The recount. I believe it has in introduction going on first. Watson . Is he going to do with . To do it . Is it going to happen . Watson . Please start. Hello and welcome to the imb research demonstration. Today we will research some of her keep abilities and generating argument for or against specific topics. To proceed, please select a topic. Okay, lets go ahead and do on speech. Skinning for one million wikipedia article. Returning 10 most relevant articles. Scanned all sentences. Ready to deliver. Thank you for the opportunity to share my view about this interesting topic. It is always good to start with some background. The reliability of wikipedia compared to other encyclopedias and more specialized sources has been assessed in many ways, including statistically through comparative review, analysis, and historical patterns, and strengths and weaknesses inherent in the editing process unique to wikipedia. My opinion is that wikipedia is reliable. I would like to say a few simple reasons for that. Contributors provide identification. Another reason is that wikipedia provides better coverage and longer articles in general. These claims are supported by the scientific literature. For example, an early study conducted by ibm researchers in 2003, two years following wikipedias establishment, found vandalism is usually prepared repaired so quickly that most users will never see it. Wasoncluded that wikipedia surprisingly effective at healing. I hope i have convinced you to support my view, wikipedia is reliable. Thank you for listening. That is going to make High School Kids everywhere so happy. So that is good. I am curious, when you in just that much data when you ingest that much data, had you formulate questions and answers . Do you train it, or does it automatically understand how to pull up different topics from a data set . All you do is give it a topic. What you just saw, watson was not trained in that domain. We gave him the corpus of information and wikipedia. We gave him a topic and said, for many opinion on this topic. It went through an organized all the information. It understood the context of all of the passengers in wikipedia, took apart all the syntax and reassembled it and machine generated the language. How does it understand a concept like honesty or accuracy . How does it understand this concept so that you can actually pick how to argue for some position . It looks for multiple scenarios and reinforcing information. For instance, i was surprised to hear a reference to imb research working in that area. Found some was it passage in wikipedia, then it went off and validated it was legitimate scientist from ibm research before it would say it. Its constantly looking for verification of what its about to say. Is that piece of technology, is that currently something people can use in the market . Is it more of a forwardlooking thing that you have not released yet . Its forwardlooking which will be available as a service. Let me remind you all that i see time of it jeopardy, watson was a large Computer System in a room. Since that time, we have taken watson apart, if you will, lifted it up to the cloud. Its available as a set of services and apis. Everyone in this room cannot go out and start to compose their own miniwatsons, if you will, in the application space. Is it a sixmonth question, threeyear question . How far a week away from having that out . This is probably 1218 months from being in the market. That is a trivial example of the beauty of. Remember that in the area of health care, watson has ingested almost all of the worlds medical domain. If you give watson a disease topic, it will go into all andished pubmed journals form opinions on diagnoses or drug discoveries. I was doing Research Today and found a funny story. Nikita khrushchev actually came to an ibm facility in san jose. This was back in the 1950s. They rigged up a computer to ask questions. Have you solved it . Is it done now . Or are you still making progress . That is a great question. Prior to watson, everyone in the Artificial Intelligence community had tried to solve open to me question and answer by writing a month of rules. Rules based learning, or organizing research. That had very limited success. It wasnt until we took a full open to me statistical approach open domain statistical approach that watson was able to answer questions in open domain. On that point, i have heard more about ai and computing in the last six months than the last six years. It seems that there is a moment going on in this space. Why are we seeing innovation and growth so quick now . What has changed in our approach . We are at the proverbial perfect storm. Much of the worlds information is now digitized, including natural language and areas like health care, law, etc. Computers can now access it. We now have the Computing Power to do Something Like you just saw. We did not have met a few years ago. Just the raw capability. Yeah, and what has really changed in the area of Artificial Intelligence is areas like Machine Learning, Statistical Analysis are now advanced to the point where we can do things like you saw there. That was not the case a few years ago. Machine learning is one of the things watson can use. Its one of its building blocks. That is right. Think of watson as a whole series of statistical learning engines. Its not one thing. And its constantly computing and trying to learn over information. We do not program watson. We give watson data were better data or better data, but we do not reprogram it. We give it better algorithms, but we dont reprogram how it operates. You give it a stronger brain over time, but you dont tell it what to think. No, it learns over the information. I brought some with us today. When you got to pitch developers watson in new york, what is your core pitch . The interesting thing is that its such a powerful technology, i dont have to give a sales pitch. They immediately go into, how can i