Lo Toney, Plexo Capital founder and managing partner, joins 'Closing Bell' to discuss Jeff Bezos' recent comments on AI, how to distinguish between the good and bad ideas and much more.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Low Tony, founder and managing partner of Plexo Capital, shared insights on the current boom in artificial intelligence (AI) investments. He emphasized that while the revenues generated by leading AI companies such as Anthropic and OpenAI are substantial and real, the sector faces challenges in distinguishing between promising and unsustainable ventures. Tony noted that the rapid ramp-up in revenues for companies like Anthropic and Cursor is unprecedented, with some firms achieving billion-dollar revenues within a few years.

Despite this growth, Tony cautioned that not all investments will succeed, and there will likely be significant losses alongside major winners. He explained that the enthusiasm surrounding AI has led many companies to incorporate AI into their offerings, but only a few will emerge as long-term leaders. The key challenge for investors is identifying which companies have sustainable business models amid the sector's rapid expansion.

Is an AI bubble brewing?

Let's welcome in low Tony. He's Plexo capital founder and managing partner with me here on sets. Good to see you Good to see you. You make it what Bezos said? I think what he said is spot-on I truly do believe that this is a boom time for AI But the question becomes and we talked about this with your colleague John on overtime. What's the analogy here? Is this you know more of a build out of the dark fiber that? Unfortunately the world comes of the world We're not able to benefit from because they went bankrupt before and then Verizon picked up those assets And that became the backbone that drove growth in the internet for 20 years, right? We're still benefiting from that So that's the real question. The revenues are real, right when you think about the dot-com companies This is not a pets dot-com 2.0. I mean, we've got over 20 billion in revenues just from Anthropic and open AI alone and then the question just becomes how far ahead of the demand are they building out that capacity? So it's real right everybody agrees. It's real But the other point that he made I thought was interesting hard to distinguish between the good ideas and the bad ideas That's right. Just because it's real doesn't mean that all this money going towards every idea is gonna pay off Yeah, and it's really hard to distinguish as an investor Which will be the best bets and the ones that aren't are gonna lose and they may lose big and they may lose big and I think David Solomon made a similar point earlier the CEO of Goldman Sachs because when you have these types of Platform shifts and this amount of real that generates a lot of enthusiasm You have a lot of folks trying to hitch their wagon onto that bandwagon or on that ship, right? And so what you have are a lot of companies trying to add in AI And so what you're gonna find is that there'll be a lot of losers as well There will be massive winners and I think we're gonna see one of the greatest Accumulations of capital generation within our lifetime over the next 48 months potentially the challenge is going to be to your point How do you tell what's real? Well, you have an interesting perspective on trying to make those determinations because you're at the earliest Maybe not the very earliest stages, but close enough of Deploying capital in this area. I mean, how are you as a venture capital guy? Trying to figure out what's real and what's not or what's good and what's bad The good news here is that we have the ability to see revenues ramping Incredibly in a shorter period of time if you think about anthropic one of our portfolio companies It went from zero to a hundred million in 2023 and 24 went from a hundred million to a billion and at the midpoint of this year It was already about four and a half or five billion that could be Extraordinary if they hit ten billion this year that would be a 10x in the first three years Which is unheard of once you hit the law of large numbers another company where we're an indirect investor through one of our LP Investments into a venture capital firm is a company called cursor and they are really unique in that They are able to generate computer code through their platform Cursor has been reported to have been the fastest from zero to a hundred in ARR, I mean they were able to do that in a little less than 12 months and it's reported now that their revenues about a 500 million so, you know, that's an incredible ramp over just a couple of years So I think that's what's different is that we're able to see these rapid ramps very quickly and for those companies like cursor You know, they're really sitting on the application layer so they're benefiting from all of the Infrastructure that has been built out by the anthropics and the infrastructure providers like the hyperscalers and of course in video

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Jerusalem

Middle East Conflict

Hamas agrees to parts of Trump's Gaza peace plan

The United States Senate on Friday (October 3) failed to advance competing plans to extend federal funding and end the government shutdown, likely pushing the funding lapse into at least next week.

Washington

U.S. Senate fails to pass funding bill to end government shutdown

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Hegseth announces another strike against vessel off Venezuela coast

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Canterbury

Church of England names first female archbishop

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Israel's interception of Gaza aid flotilla prompts protests

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Trump issues deadline for Hamas to reach ceasefire deal

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London

Prince William opens up about family, future plans for monarchy

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Government shutdown mass layoffs could begin today, White House says

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Manchester

One victim likely killed by police during Manchester synagogue attack

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Sochi

Putin warns U.S. Tomahawk supply to Ukraine would trigger escalation

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Chernihiv

Ukraine Invasion

Russia, Ukraine exchange 185 prisoners of war in latest swap

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Two killed in U.K. terror attack outside synagogue on Yom Kippur

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Trump declares U.S. in 'armed conflict' with drug cartels

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Abilene

Eisenhower library head resigns

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LaGuardia Airport

Two regional jets collide on tarmac at New York's LaGuardia Airport

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White House says federal worker layoffs ‘imminent’ after shutdown

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Los Angeles

Jane Goodall, chimpanzee researcher and conservationist, dies at 91

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Doha

Trump signs executive order protecting Qatar after Israeli strike

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Israel continues Gaza offensive as Hamas weighs U.S. peace deal

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Odesa Oblast

Deadly flash floods hit Odesa after downpours in Ukraine's south

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Government shutdown continues after Senate votes down resolutions

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Kabul

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Cebu

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Is an AI bubble brewing?

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Rise of AI