[ { "speaker": "Speaker 1", "text": "All right, good morning folks. So this is actually a really fun setup for a panel because the topic is about generalists versus right it's about like the death of the middle how the generalist" }, { "speaker": "Speaker 1", "text": "investor is no longer as in vogue as it was before but we actually kind of have the spectrum pretty much represented here right benchmark you guys famously have stuck with the 450ish now 425" }, { "speaker": "Speaker 1", "text": "fun your last raise iconic is the standout here. You guys are the 5.7 point uh five sorry 5.75 billion fund as of 2024." }, { "speaker": "Speaker 1", "text": "Um so I'll take a step back and give us a state of play. Um the top 10 funds alone in last year raised a combined 22 billion. That was 32.9% of all venture capital. That's 2.5 times up from the" }, { "speaker": "Speaker 1", "text": "13% that they had in 2021 according to NVCA. Um, so battle it out." }, { "speaker": "Speaker 1", "text": "Tell me, is the middle dead? Is the generalist investor on its way out? I I'll start with you, Timbo." }, { "speaker": "Speaker 2", "text": ">> Uh, well, thanks for having us, Websummit. It's uh, good to be on this panel with uh, with you all. I would say Luca is right. You know, we have a lot of representation from different ends of" }, { "speaker": "Speaker 2", "text": "the spectrum. Uh from a venture ecosystem perspective, I would say, you know, I'm personally very encouraged by the amount of innovation that we're seeing in venture right now. I would say" }, { "speaker": "Speaker 2", "text": "the stats that you cited are pretty much indisputable in the sense that post the pandemic and as we entered the correction era of 2022 and 2023, it is true that uh the fund sizes tended to" }, { "speaker": "Speaker 2", "text": "bifurcate. You had some of the larger funds raise even larger funds and then the number of I think the stat was 25 to hund00 million funds actually compress over the period from the pandemic to" }, { "speaker": "Speaker 2", "text": "2024. But what I think that doesn't reflect is actually the last couple of years where there's obviously been a lot of fervor and excitement and investment behind AI. And I think it's always when" }, { "speaker": "Speaker 2", "text": "these platform shifts sort of happen that newer players can emerge. I do think that the the the the larger funds bring a lot of resources and you know differentiated value ad to the companies" }, { "speaker": "Speaker 2", "text": "that they back. I think a lot of the smaller specialist funds can do the same but um in this sort of messy middle I think there's always opportunity for innovation and you know when I reflect" }, { "speaker": "Speaker 2", "text": "on Iconic um you know our our founding principles were that we were built around a family office that supported some of the best entrepreneurs within technology. That's how we started was" }, { "speaker": "Speaker 2", "text": "actually as a family office and then we built a tech uh investment firm on top of that to support founders uh from the earliest stages from seed series A and you know one of the things that we" }, { "speaker": "Speaker 2", "text": "thought about very seriously from from early on is what is our differentiated value proposition to to founders and I think that's sort of the question that's incumbent on any VC whether you have a" }, { "speaker": "Speaker 2", "text": "$200 million fund or a billion dollar fund or a10 billion fund to to sort of ask yourselves in this age where companies are growing in in new sort of arguably different ways from the mobile" }, { "speaker": "Speaker 2", "text": "and cloud era. Um I think it's incumbent on all of us to really figure out what is that differentiation and how do we continue to to sort of grow and um be the best possible partner to to founders" }, { "speaker": "Speaker 2", "text": "and I think funds of any scale can frankly frankly do that." }, { "speaker": "Speaker 3", "text": ">> Sure. So tell me what is the differentiation?" }, { "speaker": "Speaker 3", "text": ">> Well so for for us we actually wrestled with this question. I joined foundation um about 12 years ago at this point and uh this was exactly the question that we were asking at the time. U venture was" }, { "speaker": "Speaker 3", "text": "changing maybe not as rapidly as it is today uh but certainly we were investing you know across a lot of different sectors and across different stages series A series B as well as a little" }, { "speaker": "Speaker 3", "text": "bit of seed as well. Uh and so we took a step back and thought you know what do we really really e excel at and what do we really want to do as you know individuals that we are and then we" }, { "speaker": "Speaker 