Two VCs On AI’s Possibilities — With Joe Marchese and Michael Mignano

Michael Mignano is a partner at Lightspeed VC. Joe Marchese is a general and build partner at Human Ventures. The two investors join Big Technology Podcast to discuss this new wave of generative AI's potential. We interrogate how this technology might be overhyped, and then speak about the potential areas of opportunity. Three domains stand out: 1) Content creation and entertainment. 2) Search and discovery. 3) AI as an assistive agent. Tune in for the second half where we discuss platform strategy and the associated risks. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

  LinkedIn Presents.

• 0:14Alex Kantrowitz?

  Welcome to Big Technology Podcast, a show for cool-headed nuanced conversation of the tech world and beyond. This week on the podcast, we have two venture capitalists talking about the opportunity that they see in this latest wave of generative artificial intelligence. Joe Marchese is a general and build partner at Human Ventures and Michael Mignano is a partner at Lightspeed VC and the co-founder of Anchor. With all the hype we've been hearing about generative AI, I figured it was just time to have a grounding conversation. You know, what is the actual business opportunity here? And is it going to be incremental or a sea change? These two VCs you're about to hear from believe it's the latter, that this is going to be big. And they help us flesh out a bit about

• 0:55Alex Kantrowitz?

  where this is going. As you listen, I suggest paying attention to three main categories. One, content creation and entertainment. Two, search and discovery. And three, and this is probably the most interesting one, the AI acting as an assistive agent. So stay tuned for nutrient-rich, fun conversation. And this one's a bit on the shorter side after a few longer episodes over the past few weeks. My conversation with Joe Marchese and Mike McNano, coming up right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer

• 1:38Alex Kantrowitz?

  experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large-scale agentic CX transformation, including the business decisions, trade-offs, and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their

• 2:15Alex Kantrowitz?

  inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation.

• 2:28Alex Kantrowitz?

  Joe and Mike, welcome to the show.

• 2:30Speaker 01

  Good to be here.

• 2:31Alex Kantrowitz?

  We're going to talk a lot about the opportunity that this new wave of AI has. And one of the things I think a lot of people are trying to figure out at home is, is this, it feels like it's something, but is this going to be another fad like crypto was, right? Is this going to be something that has a tremendous amount of hype and fades away? Now, I'm going to let you guys spend most of this podcast making the case like that maybe there's something and maybe we should be afraid of it. But let's first start with a theory of what, if this is a flash in the pan, like what is the path for it just fading away as a bunch of hype? Joe, I feel like you'd be good to start this one.

• 3:09Speaker 02

  I mean, I don't know if I'm good for, for what would make it fade away. I think, I think there's, because I just don't believe that there's a chance that this is, isn't fundamentally industry changing at every level. I think the difference is, you know, whereas crypto and web three, they have aspirations to make wholesale changes to the monetary system and, you know, basically new forms of government and new forms of governance. Like this AI is fixing the boring stuff and that's how you know it's a real business. It's like, it's just making workflows more efficient at these, at these micro levels of like legal processes and HR and, and like, so just that alone, I don't, I don't see a path that it isn't already going to have an impact on, on multiple, multiple business lines.

• 3:52Alex Kantrowitz?

  So then let me rephrase, let me rephrase. So instead of fade away, like have a minimal impact instead of an outsized impact, because you see every day, like all these predictions of how this is going to change the world. And so what is, is there a way where it just like makes a few things a little bit better? Or like, yeah, what is the path for that?

• 4:14Speaker 01

  I mean, I think maybe you would want to start, so, so first of all, let me just say, I agree with Joe. So I think if you wanted a podcast of two people like choking each other, uh, yeah, this, this episode may not work out that way, but, but, but I agree with Joe, but maybe a framework for analyzing your question and thinking about it is to sort of think about the, the areas of, of business or really life in general that stand to be most disrupted by this, and then maybe the areas that are least disrupted by this. And, uh, and think about those areas, right? And those areas that this technology just can't or won't get to anytime soon. Now, the question is, which areas are those?

• 4:56Speaker 01

  Well, I think let's start with the areas where that on the opposite end of the spectrum, maybe we can like work our way down. I think like inevitably, these tools we're already seeing are really good at doing things that humans can do, but just a lot faster, right? And I think that's why you're seeing things like you're seeing a lot of these like virtual assistants, you're seeing things that write on behalf of people, you're seeing a technology that analyzes text far faster than humans ever could. So maybe, maybe one, one place we could focus are like, what are the things that are, that are uniquely challenging to do regardless of time, right?

• 5:38Speaker 01

  I don't know. Do either of you have any, an idea based on, based on that prompt?

