Why Are Private Markets Attractive for AI?

Gabe Stengel says private markets are attractive for an AI business because humans still do the coordination, the standardization, looking into things, and the actual transacting. A lot of public equities work has already been automated. The opening is a vertical where lots of plumbing is not yet built, with the AI applied on top.

Serving public markets would require the domain knowledge of a great public markets investor. He has never done it and has not spent nearly enough time with people who are great at it, so the business needs to hire that expertise and then apply the systems already built. He holds extreme conviction that the underlying systems, tools, and infrastructure will be invaluable there, but a great chef still has to piece them into a product and the last mile for public equities investors. The board pushes an expansion beyond core banking. There has been so much depth in the dealmaker vertical, and the end state of full infrastructure for private markets, where people can transact very effectively, matters far more to dealmakers. Public equities already have the infrastructure and the exchanges. He would like to serve the most sophisticated users, who know the companies they track and the industries they follow, and make them even smarter.

He can still build a huge business by concentrating where he is today. The unfinished human work in private markets is the reason to go deep there before public equities.