This is an AI Transcription. It’s pretty good, but please forgive any errors.

[00:00:00] Jonathan: Welcome to The Difference Engine, the show for tech founders, investors, and innovators.

Today's special guest, Hussain Kassai, is a young entrepreneur who traveled south from the cradle of enterprise computing, Manchester, where the world's first commercial computer was specced, to the so called dreaming spars of Oxford, our premier university, and ended up building a world beating AI company, only to exit it at the behest of investors.

in what was the biggest AI exit in the UK to date. Rather than enjoy the payoff from this record 650 million deal, it's come back for more. Little older, a lot wiser, somewhat wealthier, and surprisingly hungrier.

[00:00:46] Paul: You really are not going to want to miss this episode. It contains the most valuable set of lessons for entrepreneurs and funders that we've ever recorded.

We're going to look at the future for AI. from somebody who actually has been there and done that, and the future of European tech. Hussain Kassai, welcome to The Difference Engine. I have been looking forward to this episode for quite a while. Uh, Hussain and I, I had the pleasure of first meeting this gentleman on a stage at a VC, uh, Boulderton event a few years ago now.

Um, since then, Hussain, I understand, and I didn't know at the time, that you and I We schooled close to each other in Manchester, right? It sounds like it. Uh, I was in the south part and you were Victoria Park, I think. Um, and of course, Manchester is the birthplace of commercial computing and better or worse, Karl Marx, uh, and graphene and a bunch of useful stuff.

So it would be useful to start there. Could you just paint a little picture of like life in, you know, in the household back in Manchester before you kicked off this great journey?

[00:01:49] Husayn: Yeah, of course. So, We, uh, my dad's Iranian and my mom's English. So we moved from Iran to the UK when I turned 10. My mother was accused of being a spy.

She was an anchorwoman. She read English news in Iran. And that, that might sound surprising, but in Iran, almost half the population are accused of being a spy at one point or another. Anyway. She, she wasn't a spy is is the good news. Uh, or maybe she was, it's just a great block, . But anyhow, so, so we moved over to the UK when I was at 10.

My dad had to stay Iran for a while just to continue work. And, uh, we moved. So we had, we were two bedroom flat. Um, and, but there were six of us, so I've got five. Uh, there were, we were five siblings and it was a good experience in many ways. And that's like a complete change actually was loving life, but back in Iran, as you may know, Manchester is the rainiest city in England.

And I was just so used to being out and playing on the streets. It was quite odd for me. So I had to find new things and new passions and so forth. So I got into online gaming a little bit and I enjoyed that. Soon after, you know, it was a couple of years, uh, later in 2012 when my English improved a little bit.

So I was able to start my first sort of online business, which was selling Iranian music CDs on eBay and, uh, just working on one company after banks thereafter. So an experience that was like very different to what I was used to, but as, as, as with anything, you try to make the most of it.

[00:03:17] Paul: Brilliant. Well, I, you know, I've just listened to the meta story and how, um, Zuckerberg, uh, started coding early, uh, from gaming, and it's an analogy to that, and I just want to point out to our American listeners, it ain't just the Americans that can break, you know, nurture great talent from wherever it comes from.

We're really glad that you, you landed here, uh, indeed. Eventually,

[00:03:38] Jonathan: you, you went to Oxford to, to study economics and management, and In almost West Coast style, you founded Onfido when you were halfway through your degree. Um, I mean, how did you come up with the idea for the company and then decide to take the leap into the, into the world of big, bad commercial IT?

[00:03:58] Husayn: I got to experience this university life, uh, and quite quickly realized I enjoyed like just going to student societies a lot. And Oxford Entrepreneurs was, became my favorite one. I Learn all about like the world of entrepreneurship was the first time I'm from a family of teachers We really don't have anyone in business as such So I found it just a very exciting thing to be doing and I felt that this is much more of a natural thing That I would like to do and so at the same time I The problem of identity, it stuck with me since the age of 10.

So when I mentioned my parents moved and, um, they couldn't open the bank account at first and had to rent, uh, couldn't even rent easily, it became a question of verifying your identity online became, was a big problem and it was just felt like it wasn't solved. So at that point, I met my, my two co founders and we started to see that the future really will be taking a photo of your ID and your face and being able to verify yourself digitally.

There were many challenges making that work. Firstly, you need it. Tens of thousands of samples of ideas to build a machine learning or AI model on it. But we were just ignorant to all the difficulties and that's why that's why we got going.