• 5:43Speaker 02

  No, I mean, this is, this is the struggle. I mean, I've spent the better part of obviously the last couple of months is, as everyone has been just captivated by the rollout of AI into people's hands directly. And the more I've dug in with every business, I'm convinced that it's not a single business. It's that every business is going to have to figure out what role it plays in it. It's like, it's like saying that you're a cloud business. You're not a cloud business because you worked on AWS or Azure, like that was just the most efficient way to host your servers. And so I think that this is, I'm pretty convinced it's pervasive. I guess what you could make the argument is that if it becomes so pervasive that everybody has it and it's then, then it doesn't mean anything to anyone, right? And but like you'd still make, you'd still have

• 6:25Speaker 02

  to make the argument that those that are most efficient at using it will end up winning. Like I, I think the line was AI isn't going to replace humans, but humans who use AI will replace humans who don't use AI.

• 6:36Speaker 01

  Yeah, we just had Palmer Lucky on the show last week talking about like AI won't kill humans, humans with AI will kill humans. But sorry, same, same, same philosophy. Yeah, go ahead, Mike. Yeah, I mean, I personally like, I think the, the companies that are most interesting right now, or that will be most interesting over these next few years are actually the ones that look to take advantage of the AI more aggressively and more quickly than other companies, right? The companies that are more quickly going to be adopting things like Copilot to help write their code, you know, the marketing teams that are more quickly going to be adopting ChatGPT or, or, you know, our products that are based on large language models to help with writing. Those are the companies that are going to have massive efficiency gains. And it's almost like if you're not using those things, you're going to be at a disadvantage.

• 7:19Speaker 02

  And, and one thing, one, one new Lens that I've been looking at this through is like, I think, you know, someone said once, I don't know if this is the exact quote, so I won't butcher it, uh, or who said it, but it, but, because I don't want them to not want credit for this, but it's basically like, strategy is doing the hard thing, right? Like, like, like, everybody has ideas, but like, execution is the hard thing. And it used to be the technology was the hard thing, right? Purely like, you know, we needed enough engineers and enough coders. Now, if everyone's coding on top of these large language models and like, using Copilot, so one engineer could do the work of 10, or maybe even you get to a place where you, non-engineers can do like, a lot of the technical architecture. The question you have to ask yourself is, what's the hard thing? Like, what is the new hard thing if, if everyone has all these tools at their disposal?

• 8:04Speaker 02

  And, and, you know, I, I would make a big case for, you know, cultural relevancy and brand, uh, and/or, you know, things that we talked about, like, in the humanities, like, what are the human insights that you're, that are driving your business and, and how do you, how do you maintain an edge? But it, for so long, was the ability to go from, I have an idea of how to put a button on a screen, to needing to build a lot of things to get to do it. Now that's the easy part. So now what's the hard part?

• 8:31Speaker 01

  Maybe the hard part is places where technology can't go, or has a hard time going, right? It almost feels like where technology can go will be completely, uh, AI will be completely deflationary to those, those areas of commerce or business. But actually, the things where technology can't go, maybe, I don't know, uh, whether it be construction or agriculture, and, and obviously, technology can reach these industries, but maybe more like the, the more offline aspects of these industries are, are the things that will be most untouched, uh, by AI.

• 9:02Alex Kantrowitz?

  Yeah. And the reason why I started at the beginning, talking about like, the bear case here, and, and I know, like, I think the three of us all believe that this is gonna be big. But like, yeah, I think there is some concern that, okay, if, how much should people buy in? It goes anywhere from, uh, CEOs deciding whether they need to input this in their business, marketing teams trying to figure out whether they should use it, reporters, for instance, thinking about whether they should write about it, and of course, VCs thinking about what, whether they should invest in it. The one thing that I'll say, and, and I, I want to get into some use cases, but the one thing that I'll say, you know, as we think about the bear case, is I'm also curious if you guys could help put into context the leap that we just saw, because

• 9:46Alex Kantrowitz?

  You know, if you think about it technologically, ChatGPT was just taking a technology that was already there, GPT 3.5, and putting it into a chatbot. You know, so we were talking about an incremental step and you can push back on me on this one, but we're talking about an incremental step in terms of, you know, computers being able to read and write. And that combined with image generation with things like Dolly and Mid Journey, which have gotten good. So, okay, that's interesting, but why would this represent a moment of like potentially unprecedented economic opportunity if the technology change is incremental?

• 10:22Speaker 02

  Well, well, there's, I mean, yeah, let me give, I'll give you one, one thing on the bear case side that could freeze us is we have no idea how trademark law is going to work with, with AI right now. We have no idea what the models are being trained on, like even like, it's going to be so hard to figure. So there could be a little bit of a delay as we figure out what's investable. Cause like to, to your last point there, to what VCs invest in, we look at, I mean, we're looking at everything we can here. And I'll tell you, it's hard to figure out investable unless you're going all the way to the arms range of like, you're going to build your own OLMs.

• 10:55Speaker 02

  But, but the idea of, um, I'm sorry, I lost my train of thought after the last, oh, no, sorry. The idea of what makes this a step change is two things. One is AI has been directing our attention for a long time. We famously all talk about the TikTok algorithm all the time. We all know what the Facebook news feed is, right? It's like, basically consumers have been talking about AI without even knowing they were talking about AI. But that was AI directing our attention to things made by other people, right? Now AI is literally creating the content. When you ask ChatGPT, it doesn't go search the web and then give you a reference. It creates an answer for you. So now like, what that does is it absolutely turns on its head, search,

• 11:37Speaker 02

  which how much of the internet do you think is based on search? Most of it, right? It turns advertising on its head, which is the entire internet economy is built on advertising. So like, so that means that like just trillions of dollars of market cap are, are. Up for grabs in some ways and but the chilling part of that is we don't really have a replacement model for that yet. So like I, I as much as anybody, I'm very excited for the day the internet is not wholly ad based because it's done some horrible things to the internet, including listicles and you know, Alex, we, we've talked about these plenty of times.

• 12:08Alex Kantrowitz?

  All right. You're former ad tech executive. I'm former BuzzFeed reporter. That hits home for both of them.

• 12:13Speaker 02

  I know. I think, I think, I think, I think we have some sins to, we have some sins to.

• 12:17Alex Kantrowitz?

  To a tone for?

• 12:18Speaker 02

  But no, but the, the internet being fully ad based is, was a problem for a lot of reasons. But for better or worse, it is an ad based economy. And AI by saying, okay, not only will I direct your attention, but I'll create the content for you. I mean, I, I, it's hard to overstate how big a deal that is.

• 12:37Speaker 01

  Yeah, I think this is a really important point.

• 12:41Speaker 01

  And you know, it's something, it's something I've been thinking about as well. TikTok per your point, Joe, ha- has proven TikTok and Instagram and, and frankly, companies like Spotify have been doing this for a while. They've sort of proven to us how good the models can be and the algorithms can be at giving us exactly what we want at the exact time we want it. For as long as our attention will, will stay focused on it. Um, and I think that those models are, are only going to become more and more needed as AI creates this sort of explosion of content. However, per your point, Joe, they're sort of all driving at the platform business model of today, which is effectively ad revenue or some sort of proxy for ad revenue, right? Let's just call it attention.

• 13:26Speaker 01

  If the platform can now make the perfect content, if, if the platform can deliver the perfect content at the perfect time, and now it can make the content at the perfect time. I mean, platforms are going to be, they're already, they already are really, really, really good at keeping us addicted. They're going to be literally perfect at keeping us addictive. And so I, I do think new business models are needed to break away from that. I guess the question is, you know, will, will users pay for news, new models, right? Like, will I pay for a model to give me the content I think I want versus the content that the TikTok algorithm has sort of proven that I want? It's kind of like, you know, I know I should eat more broccoli and eat more vegetables, but I still eat the cheeseburger every once in a while.

• 14:09Speaker 01

  Can, can vegetables win? Can a new sort of vegetable model, uh, win? Uh, because I think. I think it's gonna have to, or something's gonna have to give, otherwise we may all end up like the, the final scenes in Wally where we're just floating around on these machines staring at our, uh, at our, at our screens all the time.

• 14:27Alex Kantrowitz?

  It seemed bad in the movie, but every now and again, I, I do wish to be that Wally.

• 14:31Speaker 01

  They look happy. They, they seemed happy.

• 14:33Alex Kantrowitz?

  I mean, yeah. So, so I'm just gonna, well, I don't know if this is reading between the lines or whether you guys are explicitly saying this, but hearing you both talk, it does seem that content creation, AI-based content creation, and then getting that to people is like the number one big opportunity here. Like just, is just companies creating content through AI. How right or wrong is that?

• 14:58Speaker 02

  I mean, I don't know how much, how much your listeners like have been really going deep on AI and what, what, what the LLMs are, but just let's pause for a second and think about how insane this is. When you ask it a question, when you ask ChatGPT a question, it doesn't actually understand the answer that it's writing out and it's not copying and pasting from the internet what it's writing on. It's taking each individual word and giving a probabilistic outcome to the next word that goes after it. And then they end up forming whole ideas and thoughts and, and you know, you can say, you could say, I did this yesterday. You are David Ogilvy, come up with 10 taglines for new banana Oreos that do that. And it comes up and it writes it like him and, but he actually didn't go find it anywhere. It created that. So it's not, it's not just creating content.

• 15:39Speaker 02

  It's, it's creating the answers to our questions, you know, based on the sum total of, I mean, that should be awe inspiring to people like, and, and it, and it works right now. This is an example back to your, back to before where with the crypto and the web three side of the world where you're saying, hey, we're imagining a world that's going to change or become this. Well, the world has already changed and now we're just figuring out what to do with it, but, but it's, it's, it's unlike anything that we've seen. So, so it's hard to answer. Like how I, what wouldn't be affected by that. Um, but it's not just content creation. It's, it's, it's, it's answering our questions like those, like that's crazy.

• 16:19Alex Kantrowitz?

  I mean, search is a big business.

• 16:19Speaker 01

  Yeah. And, and through.

• 16:21Alex Kantrowitz?

  Yeah. Maybe it's more than that.

• 16:22Speaker 01

  And, and it's not just answering our questions, but through, you know, I'm, I'm sure you both saw like the plugins got announced recently. You know, there, there are companies that are, that are building models specifically for action taking, not just language. So it's very, very soon going to start. I mean, it already is possible, but we're, but more of us are going to see very, very soon at making the leap from words on a screen to taking specific actions that either we direct it to, or it directs itself to based on the answers to our questions. Right?

• 16:54Speaker 02

  Think, think of one small vertical, right? Like travel, travel industry, OTAs, Priceline, TripAdvisor, Expedia, hundreds of billions of dollars in market cap, right? And they really rely on that. You go to Google and you type, you know, where should I go on vacation? And there's a search results page of which they are one, two, three, and four. Most likely you click through one. I'm on Priceline. Oh, I know Priceline. William Shatner used to be the Priceline negotiator for me, right? Like out there negotiating my hotel room rates. So I can trust that this brand is getting me the best deal. Okay. I trust this. And then you, you make a purchase and there's a, that entire flow goes, goes around the other way. If you just say, you know, talk to me about where I should travel. Here's some things about me. Here's my income.

• 17:37Speaker 02

  Like, and it's giving you answers. And so then the process of booking, I mean, that's, and that's just one vertical of commerce. Right? And that is an entire vertical that is reliant on the flow of consumers today that usually started a search bar.

• 17:52Alex Kantrowitz?

  So Mike, Mike, you, you brought up the plugins. So I feel like it would be great to just, um, talk out what those are. Because they go into chat GPT and part of it is for instance, like having basically talking with a kayak, right? And having it then go book you a flight. Like, can you expand a little bit upon what it is?

• 18:11Speaker 01

  Yeah, basically, OpenAI built in, basically, you know, a developer ecosystem now to ChatGPT, where developers, applications, you know, products, services can integrate directly with ChatGPT. So, you know, if Joe says, hey, you know, I wanna, I wanna travel to Barcelona next week. What's the, you know, best time of day, you know, give me some option, whatever. It can now go and plug in directly with, I think, actually, Kayak has a plugin.

• 18:41Speaker 02

  Yes.

• 18:41Speaker 01

  I could be wrong. And go do the transaction right from within ChatGPT. And, and, you know, there are a number of these, Wolfram Alpha, Wolfram Alpha. But maybe the most interesting one is there's a plugin that just connects it to the Internet, which is, which is a huge deal, because ChatGPT, you know, or GPT-4 is trained on, you know, a corpus of data that goes up until, I think, you know, somewhere in 2021.

• 19:06Speaker 02

  September 21.

• 19:07Speaker 01

  Yeah, September 2021. It's not live, it's not connected to the Internet, it's just a snapshot in time. But now it is connected to the Internet, and so it can go seek real-time information and take actions based on that real-time information. So, yeah.

• 19:21Speaker 02

  Think about that example, think, think about the kayak example for a second. Like, let's just all pause here. Okay, so a incredibly smart AI has now plugged into a kayak, you know, so it can go book you your travel. But why does it have to? Like, why doesn't it just plug into Delta and to Marriott and to, you know, like, like restaurants on the ground? Like, that layer in between doesn't really make sense if the AI can figure out what, like, what it is you wanna go do, right? And so, how long until that becomes disintermediated or risk of disintermediation? Like, that is, that is, that is tons of industries.

