E515 | This Week in European Tech with Dan, Mads & Lomax

30:59You know, rates are 2 % versus over 4 % in the UK and the US. Why is that? Well, you know, there's less inflation, there's less growth. So some of it is, I think, benefit of sort of central bank decision making, government decision making. And I'm always a bit suspicious of that. like is it actually a secular shift um or is it um sort of fiddling fiddling by the people um in in in brussels or in in berlin um you know because you're not really seeing i don't think you'll see you know you'll say it's very sentiment driven i don't i don't see the the growth um in the earnings that being particularly spectacular i mean germany the economy has sort of returned to growth at a slightly faster pace now like we'll see i think this this spending will take time to trickle through i think there's plenty of rooms room for optimism and i'm not just not as optimistic as mads about this you know um part of this is i think is just like the trump chaos has just caused people to rotate out of the u.s and and look at you know look at oh europe has always been cheaper than the u.s you know u.s is roughly on average 20 times multiple you know price to earnings whereas europe is more like 12 to 13 so there's a sort of arbitrage you know or not arbitrage but there's you know, if the companies are growing more slowly in Europe, then really, is that a sort of false, is that a false profit, as it were, or false benchmark for success?

32:25But we can, there are levers to pull, Mads, aren't there? There are reforms, there are actions that governments can take, that business can do. What can, should we do? Yeah, I think I have a natural bias for optimism, but I think sometimes the trick is also to squint a bit and imagine what could be. I do firmly believe that we have our destiny in our own hands. I think we're just as well educated. We've got super modern, sophisticated societies. And I think in some ways we have benefits that the Americans don't in the form of proper better social cohesion. You look at some of the Nordic countries that have relatively high tax burdens, but have managed to grow very fast and develop very high GDP per capita basis with economies that are just a little bit different from what you're seeing in the US.

33:10I also can't help but think that a society that is maybe more stable, has slightly less turbulent swings than what we've seen in the US is going to benefit business. So while I agree that US is still the world's leading economy and the best place to make money today, I do think we have everything to play for. And if we grasp the nettle and make some of the necessary reforms, I'm hugely bullish Europe. I think it's all down to us. I'm with you. I think you have to take these opportunities. I'm not with you. I think there's, you get these little kind of whatever they might be, environmental, fiscal, government regulation, Trump-esque.

33:51And then if you get the lever, you get the opportunity, you go, okay, how do we get to the next lever, to the next lever, to the next lever? So I think between this defense resilience, this renewed kind of wake up across Europe, I'm more than optimistic. But I am going to now, I'm going to take us on another emotional journey. Do we agree to disagree? Okay, let's agree to disagree. When do we talk about the AI act? Oh, don't. Well, we're going to come on to that. And we've got some more on that later. But before that, we are going to go a bit more Debbie Downer. I'm going to take you on this super emotional roller coaster this week because we do need to talk about the UK reform on benefits and this new five billion euro pound hole.

34:34It's a pound hole, isn't it? So the UK fiscal policy, the reform failed. The 10 billion of budget headroom is now shot. Interestingly, I found that other chancers usually gave themselves three or four times that, the 30 to 40 billion fiscal headroom space. That's a big difference. Yeah. So there wasn't much to play with. Stammer's U-turn has created this£500 hole due to welfare cuts that now won't happen. If we miss our growth targets and we are looking at roughly 1 % plus, and if you look at either the independents or is it the OBR and what the government are saying, they're all slightly all over the show.

35:08And as you go over time, then the differences between what the independents think and what the government thinks start to go in opposite directions for the wrong reasons. but if we miss those growth targets by even slim margins, this is going to be pretty catastrophic for the UK economy. And just for some context, the UK tax receipts are just over 1.1 trillion and our spend is just under 1.3 trillion pounds. So there's roughly 160 billion pound deficit currently, but it's growing. So Lomax, kick this one off. So we've got taxes up, more cuts, more borrowing. What's going to happen or is it all of the above?

