Opinion
Hyatt: Junior VCs prioritize quick markups from later-stage firms for promotions
“Well, that means if I want to get a promotion and I'm inside of schmooby schmooby VC firm, then I need markups. So if I need markups, how do I quickly get markups? I figure out what the guy one stage after me is interested in. And so my job is not really to go…”
Insight
Hyatt: VC principals care about internal promotions, not startup exits
“A principal is not actually waiting for an exit. They just want a promotion, man.”
Opinion
Hyatt: Founders churn out short-term arbitrage projects just to raise seed
“We are in the industrialization of startups playbook land where everybody's trying to churn out some piece of ridiculous arbitrage every week in order to get through the end of their incubator and raise their seed round.”
Prediction Not checkable as stated
Hyatt: Rapid-growth AI startups reaching $10M ARR will die in two years
“That will probably be dead in two years.”
Opinion
Hyatt: Most AI agent startups are near-term arbitrage risking market collapse
“I think most of them fall into, if you just really think through the second order effects of it, fall into kind of like near-term arbitrage, which might just take that whole market to zero, especially if you are meeting the market where it is today with the mo…”
Opinion
Hyatt: AI startup founders must build in San Francisco to minimize risk
“And so if that's true, and you're trying to risk mitigate all the things that are going to kill you, and it's the age of AI, I don't know why you're not in San Francisco.”
Insight
Hyatt: Investors shouldn't evaluate AI companies by their underlying models
“I don't think you should evaluate any company by the models that are underneath it. Even model companies.”
Insight
Hyatt: B2B SaaS investing was about metrics; AI is a mystery
“Greg Treverton uses this phrase of puzzles versus mysteries, which is just like puzzles are this thing that you can like, you know, use that raw horsepower to solve. And mysteries are, you know, there you have to go on the journey. There's like fog of war and …”
Opinion
Hyatt: Most VC firms are failing to adapt due to LP constraints
“No, I think most, you know this cycle, because the cycle in VC evolution is like horribly, horribly slow, because it also loops back to LPs. They don't get to act on their own.”
Opinion
Hyatt: High-volume 'Brita filter' deal coverage is ineffective venture investing
“I don't know that the Brita filter version of investing is the right way to evaluate, or at least I'm not executing the way that I want to do my job and the way that I think my partner should do their jobs together in that kind of like trying to get, win the c…”
Insight
Hyatt: All VC measurements prior to exit are false profits and packaging
“The reason for that is that all of the measurements before exit are all false profits, right? Until the thing is actually a return back capital, and you see this wonderful, enduring institution, It's all just games and packaging”
Disclosure
Hyatt: Spark Capital's early-stage deal quality dropped during COVID
“I think our quality of investing went down on the early stage team and has since recovered.”
Opinion
Hyatt: Founders seeking hands-off VCs are settling for mediocrity
“They're setting their bar too low. Like that's the bottom line. Like they're settling for mediocrity because they're afraid of risk.”
Prediction Not checkable as stated
Hyatt: Taste will be the main AI differentiator as execution becomes automated
“Especially in the world of AI, only taste is going to matter in the future because execution is just going to happen, right?”
Insight
Hyatt: Long-term static moats do not exist for modern AI startups
“But some kind of compounding effect where we think no matter what happens after this year, it's eBay, they just launch a product and 40 years later, the product looked basically exactly the same and it's just fine. Like that, that, those ages are not right now…”
Disclosure
Hyatt: Spark Capital ignores market size when evaluating investment opportunities
“We don't talk about or look at market size at all, unless it's sometimes there's a, you know, a confirmation that it's a small market.”
Opinion
Hyatt: Most AI startups are adapted products with superficial AI branding
“So we mostly have evolved products that are not good enough, or we have adapted products with a coat of paint on top that says AI.”
Insight
Hyatt: AI models must own the direct user interface to stay ahead
“I think you want to own the interface with the customer, and if you own the interface with the customer, you have the chance to iterate on an interface with the customer and stay ahead of everybody else.”
Insight
Hyatt: Pure compute-heavy AI labs without consumer applications will fail
“So if I compare that to somebody who's spending a bunch of money on compute for an academic lab for a very large foundational model I don't think those things accrue very well over time. I think you need to be full stack.”
Disclosure
Hyatt: We invested in Anthropic because capital isn't the only AI moat
“If we had believed that only capital was going to win, Then we would not have invested in Anthropic, because you know, surely Sam was telling us and everybody else, like, we're going to win the capital game. The capital game is the only way to win, and so ther…”
Insight
Hyatt: AI founders should build for model capabilities six to nine months ahead
“If you are doing something at the very edge, I mean, I definitely am constantly trying to advise founders and encourage founders to think about what the models might do in six months or nine months and start to chart there.”
Insight
Hyatt: Disruptive innovation rarely recurs in the exact same industry
“The nature of startups is That you're looking for disruptive innovation, and it is very, very rare that you're going to have disruptive innovation in exactly the same market, exactly the same industry over and over and over again.”
Insight
Hyatt: Top-down modeling could never have predicted Oculus
“But that's not something you could have ever modeled your way into before we made that investment, right? Like, virtual reality was dead, and it'd been dead for, like, 15 years plus until, you know, Brendan and Palmer and Nate walk in and give you a demo, and …”
Insight
Hyatt: Autonomous Vehicle Startups Must Partner With Major Automakers to Scale
“It, I think was the absolute right thing to do for the company. You know, I think I supported Kyle in decision, and it is a good exit but more importantly, you know, Kyle wants to lead the self-driving revolution, and we knew all along that that would require …”
