May C2V Notes From The Trenches
Welcome friends!
Before we get into our usual mix of (semi) awesome content, some quick housekeeping/shameless promotion.
As you hopefully know by now, we very much appreciate you all tuning in to read our monthly missives, and we’d certainly understand if that monthly dose was enough. But for those of you who really like it here in the trenches and just wish you had a reason to spend more time in these dark and peculiar, yet strangely captivating confines, Matt’s launching a new weekly Substack.
Why this, and why now? Well, as VCs in 2023, it seems we’re obligated to constantly pollinate the world with our unsolicited takes/advice/faux-wisdom, and Matt can’t figure out Twitter, so he’s trying this instead.
The goal is to stick to 800 words or fewer and a weekly cadence (the betting market has Matt pulling off both at roughly the same odds as a Mike Pence presidency, but we’ll see).
This may evolve over time, but the initial content plan is (as Matt has described it on his personal page):
A delightful cocktail of startup/venture takes, data deep dives, and occasional old-man rants, with a splash of juvenile humor and a garnish of woefully-dated pop culture references.
In other words, not too dissimilar to what you’re used to seeing in this space, just more of it.
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You Can’t Spell “Mania” Without “AI”?
To say Generative AI is all the rage right now might be the understatement of the year. Set off by the public launch of ChatGPT last fall, this thing has gone from zero to full-fledged frenzy in just six months, in a way that reminds us of another tech craze from a prior generation, and one which may serve as a template for how this plays out over the next few years.
More on that in a minute, but first, a bit of context.
Watson’s Deep Blues1
It’s worth a quick reminder that AI is not new. And we don’t mean Alan Turing and early machine learning models that never made it out of the lab due to data and computing power limitations; predictive AI has been in commercial use for years.
Nearly every software company in our portfolio incorporates at least a module or two that uses AI, and it’s very much at the core of some platforms (e.g., robotics, computer vision). We’ve also heard reports out of IBM HQ that Watson has been holed up in a breakroom for weeks watching the nonstop “AI is here” news reports and screaming at the TV that he was wiping the floor with human Jeopardy champions 12 years ago.
Okay, that last bit might be made up, but you get the point. What’s new is not AI, it’s AI that is (ostensibly) capable of performing all manner of functions based entirely on natural language commands and (perhaps just as importantly) AI that everyone can play around with thanks to ChatGPT.
Back to the Current Frenzy
Now we know what you’re saying, “Couldn’t one basically describe the entire history of venture capital as a series of leaps from one mania to another?” A little harsh, if not totally unfair, but despite the lifecycle similarities of every shiny new (air quotes) game-changer and its temporary monopoly on press coverage (“the next big thing” always making for excellent clickbait), not all manias are created equal.
Take the recently deceased Web3/NFT craze. While there was certainly a substantial, passionate, outspoken segment of venture-land evangelizing for (and dumping money into) this space, it was still only a relatively small subset of the overall market. Most venture manias fall into this category, but a rare few will capture the imagination and capital of the whole industry.
It’s still early, but this looks like one of the big ones, perhaps the biggest since the original dot-com craze of the late-90s. For those of us old enough to have been regular attendees of HORDE festivals, it certainly bears a striking resemblance thus far, and we believe it has a good chance of playing out similarly over the next few years.
We recently talked about the growing AI enthusiasm with one of our LPs, a highly accomplished, veteran engineer who’s been building AI models as long as just about anyone (i.e., someone much more qualified to comment on this than we are), who summarized it nicely. He said:
He does expect these LLM-based Generative AI tools to have long-term impacts comparable to the advent of online commerce, but…
It’s already crazy overhyped,
The actual impacts of this tech are completely misunderstood by most people (thus far, anyway), and as a result,
We will likely see “a thousand-car pileup of AI startups in a few years.”
Sound familiar (at least to those of you who are old enough to have owned Nevermind on cassette)? It should. This is pretty much exactly how the dot-com boom and bust played out.
On a longer-term macro level, the hype was entirely justified, but on a day-to-day micro level, the investment approach was a FOMO-fueled, capital-squandering mess, with investors throwing money, more or less indiscriminately, at anything with “.com” in its name. The NASDAQ made a full 4x round trip in just over seven years, from (round numbers) 2,000 to 8,000 and back, and triggered a recession in the process. But…
In the same year as that post-bubble market bottom (2002), Amazon launched AWS, PayPal processed more than $1.5 billion of e-commerce payments, and Google was on the cusp of overtaking the long-standing incumbents in search (claiming the top spot for good two years later).
It's still early in this one, however:
We’re starting to see generative AI-based products creep into more and more of our deal flow (including nearly half the companies in an accelerator demo day we attended last week), and
We’ve heard from multiple founders that they’re already receiving regular inquiries from investors about AI strategy, AI threats, AI pivots, AI fundraising, AI [just put any word here], etc.
