How do you solve a problem that evolves faster than you can think?
Tobias Hooton is CEO of technology venture Stelia, where he leads a team that is exploring how to combine and integrate artificial intelligence systems into every aspect of daily life.
The entrepreneur consulted for governments, international businesses and well-known tech giants on issues such as strategy and security, before starting Stelia in 2019. By his own admission, the team operate like undercover agents. In his words: “You don't see us, but you see the impact of everything we deliver.”
Here, entrepreneur and investor Tobias explains what he has learned so far, how business leaders can unlock innovation, and what he believes the future actually looks like.
1. Can you tell us about your background and some of the real-world challenges that you tackled before starting Stelia?
Tobias: My background is unorthodox. I dropped out of school to work for a couple of private companies, before joining private defence contractors. I ended up spending time in intelligence services for the British government, focused on counter-security measures.
I then built and sold four companies around the world, and my current portfolio business – Stelia – is in the AI sector. I think the life skills I learned in conflict, and when dealing with large, complex organisations, has put me in good stead for where I am now. At 21 years old, the biggest team I ran consisted of 487 people in three countries. So, that was a rather challenging task!
2. As a serial entrepreneur, how do you progress from one venture to another?
Tobias: As my wife will attest, I spot things all the time and think they could be better or that someone is missing a trick. The businesses I have been involved in have never been sequential, they’ve always overlapped.
The first companies I built were consulting companies. They were focused on providing services, such as security, for government departments, universities and research labs. We moved into the online-hosting space where we ran a multi-million user hosting platform and a large connectivity company working with some world-leading brands.
Now, working in artificial intelligence (AI), we are trying to drive humanitarian benefit through technology and look at how the current needs will evolve in the future.
3. What is the problem that Stelia is trying to solve?
Tobias: We’re building the fundamental, foundational technology that enables AI to be integrated and scaled to millions of people.
At the moment, AI has been likened to the internet in 1996. Back then, email was not quite fully mainstream and social media didn’t exist. The internet was just entering the home, and no one was sure whether it was a passing phase or here to stay.
Now, if we follow the same curve, artificial intelligence will be integrated into every area of humanity, some more obvious than not. The market is still building single systems in single locations, such as hardware or graphics processing units (GPUs) that operate in silos. There’s a huge gap between investing in those assets and realising the economic and operational gain through distribution and integration, and actual consumption.
4. Who is your typical client and how do they find you?
Tobias: We’re working with companies that are trying to build AI into every part of their organisation. It’s not about bolt-ons. We start with a blank sheet of paper.
We work with everybody, from insurance and banking institutions to social media platforms and entertainment companies. At the moment, there are very well-known media and streaming services trying to build AI-generated films. Users would no longer scroll through an endless dashboard of films, they’d say: “Generate a two-hour film about 1950s London,” and it would be built for them immediately.
We're also working with other world-leading organisations to create things like news disinformation engines or truth engines, which are quite powerful.
We’re using tech that’s unique to Stelia, owned by us and built by us. We have a large focus on academic research within our wider team too.
5. How can other entrepreneurs and leaders recognise the AI opportunity for their businesses?
Tobias: If you’re trying to embrace AI right now, the first thing I would do is rethink your business product or service from the ground up.
As an example, if you think about how you're going to deliver customer support with AI, everything becomes instant, painless and on demand. It knows every system, every vendor, and every problem you've ever had. It knows everything about you, and it's always there for you, 24/7, 365, in any language, in any country, in any place, all the time. So, it's not an evolution. It's a complete rethink.
Home in on what you want the outcome to be, then work backwards to identify the key milestones and identify what tools are available.
6. How do you set goals in a sector that evolves as quickly as AI?
Tobias: I look for cultural alignment. With artificial intelligence, it’s challenging to find complete technical or business alignment when the goal isn’t fixed and tangible. So, we say ‘this is the direction of travel’, and we find like-minded people that want to challenge the status quo.