[00:05:06] Jonathan: A little knowledge is a dangerous thing. So off you went. Um, and I understand that the original funding for the venture came through the university.

I mean, how did that happen? And, um, would it be a route you'd recommend to any aspiring? Oxford, uh, tech entrepreneur.

[00:05:24] Husayn: Sure. So it was a 12, this is a 2012, right? So things have definitely changed since, but this is, this was a 12, 000 pounds or 15, 000, um, invoice based investments. And those things don't exist anymore.

And not a 30 day invoice, a 90 day invoice, but, but you just take, take what you're given. And that was enough that that helped buy me three or so months. Uh, and I started to, essentially, I was the one working full time. One of my co founders was still at a bank, he had a mortgage, and my other co founder was still going through his sort of finals.

So for the first 18 months, it was primarily me, like, working hard, building away, and they were working whenever they could squeeze in, evenings and weekends. But we eventually got to our first few customers, and then we were able to raise, um, more funding.

[00:06:09] Jonathan: How did you go about finding that funding, and how did you make your decision about Who to accept the money from.

[00:06:14] Husayn: It wasn't easy. And your question was, would one recommend. You raised from like the university absolutely could, uh, and you should for me, I'm proud because that, um, Oxford, uh, check is one of the highest returns of any university outside of the U S I believe they've made a 320 X return. So 12, 000 pounds went in and they got more than 4 million back and that's being pumped startups.

So it is wonderful to. Raised from, from universities where you can, you need to ensure there's not many strings attached. Mine wasn't, I was fortunate, uh, just because you really need the freedom to be able to pivot and move and move fast. You don't want like layers of decision making outside of it. But outside of the university ecosystem at the time, it was mostly those who made angel investments were mostly former private equity types who had been geared for 50 years to be risk averse.

So not attuned to high risk sort of early stage investing. So it was only once after three months, I was like, Able to move to London and met with start a funding club where I raised a further 62, 000 pounds, but that was from London based angels whether the interesting things you brought

[00:07:23] Jonathan: up there was was was the attitude of ex private equity people Do you think there's any issue there with the fact that those private equity people may never have actually built a firm?

Yeah, spent their life handling money.

[00:07:35] Husayn: I've come to realize that now I think for early stage founders or those raising money a good question usually what an angel is How many investments have you made in the last 12 months? It's just, that's, that's a very, very strong sufficient, you want to qualify them, so to speak.

And nowadays you got gen AI, right? So before you meet with someone, you say meeting with someone was from this kind of industry. I'm an early stage founder. What are the five questions I should ask to see if there would potentially be a good investor and potentially be able to help me. And you, we didn't have these tools at the time.

So I, uh, your question on those prior equity, if you just need the money. Then, you know, so be it's the investors and an investor, but if you need investment and a help, you certainly want to optimize for the extent to which they're a practitioner in the U S uh, 60 percent of partners at VC firms are practitioners, operators, builders in one way or another in the UK.

Fewer than 10 percent are, which is in my view, the biggest difference between the U S and UK, it's not a funding difference or gap or anything like that. In my experience, it's, um, who is a builder and who isn't, and therefore who's able to actually help, uh, these companies grow, grow fast.

[00:08:40] Jonathan: I gather also by the time you.

Ended the investment journey with the exit, you were more than a little jaded, um, with the financing system.

[00:08:50] Husayn: I'm not sure if I was jaded as such. Like the fact of that matters, like without investment we would've never been able to take off. And I'm really pleased that we're, we, we, we great made a great return for, for, for the investors.

I do, uh, I do think, I look at my, um, poly competitors and poly other founders. And I just felt that we as a company at 2020, when I sort of left, we were at a hundred percent, um, uh, year on, well, excuse me. We were at 79 percent year on year growth. We're a hundred million in ARR, 74 percent gross margin, 8. 2 out of 10 cultural peak on score.

We were just about 520 people. And that kind of organization growing 79 percent year on year in the U S you'd have all investors, everyone saying, okay, well done. Let's go. Yeah, let's

[00:09:40] Paul: do the hammer down baby. Yeah,

[00:09:42] Husayn: let's go all the way when you're straddled with investors that Essentially are either have terms that they've agreed to like they have to return funds within five years or who've made heavy losses elsewhere for them, it's not a case of We can still go like 10 X from now.

It's okay. So, okay. They've got, they've generated 200 X return. Let's push for an exit. Uh, and it's, then it's not down to how well you're, you're doing as a company. It's how well or not. Well, the funds that are back to you are doing, which, which is, which is not great. That's why, um, with my new startup, I've raised, uh, mostly for like.