Suffice it to say, the hype train is only picking up speed.
This is normally where we’d add a cautionary note, but who are we kidding? No one will listen anyway. Plus, we need to wrap up so we can finish the deck for the new C2V Generative AI Fund.
Our Latest Investment
Our latest investment from our pre-seed Tributary Fund is Eskuad, a no-code productivity and compliance platform for field workers that removes the heavy paperwork and manual reporting burden still plaguing field teams in a myriad of industries.
Eskuad’s platform significantly reduces time spent by field workers recording information in the field and transcribing it later by allowing them to enter information directly into standardized reporting templates while also providing simple controls (dropdown menus, drag/drop functionality, formula templates for common onsite calculations, etc.) and resources for responding to common worksite issues to reduce manual errors and costly work stoppages.
The app is specifically designed to support field teams in areas with little or no internet connectivity (a common feature of job sites in dozens of industries), allowing field teams to communicate onsite via Bluetooth and automatically sync to the cloud when users move back into areas with sufficient data service.
We see the target market for Eskuad as particularly large out of the gate. The no-code functionality allows non-technical team leaders to quickly and easily generate reporting templates tailored to specific job site requirements across various industries (maritime maintenance, construction, agriculture, mining, and stevedoring, to name a few). Furthermore, companies of all sizes in most of these sectors face the same issues, as the ERP platforms used by larger companies are generally not designed to support remote field workers, and getting ERP providers to add this kind of customization is expensive and time-consuming.
It’s still early for Eskuad, but they have pilots running with customers in multiple sectors and we believe they can efficiently scale in several of these verticals over the next few years.
C2V Watercooler
It’s been another busy month of visits with Founders, Investors and networking with other VCs.
(Left to Right: Christopher Feo, Leandra Elberger, Shavani Kim, Brian Hirsch, Justin Choi, Josh Felser)
“We look for people who really want the job,” said Chris Cunningham, a serial entrepreneur who runs C2, a venture capital firm. “And that sounds really simple to say, but some of the important people in the organizations I’ve run were the ones who were almost jumping out of the chair, saying: ‘I have to be here. I’ve been studying this company. This is all I’ve ever wanted. And if I’m not here, I won’t be happy.’ Those individuals also took that extra step to follow through after the interview. How badly do they want the job – I can’t stress that piece enough.”
Adam Bryant, former host of NYT corner office, and Chris reconnected, featuring Chris in Adam’s latest book, The Leap To Leader, coming out July 11, 2023.
Portfolio Spotlight
Driving Change In The Trucking Insurance Industry
Ian White from Koffie Financial joined the Operate Podcast to talk about the company. He also shares a crazy story of how he used Craigslist to recruit for his business and ended up on an FBI list.
Introducing smart plugins for ChatGPT
With Blutag's ChatGPT smart plugin, give your customers a unique shopping experience and dramatically increase the speed of building shopping carts!
Collecting Payments Starts With Better Invoices
“Small and medium-sized businesses are often inefficient at collecting money and sometimes fail to collect at all,” Jeremy Crane, founder of debt collection marketplace Retrievables.com, tells PYMNTS.
He adds that recently he spoke to a small construction company in the U.S. that was owed $40,000 and “hadn’t done anything about it.”
The Robots Are Coming (To Address The Labor Shortage)
There simply aren’t enough bodies to fill construction’s growing demand.
According to data published in 2021 by the U.S. Bureau of Labor Statistics, 65% of workers are aged 35 and older, with 21% above age 55. And although the number of new workers entering the labor force has increased slightly over the last few years, there simply aren’t enough laborers to fill the estimated 650,000 roles left vacant in 2022.
Driver Enterprise Solution joins Geotab Marketplace
Geotab Marketplace, an ecosystem of transportation applications and add-ons, has added AI-based mobility tech company Driver Technologies’ Driver Enterprise Solution, which helps small fleets increase driver safety and reduce equipment costs and installation times of new technology.
Southwest Airlines Upgrades Revenue Management
with Amadeus and Kambr
Southwest Airlines® (NYSE: LUV) has signed a multi-year agreement with Amadeus for its Network Revenue Management (NRM) solution. Kambr, an Amadeus company acquired in 2022 that specializes in providing revenue management solutions and advisory for airlines, has been a key contributor to this agreement with its airline revenue management expertise, consulting, and workflow best practices.
Ad spending is slowing, but it’s a return to ‘normal’
This week’s Media Briefing looks at Boostr’s 2023 Pricing & Yield Trend report to understand ad spending in the media industry.
Australian podcast advertising during Q1 grew by 43% year on year
New data from ARN’s iHeart and Magellan AI revealed Australia’s top 15 brands advertising on Australian podcasts for Q1 2023.
Job Opportunities
Beam - Data Analyst
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