TECHNOLOGY FOR THE PACE OF CHANGE

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[LANCE BRAUNSTEIN]

So, I'm curious on ChatGPT and more generally OpenAI, the interest is spreading like wildfire here like people are thinking about every possible permutation of how to apply it to our investment lifecycle or operations or compliance, day to day technical operations. How do you get your arms around the control framework? How are you thinking about harnessing that innovation and all the coolness of generative AI, but doing it in a way that is controlled and not spitting out authoritative answers that are wrong and not having anybody check that?

[JASON WILD]

I think it's one of the trillion-dollar questions for sure, Lance.

And right to the easy one. But, I think you're right. I think it's a very interesting moment. I think when you look at artificial intelligence, it's nothing new. You know, for example, in some senses it's nothing new. Ginni Rometty, the former Chairman and CEO of IBM, actually went to Northwestern and graduated with an artificial intelligence programing degree in the 1970s.

So, I think what's interesting about artificial intelligence is this moment right now, how visible it is in terms of the potential applications to our everyday life. So, ChatGPT actually passed 100 million users in less than 2 months.

[LANCE BRAUNSTEIN]

Fastest growing.

[JASON WILD]

Second, fastest. After Pokemon Go, which bested it. It only took a month for Pokemon Go to get to 100 million users.

It took GPT two months. TikTok needed nine months.

[LANCE BRAUNSTEIN]

Is that right?

[JASON WILD]

Yes, it did. So, slackers, right? You know, what took them so long? And so, I think it is a very interesting moment that's been building for some decades. And I personally believe that in a few years, everyone is going to have some form of copilot, nurses, doctors, analysts, accountants, professors, everyone is going to have some form of intelligent shadow.

Our almost best friend, kind of, from high school. And I think in every craft and every profession, it's going to raise the bar of quality and the standard of what we expect. And to your question, I think specifically about, how do you control that? I think the biggest question that I have, and we have, and Microsoft, is obviously the ethics and where this is going is getting closer and closer to human values.

Well, who determines what those human values are? There are no standards, bodies or ethics bodies that exist right now as a mechanism to kind of put this in place. So, we're working very, very closely with our partners, with our customers. And what I'll say is three things. Number one is your data is your data. So, these models are incredible and I think the world is starting to see what the potential is. But any relationship that we have with our customers and with our partners, number one, it's your data. And these models, you know, that are getting smarter by the second and learning a lot. I think the second thing is, is anything that is your data that interacts with these models and the training that you're providing is really your responsibility and you really, really own it.

So, I think how do we make sure that the right controls are in place? It really depends on the context of what you're operating. And I think if there's anything that we learned before COVID and during COVID is frankly, ethics are no longer optional. And one of the reasons that we were excited about the partnership between Microsoft and BlackRock and having this conversation is many, many years ago, I think we connected, and we connected very deeply is values driven, purpose centric organizations. And I think the importance of whatever tool, and this is just the latest tool and I think it's mind blowing the possibilities in terms of the applications. But like any tool, it's really important to understand - okay, how do we apply this tool in the context of what's important to us and our values? And I think it's up to us to start to figure out and we're just very, very early days in some of this. And I think it's an exciting moment.

And like anything that's new and I love history and you look across human history and things that were kind of new, it can frighten and scare people. I remember reading, you know, very recently, two French brothers in 1899 showed a motion picture of a moving train on the wall of a cafe in Paris. And what happened? A bunch of the customers just like started screaming and ran out of the cafe because they had never seen this before and they didn't know what it was. And they thought literally a train was like busting through the wall. So, it's good that we have a little bit of natural fear to understand that this is a tool and like any tool, it can be very powerful, and it can create a lot of good for us in the world. But at the same time, like any tool, it can be used for harm.

So, I think we're very much at the beginning of this and thinking very, very deeply, but at least know from Microsoft that we're going to lead with ethics and it's always going to be about ethics and how are we actually using this and trying to be as thoughtful and inclusive about the design and implementation of this sort of technology.

[LANCE BRAUNSTEIN]

Yeah, I think we are obviously a purpose driven organization and I do think that is the basis for a lot of our partnership. I love the idea of a copilot, so I love the notion that like this doesn't go and make decisions and drive processes on its own. You have a human hybrid, human-AI hybrid that very much is how you operate. I wonder if people sort of get that notion or if people are just going to relinquish control and like type in a question and get an answer. And that's the authoritative answer. I wonder, you know, from a societal perspective, if people will sort of be more controlled.