• 19:59Speaker 01

  I think maybe the more interesting question is, okay, so everything's gonna plug into this. Like, ChatGPT will be able to go anywhere. Where can ChatGPT go? Right, right now, it is. In a box on my computer, I have to navigate to whatever chat dot openai.com or whatever. Where am I going to be able to access chat GPT from a year from now, two years from now? That brings that capability so much closer to to me, to the thought in my brain, right? Like, oh, wait, I want to go to Barcelona next week. How can I act on that immediately? I think it's probably pretty inevitable. It's going to get much closer to our smartphones, maybe our watches, maybe our our our smart speakers in our kitchen. Where where is this going to be distributed to? I think is is is.

• 20:44Alex Kantrowitz?

  And I can't stop thinking about this, and I brought it up on the show before, but this Benedict Evans tweet talking about like people have been like awe inspired by the fact that you can have GPT four in Microsoft Excel and then ask Excel questions about your data. And what he says is the old way of thinking about this is it's just a feature on programs you use already. The real question is, why do we even need Excel? Because if you just upload your data into some AI cloud and dialogue with it, you might not need to have those spreadsheets like you did before. How do you guys think about that?

• 21:23Speaker 02

  Yes, I mean, I think that's that I guess kind of my point is that there's a step in there that might just get skipped entirely. If if if AI is plugged into, you know, point of sale data at restaurants, they might not even have invoices at the end of the month to have to upload because like they won't just won't need to do that. And and that is such a amazing efficiency addition for small businesses, for supply chains. I mean, this could be very, very good news from us. And I know we'll get into the the scarier sides of it before we finish here, but like it could be very good news in terms of efficiency

• 22:03Speaker 02

  for the economy, like literal GDP up up into the right, you know, with less people. But we don't really have a replacement business model for that yet.

• 22:14Speaker 01

  Yeah, I I agree with that. I guess the thing I, you know, getting back to your question, Alex, the the part that I struggle with is like, what are the things where I actually do need to touch and feel and see something for it to be really useful to me, right? Like?

• 22:31Speaker 01

  You know, GUIs were created for a reason, right? Like, an actual user interface was created for a reason. It was because it became easier, faster, or more convenient for me to tap some buttons, either through a mouse on my desktop or on my phone than it was for me to type into a command line. So I'm curious to see, and I wondered a little bit about this like, you know, five or six years ago, when, you know, the sort of Command K within Slack, or whatever it is, like, that started to show up everywhere, right? Like, the command bar? I'm curious, like, if chat and voice and sort of interacting directly with an AI will replace this notion of a user interface that has been so pervasive over the past, you know, 30 years?

• 23:15Speaker 02

  I think that's a good point, because I do think that audio architecture has not moved. I mean, a lot of people ask, why didn't Amazon Home get there? Why didn't Google Home get there? Like, why isn't this, why isn't this all prevalent? And it's because without menu listings, audio is very difficult for, because, like, we all talk a little bit differently, right? We all think in slightly different mental models of how we form a sentence. And so without a command bar, it doesn't work. But this new system, like, I, you know, I would respond to ChatGPT, and I'd say, number nine from above, give me this versions of that. There wasn't, there wasn't some architecture that said, I had to press, you know, pound sign, number nine, you know, then this, or I had to spell out nine. It just figured it out. And I think that was what was missing from the last time audio.

• 24:00Speaker 02

  So audio didn't work before because there's no interpretation. And this has the ability to interpret. And so you won't need kind of a command hierarchy to be known by the user. Like, the only commands that were useful on Amazon Home, you had to already know what the commands are, right? And that's, that's just not helpful, because we don't all think the same way.

• 24:16Speaker 01

  Yeah. All right, let's take a quick break and come back here. We're here with Joe Marchese, General and Build Partners, Partner at Human Ventures, and Michael McNano. He is a Partner at Lightspeed and the co-founder of Anchor. We're going to be back right after this to talk a little bit more about the opportunity for startups and then some of those worries that Joe mentioned.

• 24:33Alex Kantrowitz?

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• 25:18Alex Kantrowitz?

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• 26:00Alex Kantrowitz?

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• 26:39Alex Kantrowitz?

  And we're back here on Big Technology Podcast. We have Mike McNano here with us, co-founder of Anchor and a partner at Lightspeed VC, and Joe Marchese, a general and build partner at Human Ventures. Great to have you both on. So we actually talked about some interesting things in the first half that I think they require us to expand upon them a little bit. Now, we talked about the fact that OpenAI is releasing plugins for ChatGPT, and you're both venture capitalists, thinking about how can companies actually go up and build on top of this software. So when the plugins came out, some people were like, well, there goes a generation of ChatGPT startups, because OpenAI is just releasing it on their

• 27:19Alex Kantrowitz?

  own. And then I think about Bing and Microsoft's offering, and I wonder in some ways whether these big platforms, like the model has always been to build platforms and allow other people to build on top of the APIs. And at first, it seemed like ChatGPT and Bing were demos, and I even wrote that that was the case. But now I also wonder, do these companies think they have something so powerful that their use case is actually the demos themselves, right? The ChatGPT and the Bing, and not making this available to everyone? I'm curious how you think about that. Like, doesn't it make more sense for like, an OpenAI to just make ChatGPT the platform as opposed to,

• 27:59Alex Kantrowitz?

  you know, try to make money on its API because of the power there? And how does that influence your thinking as a VC? Mike, do you want to take this one?