35:48Well, it's difficult. So she's obviously set this rule, her fiscal rules. And if you as a chancellor break your fiscal rules, then you're kind of finished, I think. You send a very, very, very negative signal to the bond markets. um i don't know where she goes from here because as you said most chancellors historically have had a 30 40 billion margin for error so if things go against them they have this sort of headroom so she set this rule to balance the books you know therefore you know to have all spending covered by tax receipts by 2029 and and we've seen the various things she's done to try and um to try and get to that position it's a mixture of you know taxing more we saw that with the national insurance increase um it's just one quick point there lomax we are we are now i think i'm right in saying both of you correctly if i'm wrong we are now at the highest tax burden since world war ii yeah across across the piece yeah so she's also pledged right in their manifesto um that they're not going to increase um they're not going to increase taxes right so she's now in a bit in a sort of what do you do well if you can't increase tax what are the levers that you that you you know you pull you can either cut costs you can increase taxes or you can increase borrowing if in for example or increase care budget which yeah but it's not a lever you can actually pull yeah it's an outcome of the decisions that you make yeah yeah okay so the actual levers that she can directly pull um she's constrained on cuts we've seen this i mean the social care budget is is pretty much the biggest budget that the uk has i think we're spending um well not i think that like uh the nhs plus social care is about 400 billion it's nearly nearly you know half yeah it's right it's roughly half if you add up all because they they break it down into certain buckets that you then need to re-add up to look at the full social care budget and i think it's sort of like it's like it's sort of this like secular decline that these economies face as part of an aging population anyway let me just go back to what i was saying so i think i think she's in a bit of a rock and hard place because she said she can't raise taxes she can't she's constrained on cuts and so therefore what does she do she has to go and raise more money which i think the bond markets weren't like which increased borrowing costs especially in a higher higher interest rate environment look i i think i'm trying to work out like what this means for us um one of the biggest things that stood out to me was you know these guys labor's now been in charge for a year and it's been a bit shocking to be honest there was so much optimism.

38:22Don't forget they had one of the biggest majorities that any government's had in the last 25 years. They had a majority of 165 seats. So you would have thought that it would be easy to get these kind of things through. You know, what do you want? You want a strong government that can set out an agenda and push that through and then, you know, deliver results off the back of that. And, you know, maybe one of my reflections is what's happening to, you're reminded that the Labour Party is as fragmented as the Tory party was. And what happened to the Tory party? It got eviscerated by infighting from those on the left and the right elements within the party.

39:01And now the same thing's happening to Labour. The centrists who want to push through these reforms, push for growth, push for infrastructure, and also reduce the tax burden if possible by reducing cuts, they are being constrained now by the left of the party and i so i do worry uh you know if you're looking at the uk kind of broadly and we've seen the markets have reacted very negatively to this although it's softened a little bit since in a few days since is that generally for like uk plc or just the uk and our perception in the world um this is a challenge and i think it shows that the sort of if the labor government with the majority of that working majority of 165 seats can't push through reforms like this, then how is this going to sit over the next few years as they push through other reforms, right?

39:47So, especially with zero headwinds. Corbyn has just spun out, hasn't he? So, Corbyn, and I've forgotten the lady's name he's going with. He was already expelled from the Labour Party. Don't forget that. Oh, I forgot that. But he's now setting up his own party, and I'm wondering if that draw for the hyper-lefties will then go and join Corbyn. So, my head went to, will this mean that there will be more more availability for a centrist push because the the super lefties are going to go and join him and that was it was a sideways thought yeah yeah i don't think this is great for business basically if you go back to business and startups and tech in the uk i'm not sure it's brilliant and you could you could well end up with with um you know angela rayner there's a lot to admire her her backstory is is fascinating but you know she could end up in number 10 i don't think she's pro business i think it's the opposite so that's a problem um mads this do you know who's gonna end up in number 10 lomax um angela reyna nigel farage well one of those two so it's not great for it yeah yeah yeah rock and a hard place if you if you if you just talk about this labor labor party fragmentation labor kind of spinning around not getting any traction it opens the door you know conservatives still in a fucking in a complete mess it leaves it leaves open the door open for farage as you say i remember we're hammered by For the first-past-the-post system, it's an absolute diabolical mess.