140 investors, but very small checks across the boards. And over time when I need to do latest age investing, it's going to be with funds that can go the whole way, which in today's world means 10 to 20 years, not two to five years

[00:10:30] Jonathan: in getting so many investors. So early on in, in the new venture, uh, you're not a little concerned that there, there may be a problem, uh, later on when you've got so many.

Different, um, attitudes to investor, to satisfy.

[00:10:45] Husayn: It's all comes down to, uh, expectations and essentially obligations. When an investor owns one or 2% of the company, they, they're happy. Usually just be kept informed, and that's it. It's normally if they have 10 or 20% and that board seat and so on, where there's, there's more obligations involved and that is needed and necessary at times.

And anyway, not necessarily against it. So in my circumstances, I was kind of, I knew what I needed to do. I didn't need the advice as such. I was fortunate to be able to get the advice without having to take it, take on investments. But I almost 90 percent of my investors in my new startup are my former investors.

And I was just very open with them saying, Hey, I'm doing a new thing. I'm almost clueless of what it is. I know that it's going to be about enterprise productivity. That's the problem I want to solve. I really don't know. And I know it's going to be AI focused. Um, but I don't know much, this is 2021 when I was just getting going.

Um, but I don't know much more than that. And, you know, this is a high risk, high return world just because I've done it once and by no means does that mean I'm going to do it again. So with your eyes wide open, if you want to do a check, I'd absolutely love for that. And I was very fortunate of that, that almost all of them.

It does

[00:11:49] Paul: sound like, um, there's some lessons from that journey. Um, let's play a little game of like what could have been though, because I appreciate the exit was the exit. Uh, look, let's, you know, it was a fabulous exit and, uh, you helped create wealth for many people in the UK and beyond. Um, from a category point of view, what Onfido does now is really.

I mean, like, you've got, um, lots of, of mandates where age and identity verification is. It's really required, you know, I'm thinking of here in the UK, digital passports, uh, which is in the news, uh, digital driving license just got mandated. Um, there's some unfortunate news about, um, checking that, um, you know, people are the age that they should be to buy knives, et cetera.

That category is now almost hotter than it was at the time you were leading it. Wouldn't, wouldn't you say?

[00:12:42] Husayn: Right. So back in 2012, it was bizarre because the industry was a credit bureau industry. Half the world's population are under banks and non banks, so they're not privy to like a credit file, so they can't access services.

And the other half, for the most part, a lot of that data is on the dark web anyway. So they're victims of identity theft. So there's no protection and it just offers, um, Um, not much access. So we were certain that the ways as a sort of a digital verification to take your offline identity online, but the early investors, not just for the first year for the first three or four years, they would say.

It sounds good, but we can't invest because you're expecting us to believe that two miracles will happen. The first miracle is a technological one. And you're saying machine, machine learning and computer vision is somehow going to be able to do a better job than the human eye at detecting whether an idea is fake or not.

And although we had the papers to show, Hey, machine learning, computer vision, like narrow AI is a big deal. It was all in theory. So, okay. Technological miracle, like too risky, not for us. The second miracle was even a tougher one. We were told the user behavior right now, when they want to access services.

It's all done behind the scenes. They check their credit files and they give them access or not. And you're expecting people, this is 2012, right, to take a photo of their passports and a selfie. Believe it or not, selfies in 2012 was still like relatively novel. And send it on an online app to a company that they've not seen.

And uh, so you want a technological miracle and a behavioral miracle. It's too risky. We don't, we can't do this. And uh, that's sort of a mindset of 2012. It was like a fine and fair thing to say. But, um, things move quite quickly in this form of that on, on demand and untrust marketplaces came about. So it became normal for you to share your house or your car, like a blah, blah car, then on demand marketplaces, and then the rise of FinTech.

So we were very lucky to be at the right time in the right place and just navigating this place. And we were also lucky that. We basically didn't have any competitors, we were the only ones trying this in a proper sense. So we had a first, uh, mover advantage then, but we were able to work really hard to basically build out the best models and the best technology so that when it became the de facto way to do it, we, we sort of had the best model.

I

[00:14:45] Paul: love the fact that you had the vision, right? Like, okay, you call them miracles, but clearly you bet on the miracles, right? You saw. What was changing? You saw this category create before your eyes.