Certainly, as we think about AI from a BlackRock perspective, and an investment lifecycle perspective, we are thinking deeply about what are the control frameworks and how does this operate more in the copilot paradigm than in the spit out the authoritative answer and that's my investment decision.

[JASON WILD]

Yes. And I think that's great. And we applaud BlackRock in taking that leadership position and you know, one of the things that you made me think of Lance, is over the years, I'm sure we've all heard of, data driven decisions and we would talk about that even before the advent of AI and AI going mainstream. One of the things that, you know, we like to talk about is data informed, because if you think about it, data driven, it almost sends the wrong message to people and I think you could say even within the context of this conversation around artificial intelligence and social media, that if its data driven, it kind of means that the data or the machine or the bot is also making the decisions.

[LANCE BRAUNSTEIN]

Is driving, right?

[JASON WILD]

Yeah, is driving, is leading and making the decisions. So, it's subtle language is very, very important. But data informed I think gets to the core a lot of what you're talking about, which is the importance of the humans being in the loop and the right humans ensuring that this is aligned with the values of the organization or whatever it is that we're going off and trying to create an impact in terms of the outcomes.

[LANCE BRAUNSTEIN]

Yeah, I mean the analog there is when I'm driving, I have speedometer or I have a tachometer or I have a bunch of instrument clusters that inform me, that provide data so that I could drive safely and responsibly, but ultimately, the car is not making its own decisions. Now, autonomous driving takes that to a next level and relinquishing that control, that becomes a question.

So, one thought on the talent front is, as we make more data driven decisions and there are more tools and more powerful tools to do that, do you see like tech IQ and being more technical across different professions as being important, because that is something BlackRock has been emphasizing for years. this notion of the citizen developer. So, no matter which part of the organization you're in, you understand data, you understand data visualization, you understand how to do basic coding.

[JASON WILD]

Yeah, we definitely think that that's important. I think I'd say three things around what skills are going to become more and more important in this world that we're living in right now. I think you mentioned the developers.

We, as organizations and leaders of organizations really feel strongly that developers are a big part of the creativity, of co-creating the future of what we're trying to do and the value that we want to create with our customers. But we want to democratize this and really recognize that we live in a world where, frankly, 14-year-olds are inventing million dollar businesses from their bedroom.

So, on the one hand, in terms of the source of creativity and ideas, there is innovation all around us. So, the more that we can kind of lower the barriers and enable people and empower people, especially ones from uncommon pools of talent, to be able to jump onto this movement that we're trying to create. And through the advent of no code, low code tools, that's something that can be really, really powerful.

So, for example, GitHub’s copilot tool just surpassed 1 million users, which is pretty amazing for an esoteric developer tool. And Andrej Karpathy, who was the chief architect of autopilot for Tesla has now publicly you know talked about on Twitter how GitHub copilot has been a game changer for him to be able to get to another level of output and quality of code but do it much more efficiently and bring in new skills and members of a team that he wouldn't have dreamt of before. So, it's taking super developers and their ability to a whole other level. So that's one side.

Now, the second thing you talked about is like democratizing it and really getting to like a foundational level of understanding and knowledge in terms of technical IQ. I think that that

becomes really, really important as well, to be able to engage in kind of cross-functional teams, work on scrum teams, be much more agile.

I think what's different about this day and age is we have multiple technologies that are disrupting the world. When you look at previous industrial revolutions, it was really one technology, steam, electricity, then the Internet. Today we have 5G, artificial intelligence, machine learning, blockchain, on and on and on and they're all feeding off of each other. So, when I engage with lots of organizations and leaders, sure, the what becomes really important, but how you innovate and the culture of how you come together with speed and adaptability becomes super important.

So, it's hard to do that without kind of a social contract of how do we engage together, what are the things that are important to us, the language that we use and inclusive of understanding a set of tools in the toolkit that make it easier for creative people, technical people and business strategists to come together and form as one team aligned around the customer outcomes that you're trying to deliver. And so that's why I think it's absolutely important to have this foundational knowledge.

Now, the third and last thing I'll say is I think many organizations, understandably over the years have attracted talent that is decidedly left brain and really strong at identifying performance gaps or analyzing a bunch of data and information through a microscope and cutting it with an axe. A million different ways to kind of see the world differently and make sense of it and that's great. But I think increasingly we're seeing the importance of activating the right side of our brain as well and being creative problem solvers. This whole notion of design thinking, some people say, oh, we've got that, it's come and gone, design thinking. But I think the problem is kind of in the jargon, what will be timeless is creative problem solving.

