Foundation Capital

Advice to founders: Your AI strategy needs to evolve beyond workflow automation. Here's why. The enterprise AI market is evolving from path 1 to path 2: Path 1: Automated workflows aka traditional automation → Rule-based processes → Manual data inputs → Human oversight at every step → Limited to structured data Path 2: Systems of Agents (the future) → Networks of specialized AI workers → Real-time data capture and analysis → Continuous learning from each interaction → End-to-end business capabilities Repetitive, rule-based tasks were the low-hanging fruit ?? Meaningful breakthroughs happen when we build systems that enhance human teams' capabilities. This human < > AI collaboration opens up completely new categories of work—things we couldn't even attempt before. Agree? LMK in comments.

Traditional supply chain software is leaving $1.6T on the table annually. The average company loses half a year's profit over a decade to disruptions. The core problem is fractured data across three systems: → Communication tools run on unstructured data (emails, PDFs, scanned documents) → Electronic Data Interchange (EDI) systems from the 1960s → Multiple disconnected management systems (ERP, WMS, TMS) This fragmentation cost market leaders. → Tesla missed chip shortage warnings in emails, leading to 190,000 fewer vehicles in Q3 2021 → Walmart's legacy EDI system caused delays in their drop-shipping initiative → Unilever saw 23% more stockouts and 17% higher excess inventory from poor ERP-WMS communication Digitization efforts haven't fixed this. Solutions like project44 and FourKites aggregate data via APIs, but McKinsey reports that nearly half of the companies surveyed still lack core digital infrastructure. The supply chain software market will grow from $29B to $62B by 2028. The companies that unify these fragmented systems will capture this opportunity. My latest analysis on supply chain's future with Foundation Capital Partner Jaya Gupta: https://lnkd.in/gCJrPZ5g Thanks to Tushar Dalmia for supporting the research behind this post.

A provocative piece in the Harvard Business Review from my friend Bobby Yerramilli-Rao (Microsoft CSO) charts how AI will reshape enterprise expertise and strategy. What resonates deeply with me is their insight into AI's "triple product" return. I’ve seen firsthand how AI drives operational efficiency, elevates workforce performance, and enables sharper strategic focus by automating non-core activities. Another fascinating insight: the conventional wisdom that AI mainly benefits top performers is wrong. Studies show AI assistants boost lower-skilled workers' performance by 43% versus 17% for high performers. AI is raising the floor for everyone. This has major implications for how enterprises should think about talent and org structure. Bobby and his co-authors John Corwin, Yang Li and Karim Lakhani deliver a clear-eyed view of what it means to compete when AI puts expertise at everyone's fingertips. Well worth the read: https://lnkd.in/gy9TsVVU

The digital banking paradox: high volume, low value. Central Bank's data shows customers check their app 20-26 times monthly yet spend less than a minute per session. Digital customers bring just 1/15th of deposits compared to branch-acquired ones. Our Fintech team's latest analysis examines how banks can use generative AI to transform these transactional touchpoints into deeper relationships. Based on conversations with 20 banking executives, we identify specific opportunities for incumbents and startups. ?? Read the full analysis: https://lnkd.in/er4DBMA3

Over 112 million Americans struggle to pay for healthcare. Over 240 million feel what they pay isn't worth the cost. We can't let this continue. Here’s how AI will help level the playing field in healthcare:

The Open Data Lakes(ide) gathering at Foundation Capital this week brought together an exceptional group of technical builders tackling massive-scale data challenges. Foundation Capital General Partner Steve Vassallo and our friends at dltHub curated an evening focused on practical solutions for solving 16B+ data problems (we counted!), with powerful demonstrations from Alexander Butler (Harness), Josh Wills (DatologyAI), and Marcin Rudolf (dltHub). Special shout out to the hardcore data enthusiasts who stayed deep in technical discussions until the cleaning crew had to kick us out! Thank you to Matthaus Krzykowski and the dltHub team, and to all who joined us!

OpenAI just hit a $157B valuation. But the companies that will define AI's future aren't yet built, according to General Partner Ashu Garg. In his latest B2BaCEO Newsletter, Ashu breaks down: → Why OpenAI's core economics don't work like traditional software → The challenges of being a research lab, platform, enterprise solution, and consumer product simultaneously → Where the most valuable AI companies (which don't exist yet) will emerge ?? Read why startups targeting specific, costly problems in engineering, healthcare, legal, and sales will create more value than foundation model companies: https://lnkd.in/eKnSQvCE

Software is undergoing its most profound transformation yet—evolving from a tool that helps humans complete tasks to an autonomous worker that handles complex services. General Partner Joanne Chen and Partner Jaya Gupta explain how AI is ushering in a new System of Agents that mirrors human teams, with specialized agents collaborating, competing, and continuously learning from each other. They map out: → The three phases of software's evolution → How builders can tap into the $4.6T service-as-software opportunity → The top 50 startups making progress in this space ?? Read more about why multiple agents working together achieve better results than one, and how this shift will fundamentally change enterprise software: https://lnkd.in/eKgawCrt

Cal Students and Alumni—Applications are now open for our 3rd cohort of Cal Build! Our goal is to help more Cal students and alumni?start, build, and scale companies. If you're a current Cal student or Cal grad who has started an Enterprise company in the last 6 months or is thinking of starting a company in the next 3 months, please apply! ??? Applications are due by?November 29. Each cohort has 8 Cal builders. We have intimate in-person & virtual events, access to me and the rest of the Foundation Capital investment team, free office space, demo days with our broader VC & angel network, AWS/Azure/Open AI/Anthropic free credits, and a lot more. Learn more and apply here:?https://lnkd.in/guyAagiu

Banks have struggled with two realities that seem at odds: low customer satisfaction and high service costs. Despite massive tech investments, these challenges persist. We're excited to share a new series by General Partner Charles Moldow and Partner Nico Stainfeld exploring how generative AI can reshape banking, starting with customer acquisition and onboarding: Part 1: Banking Reimagined An overview of how generative AI plugs into every phase of the consumer banking lifecycle—from acquisition through collections—and the strategic opportunities for both incumbents and startups. https://lnkd.in/ec_aH34T Part 2: Winning the First Impression A deep dive into how generative AI transforms those crucial first interactions between banks and customers, reducing costs and increasing conversion while fundamentally reimagining how financial relationships begin. https://lnkd.in/edDMN6zb Key findings:? → 80% of banking data is unstructured and largely untapped → 68% of customers abandon financial applications due to poor onboarding → Only 30% of bank customers receive personalized financial advice Stay tuned for more insights as we explore customer engagement and collections in the coming weeks.