41:07I remember when Keir Starmer was first elected, I remember thinking to myself, and I was saying to my wife, I just love the fact that we've got somebody boring. I love the fact that he's just ex-lawyer, boring, methodical, thoughtful, smart, and now I'm kind of having to eat my own words because he's just not strong enough. There's just a lack of grit or a lack of... I don't particularly want Trump levels of crazy FU, I'm going to do it my own way, but I think there's maybe a middle ground that I would prefer to see. But Mads... Contrast the two administrations this week. So the UK reforms, the welfare reforms, utterly failed.

41:51We're completely gutted by rebellion and infighting. And Star Wars basically left with a total mess to try and resolve. and with four years left in office. I mean, it's just not a great situation. At this point, we should just have an election because this is ungovernable. Now, the alternative is, you know, look at Trump. He had a, you know, I don't think, not very smart bill, kind of this, you know, build back, big, big, beautiful bill. Beautiful bill, baby. Yeah, exactly. And was able to push it through. And so to your point, I completely agree with you. We don't need the theatrics he's presenting.

42:29And there's so much to dislike about his policy platform. But I think in policy and in politics, if you can't push your agenda through, you're a lame duck. And that's pretty useless. Yeah. Starmer always used to say, look, I'm not a politician. I'm not an insider. I used to be a lawyer or whatever. And he uses that as an excuse. And it's like, no, I'm sorry, man. Like, you've got to at least do the politicking well. like get your whips to make sure that yeah so he won't make it do you think do you think Reeves will make it I think what I mean one option for Starmer is to base because how do they how do they get out of the bind that we talked about at the beginning which is oh well they've already promised not to increase taxes they don't want to increase borrowing they're now constrained on cuts they've now kind of backed themselves into a corner I think the only way that you could possibly get yourself out of that corner is to fire Reeves and be like she's out we're going to do a new fiscal rule um i don't think that's going to end well uh but i think um um yeah i don't that's going to end well you you know you what are you going to do i mean you're going to placate the the rebels by by by potentially appointing a slightly more left-leaning chancellor or whatever like that's that's the markets are going to hate that so um mads we've got three scenarios we we either we either stay this stasis has been around for a long time there's kind of gradual gradual your miserable decline.

43:50We've got further decline or we've got righting the ship and actually turning the ship around. Could you have a bash at breaking down those three boxes for us? I mean, let's start with the kind of central scenario, the model through, because we're very good at that. And this is what I think will happen, by the way. I think they will patch the fiscal holes with stealth taxes. So that means increasing the tax thresholds. That means that you push 6 million people more into higher rate tax. You're probably going to revalue the council taxes because so many of the councils have such poor fiscal positions.

44:26And that means that being wealthy in the UK will be redefined down to somebody making£60 ,000 a year. And of course, hold on, I'm pretty sure I'm right in saying that 75 % of tax receipts are paid by people earning over 50 ,000 pounds. So if you like, the wealthier members of society are already taking the majority of the tax receipts probably already. I don't know if anyone knows anything different to that, but that was the last figures I saw. No, that is correct. And you're going to redefine what it means to be wealthy. So people that are slightly poorer will also be contributing more. In the pot, right.

45:04So you push up the tax burden, basically. You're going to have zero reform momentum because welfare is basically untouchable after this pip rebellion. You're going to have an NHS which continues to be sacrosanct, which means no productivity push. We've talked about how you've had a lot more money put into the NHS over the last five, six years, but with declining productivity, you're not going to fix some of the important things around stock options that need to be reformed. You're not going to see some of the pension reform we've talked about. And effectively, you're at risk of the UK gradually becoming more of an R &D lab for US companies.

