Photo credit: Jonathan Jay
Talking to business entrepreneur JONATHAN JAY
DON’T bet your investment on artificial intelligence says one seasoned entrepreneur as AI company values soar to dizzying heights.
“AI looks to be the next ‘Tulip Fever’ or ‘DotCom Boom’ event, with a crash almost inevitable,” says Jonathan Jay, a company takeover specialist.
“Yes, AI will undoubtedly reshape how we all do business, but the smart investment capital is going non-digital rather than chasing the next software unicorn or AI-powered start-up.
“These investors want ‘un-mechanisable’ investments - established enterprises with physical infrastructure, skilled craftsmanship and trusted human relationships – because true investment longevity lies in buying businesses already at their mechanisation ceiling and still using and being known for the human touch.”
Jay is a serial entrepreneur and takeover guru who sold his first business in 1999, making more money in one day than in two and a half years running the operation. It opened his eyes to the opportunities of buying and selling companies – he has since bought and sold some 70.
Now aged 54 he also runs the UK-based investor mentoring organisation, Dealmakers, recently attracting 150 ambitious business people to a luxury seminar in Puerto Banus, Marbella.
He freely admits that his findings and advice on what firms his mentees should buy might run contrary to decades of thinking, but adds:
“Companies in software development, digital marketing, bookkeeping and data-processing used to attract buyers due to low overheads and apparent scalability, but are now threatened by AI's growing capabilities.
“So, smart investors are pivoting towards sectors whose services are rooted in the physical world.”
He suggested several major sectors that qualify: HVAC (heating, ventilation and air conditioning) whose skilled engineers are needed to service increasingly sophisticated buildings; specialist marine engineering firms maintaining Mediterranean superyachts – many of these being bespoke one-off vessels –; aviation ground handling and logistics; or healthcare where the human touch will become increasingly important as populations age.
And while everyday estate agency is largely done online, Jay still sees a niche for premium estate agency management, overseeing luxury residential portfolios and sales, which still rely upon trusted personal relationships and regular onsite inspection.
“Some of these may lack the heady allure of AI,” he says. “But they can deliver something increasingly prized by sophisticated investors: dependable, recurring cash flow by offering a product or service not replaceable by physical robots or AI or outsourced to China and the Far East.
“The further value of such companies is that they are best placed to upscale their own business, using their baked-in expertise that allows in-house training.
“This also makes them largely immune to would-be local competition, which can’t easily hire off the street for a start-up, especially in an era where governments have prioritised higher education only to create an over-qualified workforce whose degrees may be worthless in the face of AI.
“Meanwhile, the vocational and engineering skills of my ‘un-mechanisable’ companies, once acquired by young people on apprenticeships or college courses have been allowed to wither on the educational vine – a fact increasingly recognised by the UK government, for instance.