We’re in a space where the market moves so fast that we needed to build an entire institution from the ground up with 50 people in 24 months. We literally work day-to-day as a business, so we’re bound by cultural fit.
7. What do you believe the future of AI looks like?
Tobias: The biggest transformational change you will see within our lifetimes is how we interface with technology. At one end of the spectrum, there is a laptop, at the other end is embedded hardware, and somewhere in the middle is a blurring of wearable tech.
The other thing that I find interesting is that while technology adoption is growing, more traditional engagement is growing at the same time. Amazon has record years in paperback and hardback book sales, and there’s a resurgence in homemaking in the more traditional sense.
I think it tells us that society wants to be in control of how it interacts with tech and what tech knows about us.
8. How capital intensive is starting up a technology venture such as Stelia?
Tobias: Depending on the area of tech you're in, it can be tremendously capital intensive, especially the world of AI. The depreciation in this space is also monumental. It's like buying a mobile phone that is already out of date and worth nothing in seven months. So, it’s a real challenge for private equity firms to understand that the ‘latest model’ will be released in seven months’ time, and your target market may no longer want it.
The wonderful thing about AI is you can achieve an awful lot more with a much smaller team. It's very common to see tech companies growing with a small team of people. We're somewhere between the two examples. We're not that capital intensive in terms of hardware. We don't really buy our own GPUs, although we have spent a lot of money on research and development and that was a deliberate business decision by us.
9. What does success for the business look like in five years?
Tobias: Success for us is deriving humanitarian benefit from AI. Individuals are doing something, eating food or shopping a certain way, and have had some sort of enrichment in their lives that's been generated by a platform that we've curated or scaled.
I think success is also about the people that are part of the company seeing the reward – all our employees are shareholders and part of its long-term value creation.
10. Having exited ventures before, what stage of your journey do you think about an exit?
Tobias: I don't think I've reached my end goal as an individual and I don't think I ever will. I'm in a position where I think about the world through my youngest daughter's eyes. She’s two years old and I try to ground myself around what her world will look like by the time she’s my age.
People always ask, ‘when are you going to exit a business?’ The answer is, when I think I've given as much as I can within my skillset. And I'm okay with that process of constantly letting go.
I think it's very difficult to put a finger on when the time is right. People say it's when you've got a certain amount of profit or a certain turnover, but none of that really matters. There are start-ups that lost money for 11 years straight and then made huge amounts of value for shareholders.
It's about when it's right for you financially and personally, and if you've achieved the things you wanted to try and achieve.
11. When you do exit a business, how does it feel afterwards?
Tobias: Like you've lost a leg. We're entrenched in the culture of opening our phones and checking emails first thing in the morning. So, the first thing you realise is that you’ve got no emails. I'm fortunate enough that the team I have around me are phenomenal, so I'm not involved with the day-to-day business at all. But it is a bit anti-climactic. You go and buy a new car, and you go on holiday. Once you've got all that your system, you come back and think: well, now what?
“The natural course of business is going to be hard. Accept that you’re going to have sleepless nights. You are going to wonder why you're doing it. You are going to have problems meeting payroll at times. You're going to get grief from people. Someone's going to try and sue you. Unfortunately, the world doesn't work perfectly.”
“If you’re doing something that’s not going to work, make that happen fast. The world of business moves so quickly, you don't want to spend a year going down a path that doesn't work, because you could lose 80 years’ progress. Identify issues early on and kill things if they’re not working. Learn to say no.”
“Stick by your own morals and your own view of what you want to get out of something. Be prepared to hold your ground confidently with shareholders. You don't need to have a plan for what to do next. Allow yourself the space and time to grieve after an exit, go through that process of letting go and be prepared to watch things change.”
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This article is for general information purposes only and should not be used or relied upon as professional advice. It is advisable to contact a professional advisor if you need financial advice. The opinions featured are not to be considered the opinions of Investec.
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