The Exchanges

Q So just want to give a flashback to our audience. What has changed in how you think about technology and startups since last time we spoke?

A You know, the biggest change, of course, has been the realization that AI is going to have such a huge impact on the market. Um, when we met last time, I had already invested in companies like Concentric, Vince, Robust Intelligence, all of which are AI native companies, but at that point, they were just regular companies. Nobody thought of it as an AI company. After ChatGPT, people became aware of the capabilities of AI, and that is having a tremendous impact on the market. Now, those companies are still growing. Robust Intelligence got sold. It became Cisco Intelligence. Evinst and Concentric are now mid-stage growth companies. So, you know, the businesses continue to build, but I think the public realization of the impact of AI is going to be huge. It's a generational technology.

AI assessment note: “the biggest change, of course, has been the realization that AI is going to have”

Q And Ashmeet, you also teach about scale and markets, a class. Right? From a VC perspective.

A Yes, I have a class called Market Size from a Venture Capital Perspective, which is really better described as market size for markets that don't exist yet. One of my frustrations is that often entrepreneurs don't think about the market that they're going after well, and so I developed this class as a way of giving back, as a way of talking to people, and I've taught this class at Stanford, at USC, Um, at Wharton, in different universities, different locations, uh, you know, at conferences, et cetera, where I talk about how should an entrepreneur or a venture capitalist think about a new market? In other words, a market that doesn't exist yet. How should you try to estimate that market size? And, um, you know, I'm always, uh, it's, it's gotten a good reception, so I think it's really important that people think and understand that carefully. Because many, many, many companies fail, not because the entrepreneurs don't work hard, or they don't have a good insight, or that they don't get financed, but because they have not estimated the market correctly. They haven't thought about what is the true market size that they're going after. Because here's the sad truth. A company can only be as big as its market. It can never exceed the size of its market. And so it's really important to get that market size right. And I'm always happy to share that, uh, that lesson. Maybe I'll do it as…

AI assessment note: “Yes, I have a class called Market Size from a Venture Capital Perspective”

Q So when you are evaluating founders, is storytelling one of the abilities that you are also evaluating them on?

A Absolutely. Um, I'm evaluating them on all criteria. Do they have the education? Do they have the experience? Do they have the sales skills, the storytelling skills, the relationship skills, the recruiting skills? Reality is no founder is perfect. No founder has all of these skills. And so what I'm really evaluating for is the meta skill Which is, are they going to learn this? Are they going to spend the time and effort to try to learn it, and how good will they be at learning it, and do they have those abilities? So that is also part of my job as a venture capitalist. Um, you know, I share this anecdote with people that my current title at Engineering Capital is Chief Engineer.

AI assessment note: “Absolutely. Um, I'm evaluating them on all criteria.”

Q Is there a way to bring that back that ecosystem? Because then it creates so much inefficiencies, like a company at a hundred million ARR is even not able to deliver value to its stakeholders.

A It is absolutely possible to bring it back. Uh, the reason that this has happened is because mistakenly the bureaucrats and Washington DC and the elites believe that they are protecting the widows and orphans and the uneducated people who are not well informed from making a mistake in buying that stock. What they have done instead is they have prevented people from buying stocks, which could be very valuable. Uh, your four one K, your pension plan, your retirement account, they should all have benefited. They can only, most of them can only participate in public stocks. And so right now there's a movement to allow people to invest in private companies. Instead of that, we should be doing the reverse. We should be allowing companies to go public. Um, we, we have, uh, you know, people don't realize, but the number of public companies in America today is half of what it was 20 years ago. We should be four times the number. Of what we were 20 years ago. And I think a good government could make that change very quickly.

AI assessment note: “It is absolutely possible to bring it back.”

Q And what about the other companies, Robust Intelligence, We Function, Concentrix? What were the insights?

A Yes. One of the things I love about this work is that every day I get to meet people who have a new insight, who've solved a creative new problem. And one of the problems that is existing in the world today is that, um, a phrase often popularized with data is the new oil because data is now such an important commodity that people use. I like to say data is also the new asbestos. In other words, data is toxic, and data will kill your company if you're not careful how you manage the data in your organization. And robust intelligence was started with a very clever insight on how to prevent data becoming asbestos in the artificial intelligence space. So the founder, your own singer, Um, came out of Harvard, you know, PhD from Berkeley and Harvard, very technical founder, and he understands the problem of data contamination. In other words, when you run an artificial intelligence system, typically people run an AI, they use some data to train it, then they create a model, and now this model is running in the real world. It's doing whatever you, whatever problem you have solved with this model. For example, here in the US, you know, we will often use Uh, artificial intelligence to deposit checks in the bank. Nobody goes to a bank anymore. You just deposit the check using your smartphone by taking a photograph of the check. Very simple AI application, uses image recognition, and frank…

AI assessment note: “robust intelligence was started with a very clever insight on how to prevent data becoming asbestos”

Q But I also asked about problem solving since, you know, you narrowed it down to Steve's job skill at problem solving and what you are also looking for, you know, focus on a very narrow problem. So how, how, how do entrepreneur people in general get better at problem solving?

A Oh, that's a really interesting question. I haven't thought about it carefully. Um, the, you know, I mean, I am an engineer, so I am by inclination a problem solver. Engineers are problem solvers. That's what we do. That's what we are trained to do, and we are attracted to that. I would assume that there are people who are attracted to problem solving and people who are not. And, uh, you know, as human beings, we would, if you then focus on what that problem is, you learn everything that you can about it. You look at different alternatives, then you can pretty much start solving that problem. You can start deriving what the outcomes will be over there. Um, that's sort of a very abstract view of it. Here's a more tangible way of what I would recommend if somebody wanted to start a company or somebody was looking for problems to solve. The one thing that you need to do is go talk to customers. If you imagine yourself in the world, and this is a place where I will contradict what Steve Jobs often said. Steve Jobs often said that the customer does not know what he wants, he or she wants. I don't believe that. I believe that if you spend time with customers and you really understand and really listen to what they are saying, you can identify the problem and you can solve their problem in a better way, in a more interesting way. And so that is the one thing that I think no entreprene…

AI assessment note: “The one thing that you need to do is go talk to customers.”