45:42Now, the irony here is, as VC investors, we're probably going to do okay in this scenario. We're going to keep building and funding early stage companies and eventually they'll flip to the US. But there is another scenario where UK PLC makes more from those investments. And of course, that's the one we would really hope to drive. And so anything on the other scenarios? I don't really want to go into the doom and gloom and the death and destruction, but is there anything that we need for context just to share? Yeah. I mean, riding the ship, what would you need to do? I mean, you'd need some bold reform.

46:15We've talked about pensions. They're super important, but you also need to reform the welfare state. And one thing you could start with is means testing, state pension for wealthy pensioners. I mean, we just cannot afford to pay everybody so much money. It's just not enough. Didn't they try that with the heat? What was the winter fuel allowance? Fuel allowance, fuel allowance, yeah, which you turned on. Yeah, so it feels like that kind of process has been shown. It's very, very hard. It's very hard, especially if you're a Labour government. Even Theresa May, she stumbled on that, right? That was one of the things that ultimately pushed her from office.

46:52But that wasn't the question. The question was what could or should be done. We've already given the what I think will happen scenario, which I don't think is great. It'll be more muddling. But what I think should happen is exactly this. It's reform. It's productivity push in the public sector. It's AI diagnostics in the NHS. It's robotic surgery. It's digital first GPs. It's really leveraging all this amazing tech we have to drive more productivity. It's a reduction in civil service headcount. We could reduce that by 25%. That's not something I'm making up. That would just take us back to 2016 levels.

47:25And there's so many things we could do to implement technology and drive efficiency. So if we can do the bold reforms and if we can drive the efficiency we need, I think there's everything to play for. It's not that it's kind of inevitable that you'll have this managed decline. It's just that if you don't have the political will, it's not going to happen. Max, what would you add? Anything that you think could be done differently or how do you see the world? I fully agree with Max. We need to reject that, but it's very, very hard to do it. Thank God I'm not in politics. Thanks. Well, let's see how this unfolds.

48:01And I know that this is going to be a topic for future pods. Thank you, gentlemen. We need to talk now about the EU AI Act. There's been some pressure for the EU AI Act to not come into force, and it's supposed to be coming into force in August. 44 major European firms have called on the European Commission president to introduce a two-year pause. However, let's start with what is the EU AI Act? It's a first-of-its-kind comprehensive AI regulation aiming to ensure AI in the EU is safe, trustworthy and human-centric. There are fines, there are things that happen to you if you get it wrong. There are fines of up to 35 million euros or 7 % of global turnover for violations.

48:42And why are they calling for a pause? One critical issue is that the AI Code of Practice missed its May the 2nd deadline, so companies have no idea what to do. Other issues include restricting European competitiveness, there's an innovation risk how these regulations will overlap with other laws there's no agreed standards or rules of implementation so i think it's totally fair that these 44 companies are asking for a pause do we think the request will be listened to mads if it does get delayed how will this affect startups would they be affected how is this going to affect the real world yeah i'll touch on first and whether to be listened to i'd say absolutely the mood music we've had coming out of brussels this year is that there's really a newfound understanding of just how precarious our economic position is here in europe and i think that's coupled with the newfound dynamism we're seeing in germany and sort of this desire to invest we're similarly seeing i think in brussels and understanding that maybe we went a bit too far on some of these regulatory pushes.

49:46So I think you'll get at least a partial win here. Could there be a two-year pause? I don't know. I think maybe it's a shorter implementation period, quote unquote. But I think what will happen during some of that implementation period is I think some of the requirements will be watered down. And if not, the startup impact could be brutal. Now, the European Commission, they assess that only 5 % to 15 % of startups would be touched by the regs. But when surveying startups, they're saying that up to a third are saying they think it would be directly impacted. And that uncertainty in itself is massively driving outcomes negatively because uncertainty impacts behavior.