use this . Can you give me an api to do a certain set of services . I was up at mit and they are blown away by it. They have been working at ai and Machine Learning for decades. They are just using the services that are coming out of this. We have opened up the platform. There are hundreds of start up companies. Ibm informed a 100 million fund to bring additional players onto the platform. So if you want a check, you should grab you offstage. Middle of a progress in watson over the last 18 months. Been impressive, has it been slow, or what you have expected . It has been exponential. Were running as fast as we can to keep up with demand. Not just for developers, but for investors. Even Large Enterprises are using it to transform areas of their business. Old respectedry company. The history, lots of work. Its not snapped at or facebook. Snapchat or facebook. Do you think you have the share you need in Silicon Valley to attract other developers to your company . Or are you still fighting off that stodgy pocket protector kind of image . No offense. We do not have the mind share here. Its growing exponentially. But if you listen carefully later this week, you will hear things from us that will reinforce our commitment to the developer community. I would also remind you that when you think about the arrows of computing, the first was tabulating machines. The eras of computing. That was in the early 1940s. Then we had programmable systems. Every computer today, every device today is programmable. Watson is not a programmable system. Its a learning system. Its the first of a third era of computing. I will remind you that ibm played an Important Role in the first and second eras of computing. We will play a key role in the third era of computing. This is a good segue. Who is her main come edition who is your main cover edition . Are there any big players tryig to encroach on your territory . There are a lot of great people working in the area of ai and cognitive computing. Most are developing single algorithms for solutions to solve some problem, to improve search. A very narrow solution. They are narrow solutions. We are the only company that has developed a complete platform, open api, that ability the ability to innovate on top of this. If i had to make a prediction, for every innovation coming out of ibm research and development labs, there will be 100 or thousands of pieces of innovation that will occur on top of it. That is what we want. Yes, we are in old company. For watson on a regular basis . We do a value share platform. Aws charges by usage. Why did you pick that model . The first decision we made, we still could sell lots of watson boxes. But we decided we wanted to open a platform up and make it as a service, knowing where the club is going. Were the cloud was going. That was a strategic decision for us. Then it came to, do you charge by the click or not . Because this is a learning system and is becoming smarter, its important that we share the value with our partners and customers. Have you had any pushback from developers . We want to pay on more of a click basis . No, it is a shared risk. For developers, you come on for free, develop your business. As you are you revenue, then we sure that. But we want an easy onramp. We want to get going. We think is very fair. Is watson going to be a key revenue driver for imb Going Forward . We have a set of Strategic Initiatives in the company. Watson is part of our analytics business, which is part of a 17 billion doubledigit highgrowth business. Watson is the fastestgrowing component of our analytics business. Now we can talk about the future. Thank god. Im going to presume that you dont think that ai is going to end mankind as we know it. There has been some talk about what this looks like, and should we be worried. Do we build defense against this . This seems relatively benign and more industrial than progressive. When any new Technology Comes along, people get scared. Technology can do great things were not so great things. It depends on how we use and control it. Whether that was the steam engine, automobiles, xrays, you name it. This is a brandnew technology. Its going to change the world. There is no question in my mind. We think about what this technology can do, fundamentally if you look at decisions that human beings make, we make decisions with a bias. We make decisions on incomplete information. I believe that nearly or perhaps every decision that would make of any importance in the future will be made with a watson by our side. Does not letting the computer making our own choices, its giving options that we can select from. Its more of a addition. That is right. Didsimple demonstration we around wikipedia. Think about watson where it has ingested all the worlds information on drug therapies for cancer. I dont know about you, but if i had cancer, government, and the cancer board was meeting to decide what chemotherapy they were going to give me, i would want watson to have gone through it. To be sitting at that cancer board to augment the decision. Say hey, guess what, you may want to rethink that based on this piece of information. Or, heres a new con to the procedure. As watson gets smarter will they be more leaders in our lives . Will we handle off stuff to watson . Hand off stuff to watson . There will always be moral decisions, labor death, where it will be a joint decision. We as humans will always have the control of position. As time goes on, more and more decisions will allow the system to make. Think about the internet of things when we need constant responses in milliseconds. Making that in realtime versus waiting for me to digest something in seconds or minutes. In our daily lives, in 510 years, does watson power experiences we already use . Or is it a standalone product that i would talk to . Its going to be a combination. It will be literally everywhere. It will be powering things that you just take routine in your daily