20VC Newsletter - 13th Oct 2024
Here are the transcripts and top takeaways from 20VC episodes released this last week!
Monday’s episode with Eiso Kant, CTO & Co-Founder @ Poolside AI:
Download the full transcript:
My 8 key takeaways:
$600M is the entry ticket into the AI race
It buys us 10,000 GPUs to enter the AGI race.
We made incredible model advancements through reinforcement learning from code execution feedback.
This will not be enough in the future.
Why Amazon and Google Could Be First To Win The Cost Game
They both realized they couldn’t be reliant on NVIDIA/AMD hardware & built their own early.
This allowed them to internalize those margins.
Google has TPUs, Amazon has Trainium & Inferentia chips.
Three Criteria To Determine Where Value is and is not
Three questions:
What is the gap between models today & human capabilities?
How large is the gap?
How easy is it to close the gap?
This comes down to where you can find extremely large web scalable data.
To What Extent is Blackwell Chips for NVIDIA a Needlemover
We are seeing around 2x training improvements every 2 years.
There is more potential to unlock an entire new game for inference.
NVIDIA will still make as much as possible because the demand for compute is insane.
Why We Built a Global Not US Company
We made a list of 3,000+ potential hires.
A majority of them are scattered across Europe.
They do not want to relocate, and there are so many ambitious young people in Europe.
Why It Is Hard to Be Sam Altman Today
He is building a general purpose model for everything & everyone.
He is building a platform & a consumer product at exactly the same time.
It is an incredibly competitive market.
You Cannot Have Work Life Balance and Win The Race
We will look back to this moment 10 years later like we did with mobile & the internet.
We will realize this was the moment the table got set.
You want to give everything you’ve got in this period.
Why Yuri Milner is So Special
He is a big believer in becoming a spacefaring civilization to continue humanity’s story.
He understands technology waves that are happening all over the world.
Very few have that conviction & found a way to place bets all over the globe.
Wednesday’s episode with Jeff Wang, Managing Partner @ Sequoia Capital:
Download the full transcript:
My 8 key takeaways:
Why The Best Investors are Pirates Sailing to the Right Island
Sailing to the right island is more important than picking the right ship.
We prioritize picking the right theme over the right company.
Our research process is 70% on theme & 30% on company.
Why Crossovers are More Attractive: The Tourists Have Gone
There have been a lot of tourists on the hedge fund side over the last few years.
They dabbled in the private markets & got burned.
They are out of the market now.
Why Company Predictability Will Impact IPO Window
Many companies took years to achieve revenue predictability for public markets.
The markets are more stable now.
These companies are IPO ready.
Why Nvidia's Price is Reasonable Today
It’s reasonable if you think it’s going to keep going up
Nvidia is trading at 25x next year’s earnings.
Hyperscaler capex has grown 50% YoY.
‘25 could grow 30%, ‘26 could grow another 30%.
Why Meta Will Be The Biggest Competitor to Google
Meta has the #2 chatbot in the world.
It is connected to Instagram, Whatsapp & Facebook.
AI helps Meta with ad matching, while Google struggles to adopt AI without cannibalizing search.
How Sequoia are Playing AI in the Public Markets
We invest in:
Semiconductors & hardware: These power the AI industry.
Application companies: These can profitably infuse AI into their products over time.
Buying a nice core business with call options on AI is a very good approach.
Why China Is F***ed and Can It Recover
Companies have been less transparent with us over time.
The current administration is destroying net new companies created.
BUT the founder quality is world class & the best Chinese companies will go global.
Lesson From Mike Moritz on Investing
Too much focus on numbers isn’t enough.
You have to be able to dream about what the founder & company can become over time.
You have to have the dream gene.
Friday’s episode with Eoghan McCabe, CEO & Co-Founder @ Intercom:
Download the full transcript:
My 7 key takeaways:
AI Companies Revenues Are Growing Fast
The average time it took SaaS companies to reach $30M ARR was 4-5 years.
AI companies take less than 2 years.
Most AI Investments will not do better than the S&P 500
We are still in the early days of AI & there is a lot of noise.
Your job as an investor is to filter out the noise.
Why It Is Nuts to Think Companies Will Build Their Own SaaS Tools With AI
It’s a terrible f**king idea, like building your own SaaS workflow.
Fin went through 100+ experiments with 30+ ML scientists, and 100+ engineers alone.
There is so much more depth to this, you can’t build a highly performant AI agent on the side.
Why Gurley Is Wrong and More Companies Do Not Need to Go Public
VCs want liquidity.
Founders have a different mission & time horizon.
All the regulation & compliance just gets in the way of building a generational company.
Professional CEO vs Founder CEO
Professional CEOs run things by consensus.
Founder CEOs run things by conviction.
Greatness will not come from doing things through a communist approach.
All Founders Are Unbalanced
No person in a grounded & loving community decides to start a tech company.
Founders all have big chips on their shoulders & much to prove.
That’s what gives us our edge.
Why Now Is the Time to Be Political
Western governments are impinging on freedom of speech & entrepreneurial freedom.
They are starting wars between nuclear powers.
It is important for humanity.
Let us know what your big takeaways from this week’s shows were in the comments below!
Thank you for reading, and don’t miss the great guests we have next week:
David Frankel, Managing Partner @ Founder Collective
Zach Perret, Co-Founder & CEO @ Plaid
Antoine Le Nel, Chief Growth & Marketing Officer & Partner @ Revolut
Thank you for reading 20VC.
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