I was watching a fireside chat from SaaStr 2023 between Jason Lemkin and David Sacks (ex Paypal Mafia, All In podcast co-founder and managing partner at Craft Ventures, with $3.3 billion under management). David and Craft are considered top SaaS investors and David said that basically, the industry has been waiting for a catalyst, something that will accelerate digital transformation and help SaaS companies grow faster, and Generative AI seems to be it.
Interestingly Craft Ventures divides AI opportunities into three main buckets:
?? Infrastructure – massive rounds getting done at high valuations, but ultimately, David believes infrastructure will be owned by the the big tech and cloud platforms.
?? Co-pilots – every industry will have its own co-pilots. Lawyers, doctors, architects, designers, etc. There will also be horizontal, cross industry co-pilots like marketing, accounting, sales, etc. This is an opportunity for founders as large companies are less likely to venture in here.
? Pre-AI SaaS companies that are getting turbo charged by new AI capabilities.
Gong is able to analyse content of calls, Notion autocompletes page, etc.
Interestingly, one of the major points of discussion was if today, a company trying to say, disrupt payroll, can attract funding if it’s not using AI. The answer, at least for now, was yes, but the question is for how long.
As I mentioned in my previous post on VC Cafe, I believe there’s value in generative AI beyond the picks and shovels. Publicly traded companies that have been founded 20-30 years ago and are slow to adapt will become targets for disruption by AI-first products that require lower costs and increase automation.
The full talk is embedded below: