagging. Called the “Familiar,” the robot intends to support emotional well-being. The launch of the new venture is just a few months after iRobot filed for bankruptcy and was acquired by its Chinese manufacturer, as Chinese autonomous vacuums have largely dominated publicity on the tech front. Colin Angle, the longtime iRobot CEO who is now leading cuddly robot startup Familiar Machines & Magic, says he’s learned his lessons in competing with China, even as Asian companies have a jumpstart in the market for pet-like robot companions.

“We were able to maintain a significant lead for 17 years at iRobot. The opportunity is many, many times the size, and we learned from our mistakes,” he told Semafor, adding that existing companies have helped legitimize the sector. One mistake that he intends to correct with Familiar is lowering the initial cost of the robot and implementing a subscription model, which makes buying the bot less of an upfront cost burden for consumers but makes the company more money in the long run.

— Rachyl Jones

Compound Interest is now Podchaser’s top-ranked emerging business podcast. At a moment when business is being reshaped in both subtle and seismic ways, from AI to shifting capital and new ideas about risk, the show brings clarity to the forces redefining the global economy.

Every Tuesday, Semafor Business Editor Liz Hoffman and reporter Rohan Goswami cut through the noise with candid, in-depth conversations with the founders, CEOs, and power players behind some of the world’s most influential companies. Their interviews go beyond the headlines to reveal how, and why, the strategies, mechanisms, and systems driving today’s business landscape actually work.

Recent episodes include interviews with Wonder Group CEO Marc Lore, Oura CEO Tom Hale, Uber CEO Dara Khosrowshahi, and Mark Cuban.

The system prompt for OpenAI’s latest AI model sternly warns it, twice, against talking about goblins. “Gremlins, raccoons, trolls, ogres, [and] pigeons” are also off limits except when relevant. Codex 5.5 had, apparently, previously been obsessed with goblins. It’s not the first unusual AI failure mode: Earlier models would help you commit tax fraud if told to do so in cutesy language, or explain how to hotwire a car if asked in base-64 code. As the essayist Scott Alexander wrote in 2022, “perhaps it is a bad thing that the world’s leading AI companies cannot control their AIs,” because they use the same strategies to control the LLMs as they will on “the drone-mounted murderbots.”