3", "text": "decided to really focus um the firm to super early stage and meaning seed predominantly uh with companies that are technical uh but have pre-product market fit meaning you know they don't really" }, { "speaker": "Speaker 3", "text": "have many customers or revenues to speak of uh and to also build a team and have a fund size that's corresponding to this value proposition. So today if I when I look at what we have done uh about 90%" }, { "speaker": "Speaker 3", "text": "of our companies uh have no revenues when we invest um no customers oftentimes they have no product um and we are writing seedstate checks usually as the first institutional investors" }, { "speaker": "Speaker 3", "text": "that's you know 85% of the time um and our value proposition to founders is very clear which is that we help you go from zero to one we help you get your first customers we help you get your" }, { "speaker": "Speaker 3", "text": "first hires um your first heads of you know marketing sales etc. ETA and that has I think played out pretty well. Um the first fund in which we really focus on the strategy was fund 8 which is you" }, { "speaker": "Speaker 3", "text": "know the fund that we incubated Cerebras along with with benchmark um service just went public this morning which is awesome. Um and then we have done that over and over again." }, { "speaker": "Speaker 4", "text": ">> Yeah. I think the um the era of AI and the era of LLM I think have actually pushed the two book ends of the spectrum even further apart. And I think it's even harder today than it was, call it" }, { "speaker": "Speaker 4", "text": "five or six years ago, to do both. Well, and what I mean by both is either being a platform that primarily focuses on um growth investing or being a specialist investor that uh focuses on either" }, { "speaker": "Speaker 4", "text": "investing in a particular sector or a particular stage, typically early stage." }, { "speaker": "Speaker 4", "text": "Mhm." }, { "speaker": "Speaker 4", "text": ">> And the reason I say that, if you look at the enthropic, even if you looked at the um just the anthropic $380 billion valuation round, um the last round that they announced of funding, and you" }, { "speaker": "Speaker 4", "text": "assume that Anthropic at some point in the next four years will IPO at a $ 1.5 trillion valuation. Um you could say obviously they're not you're there uh they're not there yet, but um there's" }, { "speaker": "Speaker 4", "text": "rumors that they're going to raise it near that valuation now. Um, so I think it's like a fair line to draw. The amount that the investors in the $380 billion round would make as a whole is" }, { "speaker": "Speaker 4", "text": "35 times higher than the investors in the snowflake preo round. And the Snowflake preo round was like a gold standard large growth round that everyone was very proud of investing in" }, { "speaker": "Speaker 4", "text": "and everyone's LPs were very happy doing. and the enthropic single round at $380 billion will uh will produce you know an order of magnitude and then some more returns for its investors. And when" }, { "speaker": "Speaker 4", "text": "you think about the the sort of capital intensive rounds that folks like the LLM providers are raising that was a $30 billion round. That's that's a mega mega IPO just in one round. Obviously OpenAI" }, { "speaker": "Speaker 4", "text": "raised an even larger round before that." }, { "speaker": "Speaker 4", "text": "you you you can only really do that and you're only set up to do that if you're a large platform that has a ton of capital to deploy. And at the same time, I think if you are one of those large" }, { "speaker": "Speaker 4", "text": "platforms putting a billion dollars into an enthropic, it is really, really, really hard to get up in the morning and convince yourself that you care about a $10 million seed check. Um, and I find" }, { "speaker": "Speaker 4", "text": "that firms like to, you know, either lie to themselves or their LPs, uh, and say, \"No, we do still really care about doing seed and series A.\" But I think you know beyond the brand and the history of" }, { "speaker": "Speaker 4", "text": "benchmark our differentiator today that I think is as strong as ever is that we can go to an entrepreneur and say we genuinely care about you your company and we will deeply be involved with with" }, { "speaker": "Speaker 4", "text": "you and and care deeply about what you're do doing even if we're only investing5 to$10 million which I don't think that if you're at a large platform you can say with a straight face because" }, { "speaker": "Speaker 4", "text": "if 90% of your P&L is coming from Enthropic you're just not going to care about the small company." }, { "speaker": "Speaker 1", "text": ">> Yeah. Well, I think how do you feel about because I've heard this argument before too from both sides, right? And from the large funds, the large funds that have uh multi-billions and then" }, { "speaker": "Speaker 1", "text": "they create kind of subcategories within those funds, the organization becomes much larger, right? They say, \"Okay, we do have time for you seedstage investor because the growth investors, the" }, { "speaker": "Speaker 1", "text": "anthropic investor, he's over there. We have five seedstage investors here." }, { "speaker": "Speaker 4", "text": "They've definitely got time for you, right?