Venture Europe: Entrepreneurship | Technology | Venture Capital | Eu/Acc
00:25:53 · Calin Fabri, Chaz Englander
[00:25:53] S0: I I I just went to New York a couple of months ago, and I met this GP, and it's the first AI native fund. The only way that they make decisions is just they let the AI, you know. They have I don't know how many sources. Like how far away do you think we're going to be from the first PE fund that makes decisions just purely on AI? The humans there will just be on the relationships, investor relationships, but all the decision making is going to be by AI. [00:26:25] S1: I think about eighteen months. [00:26:27] S0: Eighteen months? [00:26:28] S1: Yeah. Wow. [00:26:32] S0: Also, talked with Steve from Feet. They led the round. He told me a bunch of questions that I should ask you. But I think the first one, and indeed I'm also curious, how come you guys decided to let them lead the round when, as everyone knows, you chose them over the elite of Silicon Valley?
00:26:59 · Chaz Englander
[00:26:59] S1: So this is an interesting one. It's an interesting topic. So first of all, when have a scale lawsuit and you have product market fit and you're going after clearly an enormous TAM, you're going to have acute competition. Right? Your only threat is competition, really. Right? You know, the way that we think about our business is if you have escape velocity, escape velocity, by way, I don't use that word lightly. Escape velocity is where twelve months ago, it was a risk to use Model ML. Now it's almost a risk in some cases to not use Model ML if you're working with all of their peers as an example. I'm not saying that's the case, but I am saying that that is what we define escape velocity as, right? So if you have those things, you have product market fit and escape velocity, what is your risk? Your risk is speed, right? Because in an AI world, you might have product market fit today, but you might wake up in the morning, you no longer have product market fit. So it all comes down to the speed at which you could move. Put bluntly, if you move faster than the competition, you will win fact, right? So that really played in my mind, particularly as we're coming to this round, it was competitive, the business was moving in the right direction, etcetera. And as we looked at our stage, right, and what was still going to be possible in the future versus now, I spoke a lot with Steve and know, Steve is a force of nature and arguably the best, you know, certainly the best fintech investment banker, you know, that's ever existed. And Steve had done a lot of work in the market. Frankly, a lot of people were looking at Steve as like, okay, tool is the out there from a verticalized perspective? And, you know, I sat with Steve and he gets it, know, Steve himself, remember, he's an entrepreneur, right? So he got it. And I think we made the decision on the basis that, you know, we're going to need every ounce of help we can get because Arne and I, we're not planning to come second. Know, I say team regularly, we have three outcomes, 1,000,000,000,000, dollars 100,000,000,000 and zero, and you have two choices, everyone better be choosing zero and $1,000,000,000,000 No one is choosing $100,000,000,000 We're not going to be sat there in twenty, thirty years' time saying, Yes, we made $100,000,000,000 company, but we came second. No one wants that, right?
00:29:24 · Chaz Englander, Calin Fabri
I think that really relates to Steve relates that and I think he has been incredibly helpful to the business, both in terms of as a customer and also now as a shareholder. [00:29:35] S0: Also, like some of the questions, I mean, if you can answer them, maybe some of them are not yet public, but what's an example of one or two larger clients? Like what's the size, scale today and at full ramp for some of those larger implementations?
00:29:35 · Calin Fabri, Chaz Englander
[00:29:35] S0: Also, like some of the questions, I mean, if you can answer them, maybe some of them are not yet public, but what's an example of one or two larger clients? Like what's the size, scale today and at full ramp for some of those larger implementations? [00:29:52] S1: Every time I answer this, I get it wrong based on who we've got permission from. I always point the audience in the direction of our website. I think it's like pretty obvious from there. Look, we're live now in production with eight out of the top 10 European banks by way of example, three out of four of the big four, similar names and numbers now in The US, you know, three or four of the, you know, best banks, bulge bracket and boutique advisors. Some of the most famous Tier one asset managers, you know, both APAC through to Europe, US. And we're pretty evenly split for now across consulting, asset management and banking. How that skews over time, I'm not sure. I mean, I think it will skew where the headcount is, which typically will mean that asset management will probably be slightly lighter by way of, you know, actual revenue. But that's on the basis that we're a seat based model or a usage based model. I think these systems over time may move towards an outcome based model, which actually you probably end up making more money from the larger asset managers. In other words, almost pricing on an AUM basis if I fast forward these systems sort of eighteen months out.
00:29:52 · Chaz Englander, Calin Fabri
[00:29:52] S1: Every time I answer this, I get it wrong based on who we've got permission from. I always point the audience in the direction of our website. I think it's like pretty obvious from there. Look, we're live now in production with eight out of the top 10 European banks by way of example, three out of four of the big four, similar names and numbers now in The US, you know, three or four of the, you know, best banks, bulge bracket and boutique advisors. Some of the most famous Tier one asset managers, you know, both APAC through to Europe, US. And we're pretty evenly split for now across consulting, asset management and banking. How that skews over time, I'm not sure. I mean, I think it will skew where the headcount is, which typically will mean that asset management will probably be slightly lighter by way of, you know, actual revenue. But that's on the basis that we're a seat based model or a usage based model. I think these systems over time may move towards an outcome based model, which actually you probably end up making more money from the larger asset managers. In other words, almost pricing on an AUM basis if I fast forward these systems sort of eighteen months out. [00:31:16] S0: Interesting because I was just about to follow-up on how do you think about pricing now? And how do you price it? Like do you price per seat and then per usage? You combine those, like how do you look at it? And how do you think this is going to change?
00:31:16 · Calin Fabri, Chaz Englander
[00:31:16] S0: Interesting because I was just about to follow-up on how do you think about pricing now? And how do you price it? Like do you price per seat and then per usage? You combine those, like how do you look at it? And how do you think this is going to change? [00:31:30] S1: So yes, for now we're a seat based pricing model. We do have a small number of large customers, on a usage based pricing model. I think the way the market will evolve is I think it will be seat based that will sort of evolve into usage based and usage based eventually may even evolve into outcome based, if I was guess. The way that we think about costs as well, to be clear, I think costs, in the last six, eight weeks, you'd probably rarely hear series A, B, C founders talking about the cost of the underlying models. But the thing is, is just based now based on what they can do and the volume that they can do. The example I used earlier of like, you've got a list that you're monitoring and it's going off and doing modeling and building materials, that list could be 3,000, four companies. Right? So suddenly you're building systems that subjects having the correct infrastructure are capable of building hundreds, if not thousands of models and decks all at the same time. The spend in terms of the models is clearly going to go up. That naturally means that you'll move probably slightly more towards a usage based model. You could see this obviously with what Anthropic and OpenAI and the other vertical players like LegalAI, for example, are doing.