Venture with Grace
00:02:31 · Dan Mishin, Jake Saper
[00:02:31] S1: I love that as real disruptors, you already disrupted the flow. That's like definitely the way to go. We just disrupted the banner. Let's see where we end here. Well, truly an honor to be here sitting with you. Person who actually came term AI native services. Is it true that like your blog post was like the first time this was like publicly mentioned as a term? [00:02:56] S0: Yeah. So for context, in 2024, I wrote a post called the death of Deloitte. And this post went viral, and then I received a cease and desist letter from Deloitte, which didn't love the concept. But I defined this idea of AI native services in that moment, and the reason I chose that term was very intentional. Before people talked about, like, services as software, I really hate that phrase. It sounds kinda cool, and then when you actually push on it, it means nothing. So AI native services is intended to describe what Dan is, which is a startup created de novo in the AI era to deliver a service faster, better, and cheaper than legacy players. This is different than the AI roll up thing that has received a lot of funding, and so I intentionally called it AI native services to distinguish it from all the roll ups. What Dan is building is really interesting because he started an immigration law firm from scratch, and he has hired some of the best immigration law practitioners and put them on top of an AI platform to deliver this service faster, better, cheaper than incumbents.
00:02:56 · Jake Saper, Dan Mishin
[00:02:56] S0: Yeah. So for context, in 2024, I wrote a post called the death of Deloitte. And this post went viral, and then I received a cease and desist letter from Deloitte, which didn't love the concept. But I defined this idea of AI native services in that moment, and the reason I chose that term was very intentional. Before people talked about, like, services as software, I really hate that phrase. It sounds kinda cool, and then when you actually push on it, it means nothing. So AI native services is intended to describe what Dan is, which is a startup created de novo in the AI era to deliver a service faster, better, and cheaper than legacy players. This is different than the AI roll up thing that has received a lot of funding, and so I intentionally called it AI native services to distinguish it from all the roll ups. What Dan is building is really interesting because he started an immigration law firm from scratch, and he has hired some of the best immigration law practitioners and put them on top of an AI platform to deliver this service faster, better, cheaper than incumbents. [00:04:06] S1: Yeah. For sure. By the way, our very first hire, the very first lawyer who joined us, Nicole, is right there. She just flew in. [00:04:14] S0: I think it's very... Like, it's very cool to be the first person to join an AI native service because I'm sure you came from some fancy firm, and like leaving to join this dude as charming and good looking as he is without any evidence. [00:04:26] S1: Not sure about that.
00:04:26 · Dan Mishin, Jake Saper
[00:04:26] S1: Not sure about that. [00:04:27] S0: It can be hard to get your first services per employee because it's not like a software startup where everyone knows what this is. You had to leave your big fancy thing and join this. Now it's obvious, but like you deserve a lot of credit, and I hope your equity is paid out. [00:04:47] S1: But okay. Let's take a quick step back and actually define what AI native services is versus purely selling software. Can you raise your hand if you know what AI native services business model actually means? We've got one in the back. Everyone So is like, what the hell are you guys talking about? That's that's that's my read of the room. [00:05:07] S0: It's like... It's... I mean, it it is as if we were in 2000 on a stage, and we're like, do you guys know what SaaS is? And people were like, what the fuck are you talking about? What does that even mean? Like sassy? Like what does that we are in this moment. The fact that none of you raised your hands, like think about this moment ten years from now. You're gonna be like, oh shit. That was you know one of the most dominant business models of the AI era, and these two jackasses were on stage talking about it. So like remember this moment.
00:05:32 · Dan Mishin
[00:05:32] S1: So basically historically, Venture Capital went into businesses that sold software to other businesses as a business model. The problem with that business model in 2026 is the fact that anybody can build software on cloud much faster, much better, much more customized, in a much more customized fashion right now. So where does the venture capital go? Does the venture capital as an industry die? Does it disappear? Is that it? Are we done here? I think the next biggest frontier of where there is going to be innovation is at the services layer. And the reason it hasn't happened historically is because services were never scalable. Think about your accountant. Your accountant can only service a finite number of people or companies and that's it. And that their capacity is their natural limitation, and then the quality of service starts deteriorating rapidly. What AI has made possible for the first time is that the actual service provider, the actual practitioners, whether or not it's an insurance broker or an attorney in our case or an accountant, can now do five times, 10 times, 20 times. Who knows where the limit is? The number of cases with identical equal quality without the quality deteriorating. That is the single biggest change that's happening in the 2026. That is the single biggest trend in my opinion, besides foundational model that's going on in the entire technology market right now, is that Venture Capital is pivoting to invest in AI native services. And my question to you Jake is that just like people thought that I'm crazy starting a service business and raising Venture Capital two years ago, I'm sure when you came out and you said, listen, we as a venture capital category are going to invest in this completely new asset class that we've never invested in. Why did you do that? What prompted you?
00:07:19 · Jake Saper
[00:07:19] S0: I mean the first honest truth is like as a VC, you have to be finding arbitrage. Like, your job is to try to get early to something and buy early when it's, you know, under... Not understood, and then, you know, later on everyone understands it and it's it's higher priced. So part of it was, like, I had a suspicion that this was an area that other people weren't spending time on, so I wanted to go deeper. I made an investment in a company called Mechanical Orchard in 2023, which is an AI native service for mainframe modernization. I didn't invest because it was an AIs business. I invested because the founder was this guy Rob Mee who started Pivotal Labs, which was one of most successful tech consulting firms he took public. But as I worked with him, I realized, oh, shit. This idea of using AI to deliver existing service faster, better, cheaper is bigger than mainframe mod. 80% of the American economy is services driven. 80%. That means like the whole SaaS thing that we've all been chasing for twenty years is a tiny fraction of the opportunity if you focus on services. Historically, services have not been investable because cost and revenue scale linearly. Because as you close a new immigration client, you gotta hire a bunch more of this woman here. This moment for the first time allows for discontinuity in those two lines. There is a now possible world where you can grow revenue and have cost stay static, which allows you to have a 70, 80% margin services business, which has a massive massive TAM that's much larger than software. So I did this investment. I realized it's something bigger. I wrote that piece. It went viral, pissed off Deloitte, and then I was like, wow. Deloitte and others wouldn't care unless I was onto something. And so I started just making a bunch more investments, and what I've been trying to do since is to amass the learnings on how to build these businesses because that's... There are a million examples of how to build a SaaS business. There are no examples yet of how to build a successful AIMS business because it's only been two years. So my job is to work with amazing people like Dan to understand, like, what did you figure out on early hiring? How are you pricing this thing? How do you think about deployment and tracking efficiency of the AI?
00:09:28 · Jake Saper
All those questions which are germane across AIANS businesses, I've tried to write up into this AI native services playbook, and I'm keeping an update. I just gave Dan a copy just now.