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Podcast

Ravi Gupta - AI or Die - [Invest Like the Best, EP.411]

Invest Like the Best with Patrick O'Shaughnessy

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  • Midjourney Advancements
    • Ravi Gupta was surprised by the advancements in Midjourney v5.1 Pro.
    • He was stunned when the model asked clarifying questions, showing a new level of interaction. Transcript: Ravi Gupta Like everyone, you see these new model advances, and they’ve come out so quickly that you are using the models for whatever you’re using them for the day before. And it’s hard to think of even what to ask them when the new ones come out. So a couple of things happened. One, you know I’m on the board of Sierra, Brett and Clay’s company. They started describing some of the things that were able to be done in 01 Pro that were not able to be done with 4.0. And I was surprised. And I think that the specific example that came up was when Clay was talking about something he was doing with it. I asked him to show me how he was using it. And when he did that, he asked the model a question, which was, are my instructions clear? Is there anything else I can do to make it to clarify what I’d like to have you do? That interaction was so different than anything I’d ever thought about with a model. I’d never thought to ask it a question. And the model came back and said, no, actually, in fact, can you please clarify these five or six things? And I was pretty stunned by that interaction. That was point one. Point two was a friend of mine who was at one of the model companies left to go to another one. And I said, hey, what happened? And he said, the pace of progress has changed so much in the last three months that I had to go to this one. And in our business, take the Matt Kohler quote that you and I both love. Matt is a good friend of ours, both of ours. Our job is not to see the future. It’s to see the present very clearly. All of a sudden, it felt like the present was different than what I thought. And so I just started trying to use it more myself. And I think I’m barely scratching the surface, but I was pretty stunned at what was possible from this. And I’m somebody who lives in Silicon Valley and works as a venture capitalist. (Time 0:06:01)
  • AI’s Potential Impact
    • Powerful AI, like a “country of geniuses,” will be available to everyone.
    • This will lead to dramatic changes, with smaller teams potentially outcompeting larger corporations. Transcript: Patrick O’Shaughnessy You mean by AI or DAI in its most kind of intense form. Ravi Gupta Well, if you take that Dario quote from his essay from October, he describes what he believes powerful AI will be. And it’s this idea of a country of geniuses in a data center. That’s what’s going to be available to anyone. And then you take what Sam has been saying, the quote he has is, in a decade, every person will be more capable than any person is today. And if you just take a moment, literally just read the words again or say them again in your brain, they are like mind bending. And so the point of what do I mean by AI or die? If they’re at all right, if there’s something approaching right, there’s going to be dramatic change that is going to come to any company, to any person. If we then think about the most intense version of that, if that’s true, then you should be able to recreate what we have now with dramatically fewer people working on it because there Are a country of geniuses available in a data center. And so I think the most intense version of that is envisioning a group of developers hanging out on a Friday night and sorting companies based on their market cap and their number of people And their NPS in some calculation. And finding the biggest company with the most people with the lowest NPS and then competing about who can build it faster. It’s just like a crazy thought of what could happen. But I don’t think it’s crazy if the AIs turn out to be as powerful as we think. And then the much less intense version that I think is very real is anything you have that prevents you from embracing change right now is a huge limiter. (Time 0:07:50)
  • AI for Real Work
    • Ravi used an AI model to prepare for a dinner with a company he knew little about.
    • In minutes, the AI provided valuable insights, showcasing its practical use for real work. Transcript: Ravi Gupta Specifically, what have I done personally is I try to use it more for real work. I had dinner with somebody recently, and I hope he’s not listening because of the setup I’m going to give you. But it was with a company, somebody who was on the board of a company that I didn’t know that much about. I was not well prepared for the dinner. And it was somebody who I wanted to make sure I had a productive conversation with. And there was 20 minutes before I was going to go to the dinner and I prompted the model, the latest model, the $200 a month one, which I know sometimes people just don’t want to do that because $200 a month is a lot of money. It is, but it’s not a lot of money when you think about relative to seeing the future. I mean, that’s literally what they’re offering you right now. So I put in, I said, I am a sophisticated investor. That was a very generous term for myself. I have a dinner in 20 minutes. I am not prepared for this dinner. And I’d like to understand deeply what this company does in a way that I can understand within 10 or 15 minutes. I’d like to understand these four or five things. And I’d like to have some good ideas for this person for what they could do. And are my instructions clear? And I use deep research. And he said, no, can you tell me these four or five things? I told it. Four minutes of thinking, and it came back. And I read it on the way to the dinner. And we had a great dinner. This person thought that I knew what I was talking about. That is a pretty different use than, can you summarize this email for me? I think that the AI interaction most of us have is Apple’s an amazing company, but the Apple intelligence summary of your text message is the most absurd. It’s a terrible experience, right? And it’s truly like laughable. It’s more used for comedy than it is used for like actual value right now. And that’s the interaction that most of us are having with this thing versus that wow experience for me of, oh my gosh, I actually know a lot more about this company now. (Time 0:11:07)
  • Hidden Costs of Large Teams
    • There are hidden costs to large teams, including time spent on internal matters instead of customer needs.
