Ready to deliver. 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 through comparative review, strengths and weaknesses inherent. My inherent is that wikipedia is reliable. Another reason is that they provided better coverage. These claims are supported by scientific literature. An early study conducted by ibm , that vandalism is usually repaired extremely quickly that most users will never see its effect and concluded that wikipedia has surprisingly effective selfhealing capabilities. I hope i have convinced you to support my view. Reliable. Is makes High School Kids everywhere happy. When you ingest that much data into watson, how do you train it to understand how to formulate questions and answers . Understandomatically calling in topics from a data set . You just give it a topic. He was not trained in that domain. Wikipediaformation to and gave a topic and said to form an opinion on this topic. I went through an organized all the information and understand it it took apart the syntax, reassembled it, and regenerated the language. How does it understand those concepts . It looks for multiple scenarios and reinforcing information. I was surprised to hear it reference ibm research working from that area. It found some passage in wikipedia and went off and validated it was a legitimate scientist before it would say it. It is constantly looking for verification that what it is about to say is correct. Is that something people can use in the market . Is forwardlooking and will be available as a service. Let me remind you all that at the time of jeopardy, watson was a large Computer System in a room. Time, we have taken watson apart, lifted it up to the cloud. Everyone in this room can now go out and start to compose their own mini watson. How long until that is in the market . This is probably 12 to 18 months from being in the market. That is a trivial example of wikipedia. Almost allingested of the worlds medical domain. If you give him the disease topic, it will go into all published medical journals and form opinions on diagnoses and drug discoveries. I found a really fun story. The russian premier came to an ibm facility. They rigged up a computer you could ask questions of. Problem or this one question topic, is it done now . Prior to watson, trying to solve open domain questionandanswer by writing rules and organizing the information for search. It had very limited success and wasnt until we took an open domain statistical approach and taught language that it was able to answer questions and open domain. Have heard more about ai and cognitive commuting computing in the last six months then in the last six years. Why do we see innovation grow so quickly right now . What has changed in our approach . The proverbial perfect storm. Much of the worlds information is digitized including natural language. Computers can now access it. We now have the compute power to do Something Like you just saw. Machine learning and Statistical Analysis are advanced to a point that we can do Something Like what you saw there. That was not the case a few years ago. It is one of the Building Blocks itself. Think of watson as a whole series of statistical learning engines. Thing and it is constantly computing and trying to learn that information. We do not program watson. We give watson data and we give him better data. We give it better algorithms or Machine Learning but we do not reprogram how it operates. You give it a stronger brain over time but you do not tell it what to think. Tell it what to think. It learns over the information. When you go out to fish developers, what is your core pitch . It is such a powerful technology that i dont have to give a sales pitch. Go, how can ily use this . Can you give me an api to use this . They have been working in a and Machine Learning for decades. We have opened up the platform and there are hundreds of start up companies. To fund and bring additional players onto the platform. It is an outreach push for you guys. It has been exponential. We are running as fast as we can to keep up with demand. Even Large Enterprises are using it to transform many areas of their business. Big history and lots of work. It is not cap chat or facebook. Do you think you have the mind share to attract even more developers. We do not have the mind share here. It is growing exponentially. It will reinforce our commitment in the business community. But think about the areas of computing, it lasted through the 40s. And we start a programmable systems. It is a learning system. A pretty important role. Are there any other big players out there trying to encroach in your territory . Peoplees a lot of great and most of them are developing single alderete algorithms to improve search. Were the only company that has developed a complete platform. For any innovation Going Forward , there will be thousands of pieces of innovation. In terms of computing, we dont think of it in terms of the afternoon. Wattage you pick that Business Model . We can sell lots of boxes. We could open a platform and knowing where it was going. Its just a matter of the charge by the click or not. Because this is a learning system and it is constantly becoming better and smarter, it is very important that we share the value. Have you had in the pushback . It is a shared risk. As you start to learn your revenue, we want an easy onramp. It we want to get going. Will watson be a key revenue driver . It is the highest growth area. Is 17 billion and watson is the fastestgrowing component. And now we can talk about the future. That you to presume dont think ai will end humankind as we know it . To have been talk about luminaries about what this looks like. This seems relatively benign and more industrial than aggressive. When any new Technology Comes thatd, people always know they can do great things and not so great things. Automobiles, xrays, you name it. This is going to change the world. There is no question in my mind. It the decisions make, i believe