[00:14:57] Husayn: And this is a problem that goes back to, sort of, uh, pitching to those, maybe just from a narrow experience background, be it finance or just, just the city.

And, uh, I can tell you, like, from Manchester, when you do ID checks, it's not, like, done behind the scenes. They ask you to pick up your driving license and pick up your paper documents, go and queue up in the cold. Line up and then prove it in person. It's far more painful It's not like i'll be if you've got a very thick credit profile The bank will do all the work behind the scenes but for the majority it's like that's not the case It's a very very painful process So in my head I was like am I going to take 20 seconds and maybe take a risk taking a photo of my password?

My head said online if it's a trusted service When I can do online banking, for instance, or I can share a car with someone, I'm not going to have a nanny come to my house before I ensure that they're verified. So, or, uh, am I, am I going to basically go without those services? And am I going to basically go and do all this manually and offline?

So we were convinced of it, but it was a case of convincing. You have the

[00:15:51] Paul: vision, you figured out the problem. You have a point of view about how to solve it. It doesn't resonate at first. Over time, though clearly it does. Can you talk about how it felt when people start to see it your way?

[00:16:05] Husayn: There was a few moments, but one was in late 2016 when it was one of the large five banks in the UK called for a meeting with us in person and it was, they wanted us to meet basically the same week.

So we've been discussing with that bank for about two years on and off, saying, Hey, you know, whenever you wanna do digital verification, online identity, please get in touch. When we arrived at that meeting, we didn't expect it, but it was quite senior people around the table. And I just, just asked, Hey, can I just understand like, what is the urgency?

What, what, what, why now? And why so quickly? And they responded saying the latest cohort of students that had just signed up that, that semester to go to university, the signups, signups to that, that this traditional bank has gone off a cliff. And when they interviewed the students and asked, why aren't you coming into our banks to open bank accounts?

The response was, why on earth would we? We could do it on an app. And so we know that you're behind all these online banks. So therefore we want it and talk us through how that works. I think it can happen that quickly. And we saw something very similar during COVID. During COVID, we had a large pipeline of banks that had like a 12 month process to like on board.

Uh, and some of them were able to integrate and go live within 12 days during COVID. Given, given that when it became like a number one priority. So those were very much a sort of, um, eye opening moment.

[00:17:17] Paul: Yeah. Amazing. Amazing. When it comes to fruition, I'm gonna Jonathan, you want to you want to take the journey on a little bit?

[00:17:24] Jonathan: Yeah. So I just wanted to go on to the next thing, which is often as we've We've talked about, you know, in, in musical circles and, and, and, and coming from Manchester, you'd be very familiar with some, uh, some great bands and some musicians is that, uh, particularly the stone roses, I think in this case, I thought you were going

[00:17:42] Paul: to go Oasis on that Jono, but okay.

[00:17:45] Husayn: I thought you were going to say sugar babes, but yeah. I think they were led by a scouse. Mancunians think

[00:17:51] Paul: of them as scouses, but one of them I believe is Mancunian, actually.

[00:17:55] Husayn: Yeah, they started out in Burnage, a neighborhood in Manchester, but yeah. Did they

[00:17:58] Jonathan: really? Well, sugar babes are from Burnage as well.

I'm going to take it. We need to brush up on our Burnage history, I think. Um, so, you know, some people talk about, you know, musicians, that they, you know, they have almost their entire lives before they Publish their first album and their whole life is put into that album And then they really really struggle to write the next one because they don't have that to inform them.

All they have is a sudden experience of becoming successful You know, it's known as the difficult second album and it can occur in tech as well. And So I wanted to talk here Hussain about your new company Quench You mentioned completely candidly, um, some time ago, um, when we asked you about what your new venture does, uh, you said, uh, we don't know yet.

Absolutely. Love that. Well, Avicii or other investors might find that absolutely horrific. We just love that honesty. You know, if you were an outsider, how would you react to this sort of unconventional response?

[00:19:07] Husayn: It depends if the investor knows what they're getting in for. Most investors, at least those who have some experience, would recognize early stage is really down to like a team and a vision and it's like quite broad and they don't look at pivots as like a sign of weakness.

They actually look, they celebrate it. If there's a good reason for it. In fact, we have a runway. We want you to pivot as often as you need to, to find product market fit. Um, so with that, obviously you can't say that when you're post product market fit or at scale and post product market fit you can't really, you have to have a very clear plan and at the scale you have to be, the numbers should, should be able to basically lead on a, on a pitch.