50:25And so one might ask, what's driving costs? Well, the AI Act is asking for a risk management system, a quality management system, more technical documentation requirements, some data government requirements. And all of this sounds sensible on the surface, but if it adds hundreds of thousands of euros of cost to startups early on before they've had any customers, that just slows down innovation and it gives Europe a real disadvantage compared to US and Chinese competitors. We can talk more about the sectors where we see this unfolding, but I'd love to hear Lomax take on the same. I don't think they're going to stop the clock on this.

51:07I think they're going to keep going. really i think it's a bit yeah i i think it's um i think it's a bit shocking what i find shocking is so that the act has already been passed right it's coming in it's coming in in phases over the next two three years big big deadline is is august what shocking was on the second debate they were supposed to deliver this code of conduct right the code of practice the code of practice is is if you're sitting there as a chief security chief information officer um trying to work out um or compliance compliance officer trying to work out how to actually implement these laws you need this code of practice and the eu is now delayed it till the end of the year so how the hell can you like put in place um new legislation and then say you're going to put out a code of practice to help companies actually comply with it and then you're seven eight months late and then you still crack on with implementing the legislation i think it's it's you fucking mad i don't know where these people get off um and this is this this kind of is like gdpr on steroids this thing you know you look at gdpr has cost like as i i think it's over overkill um and it costs startups thousands it costs medium enterprises tens of thousands hundreds of thousands and it costs big companies tens of millions there's this whole there's a whole industry of like regulatory consultants who have made a fortune off gdpr they're now just gonna like you know switch the hat and they're gonna make a fortune out of this ai um this ai act i think it's just crazy and then you look at the fines the fines on it a bit you know they're up to seven percent of global turnover i mean gdpr was a 4%.

52:30So this is nearly double what GDPR was. You know, Amazon was fined up to a billion three years ago. It's like these US people are just going to not give us the products we want. You know, like the users are going to suffer. So I think it's, I think the whole thing, and Mads is right, there is a bit more of a push now in Brussels, because they've realized that we need to actually, you know, not implement so much red tape. But there's a whole industry of people who are just incentivized to push out red tape. And I'm sorry, it's an absolute disgrace. I agree with most of what you've said. I would say we actually have form for some of this watering down.

53:08I mentioned, I don't know if you recall, earlier in the year, we were talking about the corporate sustainability due diligence directive, which was this flagship new Green Deal measure. And that's been watered down massively this year, where you increased the threshold for what size of companies need to report. You change the threshold for when reporting need to be made and how much needs to be made to make it less onerous for smaller companies. And I must say, I could see something similar happening here. I hope it will be because if not, it's really not great. It's a bit harder technically. Don't forget, this act has already been passed into law.

53:41This is not some like consultation in the run-up to a law. It's actually already in law. I mean, you know what I mean? So it's for the people who would die hard, die in the ditch. I want this to be enshrined as it was intended. It's harder. The bar is harder to fight those people. But yes, you're right. There is a growing cohort of people within the EU who are trying to cut down on these things, but I think they've got their work cut out. Well, let's assume, gents, that it happens. Let's assume this is all going ahead. Who's going to be affected? How is it going to affect us? What sectors? What do we need to look out for, Mads?

54:17so there's three specific places to look i would say is healthcare ai is you know a place that will be massively impacted because they'll have the double compliance of existing regulation but also the ai act which is because you know a lot of the tech would be dealing with sensitive data and dealing with sensitive data and sensitive ways around people's health would face a lot of scrutiny so that will you know really you know add to costs and slow down innovation for healthcare AI. The other one to focus on is financial AI, where you're already dealing with a lot of MIFID and GDPR rules, and you're going to have the AI rules, AI Act rules on top.