that nearly or perhaps every decision will be made with watson by the side. Is more of an addition. Sick of the simple demonstration we did. Watson, where it has ingested all of the worlds information on cocktails for drugs for cancer. If i had cancer, god forbid, and the cancer board was meeting to decide which chemotherapy they were going to give me, i would watson to augment the decision and say, you may want to rethink that based on this piece of information, or here is a new cog for the procedure. Will they always maintain that secondary status on how we make choices . Are we going to hand off to watson . Moral decisions or life and death decisions will be a joint decision. We as humans, will always have the control position. As time goes on, more and more decisions we will be able to allow the system to make. Making decisions in real time versus waiting for me to digest something. Think about that. Thates watson power apps we already use . Standmore phased inor out . Watson will be behind enhancing your experience. It will also be visible in many applications where you are being creative or you want information, but you just dont have time. I took it will be both invisible and highly visible. Physically ubiquitous. Basically ubiquitous. You want watson to be a brandnew technology. Watson is already the premier intelligenceficial and cognitive computing. That is not something we set out to do, but through the demonstration and what we have applied it to, it has grant recognition. As we move forward, we will decide. We have opened up a new division of ibm around watson health. You have seen us recently stand up new divisions around internet , around education. As watson becomes capable of operating in those domains, we will bring watson into those areas. Was there a moment in the past with watson where you and your team thought, wow, it actually worked . To jeopardy,rney back in 2011, there was a point mademe in 2009 when watson a quantum jump forward in its ability to learn and answer open domain questions. At that point, i sat in my Conference Room and looked at the demonstration. I said, we have something that will change the world. It was shocking. Did people agree with you . Or did they think you are crazy . Obviously, a Research Team had high visions, but they were very much focused on a q a machine. When i saw the system could not only understand complex language, but good reason and learn, i said, this is something that will change the world. This is a new era of computing. But again, nothing to fear . No zombies, no apocalypse . Nothing to fear. It is only going to help us. Thank you for coming out. [applause] man, this room is filling up. You are here to hear the investor talk. How many entrepreneurs inth th e room . So, all of you. So listen up. This is the time to shut your laptop. These are the people who will give you money. A big round of applause. [applause] ooh i like your shoes i am so glad to have this great panel here. Thingsroll right into and ask you a hypothetical. Cim this supersmart entrepreneur say i am this supersmart entrepreneur and i live in austin. Everybody tells me i have to move to San Francisco. Is that true . Dana . Not if youre raising money from gray croft. Of our investments have been outside of silicon valley. We are finding opportunities everywhere and i think they are great opportunities in great growth pockets. In austin, new york, los angeles, and chicago in places all over the world. If you are based in austin or new york, or a lay and you have a network that gives you a recruiting advantage then you can stay there. If you dont feel you have the expertise you need for the market you are in, i do think the bay area is quantitatively the best place to found companies. I organized the dinner last week and your fellow investor basedoted that being in San Francisco cuts your runway in half. If you live in san mateo or oakland, you can get more mileage out of your fundraiser. Does that change things . As long as you dont spend all of your money, you are ok. The thing is, i really do think you can start a company anywhere. Scaling back is company to the next level. ,ou can find Great Developers great project designers, great product people in any country, in any city in any town. Anyplace in the world. Lets say it is working and you hit 100 people on the team. You want to have some vp level votes who are not in the weeds doing the work. Fronttwo on the line. Finding people who have the experience who have done that before becomes more difficult. It is a matter if it is San Francisco, oakland, the peninsula, or even in north bay. Of experience, especially on the consumer side. It only exists here. There are certain cities in the world where you can and new york, l. A. , increasingly in starting to see some of that secondgeneration experience. Tuscaloosa, youre going to have a tough time finding that locally. Have aportantly, he will tough time for someone with that experience to move there. That is a in a city global city where people are willing to move, and i think los angeles counts and new york counts. Ustin is on the edge. It has visibility that makes it attractive to people. It does not have the same ecosystem for what people do next. That is something people care about. Really, that is the key question. If you cant attract people who are willing to move to your city, you should consider moving your headquarters. I think a key point was made. If you have a network, where your network is and what you are focused on. I would argue that in l. A. , there are probably the most talented people in the Media Business in anywhere in the world. It has been the central in ecosystem and they understand the dynamics of that market better than anywhere. If youre certainly a Digital Media company in San Francisco, you would be recruiting executives from los angeles. It depends on the industry and the network that you bring. Like any great entrepreneur, you have to be a pied piper and be able