Public and private markets vie for gains from AI job disruption

{"text":[[{"start":4.55,"text":"Corporate chieftains tend to agree that AI will create enormous gains. But are those best reaped in public or in private? On Tuesday, Coinbase founder Brian Armstrong said his listed crypto exchange would cull 14 per cent of its workforce, shifting over to AI-driven processes. Its shares fell 2 per cent. Others have enjoyed a more enthusiastic response. Shares in Block rose by a fifth in February when the fintech, run by former Twitter boss Jack Dorsey, said that it was letting go of 40 per cent of its staff."}],[{"start":38.3,"text":"Meanwhile, in the private sphere, Long Lake said on Monday that it was buying the Global Business Travel Group, a listed business travel agency affiliated with American Express, for $6.3bn, in a bet that more automation will produce outsize returns. Long Lake is an acquisition vehicle backed by the Silicon Valley venture capital firm General Catalyst that is rolling up service-based companies ripe for the AI treatment. GBTG’s shareholders include Amex, Qatar Investment Authority, Expedia and Apollo Global Management. "}],[{"start":null,"text":"

"}],[{"start":72.94999999999999,"text":"Long Lake says that, with the arrival of AI, the once immutable trade-off between growth and profitability that has plagued software companies is no longer applicable, with far less spend on human engineers and lower price points bringing in new customers."}],[{"start":87.89999999999999,"text":"It is putting its money where its mouth is by paying a whopping 65 per cent premium for GBTG. The purchase price is rich considering GBTG shares had fallen 50 per cent from the moment the company went public four years ago by listing through a blank-cheque merger. "}],[{"start":105.39999999999999,"text":"For its part, the existing GBTG management was trying to quickly adapt to the AI age, shifting from humans to AI “agents” to handle customer tasks. This strategy, company said, could grow its gross margin as much as 2 percentage points per year for the next five years, taking it to nearly 70 per cent. In 2026, GBTG said it would generate just over $3bn in revenue, up a fifth from 2025, and “underlying” free cash flow of around $250mn. "}],[{"start":136.89999999999998,"text":"The worry for public market investors was that some AI-native travel agency would simply usurp legacy providers such as GBTG. Long Lake believes it can totally re-engineer the company before that disruption happens. "}],[{"start":150.7,"text":"Coinbase and Block, both unlikely to be taken over by private equity given their size, can’t be quite so speedy. They have to show results, quarter after quarter, that confirm that AI is doing what they say it will. As public companies, they also have to think about the cost of being another data point in a narrative about AI leading to mass redundancies. "}],[{"start":172.35,"text":"Private markets may indeed, for that reason, be a better place to make seismic changes. As Long Lake shows, buyers will need to pay up for the privilege of making them. Too high a merger premium, and the risk is that a buyer will have spent a sizeable chunk of its metaphorical AI dividend before the benefits have even arrived. "}],[{"start":199.85,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778045605_9507.mp3"}