• 28:08Speaker 01

  Yeah, honest answer is I'm not sure yet. And I think they may not be sure yet, which I think is why they're probably doing both, right? And it does, it's only been a few weeks or a few months or whatever, but it does seem like they are investing more and more into ChatGPT. It does seem like it's becoming more of a destination than it was. I mean, you know, there, I think there are some figures being thrown around about how many subscribers they have and how much revenue they're generating, and they're all pretty mind boggling. At the same time, you know, I have to manage, I have to imagine that their API business is really, really healthy and robust as well, because it seems like pretty much every company I talk to is

• 28:50Speaker 01

  is integrating with the API and looking to get access to more and more credits for their users and more GPUs. So I'm not sure. It's hard to say from where I sit. And if I was at that company, something tells me I'd be unsure inside that company as well. So it's possible they're still just pursuing both.

• 29:09Alex Kantrowitz?

  Right, like Joe, like Joe, I mean, and just to set Joe up, I mean, think about just the Bing example, right? Where if this is something that can unseat Google or even take a chunk of its market share, like, isn't that where you want to focus versus like making your GPT for chat abilities available through Azure?

• 29:29Speaker 02

  Yeah, maybe. Again, I sorry. So this is this is the hard part. And this is where I'm perfectly willing to say we don't know yet. And there's you have to watch. It's hard to tell what's exactly investable, except for a couple of key categories. I think to your point that you brought up early, that Benedict had said about, well, why are we adding, you know, chat GPT capabilities to Excel? Why are we adding chat GPT capabilities to search? Like, maybe this is, maybe there's a different interface that we're going to be coming through that accesses these capabilities. Where I think you can start to get a little bit of comfort right now is to say, okay, what were real businesses that might not have been venture investable businesses,

• 30:13Speaker 02

  but they have a real product? Usually, I tend to like ones that end in the physical world somewhere because, you know, atoms are infinite and molecules aren't right? Or sorry, bits are infinite and molecules or atoms aren't. And so, you know, but now with AI, it might be a venture investable business because you've got someone who can do the hard thing, like we talked about before, like, maybe that's logistics and getting products to people, manufacturing hardware. But now with this AI layer to it, it's going to improve the capabilities or efficiency of the business to a place where there's there's venture returns. So that's that's something that you can look at right now. You can also look at people who are skilled craftsmen in a particular area that now will be able to expand or scale what they do.

• 30:56Speaker 02

  You know, I was talking to a good friend of mine, Apollo, who's at LinkedIn. And he's looking at this idea of the kind of future of work with AI. And it's, yes, maybe I could do my job in a quarter of the time. So what am I going to spend those other three quarters of my time doing? Like, what is the part of my job that is, makes me uniquely good at it and a craftsman? And now expand that. And, and I think that's exciting for, for a lot of people.

• 31:20Alex Kantrowitz?

  Do you guys both have companies that you've invested in that you want to talk about? Like, why you think they're, you know, interesting? And, and what do they represent? Or is there like specific categories of companies that you're looking at that people should be paying attention to?

• 31:35Speaker 01

  This doesn't directly answer your question, but it sort of calls back to, to what I said earlier. I mean, I think what I'm most excited about right now are companies that are using AI, maybe not only in their actual products, but also as a company. If you think about like the things that companies can do to drive greater, greater efficiency, better use of their capital and time. Again, it seems like you're, it seems like you're almost being wasteful at this point. If you're not plugging AI into pretty much everywhere it can go inside of your company. So that's one thing I'm looking at with almost every company that I'm talking to. It's just like, how are you leveraging AI to be more, to be, you know, more powerful than you could be without it?

• 32:16Speaker 02

  And I think you look at some of the ones. So I think Mike and I are both investors in Capsule, which, which is a perfect example of a company that the two founders had been building for a long time. They found a unique insight in terms of the, the browser rendering of video editing. They give it as no code video editor. And it had always had a component of AI before it got buzzy and, and cool. And everyone was piled onto it. But that's a perfect example of a real business that's now going to use AI to make it even easier for the editors to do their job. But they were selling a product to a business, right? I think that's interesting, you know, one that I'm not invested in. So you can say, so you can say I have the same thesis even when it's not my, not my financial upside. Like Jasper, Jasper was around for, I don't know, there's a great story.