\" Do you think that's a fair argument for that kind of a structure? I I think again I think that people entrepreneurs and founders the best ones" }, { "speaker": "Speaker 4", "text": "want to work with the principles of the firm that they're working with. They want to work with the people that matter most to the firm and the investment firm that they're working with typically. And" }, { "speaker": "Speaker 4", "text": "I think it's very hard when you have a seed room and a growth room. Uh and in you know the CEO of whatever firm that is um they're going to go to the the growth room and talk about you know" }, { "speaker": "Speaker 4", "text": "making um billions of dollars in a very short amount of time. And then in the seed room it's like well if this goes really really really really well maybe we can make you know a billion dollars" }, { "speaker": "Speaker 4", "text": "in 15 years. Again I think it's just very hard mentally to keep both um in your mind at the same time. I don't think that's that's um that that's a a bad thing whatsoever. I think it's just" }, { "speaker": "Speaker 4", "text": "a natural human instinct of focus on the thing that you're best at and and where the the you know the greatest returns and dollars will come given your setup." }, { "speaker": "Speaker 3", "text": ">> I I definitely I mean a little bias but definitely agree with that." }, { "speaker": "Speaker 3", "text": "Um for for us, every single general partner is is very much incentivized to make sure that each company that doesn't have any revenues and doesn't have any customers is going to be successful," }, { "speaker": "Speaker 3", "text": "right? Like our jobs are on the line uh for this to happen. Uh I think at multi-stage firms that may not be the case because you can make capital in other ways." }, { "speaker": "Speaker 2", "text": ">> I I might jump in and just say that I I agree with the principle in concept. I do think that venture is hard to scale." }, { "speaker": "Speaker 2", "text": "I think that both Benchmark and Foundation are artisans of the craft and individually as GPS practice uh this this craft as as artisans and genuinely want to be, you know, the best possible" }, { "speaker": "Speaker 2", "text": "partners to founders. And I do think it gets hard when you become a multi-stage fund, you know, four, five, six billion dollars when you end up trying to invest in many numerous companies uh when" }, { "speaker": "Speaker 2", "text": "you're investor that thinks about companies more as call options than true partnerships. And uh while I can't speak to the philosophy of other funds, I can say that Iconic, having been here for" }, { "speaker": "Speaker 2", "text": "over a decade, we treat each partnership, whether it's anthropic, where we've invested several billions of dollars and where we're one of the largest financial investors or some of" }, { "speaker": "Speaker 2", "text": "the companies that we've incubated recently or done seed investments in as as equal partnerships in the sense that um this is an incredibly hard journey to be a business builder, to be a founder." }, { "speaker": "Speaker 2", "text": "Um, and some of our best investments have been ones where we've been uh alongside these founders from close to close to day one. We were one of the earliest investors in Figma where we" }, { "speaker": "Speaker 2", "text": "invested less than $2 million uh and we're along for for that journey with with Dylan and team. And there are other examples of that. And over the last 5 years, you know, we've invested in um" }, { "speaker": "Speaker 2", "text": "you know, probably 50% of our checks have been in companies sub 10 million of of revenue. So we've seen success at the the the greater end of the scale when companies have already seen meaningful" }, { "speaker": "Speaker 2", "text": "you know revenue traction and and also at the smaller end of the scale. And the way we approach it is we're not trying to make a hundred bets uh build a 100 partnerships in any given fund despite" }, { "speaker": "Speaker 2", "text": "the fact that we can write multi-billion dollar checks. We're