54:54And then the third one is around B2B SaaS. And we'll often say, look, we are maybe less impacted in a lot of B2B areas and a lot of verticals from some of the regulation you see in healthcare, for example. But many enterprise customers won't touch tools unless you can prove that you are compliant with the legislation. And so again, here it will lead to slow down. So as I said, I do hope that we can find a way to address this. It's not great. Doesn't this also stifle innovation in open source as well? Like aren't you just less incentivized to build open source? I mean, I guess. I think they're extra screwed, I think.

55:33I want to talk about Cloudflare. I don't know if you caught Matthew Prince at can last week. I was quite emotionally touched by his. He was on stage talking about the internet and how creativity is going to be crushed by AI and what he at Cloudflare and what they were going to do, the product they were going to release. You could argue in one hand, it was quite a self-serving, we've got this problem. I've got this product to serve it and solve it. But I think the intent is absolutely brilliant, clean and pure. But let me just break it down a little bit. So Matthew's insight was that the business model of the web is search, but AI is now eating that lunch and it's problematic.

56:17SEO is dead. Content creators are being absorbed, dissolved and dispersed by AI. You can't have a market without scarcity and you can't have the Internet as we know it without content creators. So we've got these two opposing forces. and we're in a bit of a death spiral. He also gave some numbers which I thought were quite telling. So 10 years ago when Google crawled one of your pages or one of your websites you get two page crawls per visitor. Six months ago Google was six to one, OpenAI was 250 to one, Anthropic was 6 ,000 to one. Now Google 18 pages per visitor, OpenAI 1 ,500 to one and Anthropic 60 ,000 to one.

56:57So creators and publishers are getting a lot less bang for buck. His answer, he wants Cloudflare to enable content creators to gatekeep and charge AI bots before they're allowed to scrape, which I think is just eminently sensible. Now, when you look behind the business, Cloudflare only own about 20 % of traffic, but they are the biggest player in the space. And it was an incredible watch. If you want to search it, Matthew Prince, Cloudflare, can lie in 2025. And if you just search that, you can watch him on stage and he talks about 20 minutes. So I guess the question for you, and maybe Lomax, you can kick this one off is, is this the beginning of a new gatekeeping revolution?

57:36Are we going to start to see how AI manages the web and how content creators can work on the web in a new way and monetize, do you think? I think, yeah, I think it could absolutely be the start of a gatekeeping revolution um but only if infra players like cloudflare are joined by publishers content delivery networks and regulators um what cloudflare's doing weirdly i think weirdly some of the ai companies are also signing up i think they get it is my sense i think they get it yeah and actually just having talked about regulation like i don't think fixing things through regulation or sometimes it works but in this case i don't think it works so you look for market-based solutions and i'm i think i think maybe this is actually could be could be the solution if you're an optimist about it right um and what they're doing is clearly you know flipping the web's default from free to crawl to to ask and pay first um so it's not too late the window is closing i think if we don't act now um you know the open web risks becoming a free training set for ai and with no incentive to create anything and it kind of reminds me a little bit of the napster spotify situation and maybe we're in the messy kind of middle phase before the new the new rules and the models settle in so yeah it's not too late for sure i think it's interesting um and good on good on this dude Yeah, I think so too.

58:46Mads, horse bolted or not? The horse is definitely bolted for foundation models. You know, OpenAI, Anthropik, Google, they've already trained on the open web. The future models, they need fresh data. That's really where the choke point is. But I think, paradoxically enough, I think the irony is that these types of rules will accelerate AI dominance. They don't slow it. because a paywall like this will help incumbents. They've already data mined the full internet. All they need is agreements with a few of the top publishers to get news. That's the only thing they don't have. And it's much easier for an open AI or an anthropic to afford to buy that than it is for a smaller developer.

59:31So I think what you're going to do is you're going to cement the dominance of the big players. You're going to have a two-tier system where you have the premium tier, which are these amazing US foundation models that we all use and think are incredible. And then you're going to have an underground tier of open source models that are trained on pirated data. We can all guess where they're going to come from. And they're also going to be very, very good. But I think the risk for Europe is we're going to be stuck between wanting to follow the rules, as we always do. We're going to pay for premium.