• 32:59Speaker 02

  I would have five, six years where they were kind of bumping around copyrighting, copy editing. And then they, because they were trying to fix this one thing that was bumpy. And then they realized with AI, they could do it so much faster and it exploded. Like, I'm, I'm looking for those.

• 33:13Alex Kantrowitz?

  And that's Jasper's writing assistant.

• 33:14Speaker 02

  Which is very different. Yeah, it was a writing assistant, specifically marketing copy. Like, I'm looking for companies that have, they've built this infrastructure that with AI they could take off. And I think that's a very different profile than most VCs look for.

• 33:27Speaker 01

  I totally agree with Joe. Capsule is a great example. That team is incredible and they're just shipping really, really high quality features so quickly.

• 33:38Speaker 01

  The AI is making their product even better, but there has to be something really, really special about the team and the product even without the UI or the AI. I think Capsule is a great example of that. You know, we invested-

• 33:50Alex Kantrowitz?

  What does Capsule do exactly?

• 33:53Speaker 01

  Joe, you wanna?

• 33:53Speaker 02

  Yeah, so, yeah, so, well, that's what I was kind of describing earlier. So basically, it allows you to appear your, it's actually cloud-based that they have built, but it appears that you're editing video right in your browser. So social media manager, I'd say Bloomberg or the New York Times, could just edit video to kind of no code. Think of it as like Canva or Figma for a video, I think.

• 34:12Alex Kantrowitz?

  And what does the AI do?

• 34:14Speaker 02

  And so, and so now the AI is starting to be predictive. Put a chyron here. Maybe you should, oh, maybe you should title this sequence. Oh, here, I'll transcribe this. I'll transcribe the video for you and now you can edit it like, but the, so it's, it's just making it recommendations. You know, I liked the joke when Microsoft invested in OpenAI. Remember Clippy? Like, would just be up there and start talking to you. Well, now we have, now we have Clippy on steroids here. Like, like, that's, that's going to be the idea everywhere. But like, but, to Mike's point, the product that Capsule had been building for a long time was trying to make it easier for no-code people or, you know, without using advanced video editing tools to edit videos. That was the interface. Now AI is making it, they're making recommendations for them. Like, the person's just edited.

• 34:55Speaker 02

  Like, everyone's Scorsese at this point, right? But don't tell Marty. Marty, I said that. I'd be in trouble.

• 35:01Speaker 01

  Yeah, so, so I was really fortunate to invest in Capsule as an angel investor. Really excited that Joe invested as well. And, but in the context of Lightspeed, I recently invested in a company called Tome. And Tom has taken a similar approach where, you know, they've taken this massive, massive market of workplace presentations, right? Storytelling in the workplace through presentations, huge market, predominantly dominated by incumbents like Microsoft, et cetera. However, these things are really, really hard to create. And they also don't travel well, right? It's an old outdated format. It's like a 16 by nine fixed grid. And so sort of along the same lines of what we were just talking about with Capsule, this team spent the past two years building

• 35:45Speaker 01

  easier creation tools and a better format, a format that's actually mobile optimized and connects to all your different data sources, et cetera, et cetera, et cetera. And then when AI came along, they realized, oh, my goodness, we can leverage AI to drop the friction and reduce, you know, reduce the cost to the user to create one of these things to zero. And so AI has been a massive, massive force of democratization for this format and just makes the company that much more interesting and that much better. So I think it's really important that like the products and the companies have really, really sound and interesting business models and strategies, even in the absence of AI and such that the AI service is almost a rocket fuel for it. That's at least how I've been thinking about it.

• 36:27Alex Kantrowitz?

  So we have like five minutes left, or we have exactly five minutes left. Where are the worries coming in? Because you guys are both, you know, concerned about what this technology will do to society. Where should we be worried about where it might lead?

• 36:41Speaker 01

  Look, one thing for me, and there are definitely a long list of worries, but you know, I have two young daughters and, you know, my daughter, one of my daughters and I recently have been saying, oh, we want to, we want to write a children's book together, right? And so we've been playing around with that. And naturally, we started using chat GPT to help us create the concept and some of the, some of the, you know, narrative elements or whatnot. And by the way, it's been, it's been awesome. It's been fun. But there is a part of me that's like, we're cheating, you know, we're like, we're kind of cheating a little bit. We're not like, we're not doing this purely based on our own creativity. We're tapping into this a little bit. So I do think a little bit about like the educational aspect and, you know, obviously, there have been a lot of stories around cheating on

• 37:25Speaker 01

  exams and things like that. But I think more like, Where are the areas where I'm going to be using this or a child's going to be using this and they're not actually going to be learning concepts themselves? I don't know. That's something I think about.

