Career Interview with Nicolas Chapados, Ph. D., CFA, Co-founder & Chief Science Officer, Element AI Inc.

Most recently, Element AI, an artificial intelligence (AI) company that turns cutting-edge AI research into scalable solutions that make businesses safer, stronger, and more agile, made the news in pursuing their global expansion by officially opening their second Canadian office in Toronto. This opening is the company's fifth office alongside London, South Korea, Singapore, and its Montreal headquarters. CFA Montreal had the privilege to sit down with one of their co-founders, Nicolas Chapados, to establish a parallel between his work and the investment industry. Nicolas holds a Bachelor's degree in Computer Engineering from McGill University as well as a Master’s and Ph.D in Computer Science from Université de Montréal. He obtained his CFA designation in 2010, a year after completing his Ph.D. He is the co-founder of four companies: ApSTAT Technologies, which he co-founded in 2001 with his thesis advisor Yoshua Bengio; and more recently Chapados Couture Capital, Imagia, and Element AI. He holds multiple patents, has written several publications and has had a significant impact on multiple industries over his professional career.

When did you begin your career, and what was your first job? Was it the position you were hoping for?

I started my career as a project leader for ReadySoft Inc. where I coded and debugged video games. I didn’t know it at the time but that experience would later help me in the job I took right after completing my Bachelor's degree, when I joined the speech recognition research group at Nortel. I was the least academically qualified team member having “only” a Bachelor’s degree in Computer Engineering. However, my programming skills proved helpful in creating the cutting edge speech recognition software and dialogue management systems we were working on. It may surprise you to know, but the technology behind Amazon’s Alexa was already being developed in the late 1990s at Nortel, and some of the key techniques still used today were patented by our group.

 

Did you follow a specific career plan? How often have you changed employers or jobs within the same firm? What was the main reason for those changes?

I enjoy solving challenging problems, and I like variety. The companies that I co-founded aligned with these purposes, from using neural networks to better price car insurance policies, algorithms for systematic commodities trading, artificial intelligence for detecting and diagnosing cancer on body scans, to machine learning and optimization algorithms to create optimal employee schedules for call centres and retail operations.

 

Tell us more about the position you currently hold. Did you encounter any major obstacles in your career path? What do you enjoy most about your job?

Most recently, I’ve been the co-founder and Chief Science Officer of Element AI. Our mission is to help transform companies so that they can leverage artificial intelligence throughout their organization.

In terms of past challenges, I experienced being too early in a market, when we tried to introduce advanced risk estimation models based on neural networks into the P&C insurance industry. The market just wasn’t ready for our solutions at the time. The surge in interest in our field, from a commercial perspective, really started in 2014 and has risen dramatically since then. In June 2017, Element AI broke a record for Series A financing for an AI startup, raising US$102 million. Another sign of the change in times is that NVidia and Intel both co-invested in us despite being competitors and not traditionally co-investing in companies. Additional strategics, such as Microsoft and Tencent, also got in on the action.

 

What skills do you believe someone needs in order to succeed in your area of expertise? What sort of impact has the CFA® charter had on your career path?

You don’t have to go out and get a Ph.D in Computer Science like I did in addition to beign a CFA Charterholder. However, it’s important that you have a good understanding of the technologies being deployed and how to use them.

For me, the CFA designation is a calling card when dealing with investment professionals. Having the title gives me automatic credibility and allows me to skip right to business with the understanding that all participants have the necessary background.

 

How do you view the career possibilities in your sector? What recommendations would you have for someone setting out in this field?

Artificial Intelligence, Machine Learning, Neural Networks, etc.… are the themes for the 21^st century the same way that electricity was in the 20th century.

Why was Ford able to out-produce its competitors? Because it was the first to electrify its production lines. The same idea applies to what we’re doing: AI is becoming a new platform technology. It’s important to recognize and understand the seismic shift taking place with implications that span every facet of the economy, and ultimately human life.

 

In your opinion, how much will the investment industry be shaken or transformed by the rise of artificial intelligence in the next decade?

I don’t have a crystal ball but I can give you an idea of what kinds of things we can expect to see in the next couple of years.

There are two main camps in the investment world; Quants and fundamentally focused investors. For Quants, leveraging the technologies discussed means better models, automated trading based on reinforcement learning, and new deep learning techniques that mitigate overfitting. For fundamental investors, if you believe that humans will always buy “value”, you can use AI to enhance your screening criteria.

For stock analysts as an example, technologies are being developed that can automatically “read” through the hundreds of stock reports they receive daily, understand semantics that go far beyond mere keyword matching, and can direct the analyst to the overall conclusion. Then it’s just a matter of the system comparing the overall conclusions for all the stocks in question to the analyst’s assessments and flagging the discrepancies. This way, analysts can focus their attention where it matters and use their skills for value-adding activities instead of reading and filtering reports.

Additionally, since these technologies are so transformative and critical for survival, I suspect that AI and machine learning strategies should become a main agenda item on conference calls with company management.

It’s important to note that the CFA curriculum, more specifically the various valuation models and statistical distributions, gives us all the foundational knowledge required to start thinking of solutions along these lines.