trying to take a very concentrated approach partnering with a select group of a few dozen companies per per fund. And that enables" }, { "speaker": "Speaker 2", "text": "each partner to allocate, you know, the time, the resources that are warranted in any given situation. And then on top of that, what we built is a sort of team that's actually bigger than the" }, { "speaker": "Speaker 2", "text": "investment team. So we actually have 50 professionals solely dedicated to supporting our portfolio companies across data science, across leadership, uh, introductions, uh, and talent," }, { "speaker": "Speaker 2", "text": "across, uh, portfolio, uh, commercial introductions, helping our companies get connected to the global 2000, a lot of buyers that they were closely connected to. And so we actually layer on, you" }, { "speaker": "Speaker 2", "text": "know, more individuals uh to support our companies than just the partner who's spearheading that deal. And in a lot of instances, the founders that we work with, they have 10 or 12 different" }, { "speaker": "Speaker 2", "text": "relationships with different people on our team. And so that's how we try to solve the structural issue that I think exists in principle >> um that we know can you know create issues, but um you know, we try to work" }, { "speaker": "Speaker 1", "text": "work past that in a meaningful way." }, { "speaker": "Speaker 1", "text": ">> It's part of the thinking there too, right? Because I think seed stage in general, it sounds like you're taking concentrated approach to it, but some funds are taking kind of seed stage" }, { "speaker": "Speaker 1", "text": "generally you're writing more checks per fund than you are at the later stage." }, { "speaker": "Speaker 1", "text": "That kind of gets into a conflict of interest issue that you typically wouldn't be as severe in the growth stage funds. Is that part of the thinking as well?" }, { "speaker": "Speaker 2", "text": "Uh I would say we've we've written as many sort of seed series A uh and early series B investments as we've written in some of these later round series D series uh you know EF. So um again I" }, { "speaker": "Speaker 2", "text": "would say there's you know I think in general we try to be conscious around time management and how many board seats every partner has. You know if you're getting to sort of nine 10 11 boards" }, { "speaker": "Speaker 2", "text": "that's where things start to get a little bit stre uh stretched. And so we try to be actively conscious around around those dynamics and and and try to get out of that." }, { "speaker": "Speaker 1", "text": ">> Maybe a controversial question, but are there do you think there's there are not enough investors out there right now in the venture capital space?" }, { "speaker": "Speaker 4", "text": ">> I think there are probably anywhere from five to 10 times too many investors in the in the venture capital space at any given point. Um, I think that generally the the best ideas are" }, { "speaker": "Speaker 4", "text": "found relatively quickly and they're they find great partners and they um and and they're they're funded throughout their life cycle pretty well at this point. I do think that it's the case" }, { "speaker": "Speaker 4", "text": "that there are not there's a ton of white space as Tango already said around innovation that investors could be doing that there's not nearly enough done. And so I think if I was a growth stage" }, { "speaker": "Speaker 4", "text": "founder, I have no idea why I would not go with a firm like Iconic that has built an incredible platform, has all these resources for me. Um, as a growth stage founder, as an early stage" }, { "speaker": "Speaker 4", "text": "founder, I don't know why I wouldn't want to go with a firm like Benchmark with all of its history or foundation or a ribbot if I was a fintech investor." }, { "speaker": "Speaker 4", "text": "There are firms that have clearly built resources and assets that act as differentiators for their firms and allow them to continuously win great investments and uh partner with great" }, { "speaker": "Speaker 4", "text": "entrepreneurs over the years. Um but I think if if you threw up on the screen every single venture growth firm that exists and you ask okay which one of these have actually built any form of" }, { "speaker": "Speaker 4", "text": "true differentiation when founders are looking for capital. I think it'd be hard to point to more than 20% of them and say that they have built that out." }, { "speaker": "Speaker 3", "text": ">> Yeah. With with more competition, you have to have specialization, right? I mean, this is the reason why I think for us, we really double down on the stage and in also in the um technology trends" }, { "speaker": "Speaker 