In this world we're always going to have stubborn, really gnarly problems. And I think more and more that we have people who are really good at understanding, crafting the right question. Sometimes questions lead to deeper questions and understanding of the kind of tools and capabilities that we have around us to be able to more deeply understand the human value that we're unlocking in this and really being ambidextrous teams who are not only left brain but right brain as well. And I think this was happening in the world even before GPT and all of this generative AI, but I think it's taking that to a whole other level.

[LANCE BRAUNSTEIN]

Agreed. Two concepts that really resonate for me. One, this notion of innovation at the edge, this idea that everybody is an innovator and empowering them and providing tools that allow them to create that innovation. That's a big one. Innovation can come from anywhere. A 14-year-old in their bedroom, a trader on a trading desk. I think that is something that we're trying to harness. Again, we call that program broadly citizen development, but it like the title is not important. What's important is the empowerment, making sure that with power comes responsibility. So, there's a control framework around that.

The second thing you said that really resonates is this notion of diversity of thinking. So, the engineer, the left brain professional, shouldn't always be the one driving a design, a system, a solution. The notion that we have a diverse set of perspectives and someone who's perhaps bringing more EQ and more of a design thinking more of a client centricity, that's key. And so, empowering that diverse workforce I think, is something we've been trying to harness. And I think we've been successful in parts, but more to do. And as some of these tools come into play, open AI specifically, I think that's going to help.

[JASON WILD]

Yeah, I think you're right. I mean, I've been impressed at the talent that BlackRock seriously attracts. And when you look at kind of broadly in your industry and even the tech industry, people usually are really passionate about being solutionists. Like, I want to find the problem and I'm really good at creatively solving those problems as individuals and teams. But I think it's important at the same time to get people who are really excited and fall in love with the problems as well because yeah, you have really talented people, but how do you know you're solving the right problems?

[LANCE BRAUNSTEIN]

So, you talked about this like multidimensional transformation that's going on now with blockchain and AI. How do you harness all of that change? How do you bring all of that sort of under control? And I don't just mean from an ethical perspective, like clearly there are sort of ethical questions and privacy, security, but it feels like a lot.

And we are changing in many, many different directions as a firm, as a platform, as an ecosystem. How do you think about bringing this all together in a coherent way, where you have things like copilot, generating code, AI, spitting out answers to questions that may or may not be right. How do you bring that sort of into a framework?

[JASON WILD]

Yes, I think it's a great question, Lance. I mean, first, when, as an executive representing Microsoft, I think about our own mission which is, in my words, empower every individual and every organization to achieve more. So, our role is, we want to be an enabler. We literally want to be a platform to help accelerate and deliver the sort of change that's important, change in terms of society, how people work, business models, etc…

So, we start first with the outcome in mind and I've had the privilege and honor of leading projects in 38 countries with CXOs around the world around growth, innovation, digital transformation. And one of the questions often is, we know we need to do this and leverage all this amazing technology and change, but where do we start?

And if you think about it, think about the last 30, 40 years, namely Fortune 500 company that successfully has pivoted from one thing to success in something else. Hey, maybe Netflix from distributor stories to creator stories. And whether you agree with those or not, you can kind of count on one hand the number of success stories. Now, there's lots of organizations who have had pockets of success and piloted some things, and they're now working on how do we scale that to the entire enterprise. And one of the things that I learned is, the importance of having the outcomes in mind. Where do we want to be in terms of the customer impact in one year, three years or five years? The context of time depends on you and your organization. Technology is a very important enabler, but it is only an enabler and really thinking about what is the human value and the business value that we want to sort of unlock.

Now, in any large organization, there's lots of things that you need to do, of course. But I think sometimes the mistake that organizations make, and I don't think this is the case with BlackRock, but generally speaking is they try to be a Swiss Army knife and try to be great at everything. Now I have kids and I have this argument sometimes, you know, is there anything that's world class in a Swiss army knife? You know, the scissors are pretty sharp. You know, they

cut me a little bit. And but, you know, the point is, you can't be great at everything. You have finite resources. So, I think the importance of really articulating and declaring here the three things that you want to be world class in and execute flawlessly and using that to then shine a light on. All right, there's all these things that have these great possibilities, but in the context of where we want to be and we what we can uniquely claim as an organization with our ecosystem, now let's start to think about how these things can start to sort of enable that. And that's where I start this journey.