    • Focusing on customer value delivery becomes crucial, especially for leadership. Transcript: Ravi Gupta You and I have been talking about how there’s this meme that’s sort of starting to arise of like small companies. Small team meme. Small team meme. Yeah, small team meme. And I think that Dharmesh from HubSpot talked about this, SMB doesn’t stand for small and medium businesses anymore. It stands for small and mighty businesses. So if you start with this premise, maybe small is even better than we thought. Maybe small is even more of an advantage than we thought. The question is why? And I think that there’s a lot of hidden costs to having a lot of people. We’ve all talked about in the past, well, coordinating amongst them. Well, okay, that seems like a hidden cost. And then there’s all the other things that we’ve talked about in the past. If you have a lot of people, you would spend a lot of time interviewing and hiring. You also spend a lot of time putting people on pips. You spend a lot of time discussing all those very specific things. I think the bigger picture zoom out that I believe is sort of like how much of your time is spent dealing with employees in a way that doesn’t actually help your customer. What percentage of your day, if you’re a CEO or a founder or a leader, is spent on things that your customer cares about? And I think that number is vanishingly and astonishingly small for a lot of people. This is why I think sometimes you’ll hear CEOs be like, I don’t even like my job because they don’t actually spend that much time doing stuff for the customers. And I do think that that exponentially goes up the more people you have, or it has the risk of exponentially going up the more people you have. I have a friend who runs an organization that’s like 400 people. And he was telling me that he had to let go of like 20 people last year. And he’s like, it’s taken up the most crazy amount of time of setting up how he does the layoff, figuring out how to talk to each of those people. What is the severance package for each of those people? How does he talk to the people that stay? How does he describe to them what’s going on and why it’s going to be durable and why it’s okay? There’s just all these hidden costs that go in and they all prevent percentage of time you are focused on delivering a resolution to your customer. And if we envision there’s this incredible advantage right now that’s pronounced and even more pronounced than it’s probably ever been of just people that spend time thinking about What their customer wants and how to deliver it to them in the best, fastest, cheapest way. And I think that moments that you get to free up your brain to think about that are the moments that are going to deliver value for your company. So maybe going back to your question of like, how would I think about the biggest value creation lever for a company if you were like dropped in as the leader? It’d be like, what percentage of time does the senior leadership team think about how to deliver value to the customer in the best, fastest, and cheapest way in six months, 12 months, 18 (Time 0:18:07)
  • Re-Underwriting Your Business
    • Re-evaluate your business model, including pricing, and consider moving away from seat-based models.
    • Assess each role’s potential for AI augmentation or replacement. Transcript: Patrick O’Shaughnessy This idea of enthusiastically rehiring somebody is the standard. Ravi Gupta If you could do it again, would you hire this person to do this job? I think you have to like enthusiastically re-underwrite your business. And what do I mean by that specifically? You need to go and say, what is the purpose of your company for these customers? What is the best, fastest, and cheapest way for us to go and deliver that? And is it what we’re doing now or not? And you can hold nothing sacred. So what do I mean specifically? Let’s take pricing. Today, a lot of companies have seat-based pricing models. I don’t believe that that will be the future of the way that people buy software. I think that there is something, we’ve heard this from different people, but maybe they’re going to pay for the job to be done. Maybe they’re just going to say, I want this piece of work done, and I want to pay just for that piece of work done. I don’t want to pay for each person that uses your software. I want to pay only when something gets done. Well, that is a massive and dramatic shift if you’re a big company to move away from the pricing model that got you there. But understanding that that might be the future of your pricing, that is a big realization that has a bunch of knock-on effects as to like, well, what do you go do then? And maybe it means you’ll have 60% less revenue now if you move to that. But in the future, you have the potential for 5X more revenue because you have a bigger customer base that you can go after, or you can do more jobs for somebody. But I think one thing, you can hold nothing dear. That’s one thing, which is pricing model has to be evaluated all under this idea of enthusiastically re-underwrite the way that you’re delivering the purpose of your company to its Customers. That’s one. Two, I think that you do have to go role by role and figure out what is this AI superpower version of each of these roles. Is it that it’s replaced? Is it that it’s augmented? And I think that that is a big deal of like the specific role by role conversation. And I know people like, well, we have 5,000 people. I don’t want to do that. I’m like, can you tell me what’s more important than that? What is more important than figuring out whether you have the right people doing the right jobs for your company? So that’s that. I think the third thing, Patrick, is this idea of what percentage of our time do we spend thinking about our customers? I really think that’s valuable. You know, this thing that Shopify does, Shopify will just kill meetings and recurring meetings randomly. I think doing the calendar audit of what percentage of our time as a company, as a leadership team, first as the CEO, then as a leadership team, then as a company, is spent on things that Move the needle for our customer. What percentage of time do our engineers spend coding? All these things I would do. And it’s easy for me to say because I don’t have the responsibility of doing this. You asked, what would you suggest to somebody? (Time 0:26:47)
  • Reactor vs. Predictor
    • Being a world-class reactor, adapting quickly to new information, is more valuable than predicting the future.