life. If you are buying something, watson will be behind that, enhancing your experience. It will also be visible in many of your applications. You are if, or you want you are being creative, and you just dont have the time. It will be both visible and highly invisible, both ubiquitous in every thing we do. But to be fair, you want watson to be a brand name and technology. Will i have a watson sticker on my phone . Watson is already the premier brand in ai. Not something we set out to do, but through the demonstrations in jeopardy and whatnot, they have already had brought broad recognition. As we move forward, we will decide whether we want to do powered by watson. We opened up a new division of ibm around watson. Health care vertical. Stand up a new divisions around education, the internet of things. As watson becomes capable of operating in those domains, we will bring him into those areas. Before we go, humor me with this last question. Was there a moment where you and wow,team were like oh that actually works. How did i come to be . Did that come to be . On the journey to jeopardy back in 2001, there was a point of time in 2011, there was a point in time in 2009 when watson made a quantum jump in its ability to learn questions. At that point, i remember sitting in my Conference Room looking at the demonstration. I said, we have something that is going to change the world. It was shocking. Did people you back then . People doubt you . They they agree with you at the time that this would be a watershed moment . Yes. Obviously my Research Team had hydrogens. They were very focused on the q a machine. Had high ambitions. This is not just another Computer System. This is a new era of computing. But no zombies, no apocalypse, no matrix . Its only going to help us with complex decisions. Thanks. [applause] man, this room is filling up. You are here to hear the investor talk, arent you . How many on maneuvers are in the room . So all of you. Listen up all of you. Maybe you can shut your laptops and learn something. These are the folks that are going to give you money. Please welcome our guests. Big round of applause. [applause] i am so glad to have this great panel. I will roll into things and ask you a hypothetical. Say i am this supersmart entrepreneur. I have a great product, i live in maybe austin. Everyone is telling me i have to move to San Francisco. Is that true . Money if youre raising from greg croft. Why is that . I think 82 of our investments have been outside Silicon Valley. We are finding opportunities everywhere. I think there are great growth pockets in austin, new york, ellie, seattle, all over the world. I think it depends. If you are based in austin or l. A. And you have a network with a recruiting advantage, then it might make sense to stay. Like there is expertise that you need that doesnt exist in the market you are in, the bay area is quantitatively the best place to found companies. Is not getting too expensive though . Isnt it getting too expensive though . Being based in San Francisco at this point cuts your runway in half. He said, if you live in san mateo, oakland, you can get so much more mileage out of your fundraising. Does that change things . Spendlong as you dont all of your money on candy bars, you are fine. Do think you can found a company anywhere. The challenge is scaling back company to the next level. You can find great individual contributors. You can find great designers, great product people in any country, in any city, in any town. Once you start to scale, lets say its working and you starts to hit 100 people on the team. You have folks that are not up from theut 2 frontlines. Back is difficult the further you are from the bay area. That gets difficult the further you are. Experiences,t of especially on the consumer side. It only exists here. There are certain cities in the l. A. , new york, increasingly in europe, you are starting to see some of that Second Generation experience. If you are in tuscaloosa, you are going to have a tough time finding that locally. More importantly, a tough time attracting someone who has that experience to move there. If youre in a global city where people are willing to move, and i think l. A. And new york counts. Austin i think is on the edge. It has some livability that makes it attractive to people. It doesnt have the same ecosystem for what people do next. That is something people care about. That is the key question. If you cant attract people who are willing to move to your city, you have to consider moving your headquarters to a place where those people already are. Network ou have a i would argue l. A. Might have the most talented people in the Media Business out of anywhere in the world. Dynamics ofand the that market better than anywhere. If you are starting a Digital Media company in San Francisco, you will be creating you would be recruiting executives from l. A. It depends on the network you bring. Any great entrepreneur has to be a pied piper and be able to recruit people anywhere, whether you are in reykjavik or in chicago. We have seen Great Companies in both of those places. That is a huge part of it, to pick a vision and tell a story that attracts people anywhere. What about new sections of technology . Maybe i will segue into asking what youre looking at that you were not a couple of years ago. I dont know if there is a Virtual Reality headquarters. John. We Just Announced this morning, we and disney an investment in john, the Virtual RealityCompany Based in palo alto along leadcmc, a Chinese Investment platform. Its the combination of both technology and innovation that you find here any specific expertise on related to content and distribution that you would find in disney. Caa. N the a combination of l. A. Shanghai media landscape married to the Technology Innovation here. Most of the most interesting Technology Innovations are happening here. Channels areng happening elsewhere. It is the combination of bo