[LANCE BRAUNSTEIN]

Core competencies, prioritization. I think those concepts are king. And yeah, that's something that we think a lot about. We're in a lot of different businesses serving many different segments in many different regions. So, really trying to focus on the thing that we want to be great at is a big part of the ethos here. And it reminds me of The Incredibles line, “If everybody is super, no one is super.” I feel like you have to define your area of super.

I think we've spent decades building a foundation for portfolio management and for technology innovation. And what's interesting now about the next decade ahead of us is, we're not starting from a standstill. We're starting from a platform that is stable, is mature, has all the models, all the workflows baked in to be an investment manager.

I think what's important is continuing to innovate, never resting on the laurels of that stability. And I suspect Microsoft is in very much the same sort of headspace where you're a storied technology firm that has a foundation of decades of innovation, ensuring that you are culturally and organizationally set up for the next decade of innovation. I think that's the key.

So, when I think about how we are trying to provoke and compel this next gen of thinking so that we don't just assume that the stable foundation is sufficient, I think that's the key for us. And, you know, we spent a lot of time thinking about how we incorporate blockchain, how we think about next generation of whole portfolio, which is a key concept for us and our clients.

So, I'd be curious for Microsoft, how do you go from like a storied, incredibly stable technology, foundational firm to the next generation of innovation?

[JASON WILD]

Yeah, and it's great to hear that you're doing this at BlackRock. And, you know, obviously the foundation is really, really important. And I think you've got the right mindset and attitude, which is better, better, never done getting better.

[LANCE BRAUNSTEIN]

Never done, that's right.

[JASON WILD]

Right. You know, almost it. Although foundation sounds like something that would be a destination or an outcome. You're continuously managing this foundation and I think you already understand that. And I just want to reinforce that as point number one. This is really a mindset and really a psychological state of we want to create a culture where we're continuously improving this foundation. I think number two is, Microsoft for us, moving into the cloud was a big deal.

[LANCE BRAUNSTEIN]

That was a moment. It felt like that was a moment of reinvention.

[JASON WILD]

Many, many moments. A multi-year journey.

[LANCE BRAUNSTEIN]

You talked about Netflix shifting its business paradigm. But I think you guys did that as well.

[JASON WILD]

Yes, it was. And for us, a big part of kind of establishing the future for us and creating a very strong foundation was migrating the product functionality that we had that was on prem and moving it into the cloud, which enables us to do a lot of things that were impossible, that we couldn't have dreamt of, in terms of the innovation like integration and the deep native integration, when you have everything on one single platform now inside of the cloud.

So, for us, one of the things that we think about in this notion of dual transformation is one of the big questions for a lot of large organizations that have had a lot of success, which is how do we continue to deliver value for the customers right now who are expecting this, but at the same time continue to build and co-create for this future? And you could argue that things are changing as slow as they will ever be. It's going to continue to increase and just get faster and faster and faster. So, I'm a big believer that, yes, you have to be optimized around efficiency and continuously redefining how you work and your cost structure. But at the same time, you have to optimize around learning.

And it used to be that it was competition was determined about being the biggest, then it was about being the fastest. Now it's literally about being the most adaptable. So, you need a very adaptable foundation and it almost sounds counterintuitive. Something that's stable, something from the group that we want to bring us into the future in terms of this new way of working.

[LANCE BRAUNSTEIN]

Something you said triggered a synapse, which is, as we think about inventing the next generation of Aladdin, of BlackRock, in some ways limiting the degrees of freedom that you have to reinvent. So, if you have a very well-understood, well-established security framework, defense and death strategy, in some ways you then take that as read. And the teams that are building to the next generation sort of inherit the application security, the infrastructure security, all of those security elements and the degrees of freedom that they do have, they can sort of exploit to a greater extent.

The other thing is really figuring out, which is something you said earlier, what do you want to be great at? Like what are those areas of innovation versus trying to do everything? So, when we think about our partnership with Microsoft, you're great at data centers. We will never be the data center operator that you are, and that's fine. So, we have partnered with you. You bring that innovation to us, and we can focus on the investment management software problem and reinventing the next best workflow, the next best visualization, the next best algo. And I do think that that like sort of, that almost myopic vision on your core competencies and ensuring that that's the dimension in which you innovate versus trying to innovate across too expansive a surface area. I think that's key.

[JASON WILD]

That's exactly right.

[LANCE BRAUNSTEIN]

So, limiting degrees of freedom such that you could focus on your core competencies.