Family investors weigh AI disruption against the businesses funding it

Abeer Abu Omar asks how family businesses distinguish preserving wealth from preserving the operating business. Mishal Kanoo, chairman of The Kanoo Group, begins by separating a family office's investment arm from services such as family education and support. He focuses on the investment side for this discussion.

Kanoo says objectives vary by family. Some use the operating business for growth and the family office to preserve capital; he views his own family office as a growth vehicle. Growing capital, he says, allows him to do more with it, but another family may reasonably choose a different balance.

That choice also affects the person making investments. Kanoo says a chief investment officer who fears blame for losses may avoid taking risks. Clear guidance from the family that experimentation is welcome, and that family members share the consequences, can reduce that fear.

Asked whether younger generations take more risk, Shravin Bharti Mittal says risk appetite is personal and shaped by the structure around the investor. His family does not view the operating enterprise and family office as entirely separate: he says growth drives the long-term value of the business.

Mittal describes telecommunications as the family's core business in India, followed by expansion into Africa and investments including British Telecom and OneWeb. He looks for ideas with potential for sustained growth over 20 or 30 years. His investment firm Unbound takes an explicitly risk-seeking approach to new technology.

Technology can enable an industry or disrupt it, Mittal argues. He cites the shift from landlines to mobile phones and then satellite communications. He says the challenge for a family enterprise is to stay close to technological change rather than assume its established business will remain untouched.

Mittal distinguishes the operating company's capital spending from Unbound's longer-range work. He says the Indian telecom business spends about $5 billion a year on capital projects, while Unbound looks five to 15 years ahead for technologies that could support or disrupt core businesses. Ideas can flow in both directions between the established business and new investments.

Abu Omar asks whether a bad investment or failure to adapt is the larger risk for a family business. Kanoo points first to internal family dynamics, particularly from the third generation onward. If relatives direct criticism at the person leading the business, fear of being blamed can inhibit decisions and investment.

Kanoo compares this to judging a decision only after its outcome is known. Before taking an opportunity, a leader may worry that a cousin, sibling or other relative will later challenge the choice. He sees that internal pressure as a major risk, separate from external market threats.

Turning to AI and robotics, Kanoo says their development is unusually difficult to predict. He suggests spreading bets across opportunities because it is unclear which businesses will survive. He also urges investors to read extensively and listen to technical specialists as well as people in the investment world.

Asked whether the current environment favors holding cash or deploying it, Mittal says a long-term investor should keep looking for strong businesses. These may be established companies producing cash or newer technology businesses. He says his group typically holds limited cash and looks to reinvest in operating businesses or new opportunities.

Unbound raises capital to invest in disruptive technology, so Mittal says it remains in deployment mode rather than trying to time market peaks and troughs. Its question is whether a business has the potential to become a large franchise. If the team believes it does, he says, it wants to participate.

Kanoo says his priorities have not changed over the previous seven or eight months. He continues to watch renewable energy, AI, robotics and quantum computing. Price fluctuations and dramatic headlines should be filtered as noise, he argues, rather than automatically prompting either euphoria or panic.

In Kanoo's view, a patient investor who is not burdened by debt can tolerate a share-price decline if management, the business and its growth prospects remain sound. He says AI has affected businesses quickly and that he looks for a company to have an internal AI plan or outlook.

Kanoo describes using tools such as Claude and ChatGPT for basic research, including asking about company cash flow and other financial information. He says answers that once took him time to locate through searches can now appear in seconds, giving him more information with which to plan.

Asked about overlooked opportunities, Mittal points to financial technology in the UAE, including wealth management, cross-border payments, lending and insurance. He expects technology to change manual processes such as insurance claims, though he presents that as a view of future business opportunities.

Mittal says AI investing should be assessed by sector rather than treated as one undifferentiated category. In cybersecurity, he expects increasingly agentic attacks to require changes to defensive infrastructure. The investment question is whether an incumbent can adapt quickly enough or a startup will take its share.

He applies the same test to software. He rejects the idea that every traditional software company will fall to zero, saying products embedded in a customer's records and workflows can be hard to replace. The competition, in his view, is between incumbents retooling their products and newer companies winning customers.

Asked how to distinguish a generational AI opportunity from a mistake, Mittal says the result may be clear only after the investment. One of his key tests is distribution: can the business reach customers, and why would an enterprise replace an existing tool? Once a large customer changes its workflow, he says, the new provider may also become embedded.

Asked what he would avoid if starting over, Kanoo says he is hard pressed to name an entire sector he would refuse and values the lessons from past mistakes. He emphasizes that established businesses such as shipping, aviation, trucking, warehousing and logistics continue to move goods and generate revenue.

Kanoo sees AI and other new technologies as tools that can make those existing activities more efficient. People still need food, transport and other physical services, he says, so investors and businesses must pay attention to the old economy as well as new technology.