E39: Tomasz Tunguz of Theory Ventures on AI, 2024 Predictions, and Metrics That Matter
Jan 15, 2024
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Tomasz Tunguz of Theory Ventures shares his 2024 predictions, discusses the changing landscape of AI, Microsoft's success in the AI industry, concerns about the venture capital industry size, and the metrics that matter for seed and Series A companies.
Microsoft is leading the AI race, leveraging their enterprise presence and distribution to generate significant revenue.
By the end of 2024, half of searches will be answered by generative algorithms, posing a challenge for Google if they don't catch up.
AI automation in sales and marketing has the potential to greatly enhance productivity and customer experiences.
Deep dives
Microsoft leading the AI race
Microsoft is currently leading the AI race, with their ability to cross-sell AI products like Office to a large user base. They have a strong presence and distribution within the enterprise, enabling them to command a premium and generate significant revenue. On the other hand, Google is lagging behind in AI, while Amazon is also far behind. Startups like OpenAI and Anthropic have made strides in the application and infrastructure layers, but Microsoft remains the frontrunner in the B2B space.
Shift towards generative algorithms in consumer search
There is a significant shift happening in the consumer search landscape, with the prediction that half of searches by the end of 2024 will be answered by generative algorithms. This shift is driven by the desire to differentiate mobile experiences and the potential for strategic partnerships between companies like Samsung and generative AI providers. Google is starting to incorporate generative algorithms into their search results, but if they don't catch up, they risk being destabilized in this space.
Practical implementation of AI in sales and marketing
One area where practical implementation of AI is expected to be prominent is in sales and marketing. AI automation of tasks such as sales development representative (SDR) work can greatly enhance productivity and efficiency. AI-powered chatbots and generative algorithms can also provide personalized customer experiences and help with lead generation. This automation of sales and marketing processes has the potential to significantly impact the way businesses operate and interact with customers.
Impact of AI on Venture Capital
The podcast episode discusses the potential impact of artificial intelligence (AI) on the venture capital industry. The speaker explores the idea that as AI technology advances, it may lead to the commoditization of certain features in software-as-a-service (SaaS) tools. This could result in lower-cost competitors developing commodity tools that don't require per-seat licenses. While this may affect the business model of venture capital, the growth of AI and a shift in emphasis towards other areas could offset these effects.
The State of Venture Capital Funding
The podcast delves into the state of venture capital funding, particularly in relation to different stages of investment. It highlights that traditional venture capital has experienced significant growth, with a majority of late-stage capital being raised by non-traditional sources. However, this shift in funding dynamics may impact valuations and multiples in the mid stages, as the market becomes more competitive. Nonetheless, there continues to be a strong presence of innovation and opportunities at the early stage, with a growing number of unicorns and a promising future for startups seeking seed and Series A investments.
Founder and General Partner of Theory Ventures, Tomasz Tunguz, shares his founder story, his predictions for 2024, and his point of view on artificial intelligence from the changing landscape of AI to Microsoft’s leadership in the AI race.
He also shares insights on the impact of inflation and interest rates on the tech industry, concerns about the size of the venture capital industry, and the metrics that matter for seed and Series A companies.
