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

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

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 6 May 2024

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

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Summary

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?

Transcript

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0:00.0	You just see the tremendous amount of investment that has to happen right now in order to progress these models.
0:06.0	Because at this point, it's kind of compute constrained.
0:09.8	You just see the progression where each successive model is going to be more and more expensive to train.
0:15.5	That suggests a world where you're going to have an oligopoly.
0:19.0	If you want a model that's on the frontier,
0:21.9	that's going to be close source. I just am a huge believer that the application layer is going
0:26.7	to drive most of the value. This is 20VC with me, Harry Stebbing, and today's show is incredible. Sarah
0:31.9	Tavel joins us in the hot seat. Now, Sarah is a general partner at Benchmark, one of the best
0:36.5	firms in venture, period. Such an
0:38.6	incredible discussion here on application layer versus infrastructure layer, on where sustainable
0:43.5	value will be generated between the two, and then a behind the scenes inside the benchmark model,
0:48.9	how they find, win, and help companies be their best. You can check out the full video on YouTube by searching
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	...

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