3", "text": "of AI and crypto because you can't do everything well. You had to do a few things really well and u that's true especially when the market is inundated with options." }, { "speaker": "Speaker 2", "text": "I I think there was a chart that got posted this morning. I've seen iterations of it in in other circumstances that showed the top theme in venture of every year and then the most valuable company that was created" }, { "speaker": "Speaker 2", "text": "in that year. And it's disjointed every single time in the sense that in a certain year the company that the the top theme might have been web 3 and then the company had nothing to do with web 3" }, { "speaker": "Speaker 2", "text": "that the ultimately most valuable company created in that year. And I think that is indicative of sometimes often what happens in venture which is that the capital tends to flow to areas" }, { "speaker": "Speaker 2", "text": "that are seen as ultimately going to be valuable as is certainly being hyped up in the moment. Um and there's often uh mis you know arguably misallocation of capital away from areas that ultimately" }, { "speaker": "Speaker 2", "text": "end up being enduring and super valuable from a society perspective from a economic perspective. I think we're seeing this in areas like uh perhaps nextgen manufacturing for instance which" }, { "speaker": "Speaker 2", "text": "is an area that up until recently there hasn't been much investment in and now there's companies that are cropping up using automation and software to revitalize uh the industrial base and" }, { "speaker": "Speaker 2", "text": "and these sorts of things that I think are are vital from all these perspectives beyond just what's going to be lucrative from a venture investment perspective. Um, so I'm hoping that, you" }, { "speaker": "Speaker 2", "text": "know, I think over time, over the arc of history, that that capital ends up getting allocated in in the right directions, but often in the moment, there's there's these sort of distortions. And I think that creates" }, { "speaker": "Speaker 2", "text": "opportunities for venture investors to find those pockets of underinvestment. I mean, we mentioned cerebras earlier." }, { "speaker": "Speaker 2", "text": "Chips were not hot in 2016 and 2015 when when benchmark and foundation made that investment. And I think often times those contrarian bets are often you know uh that's sort of the job of venture is" }, { "speaker": "Speaker 2", "text": "to be contrarian and see into the future a little bit and um you know these firms and us in many instances uh you know hopefully we can build on our history to to do that more." }, { "speaker": "Speaker 1", "text": ">> Yeah. So I think this is a good you guys you guys beat me to it already by by talking about cerebras because I do want to talk about that for a second because the underlying theme of all of this" }, { "speaker": "Speaker 1", "text": "right I think you're getting bigger and bigger funds but the bigger and bigger funds are coming because you have in theory bigger and bigger outcomes but the bigger and bigger outcomes do not" }, { "speaker": "Speaker 1", "text": "quite yet have full exits. We don't have the liquidity yet from the anthropics of SpaceX's. We just had one in Cerebras and it was it's been a huge outcome." }, { "speaker": "Speaker 1", "text": "They're up. Um originally, I guess by the numbers, uh last private round valuation, 23 billion. Um a few months later, IPO price was supposed to be slated around 54, I believe, earlier" }, { "speaker": "Speaker 1", "text": "this morning. And first trading, it's now supposed to be over a hundred billion. So for foundation and benchmark who were early investors this has been going from kind of a couple hundred" }, { "speaker": "Speaker 1", "text": "million for benchmark and uh tens of millions for foundation is now you know six seven billion in returns. Um I'm kind of curious right is this going to be does this Cerebrus IPO mean that" }, { "speaker": "Speaker 1", "text": "we're about to have far more companies IPOing in the AI space on on an accelerated basis?" }, { "speaker": "Speaker 1", "text": "And I'll ask you, I'm gonna make you answer first because you're the the unbiased one in this particular question." }, { "speaker": "Speaker 2", "text": ">> I I think that the bar for going public has gone up um by maybe an order of magnitude in the last four or five years. I think we saw a flood of uh traditional software companies, mobile" }, { "speaker": "Speaker 2", "text": "companies um that went public in the pandemic era and some of them have performed extraordinarily well over the past four or five years. I think sometimes the public markets haven't" }, { "speaker": "Speaker 2", "text": "fully recognized a lot of the value creation that those companies have have generated but um I think the bar has gone up uh much higher since that period of time. uh if the bar previously was" }, { "speaker": "Speaker 2", "text": "maybe a hundred a couple hundred million of revenue growing you know 40 50% I think from a revenue scale perspective you've got to be closer to 500 600 million of of revenue as a software" }, { "speaker": "Speaker 2", "text": "company software AI company to to even I think have a strong shot of of performing well in in the public markets and there's a lot of capital out there but there's also a lot of places to park" }, { "speaker": "Speaker 2", "text": "that capital including new neocloud companies that have gone public for instance where if you're a longon only asset manager you have a lot ofter alternatives to investing in traditional" }, { "speaker": "Speaker 2", "text": "SAS or subscale companies. So I would say that's the sort of sobering fact, but at the same time like what we're seeing in I think all of our portfolios is companies growing faster than they" }, { "speaker": "Speaker 2", "text": "have ever before. I mean we're investors in Anthropic, in 11 Labs, Lorraa, companies that are outpacing every benchmark of traditional software that are sort of reaching these thresholds" }, { "speaker": "Speaker 2", "text": "where they could conceivably have success in the public markets in in a reasonable time frame. And so that gives me encouragement that at least over a 24 uh 36-month period, we'll we'll start to" }, { "speaker": "Speaker 2", "text": "see some of the true AI native companies actually start to to emerge into the public markets and and have strong showings hopefully. Um I think in the next >> I think uh you know, knock on wood and" }, { "speaker": "Speaker 2", "text": "then we'll see I think in the next next 12 months. But I think the flavor of companies that you're starting to see go out um in this AI era it's it's different. Um it's not traditional" }, { "speaker": "Speaker 2", "text": "software companies. It's the Cerebruses." }, { "speaker": "Speaker 2", "text": "It's the core weaves. Um, I think especially in this stage of the AI buildout, often more infrastructury sort of companies versus application. That'll probably change over time, but that's" }, { "speaker": "Speaker 3", "text": "that's what we're seeing." }, { "speaker": "Speaker 3", "text": ">> I I don't opine on the public markets um that much, but from from our experience, it does seems like the the market is open for for special companies, as Tambbo said, um usually ones that have" }, { "speaker": "Speaker 3", "text": "uh the kind of demand and growth that we haven't experienced before because of a new technology. Uh and I'm hoping that we see more of that so that the dollars can be you know sent back to our LPs and" }, { "speaker": "Speaker 3", "text": "then that can be invest reinvested in venture funds. I think that's good for everybody. Uh but one thing that you you mentioned earlier which was kind of something that I wanted to underscore" }, { "speaker": "Speaker 3", "text": "which is that if you're doing if you know when when we're doing early stage investing oftentimes the trends and the problems are not obvious. It has to be that way because if if it's obvious then" }, { "speaker": "Speaker 3", "text": "um then a lot more founders are working on it. A lot more capital is going to it. I think a lot more competition will also happen. So the dynamics will be very different. And I think it takes a" }, { "speaker": "Speaker 3", "text": "special kind of uh investor to be like okay you know I don't believe what the market is saying. I'm going to believe something that no one else believes and to make investments based on that. And I" }, { "speaker": "Speaker 3", "text": "think that's like a very different mindset than say a growth stage investor who's more investing in momentum and who's more investing in the macro, right? And I think we try to hire for" }, { "speaker": "Speaker 3", "text": "people who are more like that. Um, which is maybe more like the entrepreneurial founder types. Um, and I think Cerebras was what a great example of it because when I think when Andrew came and" }, { "speaker": "Speaker 3", "text": "pitched, I had just joined Foundation 18 months. Um, he was painting a a picture of the future that most people didn't really believe in, right? Right. And the future, you know, happened much later" }, { "speaker": "Speaker 3", "text": "and it happened maybe in a different way. Um, but it happened and the direction was a a a point of high high conviction for both him and also our team." }, { "speaker": "Speaker 4", "text": ">> Yeah, I think very practically I think this is