But I was open like, Hey, this is early stage. Uh, and we are pre product market fits. I've got a few clear ideas of what I'm going to. Experiment with them on my hypothesis, but I've got absolutely no evidence. So what you're funding is for me to run experiments, not for me to bring back any revenue. So I just want to set your expectations that I have a strong feeling that there's going to be significant revenue here, but I can't guarantee it.

So this is very different from my pitch to you two or three years ago when I was raising for on Fido, where I could tell you like you put in a dollar, you're going to get a lot back. Uh, and that is so not, it's not just an investor. Mindset that needs to shift, but the founder mindset has to shift you. I left a scale up where I was constantly delegating.

It was all about market share, all the way back down to like a day zero pre-product market fit, which you don't delegate, you as a founder should be doing on the customer calls. I do the payroll, for instance. And you also are, uh, you, you really shouldn't be scaling like you keep a small team, eight to 12.

You prove out things and then you slowly take it through that journey again. I just, I've just seen founders come out of a scale up, raise large rounds, grow big teams and actually are not to, in some instances don't even have put a market fit

[00:20:53] Jonathan: for the benefit of the listeners. And can you explain the problem that you're trying to solve with quench AI?

And who has that problem?

[00:21:01] Husayn: So at a high level, my experience out on Fido, which is in many ways. My also my first job Was that after the first one or two hundred people that we hired I felt that productivity started to go down And this is not a function of um as a company. We're performing relatively well Um, but I just saw that in other companies in other Founders said the same, investors said the same.

And it was sort of taken for granted that, that this happens. And I felt that that is odd, like surely there are ways for us to be able to effectively help productivity improve as we scale. Uh, so that's the essence of it. And we spent a good 10 years. Using narrow AI or computer vision machine learning to automate the process of verifying something quite complex.

Is this ID fake? And is a facial biometric match that? So seeing that firsthand, we went from like 0 percent automation rate to 10 percent to 20 percent to 50 percent and then 90 percent and so on. I always figured as AI develops, we ought to be able to automate other tasks and hopefully much more simple tasks and tasks that could be.

Across all the other daily activities. If we've cracked this very difficult one, in my head, we ought to be able to crack most of the other tasks. So then it became, the vision is to help organizations improve productivity by deploying AI in those organizations. Now that's called AI agents. by deploying AI agents to improve organizational productivity.

And that's what we deploy and deliver today. So we essentially are deploying AI agents into organizations to automate tasks at level one, agents level two and level three agents.

[00:22:31] Jonathan: That sounds like an enormous total addressable market. I mean, is that the case?

[00:22:36] Husayn: Yes. Uh, in some ways, uh, the global economy is around 100 trillion of which 60 of that 60 trillion is, is labor workforce and about 15 trillion is technology, I suspect in the next decade or so that will rebalance.

So a great to show every technology. And a lower share will be labor. That's going to have massive societal consequences, and that's part of the reason why I'm involved with the London AI Hub, so that there's responsible growth, and reconsideration of policy of redistribution, inequality, and so forth. At a micro company level, um, some of the tasks that we carry out on a daily basis, are slowly going to be automated away, uh, by AI agents that will ultimately significantly help, um, productivity.

[00:23:18] Paul: We really need that. Please sort out the calendar, uh, appointment setting. I would love that. But thank you very much for like staying in the UK. I have to say, like, you must've been tempted. There must've been people trying to take you to the sunnier climbs. You mentioned it's rainy in Manchester. It's not too bright in London.

Uh, we're all in West London today too. You've, I'm sure you've had offers and I, and I think the London AI Hub, um, benefits, we're really grateful that, that you've actually decided to, to, to stay with us. Could you give us a flavor, you know, like the team talent, what you see here, what, what's appealing about London because, you know, so many.

Uh, of our rivals and now with Mr. Trump in the States are, you know, banging the drum for the States. And, and, and you're here. I mean, what's good.

[00:24:00] Husayn: I think London is significantly underrated. And I think part of strategy is to see value where others don't see it. So I like, I mean, it's, it's unfortunate. I wish they would stop, but as a healthy number of founders often who have left the UK who are like bashing the UK, um, you're right.

That's. I, I, I don't see that. I don't share that perspective. I actually, as I said, I think London is significantly underrated. I built teams around seven countries. We had a large team in San Francisco and a large team in New Mexico. Um, and one in New York. So the question becomes, where is the talent and where can you hire the talent to build in a special company, a special product?

