Blackstone chief technology officer John Stecher spoke to PE Hub about how the private equity industry uses artificial intelligence tools.

One of the basic classes of applications has to collect and use data “both internally and from portfolio companies,” Stecher said. The reason is the complexity of the applications and the constraints of what data is available and how it can be obtained and used. While AI is used, the question that always needs to be asked is what types of AI are used because it’s a broad umbrella for types of technology that go back as much as 50 years. As much as complex tools are put to use, so are spreadsheets and business intelligence tools.

Stecher said that most of Blackstone’s portfolio companies are looking to unlock “data that’s trapped inside of ERP [enterprise resource management] systems, HR [human resource] systems, and a variety of customer data systems, to leverage it and move their businesses forward.”

One focus of Blackstone is the basic and intelligent application of technology—eliminating monotonous and repetitive tasks so people can “focus on value creation.” Stecher gave a classic example of the creation of reports and presentations. The right set of tools and processes can reduce the time for a custom report from days to minutes.

However, something to remember is that historically, companies have always offered such explanations when they want to reduce head count.

When it comes to generative AI like ChatGPT, you have to get beyond the hype to understand what companies can do with it today. “If you follow AI oracles on social media, you’d believe robots are walking around ready to do our jobs today,” Stecher said. He quoted a formulation he heard years ago from a mentor that people overestimate what technology could do in two years and underestimate what it might accomplish in a decade. That is true, he thinks, of generative AI. There are rapid advancements, but the capabilities that proponents and vendors suggest are still years off.

Nevertheless, Blackstone uses generative AI technology to help investment teams do “deep company and sector analysis.” One tool, Document AI, will summarize collections of documents and even evaluate vendor contracts. Some deal teams use the same software to get summarizations of documents and find particular types of clauses.

Instant Insights /

How Blackstone Is Using AI Tools

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