59:59China's going to train on everything. And I think this would pretty much be the nail in the coffin for any hope Europe has of developing a frontier AI model. You've just nailed European foundationals. Not that there was much happening anyway, but you've just absolutely, absolutely shut the gate. But there will be some new business models, right? So Lomax, what it feels like, let's say this is going to be the new paradigm, what new business models will come out? um yeah i think that therein lies an opportunity you know api first monetization licensing layers for ai training um infra level monetization um platform native monetization so platforms like substack will will keep creators behind paywalls where ai can't easily scrape so i think all of this enables those kind of things but you know they're all going to have to be tested in the usual way that new business models are right in the market so you know i like open open season And like long may that continue.

1:00:57And we will enter into a sort of new, with the whole of AI stepping back, we are in this big experimentation phase, you know, generally. So this is just part of that. I think it's super exciting. And I think he's going to make inroads is my personal take. And I think this is going to be a new swathe of opportunity for startups to build in this space around control and measurement and gatekeeping and all of these niche, very niche vertical AI applications. I think it's going to be super, super interesting to see. One thing also I want to talk about this week about AI was the, I don't know if you saw the Microsoft research study that pitted real world doctors against AI to see who perform best.

1:01:43They built a tool called the SD Bench, which was real world medical mystery cases from the New England Journal of Medicine. And then they put human doctors and AI together and see how they perform. Now, the results are not... I thought the space between was quite vast, but obviously everyone would expect AI to win, but it was quite different. So human doctors got the right diagnosis in 20 % of cases and AI got it right in over 80 % of cases and solved those cases with fewer resources and less money so lomax the end of doctors is my big bold statement for you yeah that's a bit too optimistic i think it's the it's the start we've already seen this is not new by the way i mean you know you know implementing software and or ai into into the medical field into into doctoring has it's not i mean remember ibm watson right you know ibm put five billion into into that project over the last 10 years and eventually shut it down.

1:02:38Yeah, exactly. So I think what it probably heralds is a continuation and a massive step change in the sort of doctor plus technology, doctor plus software, right? So the sort of tech enabled doctor. You know, I mean, this is interesting. It's good. The results are impressive. But don't forget, this is a retrospective trial, right? The gold standard for any kind of clinical trials is perspective. Yeah, they actually take place in the real world environment over patients as they come in on a forward-looking basis rather than taking a data set and looking backwards you go forward so you know if you want to get any of this implemented into health your health care systems it's regulated right you know highly regulated you need to run prospective trials those things cost tens of millions of dollars right especially at this scale um clearly audit auditing of decision making right you need the ability um to look through and what the explainability why decisions were made you haven't got that yet with with the models so i think that's going to be another thing to work on in theory there are there are also these cost claims where they're basically saying not only we're making better decisions we're also saving money by sending people to cheaper diagnostics etc i think in the real world that's got that's got more to be um uh more to be done but i think it's look it's it's part of a trend that we're seeing which is that doctors a bit like we use chat gpt in our day jobs it will be and lawyers using the same doctors will use more and more and and that will continue and there is an analogy here right if you think about if you look at what's happened in the medical field it's imaging so computer vision was used to look at images so ct scans pet scans um mri scans ultrasounds to actually people because of the ai computer vision is very good at looking at patterns and recognizing patterns there are a thousand fda approved algorithms for ai algorithms right for imaging right we've gone through that in the last six years do you know how many of those 1000 are AI only?

1:04:26One. No clue. One. All of one. So the remaining 999 is doctor plus AI. They make the decision together. You're the radiologist. You use the software. It's clinical decision support services. It's a huge industry. CDS, clinical decision support. That is what's happening here. Doctors are going to be using AI to support their decisions and it will no doubt be a great thing. It will choose costs. It will hopefully improve outcomes. But it's not you're not going to be walking into a robot at some point, maybe in 100 years time, this will happen and a robot will be doing everything for you. But certainly in the in the sort of near to midterm future, it's doctors plus technology.