• 37:37Speaker 02

  I think a lot about, well, we talked a little bit before, trademark law, what's going to happen. I mean, I described in a piece, a good friend is an advisor to human Esther Perel. So she focuses on relationships. She's a world renowned relationship therapist. Somebody wanted to see her and obviously she's very busy, she can't see it. So he created an Esther bot. He ingested all of her books, all of her podcasts, all of her writings and had a little bot that he could chat with that sounded like Esther to him. Think about the, not forget whether, how violating, you know, or not. Who's responsible for that? Right? Section 230 like prevents any algorithm for getting in trouble for recommending harmful content. How is section 230 going to apply to artificially generated content? Like who's

• 38:21Speaker 02

  responsible for it? Who's responsible for that AI bot that got created? Is it the large language model that they trained it on when they didn't have the rights? Do we have the rights? So trademark's one whole area. Then the area that we've all been waiting for, that we've been afraid of for a long time, but it hasn't quite reached capacity yet, which is deep fakes and, you know, flooding the zone with misinformation, or everybody getting their own version of the news. Like, we all think it's a utopian future where everything's customized to us. But what are the three of us going to talk about when we haven't seen the same movies? Because we all saw our version of the movie. We have, like, imagine we haven't seen the same news. Like, I mean, society functions based on having shared narratives, like from religion to money to politics. This is, this, this

• 39:04Speaker 02

  again, changes all of that in really significant ways. So I, I worry that, not that we couldn't figure it out, it's just the level of unintended consequences and the scale is so great. You know, I don't believe in any world we're getting a six month pause, but I can totally understand why it was asked.

• 39:22Alex Kantrowitz?

  Neither of you brought up job losses.

• 39:26Speaker 02

  Well, I think, well, okay, yes, I do think job losses is a big one, but I think that's, that's always been a fear, although I think this is different. My hope is that the increase in efficiency to, to workflows and, and the GDP overall, we find a way to put that back into society. I mean, it's a for a whole nother podcast, but I do think AI needs to be tied to UBI and, and some sort of revaluing the purpose economy. So that is things that are not counted in GDP, but we know benefit society. Childcare, a lot of education, mentoring, elder care. Like there's a list that we know, like volunteerism, that we know that makes society better. Civic participation.

• 40:09Speaker 02

  That is a huge topic and I, I have a lot of hope for that because yeah, I do think this will be a net job destroyer.

• 40:15Alex Kantrowitz?

  Yeah, neither, oh, sorry, neither. Both of you have, you know, expanded thoughts on this that you write about on the internet. I'd like to direct listeners, if they are enjoying this conversation, enjoy this conversation to find out where they can continue to follow your writing. And I think you have a piece that's dropping today, Joe. So would just love to hear you both share where people can follow your work.

• 40:39Speaker 02

  I, I'm easy to find on Twitter and LinkedIn is probably where I'll post most, most of my, most of my work. I know this, this venerable podcast is sponsored by LinkedIn. So, you know, I like to be a homer on that.

• 40:53Speaker 01

  Yeah, similarly, I'm just at McNano, my last name everywhere, Twitter, LinkedIn, Medium, Substack. All my writing goes to all of those different places. So, but, but to the, to the sponsor of this podcast's credit, you should, you should go check it out on LinkedIn.

• 41:10Alex Kantrowitz?

  Nice. Yes. Well, we're glad to be part of the LinkedIn Podcast Network here at Big Technology Podcast. And so glad both of you were able to join. This has been great. Thanks so much for being here, Joe and Mike. And that will do it for us here on Big Technology Podcast. Thank you, Joe, and thank you, Mike, so much for coming on. This was great. You guys have amazing podcast chemistry, so we'll have to get you back. Thank you, Nate Quatney, for handling the audio. Thank you, LinkedIn, for having me as part of your podcast network. And thanks, of course, to all of you, the listeners. I appreciate you coming back. Week after week, we had a record month in March, and let's go for another one in April. All right, so on Friday, we will be joined again, as always, or well, back from vacation by Rajan Roy, breaking down the week's news. So we hope

• 41:53Alex Kantrowitz?

  to see you there. It's going to, of course, be here on the feed and live on LinkedIn and YouTube, so please check it out there. And we will wrap it here. We will see you next time on Big Technology Podcast.

• 42:14Speaker 03

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