The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:11:04 · Harry Stebbings, Erik Bernhardsson
[00:11:04] S1: I actually think the three things that matter to say when I invest is like, one, team. Are they top 1% team? Yeah. Two, speed of product decision making very specifically. You look at Instinct today. The speed of feature shipping is really very impressive and they're very, and then three is brand. Yeah. And I think those are the three determinants to me of defensibility, moat, but it's a kind of package. [00:11:25] S0: Yeah, I mean, again, I don't know if I would... But I kind of agree with your point. I think brand, I don't wanna call it a moat, but it's actually, I think the value of brand has gone up a lot. [00:11:34] S1: Can I be a dick? [00:11:35] S0: Yeah, please. Do you [00:11:36] S1: think Modal have done well with brand? [00:11:39] S0: I think pretty well. I think we have, it's coupled with the developer experience, and the product, and the website, and the visual identity, and all these things. We just did an event in San Francisco, and I thought a lot about that, sort of how we package it, the event, and the visual look and feel and [00:11:52] S1: But like, do you think you have a bigger brand than Baseten and Fireworks?
00:11:52 · Harry Stebbings, Erik Bernhardsson
[00:11:52] S1: But like, do you think you have a bigger brand than Baseten and Fireworks? [00:11:55] S0: I think we have that. I think we have like really, really good vibes. Like, I'm terminally online. Like, people tweet, like, way more about Modal. I think there's, a little bit more of a community. I think there's, like, much better vibes around us. Like... But, like, I am paranoid about those companies. Like, I am paranoid about competition. Of course, I track it. Like, I of course, like, I I see everything that gets tweeted and about our competitors, and this is important. Like, everyone wants to be a part of the community. Everyone... You know what I think is, like, people misunderstand is I I love TypeSafe with JEV. Yeah. Because, like, everyone wants to clone JEV. No one wants to get up on stage and wear a fucking pink fur coat just, like, talk about the Jevolution in an unhinged way. That is what brand to me is. Like, it's... Like, that guy is, like, he's playing the game on a whole different level. And and I think it's just, like, so, like, true about, like, companies today. Like, you have to [00:12:39] S1: think about that. What... So can you just unpack why? Because he's authentic and different?
00:12:39 · Harry Stebbings, Erik Bernhardsson
[00:12:39] S1: think about that. What... So can you just unpack why? Because he's authentic and different? [00:12:43] S0: I think so. I I think you just have to create a personality. You kind of have to, like, figure out, like, what is the personality of your company, and just be consistent, and create, like, almost like a sense of movement, a sense of, like, community. Like this is something cool, and people want to use you because you're one of the cool products out there. They're like, have you tried Modal? It's pretty cool. [00:13:00] S1: What what has Modal done then that base ten and four OS haven't to build that? [00:13:04] S0: I think we started with the developer experience. So that was... And we had a very clear sort of PLG product market fit, product led growth, in the sense that people came bottoms up, they just sign up on a product. Like, I think the consumer background of coming from Spotify is very important in how I thought about building what's now a B2B company, selling tech effectively. In a way, it's like a very boring category, but I think, you know, like, having personality and having, you know, a little bit of an edge is a big part of how you create that sort of movement and that sort of like sense of excitement and the feeling that you're different. And I wanted to start the moment you go to a website, and the moment you try the product and you just feel that it's different, that magic moment.
00:13:04 · Erik Bernhardsson, Harry Stebbings
[00:13:04] S0: I think we started with the developer experience. So that was... And we had a very clear sort of PLG product market fit, product led growth, in the sense that people came bottoms up, they just sign up on a product. Like, I think the consumer background of coming from Spotify is very important in how I thought about building what's now a B2B company, selling tech effectively. In a way, it's like a very boring category, but I think, you know, like, having personality and having, you know, a little bit of an edge is a big part of how you create that sort of movement and that sort of like sense of excitement and the feeling that you're different. And I wanted to start the moment you go to a website, and the moment you try the product and you just feel that it's different, that magic moment. [00:13:42] S1: Can I ask you, we've spoken about the three different providers there? Inference as a market has many different speculators commenting on it. When you look at the next five years, how does the inference market play out?
00:13:42 · Harry Stebbings, Erik Bernhardsson
[00:13:42] S1: Can I ask you, we've spoken about the three different providers there? Inference as a market has many different speculators commenting on it. When you look at the next five years, how does the inference market play out? [00:13:55] S0: Of I I think inference is gonna be an enormously large market. It's like the new cloud, basically. And... But I don't think inference in itself is maybe, like, the only thing you need. One of the things that I feel very strongly about is, like, it has to come with, like, a lot of other products. It has to come with post training, sandboxes, agentic stuff, all kinds of, you know, other types of inference, like low latency inference, batch inference. So building that platform, by the way, we've been working on this for the last five years. Think that to me is, you know, not a moat, but it's a very hard product to build, that infrastructure. Why do you need [00:14:25] S1: to have the breadth of that product set? Otherwise, you're just in a compression layer. Yeah, because otherwise you're just selling commodity product.
00:14:25 · Harry Stebbings, Erik Bernhardsson
[00:14:25] S1: to have the breadth of that product set? Otherwise, you're just in a compression layer. Yeah, because otherwise you're just selling commodity product. [00:14:32] S0: And, like, if you're just selling, like, tokens for dollars, there's no switching cost, you know? People can just switch to different provider. It's just a race to the bottom. But if you couple it with all these other things around it, sandboxes and post training and reinforcement learning and all these things, like, you can actually create a whole set of tools. Like, one wants to build a, you know, buy a single trick pony. People want to buy a portfolio of different things. Like, they want to buy, you know, a whole suite of tools that basically lets them build amazing AI applications on top of it. Right? And the infrastructure underneath is a lot of differentiation, a lot of, you staying power in the markets. It's very hard to copy like the infrastructure required to build all of these products. [00:15:09] S1: What does no one see about the inference market, or you don't see commented on much, that is very obvious to you? [00:15:15] S0: One thing that people don't see about the inference market is, I actually think in the long term, there is so much gross margin opportunity in this space, because you can build all these things around it. All the sandboxes, all the agentic stuff, workflows, post training reinforcement learning. If you do all those things, there's actually so much opportunity to make money.