Kleiner Perkins’ Mamoun Hamid and Ilya Fushman: “More than 80%” of pitches now involve AI


Last week, in a StrictlyVC At the event in San Francisco, we sat down with two longtime VCs Mamun Hamid and Ilya Fushman Whose paths first crossed as children in Frankfurt, Germany, and who were brought in to restart renowned venture firm Kleiner Perkins about six years ago.

It seems they have accomplished their mission of polishing the brand. Among Kleiner’s bets in recent years: Rippling, the workforce management company founded by serial entrepreneur Parker Conrad, which was valued at more than $11 billion last year; Loom, a video messaging organization recently acquired by Atlassian for just under a billion dollars; And the design tools company Figma, which came close to being acquired by Adobe for $20 billion—and which Fushman and Hamid argue is now happily charting a course as an independent company.

Perhaps not surprisingly, Team Kleiner is also leaning heavily into AI investments, and this is what we’ve spent the most time talking about. You can find the video of that chat at the bottom of the page; In the meantime, follow excerpts of our conversation, lightly edited for length and clarity.

The last time we sat together in person was four years ago at a StrictlyVC event. At the time, SoftBank dominated the conversation. It has since been retrenched; What impact do you think it had on the industry?

IF: We’re going to be putting incredible amounts of capital into the venture over three to four years, and it’s not just SoftBank – there are a lot of people who have growth funds, crossover funds. And the influx of capital has done a few things. One, it created a lot of big companies. Two, some of those companies [became] More money than needed and some of them now have to rationalize what happens to them. When we were here four years ago our contrarian approach was to go back to basics and focus on early stage [startups] Mainly, where we said, ‘Hey, we’ll just have a venture fund and a very small team.’ We’ve always thought that this is a much more boutique business than some of these big players.

Your company looks bigger than when we last sat down. Now you have old-fashioned investors, experts and advisors [at KP]Including Bing Gordon and John Doerr.

MH: I think we might actually be younger than the last time we met. I think our total number of employees in the company is around 50.

Does ‘Everything AI’ change anything? Can you do more with less, or do you really need more people chasing all these AI researchers who are leaving Google to start companies?

MH: It’s incredible to have this tidal wave of technology innovation. I moved to the Valley in 1987 when we were in the middle of the Internet boom, and to be able to live through such a boom twice in my lifetime feels like a dream. So I think there is no better time than today to make a living and invest in startups because to your point, there is a change in how we all live and experience life, as well as how we work. There is going to be a step-change. This will come in the form of productivity that we will all gain through AI, and I think we’re already seeing that in the businesses that we’re supporting – whether it’s legal or healthcare or software developers. . AI is actually supercharging the highest-paid employees. They are able to do more work in less time.

Regarding all these AI engineers, are VCs actively reaching out to these big companies with stake offers? Have you done this?

Image Credit: techcrunch

I think it’s definitely happening but the allure factor of AI – the wow factor – has really pulled people out of these companies. As these tools become more useful and data becomes more accessible, these opportunities become clearer and more accessible. The big thing for us in this first wave of people trying to come out and start these companies was to try to understand: Are they really the people who know how to do this? We trust our founders to [help with these questions], We look for that pedigree, people who know how these things work.

If you think about the last 10 years in enterprise, there have been waves where technical talent becomes the scarcest resource, and we’re seeing that right now.

How are your portfolio companies addressing this challenge in terms of hiring? Meta and Google and OpenAI are offering packages worth millions of dollars to pursue this talent.

IF: We have companies like Harvey that are changing the legal profession. We have companies like Ambience that are transforming healthcare. We have companies like Viz that are doing automated stroke detection and medical diagnosis. This mission definitely influences the people who are joining those companies; This is a huge component. Second, while platform companies are building a lot of phenomenal infrastructure, when you get into real-world use cases and get into these areas that get really big over time, you realize That you need to make changes to the model and potentially build your own models and potentially your own infrastructure, and it becomes a really interesting technical challenge, which is also incredibly fascinating.

From the outside, it’s hard to understand how these startups build moats – or how strong these moats can be, given how fast everything is changing.

If: It depends on the company. The moat and overall market size are the hardest things to figure out as an investor; These are usually the things that feel most wrong to you.

One thing we have learned from our history is that we always underestimate our biggest winners. The companies that do best always grow fast. They create or expand their markets far beyond anyone’s estimation. So we look for some intangibles, one of which is incredible customer engagement. As such, when the product becomes a part of your daily usage, it is really difficult to break it.

The more obvious part of the gap is the part of the market you are in. A lot of the companies we’re supporting, especially in AI, are taking a bigger problem space that a company can and should have. For example, enterprise assistant, it’s a big space, and the people who figure it out first will be the people who move the fastest. If you look at AI, unless you’ve built an incredible product that just became available, you don’t get free distribution like you did with mobile. AI requires delivery and it requires data to improve the product experience, so in our view, the first movers to define a product category can move much faster than anyone else.

How many AI-related pitches are you seeing on a weekly or monthly basis?

MH: From a percentage standpoint, I would say more than 80%. To be fair, if you were building a company in 1996 and you didn’t mention the Internet, you’d be out of your mind, right? Similarly, not mentioning or using AI would be a missed opportunity.

And how active are you in this area, if we can call it that?

MH: If you look at Q1 to Q3 compared to last year, it was our slowest year in 13, 14, 15 years. Meanwhile, December was actually a good month.

That’s when you led a deal in Together AI, which was a very exciting deal. Why are people so attracted to this company?

IF: It’s running a platform and set of services for people who want to run their own models. This is in some ways an orthogonal move to weeding out oligopoly. [centered on OpenAI, Microsoft and Google] Who provide the infrastructure, but this is a company with incredible customers, really strong growth and a phenomenal nominal team, and the numbers speak for themselves. Again, we’re building vertical experiences – healthcare, legal, software, engineering, science – and there will be fine tuning and [proprietary] Some of these use cases may require modeling, and so that opportunity is really quite exciting.

I understand you’ve also invested in a wearable device started by someone who would make VCs drool. Tell us more!

MH: I’m not sure I can tell you more today. I don’t think they would want that. next time.

Based on what you’re seeing, do you think an AI wearable will win? Just like we carry a phone with us, will we use a wearable device?

I think the question we all ask ourselves is what is a computing platform other than a mobile phone. Some people wear Aura rings, some people wear Fitbits. I’m wearing whoop. These are beautiful, basic wearable items. They are not smart at all.

What is capturing the imagination of all of us is what is the next wearable computing device that we are going to adopt that does not look like a cell phone. There’s rabbit, there’s human AI pin and soon you’ll see Vision Pro Vision. Exciting things are happening there. But as you know, it is very difficult to get consumers to adopt new form factors and new ways of working. It requires some incredible design and low-cost products and beautiful interfaces, and I think we’re excited to see all of these things happen.

Figma, whose Series B round you led in 2018, just cut its valuation in half, from the $20 billion Adobe was planning to pay for it, to $10 billion. Where does it go from here?

MH: Figma is one of those companies that meets once a decade, from the team, from the product, from the love of the community, from the revenue profile, from the profitability. This is a venture capitalist’s dream. So it doesn’t hurt that it is charting its own independent path. It was bittersweet for everyone to agree to sell the company in September 2022. So I think we’re very energetic about the future and the company will continue to perform incredibly well.

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