The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Benchmark's Sarah Tavel on Are Foundation Models Commoditising | Why Frontier Models Will Be Closed Source | Why the Value is in the Application Layer | The Future of AI is "Selling the Work" Not the Tools

May 6, 2024

Sarah Tavel from Benchmark discusses the future of foundation models, application layers, and AI. She talks about the shift towards selling work outcomes facilitated by AI, challenges in AI training costs, and the importance of strong partnerships in venture capital investments.

01:00:51

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Episode guests

Sarah Tavel

AI Summary

Highlights

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The future of AI lies in closed-source frontier models to protect technology and drive innovation.

Value creation in AI is concentrated in the application layer through continuous user-focused improvements.

Benchmark's partnership model prioritizes direct involvement with founders, fostering deep engagement and alignment for success.

Deep dives

The Increasing Cost of Training AI Models

Training advanced AI models is becoming increasingly expensive due to the need for significant investment in compute power. Each successive model requires more resources to train, leading to a potential oligopoly scenario. Despite expected cost reductions in underlying hardware, the demand for compute continues to rise, resulting in a costly race for advancements in AI technology.

Value Focus in the Application Layer

01:15

Why Be Real didn't succeed

01:16

Building Value Beyond the Foundation Model

01:23

Providing a Better Quality Product in Recruiting

01:14

Introduction

4min

Partnering with Benchmark and the 'Why Now' Story in Venture Capital

6min

The Shift Towards Selling Work Outcome Facilitated by AI

19min

Evolution of Network Effects and Specialized Models in B2B AI Industry

2min

Exploring Foundation Models, Application Layer Enhancements, and the Future of the Model Landscape

2min

Navigating the Complexities of AI Training Costs and Competition in the Tech Space

7min

Building Strong Partnerships in Venture Capital Investments

13min

Unveiling Missed Opportunities and Shifting Perspectives

4min

Excitement in Partnering with Founders and Investment Insights

4min

Sarah Tavel is a General Partner @ Benchmark, one of the most successful and renowned venture firms in the world. At Benchmark, Sarah has led rounds in Chainalysis, Hipcamp, Medely, Rekki, Glide, Cambly and more. Prior to Benchmark, Sarah was a Partner at Greylock Partners. Before Greylock, Sarah was the first 30 employees at Pinterest. Sarah joined Pinterest in 2012 after co-leading the Series A investment while at Bessemer Venture Partners.

In Today's Episode with Sarah Tavel We Discuss:

1. Becoming a GP at The Most Renowned Firm in Venture:

How did the process of Sarah joining Benchmark start? How did it progress? What was it that convinced her to leave Greylock and join Benchmark?
What does Sarah believe makes Peter Fenton the world-class investor that he is?
What does Sarah know now that she wishes she had known when she started in venture?

2. Foundation Models: Is it All Going to Zero:

Will foundation models be commoditised?
Will 99% of the funding going to foundation models go to 0?
How does Sarah view the future of open vs closed source?
Why does Sarah believe that all frontier models of the future will be closed-source?
Why does the business model of foundation models remind Sarah of the food delivery business?

3. Application Layer: Where $BN Companies Will Be Built:

Why does Sarah believe that sustainable value-creating companies will be in the application layer?
How does Sarah determine between a wrapper on top of ChatGPT and true product value?
Are enterprises opening real budgets for AI today or are we still in experimental budgets?
How does Sarah think about how AI companies differentiate when there are so many in the same space of customer service, sales team support etc etc?
Why does Sarah believe that it is rational to pay more for these companies when investing in them?
What does Sarah mean when she says the future is "selling the work and not the tools"?

4. Inside Benchmark: How the Best Do Venture:

What is the one rule that Benchmark is willing to break when doing a deal?
Why do Benchmark aim to be the best recruitment firm in the world?
Why do Benchmark not agree with the concept of reserves?
In a case where Benchmark have lost, why did they lose? How did they change their approach?

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The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Benchmark's Sarah Tavel on Are Foundation Models Commoditising | Why Frontier Models Will Be Closed Source | Why the Value is in the Application Layer | The Future of AI is "Selling the Work" Not the Tools

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Increasing Cost of Training AI Models

Application Layer vs. Infrastructure Layer in AI

Balancing Open vs. Closed Source Models in AI

Partnership Model and Differentiation in Investing

Investment Strategies and Decision Making

Value Focus in the Application Layer

Why Be Real didn't succeed

Building Value Beyond the Foundation Model

Providing a Better Quality Product in Recruiting

Get the Snipd
podcast app

AI-powered
podcast player

Discover
highlights

Save any
moment

Share
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podcast player

Discover
highlights

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Benchmark's Sarah Tavel on Are Foundation Models Commoditising | Why Frontier Models Will Be Closed Source | Why the Value is in the Application Layer | The Future of AI is "Selling the Work" Not the Tools

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Increasing Cost of Training AI Models

Application Layer vs. Infrastructure Layer in AI

Balancing Open vs. Closed Source Models in AI

Partnership Model and Differentiation in Investing

Investment Strategies and Decision Making

Value Focus in the Application Layer

Why Be Real didn't succeed

Building Value Beyond the Foundation Model

Providing a Better Quality Product in Recruiting

Get the Snipdpodcast app

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