    • This ability to react is within our control and essential in a rapidly changing environment. Transcript: Patrick O’Shaughnessy Can you talk about that new dichotomy? Ravi Gupta It’s such a perfect question for me because it gets to merge together things that I love that may not seem like they have anything to do with each other. But the first person I heard say that was Coach K at Duke. He said, I am not a world-class predictor, but I am a world-class reactor. And he was referring to it as like when college basketball changed from people that stay for four years to people that play for one and then go to the NBA. He was like, I couldn’t have predicted that that’s the way the rules would go. I didn’t know. But you know what? Once that was the game on the field, I played it extremely well. That actually was very helpful for me, Patrick, along with Kohler’s quote, because it’s very intimidating to think about predicting the future. There are really smart people in Silicon Valley. There are really smart people all over the world. I don’t know how to predict the future. I do not have the IQ points for that. There are people that are much brighter than me who can do that. I think the thing that I do have in my control is the ability to respond quickly to new information. I can control that. I can control being open-minded to seeing new information and then reacting quickly. I can control being averse to change. That is something that it feels empowering to me. And it’s something that’s in my hands and it’s in the team’s hands too. I can help the team be like, guys, let’s embrace this change. Let’s embrace this reality and let’s go react to it. I think right now the world is totally awesome for people that can be world-class reactors rather than world-class predictors. If you look at the people that created these labs, they were world-class predictors. That was an amazing insight however many years ago. Look at what the scaling laws are going to do. Look at these exponentials. And they themselves, funny enough, are sort of humble about it. They’re like, it wasn’t that hard. If you just believe that the scaling laws continue, you could bet that this was going to happen. But like, it was hard. Looking at what a model can do today and being like, that’s going to be cheaper in the future. That’s not being a world-class predictor. That’s just looking at the facts. What is hard is choosing optimism to go and react to that, but it’s totally within our control. It’s hard the way going to the gym is hard. It’s not hard the way creating a new mathematical theorem is hard. It takes discipline and it takes fortitude and it takes a choice. But I love those kinds of things because those are in our control and they don’t require like a new brain. They require more discipline. (Time 0:37:16)
  • The New Status
    • Traditional status symbols like team size might become obsolete.
    • The new status will be “magic per employee,” maximizing impact with smaller teams. Transcript: Patrick O’Shaughnessy We’ve talked a lot about the role of status before in all things. Apply your ideas about status and our status-seeking nature and behavior to this new world. Ravi Gupta This has been observed in the past, but I think sometimes there is historical status in business to like the size of the team that you manage. Sometimes, still today, how many people do you have is a question that is asked to like a startup founder as some indication of progress or the scale of your company. How much money have you raised? How many people do you have? I think if you take this idea that you talked about, the small team meme, or Dharmesh’s idea of small and mighty businesses, it seems possible that the new status is having a small team. The ratio of magic to people. And I think magic, sure, it can be like measured in revenue if you want to use a very blunt instrument. But like maybe this idea of magic per employee implied being like, oh my God, you did that with 10 people? That kind of thing. Can’t you feel that already? That feels like that shift has happened already. I think so. And I think that if it’s that’s great. And it’s not because that means people will lose their job. That’s not the point. The point is that each person will deliver more magic. They might leave a bigger thing and start a smaller thing or join a smaller thing and have more impact, have more purpose. Nobody likes being a cog in the wheel. Nobody likes feeling like if they left, nothing would change. And I think that the more we can get to people like getting more out of their potential, that would be freaking awesome. It does seem like it’s starting to go that way. And I think that is an awesome thing. Small teams feeling like they can do anything. Oh man, there’s nothing that stops us from doing that. I think that would be an awesome thing for the ecosystem. (Time 0:42:28)
  • Shane Battier’s Ghost
    • Shane Battier was driven by the idea of a “ghost” competitor always working harder.