to recruit people anywhere. Orther you are in reykjavik chicago. We have seen Great Companies and both of those places and i think that is a huge part of it. Being able to paint the vision and tell the story to attract people. Sectors andt new technologies. Maybe i will say quite into asking, what you are looking at that you were not a couple years ago. I dont know if there is a Virtual Reality headquarters. A place where you have to have a Virtual Reality company or a a. I. Company. You Just Announced this morning. We and disney an coled an investment. It is the combination of both the technology and innovation that you find here and the specific expertise related to content and distribution in media that you find in disney. In ourselves as well. We own caa. We have made other investments in that media platform that drive the investments. We have the shanghai media landscape married to the innovations occurring here. We have the Product Design occurring here. The Business Models are happening elsewhere. It is the combination of both. Have you found anything in the past couple years that he would not have imagined finding a couple years ago . Were looking at a lot of things that two or three years ago we were not looking at. Especially, the food category. Now, it is a trillion dollars plus market. We are looking at drones. We have been starting to look at more healthcare related things. When it takes a lot of capital, it is probably not a great fit for us as a investor. Things are becoming increasingly consumer eyes. Becoming increasingly consum erized. To lookportant for us at these new things we have that looked at before. Moderator i have heard a lot about health care and court sciences. How long does it take to get up to a speed in a new sector . I havent done anything in that sector so i cant speak to it. What are the big sectors that we sure thats not exactly how it works out. See thee entrepreneurs opportunities and we react to that. It is really hard to predict the future. It is a lot easier to observe the present and see what is working and then, try to suspend that is as to like, oh, a stupid idea, that is never going to work, that is never going to scale. That is the bit that gets tricky. Seeing the future is very difficult and recently, we invested in a new company. That has seen tremendous growth on the back of this wave of gift adoption from social media. I could not tell you that we had this knowledge of that gifts were going to be the big driver. Gifts have been around forever. Why now . The point is, we did not need to have a thesis. Only to do is to recognize it, andwho the leaders were, then to suspend judgment and say, that is not silly. It is a meaningful thing. The context matching is being able to say, this fits into a lens of selfexpression that has its roots back from email signature files from aim buddy icons and myspace profile pages you can start to see the connection. That is where i think having the sense to where things are going, next to where things come from, is not necessarily saying, here is where the big opportunity will be. We have a slightly different model. We work with investors like these as partners, along with the entrepreneurs they back. We are investing in the industries we have a strong history and track record. Health care, for example. We are probably the largest Healthcare Investor in the world. We are investing across Drug Discovery companies and phar ma. Differentou a perspective and allows us to be a strategic partner. We tend to find her self, not competing with venture firms were earlier stage we tend to find ourselves not competing with venture firms. We came in because the entrepreneur wanted a partner that was global that had deep industry capabilities with a toolkit. Were jumping into the boat with them and helping them row strategically. I think it is so interesting. Investor inarly i think a lot of people think of it as being a firm that drives the evaluations. I will not talk about evaluations. First of all, what do we do here . Are you writing bigger checks, fewer checks . How are you handling this . We are kind of of the supply chain of venture capital. For us, this year we have been slower to invest. Partially, i think in our analysis there are years that have lots of great new ideas. They are big swings going for very large industries. Last year or the year before were better years for big, new ideas. This year we have not seen as money. A lot of the ideas are looking for higher seed stage evaluations. Entrepreneurs are looking for somewhat rich valuations. They dont realize they could be setting themselves off on the run trajectory for the rest of their life. We try to balance the fact that sometimes the valuation does not matter if you are in on something big. You want to be involved with the entrepreneurs, but you dont want to set the company up for failure because it started out too expensive. This year seems like a great year for companies that were started a couple years ago. We have not been super active this year because i think we are looking for big ideas at the right valuation. Agreed. There has just been a significant increase in the number of the deals being funded, but the valuations at those levels are relatively constant. They have bumped up, but are not crazy. You look from 20 12th two today, those premoney when you look those012 to today, notmoney valuations are very different. When you look at average eggs massg back 40 years, the gets tough. Blanket. The wet there is sort of the reality factor that plays in. We think about that a lot. In the markets that we are investing in more heavily, some geographies tend to have a little more valuation discipline. It is just lower supply of capital. Moderator are there any sectors that have better deals right now . People suddenly interested in Synthetic Biology . It is relatively undiscovered. We have continued to invest in Ecommerce Companies during a time which it has been relatively out of fav