Exceeding AI expectations

Greetings, readers. As AI reworks the fabric of our world, we've?been thinking about how we can truly harness its full potential. Is a 20% boost in workflow enough, or is there a point where we and our companies exponentially accelerate? Rohit Sharma shares thoughts, you’ll get the lowdown on the latest AI companies, and we’ll invite you to our next event.

AI, Thinking Beyond Incremental Improvements

By rohit sharma

Following an interview where I was prompted to?share thoughts?on where we see the most potential for AI to transform not just workflows but technology and infrastructure at its core, we’ve been thinking about where the most opportunities lie for founders and what’s fundamentally redefining our expectations of what's possible.

At the core of that discussion is the real value proposition of AI; not marginal improvements to our existing workflows but rather solutions that create and operate AI-reasoned workflows that are different from scenarios where humans are typing and clicking away at software on their screens. In other words, a 10-20% productivity improvement is not as relevant as a wholesale replacement of prior software workflows as well as associated staff time on that software application.

The real magic happens when AI enables entirely new possibilities – where AI software initially augments and then eventually replaces software and laborious work altogether. Having an AI review a meeting you couldn't attend and engaging in a natural conversation about what transpired is one thing. But deploying 10,000+ software programmers or IT experts with a single line of text to build and operate complex systems is quite another.

To that end, the stakes for AI startups as well as startups looking to work better and smarter with AI are about to get that much higher. If you can harness AI to do the work of 100+ engineers on-demand in three weeks instead of 20 engineers in three years, that's the kind of transformation that could really change the world. And it doesn’t need to be perfect. But it would be transformative. Much like with the tipping point of robotics, this doesn’t mean jobs are taken but rather many roles and skill sets will transform into entirely new ones.

One frame of thinking is that the human touch will remain crucial at both ends of the AI spectrum. The initial 1% –?the creative spark and direction – will always need human input. The final implementation and oversight will also require human judgment, curation, and sound strategy. It is the previously inefficient middle 98% where AI can deliver radical transformation.

What does this all mean for investors?

Well, the velocity of innovation will require us to evolve faster than the startup community we serve. For example, our learned patterns of historic metrics for the number of people building a tech startup has remained pretty consistent for the past two decades. Now, a small group of AI-native innovators can build, deliver, and operate the equivalent of 200-2,000 engineers within two years.

Do we value it with previous frameworks for investment dollars, valuation, and time/scale to the next fundraise? Of course not. For a startup seeking to replace the output of 10,000 engineers a year at upward of $100 thousand a year in salary per engineer, it would mean approximately $1 billion a year of replaced cost and, at a 50% discount, $500 million a year of revenue.

We will see companies race to unprecedented revenue, margins, and scale. And even at 10,000 engineers, the only real inhibitor to further scale (to 100,000 engineers or even 1 million engineers) is infrastructure in computing, networking, and storage – fundamentals that we know how to build and recursively, most of that infrastructure can be designed, orchestrated, and operated with armies of AI agents.

Perhaps the only inhibitor to this unprecedented scale is the pace with which we can build data centers and connect (hopefully green) sufficient power to them. Specifically, one way early stage venture capital may evolve is trying to understand the sheer pace of change in this exciting field. Not a week passes without significant new advances in scale, training, and new models and capabilities. How we understand this new way of computing integrated with human and perhaps superhuman reasoning is by being ‘in it’.

If this is not like any prior tech wave – and all signs so far point to that – ‘rational design’ of investing strategy and execution likely won’t work. We must learn here by ‘doing’ and engaging as much as we can while suspending our patterns developed in the last few tech waves. There is also a component that doesn’t change — that of the founder mindset that takes on an amazing array of challenges and the founder skillset that zeroes in on innovation. If we're not relevant to this new class of founders and startups, we shouldn't be in this business.

Rohit Sharma is a Partner at True Ventures. As former founder and CTO of ONI Systems, he helped pioneer optical switching technologies and led the company through its IPO and acquisition. Now, he's deeply passionate about GenAI and its transformative potential.

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AI Company Briefing

Tough time keeping up with all the new AI companies out there?

Here are a few new AI apps and platforms that recently joined the True Portfolio?to stick in your back pocket for informed dinner party (or hacker house) conversations.

Smashing App: AI-powered content discovery app that incorporates community curation.

What You Should Know: Founded by Otis Chandler of Goodreads, Smashing App blends?AI recommendations with user-powered curation to surface content you actually want to read base on?interests. Try the beta.

Vectorize: helps developers build fast, accurate, production-ready genAI applications.?

What You Should Know: Built for devs who want to move genAI models from concept to production quickly, Vectorize 's software handles the heavy lifting around model optimization and scaling. Game-changer for anyone building real-time AI applications.?

RadiantGraph: helps healthcare organizations supercharge their personalization with AI.?

What You Should Know: Merging?patient data, marketing, and care delivery, the software helps healthcare providers with patient lifecycle management and revenue ops as well as driving customer engagement. RadiantGraph has seen more than?1,400% growth?in one year since launch.

AI App Use Case?Spotlight

“I've been using?Claude Projects?to mine really lengthy studies, reports, and other market resources to find the info I need for running due diligence on companies who've pitched us and to more deeply understand research papers. Being able to upload hefty files and quickly find the most relevant data, statistics, and market details I need has been hugely helpful."

- True Associate Shan Reddy

AI x Wellness

SuppCo emerged from stealth to launch its AI-powered platform for sharing personalized health supplement stacks. Users can build their own ‘stacks’ and optimize them for better health, performance, and cost savings. And wellness creators can design content tailored to particular communities. Subscribers can follow these creators for guidance and products?available for purchase.?

See?True Partner Adam D'Augelli's supplement stack?and make your own. SuppCo’s co-founded by serial entrepreneur Steve Martocci of previous True co' Splice and Nick Michlewicz .

AI x Sustainability

HomeBoost emerged from stealth?to launch BoostBox, an?AI-powered DIY energy assessment kit. Using smartphone sensors, the kit identifies energy inefficiencies.

HomeBoost’s AI analyzes factors like insulation, HVAC performance, and appliance use to offer up?recommendations for optimizing?energy consumption. Company is led by Selina Tobaccowala and an incredible team of co-founders. Get your?BoostBox.?

What We're Reading

Machines of Loving Grace by Dario Amodei, shared by Om Malik

How AI Is Changing Enterprise Sales by Brendan J. Short, shared by Lars Nilsson

Can Startups Thrive in an Age of AI? by Hemant Taneja and Fareed Zakaria, shared by Priscilla Tyler

True, IRL

Join us in Detroit?next on November 14th for our next True Talk. True team members Clarence Bethea and Puneet Agarwal will lead an honest conversation with Co-founder of Michigan Founders Fund and Duo Security Dug Song on getting funded, scaling creative ideas, and surging industries with innovation.

About True

Founded in 2005, True Ventures is a Silicon Valley venture capital firm that invests in early-stage technology startups, often leading pre-seed and seed rounds. We invest in people and products that capture the world's imagination?–?and big, bold creative ideas that inspire new markets altogether. If you're building an AI company and are looking to raise between $500K-$3M,?pitch us. Or, get the True Newsletter in your inbox.