    • He later met his “ghost” in Kobe Bryant, highlighting the importance of continuous improvement. Transcript: Patrick O’Shaughnessy Love the story Shane Battier told you about his career training when he was young and this idea of the ghost. Can you relay that? Because I do think it’s as an analogy, interesting way to think about what’s happening here. Ravi Gupta Shane Battier, former professional basketball player and a dear friend, he’s very different than most people in that when he was growing up, he sort of knew he wanted to be an NBA player And was working accordingly to do that from very young age. A lot of kids say that, but they’re not serious about it. I think Shane describes himself as like, I was like a professional basketball player from the time I was 10 years old. I went and did these things. I was working. I was working with a goal in mind. So he tells this story of there was a poster in his room and the poster in his room had basically like somewhere somebody is out there working while you’re not. Somebody somewhere is out there practicing while you’re not. And Shane would talk about how that haunted him. There was this ghost that was out there and it would make him work harder because it’s like, gosh, if I take a break, there’s somebody out there who’s doing it. So he tells this story. And of course it like ends well because he plays in the NBA and he ends up being amazing. And he has this 13 year career and it’s like the value of hard work. But the thing that’s so interesting is Shane met the ghost. When he played in the NBA, Kobe Bryant was that ghost. Kobe Bryant was working all the time. Kobe Bryant was born a month after Shane. It’s crazy. Grew up in Italy. He wasn’t like around the corner in Michigan. There literally was someone on like the other side of the world working all the time. And then he like comes face to face with this guy and he was out of this world good. And that was how Shane had to ultimately measure himself. As we think about this moment in what’s happening, there is someone out there working right now to produce the magic that you promise to your customers. There is someone out there working on it and they are working on it a lot. You’re going to come face-to with them because your customer is going to decide at some point, do they want to work with you or do they want to work with them? You got to approach that with joy. You got to approach like, I’m going to come face to face. I’m going to go earn the right to play against this person and I’m going to be amazing. And I’m going to go and take this opportunity because I’m given this chance. But that reminded me so much of this moment for a CEO or a leader or anything. The ghost is out there and you get a chance to play against them, but you (Time 0:54:10)
  • Limitless Ambition
    • In the age of AI, ambition is the only limit.
    • Smaller, agile teams have the potential to achieve unprecedented success. Transcript: Patrick O’Shaughnessy Maybe just try to put a bow on this for us. You’ve thought about this a lot now. You’re talking to these founders every day. You’re working with the investors that get this the most. What’s your summary of this entire exploration? Ravi Gupta The post starts with this quote from Ayrton Senna, which is that this is a moment where you can actually pass a bunch of cars in front of you. And I think the reason that that creates the optimism for me is you are only limited at this moment by the scale of your ambition. This is something Ruloff asks a lot of founders, but like, what is the scale of your ambition? This moment, you can go and pass 15 cars in front of you. And remember, like you get to decide what race you’re in. So if your company’s worth $10 billion, this is a chance for you to be worth $100 billion. And if your company’s worth $3 trillion, it’s a chance for you to be worth $30 trillion. And if your company is just getting started, you have a chance to beat people that you never thought you’d have a chance to beat. You get to choose the race you’re in. So the reason that I think there’s such an incredible optimistic moment here is there’s going to be a bunch of change. None of us want to live in stasis. None of us want to be stuck where we are. All of us want to have upward movement that comes from doing something great and like earning it. This is a moment where if you earn it, if you are willing to go and learn this stuff and go and just be committed to being excellent, the world is available to you in a way that it’s never been Before. You don’t even need to hire a lot of people. Think about all the constraints that existed before. If it’s true that a 20-person company can do something that a 20-person company can never do before, it’s so much easier to find 20 awesome people than it is to run a 10,000 org. That’s so far away. You can do it faster. The thing for me is for high-agency, ambitious people, you’ve been given tools to like go enter a race you never knew possible and to fucking win it. That is so awesome. That is what I hope people get. It’s not, yeah, sure. If you choose stasis, yeah, you might go into irrelevance. But if you choose optimism and you choose forward motion and you choose embracing this, there is no limit to what you can go and do. (Time 0:56:55)