going to be the year or could at least be the year of like the true mega special company IPO. Obviously, there's reports of SpaceX going out and one or" }, { "speaker": "Speaker 4", "text": "both of the main foundation model companies could go out. I think that would make it almost very hard for anyone else to to go out because >> like it'll take the capital out of the" }, { "speaker": "Speaker 4", "text": ">> Yeah. just the attention like you need people. I think that's the the tango went around it being the the the bar to IPO is so much higher than it's ever been. It's because you need analysts," }, { "speaker": "Speaker 4", "text": "you need investors, you need people to care about what you're doing. You need analysts to follow your stock. You need people to care about the story of your stock. And it would be very very hard I" }, { "speaker": "Speaker 4", "text": "think for anyone to care about much anything else other than the four potential companies that we've talked about that have IPO today or could IPO this year. I do think that next year" }, { "speaker": "Speaker 4", "text": "could be and I think people are wanting it to be the year of the AI SAS IPO. And I've talked to some equity analysts that have said like look you know we're talking about you know is SAS dead? Um" }, { "speaker": "Speaker 4", "text": "you know why is everything in SAS trading so cheaply? Um and they're like look it's not that we don't um care about SAS at all. It's like we want the AI SAS like we want the things that are" }, { "speaker": "Speaker 4", "text": "growing you know 100 to 400 million in a year um and providing this new um entire vector of value through um AI native products to their customers and just none of the companies that represent" }, { "speaker": "Speaker 4", "text": "this new wave of AI native SAS are mature enough to to go out this year." }, { "speaker": "Speaker 4", "text": "But I do think that it is a bit of a race >> um among some of these AI native companies where it would be pretty amazing to be the first vertical AI SAS company to go public or to be the first" }, { "speaker": "Speaker 4", "text": "horizontal AI SAS company to go public." }, { "speaker": "Speaker 4", "text": "So, I think there's there's I think there's companies that are definitely trying to aim for a potential listing in 2027. And at that point, theoretically, you'd have both a lab SpaceX already be" }, { "speaker": "Speaker 4", "text": "out and already be trading for a while." }, { "speaker": "Speaker 4", "text": "Um, where it's not such a distraction for everyone in the community. Um, and where there's actual capital to go into these new IPOs versus being concentrated into the ones that'll probably happen" }, { "speaker": "Speaker 1", "text": "this year." }, { "speaker": "Speaker 1", "text": ">> Interesting. And are these the companies that are right like there's I feel like there was a pre-AI cohort of companies and a postAI cohort of companies were are these well I should say post chat" }, { "speaker": "Speaker 4", "text": "GBT 2 three right so are these the companies in your like that you're hearing about kind of after that first came through an explosion >> yeah exactly because you know it's like the I I've been somewhat surprised by" }, { "speaker": "Speaker 4", "text": "the market's reception to companies that you could argue are AI winners like I I would say that there's a pretty cogent argument around Figma being an AI winner. And I think some of the market" }, { "speaker": "Speaker 4", "text": "sentiment around or or the narrative that you hear around it being a potential AI loser was was somewhat surprising at least personally for me." }, { "speaker": "Speaker 4", "text": "But I think that um the line that a lot of people are drawing is like is the company maybe not even founded pre- or post chat GBT but was it developed and was the core product built in an era of" }, { "speaker": "Speaker 4", "text": "post chat GBT where you know the first product that hit customers hands was built around the idea of LLMs versus having LLM bolted on um as a secondary product or as an add-on product later." }, { "speaker": "Speaker 3", "text": "And some some of the growth that at least we've seen with these companies is that they're just targeting labor spend, right? Instead of going after existing software, they're saying we can almost" }, { "speaker": "Speaker 3", "text": "fully automate what someone can do." }, { "speaker": "Speaker 1", "text": ">> Not terribly politically popular, unfortunately. Yeah." }, { "speaker": "Speaker 3", "text": ">> Not not the most politically, you know, popular opinion, but that is a that I think that's what's happening. And that labor spend is much much much bigger than software spend. And also the