And in this competitive world, you really have to have a product that people love, not like, but love. In my mind, that's very clearly London. Amongst the top three AI capitals of the world in terms of like number of talents and funding and so on, San Francisco is currently seen as the number one. But in my head, I've tried to hire in San Francisco, unless you're a metal or Google, you really aren't able to hire.

And when you do, they're not going to stay for more than a year. And how can you build a special product that people love? And those sort of competitive circumstances that not just competitive, it's not really competitive because I can't compete with that. But in London, I can hire just like we did on Fido, uh, from across Europe and beyond the world's best AI talent, build the best products and, and essentially go out and compete in the U S.

So we're going to have a, uh, my COO right now is, is in New York. We're building out a New York grow to market team, like sales and marketing and so on. But I'm very clear that London is certainly if you're building an AI company. It should be where you call home and that it is still underrated and I'm as a selfish if I put my selfish founder cap on I want others to think that it's not good because that leaves few competitors here for me to let's just tell them it's

[00:25:51] Paul: all still happening in San Francisco.

It's fine. So, um, the IT industry itself is, is, um, pretty bad at solving its own IT. Skill shortages, right? Um, and, um, again, I see with you, I'm talking about you, you hinted at agentic there, right? So this is the new category that everyone's trying to force all the companies into, and you're taking it, it would seem to me to another level agent, agent, one, two, three level, et cetera.

I mean, does it feel to you like you're, we're at the start of a, an emerging category yet to be defined like it was on Fido?

[00:26:24] Husayn: Uh, yeah, I suspect agentic across different categories, but like workforce agentic, certainly. And, uh, you talk about a lack of investment in like skill, skilling people. I'm, I'm, I agree.

And that's really unfortunate. It's like when I came, when I was 10 years old, that was during the education, education, education era, right? I was given milk during lunchtime and I had, um, Mrs. Salvatara, she'd spend an hour. Uh, a day with me and my younger brother and two others to help us fine tune our English.

And then, uh, whenever I needed any sort of assistance, it was, I should never can recall a time where I needed a book or I needed some help. We're a working class poor family, but I just never went without. When I went to college, I got 30 pounds a week on EMA and so on. And so I was at every opportunity given a chance to really upscale and upscale to a very high standard.

I later got a bursary and a grant to go to Oxford and like. Got, got surrounded by world leading, like, it makes you proud

[00:27:20] Paul: just, just hearing it, right?

[00:27:21] Husayn: One, one, so 100%. So now when all of these are being cut so significantly, you've got half a million kids living in poverty, which means often they'll go hungry.

Like they're not going to go home and think, okay, how can I go and experiment with AI? Or how can I upskill? Right. They're thinking like, how do I get access to the internet? So in that setting, I know that startups and scale ups are tasked with upskilling. Uh, workers. That is correct. But we are at such a competitive, intense, time sensitive, uh, part of the sharp edge of the industry.

We don't really have time to take five or 10 someone. We really need to, and we only hire those who have kind of gone through that skilling journey. We tend to hire them and then they have to like, the learning curve is there and they have to like really run fast, which really means you have to have an top educational establishment, like an education education view that doesn't write off half the population or more, but that starts the educating and really investing in it from the very, very early stage.

And my problem with the, a lot of the things that are misunderstood about AI agents, there's a lot of rhetoric around AGI from the big tech folk because They, that's what they say to raise more money and a lot of talk, AI agents are going to automate your whole workforce. You're going to have five people.

You're going to build a unicorn. Like these people haven't built AI models. They don't know how it works in my view, to a large extent. If you assume that AI agents are going to automate the whole workforce, then you have no incentive in investing in the future workforce. I'm in my firm view. That is not what's going to happen.

You're going to need a very wide midst to high skilled, um, worker, uh, for workforce to be able to help AI models be deployed. And the UK is really well primed to do that. And it's not too late. It absolutely can take the lead position.

[00:29:08] Paul: I really like the vision.

[00:29:10] Husayn: So there's, there's a lot, there's a lot to be done in that revolution.

Helped propel the UK to be at the forefront of technology like globally that this AI revolution can help us do the same We're in sort of six years of GDP per capita Decline in growth, right? Things are really bad So I like the fact that startups are seen and like supported and championed and like that they're gonna somehow rescue the economy It's not really gonna happen But what is really needed as proper policy is to go and invest in the whole workforce.

And that starts with education for starting from an early stage. For the

[00:29:42] Jonathan: now, at the moment, I mean, you, as we mentioned earlier on, you are working with the, the much revamped tech nation, which is now part of founders forum and tech space to create that sort of London AI hub, something which will be truly independent of big tech players like Microsoft and Google.