1:05:05So I think it's great to have seen this, but we've still got a way to go. Mads, will it save the NHS? I think the NHS, as we've talked about, is facing a perfect storm. You've got a wait list of seven million people needing, you know, attention. And so we need a productivity breakthrough to drive that. We have had an announcement of£2 billion, kind of an AI fund to help drive some innovation. But we also know that the NHS is still suffering with IT infrastructure from the 1990s. We know that procurement timescales are quite long. And so this is not going to be an overnight thing. But I'd say from a startup perspective, where are the opportunities?

1:05:42There will be pick and shovel plays around infrastructure specifically for the NHS. There'll be lots of vertical opportunities for specific diseases and specific conditions. And then I think it's worth remembering that in Europe, we have a unique advantage in our healthcare systems, which is we have all these single payer data set, all these government owned data sets. That could be massively transformative in terms of developing next generation technology. So again, if we do it right, I think there's a lot of upside here. Wonderful. Yeah. Don't forget, who are the gatekeepers here, right? If you want to bring these new technologies to market, you have to go to the regulator, get it done.

1:06:16You then have to go through and integrate with all the existing software. So the existing software systems, the EHRs, the medical record systems, you have to go through basically the chief information officers, the hospitals. And who's the gatekeeper at the end? The doctor. You need the doctors to sign off and all of this stuff. So, you know, all this new medical software, like I don't think they're going to be voting as turkeys for Christmas quite yet. Left field thought for you, Gen Z doctors coming in are going to be much more AI friendly, technology friendly. So is there going to be a kind of a generational awareness and push for tech?

1:06:55It feels like that might be a factor. Same with lawyers, other knowledge workers. Yeah, yeah, yeah, for sure. 100%. Right, let's move on to deal of the week. Now, I just saw, this isn't deal of the week, but I just saw Clio acquired Vlex for a billion, which I thought was bloody brilliant. But your deal of the week, Lomax, what's happening? deal of the week is my deal so you know i'm talking my own book here but this is a portal biotech has just raised a 35 million dollar series a led by early birds and the nato nato innovation fund the 1 billion fund backed by the nato member countries um we did the seed round three years ago this is a protein sequencing company so they are um working on developing new technology using nanopore based technology to sequence proteins which um will make which will unlock further advances in diagnostics and therapies and also outside of healthcare in food and also in biosecurity, which is why the NATO Innovation Fund are interested in this.

1:07:50It's a good example of great technology or great research that came out of the University of Groningen in the Netherlands, married with great operators who actually came out of Oxford Nanopore. So Oxford Nanopore is a nanopore-based gene sequencing company in Oxford. So this is now operators spinning out from an That's a 2 billion, I think, market cap company. It's a good example of operators spinning out of a success story, marrying it with good research and building what hopefully will be the next Illumina. You know, in the last 20 years, we've seen huge growth in the human genome sequencing, right?

1:08:22And costs have come down from millions down to$100. Hopefully, you know, proteins is a much bigger space. There are 20 ,000 genes in the body. There's well over, you know, a million proteins that, you know, that need to be discovered, analyzed, et cetera. so this is um this is great and you know do we create another illumina which peaked at an 80 billion market cap in europe it's now down but it was up um uh i'm i'm very bullish on it so well done to the team there to andy and and congrats to um to harry at science creates who did precede seed and series a on that he effectively created the company with andy as an investor so um that's an amazing result for them so it's nice to a deal of the week this one of ours pretty selfish but I'm loving it.

1:09:04Loving your work. Loving it. It's a great company. Well, thank you very much, gentlemen. We will catch you all next week. Bye-bye. Bye-bye. Tear down this wall. It's more than just an alliance. This is a union of values. Let's start acting. Acting.