ROI" }, { "speaker": "Speaker 3", "text": "for it is very clear. and hence I think some of the growth that we're seeing is is happening. Um so very much excited to see some of these companies become like graduate to the public markets in the" }, { "speaker": "Speaker 1", "text": "coming years." }, { "speaker": "Speaker 1", "text": ">> Yeah. What does this all mean for founders? Right. I think because we've talked a lot about the fund what this all mean like venture capital is heading towards this barbell effect. um what" }, { "speaker": "Speaker 1", "text": "does it mean for the founder who's trying to raise you know the series AB like is there the ones who are trying to raise that are perhaps looking for a more generalist investor like what does" }, { "speaker": "Speaker 2", "text": "this mean for those folks >> maybe >> yeah um I I I tend to be a little bit traditional around this but I think for any founder that's that's building at any stage it is an incredibly hard" }, { "speaker": "Speaker 2", "text": "journey it doesn't matter whether you're an AI native a founder building, you know, starting this year or a couple of years ago, um, or 10 years ago and you're a traditional SAS founder that's" }, { "speaker": "Speaker 2", "text": "trying to navigate this new AI era and perhaps navigating through technical debt and, you know, a team that maybe wants to work for an AI native company." }, { "speaker": "Speaker 2", "text": "It's it's hard no matter what stage when you started the company or what have you and we have a lot of empathy around that. But I'm a little bit traditional just in the sense that I think if you're" }, { "speaker": "Speaker 2", "text": "a founder, you know, don't don't build a business for us on stage like build the business with, you know, focused on, you know, some of the basic sort of business building principles that actually" }, { "speaker": "Speaker 2", "text": "creates value. Like what is going to drive value to your customers? Um what is the best way to navigate and and win and out compete in a particular market?" }, { "speaker": "Speaker 2", "text": "And I think if you can sort of nail those basic building blocks, there is venture capital out there. And it might be from a more specialist fund. It might be from a larger fund or what have you." }, { "speaker": "Speaker 2", "text": "But there's a lot of great capital out there of all of all flavors, but I think it really has to start with um the basic principles of just building a durable, valuable, you know, company and product" }, { "speaker": "Speaker 2", "text": "that that customers love. Um to me, it's it's that it's that fundamental." }, { "speaker": "Speaker 4", "text": ">> It is. It's hard to think that it's not the best time to be a founder entrepreneur in the last quarter century. Uh, and I'm going to butcher the quote or not remember it specifically, but there's an F1 quote" }, { "speaker": "Speaker 4", "text": "around you can't pass 10 cars in the sun, but you can pass 10 cars in the rain. And I think the paradigm shift that we're seeing with LLMs and how uncertain everything is, no one knows" }, { "speaker": "Speaker 4", "text": "what the models are going to be able to do in six months. No one knows what they're going to be able to do in two years. That uncertainty is inherently great for entrepreneurs. Scrappy small" }, { "speaker": "Speaker 4", "text": "teams that can move at the pace of an entrepreneur that is unburdened by a large team or bureaucracy or anything else like that. That is going to be um the the people that are able to overtake" }, { "speaker": "Speaker 4", "text": "incumbents and create a ton of value um because it's raining out. It's not you know we're not in the sun." }, { "speaker": "Speaker 3", "text": ">> Yeah. And I think this is also true for individuals right right now there's a lot of anxiety around hey am I going to keep my job right this is for you know I see this in Silicon Valley I see it" }, { "speaker": "Speaker 3", "text": "maybe a little bit less so in other geos but that sentiment is there and on the flip side I do think it's an opportunity because for every single young person there is an assistant that can teach you" }, { "speaker": "Speaker 3", "text": "whatever you want that can create all sorts of stuff for you in a very very short period of time in some ways the sky is your limit like I wish I was 21 graduating from college today. Um," }, { "speaker": "Speaker 1", "text": ">> we have testites for that. Now >> that's a different discussion." }, { "speaker": "Speaker 1", "text": ">> Okay, awesome. Thank you so much for joining us today. We're out of time." }, { "speaker": "Speaker 1", "text": "Thank you for coming." }, { "speaker": "Speaker 1", "text": ">> Thank you." } ]