Um, Can you please share a vision of what this is going to look like and you know, how will it help create the category leaders of tomorrow out of the UK?

[00:30:09] Husayn: Sure. So I, it's mostly came out of frustration and that we, there's a misunderstanding of AI for the most part, where there is talk of AI. It's often comes with the agenda of a specific organization.

So for me, it was a question of, uh, level 39. You'll remember really well during FinTech, right? FinTech was essentially online financial services. We should probably

[00:30:32] Paul: explain what level 39 was. It was an incubator for the FinTech, uh, companies with the money from, um, some of the big financial institutions, but like a hothouse of, um, innovation.

Yeah, I don't know what happened to it now. You probably have better view on it than me.

[00:30:48] Husayn: Exactly. So level 39 was, um, in the early stage of fintech where finance went online. And one of the first few companies offering those services basically exploited people. So one guy came and really exploited payday lending.

The regulator is sort of like shutting everything down. They shut them down as they should have, but they came in and said, let's understand this. Let's let's understand it. And therefore we can regulate it so that we ensure customers have Great access to financial services and yet unexploited level 39 brought together regulators, industry companies, tech companies, and reg techs, which like us, like a supplier as on Fido.

And I just, I saw that and lived through it. And I saw that this helped create the financial conduct authority for really great. Uh, regulation, which then led us to become the financial capital of the world in terms of fintech. So that's a

[00:31:31] Paul: great point.

[00:31:32] Husayn: That's how you have revolution of others. I see the problem with AI as being the same, like in the U S you have this thing around, let's just deregulate.

And that's like, so risky. That's going to harm growth. It's not going to help growth. Uh, and then you'll have, so you need a balanced approach and. The purpose with the London AI Hub, which with Morantix, who are out in Berlin, have built an excellent AI center. And as you mentioned, sort of a tech nation or part of the Founders Forum group.

It's having the three sort of parts to it. It's essentially a neutral space that is partly neutral of big tech, which they will be involved and they'll come to events and so forth. But it also crucially means academics and policymakers and others can come and have very deep and serious discussions. And learn from each other just so that we get about having regulation that is effective.

And for the first time in a long time, in my view, academics hold a lot of power because they're at the cutting edge of building these models. And they're able to therefore decide who are they going to give their IP and expertise to? Is it going to be like some, some big techs or is it going to be for, for more public good?

And It says the time is right and that's why we're so pleased that it launched and we're just signing up companies to come to have desk space there. We're hosting events every fortnight and it's absolutely designed to be both neutral and independent. So that's the wider community, including policymakers, regulators, academics to come learn and ideally share with others their views.

[00:32:56] Jonathan: And that's interesting that, uh, you know, in the last five minutes, you seem to have fairly convincingly made the case that, uh, regulation can actually be an accelerator if you get it right.

[00:33:06] Husayn: I don't see an alternative. I don't see an alternative. We, we came across this in, um, 2017, like we built our facial biometric products ourselves.

And this, we really couldn't compete with face plus plus, which is a Chinese version. A Chinese version is able to train on over a billion people with almost no regulation. So what Obviously, technologically, we can't compete with that, um, and that it sort of was, uh, basically, that that's what it was. So it's not, what we then realized though, was that in the absence of regulation, things will start to crumble and break.

And as a result, we all do better. We should be a case of what is the good regulation that helps lift everyone up, as opposed to poor regulation that doesn't. So I will assure you, if I would bet anything, if Wanga wasn't properly regulated, and if they were, didn't stop exploiting people, that they As they were doing, there would never be a fintech industry fintech would be associated with exploitation of people and and no one would get funding, no one would use our services, and that fintech wouldn't be able to contribute the way it has, especially to the UK.

[00:34:11] Jonathan: So we should actually, uh, in the end, be glad that we had Errol Damerlin and Wonga. Because it actually created the environment for success in the end.

[00:34:20] Husayn: Yeah. So they, they, they broke things, which initiated a correction. Now, sometimes if you break things in AI, it can be very, very much more consequential. We screwed up social media.

We let social media get out of hand. It really screwed with society, had significant consequences. And even now it's not properly regulated. And a little bit of regulation is actually backfired. So, um, it's an example where we really screwed it up. I mean, not just democracies. We screwed up with kids too.

There's now so much evidence of, you know, suicide rates, anxiety, and so forth. So the hope is with AI, it will be more of a fintech UK example, not a social media example, where regulation can come and sort it out.

[00:34:58] Jonathan: And just something specific on your opinion here. I mean, as a boy from Manchester, we're interested in one of the biggest Policy research groups in this area exists.

You know, how, how do we think that we can ensure that the economic benefits of a strong AI sector aren't just realized in London and the Southeast?

[00:35:18] Husayn: The way that everything is structured is this, it's just like the way it's structured is going to guarantee that where there is power and knowledge and access to capital, that is where structurally is going to benefit.

So it's safe to say. London will significantly grow in influence and power. Uh, so the only way out of that is to heavily invest in the rest of the country in education and infrastructure. And these are not three to five year cycle investments, the 30 to 50 year cycle investments. So in my head, that's the absolute only way to do it.

And we've neglected it for far too long. And we've seen some of the consequences of that. The U S has neglected that. The rust belt have been neglected, uh, Detroit and places like that have been neglected from the last wave of automation, which is sort of the, some of the root causes of all the frustrations that the working class now have today, we, there's time to ensure we don't get that to the same extent here in the UK, but long term investments is in my mind, the only way, but AI can certainly come and help, um, automate, you know, if you want, if you want to go and access sort of your healthcare service or a dentist, I believe that if I'm, if I'm not incorrect, 90 percent of new patients for a dental practice now are in a waiting list or can't access dental services.

So AI can automate some of the work so that a nurse on a ward can help give more patient care as opposed to filling out paper forms or a doctor and others, or automation of like calendar meetings, appointments, rescheduling, and so on, to drive some efficiency so that there's more care given. There's certainly scope for that.

But these are quick wins and certainly worth doing. But the bigger one is. Let's just start properly investing again and across the country

[00:36:57] Jonathan: on that subject. Um, it seems to become really popular to, um, you know, to, to bash the UK and to bash Europe in terms of, um, tech developments, uh, and, and leadership.

And, um, you know, some people sort of scoff at the idea of merry old England producing category defining tech. You've, you've, you've proven that it can be done.

[00:37:20] Husayn: I would bet very, very heavily. That the best days for Europe are ahead, and this is in the next 10 to 20 years. I would not have said this two years ago.

And two years ago I would have said, like, this is basically game over. Um, so let's, let's, let's move to the U. S. And there's a fundamental difference. And that is Historically, if you want to build a unicorn, you need hundreds of millions of dollars in investment, and you need to go to the land of milk and honey for that investment being the US.

I will say now that because of primarily Gen AI in particular, I have founder friends who are at university or just left, they're building special things with teams of five. And they're doing so with a few hundred thousand dollars of investment, not, not millions. And that means they don't need as much capital.

And that means the U S loses his advantage. And therefore it becomes a case of talents. Where do we go in countries where they properly invest in the talent and the broad sense talent is randomly distributed. As you, as you know, you know, you can have people who are amazing at music, sports, or like let's call it AI, uh, engineering, whatever it may be.

And therefore you have to invest in the whole population to ensure everyone flourishes. So with that said, if I were to sort of summarize, if it's in a scenario where companies need hundreds of millions to become category leaders globally, then the US will win. But if it turns out that the next wave of companies can get there with tens of millions in investments, and they don't need hundreds of millions anymore.

Europe is absolutely where you want to place your bet because it's got access to an international market. The Chinese don't and it's got access to a really relatively good population that have mostly been had good investment in education. The U. S. don't. The U. S. education system, it really is if you're fortunate enough to be privileged financially, you get a good education, otherwise you really don't.

So in that sense, Europe is where you want to sort of place your bets on over, over long term.

[00:39:07] Paul: Hallelujah. Let's finish on that, on that really positive note. I mean, we are just so grateful that you've decided to roll the dice again. And do that, uh, in our hometown. Um, some of the points here I think are, you know, worth taking not just for the founders and funders that listen to us, but really for, um, you know, legislators and, and, and government governments.

Um, and, you know, thank you so much for spending that time with us. We really look forward to what Quench. And you can bring to us, uh, we're ready and waiting.

[00:39:38] Husayn: It's really been great. It's been great to be on.

[00:39:43] Paul: Thank you so much for listening to this episode of The Difference Engine. We think it was pretty special. To find out more about Hussein and his journey in AI, you can check out his new venture at quench. ai. He's also part of the London AI Hub, and the links for both of those are in the show notes. Find out more about us just go to the show notes or go to www. becategorical. com